As filed with the Securities and Exchange Commission on April 9, 1999.
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
Under the Securities Act of 1933
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UNITED INDUSTRIES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 2879 43-1025604
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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8825 Page Boulevard
St. Louis, Missouri 63114
Telephone: (314) 427-0780
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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Daniel J. Johnston
Senior Vice President
8825 Page Boulevard
St. Louis, Missouri 63114
Telephone: (314) 427-0780
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Carter W. Emerson, P.C.
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telephone: (312) 861-2000
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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
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Proposed
Maximum Proposed Maximum
Title of each Class of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered Unit(1) Price(1) Registration Fee
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9-7/8% Series B Senior
Subordinated Notes due 2009................ $150,000,000 100% $150,000,000 $41,700
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant 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.
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SUBJECT TO COMPLETION, DATED APRIL 9, 1999
PRELIMINARY PROSPECTUS CONFIDENTIAL
, 1999
United Industries Corporation
Offer to Exchange All Outstanding 9-7/8% Series B
Registered Senior Subordinated Notes Due 2009
For All Outstanding
9-7/8% Series A Unregistered Senior Subordinated Notes Due 2009
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Terms of the Exchange Offer
o This exchange offer expires at 5:00 p.m., New York City time, on , 1999,
unless extended.
o All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged.
o Tenders of the outstanding notes may be withdrawn any time prior to the
expiration of the exchange offer.
o This exchange offer is subject to certain customary conditions, which we may
waive.
o We will not receive any proceeds from this exchange offer.
o The terms of the notes we will issue in this exchange offer are substantially
identical to the outstanding notes, except for certain transfer restrictions
and registration rights that apply to the outstanding notes.
o Interest on the notes accrues at the rate of 9-7/8% per annum, payable
semi-annually on each April 1 and October 1.
o There is no existing market for the notes we are offering in this exchange
offer and we do not intend to apply for their listing on any securities
exchange.
Notice to Investors--
o Before you tender your notes, you should consider carefully the "Risk
Factors" beginning on page 11 of this prospectus.
Neither the Securities and Exchange Commission (the "SEC") nor any state
securities commission has approved or disapproved of these notes or passed upon
the adequacy or accuracy of this prospectus. Any representation to the contrary
is a criminal offense.
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The date of this Prospectus is , 1999.
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TABLE OF CONTENTS
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Prospectus Summary ............................................................................ 1
Risk Factors .................................................................................. 11
The Transactions .............................................................................. 16
Use of Proceeds ............................................................................... 17
Capitalization ................................................................................ 18
Unaudited Pro Forma Financial Statements ...................................................... 19
Selected Historical Financial Data ............................................................ 26
Management's Discussion and Analysis of Financial Condition and Results of Operations ......... 28
Business ...................................................................................... 32
Management .................................................................................... 43
Certain Transactions .......................................................................... 47
Principal Stockholders ........................................................................ 48
Description of Capital Stock .................................................................. 49
Description of Our Senior Credit Facility ..................................................... 50
Description of the New Notes .................................................................. 52
Exchange Offer ................................................................................ 93
Certain United States Federal Income Tax Considerations ....................................... 103
Plan of Distribution .......................................................................... 108
Legal Matters ................................................................................. 108
Independent Auditors .......................................................................... 108
Available Information ......................................................................... 108
Forward-looking Statements .................................................................... 109
Index to Financial Statements ................................................................. F-1
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We are a Delaware corporation. Our principal office is located at 8825 Page
Boulevard, St. Louis, Missouri 63114. Our telephone number is (314) 427-0780.
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Spectracide(R), Spectracide Terminate(TM), Spectracide Pro(TM), Hot
Shot(R), Real-Kill(R), No-Pest(R), Rid-a-Bug(R), Bag-a-Bug(R), Shootout(R) and
Gro Best(R) are trademarks of United Industries Corporation. United Industries
Corporation has, in effect, perpetual licenses to use the Cutter(R), Peters(R)
and Peters Professional(R) trademarks. KGro(R) and KRid(R) are trademarks of
Kmart Corporation.
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The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
SEC is effective. This prospectus is not an offer to sell these securities and
is not soliciting an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
You should read the entire prospectus carefully, including the "Risk Factors"
section and the financial statements. Unless otherwise indicated, all references
in this prospectus to "we," "us," "our" and similar terms, as well as references
to "our company" and "United," refer to United Industries Corporation.
References in this prospectus to industry data and statistics are based on
estimates compiled by or derived from Gallup Organization, Inc. and/or Kalorama
Information, LLC. Unless otherwise indicated, references in this prospectus to
our sales data were obtained from Information Resources, Inc. and Triad Systems
Corporation.
The Company
United is the leading manufacturer and marketer of value-oriented branded
products for the consumer lawn and garden pesticide and household insecticide
markets in the United States. We manufacture and market one of the broadest
lines of pesticides in the industry, including herbicides and indoor and outdoor
insecticides, as well as insect repellents and water-soluble fertilizers, under
a variety of brand names. Our "value" and "opening price point" brands generally
compete with higher priced premium brands. Our portfolio of value-oriented
brands includes the following:
o Spectracide, the leading value brand and overall fastest growing brand of
consumer lawn and garden pesticides;
o Spectracide Terminate, the first ever do-it-yourself consumer termite killing
system, launched in 1998;
o Spectracide Pro, lawn and garden and household pesticides targeted toward the
professional market, introduced in 1999;
o Hot Shot, the leading value brand and overall fastest growing brand of
consumer household insecticides;
o Cutter, the leading value brand and overall fastest growing brand of consumer
insect repellents;
o Peters, the leading value brand of consumer water-soluble fertilizers; and
o Real-Kill (Home Depot), No-Pest (Lowe's) and KRid and KGro (Kmart), the
opening price point brands of consumer lawn and garden pesticides and
household insecticides at key retailers.
We believe that our market leadership is a result of our: (a) leading
value-oriented brands, (b) strategic relationships with major national
retailers, (c) extensive distribution capabilities, (d) exclusive direct sales
force and (e) proprietary management information systems. Our portfolio of
pesticide brands holds the number one position in the home improvement center
channel and the number two position in the mass merchandiser channel. In 1998,
we generated net sales and pro forma EBITDA (as defined herein) of $282.7
million and $60.3 million, respectively.
Our management team has extensive operating, merchandising and marketing
experience with us and in the consumer products industry. This management team
has grown our business by developing new products and acquiring strategic brands
while also improving operating efficiencies. As a result, from 1994 to 1998 (pro
forma for the transactions) our:
o Net sales grew at a compound annual rate of 19.2%;
o EBITDA grew at a compound annual rate of 36.6%; and
o EBITDA margin increased from 12.4% to 21.3%.
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Industry Overview
Retail sales of consumer lawn and garden pesticides and household
insecticides in the United States totaled $2.7 billion in 1998. Since 1994, the
market for these products has grown at an average annual rate of approximately
3%. We believe that the industry will continue to grow at a similar rate over
the next several years due to favorable demographic trends. Approximately 67% of
households in the United States, or 68 million households, participate in some
form of lawn and garden care activity. Moreover, consumers over the age of
forty-five represent the largest segment of lawn and garden care product users
and typically enjoy more leisure time and higher levels of discretionary income
than the general population. As the baby boom generation ages, this segment is
expected to grow at a rate more than twice that of the total population. This
demographic trend is likely to increase the number of lawn and garden care
product users.
We also believe that we will benefit from the following trends in the
industry:
Channel Consolidation. Historically, consumer lawn and garden care
products have been distributed through a variety of retail channels, including
home improvement centers, mass merchandisers, hardware stores, grocery and drug
stores, warehouse clubs and garden centers. In recent years, as home improvement
centers and mass merchandisers have added stores and expanded their lawn and
garden care departments, consumers have increasingly purchased their lawn and
garden care needs from these outlets due to their broader and deeper product
offerings, competitive prices and convenient locations and hours. In 1997,
approximately 70% of consumers purchased lawn and garden care products at home
improvement centers and mass merchandisers compared to just 57% in 1992. We
believe that these retail channels will continue to gain market share from other
channels over the next several years.
Growth in Value-Oriented Brands. Consumer lawn and garden care products
fall into one of three brand tiers: (a) premium brands, (b) value brands or (c)
opening price point brands. Historically, the market was dominated by premium
brands. Over the past several years, the market has shifted toward value and
opening price point brands. Value brands are targeted toward consumers who want
products and packaging that are comparable or superior to premium brands, but at
a lower price, while opening price point brands are designed for consumers who
want quality products and packaging, but are extremely cost conscious. Value and
opening price point brands' combined share of shelf space at our four largest
customers increased from approximately 40% to 60% between 1995 and 1998 at the
expense of premium brands. We believe that value and opening price point brands
will continue to grow because of (a) continued improving consumer perception of
the quality and performance of these brands and (b) ongoing increases in shelf
space dedicated to these brands due to the higher margins they offer to
retailers.
Professional Market Buying Patterns. Home improvement centers are
increasingly targeting the trade professionals in a variety of industries. As a
result, trade professionals are utilizing this channel with greater frequency to
take advantage of the competitive prices, convenience of locations and hours,
delivery services and availability of credit offered by such retailers. Smaller
independent pest control operators and lawn and garden care professionals, who
represent approximately 70% of the professional market, have historically
purchased their supplies from commercial distributors. While the current
selection of professional lawn and garden care products is limited at home
improvement centers, we believe that strategic initiatives underway at several
national retailers will improve the breadth of professional products offered and
drive future growth through this channel.
Competitive Strengths
Leading Value-Oriented Brands. United is the leading manufacturer and
marketer of value-oriented branded products for the consumer lawn and garden
pesticide and household insecticide markets in the United States. Our value and
opening price point brands have driven a shift in the industry by offering
innovative products comparable or superior quality to premium brands at lower
prices. As a result, our products have developed significant brand awareness and
customer loyalty. Our portfolio of pesticide brands holds the number one
position (36% share) in the home improvement center channel and the number two
position (29% share) in the mass merchandiser channel.
Strategic Partnerships With Leading Retailers. We have developed
"strategic partnerships" with a number of leading national retailers in the
fastest growing retail channels. Our four largest customers, Home Depot,
Wal*Mart,
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Lowe's and Kmart, each hold significant positions in the lawn and garden care
market and have together opened approximately 750 net new stores over the last
five years. As a result, we have been able to significantly increase our sales
as these retailers have added new stores and captured market share.
Large, Exclusive Direct Sales Force. We have the largest direct sales
force in our industry, with approximately 300 sales representatives dedicated to
merchandising our products. Each representative is responsible for approximately
30 retail outlets and typically visits each store on a weekly basis to
merchandise shelf space, collect inventory data, record orders and educate
in-store personnel about our products. This process facilitates real-time
marketing, re-ordering and pricing decisions, helping to maximize store-level
profitability. In addition, our exclusive sales force helps us to identify
emerging trends and develop products to meet consumers' needs. We believe that
our level of direct in-store sales support is unique among our competitors.
Proprietary Management Information System. Our highly advanced and
proprietary management information system provides real-time data on sales,
orders and inventories at each retail outlet, allowing targeted sales promotions
and efficient inventory management. With same-day order processing and
strategically located distribution centers throughout the United States, we are
generally able to deliver products to retailers within 72 hours of an order,
allowing retailers to maintain lower inventory levels, generate higher turns and
minimize costly returns.
Proven, Committed Senior Management Team. Our management team has
extensive operating, merchandising and marketing experience with us and in the
consumer products industry. This management team has grown our business by
developing new products and acquiring strategic brands while also improving
operating efficiencies. In connection with the recapitalization, we named
Stephen R. Brian as our President and Chief Executive Officer. Mr. Brian
complements the present management team, joining us with over 30 years of
experience in the consumer products industry. Combined, our top four senior
managers have over 80 years of experience in the consumer products industry and
19 years of experience with us. After the recapitalization, our senior
management team owns or has the right to acquire approximately 9% of our fully
diluted common stock.
Business Strategy
We plan to capitalize on our strengths and the favorable industry trends
to enhance our leadership position in value and opening price point brands by
implementing the following key elements of our business strategy:
Enhance Value Brand Position. We plan to maintain our focus on building
our leading value brands for the consumer lawn and garden pesticide and
household insecticide markets. Our strategy is to provide innovative products of
comparable or superior quality to our competitors at a lower price to appeal to
the large, growing segment of consumers that desire a better value. Over the
past five years, we have grown the sales and market shares of our core value
brands - Spectracide, Hot Shot, Cutter and Peters - through the successful
execution of this strategy.
Partner with Leading Retailers. We believe that our strong value brand
position coupled with our operational expertise allows us to partner with
leading national retailers to develop opening price point brands. We currently
manufacture and market the opening price point brands for retailers such as Home
Depot, Kmart and Lowe's. Our strategic partnerships with these retailers have
enabled us to significantly increase our portion of their category shelf space.
Specifically, our products occupy over half of the category shelf space at Home
Depot, Kmart and Lowe's, where we are "category manager" for lawn and garden
pesticides. As category manager, our representatives work together with these
national retailers to determine advantageous pricing, product mix and
merchandising plans.
Maximize Category Profitability for Retailers. We focus on maximizing
retailers' profitability in selling our products by being a low-cost provider
and leveraging our one-step distribution. We are a low-cost provider as a result
of our high level of vertical integration and our patented water-based aerosol
technology. We have a one-step distribution process through our approximately
300 person exclusive direct sales force, the largest in the industry.
Leverage Distribution Network. We continually seek to capitalize on our
strong distribution network and relationships with retailers. To that end, we
have increased our sales and improved our operating leverage by supplying
complementary product lines to retailers. We add new products either through new
product development or by
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acquiring product lines. Our new product development strategy has been to
introduce innovative products that have superior performance, easy-to-understand
packaging and value pricing. Over the past three years, we have introduced 80
new products, which represented nearly 40% of our 1998 net sales. New products
generate additional sales and generally provide higher margins to us and our
retailers. Spectracide Terminate generated net sales of $21.9 million in its
limited initial launch in 1998, demonstrating the strength of our distribution
network. Our brand acquisition strategy has been to selectively acquire product
lines that can benefit from our strong distribution network, product development
expertise and other competitive strengths. Acquired product lines such as Peters
and Cutter have experienced rapid growth upon integration into our distribution
system.
Target Professional Market. While the primary end users of our products
have historically been household consumers, we have begun to target smaller
independent pest control operators and lawn and garden care professionals
through our existing retail channels. Historically, these professionals have
purchased their pesticide and lawn and garden care products from commercial
distributors. We believe that these professionals will increasingly utilize the
home improvement center channel to take advantage of the competitive prices,
convenience of locations and hours, delivery services and availability of credit
offered. To benefit from and further drive this trend, we developed Spectracide
Pro, a group of products designed specifically for the professional market.
Launched in March 1999, this line of professional pesticides is supported by
national advertising in relevant trade magazines, in-store promotional
campaigns, an exclusive direct sales force and technical support. We believe
that we can capitalize on our strong relationships with leading national
retailers to gain a meaningful position in the professional market.
The Transactions
On January 20, 1999, pursuant to a recapitalization agreement with UIC
Holdings, L.L.C., which is owned by Thomas H. Lee Equity Fund IV, L.P., we
completed a $652.0 million recapitalization (as further described in "The
Transactions" section of this prospectus, the "Transactions").
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The Initial Offering
On March 24, 1999, we privately placed $150 million of our old 9-7/8%
Senior Subordinated Notes due 2009. We entered into a registration rights
agreement with the initial purchasers in that private offering in which we
agreed, among other things, to use our reasonable best efforts to file a
registration statement with the SEC, complete this exchange offer within 195
days after issuing the old notes and, in some circumstances, file a shelf
registration statement. We must pay liquidated damages to the holders of the old
notes if we do not meet these deadlines or if we file a shelf registration
statement and fail to keep it effective until the second anniversary of the
issue date of the notes.
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The Exchange Offer
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Securities Offered...................................... $150,000,000 principal amount of 9-7/8% Series B Registered Senior
Subordinated Notes due 2009.
The Exchange Offer...................................... We are offering to exchange $150,000,000 principal amount of our new
notes which have been registered under the Securities Act of 1933 for
$150,000,000 of our outstanding 9-7/8% Series A Unregistered Senior
Subordinated Notes due 2009, which were issued in March 1999.
We will accept the old notes in exchange for the new notes in order
to increase the liquidity of both series of our outstanding notes. The
new notes are substantially identical to the old notes, except that certain
transfer restrictions and registration rights relating to the old
notes do not apply to the new notes. You may tender your old notes
by following the procedures described in this prospectus under
the heading "The Exchange Offer."
Expiration Date......................................... The exchange offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we extend it.
Withdrawal Rights....................................... You may withdraw your tender of your notes at any time prior to 5:00 p.m.,
New York City time, on the expiration date of the exchange offer.
Conditions to the Exchange Offer........................ The exchange offer is subject to customary conditions, which we may
waive. Please read the "The Exchange Offer--Conditions" section of this
prospectus for more information regarding conditions to the exchange offer.
Procedures for Tendering Your
Old Notes............................................... If you are a holder of old notes who wishes to accept the exchange offer,
you must either:
(a) complete, sign and date the accompanying Letter of Transmittal, or a
facsimile thereof and mail or otherwise deliver such documentation,
together with your old notes, to the exchange agent at the address set
forth under "The Exchange--Offer Exchange Agent;" or
(b) arrange for The Depository Trust Company to transmit certain
required information to the exchange agent for this exchange offer in
connection with a book-entry transfer.
By tendering your notes in this manner, you will be representing, among
other things, that:
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o the new notes you acquire pursuant to the exchange offer are
being acquired in the ordinary course of your business;
o you are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate
in the distribution of the new notes issued to you in the exchange
offer; and
o you are not an "affiliate" of our company.
Certain United States Federal Income Tax
Consequences............................................ Your exchange of old notes for new notes pursuant to the exchange offer
will not result in any gain or loss to you for federal income tax purposes.
See the "Certain United States Federal Income Tax Consequences" section
of this prospectus.
Consequences of Failure to Exchange..................... Old notes that are not tendered or that are tendered, but not accepted,
will be subject to the existing transfer restrictions on such notes after
the exchange offer. We will have no further obligation to register the
old notes. If you do not participate in the exchange offer, the liquidity
of your notes could be adversely affected.
Procedures for Beneficial Owners........................ If you are the beneficial owner of old notes registered in the name of a
broker, dealer or other nominee and you wish to tender your notes, you
should contact such person in whose name your notes are registered and
promptly instruct such person to tender on your behalf.
Guaranty Delivery Procedures............................ If you wish to tender your old notes and time will not permit your required
documents to reach the State Street Bank and Trust Company by the
expiration date, or the procedure for book-entry transfer cannot be
completed on time, or the certificate for your notes cannot be delivered on
time, you may tender your notes pursuant to the guaranteed delivery
procedures. See "The Exchange Offer--Guaranteed Delivery Procedures."
Acceptance of Old Notes;
Delivery of New Notes .................................. Subject to certain conditions, we will accept old notes which are properly
tendered in the exchange offer and not withdrawn, prior to 5:00 p.m., New
York City time, on the expiration date of the exchange offer. The new
notes will be delivered as promptly as practicable following the
expiration date.
Use of Proceeds ........................................ We will receive no proceeds from the exchange offer.
Exchange Agent.......................................... State Street Bank and Trust Company is the exchange agent for the
exchange offer.
Summary of the New Notes
Issuer.................................................. United Industries Corporation.
Securities Offered...................................... $150,000,000 principal amount of 9-7/8% Series B Senior Subordinated
Notes due 2009.
Maturity Date........................................... April 1, 2009.
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Interest Rate........................................... 9.875% per year (calculated using a 360-day year).
Interest Payment Dates.................................. Every April 1 and October 1, beginning on October 1, 1999.
Ranking................................................. The notes will not be secured by any collateral. The notes will rank below
all of our senior debt, but will rank equal to our other senior
subordinated debt. Therefore, if we default, your right to payment under
the notes will be junior to the rights of holders of our senior debt to
collect money we owe them. As of December 31, 1998, on a pro forma basis,
we had $225.0 million of senior debt outstanding (not including $110.0
million of available borrowings under our senior credit facility).
Guarantees ............................................. The notes will not be guaranteed by anyone on the issue date. We
currently have no subsidiaries, but if we create any subsidiaries in the
future, certain of these subsidiaries will be required to guarantee the
notes with unconditional guarantees that will rank below their senior
debt, but equal to their senior subordinated debt, in the right of payment.
Optional Redemption after Five Years.................... Except in connection with certain public equity offerings by our company,
we cannot choose to redeem the notes until April 1, 2004. At any time
after that date (which may be more than once), we can choose to redeem
some or all of the notes at prices listed under "Description of the
Notes--Optional Redemption."
Optional Redemption after Equity Offerings.............. At any time (which may be more than once) before the third anniversary
date of the issue date of the notes, we can choose to buy back up to 40%
of the original principal amount of the notes with money that we raise in
one or more public equity offerings of $25.0 million or more, as long as:
o we pay 109.875% of the face amount of the notes, plus interest,
o we buy the notes back within 90 days of completing the public
equity offering, and
o at least 60% of the notes originally issued remain outstanding
afterwards.
Change of Control Offer................................. If we experience a change of control, we must give holders of the notes
the opportunity to sell us their notes at 101% of their face amount, plus
accrued interest. We might not be able to pay you the required price for
notes you present to us at the time of a change of control, because:
o we might not have enough funds at that time, or
o the terms of our other debt may prevent us from paying the
required price.
Asset Sale Proceeds..................................... We may have to use the cash proceeds from assets we sell to offer
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to buy back notes at their face amount, plus accrued interest.
Certain Indenture Provisions............................ The indenture governing the notes will limit what we (and most or all of
our future subsidiaries) may do. The provisions of the indenture will
limit our ability to:
o incur more debt;
o pay dividends and make distributions;
o issue stock of subsidiaries;
o make certain investments;
o repurchase stock;
o create subsidiaries;
o create liens;
o enter into transactions with affiliates;
o enter into sale and leaseback transactions;
o merge or consolidate; and
o transfer and sell assets.
These covenants are subject to a number of important exceptions.
Transfer Restrictions................................... The new notes are new securities, and there is currently no established
market for them. We do not intend to list the new notes on any securities
exchange.
Use of Proceeds......................................... We will not receive cash proceeds from the issuance of the new notes.
See "Use of Proceeds."
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For more information about the new notes, see the "Description of the Notes"
section of this prospectus.
Risk Factors
You should carefully consider the information set forth under "Risk
Factors" as well as the other information and data included in this prospectus
before tendering your old notes in exchange for new notes.
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Summary Historical and Pro Forma Financial Data
(Dollars in thousands)
In the table below, we provide you with selected historical and pro forma
financial data for United. When you read this historical and pro forma financial
data, it is important that you read along with it the financial statements and
related notes, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations," all of which is included in this prospectus.
The statement of income data for the years ended December 31, 1994 and
1995, and balance sheet data as of December 31, 1994, 1995 and 1996, have been
derived from audited financial statements which do not appear in this
prospectus.
The summary pro forma statement of income and other financial data give
effect to the Transactions as if they occurred on January 1, 1998. The summary
pro forma balance sheet data give effect to the Transactions as if they occurred
on December 31, 1998. The unaudited pro forma financial data do not purport to
be indicative of our actual financial position or results of operations, nor are
they necessarily indicative of the results that we may achieve in the future.
See "Unaudited Pro Forma Financial Statements."
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Year Ended December 31,
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Pro Forma
1994 1995 1996 1997 1998 1998
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Statement of Income Data:
Net sales ............................... $ 139,822 $ 159,192 $ 199,495 $ 242,601 $ 282,676 $ 282,676
Cost of goods sold ...................... 73,230 82,603 106,640 128,049 140,445 140,445
Advertising and promotion expenses ...... 15,575 17,813 22,804 25,547 31,719 31,719
Selling, general and administrative
expenses ................................ 35,032 38,629 46,276 52,092 61,066 54,076
Operating income ........................ 15,985 20,147 23,775 36,913 47,125 54,115
Interest expense ........................ 445 609 1,502 1,267 1,106 37,926
Income from continuing operations ....... 15,235 19,249 21,826 34,920 45,027 12,959
Other Financial Data:
EBITDA (1) .............................. $ 17,299 $ 22,862 $ 27,336 $ 40,510 $ 53,284 $ 60,274
Depreciation and amortization ........... 1,314 2,715 3,561 3,597 3,838 3,838
Capital expenditures (2) ................ 1,993 4,726 6,384 5,138 3,628 3,628
Gross margin ............................ 47.6% 48.1% 46.5% 47.2% 50.3% 50.3%
EBITDA margin............................ 12.4% 14.4% 13.7% 16.7% 18.8% 21.3%
Ratio of total debt to EBITDA............ 6.2x
Ratio of EBITDA to cash interest
expense(3)......................... 1.7x
</TABLE>
<TABLE>
<CAPTION>
As of
December 31, 1998
--------------------------
Pro
Actual Forma
------ -----
<S> <C> <C>
Balance Sheet Data:
Working capital (4) .............................................. $ 30,042 $ 24,242
Total assets ..................................................... 94,161 225,683
Total debt ....................................................... 4,645 375,000
Stockholders' equity (deficit) ................................... 58,257 (186,376)
</TABLE>
(see footnotes on following page)
-9-
<PAGE>
(1) EBITDA represents income from continuing operations before interest expense,
income tax expense, depreciation and amortization, and $2,321 in
non-recurring litigation expenses accrued in 1998. Pro Forma 1998 EBITDA
includes certain related party transactions and the THL management fee as
discussed below. We have included information concerning EBITDA because we
believe it is used by certain investors as one measure of a company's
historical ability to fund operations and meet its financial obligations.
EBITDA is not intended to represent cash flow from operations as defined by
generally accepted accounting principles and should not be used as an
alternative to operating income or income from continuing operations as an
indicator of our operating performance or cash flow as a measure of
liquidity. In addition, our definition of EBITDA may not be comparable to
that reported by other companies. Pro Forma EBITDA is calculated as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------
1994 1995 1996 1997 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income from continuing operations ................................. $ 15,235 $ 19,249 $ 21,826 $ 34,920 $ 45,027
Interest expense .................................................. 445 609 1,502 1,267 1,106
Income tax expense ................................................ 305 289 447 726 992
Depreciation and amortization ..................................... 1,314 2,715 3,561 3,597 3,838
Non-recurring litigation charges (a) .............................. -- -- -- -- 2,321
-------- -------- -------- -------- --------
EBITDA............................................................. $ 17,299 $ 22,862 $ 27,336 $ 40,510 $ 53,284
Related party transactions(b)...................................... ======== ======== ======== ======== 7,740
THL management fee ................................................ (750)
--------
Pro Forma EBITDA .................................................. $ 60,274
========
</TABLE>
- -------------------------------
(a) Reflects non-recurring costs associated with two separate lawsuits: (a)
a suit filed in 1992 by the spouse of a former employee claiming
benefits from a United-owned key man life insurance policy, which we are
appealing, and (b) certain litigation concerning the advertising of our
Spectracide Terminate product for which we have negotiated a settlement.
(b) Reflects the elimination of stockholder salaries and certain fringe
benefits that were in effect prior to the recapitalization and were
reflective of the private ownership structure that existed prior to the
recapitalization, offset by the salary and fringe benefit structure that
was implemented with the recapitalization. EBITDA for 1994, 1995, 1996
and 1997, has not been adjusted for related party transactions. The
related party transactions amounts were $3,754, $4,215, $3,847 and
$3,061 for 1994, 1995, 1996 and 1997, respectively.
(2) Capital expenditures for 1995 exclude $8,272 of expenditures related to
acquisitions.
(3) Cash interest expense represents interest expense adjusted to exclude
amortization of deferred financing costs of $2,375 related to our senior
credit facility and the notes offered hereby.
(4) Working capital is defined as current assets (excluding cash and cash
equivalents) less current liabilities (excluding short-term debt and current
portion of long-term debt).
-10-
<PAGE>
RISK FACTORS
You should carefully consider each of the following factors and all of the
other information set forth in this prospectus before tendering your old notes
for new notes. The risks and uncertainties described below are not the only ones
facing our company. Additional risks and uncertainties not presently known to us
or that we currently believe to be immaterial may also adversely affect our
business.
If any of the following risks and uncertainties develop into actual
events, our business, financial condition or results of operations could be
materially adversely affected. In such case, we may not be able to make
principal and interest payments on the notes, and you may lose all or part of
your investment.
Holders of old notes that fail to exchange their notes may be unable to resell
their notes. We did not register the old notes under the federal or any state
securities laws, nor do we intend to following the exchange offer. As a result,
the old notes may only be transferred in limited circumstances under the
securities laws. If the holders of old notes do not exchange their notes in the
exchange offer, they lose their right to have the old notes registered under the
federal securities laws. As a result, a holder of old notes after the exchange
offer may be unable to sell its notes.
Your notes will not be accepted for exchange if you fail to follow the exchange
offer procedures. The new notes will be issued to you in exchange for your old
notes only after timely receipt by the exchange agent of:
o your old notes;
o a properly completed and executed Letter of Transmittal and all other
required documentation;
o a book-entry delivery by transmittal of an agent's message through the
Depository Trust Company.
If you want to tender your old notes in exchange for new notes, you should
allow sufficient time to ensure timely delivery.
Neither the exchange agent nor our company is under any duty to give you
notification of defects or irregularities with respect to tenders of old notes
for exchange. Old notes that are not tendered or are tendered but not accepted
will, following the exchange offer, continue to be subject to the existing
transfer restrictions on the old notes. In addition, if you tender your old
notes in the exchange offer to participate in a distribution of the new notes,
you will be required to comply with the registration and prospectus delivery
requirements of the federal securities laws in connection with any resale
transaction. For additional information, please refer to "The Exchange Offer"
and "Plan of Distribution" sections of this prospectus.
We may be unable to service our debt, including the notes, as a result of our
high level of indebtedness. We have now and, after the offering, will continue
to have a significant amount of indebtedness. The following chart is presented
assuming we had completed the Transactions as of the dates or at the beginning
of the periods specified below and applied the proceeds as intended:
<TABLE>
<CAPTION>
Pro Forma
As of December 31, 1998
--------------------------------
(Dollars in millions)
<S> <C>
Indebtedness senior to the notes.............................. $225.0
Total indebtedness............................................ 375.0
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Year Ended December 31, 1998
---------------------------------
<S> <C>
Ratio of earnings to fixed charges............................ 1.4x
</TABLE>
-11-
<PAGE>
Our substantial indebtedness could have important consequences to you. For
example, it could:
o make it more difficult for us to satisfy our obligations with respect
to these notes;
o increase our vulnerability to general adverse economic and industry
conditions;
o limit our ability to fund future working capital, capital expenditures,
research and development costs and other general corporate
requirements;
o require a substantial portion of our cash flow from operations for debt
payments;
o limit our flexibility to plan for, or react to, changes in our business
and the industry in which we operate;
o place us at a competitive disadvantage compared to our competitors that
have less debt; and
o limit our ability to borrow additional funds.
Any of the above listed factors could materially adversely affect us. See
"Description of the Notes" and "Description of Our Senior Credit Facility."
We may incur more debt, which could further increase the risks described above.
We may incur substantial additional indebtedness in the future. Our senior
credit facility allows us to borrow up to an additional $110.0 million and all
of those borrowings would be senior to the notes. If new debt is added to our
current debt level, the related risks that we now face could increase. See
"Capitalization," "Selected Historical Financial Data," "Description of the
Notes" and "Description of Our Senior Credit Facility."
To service our indebtedness, we will require a significant amount of cash. Our
ability to make payments on and to refinance our indebtedness, including these
notes, and to fund planned capital expenditures will depend on our ability to
generate cash in the future. Our ability to generate cash is subject to some
factors beyond our control. We believe our cash flow from operations and
available borrowings under our senior credit facility will be adequate to meet
our future liquidity needs for the next few years. We cannot assure you,
however, that our business will generate sufficient cash flow from operations,
or that future borrowings will be available to us under our senior credit
facility in a sufficient amount to enable us to pay our indebtedness, including
these notes, or to fund our other liquidity needs. We may need to refinance all
or a portion of our indebtedness on or before maturity. However, we might not be
able to refinance any of our indebtedness on commercially reasonable terms or at
all.
You may lose part of your investment because the notes are subordinated to our
senior debt. Your right to receive payments on these notes is junior to our debt
under our senior credit facility which as of December 31, 1998, on a pro forma
basis, would have been $225.0 million. In addition, these notes may rank behind
our future borrowings except any future indebtedness that expressly provides
that it ranks equal with, or subordinated in right of payment to, the notes. As
a result, upon any distribution to our creditors in a bankruptcy or similar
proceeding relating to us, the holders of our senior debt will be entitled to be
paid in full in cash before any payment may be made with respect to the notes.
In addition, all payments on the notes will be blocked in the event of a
payment default on senior debt and may be prohibited for up to 179 consecutive
days in the event of certain non-payment defaults on senior debt.
In the event of bankruptcy, liquidation or reorganization or similar
proceeding relating to us, the holders of the notes will participate with trade
creditors and all other holders of our subordinated indebtedness in the assets
remaining after we have paid all of our senior debt. Because the indenture
requires that amounts otherwise payable to holders of the notes in a bankruptcy
or similar proceeding be paid to holders of senior debt instead, holders of the
notes may receive less, ratably, than holders of trade payables. In any of these
cases, we may not have sufficient assets or funds to pay all of our creditors,
and holders of notes may receive less, ratably, than the holders of senior debt.
-12-
<PAGE>
The terms of our indebtedness impose operational and financial restrictions on
our company. Our senior credit facility and the indenture for the notes restrict
our ability to:
o incur additional indebtedness
o pay dividends and make distributions
o issue common and preferred stock of subsidiaries
o make certain investments
o repurchase stock
o create subsidiaries
o create liens
o enter into transactions with affiliates
o enter into sale and leaseback transactions
o merge or consolidate our company
o transfer and sell assets
In addition, we must maintain minimum debt service and maximum leverage
ratios under our senior credit facility. A failure to comply with the
restrictions contained in our senior credit facility could lead to an event of
default which could result in an acceleration of indebtedness. An acceleration
would also constitute an event of default under the indenture relating to the
notes. See "Description of Our Senior Credit Facility."
We may not have the ability to raise the funds necessary to finance the change
of control offer required by the indenture. Upon the occurrence of certain kinds
of control events, we will be required to offer to repurchase all outstanding
notes. Certain events involving a change of control may result in an event of
default under our senior credit facility or other indebtedness that we may incur
in the future. However, it is possible that we will not have sufficient funds at
the time of the change of control to make the required repurchase of notes or
that restrictions in our senior credit facility will not allow such repurchases.
In addition, certain important corporate events, such as leveraged stock
purchases that would increase the level of our indebtedness, may not constitute
a change of control under the indenture. See "Description of the Notes --
Repurchase at the Option of Holders."
The holders of a majority of the notes may waive defaults under or modify the
indenture in a manner adverse to noteholders who do not approve of such actions.
Subject to certain limitations specified in the indenture, the holders of a
majority in principal amount of the new notes then outstanding will have the
right to:
o waive certain existing defaults or events of default;
o waive compliance with certain provisions of the indenture or the new
notes;
o modify or supplement the indenture; and
o direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee under the indenture.
These provisions of the indenture could allow actions affecting the new
notes to be taken without the approval of all of the holders of the new notes
and thus may have an adverse effect on the holders of new notes who do not
approve of such actions. See "Description of the Notes--Events of Default" and
"--Modification of Indenture."
We depend heavily on a few customers for the substantial majority of our sales.
Our four largest customers, Home Depot, Wal*Mart, Lowe's and Kmart, accounted
for approximately 26%, 17%, 14% and 11%, respectively, of our net sales in 1998.
We anticipate a similar or greater concentration of customers for the
foreseeable future. Our reliance on these customers may significantly influence
our negotiations with them. We do not have long-term contracts with any of our
customers, and there can be no assurance that our customers will continue to
purchase our products to the degree they have in the past or at all. The loss
of, or a significant adverse change in, our relationship with any major customer
could have a material adverse effect on us. See "Business--Customers."
-13-
<PAGE>
Our historical seasonality could impair our ability to make interest payments on
the notes. Our products are used primarily in the spring and summer, so our
business is highly seasonal. For the past two years, approximately 75% of our
net sales have occurred in the first and second quarters. Our working capital
needs, and correspondingly our borrowings, peak near the end of our first
quarter. If cash on hand is insufficient to cover payments due on the notes and
if we are also unable to draw on our senior credit facility, this seasonality
could adversely affect our ability to make interest payments as required by the
notes.
Adverse weather conditions during our peak selling season could adversely impact
our financial results. Weather conditions in North America have a significant
impact on the timing of sales in the spring selling season and our overall
annual sales. Periods of dry, hot weather can decrease insecticide sales, while
periods of cold and wet weather can slow sales of herbicides and fertilizers. In
addition, an abnormally cold spring throughout North America could adversely
affect both fertilizer and pesticide sales and therefore our financial results.
We may be unable to compete successfully in our highly competitive industry. We
compete against a number of large national and regional brands. Our principal
national competitors include: The Scotts Company, which markets products under
the Ortho(R), Roundup(R) and Miracle- Gro(R) brand names; S.C. Johnson & Son,
Inc., which markets products under the Raid(R) and OFF!(R) brand names; and The
Clorox Company, which markets products under the Combat(R) and Black Flag(R)
brand names. Some of our competitors are larger, have longer operating
histories, greater financial resources and greater market recognition than us.
We cannot assure you that we will be able to compete successfully against our
competitors.
The growth of our business may make it more difficult to manage. Rapid growth
may strain our ability to manage our business and will strain our operational
and financial resources and accounting controls. Our continued growth will
require an increase in personnel, particularly in our sales force. There can be
no assurance that we will be able to continue to attract, train, develop and
retain the personnel necessary to pursue our growth strategy.
We depend on our key personnel and we could be adversely affected if we lose our
key personnel. If we were to lose the services of one or more members of our
senior management or if one or more members of management were to depart and
subsequently compete with us, it could have a material adverse effect on our
business. Although we believe we could replace our key employees should the need
arise, the loss of key personnel could have a material adverse effect on us. See
"Management--Employment Agreements."
The interests of the holders of the notes may conflict with our controlling
shareholders. The THL Parties beneficially own approximately 91.9% of our issued
and outstanding common stock, and accordingly, they have the power to elect a
majority of our directors, appoint new management and approve any action
requiring the approval of the holders of our common stock, including adopting
amendments to our charter and approving mergers or sales of substantially all of
our assets. Our directors elected by the THL Parties will have the authority to
make decisions affecting our capital structure including the issuance of
additional capital stock, the implementation of stock purchase programs and the
declaration of dividends.
We may be adversely affected by environmental regulations. We are subject to
federal, state, local and foreign environmental laws and regulations governing
our manufacturing operations and the registration and sale of our pesticide
products. The risk arising from environmental regulation may increase in the
future because the EPA is currently analyzing the risk that certain pesticides
present to children. Failure to comply with the EPA requirements, the cost of
supplying data to EPA, and the results of EPA's risk analyses could adversely
our business. See "Business--Environmental Regulation."
We may be exposed to significant product liability claims. Although we have
product liability insurance coverage in the aggregate amount of $1.0 million per
occurrence, subject to a $500,000 per occurrence self-insured retention, and an
umbrella policy for occurrences exceeding $1.0 million in the amount of $10.0
million, we cannot assure you that this insurance will provide coverage for any
claim against us or will be sufficient to cover all possible liabilities.
Moreover, any adverse publicity arising from claims made against us, even if the
claims were not successful, could adversely affect the reputation and sales of
our products. See "Business--Litigation."
-14-
<PAGE>
We may be unable to use and protect our trademarks. Our ability to successfully
compete in our markets depends, in part, on our ability to use and protect our
trademarks such as Spectracide and Hot Shot. There can be no assurance that our
trademarks will be enforceable or adequately protect us from others using
similar marks. Although we believe that our products do not violate the patents
or proprietary rights of others, it is possible that competitors or others could
claim this. If our products are found to infringe on the rights of others, we
could be required to modify our products or pay for a license for the
manufacture and sale of such products.
We may be adversely affected if our year 2000 remediation efforts are not
successful. Our failure, or the failure of our third party suppliers or
customers, to address information technology issues related to the year 2000
could adversely affect our operations. Like other business entities, we must
address the ability of our computer software applications and other business
systems to properly identify the year 2000 due to a commonly used programming
convention of using only two digits to identify a year. Unless modified or
replaced, these systems could fail or create erroneous results when referencing
the year 2000. While we believe we have assessed the relevant issues related to
the year 2000 problem, we cannot be sure that we will have adequately addressed
the issue. Moreover, we rely on third party suppliers for finished goods, raw
materials, water, other utilities, transportation and a variety of other key
services. If one or more of these suppliers fail to address the year 2000
problem adequately, these suppliers' operations could be interrupted. Our or our
customers' failure to address the year 2000 problem adequately could adversely
affect our financial results.
There is currently no public market for the notes and one may not develop. The
notes are a new issue of securities for which there is currently no trading
market. We have been informed by CIBC Oppenheimer Corp. and NationsBanc
Montgomery Securities LLC that they intend to make a market in the notes.
However, CIBC Oppenheimer Corp. and NationsBanc Montgomery Securities LLC may
cease their market-making at any time. In addition, the liquidity of the trading
market in the notes, and the market price quoted for the notes, may be adversely
affected by changes in the overall market for high yield securities and by
changes in our financial performance or prospects or in the prospects for
companies in our industry generally. As a result, you cannot be sure that an
active trading market will develop for the notes.
-15-
<PAGE>
THE TRANSACTIONS
On January 20, 1999, we completed our $652.0 million recapitalization, in
which:
o Thomas H. Lee Equity Fund IV, L.P. contributed $254.7 million to UIC
Holdings, L.L.C., which purchased common stock from stockholders for
approximately $254.7 million;
o our senior managers purchased common stock from stockholders for
approximately $5.7 million;
o we borrowed $150 million under a senior subordinated facility and $225
million under a senior credit facility to redeem a portion of the
common stock held by stockholders; and
o existing stockholders retained equity having an implied fair market
value of approximately $16.6 million.
The proceeds of the offering of old notes completed on March 24, 1999 were
used to pay off the $150 million senior subordinated facility.
Following the recapitalization, UIC Holdings, L.L.C. owns approximately
91.9% of our issued and outstanding common stock, the previous stockholders
retain approximately 6.0% and our senior managers own approximately 2.1%.
We are making an election under Section 338(h)(10) of the Internal Revenue
Code of 1986, as amended. As a result, the tax basis of our assets will
increase, which should permit us to increase our tax deduction for depreciation
and amortization which should lower cash paid for taxes. This step-up in basis
will result in an anticipated cash tax benefit of approximately $15 million per
year over each of the next 15 years, if fully utilized.
The following table sets forth the sources and uses of funds in connection
with the Transactions assuming they were consummated on December 31, 1998 (in
millions):
<TABLE>
<CAPTION>
Sources of Funds:
<S> <C>
Senior credit facility (1).......................................... $225.0
Old notes .......................................................... 150.0
Equity contribution (2) ............................................ 277.0
--------
Total sources.................................................. $652.0
========
Uses of Funds:
Recapitalization (3)................................................ $612.4
Repayment of existing indebtedness.................................. 4.6
Estimated fees and expenses......................................... 35.0
--------
Total uses..................................................... $652.0
========
</TABLE>
- -------------------------------
(1) Our senior credit facility consists of: (a) the $110.0 million revolving
credit facility, of which no borrowings were outstanding at the closing of
the recapitalization; (b) the $75.0 million Term Loan A; and (c) the $150.0
million Term Loan B. See "Description of Our Senior Credit Facility."
(2) The equity contribution consists of: (a) Thomas H. Lee Equity Fund IV,
L.P.'s investment of approximately $254.7 million; (b) the management
investment of approximately $5.7 million; and (c) the equity retained by
our existing stockholders having an implied fair market value of
approximately $16.6 million.
(3) The recapitalization consists of: (a) approximately $335.4 million used by
us to redeem a portion of common stock held by our existing stockholders;
(b) approximately $260.4 million (comprised of Thomas H. Lee Equity Fund
IV, L.P.'s investment and management's investment) used to purchase a
portion of common stock held by our existing stockholders; and (c)
approximately $16.6 million (comprised of the equity retained by our
existing stockholders) of implied fair market value of common stock
retained by our existing stockholders.
-16-
<PAGE>
USE OF PROCEEDS
We will not receive cash proceeds from the issuance of the new notes. We
used the net proceeds of approximately $145.8 million from the initial offering
of the old notes plus borrowings under our senior credit facility to repay our
borrowings under our senior subordinated facility.
-17-
<PAGE>
CAPITALIZATION
The following table sets forth our actual capitalization as of December
31, 1998, and our capitalization as of this date on a pro forma basis to give
effect to the Transactions. The information in this table should be read in
conjunction with "Unaudited Pro Forma Financial Statements," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our audited financial statements, including the related notes, which are
included in this prospectus.
<TABLE>
<CAPTION>
As of December 31, 1998
-------------------------
Actual Pro Forma
----------- ---------
<S> <C> <C>
Debt:
Existing indebtedness ...................................................... $ 4,645 $ --
Revolving credit facility (1) .............................................. -- 0
Term Loan A ................................................................ -- 75,000
Term Loan B ................................................................ -- 150,000
Notes offered hereby ....................................................... -- 150,000
--------- -------
Total debt .............................................................. 4,645 375,000
--------- -------
Stockholders' equity (deficit):
Common stock ............................................................... 2 554
Additional paid-in capital ................................................. 972 104,142
Retained earnings (deficit) ................................................ 70,193 (291,072)
Treasury stock ............................................................. (12,910) 0
--------- --------
Total stockholders' equity (deficit) .................................... 58,257 (186,376)
--------- --------
Total capitalization .................................................... $62,902 $188,624
========= ========
</TABLE>
- -------------------------------
(1) Our revolving credit facility provides for borrowings of up to $110.0
million for working capital and general corporate purposes.
-18-
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
In the table below, we provide you with unaudited pro forma financial data
for United. The unaudited pro forma data gives effect to the Transactions as if
they occurred at the beginning on December 31, 1998. The information in the
column titled "Actual" is summarized from the historical financial statements
included in this prospectus. The unaudited pro forma financial data do not
purport to be indicative of our actual financial position or results of
operations, nor are they necessarily indicative of the results that we may
achieve in the future.
When you read this pro forma financial data, it is important that you read
along with it the financial statements and related notes, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," all
of which is included in this prospectus.
-19-
<PAGE>
UNITED INDUSTRIES CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
(Dollars in thousands)
As of December 31, 1998
<TABLE>
<CAPTION>
Transaction
Actual Adjustments Pro Forma
-------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Accounts receivable, net................................................ $ 17,650 $ -- $ 17,650
Inventories............................................................. 41,444 41,444
Prepaid expenses........................................................ 2,172 2,172
-------- --------
Total current assets............................................... 61,266 61,266
Equipment and leasehold improvements, net..................................... 20,156 20,156
Other assets.................................................................. 6,948 14,500(1) 21,448
Investment in discontinued operations......................................... 5,791 5,791
Deferred income taxes......................................................... -- 117,022(2) 117,022
-------- -------- --------
Total assets............................................................ $ 94,161 $131,522 $225,683
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt.................................... $ 929 $ (929)(3) $ --
Accounts payable........................................................ 18,519 18,519
Accrued expenses........................................................ 12,705 5,800(4) 18,505
-------- -------- --------
Total current liabilities.......................................... 32,153 4,871 37,024
Long-term debt................................................................ 3,716 371,284(3) 375,000
Other liabilities............................................................. 35 35
-------- -------- --------
Total liabilities.................................................. 35,904 376,155 412,059
Stockholders' equity (deficit):
Common stock............................................................ 2 552(5) 554
Additional paid-in capital.............................................. 972 103,170(5) 104,142
Retained earnings (deficit)............................................. 70,193 (361,265)(5) (291,072)
Treasury stock.......................................................... (12,910) 12,910(5) 0
-------- -------- --------
Total stockholders' equity (deficit)............................... 58,257 (244,633)(5) (186,376)
-------- -------- --------
Total liabilities and stockholders' equity......................... $ 94,161 $131,522 $225,683
======== ======== ========
</TABLE>
See the accompanying notes to unaudited pro forma balance sheet.
-20-
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(Dollars in thousands)
The pro forma financial data have been derived by the application of pro
forma adjustments to our historical financial statements for the period noted.
The recapitalization has been accounted for as a leveraged recapitalization
which will have no impact on the historical basis of assets and liabilities for
financial reporting purposes.
(1) The pro forma adjustment to other assets reflects the following:
<TABLE>
<S> <C>
Capitalized financing costs............................................... $19,000
Write-off of unamortized financing costs on debt refinanced............... (4,500)
--------
$14,500
========
</TABLE>
The $19,000 reflects the capitalized portion of fees and expenses paid to
effect the Transactions. Total estimated fees and expenses are $35,000,
the remaining $16,000 of which have been charged against stockholders'
equity. Such total estimated fees and expenses consist of: (a) fees and
expenses related to the Transactions, including bank commitment fees and
underwriting commissions; (b) professional, advisory and investment
banking fees and expenses; and (c) miscellaneous fees and expenses such as
printing and filing fees. The $4,500 write-off relates to unamortized
financing costs related to the portion of existing debt refinanced.
(2) The pro forma adjustment to deferred income taxes reflects the following:
(a) the establishment of a deferred tax asset resulting from the planned
Section 338(h)(10) election with respect to the recapitalization; (b) the
establishment of a 50% valuation allowance to partially reserve the
deferred tax asset arising from the Section 338(h)(10) election; and (c)
the conversion to a "C" corporation.
(3) The pro forma adjustments to long-term debt reflect the following:
<TABLE>
<CAPTION>
Cash
inflow/
outflow
----------
<S> <C>
Repayment of current portion of existing long-term debt outstanding....................... $ (929)
==========
Senior Credit Facility.................................................................... $ 225,000
Notes offered hereby...................................................................... 150,000
Repayment of existing long-term debt outstanding.......................................... (3,716)
----------
Pro forma adjustment to long-term debt............................................... $ 371,284
==========
</TABLE>
(4) The pro forma adjustment to accrued expenses reflects the accrual for change
of control bonuses that were paid to management in connection with the
recapitalization, net of equity contributed by our senior managers.
-21-
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET--(continued)
(Dollars in thousands)
(5) The pro forma adjustments to stockholders' equity reflect the following:
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained Treasury
Stock Capital Earnings Stock Total
--------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Redemption of common stock.................................... $ -- $ -- $ (335,355) $ -- $ (335,355)
Cancellation of treasury stock................................ -- -- (12,910) 12,910 0
Fees and expenses related to the transactions................. -- (16,000) -- -- (16,000)
Write-off of unamortized financing costs...................... -- -- (4,500) -- (4,500)
Equity contributed by senior managers......................... -- 2,700 -- -- 2,700
Compensation expense related to change of control bonuses..... -- -- (8,500) -- (8,500)
Deferred tax asset............................................ -- 117,022 -- -- 117,022
552 (552) -- -- 0
--------- --------- ---------- ------- ----------
Stock split................................................... $ 552 $ 103,170 $ (361,265) $12,910 $ (244,633)
========= ========= ========== ======= ==========
</TABLE>
-22-
<PAGE>
UNITED INDUSTRIES CORPORATION
UNAUDITED PRO FORMA STATEMENT OF INCOME
(Dollars in thousands)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Related Party Transaction
Actual Adjustments Adjustments Pro Forma
-------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales ........................................................... $282,676 $ -- $ -- $282,676
Operating costs and expenses:
Cost of goods sold ............................................ 140,455 -- -- 140,445
Advertising and promotion expenses ............................ 31,719 -- -- 31,719
Selling, general and administrative expenses .................. 61,066 (7,740)(1) 750(2) 54,076
Non-recurring litigation charges .............................. 2,321 -- -- 2,321
-------- -------- -------- ---------
Total operating costs and expenses .................................. 235,551 (7,740) 750 228,561
-------- -------- -------- ---------
Operating income .................................................... 47,125 7,740 (750) 54,115
Interest expense .................................................... 1,106 -- 36,820(3) 37,926
-------- -------- -------- ---------
Income before provision for income taxes and discontinued
operations .................................................... 46,019 7,740 (37,570) 16,189
Income tax expense .................................................. 992 -- 2,238(4) 3,230
-------- -------- -------- ---------
Income from continuing operations ................................... $ 45,027 $ 7,740 $(39,808) $ 12, 959
======== ======== ======== =========
Other Data:
EBITDA (5) .......................................................... $ 60,274
Depreciation and amortization ....................................... 3,838
</TABLE>
See the accompanying notes to unaudited pro forma statement of income.
-23-
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
(Dollars in thousands)
The unaudited pro forma statement of income excludes approximately $8,500
of non-recurring expenses related to compensation expense to be recorded for
change of control bonuses paid to management in connection with the
recapitalization and the write-off of unamortized financing costs of $4,500.
(1) The pro forma adjustment to selling, general and administrative expenses
reflects the elimination of stockholder salaries and certain fringe benefits
that were in effect prior to the recapitalization and were reflective of the
private ownership structure that existed prior to the recapitalization,
offset by the salary and fringe benefit structure that was implemented with
the recapitalization.
(2) The pro forma adjustment to selling, general and administrative expenses
reflects the annual management fee we will pay to THL.
(3) The pro forma adjustment to interest expense reflects the following:
<TABLE>
<CAPTION>
Rate Amount
--------- ---------------
<S> <C> <C>
Interest expense on revolving credit facility ................................ 7.750% $ 2,000(a)
Interest expense on Term Loan A .............................................. 7.750% 5,813
Interest expense on Term Loan B .............................................. 8.250% 12,375
Interest expense on notes offered hereby ..................................... 9.875% 14,813
Amortization of capitalized financing fees ................................... 2,375(b)
Commitment fees on unused available revolving credit facility ................ 550
Interest expense on debt refinanced .......................................... (1,106)
-------
Total adjustment ............................................................. $36,820
=======
</TABLE>
- -------------------
(a) Reflects management's estimate of the annual interest expense
associated with seasonal working capital borrowings.
(b) Reflects annual amortization expense utilizing a weighted average
maturity on all borrowings of eight years.
A 0.125% increase or decrease in the assumed interest rate on our senior
credit facility would change the pro forma interest expense by
approximately $312 for the year ended December 31, 1998.
(4) The pro forma adjustment to income taxes reflects the following: (a) the
planned Section 338(h)(10) election with respect to the recapitalization;
(b) a 50% valuation allowance to partially reserve the deferred tax asset
arising from the Section 338(h)(10) election; (c) the conversion to a "C"
corporation; and (d) the direct tax effects of the pro forma adjustments
described above at an estimated 38% effective tax rate.
-24-
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME--(continued)
(Dollars in thousands)
(5) EBITDA represents income from continuing operations before interest
expense, income tax expense, depreciation and amortization, and $2,321 in
non-recurring litigation expenses accrued in 1998. Pro Forma 1998 EBITDA
includes certain related party transactions and the THL management fee
discussed below. We have included information concerning EBITDA because we
believe it is used by certain investors as one measure of a company's
historical ability to fund operations and meet its financial obligations.
EBITDA is not intended to represent cash flow from operations as defined by
generally accepted accounting principles and should not be used as an
alternative to operating income or income from continuing operations as an
indicator of our operating performance or cash flow as a measure of
liquidity. In addition, our definition of EBITDA may not be comparable to
that reported by other companies. Pro Forma 1998 EBITDA is calculated as
follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
1998
---------------
<S> <C>
Income from continuing operations............................................... $45,027
Interest expense................................................................ 1,106
Income tax expense.............................................................. 992
Depreciation and amortization................................................... 3,838
Non-recurring litigation charges (a)............................................ 2,321
----------
EBITDA.......................................................................... 53,284
Related party transactions (b).................................................. 7,740
THL management fee.............................................................. (750)
----------
Pro Forma EBITDA................................................................ $60,274
==========
</TABLE>
- -------------------------------
(a) Reflects non-recurring costs associated with two separate lawsuits: (a)
a suit filed in 1992 by the spouse of a former employee claiming
benefits from a United-owned key man life insurance policy, which we are
appealing, and (b) certain litigation concerning the advertising of our
Spectracide Terminate product for which we have negotiated a settlement.
(b) Reflects the elimination of stockholder salaries and certain fringe
benefits that were in effect prior to the recapitalization and were
reflective of the private ownership structure that existed prior to the
recapitalization, offset by the salary and fringe benefit structure that
was implemented with the recapitalization.
-25-
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
(Dollars in thousands)
In the table below, we provide you with selected historical financial data
for United. When you read this selected historical financial data, it is
important that you read along with it the financial statements and related
notes, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," all of which is included in this prospectus.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------
1994 1995 1996 1997 1998
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Net sales ............................................... $139,822 $159,192 $199,495 $242,601 $282,676
Operating costs and expenses:
Cost of goods sold .................................... 73,230 82,603 106,640 128,049 140,445
Advertising and promotion expenses .................... 15,575 17,813 22,804 25,547 31,719
Selling, general and administrative
expenses ..................................... 35,032 38,629 46,276 52,092 61,066
Non-recurring litigation charges ...................... -- -- -- -- 2,321
-------- -------- -------- -------- --------
Total operating costs and expenses ...................... 123,837 139,045 175,720 205,688 235,551
-------- -------- -------- -------- --------
Operating income ........................................ 15,985 20,147 23,775 36,913 47,125
Interest expense ........................................ 445 609 1,502 1,267 1,106
-------- -------- -------- -------- --------
Income before provision for income taxes and
discontinued operations ........................... 15,540 19,538 22,273 35,646 46,019
Income tax expense ...................................... 305 289 447 726 992
-------- -------- -------- -------- --------
Income from continuing operations ....................... $ 15,235 $ 19,249 $ 21,826 $ 34,920 $ 45,027
======== ======== ======== ======== ========
Other Financial Data:
EBITDA (1) .............................................. $ 17,299 $ 22,862 $ 27,336 $ 40,510 $ 53,284
Depreciation and amortization ........................... 1,314 2,715 3,561 3,597 3,838
Capital expenditures (2) ................................ 1,993 4,726 6,384 5,138 3,628
Gross margin ............................................ 47.6% 48.1% 46.5% 47.2% 50.3%
EBITDA margin ........................................... 12.4% 14.4% 13.7% 16.7% 18.8%
Ratio of earnings to fixed charges (3) .................. 11.8x 12.4x 8.3x 13.9x 17.6x
Balance Sheet Data:
Working capital (4) ..................................... $ 21,867 $ 29,565 $ 26,919 $ 32,046 $ 30,042
Total assets ............................................ 56,037 82,979 84,254 97,441 94,161
Total debt .............................................. -- 16,200 13,960 3,997 4,645
Stockholders' equity (deficit) .......................... 40,131 45,864 46,829 64,449 58,257
</TABLE>
(see footnotes on following page)
-26-
<PAGE>
(1) EBITDA represents income from continuing operations before interest
expense, income tax expense, depreciation and amortization, and $2,321 in
non-recurring litigation expenses accrued in 1998. Pro Forma 1998 EBITDA
includes certain related party transactions and the THL management fee as
discussed below. We have included information concerning EBITDA because we
believe it is used by certain investors as one measure of a company's
historical ability to fund operations and meet its financial obligations.
EBITDA is not intended to represent cash flow from operations as defined by
generally accepted accounting principles and should not be used as an
alternative to operating income or income from continuing operations as an
indicator of our operating performance or cash flow as a measure of
liquidity. In addition, our definition of EBITDA may not be comparable to
that reported by other companies. EBITDA is calculated as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1994 1995 1996 1997 1998
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Income from continuing operations ....................... $15,235 $19,249 $21,826 $34,920 $45,027
Interest expense ........................................ 445 609 1,502 1,267 1,106
Income tax expense ...................................... 305 289 447 726 992
Depreciation and amortization ........................... 1,314 2,715 3,561 3,597 3,838
Non-recurring litigation charges (a) .................... -- -- -- -- 2,321
------- ------- ------- ------- -------
EBITDA (b) .............................................. $17,299 $22,862 $27,336 $40,510 $53,284
======= ======= ======= ======= =======
</TABLE>
- -------------------------------
(a) Reflects non-recurring costs associated with two separate lawsuits:
(a) a suit filed in 1992 by the spouse of a former employee claiming
benefits from a United-owned key man life insurance policy, which we
are appealing, and (b) certain litigation concerning the advertising
of our Spectracide Terminate product for which we have negotiated a
settlement.
(b) Does not reflect the elimination of stockholder salaries and certain
fringe benefits that were in effect prior to the recapitalization and
were reflective of the private ownership structure that existed prior
to the recapitalization, offset by the salary and fringe benefit
structure that was implemented with the recapitalization. EBITDA for
1994, 1995, 1996 and 1997, has not been adjusted for related party
transactions. The related party transactions amounts were $3,754,
$4,215, $3,847, $3,061 and $7,740 for 1994, 1995, 1996, 1997 and
1998, respectively.
(2) Capital expenditures for 1995 exclude $8,272 of expenditures related to
acquisitions.
(3) For purposes of this calculation, earnings are defined as income before
provision for income taxes and discontinued operations plus fixed charges.
Fixed charges include interest expense on all indebtedness (including
amortization of deferred financing costs) and the portion of operating lease
rental expense which management believes is representative of the interest
factor of rent expense (approximately one-third of rent expense).
(4) Working capital is defined as current assets (excluding cash and cash
equivalents) less current liabilities (excluding short-term debt and current
portion of long-term debt).
-27-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
United is the leading manufacturer and marketer of value-oriented branded
products for the consumer lawn and garden pesticide and household insecticide
markets in the United States. We manufacture and market one of the broadest
lines of pesticides in the industry, including herbicides and indoor and outdoor
insecticides, as well as insect repellents and water-soluble fertilizers, under
a variety of brand names. We believe that the key drivers of growth for the $2.7
billion consumer lawn and garden pesticide and household insecticide retail
markets include: (a) the aging of the United States population; (b) growth in
the home improvement center and mass merchandiser channels; and (c) shifting
consumer preferences toward value-oriented branded products. Our management team
has extensive operating, merchandising and marketing experience with us and in
the consumer products industry and has grown our business by developing new
products and acquiring strategic brands while also improving operating
efficiencies.
The following discussion of our historical results of operations and
financial condition should be read in conjunction with the audited financial
statements and the related notes which are included in this prospectus.
Results of Operations
The following table sets forth the percentage relationship of certain
items in our income statement to net sales.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Net sales:
Value brands .................................................................... 83.4% 73.9% 76.6%
Opening price point brands ...................................................... 9.2 18.6 17.7
Other ........................................................................... 7.4 7.5 5.7
----- ----- -----
Total net sales ....................................................................... 100.0 100.0 100.0
Operating costs and expenses:
Cost of goods sold .............................................................. 53.5 52.8 49.7
Advertising and promotion expenses .............................................. 11.4 10.5 11.2
Selling, general and administrative expenses .................................... 23.2 21.5 21.6
Non-recurring litigation charges ................................................ 0.0 0.0 0.0
----- ----- -----
Total operating costs and expenses .................................................... 88.1 84.8 83.3
----- ----- -----
Operating income ...................................................................... 11.9 15.2 16.7
Interest expense ...................................................................... 0.8 0.5 0.4
----- ----- -----
Income before provision for income taxes and discontinued operations .................. 11.1 14.7 16.3
Income tax expense .................................................................... 0.2 0.3 0.4
----- ----- -----
Income from continuing operations ..................................................... 10.9% 14.4% 15.9%
===== ===== =====
</TABLE>
1998 Compared to 1997
Net Sales. Net sales increased 16.5% to $282.7 million in 1998 from $242.6
million in 1997. This increase was driven by a combination of factors including:
(a) the continued shift of consumers' preferences toward value and opening price
point brands; (b) the introduction of Spectracide Terminate; and (c) expanded
distribution at home improvement centers and mass merchandisers through
increased shelf space and rapid store expansion. Net sales of our value brands
increased 20.9% to $216.6 million in 1998 from $179.2 million in 1997. This
increase was a result of continued growth of core value brands including
Spectracide, Hot Shot and Peters, and the introduction of Spectracide Terminate,
which contributed $21.9 million in net sales in 1998. Net sales of opening price
point brands increased 11.1% to $50.1 million in 1998 from $45.1 million in 1997
driven by the continued rapid pace of store openings by our top retail
customers.
-28-
<PAGE>
Gross Profit. Gross profit increased 24.2% to $142.2 million in 1998
compared to $114.6 million in 1997. As a percentage of net sales, gross profit
increased to 50.3% in 1998 compared to 47.2% in 1997. The improvement in gross
profit as a percentage of net sales was a result of a more profitable sales mix,
mainly attributable to the introduction of Spectracide Terminate, and volume
efficiencies.
Advertising and Promotion Expenses. Advertising and promotion expenses
increased 24.2% to $31.7 million in 1998 from $25.5 million in 1997. As a
percentage of net sales, advertising and promotion expenses increased to 11.2%
in 1998 from 10.5% in 1997. The overall increase in advertising and promotion
expenses was primarily related to the launch of Spectracide Terminate.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 17.2% to $61.1 million in 1998 from $52.1
million in 1997. As a percentage of net sales, selling, general and
administrative expenses increased slightly to 21.6% in 1998 from 21.5% in 1997.
The overall increase in selling, general and administrative expenses was related
to higher selling, marketing and distribution costs to support the launch of
Spectracide Terminate and the rapid growth in sales, as well as higher related
party expenses.
Operating Income. Operating income increased 27.7% to $47.1 million in
1998 from $36.9 million in 1997. As a percentage of net sales, operating income
increased to 16.7% in 1998 from 15.2% in 1997 as a result of improved gross
margins as discussed above.
1997 Compared to 1996
Net Sales. Net sales increased 21.6% to $242.6 million in 1997 from $199.5
million in 1996. This increase was driven by a combination of factors including:
(a) the continued shift of consumers' preferences toward value and opening price
point brands; (b) new product introductions, including opening price point
brands at Home Depot and Lowe's; and (c) expanded distribution at home
improvement centers and mass merchandisers through increased shelf space and
rapid store expansion. Net sales of our value brands increased 7.8% to $179.2
million in 1997 from $166.3 million in 1996. This increase was a result of
continued growth of core value brands including Spectracide, Hot Shot and
Peters. Net sales of opening price point brands increased 146.4% to $45.1
million in 1997 from $18.3 million in 1996 driven by the introductions of
Real-Kill at Home Depot and No-Pest at Lowe's.
Gross Profit. Gross profit increased 23.4% to $114.6 million in 1997
compared to $92.9 million in 1996. As a percentage of net sales, gross profit
increased to 47.2% in 1997 compared to 46.5% in 1996. The improvement in gross
profit as a percentage of net sales was a result of a more profitable sales mix,
volume efficiencies and cost reduction efforts completed late in 1996 related to
the acquisitions made in 1995.
Advertising and Promotion Expenses. Advertising and promotion expenses
increased 12.0% to $25.5 million in 1997 from $22.8 million 1996. As a
percentage of net sales, advertising and promotion expenses declined to 10.5% in
1997 from 11.4% in 1996. The overall increase in advertising and promotion
expenses related to costs associated with the launch of opening price point
brands at Home Depot and Lowe's.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 12.6% to $52.1 million in 1997 from $46.3
million in 1996. As a percentage of net sales, selling, general and
administrative expenses decreased to 21.5% in 1997 from 23.2% in 1996. The
overall increase in selling, general and administrative expenses was related to
higher selling, marketing and distribution costs to support the rapid growth in
sales. The decline in selling, general and administrative expenses as a
percentage of net sales was a result of increased total sales and the benefits
of cost containment efforts and improved operating leverage.
Operating Income. Operating income increased 55.3% to $36.9 million in
1997 from $23.8 million in 1996. As a percentage of net sales, operating income
increased to 15.2% in 1997 from 11.9% in 1996 as a result of improved gross
margins and a decline in selling, general and administrative expenses as a
percentage of net sales as discussed above.
-29-
<PAGE>
Income Tax Expense
The low effective tax rate for 1996, 1997 and 1998 was attributable to our
election to be taxed as an "S" corporation under the provisions of the Internal
Revenue Code and similar provisions of Missouri tax law. In conjunction with the
recapitalization, we converted to a "C" corporation and will be subject to
federal and Missouri income tax beginning in 1999.
Liquidity and Capital Resources
Historically, we have utilized internally generated funds and borrowings
under credit facilities to meet ongoing working capital and capital expenditure
requirements. As a result of the recapitalization, we have significantly
increased our cash requirements for debt service relating to the notes and our
senior credit facility. As of December 31, 1998, on a pro forma basis, we would
have had long-term debt outstanding of approximately $375.0 million and up to
$110.0 million available under our revolving credit facility. We will rely on
internally generated funds and, to the extent necessary, borrowings under our
revolving credit facility to meet our liquidity needs. See "The Transactions."
Our senior credit facility consists of: (a) the $110.0 million revolving
credit facility, under which no borrowings were outstanding at the closing of
the recapitalization; (b) the $75.0 million Term Loan A; and (c) the $150.0
million Term Loan B. Our revolving credit facility and the Term Loan A mature
six years from the closing date of our senior credit facility, and the Term Loan
B matures seven years from the closing date of our senior credit facility. Our
revolving credit facility is subject to a clean-down period during which the
aggregate amount outstanding under our revolving credit facility shall not
exceed $10.0 million for 30 consecutive days occurring during the period between
August 1 and November 30 in each calendar year.
Our principal liquidity requirements are for working capital, capital
expenditures and debt service under our senior credit facility and the notes.
Cash flow from continuing operations provided net cash of approximately $27.7
million, $35.1 million and $50.8 million in 1996, 1997 and 1998, respectively.
Cash flow from operating activities fluctuates during the year as the seasonal
nature of our sales results in a significant increase in working capital
(primarily accounts receivable and inventory) during the first half of the year,
with the second and third quarters being significant cash collection periods.
Capital expenditures are related to the maintenance of our existing
facilities and the construction of additional production and distribution
capacity. Capital expenditures for 1996, 1997 and 1998 were approximately $6.4
million, $5.1 million and $3.6 million, respectively. Capital expenditures for
1999 are expected to be less than $5.0 million.
Principal on the Term Loan A is required to be repaid quarterly in annual
amounts of $10.0 million for years one through four and $17.5 million for years
five and six after the closing of our senior credit facility. Principal on the
Term Loan B is required to be repaid quarterly in annual amounts of $1.5 million
for the first six years and $141.0 million for the seventh year after the
closing of our senior credit facility. See "Description of Our Senior Credit
Facility."
Based on our current operations, we believe that our cash flow from
operations, together with available borrowings under our revolving credit
facility, will be adequate to meet our anticipated requirements for working
capital, capital expenditures and scheduled principal and interest payments for
the next few years. However, we cannot ensure that we will generate sufficient
cash flow from operations to repay the notes and amounts outstanding under our
senior credit facility at maturity without requiring additional financing. Our
ability to meet our debt service and clean-down obligations and reduce our debt
will be dependent on our future performance, which in turn, will be subject to
general economic conditions and to financial, business and other factors,
including factors beyond our control. See "Risk Factors." Because a portion of
our debt bears interest at floating rates, our financial condition is and will
continue to be affected by changes in prevailing interest rates.
-30-
<PAGE>
Seasonality
Our business is highly seasonal because our products are used primarily in
the spring and summer. For the past two years, approximately 75% of our net
sales have occurred in the first and second quarters. Our working capital needs,
and correspondingly our borrowings, peak near the end of our first quarter.
Year 2000 Compliance
The year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of our computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000.
In connection with a $2.5 million management information systems upgrade,
we have substantially completed an inventory of our computer programs and
assessed our year 2000 readiness. Our information systems and computer programs
include programs developed for our proprietary management information system.
For programs which were identified as not being year 2000 ready, we repaired or
replaced the programs and have substantially completed performing appropriate
testing for year 2000. We believe that substantially all of our information
systems should now be year 2000 compliant, but we do not expect to complete our
testing until June 1999.
Costs related to the year 2000 issue are included in the $2.5 million
management information systems upgrade. We estimate that the remaining testing,
repair and replacement necessary to complete our year 2000 compliance program
will cost less than $1.0 million. In our opinion, we do not anticipate any
additional costs relating to the year 2000 issue which would have a material
adverse effect on our financial condition or our results of operations.
While we believe all necessary work will be completed in a timely fashion,
we cannot assure you that all systems will be compliant by the year 2000, or
that the systems of other companies and government agencies on which we rely
will be compliant. We believe the most likely worst-case scenarios that we might
confront with respect to the year 2000 issues have to do with the possible
failure of third-party systems over which we have no control, including, but not
limited to, satellite, power and telephone services. However, we have developed
a contingency plan to facilitate electronic data interchange communication with
our main customers. Since June 30, 1998, we have been communicating with our
largest customers to determine their state of readiness with regard to the year
2000 issue. Based on our assessment to date, we have not received any indication
from a third party indicating that it expects to experience year 2000
non-compliance of a nature which would have a material impact on us. However,
the risk remains that our customers or other third parties may not have
accurately determined their state of readiness, in which case these parties'
lack of year 2000 compliance may have a material adverse effect on our results
of operations. We continue to monitor the year 2000 compliance of third parties
with which we do business.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities" in June 1998. SFAS 133
provides standards on accounting and disclosure for derivative instruments and
requires that all derivatives be measured at fair value and reported as either
assets or liabilities on the balance sheet. We will be required to adopt this
statement no later than the beginning of fiscal year 2000. We have not completed
our analysis to determine the impact of this statement on our financial
statements.
-31-
<PAGE>
BUSINESS
General
We are the leading manufacturer and marketer of value-oriented branded
products for the consumer lawn and garden pesticide and household insecticide
markets in the United States. We manufacture and market one of the broadest
lines of pesticides in the industry, including herbicides and indoor and outdoor
insecticides, as well as insect repellents and water-soluble fertilizers, under
a variety of brand names. Our "value" and "opening price point" brands generally
compete with higher priced premium brands. Our portfolio of value-oriented
brands includes the following:
o Spectracide, the leading value brand and overall fastest growing brand
of consumer lawn and garden pesticides;
o Spectracide Terminate, the first ever do-it-yourself consumer termite
killing system, launched in 1998;
o Spectracide Pro, lawn and garden and household pesticides targeted
toward the professional market, introduced in 1999;
o Hot Shot, the leading value brand and overall fastest growing brand of
consumer household insecticides;
o Cutter, the leading value brand and overall fastest growing brand of
consumer insect repellents;
o Peters, the leading value brand of consumer water-soluble fertilizers;
and
o Real-Kill (Home Depot), No-Pest (Lowe's) and KRid and KGro (Kmart), the
opening price point brands of consumer lawn and garden pesticides and
household insecticides at key retailers.
We believe that our market leadership is a result of our: (a) leading
value-oriented brands, (b) strategic relationships with major national
retailers, (c) extensive distribution capabilities, (d) exclusive direct sales
force and (e) proprietary management information systems. Our portfolio of
pesticide brands holds the number one position in the home improvement center
channel and the number two position in the mass merchandiser channel. In 1998,
we generated net sales and pro forma EBITDA of $282.7 million and $60.3 million,
respectively.
Our management team has extensive operating, merchandising and marketing
experience with us and in the consumer products industry. This management team
has grown our business by developing new products and acquiring strategic brands
while also improving operating efficiencies. As a result, from 1994 to 1998 our:
o Net sales grew at a compound annual rate of 19.2%;
o EBITDA grew at a compound annual rate of 36.6%; and
o EBITDA margin increased from 12.4% to 21.3%.
Industry Overview
Retail sales of consumer lawn and garden pesticides and household
insecticides in the United States totaled $2.7 billion in 1998. Since 1994, the
market for these products has grown at an average annual rate of approximately
3%. We believe that the industry will continue to grow at a similar rate over
the next several years due to favorable demographic trends. Approximately 67% of
households in the United States, or 68 million households, participate in some
form of lawn and garden care activity. Moreover, consumers over the age of
forty-five represent the largest segment of lawn and garden care product users
and typically enjoy more leisure time and higher levels of discretionary income
than the general population. As the baby boom generation ages, this segment is
expected to grow at a rate more
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than twice that of the total population. This demographic trend is likely to
increase the number of lawn and garden care product users.
We also believe that we will benefit from the following trends in the
industry:
Channel Consolidation. Historically, consumer lawn and garden care
products have been distributed through a variety of retail channels, including
home improvement centers, mass merchandisers, hardware stores, grocery and drug
stores, warehouse clubs and garden centers. In recent years, as home improvement
centers and mass merchandisers have added stores and expanded their lawn and
garden care departments, consumers have increasingly purchased their lawn and
garden care needs from these outlets due to their broader and deeper product
offerings, competitive prices and convenient locations and hours. In 1997,
approximately 70% of consumers purchased lawn and garden care products at home
improvement centers and mass merchandisers compared to just 57% in 1992. We
believe that these retail channels will continue to gain market share from other
channels over the next several years.
Growth in Value-Oriented Brands. Consumer lawn and garden care products
fall into one of three brand tiers: (a) premium brands, (b) value brands or (c)
opening price point brands. Historically, the market was dominated by premium
brands. Over the past several years, the market has shifted toward value and
opening price point brands. Value brands are targeted toward consumers who want
products and packaging that are comparable or superior to premium brands, but at
a lower price, while opening price point brands are designed for consumers who
want quality products and packaging, but are extremely cost conscious. Value and
opening price point brands' combined share of shelf space at our four largest
customers increased from approximately 40% to 60% between 1995 and 1998 at the
expense of premium brands. We believe that value and opening price point brands
will continue to grow because of (a) continued improving consumer perception of
the quality and performance of these brands and (b) ongoing increases in shelf
space dedicated to these brands due to the higher margins they offer to
retailers.
Professional Market Buying Patterns. Home improvement centers are
increasingly targeting the trade professionals in a variety of industries. As a
result, trade professionals are utilizing this channel with greater frequency to
take advantage of the competitive prices, convenience of locations and hours,
delivery services and availability of credit offered by such retailers. Smaller
independent pest control operators and lawn and garden care professionals, who
represent approximately 70% of the professional market, have historically
purchased their supplies from commercial distributors. While the current
selection of professional lawn and garden care products is limited at home
improvement centers, we believe that strategic initiatives underway at several
national retailers will improve the breadth of professional products offered and
drive future growth through this channel.
Competitive Strengths
Leading Value-Oriented Brands. United is the leading manufacturer and
marketer of value-oriented branded products for the consumer lawn and garden
pesticide and household insecticide markets in the United States. Our value and
opening price point brands have driven a shift in the industry by offering
innovative products comparable or superior quality to premium brands at lower
prices. As a result, our products have developed significant brand awareness and
customer loyalty. Our portfolio of pesticide brands holds the number one
position (36% share) in the home improvement center channel and the number two
position (29% share) in the mass merchandiser channel.
Strategic Partnerships With Leading Retailers. We have developed
"strategic partnerships" with a number of leading national retailers in the
fastest growing retail channels. Our four largest customers, Home Depot,
Wal*Mart, Lowe's and Kmart, each hold significant positions in the lawn and
garden care market and have together opened approximately 750 net new stores
over the last five years. As a result, we have been able to significantly
increase our sales as these retailers have added new stores and captured market
share.
Large, Exclusive Direct Sales Force. We have the largest direct sales
force in our industry, with approximately 300 sales representatives dedicated to
merchandising our products. Each representative is responsible for approximately
30 retail outlets and typically visits each store on a weekly basis to
merchandise shelf space, collect inventory data, record orders and educate
in-store personnel about our products. This process facilitates real time
marketing, re-ordering
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and pricing decisions, helping to maximize store-level profitability. In
addition, our exclusive sales force helps us to identify emerging trends and
develop products to meet consumers' needs. We believe that our level of direct
in-store sales support is unique among our competitors.
Proprietary Management Information System. Our highly advanced and
proprietary management information system provides real time data on sales,
orders and inventories at each retail outlet, allowing targeted sales promotions
and efficient inventory management. With same-day order processing and
strategically located distribution centers throughout the United States, we are
generally able to deliver products to retailers within 72 hours of an order,
allowing retailers to maintain lower inventory levels, generate higher turns and
minimize costly returns.
Proven, Committed Senior Management Team. Our management team has
extensive operating, merchandising and marketing experience with us and in the
consumer products industry. This management team has grown our business by
developing new products and acquiring strategic brands while also improving
operating efficiencies. In connection with the recapitalization, we named
Stephen R. Brian as our President and Chief Executive Officer. Mr. Brian
complements the present management team, joining us with over 30 years of
experience in the consumer products industry. Combined, our top four senior
managers have over 80 years of experience in the consumer products industry and
19 years of experience with us. After the recapitalization, our senior
management team owns or has the right to acquire approximately 9% of our fully
diluted common stock.
Business Strategy
We plan to capitalize on our strengths and the favorable industry trends
to enhance our leadership position in value and opening price point brands by
implementing the following key elements of our business strategy:
Enhance Value Brand Position. We plan to maintain our focus on building
our leading value brands for the consumer lawn and garden pesticide and
household insecticide markets. Our strategy is to provide innovative products of
comparable or superior quality to our competitors at a lower price to appeal to
the large, growing segment of consumers that desire a better value. Over the
past five years, we have grown the sales and market shares of our core value
brands - Spectracide, Hot Shot, Cutter and Peters - through the successful
execution of this strategy.
Partner with Leading Retailers. We believe that our strong value brand
position coupled with our operational expertise allows us to partner with
leading national retailers to develop opening price point brands. We currently
manufacture and market the opening price point brands for retailers such as Home
Depot, Kmart and Lowe's. Our strategic partnerships with these retailers have
enabled us to significantly increase our portion of their category shelf space.
Specifically, our products occupy over half of the category shelf space at Home
Depot, Kmart and Lowe's, where we are "category manager" for lawn and garden
pesticides. As category manager, our representatives work together with these
national retailers to determine advantageous pricing, product mix and
merchandising plans.
Maximize Category Profitability for Retailers. We focus on maximizing
retailers' profitability in selling our products by being a low-cost provider
and leveraging our one-step distribution. We are a low-cost provider as a result
of our high level of vertical integration and our patented water-based aerosol
technology. We have a one-step distribution process through our approximately
300 person exclusive direct sales force, the largest in the industry.
Leverage Distribution Network. We continually seek to capitalize on our
strong distribution network and relationships with retailers. To that end, we
have increased our sales and improved our operating leverage by supplying
complementary product lines to retailers. We add new products either through new
product development or by acquiring product lines. Our new product development
strategy has been to introduce innovative products that have superior
performance, easy-to-understand packaging and value pricing. Over the past three
years, we have introduced 80 new products, which represented nearly 40% of our
1998 net sales. New products generate additional sales and generally provide
higher margins to us and our retailers. Spectracide Terminate generated net
sales of $21.9 million in its limited initial launch in 1998, demonstrating the
strength of our distribution network. Our brand acquisition strategy has been to
selectively acquire product lines that can benefit from our strong distribution
network, product
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development expertise and other competitive strengths. Acquired product lines
such as Peters and Cutter have experienced rapid growth upon integration into
our distribution system.
Target Professional Market. While the primary end users of our products
have historically been household consumers, we have begun to target smaller
independent pest control operators and lawn and garden care professionals
through our existing retail channels. Historically, these professionals have
purchased their pesticide and lawn and garden care products from commercial
distributors. We believe that these professionals will increasingly utilize the
home improvement center channel to take advantage of the competitive prices,
convenience of locations and hours, delivery services and availability of credit
offered. To benefit from and further drive this trend, we developed Spectracide
Pro, a group of products designed specifically for the professional market.
Launched in March 1999, this line of professional pesticides is supported by
national advertising in relevant trade magazines, in-store promotional
campaigns, an exclusive direct sales force and technical support. We believe
that we can capitalize on our strong relationships with leading national
retailers to gain a meaningful position in the professional market.
Our History
United was founded by David C. Pratt in 1969. We initially focused on
metal works and anchor and bolt production. In 1973, we acquired Spray Chem, a
contract manufacturer of liquid and aerosol insecticides and herbicides. In
1985, we acquired Real-Kill and entered into the manufacturing and distribution
of branded products. In 1988, we formed our core businesses through the
acquisition of certain assets of various businesses of Chesebrough-Ponds, a
subsidiary of Unilever plc. The acquired brands included Spectracide, Hot Shot,
Rid-a-Bug, Bag-a-Bug and No-Pest, expanding our products to include a wide array
of value-oriented indoor and outdoor pesticides. In 1994, we acquired certain
assets relating to Cutter from Miles, Inc. In 1995, we acquired certain assets
from Alljack Company and Celex Corporation, including Peters, the manufacturing
rights of Kmart's opening price point brands, KRid and KGro, and the Shootout
and Gro Best brand names.
In addition to acquisitions, we have grown through new product
introductions. Our new product development strategy has been to identify unmet
consumer needs, exploit competitors' weaknesses and introduce innovative
products that have superior performance, easy-to-understand packaging and value
pricing. Over the past three years, we have introduced 80 new products, which
represented nearly 40% of our 1998 net sales. Examples include: (a) Spectracide
Terminate, the first ever do-it-yourself consumer termite killing system,
introduced in 1998, and (b) Spectracide Pro, a line of lawn and garden and
household pesticides targeted toward smaller independent pest control operators
and lawn and garden care professionals, introduced in March 1999.
Products
We are the leading manufacturer and marketer of value and opening price
point branded products for the consumer lawn and garden pesticide and household
insecticide markets in the United States. We manufacture and market one of the
broadest lines of pesticides in the industry, including herbicides and indoor
and outdoor insecticides, as well as insect repellents and water soluble
fertilizers, under a variety of brand names. Our products have comparable or
superior quality and performance to premium brands, but are typically priced at
a 10% to 20% discount. Our value brands are targeted toward consumers who want
products and packaging that are comparable or superior to premium brands, but at
a lower price, while our opening price point brands are designed for consumers
who want quality products and packaging, but are extremely cost conscious. Our
portfolio of value- oriented pesticide brands hold the number one position (36%
share) in the home improvement center channel and the number two position (29%
share) in the mass merchandiser channel. The following is a description of each
of our major products.
Value Brands (76% of 1998 net sales)
- ------------------------------------
We sell a broad line of value brands marketed under such names as
Spectracide, Spectracide Terminate, Spectracide Pro, Hot Shot, Cutter and
Peters. Since 1994, net sales of our value brands have grown at a compound
annual rate of 13.7% from $129.4 million to $216.6 million in 1998. Below is a
description of each of our value brands:
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Spectracide. The Spectracide product line primarily consists of outdoor
insect control products and herbicides, but also includes indoor insect control
products, specialty items such as plant disease control and rose care products,
and regional products such as fire ant killer and Bag-a-Bug Japanese beetle
traps. Since its acquisition from Unilever in 1988, Spectracide has grown faster
than any brand in the consumer lawn and garden category with net sales growing
at a compound annual rate of 14.1% since 1994. When we acquired the Spectracide
product line, it held a single digit market share in the home improvement center
and mass merchandiser channels. Today, the Spectracide brand has an average
market share in excess of 20% in both of these channels. We have grown this
brand by capitalizing on our strong distribution network, product development
expertise and other competitive strengths. The Spectracide product line consists
of 115 SKUs.
Spectracide Terminate. Introduced in 1998, Spectracide Terminate is the
first ever do-it-yourself consumer termite killing system. The product is based
on professional bait stake technology and comes in 20, 40 or 60 stake packages
to meet the needs of a wide range of property sizes. Prices per package range
from $49 to $129, which is a significant discount to professional services. The
introduction of Spectracide Terminate reflects our focus on innovative product
development. We identified a need for a do-it-yourself alternative because
approximately 98% of the revenues in the $2.0 billion termite control industry
are generated by professional termite franchises. Conceived, developed and
introduced in less than a year, Spectracide Terminate has been very successful
during its initial marketing stage, with net sales of $21.9 million in 1998. As
we continue to expand distribution and enhance marketing programs dedicated to
this product, we believe sales of the Spectracide Terminate product will
continue to grow. The Spectracide Terminate product line consists of 12 SKUs.
Spectracide Pro. The Spectracide Pro product line, which was introduced in
March 1999, targets smaller independent lawn and garden care professionals and
pest control operators. Many trade professionals are increasingly purchasing
their supplies at home improvement centers. To benefit from and drive this
trend, we developed the Spectracide Pro line, a group of products designed
specifically for the professional market. This product line will be the first to
offer both convenience and value to this market through the home improvement
center channel. Conceived, developed and introduced in less than a year, this
product line is supported by national advertising in relevant trade magazines,
an exclusive direct sales force, a technical support team and in-store
promotional campaigns. Preliminary distribution is through over 400 Home Depot
retail locations. The Spectracide Pro product line consists of 21 SKUs.
Hot Shot. The Hot Shot product line consists of household insecticides,
including items such as roach and ant killers, flying insect killers, foggers,
wasp and hornet killers, rodenticides, flea control products and, most recently,
a new line of roach and ant baits. Acquired from Unilever in 1988, Hot Shot is
the fastest growing household insecticide brand in the United States, recently
passing Black Flag(R) to become the number two brand in the home improvement
center and mass merchandiser channels. Hot Shot's market penetration has
consistently increased, growing from a market share in the low single digits in
the home improvement center and mass merchandiser channels when we acquired the
brand to over 16% today in the categories in which it competes. The Hot Shot
product line consists of 48 SKUs.
Cutter. Acquired from Miles, Inc. in 1994, Cutter's product line provides
protection for the entire family, ranging from area repellent citronella candles
to products designed especially for use on children and the outdoorsman. We have
repositioned Cutter as a value brand and increased its distribution, enabling it
to become the fastest growing brand in the insect repellent category. Today,
Cutter has the number one market position in the home improvement center and
hardware store channels. Cutter's average market share in personal repellents is
18% within the channels that it competes. The Cutter product line consists of 27
SKUs.
Peters. Peters is a water soluble fertilizer available in all purpose
formulations as well as specialty formulations for lawns, roses, tomatoes,
orchids and azaleas. We acquired Peters, our most recent brand acquisition, from
Alljack Company and Celex Corporation in 1995. Originally developed for
professional greenhouse growers, Peters is now the number two water-soluble
fertilizer in the home improvement center channel. For 1999, Peters introduced
new high-impact packaging graphics and new all-weather packaging material and
merchandising displays to improve shelf appearance and allow the products to be
displayed in the live goods departments of home improvement centers and mass
merchandisers. We believe that capital investments made in 1998 for new and
upgraded manufacturing equipment for
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Peters will streamline operations and reduce overhead, resulting in significant
improvements in manufacturing productivity. Peters will also continue to benefit
from our strong distribution network, product development expertise and other
competitive strengths. The Peters product line consists of 18 SKUs.
Other Value Brands. We also manufacture and market regional value brands
in Florida and the Caribbean. Rid-a-Bug, sold exclusively in Florida, is a
leading household pesticide product in that state. Real-Kill, marketed as a
Spanish-labeled product throughout the Caribbean, has become the leading brand
of household insecticides in Puerto Rico.
Opening Price Point Brands (18% of 1998 net sales)
- --------------------------------------------------
An important aspect of our growth over the past few years has resulted
from our introduction of opening price point brands at certain home improvement
centers and mass merchandisers. By introducing these products, we have
effectively acquired shelf space at the expense of our competitors by displacing
premium brands and lower quality regional brands. Our strategic retail partners
have also benefited from our introduction of opening price point brands through
streamlined logistics, better inventory control and higher margins. Net sales of
our opening price point brands have grown rapidly from zero in 1994 to $50.1
million in 1998. Below is a description of each of our opening price point
brands.
Real-Kill. In 1997, we repositioned Real-Kill, relaunching the brand
exclusively at Home Depot as its opening price point brand. The brand consists
of indoor and outdoor pesticides.
No-Pest. In late 1997, we introduced No-Pest exclusively at Lowe's as its
opening price point brand. The brand consists of indoor and outdoor pesticides.
KRid, KGro, Shootout and Gro Best. In late 1995, we acquired the
manufacturing operations which produce the Kmart owned opening price point
brands, KRid and KGro, and the brand names, Shootout and Gro Best. These brands
consist of indoor and outdoor pesticides.
Other (6% of 1998 net sales)
- ----------------------------
We also manufacture private label products for hardware co-operatives and
other retailers and produce under contract pesticides and other chemicals for
other companies.
Customers
We sell our products through all major retail channels, including home
improvement centers, mass merchandisers, hardware stores, grocery and drug
stores, wholesale clubs and garden centers. We manufacture and supply products
to hundreds of customers representing more than 70,000 retail stores across the
United States and in select locations in Canada, Puerto Rico and the Caribbean.
Our leadership position in the home improvement center and mass
merchandiser channels is a key element of our past and future success. Industry
wide, category sales continue to shift to the home improvement center and mass
merchandiser channels. In 1997, approximately 70% of consumers purchased lawn
and garden products through these channels compared to just 57% in 1992. Within
these channels, we focus on the fastest growing retailers and enjoy
long-standing relationships with market leaders such as Home Depot,Wal*Mart,
Lowe's, Kmart, Food Lion, Albertsons and Walgreens.
Our four largest customers, Home Depot,Wal*Mart, Lowe's and Kmart,
represented 68% of our 1998 net sales. The combination of consumer demand
shifting away from premium price brands and our control of the opening price
point brand at three of these top four customers has helped us achieve the role
of "category manager" for lawn and garden pesticides at Home Depot, Lowe's and
Kmart. As category manager, our representatives work together with these
national retailers to determine advantageous pricing, product mix and
merchandising plans. The following table sets forth our share of shelf space and
position at each of our key retailers:
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Shelf Space and Position at Four Largest Customers (1)
<TABLE>
<CAPTION>
Home
Depot Wal*Mart Lowe's Kmart
------ -------- ------ -----
<S> <C> <C> <C> <C>
Category manager................................................. Yes No Yes Yes
Share of 1999 shelf space (2).................................... 52% 13% 53% 57%
Position based on unit sales (3)................................. #1 #2 #1 #1
</TABLE>
- -------------------------------
(1) As to lawn and garden pesticides.
(2) Management estimate of our share of shelf space in the category based on
store shelf plans.
(3) Based on 1998 point-of-sale data from Information Resources, Inc. and
Triad Systems Corporation
Home Depot, Wal*Mart, Lowe's and Kmart have together opened approximately
750 net new stores, increasing their number of stores from 5,118 in 1994 to
5,858 in 1998. This store growth has permitted us to drive volume by stocking
new shelves rather than depending solely on acquiring existing shelf space from
competitors. We believe that new store growth will continue to drive volume in
the future, as our top customers alone expect to open approximately 400 new
stores in 1999. We expect to occupy the same amount of shelf space in new stores
as in existing stores in comparable geographic locations. The following table
sets forth the store base of each of our top four customers:
Store Growth of Four Largest Customers(1)
<TABLE>
<CAPTION>
Home
Depot Wal*Mart Lowe's Kmart
-------- ---------- --------- ---------
<S> <C> <C> <C> <C>
1994.................................................. 340 2,132 330 2,316
1995.................................................. 423 2,234 365 2,161
1996.................................................. 512 2,304 402 2,134
1997.................................................. 624 2,362 446 2,136
1998.................................................. 761 2,467 492 2,138
</TABLE>
- -------------------------------
(1) Represents stores at year-end.
Below is a brief description of our relationships with our four largest
customers:
Home Depot. Prior to 1997, our relationship with Home Depot included only
the distribution of our core value brands. We capitalized on a shift in consumer
preferences toward value and opening price point brands away from premium brands
by working in partnership with Home Depot to reintroduce Real-Kill exclusively
at Home Depot as its opening price point brand. Our net sales to Home Depot grew
from $9.3 million in 1994 to $73.5 million in 1998, representing a compound
annual growth rate of 67.7%. During the same period, Home Depot grew its store
base at a compound annual growth rate of 22.3%. Our share of shelf space in our
category at Home Depot is approximately 52%.
Wal*Mart. At Wal*Mart, we distribute our core value brands. Wal*Mart's
opening price point brand is currently manufactured by a third-party
manufacturer pursuant to a contract that expires in 2000. Our net sales to
Wal*Mart grew from $42.2 million in 1994 to $49.0 million in 1998, representing
a compound annual growth rate of 3.8%. During the same period, Wal*Mart grew its
store base at approximately the same rate. Our share of shelf space in our
category at Wal*Mart is approximately 13%.
Lowe's. Prior to 1997, our relationship with Lowe's included only the
distribution of our core value brands. Like our relationship with Home Depot,
our relationship was greatly enhanced with the introduction of No-Pest, which we
sell exclusively to Lowe's as its opening price point brand. Our net sales to
Lowe's grew from $11.0 million in 1994 to $40.6 million in 1998, representing a
compound annual growth rate of 38.6%. During the same period, Lowe's grew
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its store base at a compound annual growth rate of 10.5%. Our share of shelf
space in our category at Lowe's is approximately 53%.
Kmart. Prior to 1995, our relationship with Kmart included only the
distribution of our core value brands. Like our relationships with Home Depot
and Lowe's, our relationship was greatly enhanced when we began manufacturing
Kmart's opening price point brands, KRid and KGro, and acquired its other
opening price point brands, Shootout and Gro Best. Our net sales to Kmart grew
from $0.8 million in 1994 to $32.1 million in 1998, representing a compound
annual growth rate of 151.7%. During that same period, Kmart's store base was
essentially constant. Our share of space in our category at Kmart is
approximately 57%.
Sales and Marketing
We conduct our sales activities through our exclusive direct sales force,
the largest in our industry. Our sales force consists of approximately 300
territory managers and 20 area sales managers. Territory managers are typically
responsible for 30 retail accounts and visit accounts on a weekly basis to
merchandise shelves and collect inventory data. Our proprietary management
information system allows this information to be linked from territory managers'
laptop computers to our main database. Territory managers' store visits generate
close to 1,000 store reports a day. The data collected and analyzed includes
valuable real-time information on SKUs, inventory levels and sales, information
that is used by territory managers and our customers to develop promotional
campaigns and merchandising plans that maximize store level sales and
profitability. This process facilitates real-time marketing, re-ordering and
pricing decisions, helping to maximize store level profitability. Orders can be
placed directly to our distribution facilities during a store visit, generally
allowing for delivery of orders within 72 hours of a visit. Our rapid delivery
allows customers to maximize inventory turns and minimize costly returns. In
addition, our sales force is better able to help us identify emerging trends and
develop products to meet consumers' needs. Moreover, our one-step distribution
system allows us to minimize our distribution costs relative to our competitors'
smaller sales forces and use of third-party distributors. Customers benefit as
we can offer our products at a lower price. We believe that our level of direct
in-store sales support is unique among our competitors. In the retail grocery
and drug channel, we use a network of independent brokers to ensure execution of
our sales programs.
Our marketing department leads our new product development process as well
as develops all consumer support plans to help drive sales through our strong
distribution network. To promote our products to consumers, we advertise on
national and local television, radio and print media; develop consumer
promotions; and engage in market research efforts. We promote the quality and
efficacy of our value brands, while emphasizing their lower cost relative to
premium brands.
Research and Development
Our research and development department has developed over 80 new products
since 1996 which represented nearly 40% of our 1998 net sales, evidence of our
focus on innovation and the speed of our development cycle. As a result, our
active ingredient chemical vendors often approach us first with new active
ingredients, allowing us to rapidly develop and introduce new products. Our
research and development staff has extensive experience across all of our
product segments. Although our expertise is in applied formulation, items like
our patented water-based aerosol technology, our exclusive formulation of diquat
fusilade and our dual insect and disease control formulations were developed
internally.
Raw Materials and Suppliers
The key elements of our products are various commodity and specialty
chemicals including diazinon, Dursban(R) and sulfluramid, as well as packaging
materials. We obtain raw materials from various sources, which we currently
consider to be adequate. No one source is considered to be essential to our
operations, and we have never experienced a significant interruption of supply.
Our top suppliers for 1998 included Novartis Crop Protection, Inc., AgrEvo
Environmental Health and Dow Agro Sciences for active ingredients and United
States Can Co. and C. L. Smith for components. In addition, The Andersons
performs toll processing of granular insecticides for us. Several of our
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agreements with suppliers provide for price adjustments under certain
circumstances. In addition, some of our agreements with suppliers provide for
exclusivity rights, subject to minimum purchase requirements.
Competition
We operate in a highly competitive market and compete against a number of
large national and regional brands. Our principal national competitors include:
The Scotts Company, which markets products under the Ortho(R), Roundup(R) and
Miracle-Gro(R) brand names; S.C. Johnson & Son, Inc., which markets products
under the Raid(R) and OFF!(R) brand names; and The Clorox Company, which markets
products under the Combat(R) and Black Flag(R) brand names. Some of our
competitors are larger, have longer operating histories, greater financial
resources and greater market recognition than us. See "Risk
Factors--Competition."
Intellectual Property
We operate and own a substantial number of trademarks and tradenames
including the following: Spectracide, Spectracide Terminate, Spectracide Pro,
Hot Shot, Rid-a-Bug, Bag-a-Bug, Real-Kill, No-Pest, Shootout and Gro Best. We
license the Cutter trademark and other members of the Cutter family of
trademarks from Bayer Corporation and the Peters and Peters Professional
trademarks from The Scotts Company. These licenses are, in effect, perpetual and
exclusive. We also own a number of United States and foreign patents and have a
number of patent applications pending.
Manufacturing and Distribution
We have four manufacturing facilities located throughout Missouri and
Michigan. Our facilities manufacture primarily three types of product
categories: (a) aerosols, (b) liquids and (c) water-soluble fertilizers. Our
products are formulated using active ingredients manufactured by major chemical
companies. The chemical composition of our products is based on internally
developed, proprietary formulas. The typical manufacturing process consists of
four stages: (a) batch, (b) fill, (c) label and (d) pack. We currently produce
over 400 SKUs through our four aerosol production lines, three liquid production
lines and two water-soluble fertilizer production lines. Our production lines
are flexible and can operate at a variety of filling speeds and produce multiple
shipping configurations. We use outside manufacturers for the production of our
granular insecticides, baits and candles.
Our three aerosol production lines have an annual capacity of 100 million
cans, and production on these lines is approximately 60 million cans. Our three
liquid production lines have annual capacity of approximately 80 million bottles
and are producing approximately 40 million bottles. Our two water-soluble
production lines have an annual capacity of close to 40 million pounds, and
current output is approximately 17 million pounds. We believe our capacity is
sufficient to meet our seasonal inventory needs. On average, the cost of adding
a new aerosol production line is approximately $3.0 million, a new liquid
production line is approximately $2.0 million and a new water- soluble
production line is approximately $1.0 million.
We have four distribution centers, located in Vinita Park, Missouri;
Allentown, Pennsylvania; Gainesville, Georgia; and City of Industry, California.
The strategic location of these centers, combined with the real-time order
information provided by our proprietary management information system, allows
same day shipment from one of these locations directly to our retail customers.
All of our facilities are leased under leases expiring on December 31,
1999 or December 31, 2000, but may be renewed at our option for one-year periods
until 2010 in the case of leases initially expiring in December 31, 1999, and
for three additional five-year periods, in the case of a lease expiring on
December 31, 2000. Our leases, like substantially all of our other properties,
are pledged to secure our senior credit facility. See "Certain Transactions."
The table below provides information regarding the location, the use and
the approximate square footage of our facilities:
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<PAGE>
<TABLE>
<CAPTION>
Approximate
Location Facility Description Square Footage
- -------------------- ------------------------------------------- --------------
<S> <C> <C>
Overland, MO Office space and finished goods warehousing 182,200
Vinita Park, MO Office space and distribution center 159,550
Bentonville, AR Office space 3,125
Troy, MI Office space 918
Gainesville, GA Distribution center 79,000
Allentown, PA Distribution center 40,000
City of Industry, CA Distribution center 38,000
Vinita Park, MO Manufacturing plant and warehousing 318,500
Plymouth, MI Manufacturing plant 50,000
Earth City, MO Finished goods warehousing 125,000
</TABLE>
Employees
As of December 31, 1998, we had approximately 1,000 full-time employees.
Approximately 240 of our employees at our Vinita Park and Overland, Missouri
locations are covered by collective bargaining agreements, which expire in
September, 1999, with Finishers, Maintenance Painters, Industrial and Allied
Workers Local Union 980, ALL-CIO. We have not experienced any significant work
stoppage in recent years, and we believe our labor relations are satisfactory.
Legal Proceedings
In October 1998, the FTC and several state attorneys general filed a suit
against us seeking to enjoin our advertising of Spectracide Terminate as a
"termite home defense system." The suit alleges that we have made deceptive and
unsubstantiated claims regarding Spectracide Terminate; we have denied these
allegations. We have negotiated and received a signed settlement agreement
regarding our advertising claims with the FTC and the state attorneys general
involved in the litigation. As part of the settlement, we agreed that we would
not, without competent and reliable scientific evidence, represent to consumers
that: (a) use of Spectracide Terminate alone is effective in preventing termite
infestations or eliminating active termite infestations; (b) Spectracide
Terminate provides "protection for your home against subterranean termites"; and
(c) Spectracide Terminate is a "termite home defense system" or make any
representations comparing the performance of Spectracide Terminate to other
termite control methods. We further agreed to apply to the federal EPA to rename
our product as "Spectracide Terminate" (without reference to "termite home
defense system"). The agreement provides that we may describe the product as a
"do-it-yourself termite killing system for subterranean termites." Finally, in
virtually any advertisement that indicates, either expressly or implicitly, that
Spectracide Terminate kills termites or prevents termite damage or infestation,
we agreed that we would make the following disclosure: "Not recommended as sole
protection against termites, and for active infestations, get a professional
inspection."
We are also involved in other lawsuits and claims which arise in the
ordinary course of business. Our management does not believe that these claims,
or the claims described above, individually or in the aggregate, will have a
material adverse effect on our financial position or operations. See "Risk
Factors--Product Liability."
Environmental Matters
We are subject to federal, state, local and foreign laws and regulations
governing environmental matters. Our manufacturing operations are subject to
requirements regulating air emissions, wastewater discharge, waste management,
and the cleanup of contamination. Based on assessments conducted by an
independent environmental consultant in connection with the Transactions, we
believe that we are in material compliance with these requirements and have no
material environmental liabilities. Nonetheless, like all companies, we may be
subject to potentially significant fines or penalties if we fail to comply with
these requirements, and we could be subject to potentially significant cleanup
liabilities if contamination is discovered at properties currently or formerly
owned or operated by
-41-
<PAGE>
us or at a facility to which we sent wastes. We are in the process of
eliminating process wastewater discharges from our manufacturing operations, and
expect to reach "zero discharge" by late 1999. The completion of this project
will involve capital expenditures of approximately $200,000. We do not
anticipate any material capital expenditures for environmental controls in 2000
or 2001.
Our pesticide products must be reviewed and registered by EPA and similar
state agencies or, in foreign jurisdictions, foreign agencies, before they can
be marketed. We devote substantial resources to maintaining compliance with
these registration requirements. If we fail to comply, however, the affected
pesticide could be suspended or canceled, and we could be subject to fines or
penalties. Depending upon the pesticide involved, the severity of the sanction,
and the availability of a substitute product, failure to comply with the EPA
requirements could have a material adverse effect on us. Additionally, EPA is in
the process of re-registering all pesticides and is requiring manufacturers to
supply EPA with additional data regarding their pesticides. Where possible, we
are working with trade associations to reduce our cost of developing this data.
We expect that EPA will continue to request additional pesticide data over the
next five to ten years. Because we do not yet know the extent of the data EPA
will require, it is impossible for us to predict the cost impact it will have on
us. It is also possible that the data we submit could show a risk that EPA deems
unacceptable, which could result in cancellation of the pesticide registration.
While we cannot assure you, we do not expect the impact to have a material
adverse effect on us. EPA also intends to analyze the risk that certain
pesticides present to children, as required by the Food Quality Protection Act.
Depending upon the outcome of its risk analyses, EPA could limit the use of some
of our products, which could adversely affect our business. The severity of the
effect would depend on which products were involved, whether another product or
ingredient could be substituted, and whether our competitors are similarly
affected.
Our fertilizer products must be reviewed and registered by each state
prior to sale. The states typically check the weight of the product and the
accuracy of the analysis statement on the packaging. Other consumer products we
market are subject to the safety requirements of the Consumer Product Safety
Commission. If we fail to comply with any of these requirements, we could be
suspended or prohibited from marketing the affected product, which could
adversely affect our business.
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<PAGE>
MANAGEMENT
Directors and Executive Officers
Set forth below is the name, age and position of each of our executive
officers and directors. Our board of directors presently consists of seven
directors who are elected annually. Executive officers serve at the discretion
of the board of directors and, in the case of Messrs. Brian, Bender, Johnson and
Johnston, pursuant to employment agreements.
<TABLE>
<CAPTION>
Name Age Position
- --------------------------- ------ -------------------------------------------------------------------
<S> <C> <C>
Stephen R. Brian 50 President and Chief Executive Officer; Director
Richard A. Bender 49 Senior Vice President, Distribution, Human Resources and MIS
William P. Johnson 43 Senior Vice President, Sales and Marketing
Daniel J. Johnston 41 Senior Vice President, Finance and Manufacturing; Director
David C. Pratt 54 Chairman of the Board; Director
David A. Jones 51 Director
C. Hunter Boll 43 Director
Scott A. Schoen 40 Director
Charles A. Brizius 30 Director
</TABLE>
Stephen R. Brian has served as our President and Chief Executive Officer
since the recapitalization. Mr. Brian was formerly the President of Home
Products International from January 1998 to January 1999 and President and Chief
Executive Officer of Seymour Housewares from January 1996 to January 1998, each
a designer, manufacturer and marketer of houseware and home improvement
products. Mr. Brian has also held senior management positions at General
Electric Company, Electrolux AB and Hamilton Beach/Proctor Silex, Inc.
Richard A. Bender has served as our Senior Vice President, Distribution,
Human Resources and MIS since 1996. Mr. Bender joined us in 1988 as Vice
President of Human Resources. He has held various positions during his tenure
with us, including responsibilities in our former metals group division,
administration, management information systems, product supply and distribution.
Prior to joining us, Mr. Bender was a general manager in an automotive related
private business and spent 13 years in various roles including sales, plant
operations and human resources at Colgate-Palmolive Co.
William P. Johnson has served as our Senior Vice President, Sales and
Marketing since 1998. From 1996 to 1998, Mr. Johnson served as Senior Vice
President, Sales, and from 1993 to 1996, as Vice President of Sales in Non-Food
National Accounts. Prior to joining us, Mr. Johnson was a national accounts
manager for Rubbermaid, Inc. from 1989 to 1993. Prior to joining Rubbermaid,
Inc., Mr. Johnson held the position of Vice President of Sales & Marketing for
Dorcy International from 1979 to 1989.
Daniel J. Johnston has served as our Senior Vice President, Finance and
Manufacturing since 1997. Mr. Johnston joined us in 1994 as Controller and then
worked as Assistant to the Chairman. Prior to joining us, he spent five years
from 1990 to 1994 at Cooper Industries, Inc. in various financial functions at
its corporate office and Bussmann Division. Prior to joining Cooper Industries,
Inc., he was employed by Price Waterhouse, LLP from 1982 to 1990, finishing as
an audit manager.
David C. Pratt was our President and Chief Executive Officer from our
inception until the recapitalization. Mr. Pratt has continued as our Chairman of
the Board and a director.
David A. Jones became a director of our company in January 1999 in
connection with the recapitalization. Mr. Jones has been the President and Chief
Executive Officer of Rayovac Corporation since March 1996. Between February 1995
and March 1996, Mr. Jones was Chief Operating Officer, Chief Executive Officer
and Chairman of the Board of Directors of Thermoscan, Inc. From 1989 to 1994, he
served as President and Chief Executive Officer of The Regina Company, a
manufacturer of vacuum cleaners and other floor care equipment.
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<PAGE>
C. Hunter Boll became a director of our company in January 1999 in
connection with the recapitalization. Mr. Boll is a managing director of THL
where he has been employed since 1986. Mr. Boll is also a Managing Director and
Member of THL Equity Advisors IV, LLC, the general partner of Thomas H. Lee
Equity Fund IV, L.P. and Vice President of Thomas H. Lee Advisors I and T. H.
Lee Mezzanine II, affiliates of ML-Lee Acquisition Fund, L.P., ML-Lee
Acquisition Fund II, L.P. and ML-Lee Acquisition Fund II (Retirement Accounts),
L.P., respectively. Mr. Boll also serves as a director of Stanley Furniture
Company, Inc., New York Restaurant Group, Inc., Freedom Securities Corporation,
Big V Supermarkets, Inc., TransWestern Communications Company, Inc. and several
private corporations.
Scott A. Schoen became a director of our company in January 1999 in
connection with the recapitalization. He is a Managing Director of THL, which he
joined in 1986. In addition, Mr. Schoen is a Managing Director and Member of THL
Equity Advisors IV, LLC, the general partner of Thomas H. Lee Equity Fund IV, LP
and Vice President of Thomas H. Lee Advisors I and T. H. Lee Mezzanine II,
affiliates of ML-Lee Acquisition Fund, L.P., ML-Lee Acquisition Fund II, L.P.
and ML-Lee Acquisition Fund II (Retirement Accounts), L.P., respectively. He is
also a director of Rayovac Corporation, Syratech Corporation, TransWestern
Communications Company, Inc. and several private corporations.
Charles A. Brizius became a director of our company in January 1999 in
connection with the recapitalization. Mr. Brizius worked at THL from 1993 to
1995, rejoined in 1997 and currently serves as an Associate. Mr. Brizius is a
Member of THL Equity Advisors IV, LLC, the general partner of Thomas H. Lee
Equity Fund IV, L.P. From 1991 to 1993, Mr. Brizius worked at Morgan Stanley &
Co. Incorporated in the Corporate Finance Department. He is also a director of
Eye Care Centers of America, Inc.
Compensation of Directors
Other than Mr. Jones and Mr. Pratt, who receive compensation in connection
with consulting agreements, we do not compensate our directors.
In connection with the recapitalization, we entered into several
agreements with David A. Jones. These agreements provide that Mr. Jones (a)
serve on our board of directors for three years from the closing of the
recapitalization (unless removed earlier by the other directors), (b) receive a
consulting payment of $75,000 per year, (c) receive a directorship fee of
$25,000 per year, (d) receive a signing bonus, (e) purchase $1.0 million of
common stock and (f) receive options pursuant to the 1999 Stock Option Plan to
purchase 300,000 shares of common stock.
Also in connection with the recapitalization, we entered into a consulting
agreement with David C. Pratt. This consulting agreement provides that Mr. Pratt
(a) receive a consulting payment of $15,000 per month for four months from the
closing of the recapitalization or until a mutually agreed upon later date, (b)
act as Chairman of our board of directors for four months from the closing of
the recapitalization - which term can continue for up to an additional five
months at the discretion of the other directors, (c) remain a member of our
board of directors after his term as Chairman has ended until the earlier of
nine months after the closing of the recapitalization and the end of the
consulting term, (d) receive a directorship fee of $25,000 per year and (e)
receive United-paid health and welfare benefits for four months from the closing
of the recapitalization.
Compensation of Executive Officers
The following table sets forth the compensation of our former Chief
Executive Officer and the other executive officers (collectively, the "Named
Executive Officers") for the year ended December 31, 1998.
-44-
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
---------------------------- All Other
Name and Principal Position Salary Bonus Compensation
- --------------------------------------------------------------------------- ---------- ---------- -------------
<S> <C> <C> <C>
David C. Pratt ........................................................... $ 250,000 $2,771,061 $ 42,740(2)
President and Chief Executive Officer(1)
Richard A. Bender ........................................................ 100,000 260,143 24,018(3)
Senior Vice President, Distribution, Human Resources and
MIS
William P. Johnson ....................................................... 100,000 251,809 25,364(3)
Senior Vice President, Sales and Marketing
Daniel J. Johnston ....................................................... 100,000 251,809 4,716(3)
Senior Vice President, Finance and Manufacturing
</TABLE>
- -------------------------------
(1) Mr. Pratt resigned as our President and Chief Executive Officer on January
20, 1999 in connection with the recapitalization.
(2) Includes auto allowance and country club dues.
(3) Includes deferred compensation under The Long-Term Incentive Compensation
Plan, which was terminated in the first quarter of 1998.
Employment Agreements
Messrs. Brian, Bender, Johnson and Johnston have each entered into an
employment agreement with us. The agreements provide for employment until
January 31, 2002 for Mr. Brian and December 31, 2001 for Messrs. Bender, Johnson
and Johnston, unless terminated earlier as provided in their respective
employment agreements. The employment agreements provide for annual base
salaries as follows: Mr. Brian--$437,000; Mr. Bender--$300,000; Mr.
Johnson--$300,000; and Mr. Johnston--$300,000. In addition, each employment
agreement provides for annual incentive compensation to be determined in
accordance with our attainment of certain target EBITDA and customary benefits.
Each employment agreement may be terminated by us at any time with or
without cause. If the employment agreement is terminated by us for cause or by
the executive without good reason, the terminated executive will be entitled to
any unpaid base salary through the date of termination plus any unpaid incentive
compensation. If we terminate the employment agreement without cause or if the
executive terminates the employment agreement for good reason or the executive
dies or becomes disabled, he will be entitled to any unpaid base salary through
the date of termination, any unpaid incentive compensation and, under certain
conditions, his base salary through the later of January 2002 and the first
anniversary of his termination. Each employment agreement provides for
non-compete, nonsolicitation and confidentiality provisions through the later of
one year after the executive's date of termination or the last date severance
payments are owed to the executive.
In connection with entering his employment agreement, Messrs. Brian,
Johnson and Johnston each purchased $1.0 million of common stock, and Mr. Bender
purchased $700,000 of common stock. Messrs. Johnson, Johnston and Bender
purchased their common stock out of the proceeds of a bonus paid at the closing
of the recapitalization. Mr. Brian paid for a portion of his shares by
delivering promissory notes with original principal amounts of $250,000
(maturing in June 1999) and $500,000 (maturing in January 2004), which accrue
interest at a rate equal to our borrowing rate. The repayment of these notes is
secured by Mr. Brian's shares of common stock. Under certain circumstances, we
have the right to repurchase the shares owned by each executive.
1999 Stock Option Plan
In connection with the recapitalization, we instituted the 1999 Stock
Option Plan (the "Plan"), which is administered by a committee of our board of
directors. The Plan was designed as an incentive to selected employees, our
consultants and directors to acquire proprietary interest in us, to continue to
perform services for us, to increase their efforts on our behalf and to promote
the success of our business. The options are not designed to be incentive stock
options within
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<PAGE>
the meaning of Section 422 of the U.S. Internal Revenue Code of 1986, as
amended. The option pool under the Plan consists of an aggregate of 4,000,000
shares of our common stock that may consist of shares of our Class A Voting
Common Stock, our Class B Non-Voting Common Stock or some combination of Class A
Voting Common Stock and Class B Non-Voting Common Stock.
We granted to Mr. Brian 600,000 shares of Class A Voting Common Stock and
600,000 shares of Class B NonVoting Common Stock, and granted 300,000 shares of
Class A Voting Common Stock and 300,000 shares of Class B Non-Voting Common
Stock to Messrs. Bender, Johnson and Johnston. The remaining options will be
granted to selected employees as determined by our board of directors from time
to time. The options to purchase shares of common stock are subject to vesting
schedules, which are both time and performance based.
Deferred Compensation and 401(k) Plans
In connection with the recapitalization, we established a deferred
compensation plan. Messrs. Bender, Johnson and Johnston are eligible to
participate in the plan. The plan provides for the establishment of a grantor
trust for the purpose of accumulating the assets contributed pursuant to the
plan. The grantor trust used the funds contributed to it to purchase (a) 70,000
shares of our Class A Voting Common Stock and 70,000 shares of our Class B
Non-Voting Common Stock for the benefit of Mr. Bender, (b) 100,000 shares of our
Class A Voting Common Stock and 100,000 shares of our Class B Non-Voting Common
Stock for the benefit of Mr. Johnson and (c) 100,000 shares of our Class A
Voting Common Stock and 100,000 shares of our Class B Non-Voting Common Stock
for the benefit of Mr. Johnston. The plan is administered by a committee of our
board of directors.
We also maintain a 401(k) defined contribution plan. The plan allows for
discretionary participant elective contributions. We are required to match 50%
of each participant's contributions up to 6% of the employee's salary for those
employees having less than 10 years of service and 75% of each participant's
contributions up to 6% of the employee's salary for those employees having 10 or
more years of service. In 1998, our contributions on behalf of the Named
Executive Officers totalled $7,200 for Mr. Pratt and $4,800 for each of the
others.
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<PAGE>
CERTAIN TRANSACTIONS
Professional Services Agreement
In connection with the recapitalization, we entered into a professional
services agreement with THL. The agreement has a term of three years and
automatically extends for successive one year periods thereafter, unless the
parties give 30 days' notice prior to the end of the term. The agreement
provides for a financial advisory fee of $12.0 million in connection with
structuring, negotiating and arranging the recapitalization and structuring,
negotiating and arranging the debt financing, which was paid at the closing of
the recapitalization. In addition, THL will initially receive $62,500 per month
for management and other consulting services provided to us. The agreement also
provides that we will reimburse reasonable out-of-pocket expenses incurred in
connection with management advisory services. We believe that the terms of the
professional services agreement are comparable to those that would have been
obtained by unaffiliated sources.
Stockholders Agreement
In connection with the recapitalization, we entered into a stockholders
agreement with certain of our stockholders. The agreement provides for certain
restrictions on transfer of shares of capital stock, registration rights and
drag-along rights.
Recapitalization Agreement
Our recapitalization agreement with UIC Holdings, L.L.C., which is owned
by Thomas H. Lee Equity Fund IV, L.P., contains customary provisions, 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 the representations and warranties. In general, the
representations and warranties made by the sellers in the recapitalization
agreement survive until the earlier of 10 days following the delivery of our
December 31, 1999, audited financial statements or April 15, 2000.
Representations and warranties with respect to tax matters survive until 30 days
after the expiration of the applicable statute of limitations; representations
with respect to environmental matters survive until December 31, 2002. Certain
other representations and warranties do not expire.
Pursuant to the recapitalization agreement, David C. Pratt and Mark R.
Gale, our former general counsel, agreed that for a period ending on the fourth
anniversary of the recapitalization closing date not to own, control,
participate or engage in any line of business in which we are actively engaged
or any line of business competitive with us anywhere in the United States and
any other country in which we were doing business at the closing of the
recapitalization.
In addition, each Seller has agreed that for a period ending on the fourth
anniversary of the recapitalization closing date not to contact, approach or
solicit for the purpose of offering employment to or hiring any person employed
by us during the four year period.
Pursuant to the recapitalization, we redeemed a portion of our common
stock held by our stockholders, and UIC Holdings, L.L.C. and certain members of
our senior management purchased a portion of our common stock from our
stockholders. In the recapitalization, Messrs. Bender, Johnson and Johnston
collectively received an aggregate of approximately $5.8 million in cash and an
additional $2.7 million with which the officers purchased our common stock
through grantor trusts.
Lease Agreements
We lease six of our facilities in St. Louis from an affiliate of David C.
Pratt. Five of the leases expire on December 31, 1999, but are renewable for
one-year periods until 2010 and one lease expires on December 31, 2000, but may
be extended for three additional five-year periods. We believe that the terms of
these leases are similar to those negotiated by unrelated parties at arms
length.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of our Class A Voting Common Stock by each of our directors
and our Named Executive Officers, by all of our directors and executive officers
as a group, and by each owner of more than 5% of the outstanding shares of our
Class A Voting Common Stock. Each of our directors and Named Executive Officers
owns an equal number of our Class B Non-Voting Common Stock.
<TABLE>
<CAPTION>
Name of Beneficial Owner (1) Number of Shares Percent of Class
- ---------------------------- ---------------- ------------------
<S> <C> <C>
UIC Holdings, L.L.C............................................................. 25,468,000 91.9%
c/o Thomas H. Lee Company
75 State Street
Boston, Massachusetts 02109
Stephen R. Brian (2)........................................................... 370,000 1.3%
David C. Pratt (3)............................................................. 1,325,108 4.8%
Richard A. Bender (2).......................................................... -- *
Williams P. Johnson (2)........................................................ -- *
Daniel J. Johnston (2)......................................................... -- *
David A. Jones................................................................. 100,000 *
C. Hunter Boll (4)............................................................. 25,468,000 91.9%
Scott A. Schoen (4)............................................................ 25,468,000 91.9%
Charles A. Brizius (4)......................................................... 25,468,000 91.9%
All Directors and Executive Officers as a Group (9 persons) (4)................. 26,971,135 97.4%
</TABLE>
- -------------------------------
* Denotes less than one percent.
(1) Beneficial owner generally means any person who, directly or indirectly,
has or shares voting power or investment power with respect to a security.
All of the parties listed above are party to a stockholders agreement,
pursuant to which they have agreed to vote their shares in the election of
directors in accordance with the terms of the stockholders agreement. The
number of shares indicated in this table does not include the shares of
Class A Voting Common Stock that are held by other stockholders subject to
the stockholders agreement. Unless otherwise indicated, we believe that
each person has sole voting and investment power with regard to their
shares listed as beneficially owned. The calculation of beneficial
ownership is based on 27,700,000 shares outstanding and includes all
options exercisable within 60 days of January 20, 1999.
(2) Mr. Brian's ownership includes shares held by him as trustee under the
grantor trust under the deferred compensation plan for the benefit of
Messrs. Bender, (70,000 shares of each of our Class A Voting Common Stock
and Class B Non-Voting Common Stock), Johnson (100,000 shares of each
class) and Johnston (100,000 shares of each class) because Mr. Brian has
the sole right to direct the voting and disposition of these shares.
(3) Includes 134,756 shares of our Class A Voting Common Stock held by the
David C. Pratt Grantor Retained Interest Trust and 157,216 shares of our
Class A Voting Common Stock held by the 1994 Ryder Pratt Grantor Retained
Annuity Trust.
(4) All of the equity interests in UIC Holdings, L.L.C. are controlled by the
THL Parties, which may therefore be deemed the beneficial owner of the
shares held by UIC Holdings, L.L.C. All of the shares beneficially owned
by the THL Parties may be deemed to be beneficially owned by THL Equity
Advisors IV, L.L.C. ("Advisors"), the general partner of THL Fund IV, by
THL Equity Trust IV, the general partner of Advisors, by THL and by
Messrs. Boll, Schoen and Brizius and the other officers of THL. Each of
these persons disclaims beneficial ownership of such shares.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
We are a Delaware corporation. Our authorized capital stock consists of 65
million shares, of which 32,500,000 have been designated as Class A Voting
Common Stock, par value $.01 per share, and 32,500,000 have been designated as
Class B Non-Voting Common Stock, par value $.01 per share. As of January 20,
1999, there were 27,700,000 shares of Class A Voting Common Stock outstanding
and 27,700,000 shares of Class B NonVoting Common Stock outstanding. Set forth
below is a summary of the material terms of our capital stock.
Distributions. The Class A Voting Common Stock and the Class B Non-Voting
Common Stock share ratably in any distribution by us to the holders of our
capital stock or with respect to our liquidation, dissolution or winding up.
Voting Rights. The holders of Class B Non-Voting Common Stock have no
right to vote on matters submitted to a vote of our stockholders, except as
otherwise required by law. The holders of Class A Voting Common Stock are
entitled to one vote per share on all matters to be voted upon by our
stockholders.
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<PAGE>
DESCRIPTION OF OUR SENIOR CREDIT FACILITY
In connection with the recapitalization, we entered into our senior credit
facility by and among our company, a syndicate of lenders, NationsBanc
Montgomery Securities LLC and Morgan Stanley Senior Funding, Inc., as co-
arrangers and NationsBank N.A., Morgan Stanley Senior Funding, Inc. and Canadian
Imperial Bank of Commerce as agents to such lenders. Pursuant to our senior
credit facility, the lenders are lending up to $335.0 million, consisting of our
$110.0 million revolving credit facility, the $75.0 million Term Loan A and the
$150.0 million Term Loan B.
Repayment. Outstanding commitments under our revolving credit facility,
our swing line facility and our letter of credit facility terminate and all
amounts outstanding thereunder are to repaid in full on January 20, 2005. The
principal amount of the Term Loan A is to be repaid in twenty-four consecutive
quarterly installments commencing June 30, 1999 and a final installment due
January 20, 2005, with $10 million to be payable in each of the first four years
and $17.5 million to be repaid in each of the last two years. The principal
amount of the Term Loan B is to be repaid in twenty-eight consecutive quarterly
installments commencing June 30, 1999 and a final installment due January 20,
2006, with $1.5 million to be payable in each of the first six years and $141
million to be payable in year seven.
Security; Guaranty. Our obligations under our senior credit facility are
secured by a first priority lien on substantially all of our properties and
assets as well as the properties and assets of our future domestic subsidiaries.
Future domestic subsidiaries will be required to guarantee our obligations under
our senior credit facility, and the stock of future domestic subsidiaries (or a
percentage thereof, in the case of foreign subsidiaries) will also be pledged to
the lenders as security.
Interest. The interest rate per annum applicable to advances under our
senior credit facility will be a fluctuating rate of interest measured, at our
option, by reference to (i) the Eurodollar Rate (as defined in our senior credit
facility) plus the applicable borrowing margin, or (ii) a rate per annum equal
to the higher of the published prime rate of NationsBank or the Federal Funds
Rate (as defined in our senior credit facility) plus 1/4 of 1% (the Base Rate)
plus the applicable borrowing margin. The applicable borrowing margin for the
Term Loan B is 2.25% for the Base Rate advances and 3.25% for Eurodollar
advances. The applicable borrowing margin for our revolving credit facility and
the Term Loan A is between 1.00% and 1.75% for the Base Rate advances and
between 2.00% and 2.75% for the Eurodollar advances, in each case based on our
consolidated leverage ratio.
Prepayments; Reductions of Commitments. Subject to certain exceptions set
forth in our senior credit facility, the Term Loan A and the Term Loan B are
required to be prepaid and commitments under our revolving credit facility are
required to be permanently reduced with: (i) 50% of the net cash proceeds of any
issuance of capital stock; (ii) 100% of the net cash proceeds of any new
indebtedness; (iii) 50% of the excess cash flow; (iv) 100% of the net cash
proceeds of (a) any asset sale (subject to limited exceptions) or (b) proceeds
from any insurance claim relating to one of our assets, unless the proceeds are
applied to replace or repair the lost or damaged assets; and (v) 100% of the net
cash proceeds of certain other extraordinary receipts. These mandatory
prepayments and reductions will generally first be applied ratably to the
prepayment of the Term Loan A and the Term Loan B and second to the permanent
reduction of our revolving credit facility. Our revolving credit facility is
subject to a clean- down period during which the aggregate amount outstanding
under our revolving credit facility shall not exceed $10.0 million for 30
consecutive days occurring during the period between August 1 and November 30 in
each calendar year.
Covenants. Our senior credit facility contains covenants restricting our
ability and that of our subsidiaries to, among others (i) incur or suffer to
exist indebtedness or liens, (ii) merge, consolidate or liquidate, (iii) sell
assets or stock, (iv) pay dividends or repurchase stock, (v) make capital
expenditures, (vi) prepay or amend debt and other material agreements and (vii)
transact with affiliates.
Events of Default. Events of default under our senior credit facility
include (i) our failure to pay principal or interest when due, (ii) material
breach by us of any representation or warranty contained in any loan document,
(iii) material breach by us of any covenant contained in any loan documents,
(iv) customary cross-default provisions, (v) events of bankruptcy, insolvency or
dissolution by us or any of our subsidiaries, (vi) the levy of certain judgments
against us or
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any of our subsidiaries, (vii) the actual or asserted invalidity of security
documents or guarantees, (viii) certain adverse events under ERISA plans, and
(ix) a change of control of our company.
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DESCRIPTION OF THE NEW NOTES
The Company will issue the Notes under an Indenture, dated as of March 24,
1999 (the "Indenture"), between the Company and State Street Bank and Trust
Company, as trustee (the "Trustee"). The following is a summary of the material
terms and provisions of the Notes. It does not include all of the provisions of
the Indenture. We urge you to read the Indenture because it defines your rights.
The terms of the 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. A copy
of the Indenture may be obtained from the Company by any holder or prospective
investor upon request. You can find definitions of certain capitalized terms
used in the following summary 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 United Industries Corporation.
General
The Notes will be general unsecured obligations of the Company, ranking
subordinate in right of payment to all Senior Indebtedness of the Company and
senior in right of payment to all current and future subordinated indebtedness
of the Company.
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 be limited in aggregate principal amount to $150.0 million.
The Notes will mature on April 1, 2009. The Notes will bear interest at a rate
of 9.875% per annum, which will be payable semiannually in arrears on each April
1 and October 1, commencing October 1, 1999, to holders of record of the Notes
at the close of business on the immediately preceding March 15 and September 15,
respectively. 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 March 24,
1999. 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
circumstances, if the Notes (or other securities substantially similar to the
Notes) are not registered with the SEC within the prescribed time periods. See
"Exchange Offer; Registration Rights."
Optional Redemption
Except as described below, the Notes are not redeemable before April 1,
2004. On one or more occasions thereafter, the Company may redeem the Notes, in
whole or in part, at the following redemption prices (expressed as a percentage
of principal amount), if redeemed during the twelve-month period beginning on
April 1 of each year listed below:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2004 ....................... 104.938%
2005 ....................... 103.292%
2006 ....................... 101.646%
2007 and thereafter ........ 100.000%
</TABLE>
In addition, the Company must pay all accrued and unpaid interest on the
Notes redeemed.
On one or more occasions prior to April 1, 2002, the Company may use the
Net Proceeds of one or more Qualified Public Offerings to redeem up to 40% of
the original principal amount of the Notes at a redemption price of 109.875% of
the principal amount thereof plus accrued and unpaid interest thereon; provided
that:
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(1) at least 60% of the original principal amount of the Notes remains
outstanding immediately after the occurrence of any such redemption;
and
(2) the Company makes such redemption not more than 90 days following the
closing of any such Qualified Public Offering.
In the event that the Company chooses to redeem less than all of the
Notes, selection of the Notes for redemption will be made by the Trustee either:
(1) in compliance with the requirements of the principal national
securities exchange, if any, on which such Notes are listed; or
(2) on a pro rata basis or by lot or by such method as the Trustee shall
deem fair and appropriate.
If a partial redemption is made with the proceeds of a Qualified Public
Offering, the Trustee will select the Notes or portion thereof only on a pro
rata basis or on as nearly a pro rata basis as practicable, unless such method
is prohibited. Notice of redemption will be mailed by first-class mail at least
30 but not more than 60 days before the redemption date to each holder at its
registered address. On and after any redemption date, interest will cease to
accrue on the Notes or portions thereof called for redemption unless the Company
fails to redeem any such Note.
Asset Drop-Down
The Equity Investor, in its sole discretion, may cause the Company to form
and contribute all or substantially all of its assets to a newly-created
Wholly-Owned Subsidiary (the "New Operating Company"), at which time the New
Operating Company would assume all or substantially all of the liabilities of
the Company (including the Notes) (collectively, the "Asset Drop-Down"). As a
result of the Asset Drop-Down, the Company would become a holding company (as
such, the "Holding Company") that directly owns, and the primary asset of which
would be, all of the equity interests in the New Operating Company. The New
Operating Company would conduct all of the operations that were previously
conducted by the Company and for purposes of this "Description of Notes" and the
indenture, the New Operating Company would be the "Company." The Asset Drop-Down
will be carried out, if at all, in compliance with the "Merger, Consolidation or
Sale of Assets" provisions described below, and the Notes will continue to be
guaranteed by Restricted Subsidiaries of the New Operating Company as described
below under "Guarantees."
Subordination
The indebtedness represented by the Notes will be subordinate in right of
payment to the prior payment in full in cash of all existing and future Senior
Indebtedness of the Company. As of December 31, 1998, on a pro forma basis after
giving effect to Recapitalization, the Offering and the use of proceeds
described in this Offering Memorandum, the principal amount of outstanding
Senior Indebtedness of the Company, on a consolidated basis, would have been
$225.0 million. In addition, the Company would have had $110.0 million of
undrawn commitments available under the Senior Credit Facility.
The holders of Senior Indebtedness of the Company will be entitled to
receive payment in full in cash of all amounts due on or in respect of all
Senior Indebtedness of the Company (including Accrued Bankruptcy Interest) and
all outstanding Letter of Credit Obligations cash collateralized before the
holders of the Notes will be entitled to receive any payment with respect to the
Notes in the event of any distribution to creditors of the Company:
(1) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or to its creditors, as such, or to
its assets;
(2) in a liquidation or dissolution or other winding-up of the Company;
(3) in an assignment for the benefit of creditors; or
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(4) in any marshalling of assets or liabilities of the Company (all of the
foregoing referred to herein individually as a "Bankruptcy Proceeding"
and collectively as "Bankruptcy Proceedings").
For purposes of this section, all Senior Indebtedness now or hereafter
existing and all Obligations relating thereto will not be deemed to have been
paid in full unless and until all of the Obligations of any holder thereof have
been indefeasibly paid in full in cash (including, without limitation, all
Accrued Bankruptcy Interest) and all of the commitments thereunder have been
terminated and, in the case of Letter of Credit Obligations, such Obligations
have been fully drawn and paid in full in cash or 100% cash collateralized.
As a result of such subordination, in the event of any Bankruptcy
Proceeding, holders of the Notes may recover less ratably than creditors of the
Company who are holders of Senior Indebtedness.
No payment may be made on the Notes following (1) a Payment Default on
Designated Senior Indebtedness or (2) a Non-Payment Event of Default on
Designated Senior Indebtedness and the acceleration of the maturity of
Designated Senior Indebtedness. Any such prohibition shall continue until the
Payment Default is cured, waived in writing or ceases to exist or such
acceleration has been rescinded or otherwise cured.
Upon a Non-Payment Event of Default on Designated Senior Indebtedness, no
payment may be made on the Notes for a period (a "Payment Blockage Period")
beginning on the date the Trustee receives written notice from the
Representative of the Non-Payment Event of Default until (subject to any
blockage under the preceding paragraph) the earliest of (1) more than 179 days
have elapsed since the Trustee received the notice, (2) the NonPayment Event of
Default has been cured or waived in writing or ceased to exist or such
Designated Senior Indebtedness has been paid in full or (3) the Payment Blockage
Period has been terminated by written notice to the Company or the Trustee from
the Representative. No Payment Blockage Period can extend beyond 179 days from
the date the Trustee receives the notice (the "Initial Blockage Period"). Any
number of additional Payment Blockage Periods may be commenced during the
Initial Blockage Period; provided, that no additional Payment Blockage Period
can extend beyond the Initial Blockage Period. After the Initial Blockage
Period, no Payment Blockage Period may be commenced until at least 180 days
after the Initial Blockage Period. No event of default with respect to
Designated Senior Indebtedness (other than a Payment Default) which existed or
was continuing on the first day of any Payment Blockage Period can serve as the
basis for a second Payment Blockage Period, unless such event of default has
been cured or waived for at least 90 days.
Each Guarantee will, to the extent set forth in the Indenture, be
subordinate 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 Company.
If the Company or any Guarantor fails to make any payment on the Notes or
any Guarantee 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. See "Events of Default."
By accepting these Notes, each holder agrees to be bound by such
provisions and, if any such holder fails to file a proper proof of claim of debt
in any Bankruptcy Proceeding with respect to the Company at least 30 days before
the time to file such proofs of claim expires, authorizes the Representative to
file an appropriate claim on behalf of such holder. The subordination provisions
of the Indenture cannot be amended without the consent of all holders of Senior
Indebtedness unless such amendment could not adversely affect such holders.
Certain Covenants
The Indenture will contain, among others, the following covenants:
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Limitation on Additional Indebtedness
The Company will not, and will not permit any Restricted Subsidiary of the
Company to, directly or indirectly, incur any Indebtedness (including Acquired
Indebtedness and including Disqualified Capital Stock); provided that the
Company or any of the Guarantors may incur Indebtedness (including Acquired
Indebtedness or Disqualified Capital Stock) if (1) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the Company's Consolidated Fixed Charge Coverage Ratio is at least 2.0
to 1 and (2) 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 Company and its Restricted Subsidiaries
may incur Permitted Indebtedness; provided that the Company will not incur any
Permitted Indebtedness that ranks junior in right of payment to the Notes that
has a maturity or mandatory sinking fund payment prior to the maturity of the
Notes.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness or is entitled to be incurred pursuant to
the first paragraph of this covenant, the Company will, in its sole discretion,
classify such item of Indebtedness in any manner that complies with this
covenant and such item of Indebtedness will be treated as having been incurred
pursuant to only one of the clauses in the definition of Permitted Indebtedness
or pursuant to the first paragraph hereof. Accrual of interest and the accretion
of accreted value will not be deemed to be an incurrence of Indebtedness for
purposes of this covenant.
Limitation on Other Senior Subordinated Debt
The Company will not, and will not permit any of its 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:
(1) subordinate in right of payment to any Senior Indebtedness of the
Company or its Restricted Subsidiaries, as the case may be, and
(2) 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.
Limitation on Restricted Payments
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, unless:
(1) 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;
(2) immediately after giving pro forma effect to such Restricted Payment,
the Company could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the "Limitation on Additional
Indebtedness" covenant; and
(3) 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:
(a) 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
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(b) 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, net of
any amounts thereof previously relied upon or to be relied upon to
make any Permitted Investments pursuant to clause (15) of the
definition thereof, plus
(c) without duplication of any amounts included in clauses (a) and (b)
above, 100% of the aggregate net proceeds of any equity
contribution received by the Company (other than in return for
Disqualified Capital Stock) from a holder of the Company's Capital
Stock, net of any amounts thereof previously relied upon or to be
relied upon to make any Permitted Investments pursuant to clause
(15) of the definition thereof, plus
(d) $7,500,000.
For purposes of determining under clause (3) above 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 will 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 repurchase, redemption or other acquisition or retirement
of any shares of Capital Stock of the Company or Indebtedness
subordinated to the Notes 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 Company
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 Company that is Refinancing
Indebtedness;
(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
Company or, in the event of the Asset Drop-Down, the Holding
Company (other than Disqualified Capital Stock) or options on
such shares held by the Company's or its Subsidiaries' (or, in
the event of the Asset Drop-Down, the Holding Company's)
officers, employees or directors or former officers, employees
or directors (or their estates or beneficiaries under their
estates) upon the death,
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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;
provided that the aggregate cash consideration paid, or
distributions or payments made, pursuant to this clause shall
not exceed $3,000,000 in any fiscal year (provided, that the
Company may carry over and make in a subsequent fiscal year,
in addition to the amounts permitted for such fiscal year, the
amount of such distributions permitted to have been made, but
not made, in any preceding fiscal year) or $15,000,000 in the
aggregate from and after the Issue Date, provided that the
foregoing amounts shall be increased by (a) the amount of any
payments by officers, employees or directors of the Holding
Company, the Company or a Subsidiary thereof for the purchase
of Capital Stock of the Company (other than in connection with
the Recapitalization) or, in the event of the Asset Drop-
Down, the Holding Company except to the extent such payments
consist of proceeds from loans by the Company or a Subsidiary
thereof and (b) the amount of any cash capital contributions
to the Company by THL or any Affiliate thereof used by the
Company to purchase, redeem or otherwise acquire for value
shares of such capital stock;
(vi) the payment of THL Fees;
(vii) so long as no Default or Event of Default shall have occurred
and be continuing, payments not to exceed $100,000 in the
aggregate to enable the Company to make payments to holders of
its Capital Stock in lieu of issuance of fractional shares of
its Capital Stock;
(viii) Restricted Payments made pursuant to the Recapitalization
Agreement;
(ix) the Company or any Restricted Subsidiary from purchasing all
(but not less than all), excluding directors' qualifying
shares, of the Capital Stock or other ownership interests in a
Subsidiary of the Company which Capital Stock or other
ownership interests were not theretofore owned by the Company
or a Subsidiary of the Company, such that after giving effect
to such purchase such Subsidiary becomes a Restricted
Subsidiary of the Company;
(x) the payment of distributions (A) to the Equity Investor solely
for the purpose of enabling the Equity Investor to pay its
reasonable, ordinary course operating and administrative
expenses and taxes in any fiscal year will not exceed
$250,000, and (B) in the event of the Asset Drop-Down, to the
Holding Company for the purpose of enabling the Holding
Company to pay its reasonable, ordinary course operating and
administrative expenses, the amount of which distributions
pursuant to subclauses (A) and (B) of this clause (x) in any
fiscal year will not exceed $500,000; and
(xi) in the event of the Asset Drop-Down, the payment of
distributions to the Holding Company solely for the purpose of
enabling the Holding Company to pay taxes attributable to the
operations of the New Operating Company and its Subsidiaries
to the extent such taxes are actually owed and the Holding
Company is permitted or required to make such payments.
Notwithstanding the foregoing, (a) the amount of any payments made in
reliance on clause (i) and clause (v) above shall reduce the amount otherwise
available for Restricted Payments pursuant to subparagraphs (1)-(3) above and
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(b) in the event of the Asset Drop-Down, the amount of any payments that could
otherwise have been made in reliance on clauses (v), (vi), (vii), and (x)(A) may
be paid for the respective purposes set forth therein by the New Operating
Company as dividends or distributions to the Holding Company.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth in reasonable detail the basis
upon which the calculations required by this covenant were computed (including
without limitation the date, amount and nature of any purchase or contribution
referred to in clauses (3)(b) or (c) above), which calculations may be based
upon the Company's 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.
Limitations on Investments
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Investment other than (1) a Permitted Investment or
(2) 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 Company will not, and will not permit any of its 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 Company or any Restricted Subsidiary or any shares of stock or
debt of any Restricted Subsidiary which owns property or assets, now owned or
hereafter acquired, which secures Indebtedness pari passu with or subordinated
to the Notes unless:
(1) 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
(2) 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 in the same collateral as that securing such Lien to the
same extent as such subordinated Indebtedness is subordinated to the
Notes.
Limitation on Transactions with Affiliates
The Company will not, and will not permit any of its 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 Company or any of its 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 date hereof if such extension, renewal, replacement, waiver or
other modification is more disadvantageous to the holders of the Notes in any
material respect than the original agreement as in effect on the date hereof
unless
(1) such Affiliate Transaction is between or among the Company and/or its
Restricted Subsidiaries; or
(2) the terms of such Affiliate Transaction are fair and reasonable to the
Company 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 Company 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 $2,000,000 which is not permitted under clause (1) above, the Company
must obtain a resolution of the Board of Directors certifying that such
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Affiliate Transaction complies with clause (2) above. In any Affiliate
Transaction with a value in excess of $10,000,000 which is not permitted under
clause (1) above (other than any sale by the Company of its Capital Stock that
is not Disqualified Capital Stock), the Company must obtain a written opinion as
to the fairness of such a transaction from an independent investment banking
firm. The limitations set forth in this and the preceding paragraph will not
apply to:
(1) any Restricted Payment that is not prohibited by the "Limitation on
Restricted Payments" covenant or Permitted Investment permitted by the
"Limitation on Investments" covenant,
(2) any transaction pursuant to an agreement, arrangement or understanding
existing on the Issue Date,
(3) any transaction, compensation or agreement, approved by the Board of
Directors of the Company, with an officer or director of, or
consultant to, the Company or of any Subsidiary in his or her capacity
as officer or director entered into in the ordinary course of
business,
(4) any transaction permitted by the provisions described under "Merger,
Consolidation or Sale of Assets,"
(5) any transaction (a) between the Company and any THL Group Member
solely in its capacity as a holder or buyer of the Company's Capital
Stock or (b) in the event of the Asset Drop-Down, between the New
Operating Company and the Holding Company solely in its capacity as a
holder or buyer of the New Operating Company's Capital Stock, provided
that any such transaction described in this clause (5) is not
otherwise prohibited by the indenture, or
(6) in the event of the Asset Drop-Down, any commercially reasonable
transaction between the New Operating Company and the Holding Company
solely in its capacity as a holder or buyer of the New Operating
Company's Indebtedness, provided that any such transaction is not
otherwise prohibited by the indenture.
Limitation on Creation of Subsidiaries
The Company will not create or acquire, and will not permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than:
(1) a Restricted Subsidiary that is acquired or created in connection with
an acquisition by the Company or
(2) an Unrestricted Subsidiary;
provided, however, that each Restricted Subsidiary acquired or created pursuant
to clause (1) will at the time it has either assets or stockholder's equity in
excess of $200,000 execute a guarantee in the form attached to the Indenture,
pursuant to which such Restricted Subsidiary will become a Guarantor, which
Guarantee shall be subordinated to such Restricted Subsidiary's guarantee of or
pledge to secure any other Indebtedness that constitutes Senior Indebtedness to
the same extent as the Senior Subordinated Notes are subordinated to Senior
Indebtedness. Notwithstanding the foregoing, any such Senior Subordinated
Guarantee shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon certain mergers, consolidations,
sales and other dispositions (including, without limitation, by foreclosure) in
accordance with the Indenture.
Limitation on Certain Asset Sales
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
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(1) the Company 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 of the equity interests,
property or assets constituting such Asset Sale (as determined in good
faith by the Board of Directors of the Company, and evidenced by a
board resolution);
(2) not less than 75% of the consideration received by the Company or its
Subsidiaries, as the case may be, is in the form of cash or Temporary
Cash Investments; and
(3) the Asset Sale Proceeds received by the Company 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 365 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 or be applied to secure Letter of
Credit Obligations; and
(b) second, to the extent of the balance of Asset Sale Proceeds after
application as described above, to the extent the Company 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 Company 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 365th day
following receipt of such Asset Sale Proceeds (the "Reinvestment
Date") and Asset Sale Proceeds contractually committed are so
applied within 365 days following the receipt of such Asset Sale
Proceeds.
Pending the final application of any such available Asset Sale Proceeds,
the Company or such Restricted Subsidiary may temporarily reduce Indebtedness
under a revolving credit facility or otherwise invest such Available Asset Sale
Proceeds in any manner not prohibited under the Indenture.
If, on the Reinvestment Date with respect to any Asset Sale, the Available
Asset Sale Proceeds exceed $10,000,000, the Company 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 the Company is required to make an Excess Proceeds Offer,
the Company will mail, within 30 days following the Reinvestment Date, a notice
to the holders of the Notes stating, among other things:
(1) that such holders have the right to require the Company 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 no later than 60 days from the date such notice is
mailed;
(3) the instructions, determined by the Company, 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.
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The Company 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 Company 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.
Limitation on Preferred Stock of Restricted Subsidiaries
The Company 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 Restricted
Subsidiary) to hold any such Preferred Stock unless the Company or such
Restricted Subsidiary would be entitled to incur or assume Indebtedness under
the "Limitation on Additional Indebtedness" covenant 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 Company will not:
(1) sell, pledge, hypothecate or otherwise convey or dispose of any
Capital Stock of a Subsidiary (other than Liens under the Senior
Credit Facility or under the terms of any Designated Senior
Indebtedness and Liens not prohibited by the "Limitations on Liens"
covenant) other than to the Company or another Restricted Subsidiary
or
(2) permit any of its Subsidiaries to issue any Capital Stock (other than
director's qualifying shares) other than (a) to the Company or a
Wholly-Owned Subsidiary of the Company or (b) to any other shareholder
of such Subsidiary (including to another Subsidiary) in an amount not
to exceed such shareholders' proportionate share of any dividend,
distribution or other issuance to all shareholders.
The foregoing restrictions will not apply to an Asset Sale made in
compliance with the "Limitation on Certain Asset Sales" covenant or the issuance
of Preferred Stock in compliance with the "Limitation on Preferred Stock of
Restricted Subsidiaries" covenant.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Company will not, and will not permit any of its 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 Company to:
(1) (a) pay dividends or make any other distributions to the Company or
any Restricted Subsidiary of the Company (i) on its Capital Stock
or (ii) with respect to any other interest or participation in,
or measured by, its profits or
(b) repay any Indebtedness or any other obligation owed to the Company
or any Restricted Subsidiary of the Company,
(2) make loans or advances or capital contributions to the Company or any
of its Restricted Subsidiaries or
(3) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of
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(a) encumbrances or restrictions existing on the date hereof to the
extent and in the manner such encumbrances and restrictions are in
effect on the date hereof or no more restrictive in any material
respect (including without limitation pursuant to the Senior
Credit Facility),
(b) the Indenture, the Notes and the Guarantees,
(c) applicable law,
(d) 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,
(e) any agreement or instrument governing Indebtedness (whether or not
outstanding) of Foreign Subsidiaries,
(f) customary non-assignment provisions in leases, licenses or other
agreements entered in the ordinary course of business and
consistent with past practices,
(g) Refinancing Indebtedness; provided that such payment restrictions
are no more restrictive in any material respect than those
contained in the agreements governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded,
(h) customary restrictions in security agreements or mortgages or
other similar agreements securing Indebtedness of the Company or a
Restricted Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such security agreements and
mortgages or
(i) customary restrictions with respect to a Restricted Subsidiary of
the Company 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 Company shall not, and shall not permit any Restricted Subsidiary to,
enter into any Sale and Lease- Back Transaction unless:
(1) 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
(2) the Company or such Restricted Subsidiary, as the case may be, could
incur the Attributable Indebtedness in respect of such Sale and
Lease-Back Transaction in compliance with the "Limitation on
Additional Indebtedness" covenant.
Payments for Consent
Neither the Company nor any of its 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.
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Change of Control Offer
In the event of a Change of Control, the Company will be obligated to 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 30 days following the first date on which the Company has knowledge
of any Change of Control, the Company will 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:
(1) 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;
(2) 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");
(3) that any Note not tendered will remain outstanding and continue to
accrue interest;
(4) that, unless the Company defaults 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;
(5) 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
Change of Control Payment Date;
(6) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the
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;
(7) 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; and
(8) any other procedures that a holder must follow to accept a Change of
Control Offer or effect withdrawal of such acceptance.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment Notes or portions thereof tendered pursuant to the
Change of Control Offer;
(2) deposit at the paying office established by the Company money
sufficient to pay the purchase price of all Notes or portions thereof
so tendered; and
(3) 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 Company.
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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 above, but in any event within 30 days following the first
date on which the Company has knowledge of any Change of Control, the Company
covenants to:
(1) 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
(2) obtain the requisite consent under the senior credit facility to
permit the repurchase of the Notes as described above.
The Company will be deemed to have knowledge of all filings with the SEC.
The Company must first comply with the covenant described in the preceding
sentence before it shall be required to purchase Notes in the event of a Change
of Control; provided that the Company's failure to comply with the covenant
described in the preceding sentence constitutes an Event of Default described in
clause (3) 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 Company to purchase the Notes unless the
Company is 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 Company 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:
(1) if the Company or any Subsidiary thereof has issued any outstanding
(a) Indebtedness that is subordinate in right of payment to the Notes;
or (b) Preferred Stock, and the Company or such 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 Company shall not consummate any
such offer or distribution with respect to such subordinated
Indebtedness or Preferred Stock until such time as the Company shall
have paid the Change of Control Purchase Price in full to the holders
of Notes that have accepted the Company's Change of Control Offer and
shall otherwise have consummated the Change of Control Offer made to
holders of the Notes and
(2) the Company will not issue Indebtedness that is subordinate 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 Company to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule l4e-1 under the Exchange Act
at that time, the Company will comply with the requirements of Rule 14e-1 as
then in effect with respect to such repurchase.
Merger, Consolidation or Sale of Assets
The Company will not, nor will it 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):
(1) 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, a limited
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liability company 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 all of the
obligations of the Company or such Guarantor, as the case may be,
under the Notes and the Indenture or Guarantee, as applicable, 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 or limited liability company there shall be a co-issuer of
the Notes that is a corporation;
(2) immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and
(3) unless the merger or consolidation is with, or the transfer of all or
substantially all its assets is to, a Wholly-Owned Subsidiary,
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 the "Limitation on Additional Indebtedness" covenant.
Nothing in this "Merger, Consolidation or Sale of Assets" provision will
prohibit the consolidation, merger or transfer of all or substantially all the
assets of any Guarantor that is otherwise permitted by and conducted in
accordance with the other applicable provisions of the Indenture. In connection
with any consolidation, merger or transfer of assets contemplated by this
provision, the Company will deliver, or cause to be delivered, to the Holders,
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 thereof 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. All payments pursuant to the Guarantees by
the Guarantors will be unconditionally subordinate 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 subordinate in right of payment to the
prior payment in full of all Senior Indebtedness of the Company.
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 at least 80% of
its Capital Stock is sold, in each case in a transaction in compliance with the
covenant described under "Limitation on Certain Asset Sales," provided that in
the event of a sale of less than all of the Capital Stock of a Guarantor, such
release shall not be effective unless and until such Guarantor is similarly
released from its guarantee under the senior credit facility 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.
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Events of Default
The following events will be defined in the Indenture as "Events of
Default":
(1) 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 is prohibited by the
subordination provisions of the Indenture);
(2) 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;
(3) default by the Company 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
(except in the case of the consummation of a transaction governed by
the "Merger, Consolidation or Sale of Assets" provision in violation
of the terms thereof, which will constitute an Event of Default with
such notice requirement but without such passage of time requirement);
(4) default in the payment at final maturity of principal in an aggregate
amount of $10.0 million or more with respect to any Indebtedness of
the Company or any Restricted Subsidiary thereof, or the acceleration
of any such Indebtedness aggregating $10.0 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;
(5) any final judgment or judgments which can no longer be appealed or
stayed for the payment of money in excess of $10.0 million (net of
amounts covered by insurance for which coverage is not being
challenged or denied) is rendered against the Company or any
Restricted Subsidiary thereof, and shall not be discharged, paid or
otherwise satisfied for any period of 60 consecutive days during which
a stay of enforcement shall not be in effect;
(6) certain events involving bankruptcy, insolvency or reorganization of
the Company or any Restricted Subsidiary thereof; and
(7) 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 of the Company) shall have occurred and be continuing, then the
Trustee by notice to the Company or the holders of not less than 25% in
aggregate principal amount of the Notes then outstanding by written notice to
the Company 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
(1) such amounts shall become immediately due and payable or
(2) if there are any amounts outstanding under or in respect of the senior
credit facility or any commitments remain in effect under the senior
credit facility, such amounts shall become due and
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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 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 of the Company
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.
Defeasance and Covenant Defeasance
The Indenture will provide that the Company may elect either
(1) 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
(2) 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 Company has delivered to the
Trustee an opinion of counsel:
(a) 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
(b) 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
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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 Company, 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, consummating the Asset
Drop-Down, 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 Company, 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,
(1) reduce the amount of Notes whose holders must consent to an amendment,
supplement, or waiver to the Indenture or the Notes;
(2) reduce the rate of or change the time for payment of interest on any
Note;
(3) reduce the principal of or premium on or change the stated maturity of
any Note;
(4) waive a default in the payment of the principal of, interest on, or
redemption payment with respect to any Note;
(5) make any Note payable in money other than that stated in the Note or
change the place of payment from New York, New York;
(6) make any change in provisions of the Indenture protecting the right of
each holder of Notes to receive payment of principal of and interest
on such Note on or after the due date thereof or to bring suit to
enforce such payment, or permitting holders of a majority in principal
amount of Notes to waive Defaults or Events of Default;
(7) amend, change or modify in any material respect the obligation of the
Company to make and consummate a Change of Control Offer in the event
of a Change of Control or make and consummate an Excess Proceeds Offer
with respect to any Asset Sale that has been consummated or modify any
of the provisions or definitions with respect thereto;
(8) affect the ranking of the Notes or the Guarantees in a manner adverse
to the holders;
(9) change any provision of the Indenture relating to the redemption of
Notes;
(10) release any Guarantor from any of its obligations under its Guarantee
or the Indenture otherwise than in accordance with the terms of the
Indenture.
Reports to Holders
So long as the Company is subject to the periodic reporting requirements
of the Exchange Act, it will continue to furnish the information required
thereby to the SEC 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 SEC or to the holders of the Notes, it will nonetheless
continue to furnish such information to the SEC and holders of the Notes.
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Compliance Certificate
The Company will deliver to the Trustee on or before 100 days after the
end of the Company's fiscal year and on or before 55 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.
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.
Transfer and Exchange
Holders of the Notes may transfer or exchange the Notes in accordance with
the Indenture. The Registrar under the 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 Indenture. 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. We refer you 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.
"Accrued Bankruptcy Interest" means, with respect to any Indebtedness of
any Person, all interest accrued or accruing on such Indebtedness after the
commencement of any bankruptcy, reorganization, insolvency, receivership or
similar proceeding, whether voluntary or involuntary, against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such proceeding.
"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 the outstanding
equity interests on, or assets from, such Person.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
the amount by which
(1) 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
(2) 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
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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 Acquisition" means
(1) an Investment by the Company or any Restricted Subsidiary in any other
Person pursuant to which such Person shall become a Restricted
Subsidiary or shall be merged with or into the Company or any
Restricted Subsidiary or
(2) the acquisition by the Company or any Restricted Subsidiary of the
assets of any Person (other than a Restricted Subsidiary) which
constitute all or substantially all of the assets of such Person or
comprise any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course
of business.
"Asset Drop-Down" means the transaction described under "Asset Drop-Down"
above.
"Asset Sale" means the sale, transfer or other disposition (including any
Sale and Lease-Back Transaction), 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 $1,500,000 of
(1) any Capital Stock of or other equity interest in any Restricted
Subsidiary of the Company or
(2) any other property or assets of the Company or of any Restricted
Subsidiary thereof; provided that Asset Sales shall not include:
(a) 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;
(b) 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 (4) of the definition thereof);
(c) the sale, transfer or other disposition of all or substantially
all of the assets of the Company or any Guarantor as permitted
under the "Merger, Consolidation or Sale of Assets" provision;
(d) the sale or discount, in each case without recourse, of accounts
receivable arising in the ordinary course of business, but only in
connection with the compromise or collection thereof;
(e) the factoring of accounts receivable arising in the ordinary
course of business pursuant to arrangements customary in the
industry;
(f) the licensing of intellectual property;
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(g) disposals or replacements of obsolete equipment in the ordinary
course of business;
(h) leases or subleases to third persons not interfering in any
material respect with the business of the Company or any of its
Restricted Subsidiaries;
(i) a disposition of Temporary Cash Investments or goods held for sale
in the ordinary course of business consistent with past practices
of the Company;
(j) a disposition that constitutes a Change of Control; and
(k) any foreclosures on assets.
"Asset Sale Proceeds" means, with respect to any Asset Sale,
(1) cash received by the Company 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 measured by or resulting
from such Asset Sale,
(b) payment of all brokerage commissions, underwriting and other fees
(including legal and accounting fees) and expenses (including
relocation expenses) related to such Asset Sale,
(c) any consideration for an Asset Sale (which would otherwise
constitute Asset Sale Proceeds) that is required to be held in
escrow pending determination of whether a purchase price
adjustment will be made, but amounts under this clause (c) will
become Asset Sale Proceeds at such time and to the extent such
amounts are released to the Company or a Restricted Subsidiary,
(d) repayment of Indebtedness that either (i) is secured by a Lien on
the property or assets sold or (ii) is required to be repaid in
connection with such Asset Sale (in order to obtain a consent
required in connection therewith),
(e) provision for minority interest holders in any Restricted
Subsidiary as a result of such Asset Sale and
(f) deduction of appropriate amounts to be provided by the Company 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 Company 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
(2) promissory notes and other non-cash consideration received by the
Company 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:
(1) the fair value of the property subject to such arrangement (as
determined by the Board of Directors) and
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(2) the present value of the total obligations (discounted at the rate
borne by the Notes, 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 (3)(a) or (3)(b) of the first paragraph of "Limitation
on Certain Asset Sales," and that have not previously been the basis for an
Excess Proceeds Offer in accordance with the third paragraph of "Limitation on
Certain Asset Sales."
"Board of Directors" means
(1) in the case of a Person that is a corporation, the board of directors
of such Person or any committee authorized to act therefor,
(2) 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), and
(3) 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.
"Business Day" means any day except a Saturday, Sunday or other day on
which (1) commercial banks in the City of New York are authorized or required by
law to close or (2) the New York Stock Exchange is not open for trading.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated and whether or not voting) 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.
"Change of Control" means, at any time after the Issue Date, the
occurrence of one or more of the following events:
(1) 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 power of the
Common Stock of the Company,
(2) there shall be consummated any consolidation or merger of the Company
in which the Company is not the continuing or surviving corporation or
pursuant to which the Common Stock of the Company would be converted
into cash, securities or other property, other than a merger or
consolidation of the Company in which the holders of the Common Stock
of the Company 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
(3) during any period of two consecutive years commencing after the Issue
Date, individuals who at the beginning of such period constituted the
Board of Directors of Company (together with any new
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directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company 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 the
Company.
"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:
(1) vote in the election of directors of such Person or
(2) 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 Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of EBITDA of such Person during the four full fiscal quarters
(the "Four Quarter Period") ending on or prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "Transaction Date") for which financial statements are available to
Consolidated Fixed Charges of such Person for the Four Quarter Period. In
addition to and without limitation of the foregoing, for purposes of this
definition, "EBITDA" and "Consolidated Fixed Charges" shall be calculated after
giving effect on a pro forma basis for the period of such calculation to:
(1) the incurrence or repayment of any Indebtedness of such Person or any
of its Restricted Subsidiaries (and the application of the proceeds
thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of
the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital
purposes pursuant to revolving credit facilities, occurring during the
Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if
such incurrence or repayment, as the case may be (and the application
of the proceeds thereof), occurred on the first day of the Four
Quarter Period;
(2) any Asset Sales or Asset Acquisitions (including, without limitation,
any Asset Acquisition giving rise to the need to make such calculation
as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result
of the Asset Acquisition) incurring, assuming or otherwise being
liable for Acquired Indebtedness and also including any EBITDA
(provided that such EBITDA shall be included only to the extent
includible pursuant to the definition of "Consolidated Net Income")
attributable to the assets which are the subject of the Asset
Acquisition during the Four Quarter Period) occurring during the Four
Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such
Asset Sale or Asset Acquisition (including the incurrence, assumption
or liability for any such Acquired Indebtedness) occurred on the first
day of the Four Quarter Period;
(3) with respect to any such Four Quarter Period commencing prior to the
recapitalization, the recapitalization, which shall be deemed to have
taken place on the first day of such Four Quarter Period; and
(4) any asset sales or asset acquisitions (including any EBITDA
attributable to the assets which are the subject of the asset
acquisition or asset sale during the Four Quarter Period (provided
that such EBITDA shall be included only to the extent includible
pursuant to the definition of "Consolidated Net Income")) that have
been made by any Person that has become a Restricted Subsidiary of the
Company or has been merged with or into the Company or any Restricted
Subsidiary of the Company during the Four Quarter Period or at any
time subsequent to the last day of the Four Quarter Period
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and on or prior to the Transaction Date that would have constituted
Asset Sales or Asset Acquisitions had such transactions occurred when
such Person was a Restricted Subsidiary of the Company or subsequent
to such Person's merger into the Company, as if such asset sale or
asset acquisition (including the incurrence, assumption or liability
for any Indebtedness or Acquired Indebtedness in connection therewith)
occurred on the first day of the Four Quarter Period. If such Person
or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as
if such Person or any Restricted Subsidiary of such Person had
directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio,"
(1) interest on outstanding Indebtedness determined on a fluctuating basis
as of the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the
Transaction Date; and
(2) notwithstanding clause (1) above, interest on Indebtedness determined
on a fluctuating basis, to the extent such interest is covered by one
or more Interest Rate Agreements, shall be deemed to accrue at the
rate per annum resulting after giving effect to the operation of such
agreements.
"Consolidated Fixed Charges" means, with respect to any Person, for any
period, the sum of:
(1) Consolidated Interest Expense (excluding amortization or write-off of
debt issuance costs relating to the recapitalization and the financing
therefor or relating to retired or existing Indebtedness and
amortization or write-off of customary debt issuance costs relating to
future Indebtedness incurred in the ordinary course of business), plus
(2) without duplication, the product of (a) the amount of all dividend
payments on any series of Preferred Stock of such Person or any
Restricted Subsidiary, determined on a consolidated basis (other than
dividends paid in Capital Stock (other than Disqualified Capital
Stock)) paid, accrued or scheduled to be paid or accrued during such
period times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"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 Restricted Subsidiaries on a
consolidated basis (including, but not limited to, 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 (other than any such discount arising from
the issuance of warrants to purchase Common Stock to purchasers of the Company's
debt securities simultaneously with the issuance thereof) 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.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that:
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(1) the Net Income of any
(a) Person (the "other Person") in which the Person in question or any
of its Restricted 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) and
(b) Unrestricted Subsidiary shall be included only to the extent of
the amount of dividends or distributions paid to the Person in
question or the Restricted Subsidiary,
(2) the Net Income of any Restricted 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 "Certain Covenants--Limitation on
Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries") shall be excluded to the extent of such restriction or
limitation,
(3) (a) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition
and
(b) any net gain (but not loss) resulting from an Asset Sale by the
Person in question or any of its Restricted Subsidiaries other
than in the ordinary course of business shall be excluded,
(4) extraordinary, unusual and non-recurring gains and losses (including
any related tax effects on such Person) shall be excluded,
(5) income or loss attributable to discontinued operations (including
without limitation operations disposed of during such period whether
or not such operations were classified as discontinued) shall be
excluded,
(6) to the extent not otherwise excluded in accordance with GAAP, the Net
Income of any Restricted Subsidiary in an amount that corresponds to
the percentage ownership interest in the income of such Restricted
Subsidiary not owned on the last day of such period, directly or
indirectly, by such Person shall be excluded,
(7) dividends, distributions and any other payments constituting return of
capital from Investments shall in any event be excluded to the extent
used to increase the amount available for Investment under clause (15)
of the definition of "Permitted Investments" in accordance with the
terms thereof,
(8) non-cash compensation charges, including any arising from existing
stock options resulting from any merger or recapitalization
transaction, shall be excluded, and
(9) without duplication, any charges related to the recapitalization shall
be excluded.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement, which may include the use
of derivatives, designed to protect against fluctuations in currency values.
"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
(1) so long as Indebtedness under or in respect of the senior credit
facility is outstanding or has commitments for the extension of
credit, such Senior Indebtedness and
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(2) any other Senior Indebtedness
(a) 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,
(b) which is specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness" by such
Person, and
(c) as to which the Trustee has been given written notice of such
designation and, so long as there is a Representative with respect
to the senior credit facility, such Representative shall have
concurred in 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,
(1) matures on or prior to the maturity date of the Notes, for cash or
securities constituting Indebtedness; or
(2) is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, on or prior to the maturity date of the Notes, for cash or
securities constituting Indebtedness; or
(3) 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 will be deemed to
include (a) any Preferred Stock of a Restricted Subsidiary of the Company and
(b) any Preferred Stock of the Company, with respect to either of which, under
the terms of such Preferred Stock, by agreement or otherwise, the Company is
obligated to pay current dividends or distributions in cash during the period
prior to the maturity date of the Notes; provided, however, that Capital Stock
of the Company or any Restricted Subsidiary that is issued with the benefit of
provisions requiring (i) a change of control offer or asset sale proceeds offer
to be made for such Capital Stock in the event of a change of control of or
asset sale by the Company or such Restricted Subsidiary, which provisions have
substantially the same effect as the provisions of the Indenture described under
"Change of Control" or "Limitation on Certain Asset Sales," as the case may be
or (ii) payment of dividends or redemption only after the Notes have been fully
paid, 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
(1) the sum of
(a) Consolidated Net Income for such period, plus
(b) 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 (a) hereof, plus
(c) 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
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(d) depreciation for such period on a consolidated basis, plus
(e) amortization of intangibles for such period on a consolidated
basis, plus
(f) any other non-cash items (excluding any such non-cash item to the
extent that it represents an accrual of or a reserve for a cash
expense in any period subsequent to the period for which EBITDA is
being calculated) reducing or not included in the definition of
Consolidated Net Income for such period, plus
(g) without duplication, all cash and non-cash expenses and
restructuring charges arising in connection with the
recapitalization, minus
(2) 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 Company each of the foregoing items shall be
determined on a consolidated basis with respect to the Company and its
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
(1) to the extent cash income has been received by such Person with
respect to such Investment, or
(2) if the cash income derived from such Investment is attributable to
Temporary Cash Investments.
"Equity Investor" means UIC Holdings, L.L.C., a Delaware limited liability
company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction.
"Foreign Subsidiary" means a Restricted Subsidiary of the Company
(1) that is organized in a jurisdiction other than the United States of
America or a state thereof or the District of Columbia and
(2) with respect to which at least 90% of its sales (as determined in
accordance with GAAP) are generated by operations located in
jurisdictions outside the United States of America.
"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 Company that hereafter
becomes a Guarantor pursuant to the Indenture, and "Guarantors" means such
entities, collectively.
"Guarantor Representative" means
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(1) so long as the senior credit facility remains outstanding or any
commitments thereunder remain in effect, the agent (or if there is
more than one agent therefor, the administrative agent for the lender
parties thereunder) and
(2) thereafter the agent, indenture trustee, other trustee or other
representative for any Guarantor Senior Indebtedness.
"Guarantor Senior Indebtedness" means the principal of and premium, if
any, and interest (including, without limitation, Accrued Bankruptcy Interest)
on, and any and all other fees, expense reimbursement obligations, indemnities
and other amounts and Obligations incurred or owing pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with,
(1) any Guarantor's direct incurrence of any Indebtedness or its guarantee
of all Indebtedness of the Company or any of its Subsidiaries, in each
case, under the senior credit facility,
(2) all obligations of such Guarantor with respect to any Interest Rate
Agreement,
(3) 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,
(4) all other Indebtedness of such Guarantor which does not expressly
provide that it is to rank pari passu with or subordinate to the
Guarantees and
(5) all deferrals, renewals, extensions, refinancings, replacements and
refundings in whole or in part of, and amendments, modifications,
restatements and supplements to, any of the Indebtedness described
above.
Notwithstanding anything to the contrary in the foregoing, Guarantor Senior
Indebtedness will not include
(1) Indebtedness of such Guarantor to any of its Subsidiaries (except to
the extent such Indebtedness is pledged as security under the senior
credit facility),
(2) Indebtedness represented by the Guarantees,
(3) 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 other item of Indebtedness of
the Company (although this clause (3) shall not apply to the
subordination of liens or security interests covering property or
assets securing Guarantor Senior Indebtedness),
(4) any trade payable arising from the purchase of goods or materials or
for services obtained in the ordinary course of business or
(5) liability for federal, state, local or other taxes owed or owing by
the Company.
"Holding Company" means the parent company of the New Operating Company
following the Asset Drop- Down.
"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," "incurable" 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.
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"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 and expenses 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:
(1) any Capitalized Lease Obligations,
(2) 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),
(3) 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),
(4) 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),
(5) Disqualified Capital Stock of such Person or any Restricted Subsidiary
thereof, and
(6) 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:
(1) 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
(2) 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 Persons who made the Management
Contribution and, without duplication, the Persons who hold the Retained Equity
as of the Issue Date.
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"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 Company 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. For
the purposes of the "Limitation on Restricted Payments" covenant, "Investment"
shall include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Common
Stock of any direct or indirect Restricted Subsidiary of the Company such that,
after giving effect to any such sale or disposition, the Company no longer owns,
directly or indirectly, greater than 50% of the outstanding Common Stock of such
Restricted Subsidiary, the Company shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the fair market value of the
Common Stock of such Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date the Notes are first issued by the Company and
authenticated by the Trustee under the Indenture.
"Letter of Credit Obligations" means all Obligations in respect of
Indebtedness of the Company or any of its Restricted Subsidiaries with respect
to letters of credit issued pursuant to the Senior Indebtedness which
Indebtedness shall be deemed to consist of (a) the aggregate maximum amount then
available to be drawn under all such letters of credit (the determination of
such maximum amount to assume compliance with all conditions for drawing) and
(b) the aggregate amount that has then been paid by, and not reimbursed to, the
issuers under such letters of credit.
"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 or encumbrance 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).
"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:
(1) in the case of any sale of Capital Stock by any Person, the aggregate
net proceeds received by such Person, 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 Person, at the time of receipt) and
(2) in the case of any exchange, exercise, conversion or surrender of
outstanding securities of any kind for or into shares of Capital Stock
of such Person which is not Disqualified Capital Stock, the net book
value of such outstanding securities on the date of such exchange,
exercise, conversion or
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surrender (plus any additional amount required to be paid by the
holder to such Person 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).
"New Operating Company" means the newly-formed Wholly-Owned Subsidiary of
the Company participating in the Asset Drop-Down.
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles (or, in the case of certain of the
events described in clause (6) under "Events of Default," with the passage of
time would entitle) one or more Persons to accelerate the maturity of any
Designated Senior Indebtedness. "Obligations" means, with respect to any
Indebtedness, any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other expenses and liabilities
payable under the documentation governing such 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 Obligations payable in
connection with Designated Senior Indebtedness.
"Permitted Holders" means, collectively,
(1) the Company and, in the event of the Asset Drop-Down, the Holding
Company,
(2) any THL Group Member,
(3) 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, and
(4) any underwriter during the course of an underwritten public offering
until completion of the initial distribution thereof.
"Permitted Indebtedness" means:
(1) Indebtedness of the Company or any Restricted Subsidiary arising under
or in connection with the senior credit facility in an amount not to
exceed the sum of (a) $225,000,000 plus (b) the greater of (i)
$110,000,000 or (ii) the aggregate of 80% of the accounts receivable
and 50% of the inventory of the Company and its consolidated
Restricted Subsidiaries, which sum 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;
(2) Indebtedness under the Notes and the Guarantees;
(3) Indebtedness of Foreign Subsidiaries not to exceed $5,000,000 in the
aggregate at any one time outstanding;
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(4) Indebtedness not covered by any other clause of this definition which
is outstanding on the Issue Date (including, for purposes of this
clause (4), Capitalized Lease Obligations in an amount not to exceed
$10,000,000 incurred in the leasing of an aircraft for use by the
Company, which lease is entered into on or before September 30, 1999);
(5) Indebtedness of the Company to any Restricted Subsidiary of the
Company and Indebtedness of any Restricted Subsidiary of the Company
to the Company or another Restricted Subsidiary of the Company;
provided that (a) if the Company or any Guarantor is the obligor on
such Indebtedness, such Indebtedness is unsecured and expressly
subordinated to the payment in full to all obligations in respect of
the Notes and the Guarantee of such Guarantor on terms substantially
in the form provided in the Indenture and (b)(i) any subsequent
issuance or transfer of equity interests that results in any such
Indebtedness being held by a Person other than the Company or a
Restricted Subsidiary of the Company, and (ii) any sale or transfer of
any such Indebtedness to a Person other than the Company or a
Restricted Subsidiary of the Company, shall be deemed to constitute an
incurrence of Indebtedness by the Company or such Restricted
Subsidiary not permitted by this clause (5);
(6) Interest Rate Agreements;
(7) Refinancing Indebtedness;
(8) Indebtedness under Commodity Hedge Agreements and Currency Agreements
entered into in the ordinary course of business consistent with
reasonable business requirements and not for speculation;
(9) Indebtedness consisting of guarantees made in the ordinary course of
business by the Company or its Restricted Subsidiaries of obligations
of the Company or any of its Restricted Subsidiaries, which
obligations are not otherwise prohibited under the Indenture;
(10) 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;
(11) Indebtedness incurred in respect of performance, surety and other
similar bonds and completion guarantees provided by the Company and
the Restricted Subsidiaries in the ordinary course of business, and
extensions, refinancings and replacements thereof;
(12) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business,
including, without limitation, letters of credit in respect of
workers' compensation claims or self-insurance, or other Indebtedness
with respect to reimbursement type obligations regarding workers'
compensation or other similar claims;
(13) Purchase Money Indebtedness and Capitalized Lease Obligations of the
Company and its Subsidiaries incurred to acquire, construct or improve
property and assets 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
(13)), the principal amount of which Purchase Money Indebtedness and
Capitalized Lease Obligations shall not in the aggregate at any one
time outstanding exceed $15,000,000; and
(14) Additional Indebtedness of the Company or any of its Restricted
Subsidiaries (other than Indebtedness specified in clauses (1) through
(13) above) not to exceed $25,000,000 in the aggregate at any one time
outstanding.
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"Permitted Investments" means, for any Person, Investments made on or
after the Issue Date consisting of:
(1) Investments by the Company, or by a Restricted Subsidiary thereof, in
the Company or a Restricted Subsidiary;
(2) Temporary Cash Investments;
(3) 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;
(4) 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 the Company 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 Certain Asset Sales";
(5) 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;
(6) 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 $2,000,000 in the aggregate at any
one time outstanding, (b) loans to employees of the Company or its
Subsidiaries 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;
(7) without duplication, Investments consisting of Indebtedness permitted
pursuant to clause (5) of the definition of "Permitted Indebtedness";
(8) Investments existing on the Issue Date;
(9) Investments of the Company under Interest Rate Agreements;
(10) Investments under Commodity Hedge Agreements and Currency Agreements
entered into in the ordinary course of business consistent with
reasonable business requirements and not for speculation;
(11) Investments consisting of endorsements for collection or deposit in
the ordinary course of business;
(12) Investments in suppliers or customers that are in bankruptcy,
receivership or similar proceedings or as a result of foreclosure on a
secured Investment in a third party received in exchange for or
cancellation of an existing obligation of such supplier or customer to
the Company or a Restricted Subsidiary;
(13) Investments paid for solely with Capital Stock (other than
Disqualified Capital Stock) of the Company;
(14) Investments in joint venture arrangements (which may be structured as
corporations, partnerships, trusts, limited liability companies or
other Persons), or in a Person which as a result of such Investment
becomes a joint venture arrangement, in an aggregate amount, as valued
at the time each
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such Investment is made, not exceeding $10,000,000 for all such
Investments from and after the date hereof; and
(15) Investments (other than Investments specified in clauses (1) through
(14) above) in an aggregate amount, as valued at the time each such
Investment is made, not exceeding $10,000,000 for all such Investments
from and after the Issue Date; provided that the amount available for
Investments to be made pursuant to this clause (15) shall be increased
from time to time (a) to the extent any return of capital is received
by the Company or a Restricted Subsidiary on an Investment previously
made in reliance on this clause (15), in each case, up to, but not
exceeding, the amount of the original Investment but only to the
extent such return of capital is excluded from Consolidated Net Income
and (b) by 100% of the aggregate net proceeds from the issue or sale
of the Company's Capital Stock or of any equity contribution received
by the Company (other than in return for Disqualified Capital Stock)
from a holder of the Company's Capital Stock, net of any amounts
thereof used to calculate amounts available for Restricted Payments
pursuant to clause (3) under "Limitation on Restricted Payments" or
previously relied upon to make any Permitted Investments pursuant to
this clause (15).
Not later than the date of making of any Permitted Investment made in
reliance on clause (15) above that includes proceeds described in clause (b)
thereof, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Permitted Investment is permitted and setting forth in
reasonable detail the date, amount and nature of the purchase or contribution
being relied upon.
"Permitted Liens" means
(1) 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,
(2) 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,
(3) Liens in favor of the Company or any of its Restricted Subsidiaries,
and
(4) Liens existing on the Issue Date.
"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.
"Purchase Money Indebtedness" means any Indebtedness incurred by a Person
to finance (within 90 days from incurrence) the cost (including the cost of
construction or improvement) of an item of Property acquired in the ordinary
course of business, the principal amount of which Indebtedness does not exceed
the sum of
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(1) 100% of such cost and
(2) reasonable fees and expenses of such Person incurred in connection
therewith.
"Qualified Public Offering" means a public offering and sale by the
Company (or, in the event of the Asset Drop-Down, the New Operating Company or
the Holding Company) 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 pursuant to a registration statement registered
pursuant to the Securities Act; provided that the aggregate Net Proceeds to the
issuer from such offering and sale is at least $25,000,000 and, provided,
further that, in the event of the Asset Drop-Down and a subsequent Qualified
Public Offering by the Holding Company, the Holding Company will contribute to
the capital of the New Operating Company that portion of the Net Proceeds
thereof necessary to pay the aggregate redemption price (including accrued
interest) of the Notes to be redeemed.
"Recapitalization" means the transactions described in the
Recapitalization Agreement.
"Recapitalization Agreement" means the Agreement and Plan of
Recapitalization, Purchase and Redemption dated as of December 24, 1998 (as
amended by Amendment No. 1 dated January 20, 1999 and Amendment No. 2 dated
January 25, 1999) by and among the Sellers named therein, the Company and the
Equity Investor.
"Redeemable Dividend" means, for any dividend or distribution 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 is issued in exchange
for, or refunds, refinances, renews, replaces, defeases or extends, in whole or
in part, 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 the Indenture, but only to the extent
that:
(1) the Refinancing Indebtedness is subordinated to the Notes to at least
the same extent as the Indebtedness being exchanged for, refunded,
refinanced, renewed, replaced, defeased or extended, if at all,
(2) 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,
(3) 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,
(4) 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
(5) such Refinancing Indebtedness is incurred by the same Person that
initially incurred the Indebtedness being refunded, refinanced or
extended, except that the Company or a Wholly- Owned Subsidiary
thereof may incur Refinancing Indebtedness to refund, refinance or
extend Indebtedness of the Company or any other Wholly-Owned
Subsidiary of the Company.
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"Representative" means (a) so long as the senior credit facility remains
outstanding or any commitments thereunder remain in effect, the agent (or if
there is more than one agent therefor, the administrative agent for the lender
parties thereunder) and (b) thereafter the agent, indenture trustee, other
trustee or other representative for any Senior Indebtedness.
"Restricted Payment" means any of the following:
(1) the declaration or payment of any dividend or any other distribution
or payment on Capital Stock of the Company or any Restricted
Subsidiary of the Company or any payment made to the direct or
indirect holders (in their capacities as such) of Capital Stock of the
Company or any Restricted Subsidiary of the Company (other than (a)
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) and (b)
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),
(2) 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),
(3) 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),
(4) the making of any Investment or guarantee of any Investment in any
Person other than a Permitted Investment,
(5) any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary on the basis of the Investment by the Company therein and
(6) forgiveness of any Indebtedness of an Affiliate of the Company (other
than a Restricted Subsidiary) to the Company 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:
(1) immediately after giving effect to such action (and treating any
Acquired Indebtedness as having been incurred at the time of such
action), the Company could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the
"Limitation on Additional Indebtedness" covenant and
(2) no Default or Event of Default shall have occurred and be continuing.
The Company shall deliver an Officers' Certificate to the Holders upon
designating any Unrestricted Subsidiary as a Restricted Subsidiary.
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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 Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit Agreement, dated as of January
20, 1999, among the Company, the banks, financial institutions and other
institutional lenders from time to time party thereto, NationsBank, N.A., as the
Swing Line Bank and the Initial Issuing Bank thereunder, NationsBanc Montgomery
Securities LLC and Morgan Stanley Senior Funding, Inc., as the Co-Arrangers
therefor, Canadian Imperial Bank of Commerce, as Documentation Agent therefor,
Morgan Stanley Senior Funding, Inc., as Syndication Agent thereunder,
NationsBanc Montgomery Securities LLC, as Lead Arranger and Book Manager
therefor, and NationsBank, N.A., as Administrative Agent for the lender parties
thereunder, together with all "Loan Documents" as defined therein and all other
documents related thereto (including, without limitation, any notes, guarantee
agreements, security documents and Interest Rate Agreements), 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, renewing, replacing or
otherwise restructuring (including increasing the amount of available borrowings
thereunder or adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder), in whole or in part, 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 or other
party thereto.
"Senior Indebtedness" means the principal of and premium, if any, and
interest (including, without limitation, Accrued Bankruptcy Interest) on, and
any and all other fees, expense reimbursement obligations, indemnities and other
amounts and Obligations incurred or owing pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with
(1) all Indebtedness of the Company under the senior credit facility,
(2) all obligations of the Company with respect to any Interest Rate
Agreement,
(3) 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,
(4) all other Indebtedness of the Company which does not expressly provide
that it is to rank pari passu with or subordinate to the Notes and
(5) all deferrals, renewals, extensions, refinancings, replacements and
refundings in whole or in part of, and amendments, modifications,
restatements and supplements to, any of the Indebtedness described
above.
Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness will not include
(1) Indebtedness of the Company to any of its Subsidiaries, except to the
extent such Indebtedness is pledged as security under the senior
credit facility,
(2) Indebtedness represented by the Notes,
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(3) 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 other item of Indebtedness of
the Company (although this clause (3) shall not apply to the
subordination of liens or security interests covering property or
assets securing Senior Indebtedness),
(4) any trade payable arising from the purchase of goods or materials or
for services obtained in the ordinary course of business or
(5) liability for federal, state, local or other taxes owed or owing by
the Company.
"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,
(1) 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
(2) 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
(1) 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;
(2) Investments in certificates of deposit and time deposits issued by a
lender under the senior credit facility or by a bank (or subsidiary of
a bank holding company) 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;
(3) commercial paper issued by any Person organized under the laws of any
state of the United States of America and rated at least "Prime-1" (or
the then equivalent grade) by Moody's or at least "A- 1" (or the then
equivalent grade) by S&P, in each case with a maturity of not more
than 180 days from the date of acquisition thereof; or
(4) 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 (1), (2) and (3).
"THL" means Thomas H. Lee Equity Fund IV, L.P.
"THL Fees" means
(1) management fees under the management agreement between the Company and
THL and its Affiliates and successors and assigns that do not exceed
$750,000 per year and the reimbursement of expenses pursuant thereto,
provided that the amount of such management fees paid per year shall
increase to $1,500,000 if at the time of such payment the Company
could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the "Limitation on Additional
Indebtedness" covenant and
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(2) one time fees to THL in connection with each acquisition of a company
or a line of business by the Company or its Subsidiaries, such fees to
be payable at the time of each such acquisition and not to exceed 1%
of the aggregate consideration paid by the Company and its
Subsidiaries for any such acquisition.
"THL Group Member" means THL and any Affiliate thereof (including any
equity fund advised by any such Affiliate) (other than any of their portfolio
companies).
"Unrestricted Subsidiary" of any Person means
(1) any Subsidiary of such Person that at the time of determination shall
be or continue to be designated an Unrestricted Subsidiary by the
Board of Directors of such Person in the manner provided below and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated; provided that
(1) such designation complies with the "Limitation on Restricted Payments"
covenant and
(2) each Subsidiary to be so designated and each of its Subsidiaries has
not at the time of designation, and does not thereafter, create,
incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Company or any of
its Restricted Subsidiaries.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if
(1) immediately after giving effect to such designation and treating all
Indebtedness of such Unrestricted Subsidiary as being incurred on such
date, the Company is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
the "Limitation on Additional Indebtedness" covenant and
(2) immediately before and immediately after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing.
Any such designation by the Board of Directors shall be evidenced by the
board resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions. The
Trustee shall be given prompt notice by the Company of each board resolution 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 notes were offered and sold to QIBs (as defined) in reliance on Rule
144A under the Securities Act ("Rule 144A Notes"). Notes also were offered and
sold in reliance on Regulation S ("Regulation S Notes"). In addition, notes may
have been subsequently transferred to institutional accredited investors within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act of Institutional Accredited Investors in transactions exempt from
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registration under the Securities Act not made in reliance on Rule 144A or
Regulation S under the Securities Act ("Other Notes").
Rule 144A Notes initially were represented by one or more notes in
registered, global form without interest coupons (collectively, the "Rule 144A
Global Note"). The Rule 144A Global Notes were 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. Other
Notes held by Institutional Accredited Investors were represented by one or more
certificated notes bearing the restrictive legend described under Notice to
Investors ("Accredited Investor Certificated Notes"). Regulation S Notes
initially were represented by one or more notes in registered, global form
without interest coupons (collectively, the "Regulation S Global Note," and,
together with the Rule 144A Global Note, the "Global Notes"). The Regulation S
Global Notes were deposited upon issuance with the Trustee as custodian for DTC,
and registered in the name of a nominee of DTC, in each case for credit to the
accounts of Euroclear System ("Euroclear") and Cedel Bank, S.A. ("CEDEL"). On or
prior to the 40th day after the later of the commencement of the offering and
the Issue Date (such period through and including such 40th day, the "Restricted
Period"), beneficial interests in the Regulation S Note may be held only through
Euroclear or CEDEL, as indirect participants in DTC, unless transferred to a
person that takes delivery in the form of an interest in the corresponding Rule
144A Global Note in accordance with the certification requirements described
below. Beneficial interests in the Rule 144A Global Note may not be exchanged
for beneficial interests in the Regulation S Global Note at any time except in
the limited circumstances described below. See "-- Exchanges between Regulation
S Notes and Rule 144A Notes and Other Notes."
Except as set forth below, the Global Notes may be transferred, in whole
but not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for notes
in certificated form except in the limited circumstances described below. See
"-- Exchange of Book-Entry Notes for Certificated Notes."
Rule 144A Notes (including beneficial interests in the Rule 144A Global
Note) and Other Notes are subject to certain restrictions on transfer and bear a
restrictive legend as described under Notice to Investors. In addition, transfer
of beneficial interests in the Global Notes are subject to the applicable rules
and procedures of DTC and its direct or indirect participants (including, if
applicable, those of Euroclear and CEDEL), which may change from time to time.
The notes may be presented for registration of transfer and exchange at
the offices of the Registrar.
Depository Procedures
DTC has advised us 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 us that pursuant to procedures established by it, (i)
upon deposit of the Global Notes, DTC will credit the accounts of Participants
designated by the Initial Purchasers with portions of the principal amount of
the Global Notes and (ii) ownership of such interests in the Global Notes 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 Notes).
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Investors in the Rule 144A Global Note may hold their interests therein
directly through DTC, if they are Participants in such system, or indirectly
through organizations (including Euroclear and CEDEL) which are Participants in
such system. Investors in the Regulation S Global Note must initially hold their
interests therein through Euroclear or CEDEL, if they are accountholders in such
systems, or indirectly through organizations which are accountholders in such
systems. After the expiration of the Restricted Period (but not earlier),
investors may also hold interests in the Regulation S Global Note through
organizations other than Euroclear and CEDEL that are Participants in the DTC
system. Euroclear and CEDEL will hold interests in the Regulation S Global Note
on behalf of their participants through their respective depositories, which in
turn will hold such interests in the Regulation S Global Note customers'
securities accounts in their respective names on the books of DTC. The Chase
Manhattan Bank, Brussels office, will initially act as depository for Euroclear,
and Citibank, N.A., will initially act as depository for CEDEL. All interests in
a Global Note, including those held through Euroclear or CEDEL, may be subject
to the procedures and requirements of DTC. Those interests held through
Euroclear or CEDEL may also be subject to the procedures and requirements of
such system.
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 a 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 a 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. For certain other
restrictions on the transferability of the notes, see "-- Exchange of Book-Entry
Notes for Certificated Notes" and "-- Exchanges between Regulation S Notes and
Rule 144A Notes and Other Notes."
Except as described below, owners of interests in the Global Notes 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.
Payments in respect of the principal of (and premium, if any) and interest
on a 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, we and the Trustee will treat the persons in
whose names the notes, including the Global Notes, are registered as the owners
thereof for the purpose of receiving such payments and for any and all other
purposes whatsoever. Consequently, none of our company, the Initial Purchasers,
the Trustee or any of our agents or agents of the Initial Purchasers 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 the beneficial ownership 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 us that our 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
our company. Neither our company 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 our company 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 Notes for all purposes.
Except for trades involving only Euroclear and CEDEL participants,
interests in the Global Notes 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. Transfers between accountholders in Euroclear and CEDEL will be
effected in the ordinary way in accordance with their respective rules and
operating procedures.
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Subject to compliance with the transfer restrictions applicable to the
notes described herein, cross-market transfers between the accountholders in
DTC, on the one hand, and directly or indirectly through Euroclear or CEDEL
accountholders, on the other hand, will be effected through DTC in accordance
with DTC's rules on behalf of Euroclear or CEDEL, as the case may be, by its
respective depository; however, such cross-market transactions will require
delivery of instructions to Euroclear or CEDEL, as the case may be, by the
counterparty in such system in accordance with the rules and procedures and
within the established deadlines (Brussels time) of such system. Euroclear or
CEDEL, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depository to take action
to effect final settlement on its behalf by delivering or receiving interests in
the relevant Global Note in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
Euroclear and CEDEL accountholders may not deliver instructions directly to the
depositories for Euroclear or CEDEL.
Because of time zone differences, the securities account of a Euroclear or
CEDEL accountholder purchasing an interest in a Global Note from an
accountholder in DTC will be credited, and any such crediting will be reported
to the relevant Euroclear or CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear or CEDEL) immediately
following the settlement date of DTC. Cash received in Euroclear or CEDEL as a
result of sales of interests in a Global Note by or through a Euroclear or CEDEL
accountholder to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or CEDEL
cash account only as of the business day for Euroclear or CEDEL following DTC's
settlement date.
DTC has advised us 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 Notes 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 Notes for (in the
case of the Rule 144A Global Note) legended notes in certificated form and to
distribute such notes to its Participants.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that we believe to be
reliable, but we take no responsibility for the accuracy thereof.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
to facilitate transfers of interests in the Regulation S Global Note and in the
Rule 144A Global Note among accountholders in DTC and accountholders of
Euroclear and CEDEL, they are under no obligation to perform or to continue to
perform such procedures, and such procedures may be discontinued at any time.
None of our company, the Initial Purchasers or the Trustee or any agent of our
company, the Initial Purchasers or the Trustee will have any responsibility for
the performance by DTC, Euroclear or CEDEL or their 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
Notes transferred to Institutional Accredited Investors who are not QIBs
will be issued in registered certificated form. In addition, a Global Note is
exchangeable for definitive notes in registered certificated form if (i) DTC (x)
notifies us that it is unwilling or unable to continue as depository for the
Global Note and we thereupon fail to appoint a successor depository or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) we, at
our 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 any 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) and will bear, in the case of the Restricted Global Note,
the restrictive legend described in Notice to Investors and, in the case of the
Regulation S Global Note, a legend substantially in the form of the first
sentence of the legend in bold type on the cover of this Offering Memorandum, in
each case, unless we determine otherwise in compliance with applicable law.
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EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
We originally sold our old notes on March 19, 1999 to CIBC Oppenheimer and
NationsBanc Montgomery Securities LLC (the "Initial Purchasers") pursuant to a
Securities Purchase Agreement dated March 19, 1999. The Initial Purchasers
subsequently resold the notes to qualified institutional buyers in reliance on
Rule 144A under the Securities Act. As a condition of the purchase agreement, we
entered into an Exchange Offer Registration Rights Agreement (the "Exchange
Offer Registration Rights Agreement") with the Initial Purchasers pursuant to
which we agreed, for the benefit of the holders of the old notes, at our cost,
to:
o use our reasonable best efforts to file an exchange offer registration
statement (the "Exchange Offer Registration Statement") within 45 days
after the date of the original issuance of the old notes with the SEC
with respect to the exchange offer for the new notes; and
o use our reasonable best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities
Act within 165 days after the date of the original issuance of the old
notes.
Upon the Exchange Offer Registration Statement being declared effective,
we will offer the new notes in exchange for surrender of the old notes. We 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 us pursuant to
the exchange offer, the holder of such old note will receive a new note having a
principal amount equal to that of the surrendered old note.
Under existing interpretations of the staff of the SEC contained in
several no-action letters to third parties, we believe that the new 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 new notes:
o will not be able to rely on the interpretation of the staff of the
SEC;
o will not be able to tender its old notes in the exchange offer; and
o 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 us in the Letter of Transmittal that:
o the new notes are to be acquired by the holder or the person receiving
such new notes, whether or not such person is the holder, in the
ordinary course of business;
o 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 new notes;
o the holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of
the new notes;
o neither the holder nor any such other person is an "affiliate" of ours
within the meaning of Rule 405 under the Securities Act; and
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o 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 new notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection
with any resale of the new notes and cannot rely on those no-action
letters.
As indicated above, each broker-dealer (a "Participating Broker-Dealer") that
receives new notes for its own account in exchange for old notes must
acknowledge that it:
o acquired the new notes for its own account as a result of
market-making activities or other trading activities;
o has not entered into any arrangement or understanding with us or any
"affiliate" (within the meaning of Rule 405 under the Securities Act)
to distribute the new notes to be received in the exchange offer; and
o will deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of such new notes.
For a description of the procedures for resales by Participating Broker-Dealers,
see "Plan of Distribution."
In the event that changes in the law or the applicable interpretations of
the staff of the SEC do not permit us to effect such an exchange offer, or if
for any other reason the exchange offer is not consummated within 195 days of
the date of the original issuance of the old notes, we will:
o file a shelf registration statement covering the resale of the old
notes;
o use our reasonable best efforts to cause the shelf registration
statement to be declared effective under the Securities Act; and
o use our reasonable best efforts to keep effective the shelf
registration statement for two years after its effective date.
We 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:
o we will use our reasonable best efforts to file an Exchange Offer
Registration Statement with the SEC on or prior to 45 days after the
date of the original issue of the old notes;
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o we will use our reasonable best efforts to have the Exchange Offer
Registration Statement declared effective by the SEC on or prior to
165 days after the date of the original issue of the old notes;
o unless the exchange offer would not be permitted by applicable law or
SEC policy, we will commence the exchange offer and use our reasonable
best efforts to issue on or prior to 45 days after the exchange offer
effectiveness date, new notes in exchange for all old notes tendered
prior thereto in the exchange offer; and
o if obligated to file the shelf registration statement, we will use our
reasonable best efforts to file the shelf registration statement with
the SEC in a timely fashion.
If:
(a) we fail to file any of the registration statements required by the
Exchange Offer Registration Rights Agreement on or before the date
specified for such filing;
(b) any of such registration statements is not declared effective by
the SEC on or prior to the date specified for such effectiveness;
(c) we fail to consummate the exchange offer within 165 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 (as such term is defined in the Exchange
Offer Registration Rights Agreement) 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 .25% for each 90-day period during which the
registration default continues, up to a maximum additional interest rate of 2%
per annum in excess of 9-7/8% per annum.
All additional interest will be payable to holders of the old notes in
cash on each April 1 and October 1, 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 9-7/8% per annum.
Holders of old notes have no right to receive such additional interest, if any.
Holders of old notes will be required to make certain representations to
us in order to participate in the exchange offer and holders of 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 benefit from the provisions regarding additional
interest set forth above. Such required representations and information is
described in the Exchange Offer Registration Rights Agreement.
The summary herein of certain provisions of the Exchange Offer
Registration Rights Agreement 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
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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, we will accept any and all old notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on ,
1999. We will issue $1,000 principal amount of new 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 new notes are substantially the same as the form
and terms of the old notes except that:
o the new notes bear a new designation and a different CUSIP number
from the old notes;
o the new notes have been registered under the federal securities
laws and hence will not bear legends restricting the transfer
thereof as the old notes do; and
o the holders of the new notes will generally not be entitled to
certain rights under the Exchange Offer Registration Rights
Agreement, which rights generally will be satisfied when the
exchange offer is consummated. The new notes will evidence the
same debt as the tendered old notes and will be entitled to the
benefits of the indenture under which the old notes were issued.
As of the date of this prospectus, $150,000,000 aggregate
principal amount of old notes were outstanding.
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 indentures relating to such notes in connection with the exchange
offer. We intend to conduct the exchange offer in accordance with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC thereunder.
We shall be deemed to have accepted validly tendered old notes when, as
and if we have given oral or written notice thereof, such notice if given
orally, to be confirmed in writing, to the exchange agent. The exchange agent
will act as agent for the tendering holders for the purpose of receiving the new
notes from our 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. We 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 expiration date is 5:00 p.m., New York City time, on ,
1999, unless we extend the exchange offer, in which case the expiration date
will be the latest date and time to which the exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange agent
of any extension by oral or written notice, such notice if given orally, to be
confirmed in writing, and will issue a press release or other public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
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We reserve the right:
o 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, such notice if given orally, to be
confirmed in writing, of such delay, extension or termination to
the exchange agent, or
o 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 New Notes
The new 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 new notes. Such
interest will be paid with the first interest payment on the new notes on
October 1, 1999 to persons who are registered holders of the new notes on
September 1, 1999. Interest on the old notes accepted for exchange will cease to
accrue upon issuance of the new notes.
Interest on the new notes is payable semi-annually on each April 1 and
October 1, commencing on October 1, 1999.
Procedures for Tendering
Only a registered holder of old notes may tender such 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 and mail or
otherwise deliver such Letter of Transmittal or such facsimile, together with
the old notes and any other required documents, or cause The Depository Trust
Company to transmit an agent's message in connection with a book-entry transfer,
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, the 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:
o to participate in the Automated Tender Option Program ("ATOP");
o to be bound by the terms of the Letter of Transmittal; and
o that we may enforce such agreement against such participant.
By executing the Letter of Transmittal or agent's message, each holder
will make to us the representations set forth above in the fourth paragraph
under the heading "--Purpose and Effect of the Exchange Offer."
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The tender by a holder and the acceptance thereof by us 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 Transmittal 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 notes tendered pursuant thereto are tendered by a registered holder
who has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal, or 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 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 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 to our satisfaction of
their authority to so act must be submitted with the Letter of Transmittal.
We understand 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 transmitted to and received by the
exchange agent in compliance with ATOP 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, the tender of such notes will
not be valid. 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 us, in our sole discretion, which determination will be
final and binding. We reserve the absolute right to reject any and all old notes
not properly tendered or any old notes our acceptance of which would, in the
opinion of our counsel, be unlawful. We also reserve the right to waive any
defects, irregularities or conditions of tender as to particular old notes. We
may not waive any condition to the exchange offer unless such condition is
legally waiveable. In the event such a waiver by us gives rise to the legal
requirement to do so, we will hold the exchange offer open for at least five
business days thereafter. Our 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
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time as the we shall determine. Although we intend 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 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 whose old notes are not
immediately available, who cannot deliver their old notes, the Letter of
Transmittal or any other required documents to the exchange agent, or 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 by
facsimile transmission, mail or hand delivery from such eligible
institution a properly completed and duly executed Notice of
Guaranteed 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 three 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, are received by the exchange agent
within three New York Stock Exchange trading days after the
expiration date of the exchange offer.
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 of
the exchange offer.
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 of the exchange offer. Any such notice of
withdrawal must:
o specify the name of the person having deposited notes to be
withdrawn (the "Depositor");
o identify the notes to be withdrawn, including the certificate
number(s) and principal amount of such 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;
o be signed by the holder in the same manner as the original
signature on the Letter of Transmittal by which such 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 notes into the name of the person withdrawing the tender; and
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o 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 us and 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 new 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.
Conditions
Notwithstanding any other term of the exchange offer, we shall not be
required to accept for exchange, or new notes for, any old notes, and may
terminate or amend the exchange offer as provided herein before the acceptance
of such old notes, if:
o 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 our sole judgment, might materially
impair our ability to proceed with the exchange offer, or any
material adverse development has occurred in any existing action
or proceeding with respect to our company or any of our
subsidiaries; or
o any law, statute, rule, regulation or interpretation by the staff
of the SEC is proposed, adopted or enacted, which, in our sole
judgment, might materially impair our ability to proceed with the
exchange offer or materially impair the contemplated benefits of
the exchange offer; or
o any governmental approval has not been obtained, which approval we
shall, in our sole discretion, deem necessary for the consummation
of the exchange offer as contemplated hereby.
If we determine, in our sole discretion, that any of the conditions are
not satisfied, we may:
o refuse to accept any old notes and return all tendered old notes
to the tendering holders;
o 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 as described in
"--Withdrawal of Tenders" above;
o waive such unsatisfied conditions with respect to the exchange
offer and accept all properly tendered old notes which have not
been withdrawn.
Exchange Agent
State Street Bank and 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:
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<TABLE>
<S> <C>
By Mail: Overnight Courier:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 Two International Place
Boston, Massachusetts 02110 Boston, Massachusetts 02110
Attention: Kellie Mullen Attention: Kellie Mullen
By Hand in New York (as Drop Agent): By Hand in Boston:
State Street Bank and Trust Company, N.A. State Street Bank and Trust Company
61 Broadway Two International Place
Concourse Level, Corporate Trust Window Fourth Floor, Corporate Trust Department
New York, New York 10006 Boston, Massachusetts 02110
Attention: Kellie Mullen
Facsimile Transmission: Confirm by Telephone:
(For Eligible Institutions Only) (617) 664-5587
(617) 664-5314
</TABLE>
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 us. 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 our company and our affiliates.
We have 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. We, 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.
We will pay the cash expenses to be incurred in connection with the
exchange offer. Such expenses include fees and expenses of the exchange agent
and trustee, accounting and legal fees and printing costs, among others.
Accounting Treatment
The new notes will be recorded at the same carrying value as the old
notes, which is face value, as reflected in our company's accounting records on
the date of exchange. Accordingly, we will recognize no gain or loss for
accounting purposes. The expenses of the exchange offer will be expensed over
the term of the new notes.
Consequences of Failure to Exchange
The old notes that are not exchanged for new notes pursuant to the
exchange offer will remain restricted securities. Accordingly, such old notes
may be resold only:
o to our company, upon redemption thereof or otherwise;
o so long as the old notes are eligible for resale pursuant to Rule
144A under the Securities Act, to a person inside the United
States whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A in a
transaction meeting the requirements of Rule 144A, in accordance
with Rule 144 under the Securities Act, or pursuant to another
exemption from
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the registration requirements of the Securities Act, and based
upon an opinion of counsel reasonably acceptable to our company;
o outside the United States to a foreign person in a transaction
meeting the requirements of Rule 904 under the Securities Act; or
o 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 New Notes
With respect to resales of new notes, based on interpretations by the
staff of the SEC set forth in no-action letters issued to third parties, we
believe that a holder or other person who receives new notes, whether or not
such person is the holder, other than a person that is an "affiliate" of our
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 new notes, will be allowed to resell the
new notes to the public without further registration under the Securities Act
and without delivering to the purchasers of the new notes a prospectus that
satisfies the requirements of Section 10 of the Securities Act. However, if any
holder acquires new notes in the exchange offer for the purpose of distributing
or participating in a distribution of the new notes, such holder cannot rely on
the position of the staff of the SEC 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 new 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 new 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 our company in the Letter of Transmittal that:
o the new notes are to be acquired by the holder or the person
receiving such new notes, whether or not such person is the
holder, in the ordinary course of business;
o 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 new notes;
o the holder or any such other person has no arrangement or
understanding with any person to participate in the distribution
of the new notes;
o neither the holder nor any such other person is an "affiliate" of
our company within the meaning of Rule 405 under the Securities
Act; and
o 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 new notes it must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any resale of the new notes and
cannot rely on those no-action letters.
As indicated above, each Participating Broker-Dealer that receives new 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 new notes. For a description
of the procedures for such resales by Participating Broker-Dealers, see "Plan of
Distribution."
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material U.S. federal income tax
aspects of the exchange of old notes for new notes pursuant to the exchange
offer and the ownership and disposition of the new notes. This discussion is for
general information and does not consider all aspects of U.S. federal income
taxation that may be relevant to the purchase, ownership and disposition of the
notes by a prospective investor in light of your personal circumstances. This
discussion also does not address the U.S. federal income tax consequences of
ownership of notes not held as capital assets within the meaning of Section 1221
of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), or the U.S.
federal income tax consequences to investors subject to special treatment under
the U.S. federal income tax laws, such as dealers in securities or foreign
currency, tax-exempt entities, financial institutions, insurance companies,
persons that hold the notes as part of a "straddle," a "hedge" or a "conversion
transaction," persons that have a "functional currency" other than the U.S.
dollar, and investors in pass-through entities. In addition, this discussion
does not describe any tax consequences arising under U.S. federal gift and
estate taxes or out of the tax laws of any state, local or foreign jurisdiction.
This discussion is based upon the Code, existing, temporary and proposed
Treasury regulations issued by the Internal Revenue Service (the "IRS"), and
current administrative rulings and court decisions as of the date of this
Registration Statement. All of the foregoing is subject to change, possibly on a
retroactive basis, and any such change could affect the continuing validity of
this discussion.
Persons considering investing in the notes should consult their own tax
advisors concerning the application of federal income tax laws, as well as the
laws of any state, local or foreign taxing jurisdiction, to their particular
situations.
U.S. Holders
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a new note that is:
o a citizen or resident (as defined in Section 7701(b)(1) of the
Code) of the United States;
o a corporation organized under the laws of the United States or any
U.S. political subdivision (or one treated as a citizen or
resident under the Code);
o an estate, the income of which is subject to U.S. federal income
tax regardless of the source; or
o a trust with respect to which a court within the United States is
able to exercise primary supervision over its administration and
one or more United States persons have the authority to control
all of its substantial decisions (a "U.S. Holder").
Certain U.S. federal income tax consequences relevant to a holder other
than a U.S. Holder are discussed separately below.
New Notes
The exchange of old notes for new notes pursuant to the exchange offer
will not be treated as an "exchange" for federal income tax purposes because the
new notes will not be considered to differ materially in kind or extent from the
old notes. Rather, the new 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
new notes pursuant to the exchange offer.
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Stated Interest
Stated interest on a new note should be taxable to a U.S. Holder as
ordinary interest income at the time it accrues or is received in accordance
with such U.S. Holder's method of accounting for U.S. federal income tax
purposes.
Market Discount
If a new note is acquired at a "market discount," some or all of any gain
realized upon a sale or other disposition or payment at maturity or some or all
of a partial principal payment of such new note may be treated as ordinary
income, as described below. For this purpose, "market discount" is the excess,
if any, of the stated redemption price at maturity of a new note over its
purchase price, subject to a statutory de minimis exception. Unless a U.S.
Holder has elected to include market discount in income as it accrues, any gain
realized on a subsequent disposition of a new note, other than in connection
with certain nonrecognition transactions, or payment at maturity, or some or all
of any partial principal payment with respect to the new note, will be treated
as ordinary income to the extent of the market discount that is treated as
having accrued during the period such U.S. Holder held the new note.
The amount of market discount treated as having accrued will be determined
either:
o on a straight-line basis by multiplying the market discount times
a fraction, the numerator of which is the number of days the new
note was held by the U.S. Holder and the denominator of which is
the total number of days after the date such U.S. Holder acquired
the new note up to and including the date of its maturity; or
o if the U.S. Holder so elects, on a constant interest rate method.
A U.S. Holder may make that election with respect to any new note but,
once made, such election is irrevocable.
In lieu of recharacterizing gain upon disposition as ordinary income to
the extent of accrued market discount at the time of disposition, a U.S. Holder
of a new note acquired at a market discount may elect to include market discount
in income currently, through the use of either the straight-line inclusion
method or the elective constant interest method. Once made, the election to
include market discount in income currently applies to all new notes and other
obligations held by the U.S. Holder that are purchased at a market discount
during the taxable year for which the election is made, and all subsequent
taxable years of the U.S. Holder, unless the Internal Revenue Service (the
"IRS") consents to a revocation of the election. If an election is made to
include market discount in income currently, the basis of the new note in the
hands of the U.S. Holder will be increased by the market discount thereon as it
is included in income. In addition, the U.S. Holder may be required to defer,
until the maturity of the old note or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness incurred (or continued) in order to purchase or carry such old
note.
Unless a U.S. Holder who acquires a new note at a market discount elects
to include market discount in income currently, such U.S. Holder may be required
to defer deductions for any interest paid on indebtedness allocable to such new
notes in an amount not exceeding the deferred income until such income is
realized.
In addition, in President Clinton's Fiscal Year 2000 Budget which was
submitted to Congress on February 1, 1999, a proposal was submitted which would
require holders that use an accrual method of accounting to include market
discount in income (as ordinary interest income) as it accrues. Under this
proposal, the holder's yield for purposes of determining and accruing market
discount would be limited to the greater of (1) the original yield-to-maturity
of the debt instrument plus 5 percentage points, or (2) the applicable federal
rate at the time the holder acquired the debt instrument plus 5 percentage
points. As currently proposed, this proposal would be effective for debt
instruments acquired on or after the date of enactment. As of the date of this
Registration Statement, whether this proposal will be enacted is uncertain.
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Bond Premium
If a U.S. Holder purchases a note and immediately after the purchase the
adjusted basis of the note exceeds the sum of all amounts payable on the
instrument after the purchase date, other than qualified stated interest, the
note has "bond premium." The old notes were issued for an amount in excess of
their principal amount, and thus have "bond premium." A U.S. Holder may elect to
amortize such bond premium over the remaining term of such note or if it results
in a smaller amount of amortizable bond premium, until an earlier call date.
If bond premium is amortized, the amount of interest that must be included
in the U.S. Holder's income for each period ending on an interest payment date
or at the stated maturity, as the case may be, will be reduced by the portion of
premium allocable to such period based on the note's yield to maturity. If such
an election to amortize bond premium is not made, a U.S. Holder must include the
full amount of each interest payment in income in accordance with its regular
method of accounting and will receive a tax benefit from the premium only in
computing such U.S. Holder's gain or loss upon the sale or other disposition or
payment of the principal amount of the new note.
An election to amortize premium will apply to amortizable bond premium on
all notes and other bonds, the interest on which is includible in the U.S.
Holder's gross income, held at the beginning of the U.S. Holder's first taxable
year to which the election applies or that are thereafter acquired and may be
revoked only with the consent of the IRS.
Sale, Exchange or Redemption of the new notes
Upon the disposition of a new note by sale, exchange or redemption, a U.S.
Holder will generally recognize gain or loss equal to the difference between the
amount realized on the disposition, other than amounts attributable to accrued
interest not yet taken into income which will be taxed as ordinary income, and
the U.S. Holder's tax basis in the new note. A U.S. Holder's tax basis in a new
note generally will equal the cost of the new note to the U.S. Holder increased
by amounts includible in income as market discount, if the U.S. Holder elects to
include market discount on a current basis, and reduced by any bond premium
amortized by any U.S. Holder.
Assuming the new note is held as a capital asset, such gain or loss,
except to the extent that the market discount rules otherwise provide, will
generally constitute capital gain or loss and will be long-term capital gain,
which is taxed, in the case of non-corporate taxpayers, at a maximum rate of
20%, or loss if the U.S. Holder has held such new note for longer than 12
months.
Backup Withholding and Information Reporting
Under the Code, a U.S. Holder of a new note may be subject, under certain
circumstances, to information reporting and/or backup withholding at a 31% rate
with respect to cash payments in respect of interest on, or the gross proceeds
from disposition of, a new note. This withholding applies only if a U.S. Holder:
o fails to furnish its social security or other taxpayer
identification number ("TIN") within a reasonable time after a
request therefor;
o furnishes an incorrect TIN;
o fails to report interest or dividends properly; or
o fails, under certain circumstances, to provide a certified
statement, signed under penalty of perjury, that the TIN provided
is its correct number and that it is not subject to backup
withholding.
Any amount withheld from a payment to a U.S. Holder under the backup
withholding rules is allowable as a credit, and may entitle such holder to a
refund, against such Holder's U.S. federal income tax liability, provided that
the required information is furnished to the IRS. Certain persons are exempt
from backup withholding, including
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corporations and financial institutions. Holders of new notes should consult
their tax advisors as to their qualification for exemption from withholding and
the procedure for obtaining such exemption.
Non-U.S. Holders
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a new note that is not a U.S. Holder (a
"Non-U.S. Holder").
This discussion does not address all aspects of U.S. federal income
taxation that may be relevant to the purchase, ownership or disposition of the
new notes by any particular Non-U.S. Holder in light of such Holder's personal
circumstances, including holding the new notes through a partnership. For
example, persons who are partners in foreign partnerships or beneficiaries of
foreign trusts or estates and who are subject to U.S. federal income tax because
of their own status, such as U.S. residence or foreign persons engaged in a
trade or business in the United States, may be subject to U.S. federal income
tax even though the entity is not subject to income tax on disposition of its
new note.
For purposes of the following discussion, interest and gain on the sale,
exchange or other disposition of the new note will be considered "U.S. trade or
business income" if such income or gain is effectively connected with the
conduct of a U.S. trade or business, or in the case of an applicable income tax
treaty between the United States and the country of which the Holder is a
qualified resident, attributable to a U.S. permanent establishment (or to a
fixed base) in the United States.
Stated Interest
Generally, any interest paid to a Non-U.S. Holder of a new note that is
not U.S. trade or business income will not be subject to U.S. federal income tax
if the interest qualifies as "portfolio interest." Interest on the new notes
will qualify as portfolio interest if:
o the Non-U.S. Holder does not actually or constructively own 10% or
more of the total voting power of United Industries corporation,
and is not a "controlled foreign corporation" with respect to
which either of the issuers is a "related person" within the
meaning of Section 881(c)(3)(C) of the Code; and
o the beneficial owner, under penalties of perjury, certifies that
the beneficial owner is not a U.S. person and such certificate
provides the beneficial owner's name and address and such
beneficial owner files the requisite withholding form.
The gross amount of payments to a Non-U.S. Holder of interest that do not
qualify for the portfolio interest exception and that are not U.S. trade or
business income will be subject to U.S. withholding tax at the rate of 30%,
unless a U.S. income tax treaty applies to reduce or eliminate withholding. U.S.
trade or business income will be taxed at regular U.S. federal income tax rates
rather than the 30% gross rate. To claim the benefit of a tax treaty or to claim
exemption from withholding because the income is U.S. trade or business income,
the Non-U.S. Holder must provide a properly executed Form 1001 or 4224, or such
successor forms as the IRS designates, as applicable, prior to payment of
interest. These forms must be periodically updated. Under regulations effective
beginning after December 31, 1999, the Forms 1001 and 4224 will be replaced by
Form W-8, and a Non-U.S. Holder who is claiming the benefits of a tax treaty may
be required to obtain a U.S. TIN and to provide certain documentary evidence
issued by foreign governmental authorities to prove residence in the foreign
country.
Sale, Exchange or Redemption of Notes
Subject to the discussion concerning backup withholding, any gain realized
by a Non-U.S. Holder on the sale, exchange or redemption of a new note generally
will not be subject to U.S. federal income tax unless such gain is U.S. trade or
business income, or, subject to certain exceptions, the Non-U.S. Holder is an
individual who holds the new note as a capital asset and is present in the
United States for 183 days or more in the taxable year of the disposition.
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Information Reporting and Backup Withholding
The issuers must report annually to the IRS and to each Non-U.S. Holder
any interest that is subject to U.S. withholding tax or that is exempt from
withholding pursuant to a tax treaty or the portfolio interest exception. Copies
of these information returns may also be made available under the provisions of
a specific treaty or agreement to the tax authorities of the country in which
the Non-U.S. Holder resides.
Backup withholding and information reporting will not apply to payments of
principal on the new notes by the issuers to a Non-U.S. Holder, if the Holder
certifies as to its non-U.S. status under penalties of perjury or otherwise
establishes an exemption, provided that neither the issuers nor their paying
agent has actual knowledge that the Holder is a U.S. Holder or that the
conditions of any other exemption are not, in fact, satisfied.
The payment of the proceeds from the disposition of notes to or through
the U.S. office of any broker, U.S. or foreign, will be subject to information
reporting and possible backup withholding unless the owner certifies as to its
non-U.S. status under penalties of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. Holder or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a new
note to or through a non-U.S. office of a U.S. broker that is not a "U.S.
related person" will not be subject to information reporting or backup
withholding. For this purpose, a "U.S. related person" is a "controlled foreign
corporation" for U.S. federal income tax purposes or a foreign person 50% or
more of whose gross income from all sources for the three-year period ending
with the close of its taxable year preceding the payment, or for such part of
the period that the broker has been in existence, is derived from activities
that are effectively connected with the conduct of a U.S. trade or business.
In the case of the payment of proceeds from the disposition of new notes
to or through a non-U.S. office of a broker that is either a U.S. person or a
U.S. related person, the regulations require information reporting on the
payment unless the broker has documentary evidence in its files that the owner
is a Non-U.S. Holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a broker
that is a U.S. person or a U.S. related person, absent actual knowledge that the
payee is a U.S. Holder.
Any amounts withheld under the backup withholding rules from a payment to
a Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
-107-
<PAGE>
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives new 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 new 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 new notes received
in exchange for new notes where such new notes were acquired as a result of
market-making activities or other trading activities. We have agreed that for a
period of 180 days after the expiration date, we will make this prospectus, as
amended or supplemented, available to any Participating Broker-Dealer for use in
connection with any such resale.
We will not receive any proceeds from any sales of the new notes by
Participating Broker Dealers. new 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 new 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 new notes.
Any Participating Broker-Dealer that resells the new 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 new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of new 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, we 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.
LEGAL MATTERS
Certain legal matters in connection with the offering and the sale of the
notes will be passed upon for us by Kirkland & Ellis, Chicago, Illinois.
INDEPENDENT AUDITORS
Our financial statements as of December 31, 1998, and for the year ended
December 31, 1998, included in this prospectus have been audited by
PricewaterhouseCoopers LLP, independent public accountants, as stated in their
report appearing herein. Our financial statements as of December 31, 1996 and
1997, and for each of the years ended December 31, 1996 and 1997, included in
this prospectus have been audited by Rubin, Brown, Gornstein & Co., LLP,
independent public accountants, as stated in their report appearing herein.
AVAILABLE INFORMATION
We are not currently subject to the periodic reporting and other
informational requirements of the Securities Exchange Act of 1934. We have
agreed that, whether or not we are required to do so by the rules and
regulations of the Securities Exchange Commission, for so long as any of the
notes remain outstanding, we will furnish to the holders of the notes and file
with the Securities Exchange Commission, unless the Securities Exchange
Commission will not accept such a filing: (a) 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 we were 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 our certified independent accountants and (b) all reports that would
be required to be filed with the Commission on Form 8-K if we were required to
file such reports.
-108-
<PAGE>
FORWARD-LOOKING STATEMENTS
We make forward-looking statements throughout this prospectus.
Whenever you read a statement that is not simply a statement of historical fact,
such as when we describe what we believe, expect or anticipate will occur, and
other similar statements, you must remember that our expectations may not be
correct, even though we believe they are reasonable. We do not guarantee that
the transactions and events described in this prospectus will happen as
described, or that they will happen at all. You should read this prospectus
completely and with the understanding that actual future results may be
materially different from what we expect. We will not update these forward-
looking statements, even though our situation will change in the future.
-109-
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
-110-
<PAGE>
UNITED INDUSTRIES CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants--PricewaterhouseCoopers LLP...................... F-2
Report of Independent Auditors--Rubin, Brown, Gornstein & Co. LLP.................. F-3
Balance Sheets..................................................................... F-4
Statements of Income............................................................... F-5
Statements of Stockholders' Equity................................................. F-6
Statements of Cash Flows........................................................... F-7
Notes to Financial Statements...................................................... F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
United Industries Corporation
St. Louis, Missouri
In our opinion, the accompanying balance sheet of United Industries
Corporation and the related statements of income, stockholders' equity and cash
flows present fairly, in all material respects, the financial position of United
Industries Corporation at December 31, 1998, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
United's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above. The financial statements of
United Industries Corporation for the year ended December 31, 1997 and December
31, 1996 were audited by other independent accountants whose report dated
February 25, 1998 expressed an unqualified opinion on those statements.
/s/ PricewaterhouseCoopers LLP
St. Louis, Missouri
February 24, 1999
F-2
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
United Industries Corporation
St. Louis, Missouri
We have audited the accompanying balance sheet of United Industries
Corporation, an S Corporation, as of December 31, 1997 and 1996 and the related
statements of income, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of United'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 United Industries
Corporation as of December 31, 1997 and 1996, and the results of its operations
and cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Rubin, Brown, Gornstein & Co. LLP
February 25, 1998
F-3
<PAGE>
UNITED INDUSTRIES CORPORATION
BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
---------------------
1997 1998
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ..................................................... $ 316 $ --
Accounts receivable (less allowance for doubtful accounts of $60 at
December 31, 1997 and 1998) ......................................... 17,526 17,650
Inventories ................................................................... 41,637 41,444
Prepaid expenses............................................................... 1,696 2,172
------- -------
Total current assets ................................................ 61,175 61,266
Equipment and leasehold improvements, net ................................................ 20,022 20,156
Amounts due from affiliated company ...................................................... 3,428 --
Other assets ............................................................................. 7,018 6,948
Investment in discontinued operations..................................................... 5,798 5,791
------- -------
Total assets......................................................... $97,441 $94,161
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt .......................................... $ 1,050 $ 929
Accounts payable .............................................................. 22,090 18,519
Accrued expenses .............................................................. 6,723 12,705
------- -------
Total current liabilities ........................................... 29,863 32,153
Long-term debt ........................................................................... 2,947 3,716
Other liabilities ........................................................................ 182 35
------- -------
Total liabilities ................................................... 32,992 35,904
Stockholders' equity:
Common stock .................................................................. 2 2
Additional paid-in capital .................................................... 972 972
Retained earnings ............................................................. 70,798 70,193
Treasury stock ................................................................ (7,323) (12,910)
------- -------
Total stockholders' equity .......................................... 64,449 58,257
------- -------
Total liabilities and stockholders' equity .......................... $97,441 $94,161
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
UNITED INDUSTRIES CORPORATION
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Net sales....................................................................... $ 199,495 $ 242,601 $ 282,676
Operating costs and expenses:
Cost of goods sold................................................... 106,640 128,049 140,445
Advertising and promotion expenses................................... 22,804 25,547 31,719
Selling, general and administrative expenses......................... 46,276 52,092 61,066
Non-recurring litigation charges..................................... -- -- 2,321
---------- ---------- ----------
Total operating costs and expenses......................... 175,720 205,688 235,551
---------- ---------- ----------
Operating income................................................................ 23,775 36,913 47,125
Interest expense................................................................ 1,502 1,267 1,106
---------- ---------- ----------
Income before provision for income taxes and discontinued
operations........................................................... 22,273 35,646 46,019
Income tax expense.............................................................. 447 726 992
---------- ---------- ----------
Income from continuing operations............................................... 21,826 34,920 45,027
Income from discontinued operations, net of tax................................. 2,325 1,923 1,714
---------- ---------- ----------
Net income...................................................................... $ 24,151 $ 36,843 $ 46,741
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
UNITED INDUSTRIES CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
Accumulated Class B Non-Voting
Other Common Stock Common Stock
Comprehen- ------------------- ----------------- Additional
sive Paid-In Retained
Income Shares Amount Shares Amount Capital Earnings
----------- -------- -------- -------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance-January 1, 1996 ...... $-- 1,000 $1 1,000 $1 $913 $45,817
Net income ................... 24,151
Other comprehensive income ...
Distributors paid ............ (17,005)
Treasury stock reissued ...... 59
Treasury stock purchased .....
--------- ------- ----- ------ ----- -------- --------
Balance-December 31, 1996 .... -- 1,000 1 1,000 1 972 52,963
--------- ------- ----- ------ ----- -------- --------
Balance-January 1, 1997 ...... -- 1,000 1 1,000 1 972 52,963
Net income ................... 36,843
Other comprehensive income ...
Distributions paid ........... (19,008)
Treasury stock cost adjustment
--------- ------- ----- ------ ----- -------- --------
Balance-December 31, 1997 .... -- 1,000 1 1,000 1 972 70,798
--------- ------- ----- ------ ----- -------- --------
Balance-January 1, 1998 ...... -- 1,000 1 1,000 1 972 70,798
Net income ................... 46,741
Other comprehensive income ...
Distributions paid ........... (47,346)
Treasury stock purchased .....
Treasury stock cost adjustment
--------- ------- ----- ------ ----- -------- --------
Balance-December 31, 1998 .... $-- 1,000 $1 1,000 $1 $972 $70,193
========= ======= ===== ====== ===== ======== ========
<CAPTION>
Notes
Treasury Stock Receivable- Total
------------------- Treasury Stock-
Stock holders'
Shares Amount Reissued Equity
-------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Balance-January 1, 1996 ...... (135) (169) (699) 45,864
Net income ................... 24,151
Other comprehensive income ...
Distributors paid ............ (17,005)
Treasury stock reissued ...... 43 53 (112)
Treasury stock purchased ..... (308) (6,993) 811 (6,182)
------ ------ ------- --------
Balance-December 31, 1996 .... (400) (7,109) -- 46,828
------ ------ ------- --------
Balance-January 1, 1997 ...... (400) (7,109) -- 46,828
Net income ................... 36,843
Other comprehensive income ...
Distributions paid ........... (19,008)
Treasury stock cost adjustment (214) (214)
------ -------- ------- --------
Balance-December 31, 1997 .... (400) (7,323) -- 64,449
------ -------- ------- --------
Balance-January 1, 1998 ...... (400) (7,323) -- 64,449
Net income ................... 46,741
Other comprehensive income ...
Distributions paid ........... (47,346)
Treasury stock purchased ..... (120) (5,818) (5,818)
Treasury stock cost adjustment 231 231
------ -------- ------- --------
Balance-December 31, 1998 .... $(520) $(12,910) $-- $58,257
====== ======== ======= ========
</TABLE>
F-6
<PAGE>
UNITED INDUSTRIES CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................................................. $24,151 $36,843 $46,741
Adjustments to reconcile net income to net cash provided by operating
activities:
Income from discontinued operations....................................................... (2,325) (1,923) (1,714)
Depreciation and amortization............................................................. 3,561 3,597 3,838
Loss on sale or disposal of equipment..................................................... 1,411 97 31
Changes in assets and liabilities:
(Increase) in accounts receivable....................................................... (2,560) (5,410) (124)
Decrease (increase) in inventories...................................................... 2,121 (6,608) 193
Decrease (increase) in prepaid expenses................................................. 352 92 (476)
Increase in accounts payable and accrued expenses....................................... 967 8,565 2,411
Other, net............................................................................... 63 (117) (137)
------- ------- -------
Cash flow from continuing operations........................................................ 27,741 35,136 50,763
Cash flow from discontinued operations...................................................... 3,155 1,896 1,858
------- ------- -------
Net cash provided by operating activities............................................. 30,896 37,032 52,621
Cash flows from investing activities:
Payments for acquisition of equipment and leasehold improvements, net..................... (6,384) (5,138) (3,628)
------- ------- -------
Cash used by investing activities--continuing operations..................................... (6,384) (5,138) (3,628)
Cash used by investing activities--discontinued operations................................... (279) (422) (221)
------- ------- -------
Net cash used in investing activities................................................. (6,663) (5,560) (3,849)
Cash flows from financing activities:
Decrease in line of credit, net........................................................... (2,050) (9,250) --
Payments on long-term debt................................................................ (4,900) (927) (3,997)
Purchase of treasury stock................................................................ (1,437) -- (1,173)
Net advances from (to) affiliated company................................................. 1,747 (3,144) 3,428
Distributions paid........................................................................ (17,005) (19,008) (47,346)
------- ------- -------
Net cash used in financing activities................................................. (23,645) (32,329) (49,088)
Net increase (decrease) in cash and cash equivalents........................................ 588 (857) (316)
Cash and cash equivalents--beginning of year................................................ 585 1,173 316
------- ------- -------
Cash and cash equivalents--end of year....................................................... $ 1,173 $ 316 $ --
======= ======= =======
Supplemental disclosure of cash flow information:
Interest paid............................................................................. $ 1,401 $ 1,308 $ 1,584
Income taxes paid......................................................................... $ 465 $ 612 $ 567
Noncash financing activity:
Treasury stock purchased for stockholder notes........................................... $ 4,745 $ -- $ 4,645
Revaluation of treasury stock............................................................ $ -- $ 214 $ (231)
Forgiveness of shareholder note.......................................................... $ 811 $ -- $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
1. Summary of significant accounting policies
Estimates and assumptions
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, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
Cash and cash equivalents
United considers all highly liquid investments purchased with a maturity
of three months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market, with cost being
determined using the first-in, first-out method. Cost includes raw materials,
direct labor and overhead.
Equipment and leasehold improvements
Expenditures for equipment and leasehold improvements and those which
substantially increase the useful lives of equipment are capitalized.
Maintenance, repairs and minor renewals are expensed as incurred. When equipment
is retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the accounts and gains or losses on the
dispositions are reflected in earnings. Depreciation is provided on the
straight-line basis by charges to costs or expenses at rates based on the
estimated useful lives of the assets. Machinery and equipment are depreciated
over periods ranging from three to twelve years. Office furniture and equipment
are depreciated over periods ranging from five to ten years. Automobiles and
trucks are depreciated over periods ranging from three to seven years. Leasehold
improvements are amortized over periods ranging from five to thirty-nine years.
Subsequent to acquisition, United continually evaluates whether later events and
circumstances have occurred that indicate the remaining useful life of equipment
and leasehold improvements may warrant revision or that the remaining balance of
equipment and leasehold improvements may not be recoverable. The measurement of
possible impairment is based on the ability to recover the balance of equipment
and leasehold improvements from expected future operating cash flows on an
undiscounted basis. In the opinion of management, no such impairment existed as
of December 31, 1997 and 1998.
Goodwill
Goodwill is included in other assets and represents the excess of cost
over the net tangible assets of acquired businesses. Goodwill is amortized over
40 years. Subsequent to acquisition, United continually evaluates whether later
events and circumstances have occurred that indicate the remaining useful life
of an intangible asset may warrant revision or that the remaining balance of an
intangible asset may not be recoverable. The measurement of possible impairment
is based on the ability to recover the balance of intangible assets from
expected future operating cash flows on an undiscounted basis. In the opinion of
management, no such impairment existed as of December 31, 1997 and 1998.
F-8
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
Advertising and promotion expenses
The Company advertises and promotes its products through national and
regional media. Products are also advertised and promoted through cooperative
programs with retailers. The Company expenses advertising and promotion costs as
incurred, although costs incurred during interim periods are generally expensed
ratably in relation to revenues.
Research and development
Research and development costs are expensed as incurred and approximated
$427, $592 and $776 for 1996, 1997 and 1998, respectively.
Revenue recognition
The Company recognizes revenue upon shipment of its products. Sales are
net of discounts and allowances.
Comprehensive income
Comprehensive income is defined as the total of net income and all other
non-owner changes in equity (see the accompanying statements of stockholders'
equity). The Company has no other items that affect comprehensive income other
than net income.
Earnings per share
In accordance with generally accepted accounting principles, earnings per
share information is not presented since the Company does not have publicly held
common stock.
Segment information
In 1998, United adopted Statement of Financial Accounting Standards (FAS)
131, Disclosure about Segments of an Enterprise and Related Information. FAS 131
supersedes FAS 14, Financial Reporting for Segments of a Business Enterprise,
replacing the "industry segment" approach with the "management" approach. The
management approach designates the internal organization that is used by
management for making operating decisions and assessing performance as the
source of United's reportable segments. FAS 131 also requires disclosures about
products and services, geographic areas and major customers. The adoption of FAS
131 did not affect results of operations or financial position but did affect
the disclosure of segment information (see Note 17--Segment information).
2. Subsequent event--Recapitalization of United
On January 20, 1999, pursuant to a recapitalization agreement with UIC
Holdings, L.L.C., which is owned by Thomas H. Lee Equity Fund IV, L.P. ("THL
Fund IV" and, together with its affiliates, the "THL Parties"), the Company was
recapitalized in a transaction in which: (a) UIC Holdings, L.L.C. purchased
common stock from the Company's stockholders for approximately $254.7 million;
(b) the Company's senior managers purchased common stock from the Company's
existing stockholders for approximately $5.7 million; and (c) the Company used
the net proceeds of a senior subordinated facility (the "senior subordinated
facility") and borrowings under a senior credit facility (the "senior credit
facility") to redeem a portion of the common stock held by the Company's
existing stockholders. Following the recapitalization, UIC Holdings, L.L.C. owns
approximately 91.9% of the Company's issued and
F-9
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
outstanding common stock, the existing stockholders retain approximately 6.0%
and the Company's senior managers own approximately 2.1%. The total transaction
value of the recapitalization was approximately $652.0 million, including
related fees and expenses, and the implied total equity value following the
recapitalization was approximately $277.0 million. The total consideration paid
to redeem the Company's common stock is subject to both upward and downward
adjustments based on the Company's working capital on the date of the
recapitalization.
The recapitalization was funded by: (a) $225.0 million of borrowings under
a senior credit facility; (b) $150.0 million of borrowings under a senior
subordinated facility; (c) the approximate $254.7 million equity investment by
the THL Parties through UIC Holdings, L.L.C.; (d) the approximate $5.7 million
equity investment by the Company's senior management team; and (e) equity
retained by the Company's existing stockholders having an implied fair market
value of approximately $16.6 million.
The recapitalization will be accounted for as a leveraged recapitalization
which will have no impact on United's historical basis of assets and liabilities
for financial reporting purposes. The effects of the recapitalization have not
been included in these financial statements.
3. Discontinued operations
In connection with the recapitalization of United as described in Note 2
above, United formed a wholly-owned subsidiary DW Wej-it, Inc., a Delaware
corporation ("DW"). All of United's assets and liabilities related to United's
business of manufacturing and marketing construction anchoring fasteners and
providing contract manufacturing services in metals fabrication (which is
collectively referred to as the "Metals Business") were contributed to DW.
Effective January 1, 1999, United distributed all of the shares of capital stock
of DW owned by United to its shareholders.
The Metals Business is accounted for as a discontinued operation in the
accompanying financial statements. The Investment in discontinued operations at
December 31, 1998 and 1997 is primarily comprised of cash, accounts receivable,
inventory, fixed assets, accounts payable and accrued expenses. Operating
results for the Metals Business have been included in the Statements of Income
for 1996, 1997 and 1998.
Results for discontinued operations are as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
-------------------------------------------
1996 1997 1998
--------- --------- --------
<S> <C> <C> <C>
Net sales $ 18,242 $ 18,757 $ 18,038
Income before income taxes 2,373 1,963 1,751
Income tax expense 48 40 37
Income from discontinued operations 2,325 1,923 1,714
</TABLE>
4. Common stock and stock split
The Company's articles of incorporation previously authorized 20,000
shares of $1.00 par value Class A Voting shares and 20,000 shares of $1.00 par
value Class B Non-Voting shares. At December 31, 1998, 740 Class A Voting shares
and 740 Class B Non-Voting shares were outstanding. At December 31, 1996 and
1997, 800 Class A Voting shares and 800 Class B Non-Voting shares were
outstanding.
F-10
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
On January 20, 1999, United's Board of Directors declared a 83,378.37838
to 1 stock split and increased United's authorized capital to 65 million shares,
of which 32.5 million have been designated as Class A Voting Common Stock and
32.5 million have been designated as Class B Non-Voting Common Stock. As of
January 20, 1999, there were 27.7 million shares of Class A Voting Common Stock
outstanding and 27.7 million shares of Class B Non-Voting Common Stock
outstanding. In conjunction with the stock split, United's board of directors
reduced the par value of both the Class A Voting shares and Class B Non-Voting
shares to $0.01 per share. The effects of the stock split and changes to the
authorized capital of United have not been reflected in the accompanying
financial statements.
5. Inventories
Inventories at December 31, are as follows:
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Raw materials............................................... $ 8,253 $ 7,748
Finished good............................................... 33,384 33,696
-------- --------
$ 41,637 $ 41,444
======== ========
</TABLE>
6. Equipment and leasehold improvements
Equipment and leasehold improvements at December 31, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Machinery and equipment...................................... $ 27,379 $ 30,243
Office furniture and equipment............................... 3,065 3,316
Automobiles and trucks....................................... 322 322
Leasehold improvements....................................... 6,401 6,793
-------- --------
37,167 40,674
Less: Accumulated depreciation and amortization............. 17,145 20,518
-------- --------
$ 20,022 $ 20,156
======== ========
</TABLE>
Depreciation charged against income approximated to $3,324, $3,377 and
$3,624 in 1996, 1997 and 1998, respectively.
F-11
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
7. Other assets
Other assets at December 31, are as follows:
<TABLE>
<CAPTION>
1997 1998
------- -------
<S> <C> <C>
Goodwill.......................................... $ 7,988 $ 7,988
Accumulated amortization.......................... (1,530) (1,744)
------- -------
6,458 6,244
Other............................................. 560 704
------- -------
$ 7,018 $ 6,948
======= =======
</TABLE>
Amortization charged against income for goodwill approximated $237, $220
and $214 in 1996, 1997 and 1998, respectively.
8. Accrued expenses
Accrued expenses at December 31 are as follows:
<TABLE>
<CAPTION>
1997 1998
------- ---------
<S> <C> <C>
Cash overdraft $ -- $ 3,148
Litigation accrual -- 2,321
Other 6,723 7,236
------- --------
$ 6,723 $ 12,705
======= ========
</TABLE>
9. Long-term debt and credit facilities
Long-term debt at December 31, consists of:
<TABLE>
<CAPTION>
1997 1998
-------- ---------
<S> <C> <C>
Former stockholder, unsecured, payable in annual principal installments of $982 plus interest
at the six-month U.S. Treasury Bill rate in effect on the first day of each annual
period......................................................................................... $ 3,997 $ --
Former stockholders, unsecured, payable in annual principal installments of $929 plus
interest at the six-month U.S. Treasury Bill rate in effect on the first day of each
annual period.................................................................................. -- 4,645
Less: current maturities............................................................................ (1,050) (929)
-------- --------
$ 2,947 $ 3,716
======== ========
</TABLE>
The long-term debt outstanding at December 31, 1998 was repaid in
conjunction with the recapitalization on January 20, 1999. The fair value of
long-term debt approximates its carrying value.
Prior to the recapitalization, United had available an unsecured seasonal
working capital line of credit with a bank. The agreement provided United with a
maximum $80,000 line of credit. Interest on outstanding borrowings were payable
monthly at a rate not to exceed the bank's LIBOR rate plus 0.75% or the bank's
prime rate less 1.75%. No
F-12
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
borrowings were outstanding at December 31, 1998. This agreement was canceled in
conjunction with the recapitalization.
In conjunction with the recapitalization on January 20, 1999 as discussed
in Note 2, United borrowed $225,000 under the senior credit facility and
$150,000 under the senior subordinated facility.
The senior credit facility was provided by NationsBank, N.A., Morgan
Stanley Senior Funding, Inc. and CIBC Inc. and consists of (a) a $110,000
revolving credit facility (the "revolving credit facility"), under which no
borrowings were outstanding at the closing of the recapitalization; (b) a
$75,000 term loan facility ("Term Loan A"); and (c) a $150,000 term loan
facility ("Term Loan B"). The revolving credit facility and the Term Loan A
mature six years from the closing date of the senior credit facility, and the
Term Loan B matures seven years from the closing date of the senior credit
facility. The revolving credit facility is subject to a clean-down period during
which the aggregate amount outstanding under the revolving credit facility shall
not exceed $10.0 million for 30 consecutive days occurring during the period
between August 1 and November 30 in each calendar year.
The principal amount of the Term Loan A is to be repaid in twenty-three
consecutive quarterly installments commencing June 30, 1999 and a final
installment due January 20, 2005, with $10,000 to be payable in each of the
first four years and $17,500 to be repaid in each of the last two years. The
principal amount of the Term Loan B is to be repaid in twenty-seven consecutive
quarterly installments commencing June 30, 1999 and a final installment due
January 20, 2006, with $1,500 to be payable in each of the first six years and
$141,000 to be payable in year seven.
Interest on the revolving credit facility, Term Loan A and Term Loan B
ranges from 200 to 325 basis points above LIBOR depending on certain financial
ratios. Unused commitments under the revolving credit facility are subject to a
50 basis point annual commitment fee.
Obligations under the senior credit facility are secured by substantially
all of the properties and assets of United and substantially all of the
properties and assets of United's future domestic subsidiaries.
The senior subordinated facility was provided by CIBC Oppenheimer Corp.
and NationsBanc Montgomery Securities LLC. The notes mature in 2009 and bear
interest at 10.5% per annum, which is payable semi-annually in arrears on July
15 and January 15, commencing in 1999. The interest rate on the notes is subject
to increase under certain circumstances.
Aggregate maturities under the senior credit facility (excluding the
revolving credit facility) and the senior subordinated facility are as follows:
<TABLE>
<S> <C>
1999............................................................. $ 8,625
2000............................................................. 11,500
2001............................................................. 11,500
2002............................................................. 11,500
2003............................................................. 17,125
Thereafter....................................................... 314,750
----------
$ 375,000
==========
</TABLE>
F-13
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
10. Treasury stock reissued/purchased
On January 1, 1996, United reissued 42.56 shares of treasury stock in
exchange for a note for $112 from a stockholder. The note bore interest at
8.17%, payable in January of each year. The difference between the reissue price
and the cost of the treasury stock was credited to additional paid-in capital.
On August 15, 1996, United purchased all the outstanding shares covered by
the note discussed above and by previous transactions and related notes. As part
of this treasury stock purchase, the outstanding notes, along with accrued
interest, were credited against the purchase price of the stock.
During 1997, the cost of the treasury stock purchased in 1996 was
revalued, resulting in an increase of $214 in treasury stock and long-term debt.
On January 30, 1998, United purchased 120 shares, which represented all of
the outstanding common stock of three stockholders for cash of $1,173 and
shareholder notes totaling $4,645. In 1998, the treasury stock was revalued,
resulting in a decrease of $231 in treasury stock.
11. Income taxes
The Company had elected "S" corporation status under provisions of the
Internal Revenue Code, and similar provisions of Missouri tax law. As such,
United was not liable for federal or Missouri state income taxes, but rather the
stockholders include their distributive share of the taxable income of United on
their respective income tax returns. The Company was under a contractual
obligation to its stockholders to distribute a percentage of net income equal to
110% of the highest personal income tax rates to provide the stockholders with
funds to make their personal quarterly estimated income tax payments.
The provision for income taxes consists of certain state income taxes
computed at statutory rates in effect.
In conjunction with the recapitalization, United converted to a "C"
corporation and will be subject to federal income tax beginning in 1999.
12. Deferred compensation plans
The Company has a 401(k) savings plan which covers substantially all of
its employees with six months or more continuous service. The 401(k) feature
allows participants to defer a portion of eligible compensation on a
tax-deferred basis. The plan provides for United to match 50% of the voluntary
contribution up to 6% of gross earnings. The matching amount increases to 75%
after ten years of service. The matching contribution amounted to $352, $347 and
$239 for 1996, 1997 and 1998, respectively.
13. Transactions with related parties
The Company occasionally advanced funds or received funds from a company
with common ownership to United. The advances are unsecured and bear interest at
United's borrowing rate. The amounts due from the affiliated company bore
interest at 10.5% per year and were repaid in 1998.
Effective January 1, 1996, United entered into a services agreement with
an affiliated company to provide executive, administrative, acquisition,
bookkeeping, clerical and other services. The fees for these services are to be
F-14
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
determined by mutual agreement within 120 days of year end for the prior year.
The services agreement will remain in place until terminated by either party.
Fees charged under this service agreement were $768, $0 and $0 for 1996, 1997
and 1998, respectively. This agreement was canceled in connection with the
recapitalization.
The Company has guaranteed the debt of an affiliated company. The
guaranteed debt amounted to approximately $5,528 and $4,833 at December 31, 1997
and 1998, respectively. The guarantee of this debt was terminated in connection
with the recapitalization.
See Note 15--Commitments--for a discussion of lease arrangements with a
related party.
14. Concentration of credit risks, exposures and financial instruments
Financial instruments which potentially subject United to concentration of
credit risk consist principally of trade accounts receivable. The Company is
heavily dependent on four customers for a substantial majority of its sales.
These four customers accounted for approximately 64% and 68% of net sales for
1997 and 1998, respectively. At December 31, 1997 and 1998, accounts receivable
from these four customers were 56% and 51%, respectively, of total accounts
receivable. (See Note 17--Segment information for sales to United's four largest
customers.)
The Company performs ongoing credit evaluations of its customers'
financial conditions and generally does not require collateral from its
customers. The Company maintains allowances for potential credit losses, and
such losses have generally been within management's expectations.
Through December 31, 1998, United did not have any significant amounts of
debt outstanding that was sensitive to changes in interest rates. The Company
does not use any derivative financial instruments to hedge its exposure to
interest rate changes. The Company does utilize various commodity and specialty
chemicals in its production process. The Company does not use derivative
commodity instruments to hedge its exposures to changes in commodity prices.
The carrying value of cash and short-term financial instruments
approximates fair value due to the short maturity of those instruments.
15. Commitments
The Company rents one of its facilities from an affiliated company under
an operating lease expiring December 31, 2000 with minimum annual rentals of
$138. The Company has three options to renew the lease for additional five-year
periods. Rent expense amounted to $138 in 1996, 1997 and 1998.
The Company leases the majority of its operating facilities from an
affiliated company under various operating leases expiring December 31, 1999 at
minimum annual rentals of approximately $2,637. The leases also provide that on
an annual basis the monthly rent is adjusted by one-half of the annual change in
the Consumer Price Index percentage. The Company has options to renew the leases
on a year-to-year basis for an additional ten years, beginning January 1, 2000.
The Company also leased an aircraft from this company for $96 per month through
December 1998.
The Company leases a portion of its operating facilities from the same
company under a sublease agreement expiring on December 31, 2005 with minimum
annual rentals ranging from $140 to $368. The Company has two, five-year options
to renew the lease, beginning January 1, 2006. Total rent expense to this
affiliated company amounted to $3,202, $3,528 and $3,575 for 1996, 1997 and
1998, respectively.
F-15
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
The Company is also obligated under other operating leases for use of
warehouse space. The leases expire at various dates through January 31, 2001.
Three of the leases provide as many as three five-year options to renew. Total
rent expense under these lease agreements amounted to $1,233, $654 and $654 for
1996, 1997 and 1998, respectively.
Management believes that the terms and expenses associated with the
related party leases described above are similar to those negotiated by
unrelated parties at arm's length.
The future minimum rental commitments, required under noncancellable
operating leases, are as follows:
<TABLE>
<CAPTION>
Amount
--------------------------------
Year Affiliate Other Total
- ------ --------- ------ --------
<S> <C> <C> <C>
1999......................................... $ 2,514 $ 472 $ 2,986
2000......................................... 506 180 686
2001......................................... 416 -- 416
2002......................................... 416 -- 416
2003......................................... 416 -- 416
Thereafter................................... 832 -- 832
-------- ------ --------
$ 5,100 $ 652 $ 5,752
======== ====== ========
</TABLE>
16. Contingencies
In March 1998, a judgement was entered against United for a lawsuit filed
in 1992 by the spouse of a former employee claiming benefits from a
Company-owned key man life insurance policy. The Company is currently appealing
this judgment.
In October 1998, the FTC and several state attorneys general filed a suit
against United seeking to enjoin its advertising of Spectracide Terminate as "a
home defense system." The FTC and attorneys general alleged that United had made
deceptive and unsubstantiated claims regarding this product. In February 1999,
the Company negotiated a settlement agreement with the FTC which is currently
being circulated among the parties to the case for signatures, in which United
agrees to modify its advertising and to reimburse the other parties for certain
costs incurred.
Costs related to the two cases described above have been reflected as
non-recurring litigation charges in 1998.
The Company is involved in litigation and arbitration proceedings in the
normal course of business that assert product liability and other claims. The
Company is contesting all such claims. When it appears probable in management's
judgment that United will incur monetary damages or other costs in connection
with such claims and proceedings, and such costs can be reasonably estimated,
appropriate liabilities are recorded in the financial statements and charges are
made against earnings.
Management believes the possibility of a material adverse effect on
United's consolidated financial position, results of operations and cash flows
from the claims and proceedings described above is remote.
F-16
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
17. Segment information
The Company operates in one segment consisting of the manufacturing,
marketing and distribution of lawn and garden care and insect control products
to retail channels principally in the United States. (See Note 3--Discontinued
operations--for a discussion of the spin-off of the Metals Business.) The
Company's product lines include herbicides, household insecticides, insect
repellents and water-soluble fertilizers under a variety of brand names. The
product lines are as follows:
Value brands
o Spectracide--consumer lawn and garden pesticides;
o Hot Shot--household insecticides;
o Cutter--consumer insect repellents; and
o Peters--consumer water-soluble fertilizers.
Opening price point brands
o Real-Kill--opening price point brand at Home Depot;
o No-Pest--opening price point brand at Lowe's; and
o KRid and KGro--exclusive opening price point brand at Kmart.
The Company sells and distributes both its value and opening price point
brands to its four largest customers. Net sales to United's four largest
customers were as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
----------------------
1997 1998
---------- ---------
<S> <C> <C>
Customer A.................................................. 19% 26%
Customer B.................................................. 18% 17%
Customer C.................................................. 10% 14%
Customer D.................................................. 17% 11%
</TABLE>
No other customers represented more than 10% of 1997 or 1998 net sales.
F-17
<PAGE>
UNITED INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)
18. Unaudited quarterly financial information
<TABLE>
<CAPTION>
Year Ended December 31, 1998
-------------------------------------------------------------------
First Second Third Fourth Total
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales................................................... $ 82,295 $ 126,938 $ 47,952 $ 25,491 $ 282,676
Operating income............................................ 15,525 29,864 4,268 (2,532) 47,125
Income from continuing operations........................... 14,999 28,448 4,273 (2,693) 45,027
Income from discontinued operations, net of tax............. 420 534 424 336 1,714
Net income.................................................. 15,419 28,982 4,697 (2,357) 46,741
<CAPTION>
Year Ended December 31, 1997
-------------------------------------------------------------------
First Second Third Fourth Total
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales................................................... $ 83,133 $ 100,483 $ 40,187 $ 18,798 $ 242,601
Operating income............................................ 15,968 23,607 2,476 (5,138) 36,913
Income from continuing operations........................... 15,274 22,507 2,168 (5,029) 34,920
Income from discontinued operations, net of tax............. 534 577 436 376 1,923
Net income.................................................. 15,808 23,084 2,604 (4,653) 36,843
</TABLE>
F-18
<PAGE>
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F-19
<PAGE>
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F-20
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-21
<PAGE>
==========================================================================
We have not authorized any dealer, salesperson or other person to give any
information or represent anything to you other than the information contained in
this prospectus. You must not rely on unauthorized information or
representations.
This prospectus does not offer to sell or ask for offers to buy any of the
securities in any jurisdiction where it is unlawful, where the person making the
offer is not qualified to do so, or to any person who can not legally be offered
the securities. The information in this prospectus is current only as of the
date on its cover, and may change after that date. For any time after the cover
date of this prospectus, we do not represent that our affairs are the same as
described or that the information in this prospectus is correct -- nor do we
imply those things by delivering this prospectus or selling securities to you.
-------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary............................................ 1
Risk Factors................................................. 11
The Transactions............................................. 16
Use of Proceeds.............................................. 17
Capitalization............................................... 18
Unaudited Pro Forma Financial Statements..................... 19
Selected Historical Financial Data........................... 26
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 28
Business..................................................... 32
Management................................................... 43
Certain Transactions......................................... 47
Principal Stockholders....................................... 48
Description of Capital Stock................................. 49
Description of Our Senior Credit Facility.................... 50
Description of the New Notes................................. 52
Exchange Offer............................................... 93
Certain United States Federal Income Tax
Considerations......................................... 102
Plan of Distribution......................................... 108
Legal Matters................................................ 108
Independent Auditors......................................... 108
Available Information........................................ 108
Forward-looking Statements................................... 109
Index to Financial Statements................................ F-1
</TABLE>
================================================================================
$150,000,000
United Industries Corporation
[picture]
Offer to Exchange their 9-7/8% Series B
Registered Senior Subordinated Notes
due 2009 for any and all of their
outstanding 9-7/8% Series A Unregistered
Senior Subordinated Notes due 2009
-----------------------
Prospectus
-----------------------
, 1999
================================================================================
<PAGE>
PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
United 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, such as 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 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.
Article V of the By-laws of United ("Article V") provides, among other
things, that any person who, by reason of the fact he is a director or officer
of United, or is or was serving at the request of the United as a director,
officer of United, or is or was serving at the request of United as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, is or was a party, or is threatened to be made a
party, to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative, shall be indemnified
by United, provided he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of United, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. Such indemnification shall be provided against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in that with respect to an
action or suit by or in the right of United, such indemnification shall be only
against expenses, including attorneys' fees, and in such cases no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to United, unless, and only to the
extent that, the court in which the action or suit was brought determines, upon
application, that despite the adjudication of liability and in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper. To the extent that a
director, officer, employee or agent of United has been successful on the merits
or otherwise in defense of any such action, suit, or proceeding or in defense of
any claim, issue or mater therein, he shall be indemnified against expenses,
including attorneys' fees, actually and reasonably incurred by him in connection
with the action, suit or proceeding. Any other indemnification hereunder, unless
ordered by a court, is made by United only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth within Article V of United's bylaws. The determination is
made by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to the action, suit, or proceeding, or if such a
quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or by
the shareholders. The termination of any action, suit, or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption
<PAGE>
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of United, or, with
respect to any criminal action or proceeding, that he had reasonable cause to
believe that his conduct was unlawful.
Article V further provides that expenses, including attorneys' fees,
incurred in defending a civil or criminal action, suit or proceeding may be paid
by United in advance of the final disposition of the action, suit, or proceeding
as authorized by the Board of Directors in the specific case, upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount unless it ultimately determines that he is entitled to be
indemnified by United as authorized by Article V of United's bylaws.
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 United 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 United or is or was serving at the request of
United 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, or
arising out of his status as such, whether or not United would have the power to
indemnify such person against such liability under Article V.
Item 21. Exhibits and Financial Statement Schedules.
<TABLE>
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of the Company,
dated January 13, 1999.
3.2 Certificate of Amendment of the Company, dated January 20, 1999.
3.3 By-laws of the Company.
4.1 Securities Purchase Agreement, dated as of March 19, 1999, among
the Company, CIBC Oppenheimer Corp. and NationsBanc Montgomery
Securities LLC.
4.2 Indenture, dated as of March 24, 1999, between the Company and State
Street Bank and Trust Company as Trustee with respect to the 9-7/8%
Senior Subordinated Notes due 2009 (including the form of 9-7/8%
Senior Subordinated Notes).
4.3 Registration Rights Amendment, dated as of March 24, 1999, among
the Company, CIBC Oppenheimer Corp. and NationsBanc Montgomery
Securities LLC.
5.1 Opinion of Kirkland & Ellis.*
10.1 United Industries Corporation Deferred Compensation Plan.
10.2 Management Agreement, dated as of January 20, 1999, between
the Company and Stephen R. Brian.+
10.3 Management Agreement, dated as of January 20, 1999, between
the Company and Richard A. Bender.+
10.4 Management Agreement, dated as of January 20, 1999, between the
Company and William P. Johnson.+
10.5 Management Agreement, dated as of January 20, 1999, between the
Company and Daniel J. Johnston.+
10.6 Consulting Agreement, dated as of January 20, 1999, between the
Company and David A. Jones.
10.7 United Industries Corporation 1999 Stock Option Plan.
10.8 Stock Option Agreement, dated as of January 20, 1999, between
the Company and Stephen R. Brian.+
<PAGE>
<S> <C>
10.9 Stock Option Agreement, dated as of January 20, 1999, between the
Company and Richard A. Bender.+
10.10 Stock Option Agreement, dated as of January 20, 1999, between the
Company and William P. Johnson.+
10.11 Stock Option Agreement, dated as of January 20, 1999, between the
Company and Daniel J. Johnston.+
10.12 Stock Option Agreement, dated as of January 20, 1999, between the
Company and David A. Jones.+
10.13 Stockholders Agreement, dated as of January 20, 1999, among the
Company and the Stockholders (as defined therein).+
10.14 Professional Services Agreement, dated as of January 20, 1999,
between THL Equity Advisors IV, L.L.C., Thomas H. Lee Capital,
L.L.C. and the Company.
10.15 Amended and Restated Credit Agreement dated as of March 24, 1999
among the Company, NationsBanc Montgomery Securities LLC, Morgan
Stanley Senior Funding, Inc., Canadian Imperial Bank of Commerce,
NationsBank, N.A., the Initial Lenders (as defined therein), the
Swing Line Bank (as defined therein) and the Initial Issuing Bank
(as defined therein).+
10.16 Lease, dated as of December 1, 1995, between Rex Realty Co. and
the Company.+
10.17 Lease, dated as of November 27, 1989, between Rex Realty Co. and
the Company.+
10.18 Agreement and Plan of Reorganization, Purchase and Redemption,
dated as of December 24, 1998, among the Company, the sellers
named therein and UIC Holdings, L.L.C. (the "Recapitalization
Agreement").*
10.19 Amendment No. 1 to the Recapitalization Agreement, dated as of
January 20, 1999.*
10.20 Amendment No. 2 to the Recapitalization Agreement, dated as of
January 25, 1999.*
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges.*
23.1 Consent of PricewaterhouseCoopers LLP.
<PAGE>
<S> <C>
23.2 Consent of Rubin, Brown, Gornstein & Co., LLP.
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1).*
24.1 Powers 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.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Letter 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.
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 registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) 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;
(c) 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.
<PAGE>
(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 registrant hereby undertakes 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 registrant undertakes that every prospectus (a) that is filed
pursuant to paragraph (1) immediately preceding, or (b) 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 registrant pursuant to the provisions described under
Item 20 or otherwise, the registrant has 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 registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant 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 registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate 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 registrant 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 registrant hereby undertakes 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 registrant hereby undertakes 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
United Industries Corporation 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 7th day of April, 1999.
UNITED INDUSTRIES CORPORATION
By: /s/ STEPHEN R. BRIAN
--------------------------------------------
Name: Stephen R. Brian
Title: President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stephen R. Brian and Daniel J. Johnston
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 7th day of April, 1999.
<TABLE>
<CAPTION>
Signature Capacity
--------- --------
<S> <C>
/s/ STEPHEN R. BRIAN President, Chief Executive Officer and Director of
- -------------------------------------------------------- United (Principal Executive Officer)
Stephen R. Brian
/s/ DANIEL J. JOHNSTON Senior Vice President, Financing and Manufacturing
- -------------------------------------------------------- and Director of United
Daniel J. Johnston
/s/ DAVID A. JONES Director of United
- --------------------------------------------------------
David A. Jones
/s/ C. HUNTER BOLL
- -------------------------------------------------------- Director of United
C. Hunter Boll
/s/ SCOTT A. SCHOEN
- -------------------------------------------------------- Director of United
Scott A. Schoen
/s/ CHARLES A. BRIZIUS
- -------------------------------------------------------- Director of United
Charles A. Brizius
- -------------------------------------------------------- Director of United
David C. Pratt
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------ ----------- -----
<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation of the
Company, dated January 13, 1999.
3.2 Certificate of Amendment of the Company, dated
January 20, 1999.
3.3 By-laws of the Company.
4.1 Securities Purchase Agreement, dated as of March 19, 1999,
among the Company, CIBC Oppenheimer Corp. and
NationsBanc Montgomery Securities LLC.
4.2 Indenture, dated as of March 24, 1999, between the Company and
State Street Bank and Trust Company as Trustee with respect to
the 9-7/8% Senior Subordinated Notes due 2009 (including the
form of 9-7/8% Senior Subordinated Notes).
4.3 Registration Rights Agreement, dated as of March 24, 1999,
among the Company, CIBC Oppenheimer Corp. and
NationsBanc Montgomery Securities LLC.*
5.1 Opinion of Kirkland & Ellis.*
10.1 United Industries Corporation Deferred Compensation Plan.
10.2 Management Agreement, dated as of January 20, 1999, between
the Company and Stephen R. Brian.+
10.3 Management Agreement, dated as of January 20, 1999, between
the Company and Richard A. Bender.+
10.4 Management Agreement, dated as of January 20, 1999, between
the Company and William P. Johnson.+
10.5 Management Agreement, dated as of January 20, 1999, between
the Company and Daniel J. Johnston.+
10.6 Consulting Agreement, dated as of January 20, 1999, between
the Company and David A. Jones.
<PAGE>
<S> <C>
10.7 United Industries Corporation 1999 Stock Option Plan.
10.8 Stock Option Agreement, dated as of January 20, 1999, between
the Company and Stephen R. Brian.+
10.9 Stock Option Agreement, dated as of January 20, 1999, between
the Company and Richard A. Bender.+
10.10 Stock Option Agreement, dated as of January 20, 1999, between
the Company and William P. Johnson.+
10.11 Stock Option Agreement, dated as of January 20, 1999, between
the Company and Daniel J. Johnston.+*
10.12 Stock Option Agreement, dated as of January 20, 1999, between
the Company and David A. Jones.+
10.13 Stockholders Agreement, dated as of January 20, 1999, among
the Company and the Stockholders (as defined therein). +
10.14 Professional Services Agreement, dated as of January 20, 1999,
between THL Equity Advisors IV, L.L.C., Thomas H. Lee Capital,
L.L.C. and the Company.
10.15 Amended and Restated Credit Agreement dated as of March 24,
1999 among the Company, NationsBanc Montgomery Securities LLC,
Morgan Stanley Senior Funding, Inc., Canadian Imperial Bank of
Commerce, NationsBank, N.A.., the Initial Lenders (as defined
therein), the Swing Line Bank (as defined therein) and the
Initial Issuing Bank (as defined therein).+
<PAGE>
<S> <C>
10.16 Lease, dated as of December 1, 1995, between Rex Realty Co.
and the Company.+
10.17 Lease, dated as of November 27, 1989, between Rex Realty Co.
and the Company.+
10.18 Agreement and Plan of Reorganization, Purchase and Redemption,
dated as of December 24, 1998, among the Company, the sellers
named therein and UIC Holdings, L.L.C. (the "Recapitalization
Agreement").*
10.19 Amendment No. 1 to the Recapitalization Agreement, dated as of
January 20, 1999.*
10.20 Amendment No. 2 to the Recapitalization Agreement, dated as of
January 25, 1999.*
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed
Charges.*
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Rubin, Brown, Gornstein & Co., LLP.
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1).*
24.1 Powers 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.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Letter 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.
Exhibit 3.1
-----------
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
UNITED INDUSTRIES CORPORATION
David C. Pratt and Mark R. Gale, being the duly elected President and
Secretary, respectively, of United Industries Corporation, a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Corporation") do hereby certify that:
1. The name of the Corporation is United Industries Corporation. The
original Certificate of Incorporation was filed with the Delaware Secretary of
State pursuant to the Act on April 16, 1973 under the name "Kensico Industries,
Inc." A prior Amended and Restated Certificate of Incorporation was filed with
the Delaware Secretary of State pursuant to the Act on October 13, 1987 under
the name of "United Industries Corporation." A prior Amended and Restated
Certificate of Incorporation was filed with the Delaware Secretary of State
pursuant to the Act on November 16, 1992 under the name of "United Industries
Corporation."
2. The Amended and Restated Certificate of Incorporation (the
"Certificate") has been duly adopted in accordance with Sections 242 and 245 of
the General Corporation Law of the State of Delaware.
3. The Certificate is hereby amended and restated as set forth in Exhibit
A attached hereto and made a part hereof.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by its president and Secretary on the 13th day of January, 1999.
UNITED INDUSTRIES CORPORATION
By: /s/ David C. Pratt
-------------------------
David C. Pratt, President
ATTEST:
/s/ Mark R. Gale
- -----------------------------
Mark R. Gale, Secretary
- 1 -
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
UNITED INDUSTRIES CORPORATION
ARTICLE ONE
The name of the corporation is United Industries Corporation (the
"Corporation").
ARTICLE TWO
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, Delaware 19801, the
County of New Castle. The name of its registered agent at such address is The
Corporation Trust 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
A. AUTHORIZED SHARES
The total number of shares of capital stock which the Corporation has
authority to issue is forty thousand (40,000) shares, divided into two classes.
The designation of each class, the number of shares of each class authorized,
and the par value, if any of the shares of each class are as follows:
<TABLE>
<CAPTION>
NUMBER PAR VALUE
CLASS OF SHARES PER SHARE
----- --------- ---------
<S> <C> <C>
Class A Voting Common Stock ("Class A Common") 20,000 $1.00
Class B Non-Voting Common Stock ("Class B Common") 20,000 $1.00
</TABLE>
The Class A Common and the Class B Common are collectively referred to as
"Common Stock."
- 2 -
<PAGE>
B. COMMON STOCK
The distinguishing preferences, qualifications, limitations, restrictions
and special or relative rights in respect of each class of Common Stock are as
follows:
1. All dividends shall, at all times be paid at the same rate per
share on both the Class A Common and the Class B Common and if any
dividend to paid in Common Stock of the Corporation, such dividend shall
be paid in Common Stock of the same class as the shares with respect to
which said dividend is paid.
2. Upon the liquidation, dissolution or winding up of the
Corporation, any and all assets and property for the Corporation remaining
after payment or provision for the debts and liabilities of the
Corporation shall be distributed ratably, on a share-for-share basis, to
the holders of both Class A Common and Class B Common, without distinction
as to class.
3. The voting power for the election of directors, and for all other
purposes, except as is otherwise specifically provided by the General
Corporation Law of the State of Delaware, is vested exclusively in the
holders of the Class A Common, the holders of the Class B Common expressly
waiving any right to vote the Class B Common at elections for directors,
or on any question or for any purpose whatsoever, except as is otherwise
specifically provided by the General Corporation Law of the State of
Delaware, and the holders of Class B Common shall not be entitled to, and
expressly waive notice of and the right to participate in any meeting of
shareholders unless matters are to be voted upon at such meeting upon
which the holders of Class B Common are entitled to vote pursuant to the
specific provisions of the General Corporation Law of the State of
Delaware. Except as is otherwise specifically provided by the General
Corporation Law of the State of Delaware, the Class A Common shall be
entitled to one (1) vote per share.
ARTICLE FIVE
The Corporation is to have perpetual existence.
ARTICLE SIX
In furtherance and not in limitation of the powers conferred by statue,
the board of directors of the Corporation is expressly authorized to make, alter
or repeal the by-laws of the Corporation.
ARTICLE SEVEN
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
- 3 -
<PAGE>
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 EIGHT
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 EIGHT shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE NINE
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated 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.
* * * * *
- 4 -
Exhibit 3.2
-----------
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
UNITED INDUSTRIES CORPORATION
* * * *
Adopted in accordance with the provisions of ss.242
of the General Corporation Law
of the State of Delaware
* * * *
Stephen R. Brian, being the President of United Industries
Corporation, a corporation duly organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY as follows:
FIRST: The Board of Directors of the Corporation adopted the
resolutions set forth below proposing an amendment to the Amended and Restated
Certificate of Incorporation of the Corporation (the "Amendment") and directed
that the Amendment be submitted to the holders of the issued and outstanding
shares Capital Stock of the Corporation entitled to vote thereon for their
consideration and approval:
"WHEREAS, the Board of Directors of the Corporation (the
"Board") desires to effect a 83,378.37838-for-one split of the shares
of Class A Voting Common Stock, par value $1.00 per share, of the
Corporation (the "Class A Common Stock") and a 83,378.37838-for-one
split of the shares of Class B Non-Voting Common Stock, par value
$1.00 per share, of the Corporation (the "Class B Common Stock" and
together with the Class A Common Stock is collectively referred to
herein as the "Common Stock").
RESOLVED, that the split of 83,378.37838-for-one of the
shares of the Common Stock (the "Split") be, and hereby is, in all
respects, approved.
<PAGE>
FURTHER RESOLVED, that in order to effect the Split, the
Amended and Restated Certificate of Incorporation of the Corporation
(the "Restated Certificate of Incorporation") be, and hereby is,
amended in accordance with ss.242 of the General Corporation Law of
the State of Delaware by deleting part A. Authorized Shares of
ARTICLE FOUR thereof in its entirety and substituting therefor part
A. Authorized Shares of ARTICLE FOUR as follows:
"A. AUTHORIZED SHARES
The total number of shares of capital stock which the
Corporation has authority to issue is Sixty-Five Million (65,000,000) shares,
divided into two classes. The designation of each class, the number of shares of
each class authorized, and the par value, if any, of the shares of each class
are as follows:
<TABLE>
<CAPTION>
NUMBER OF PAR VALUE
CLASS SHARES PER SHARE
- ----- ------ ---------
<S> <C> <C>
Class A Voting Common Stock ("Class A Common") 32,500,000 $0.01
Class B Non-Voting Common Stock ("Class B Common") 32,500,000 $0.01
</TABLE>
The Class A Common and the Class B Common are collectively
referred to as the "Common Stock".""
SECOND: The Amendment was duly adopted in accordance with
ss.228 and ss.242 of the General Corporation Law of the State of Delaware by the
holders of the issued and outstanding shares of the Capital Stock of the
Corporation entitled to vote thereon.
* * * * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned does hereby certify
under penalties of perjury that this Certificate of Amendment to the Amended and
Restated Certificate of Incorporation of the Corporation is the act and deed of
the undersigned and the facts stated herein are true and accordingly has
hereunto set his hand this 20th day of January, 1999.
United Industries Corporation,
a Delaware corporation
By: /s/ Stephen R. Brian
--------------------------
Stephen R. Brian
President
Exhibit 3.3
-----------
BY-LAWS
OF
UNITED INDUSTRIES CORPORATION
A Delaware corporation
(Adopted on January 20, 1999)
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, 19801, County of New Castle. 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
<PAGE>
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.
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
- 2 -
<PAGE>
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 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
- 3 -
<PAGE>
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 stock holders 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 set at seven. 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. 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 in the election of directors.
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.
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
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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 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,
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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, one or
more senior vice presidents, 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.
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
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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 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. Senior Vice Presidents and Vice Presidents. The senior
vice president or vice president, or if there shall be more than one, the senior
vice presidents and 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 senior vice presidents and 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 9. 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 chairman, the
president, or secretary may, from time to time, prescribe.
Section 10. 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
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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 may, from time to time, prescribe.
Section 11. 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 12. 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 connection with such proceeding) and such indemnification
shall inure to the benefit of his heirs, executors and
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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.
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
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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.
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 senior vice president
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or 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, senior vice 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 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
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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 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
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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 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.
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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.
ARTICLE VIII
AMENDMENTS
Except for Article III hereof, 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.
- 14 -
- --------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
by and among
UNITED INDUSTRIES CORPORATION
and
THE INITIAL PURCHASERS NAMED HEREIN
- --------------------------------------------------------------------------------
Dated as of March 19, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions....................................1
Section 1.2. Accounting Terms; Financial
Statements...................................4
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........................................5
Section 2.3. Registration Rights of Holders of
Notes........................................6
Section 2.4. Offering by the Initial Purchasers.............6
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of
the Company..................................6
Section 3.2. Resale of Notes...............................20
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 Company..............................22
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company......................23
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes.....................25
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity.....................................26
Section 7.2. Contribution..................................29
Section 7.3. Registration Rights Agreement.................30
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions........................31
Section 8.2. Termination...................................31
Section 8.3. No Waiver; Modifications in Writing...........32
Section 8.4. Information Supplied by the Initial
Purchasers..................................33
Section 8.5. Communications................................33
Section 8.6. Execution in Counterparts.....................33
Section 8.7. Successors....................................33
Section 8.8. Governing Law.................................34
Section 8.9. Severability of Provisions....................34
Section 8.10. Headings......................................34
SIGNATURE PAGE ............................................37
SCHEDULE I
Exhibit A
<PAGE>
-6-
SECURITIES PURCHASE AGREEMENT, dated as of March 19, 1999 (the
"Agreement"), among UNITED INDUSTRIES CORPORATION, a Delaware corporation (the
"Company"), and CIBC OPPENHEIMER CORP. ("CIBC") and NATIONSBANC MONTGOMERY
SECURITIES LLC ("NationsBanc") (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:
"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 with 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.
"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 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(aa) of this Agreement.
"Company Delivered Documents" has the meaning
provided therefor in Section 3.1(e) 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(aa) 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.
"Final Memorandum" has the meaning provided thereof
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 between the Company and State Street
Bank and 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(q) 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 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 Company or (ii) a material adverse effect on the legality,
validity, binding effect or enforceability of this Agreement or the other 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 7/8% Senior Subordinated Notes
due 2009 of the Company.
"Offering" means the offering of the Notes pursuant
to the Memorandum.
"Offering Materials" has the meaning provided
therefor in Section 7.1 of this Agreement.
"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 Company 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(y) of this Agreement.
"Time of Purchase" has the meaning provided therefor
in Section 2.2 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 has authorized the issuance
of $150,000,000 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 Company has prepared a
preliminary offering memorandum dated March 5, 1999 (the "Preliminary
Memorandum") and prepared a final offering memorandum dated March 19, 1999 (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 Company and any material
developments relating to the Company 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 Company agrees that it
will sell to each Initial Purchaser, and each Initial Purchaser agrees, acting
severally and not jointly, that it will purchase from the Company 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% 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 March 24,
1999, 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 Company 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 Company will make such certificate or
certificates for the Notes available for checking and packaging by the Initial
Purchasers at the offices of CIBC or NationsBanc, or such other place as CIBC
and NationsBanc 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of the Company. The
Company represents and warrants to and agrees 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 Company believes to be reliable and accurate
or represent the Company'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 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, stockholders' equity 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
summary and selected financial data in the Final Memorandum present fairly
the financial information shown therein and have been prepared and compiled
on a basis consistent with audited financial statements included therein,
except as otherwise stated therein. Each of Rubin, Brown, Gornstein & Co.
LLP and PriceWaterhouseCoopers, LLP which has reported upon the audited
financial statements included in the Final Memorandum, is an independent
public accounting firm as required by the Act and the rules and regulations
thereunder. The pro forma financial statements and other pro forma
financial information (including the notes thereto) included in the Final
Memorandum (A) have been prepared in accordance with applicable
requirements of Regulation S-X promulgated under the Exchange Act (it being
understood that the rules under Regulation S-X relative to pro forma
adjustments require the application of judgment regarding whether such
adjustments are directly attributable to the transaction, have a continuing
impact and are factually supportable and that the staff of the Commission
could disagree that certain of the adjustments meet these requirements) and
(B) have been properly computed on the bases described therein; and the
assumptions used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(c) Existence. The Company is a corporation 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 Incorporation and by-laws
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. The Company does not have any subsidiaries, and,
other than DW-Wej-it, Inc., a Delaware corporation ("DW"), has not had
since it became an "S Corporation" in April 1982, any subsidiaries.
(d) Capital Stock. 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 for revolving credit borrowings since December 31,
1998 and except as described in the Final Memorandum, all of the issued and
outstanding securities of the Company 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
or referred to in the Final Memorandum, the Company is not 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 or
any other security exercisable or exchangeable for or convertible into any
capital stock or any other security of the Company.
(e) Authority. The Company has the requisite power to enter into the
Basic Documents and all other agreements, instruments and documents
executed and delivered by the Company pursuant thereto (collectively, the
"Company Delivered Documents") and to carry out its 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 Company Delivered Documents and the consummation of the
transactions contemplated thereby have been duly authorized by the Company
(to the extent a party thereto), and no other proceeding or approval on the
part of the Company is necessary to authorize the execution and delivery of
the Company 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 Company and (assuming the due authorization,
execution and delivery thereof by the Initial Purchasers), is a valid and
legally binding agreement of the Company, enforceable against it 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 Company
and, when executed and delivered by the Company (assuming the due
authorization, execution and delivery thereof by the Trustee), will
constitute a valid and legally binding agreement of the Company,
enforceable against it 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 Company and, when executed and delivered by
the Company (assuming the due authorization, execution and delivery thereof
by the Initial Purchasers), will constitute a valid and legally binding
agreement of the Company, enforceable against it 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 Company and, when executed by
the Company 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 Company 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 Company Delivered Document executed
and delivered by the Company (to the extent a party thereto) has been duly
and validly authorized, executed and delivered by the Company (to the
extent a party thereto) and constitutes or will constitute a valid and
legally binding obligation of the Company (to the extent a party thereto),
enforceable against it 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 the Company will exceed the sum of its stated
liabilities and identified contingent liabilities; the Company 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 had a
Material Adverse Effect, (ii) any transaction entered into by the Company,
other than in the ordinary course of business, that had a Material Adverse
Effect, or (iii) any dividend or distribution of any kind declared, paid or
made by the Company on its Capital Stock other than distributions permitted
under the Indenture.
(m) No Violation. Neither the execution, delivery or performance of
any of the Company Delivered Documents nor the consummation of any of the
transactions contemplated thereby (i) will violate or conflict with the
Certificates of Incorporation or By-laws of the Company, (ii) 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 is a
party or by which the Company is bound or to which any property or assets
of the Company is subject, (iii) violates, is prohibited by or requires the
Company to obtain or make any consent, authorization, approval,
registration or filing under any statute, law, ordinance, regulation
(including without limitation Regulation 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, (iv) will cause any acceleration of maturity of any note,
instrument or other indebtedness to which the Company is a party or by
which the Company is bound or with respect to which the Company is an
obligor or guarantor, or (v) 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, other than any violation, conflict, breach, default, acceleration
or Lien which, individually or in the aggregate, which does not have a
Material Adverse Effect.
(n) Title and Condition of Properties and Assets. As of the date
hereof, each of the Company has good and valid title to all of its owned
assets and properties which are material to its business, taken as a whole
and as of the Time of Purchase, the Company will have good and valid title
to all of its assets and properties which are material to its 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. Each lease of real property or personal property
that is material to the business of the Company and its subsidiaries, taken
as a whole, is in full force and effect and is valid and enforceable in
accordance with its terms except that (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 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. There is not under any such lease any default by the
Company or any event that with notice or lapse of time or both would
constitute such a default by the Company and with respect to which the
Company or has not taken adequate steps to prevent such default from
occurring, except for any such default that has not had a Material Adverse
Effect; all of such events, if any, and the aforesaid steps taken by the
Company are set forth in the Final Memorandum. To the Company's knowledge,
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 had a Material Adverse
Effect. The Company does not 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 knowledge, threatened involving the Company that (i) seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance and sale of the Notes by the Company 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 individually or in
the aggregate, has had a Material Adverse Effect.
(q) Intangible Property Rights. The Final Memorandum accurately
describes: (i) all material copyrights, patents, trademarks, service marks
and trade names, and all registrations or pending applications thereof in
the United States (collectively "Intangible Property Rights") owned by the
Company; and (ii) all material licenses and similar agreements under which
the Company uses Intangible Property Rights of any third party. Except as
otherwise described in the Final Memorandum, (i) the Company owns, is
licensed or otherwise has sufficient rights to use the material
Intellectual Property Rights and the Technology (as defined below)
necessary for the conduct of its business free and clear of all Liens other
than Permitted Liens; (ii) there are no pending claims challenging the
validity, enforceability or ownership of such Intellectual Property Rights
or Technology or the Company's right to use such Intellectual Property
Rights or Technology; (iii) the material issued patents, registered
trademarks and registered copyrights in the United States under such
Intellectual Property Rights are valid and subsisting and, to the Company's
knowledge, none of the claims of said issued patents, registered trademarks
or copyrights is now being infringed by others; (iv) there are no material
licenses or sublicense agreements now in effect regarding the Company's or
to the Company's knowledge, any third party's use of such Intellectual
Property Rights or Technology; and (v) to the Company's knowledge, the
Company is not infringing or misappropriating any U.S. or foreign patent,
trademark, copyright owned by third parties and no claim is now pending or
is threatened to such effect, except for any of the foregoing which does
not have a Material Adverse Effect. "Technology" means the material
patterns, plans, designs, confidential information, research data, trade
secrets and other proprietary know-how, formulae and manufacturing
processes, operating manuals, drawings, technology, manuals, data, records,
procedures, research and development records, and all licenses or other
rights to use any of the foregoing of others used in connection with the
business.
(r) Compliance with Laws, Etc. Except as disclosed in the Final
Memorandum and except for those failures to have, to be in full force and
effect, to file, retain and maintain and to comply, in each case, that do
not have a Material Adverse Effect, (i) with respect to its business, the
Company has all licenses, permits or franchises issued by any United States
or foreign, federal, state, provincial, municipal or local authority or
regulatory body and other governmental certificates, authorizations and
approvals (collectively "Licenses and Permits") required by every United
States or foreign, federal, state, provincial, municipal and local
governmental or regulatory body for the operation of their businesses and
the use of their properties as presently operated or used; (ii) all such
Licenses and Permits are in full force and effect and no action, claim or
proceeding is pending, nor to the knowledge of the Company is threatened,
to suspend, revoke, revise, limit, restrict or terminate any of such
Licenses and Permits or declare any such License or Permit invalid; (iii)
the Company has filed all necessary reports and maintained and retained all
necessary records pertaining to such Licenses and Permits; and (iv) the
Company has otherwise complied with all of the laws, ordinances,
regulations and orders applicable to their existence, financial condition,
operations, properties or business, and the Company has not received any
notice to the contrary.
(s) Governmental Authorizations and Regulations. 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 Company 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, or (ii) as does (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 Controversies. Except as disclosed in the Final Memorandum
and except for the following which do not have a Material Adverse Effect
(i) no employees of the Company 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 the
Company has no obligation under any collective bargaining agreement or
other agreement with any labor union or labor organization that, in any
way, affects the Company. (ii) there is no unfair labor practice complaint
against the Company pending before the National Labor Relations Board,
(iii) there is no labor strike, dispute, slowdown or stoppage actually
pending or to the knowledge of the Company threatened against or affecting
the Company, (iv) the Company has not experienced any strike, work stoppage
or other labor difficulty during the past three years, and (v) the Company
is not a party to, or subject to, a collective bargaining agreement, and no
collective bargaining agreement relating to employees, and no collective
bargaining agreement relating to employees of the Company is currently
being negotiated.
(u) Employment Contracts. Except as described in the Final Memorandum,
there are no material employment contracts between the Company, on the one
hand, and Employees, on the other hand, other than contracts representing
the standard terms and conditions prevailing between the Company and its
Employees.
(v) Finders; Brokers. Except as described in the Final Memorandum,
there re no claims for commissions or fees from any investment banker,
broker, finder, consultant or intermediary hired by or on behalf of the
Company in connection with the transactions contemplated by this Agreement,
based on any arrangement or agreement.
(w) Environmental Matters. Except as disclosed in the Final Memorandum
and except as does not individually or in the aggregate, have a Material
Adverse Effect, (A) the Company is in compliance with and not subject to
liability under all applicable Environmental Laws, (B) the Company has made
all filings and provided all notices required under any applicable
Environmental Law, and has all permits, authorizations and approvals
required under any applicable Environmental Laws and is in compliance with
their requirements, (C) there is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter or request for information pending or,
to the best knowledge of the Company, threatened against the Company under
any Environmental Law, (D) no lien, charge, encumbrance or restriction has
been recorded under any Environmental Law with respect to any assets,
facility or property owned, operated, leased or controlled by the Company,
(E) the Company has not received notice that it had been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or
any comparable state law, (F) no property or facility owned, leased or
operated by the Company is (i) listed or proposed for listing on the
National Priorities List under CERCLA or (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA, or any comparable list maintained by any
state or local governmental authority; (G) there are no events, activities,
conditions, or occurrences which could reasonably be expected to prevent
the Company from complying with, or to result in liability under,
Applicable Environmental Laws.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any federal, state, local or
municipal statute, law, rule, regulation, ordinance, code, policy or rule
of common law and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment
binding on the Company relating to pollution or protection of the
environment (including, without limitation, ambient air, indoor air,
surface water, groundwater, land surface or subsurface strata), natural
resources, or health or safety or any pollutant, contaminant, waste,
constituent, chemical, material or substance, that is subject to regulation
thereunder.
(x) Year 2000 Compliance. The Company believes that its internal
computer systems used in the operation of the Business are in all material
respects able to store, process and output dates from and after January 1,
2000 in the same manner and with the same accuracy, functionality and
performance as when dates prior to January 1, 2000 are involved.
(y) Tax Matters. (a) There are no Liens on any of the assets used in
the Company's business for any taxes, duties or assessments, or any
interest, penalties or additions imposed with respect to such amounts
(collectively, "Taxes") (other than for Taxes not yet due and payable).
(b) (i) All material Tax Returns required to be filed relating to the
Company have been timely filed, (ii) all such Tax Returns are complete
and correct in all material respects, and (iii) all material Taxes due
and owing from the Company have been timely paid or have been provided
for on the Closing Balance Sheet (as defined in the Recapitalization
Agreement). With respect to any period or portion thereof ending on or
before the Closing Date for which Tax Returns have not yet been filed,
or for which material Taxes have accrued but are not yet due and
owing, the Company has made due and sufficient accruals for such Taxes
on the Closing Balance Sheet (as defined in the Recapitalization
Agreement).
(c) The Company has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to any
material Tax assessment or deficiency.
(d) No audit or other proceeding by any court, governmental or
regulatory authority, or similar person has formally commenced and no
written notification has been given to the Company that such an audit
or other proceeding is pending or threatened with respect to any
material Taxes due from or with respect to the Company or any material
Tax Return filed by or with respect to the Company. No assessment of a
material Tax has been proposed in writing against the Company or any
of its assets.
(e) The Company has made a valid election under Section 1362 of the
Internal Revenue Code and any corresponding state or local provisions
(collectively, the "S Elections") to be an S corporation within the
meaning of Section 1361 of the Code for all taxable years (or portions
thereof) ending prior to the Closing Date which have not been closed
by the applicable statute of limitations.
(f) The Company made a valid election to treat DW as a "qualified
Subchapter S subsidiary" under Internal Revenue Code ss. 1361(b)(3)
for all taxable years (or portions thereof) ending prior to the
Closing Date during which the Company held an
ownership interest in DW.
(g) The Company is not a party to any Tax allocation or Tax sharing
agreement.
(z) Investment Company. The Company is not and immediately after the
Time of Purchase will not be, an "investment company" or, to the Company's
knowledge, a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(aa) ERISA. No Reportable Event (as defined in Section 4043 of ERISA)
has occurred during the three-year period prior to the date on which this
representation is made with respect to any Employee Benefit Plan, and the
Company has complied in all material respects with the applicable
provisions of ERISA and the Code in connection with the Employee Benefit
Plans. No Employee Benefit Plan of the Company or plan of any Commonly
Controlled Entity is subject to Title IV of ERISA and the Company has no
director interest, actual or contingent liability under Title IV of ERISA.
Neither the Company, nor any Commonly Controlled Entity (as defined below)
has Incurred or is reasonably likely to incur any withdrawal liability with
respect to any Multiemployer Plan (as defined in Section 4001(a)(3) of
ERISA). No such Multiemployer Plan is in reorganization or insolvent. There
are no material liabilities of the Company or any Commonly Controlled
Entity for post-retirement benefits to be provided to their current and
former employees under Employee Benefit Plans which are welfare benefit
plans (as described in Section 3(1) of ERISA)("Welfare Benefit Plans"), and
all Welfare Benefit Plans of the Company and welfare plans of its Commonly
Controlled Entaties are in substancial compliance with the continuation
coverage requirements of Section 498OB of the Code and Part 6 of Title I 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 is reasonably likely to 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 Company, 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 Company or to which the
Company may have liability.
(bb) Insurance. The Company carries insurance (including self
insurance) in such amounts and covering such risks as in its reasonable
determination is adequate for the conduct of its business and the value of
its properties.
(cc) The Offering. Assuming the accuracy of the Initial Purchasers'
representations and warranties in Section 3.2 hereof and the performance of
their covenants in this Agreement, no form of general solicitation or
general advertising (as those terms are used in Regulation D under the Act)
was used by the Company or its representatives in connection with the offer
and sale of the Notes; neither the Company nor any Person authorized to act
for the Company has, either directly or indirectly, sold or offered for
sale any of the Notes or any other similar security of the Company 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 Company agrees that neither
the Company nor any Person acting on its 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 Final Memorandum does not require registration under the Act and the
Indenture does not require qualification under the Trust Indenture Act. No
securities of the Company 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. The Company has not taken, nor
will it 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 Company nor any of its 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.
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 Company (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, 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 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 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 Company, 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
PriceWaterhouseCoopers 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 Company 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 Company 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 Final Memorandum, (i) there shall
not have been any change which has a Material Adverse Effect and (ii) the
Company shall not have taken any voluntary, affirmative action to conduct
their business 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 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,
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 Company 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 Company as they may reasonably
request.
Section 4.2. Conditions Precedent to Obligations of the Company. The
obligations of the Company 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 Company. The Company covenants and
agrees with each of the Initial Purchasers that:
(a) The Company 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 Company will promptly, upon
the reasonable request of the Initial Purchasers or counsel to the Initial
Purchasers, make any amendments or supplements to the Final Memorandum that
may be necessary or advisable in connection with the resale of the Notes by
the Initial Purchasers.
(b) The Company 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 Company 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 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 Company 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 Company, an amendment or supplement to the Final Memorandum that
corrects such statement or omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel to the Initial Purchasers as many copies of the
Preliminary and Final Memorandum or any amendment or supplement thereto as
the Initial Purchasers may reasonably request.
(e) The Company 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 Company will furnish to the Initial Purchasers copies of
all reports and other communications (financial or otherwise) furnished by
the Company 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 Company 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) The Company and its Affiliates will not 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 Company 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 Company will make available, upon request, to any seller of
such Notes the information specified in Rule 144A(d)(4) under the Act,
unless the Company is then subject to Section 13 or 15(d) of the Exchange
Act.
(k) The Company will use its 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 Company will do and perform all things required to be done and
performed by it 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 Company 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 Company agrees 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 Preliminary and Final Memorandum and any amendment or
supplement thereto, any other marketing related materials, (iii)any costs of all
arrangements relating to the delivery including postage, etc. 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 Company, (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 (including one-half of the costs related to the
chartered airplane) 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 Company 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 Company. The Company agrees and covenants
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 Final 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 Company
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 Company 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 Company further agrees 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
Company reimburses 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 Company further agrees 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 Company under this Article VII shall be
in addition to any liability the Company 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 Company 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 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 Company
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 Company 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 Company 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
Company, 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 Company 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 Company shall have sustained any loss or interference with
respect to its 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 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 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 Company 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 Company or any Initial Purchaser at law or
in equity or otherwise. No waiver of or consent to any departure by the Company
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 Company 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
Company 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 Company in any case shall entitle the Company 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 and in the fourth and fifth sentences of the sixth
paragraph and the eighth paragraph under the heading "Plan of Distribution" in
the Final Memorandum (to the extent such 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 NationsBanc
Montgomery Securities LLC, 9 West 57th Street, 43rd Floor, New
York, NY 10019, with a copy to Cahill Gordon & Reindel, 80
Pine Street, New York, New York 10005, Attention: Geoffrey E.
Liebmann, Esq. and (b) if to the Company, shall be given by
similar means to United Industries Corporation, 8825 Page
Boulevard, P.O. Box 15842, St. Louis, Missouri 63114, Attn:
Chief Financial Officer, with copies to Kirkland & Ellis, 200
East Randolph Drive, Chicago, IL 60601, Attention: Carter W.
Emerson, P.C. and to Thomas H. Lee Company, 75 State Street,
26th Floor, Boston, MA 02109, Attention: C. Hunter Boll. 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 Company 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 Company 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 Company,
its directors, officers, employees and agents and any Person or Persons who
control the Company within the meaning of 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>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
UNITED INDUSTRIES CORPORATION
By:
Name:
Title:
CIBC OPPENHEIMER CORP.
By:
Name:
Title:
NATIONSBANC MONTGOMERY
SECURITIES LLC
By:
Name:
Title:
<PAGE>
SCHEDULE I
Principal Amount
at Maturity
Initial Purchaser of Notes
CIBC Oppenheimer Corp. $90,000,000
Nationsbanc Montgomery Securities LLC 60,000,000
Total $150,000,000
<PAGE>
Exhibit A
Form of Opinion of Kirkland & Ellis
[To be supplied by Kirkland & Ellis]
================================================================================
UNITED INDUSTRIES CORPORATION,
as Issuer,
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
$150,000,000
9-7/8% Senior Subordinated Notes due 2009
================================================================================
<PAGE>
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
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
(a)(2)................................. 6.09
(b).................................... 7.12
318(a).................................... 12.01
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions..................................1
Section 1.02. Other Definitions...........................34
Section 1.03. Incorporation by Reference of Trust
Indenture Act.............................35
Section 1.04. Rules of Construction.......................36
ARTICLE 2
THE NOTES
Section 2.01. Amount of Notes.............................37
Section 2.02. Form and Dating.............................37
Section 2.03. Execution and Authentication................38
Section 2.04. Registrar and Paying Agent..................39
Section 2.05. Paying Agent to Hold Money in Trust.........40
Section 2.06. Noteholder Lists............................40
Section 2.07. Transfer and Exchange.......................41
Section 2.08. Replacement Notes...........................42
Section 2.09. Outstanding Notes...........................42
Section 2.10. Treasury Notes..............................43
Section 2.11. Temporary Notes.............................43
Section 2.12. Cancellation................................44
Section 2.13. Defaulted Interest..........................44
Section 2.14. CUSIP Number................................45
Section 2.15. Deposit of Moneys...........................45
Section 2.16. Book-Entry Provisions for Global Notes......46
Section 2.17. Special Transfer Provisions.................49
Section 2.18. Computation of Interest.....................52
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee..........................52
Section 3.02. Selection by Trustee of Notes to Be
Redeemed..................................52
Section 3.03. Notice of Redemption........................53
Section 3.04. Effect of Notice of Redemption..............54
Section 3.05. Deposit of Redemption Price.................55
Section 3.06. Notes Redeemed in Part......................55
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes............................56
Section 4.02. SEC Reports.................................56
Section 4.03. Waiver of Stay, Extension or Usury Laws.....58
Section 4.04. Compliance Certificate......................58
Section 4.05. Taxes.......................................60
Section 4.06. Limitation on Additional Indebtedness.......60
Section 4.07. Limitation on Preferred Stock of
Restricted Subsidiaries...................61
Section 4.08. Limitation on Capital Stock of
Subsidiaries..............................61
Section 4.09. Limitation on Restricted Payments...........62
Section 4.10. Limitation on Certain Asset Sales...........65
Section 4.11. Limitation on Transactions with
Affiliates................................69
Section 4.12. Limitations on Liens........................70
Section 4.13. Limitations on Investments..................71
Section 4.14. Limitation on Creation of Subsidiaries......71
Section 4.15. Limitation on Other Senior Subordinated
Debt......................................71
Section 4.16. Limitation on Sale and Lease-Back
Transactions..............................72
Section 4.17. Payments for Consent........................72
Section 4.18. Legal Existence.............................73
Section 4.19. Change of Control...........................73
Section 4.20. Maintenance of Office or Agency.............76
Section 4.21. Maintenance of Properties; Insurance;
Books and Records; Compliance with Law....77
Section 4.22. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted
Subsidiaries..............................78
Section 4.23. Further Assurance to the Trustee............79
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and
Sale of Assets............................79
Section 5.02. Successor Person Substituted................81
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default...........................81
Section 6.02. Acceleration................................84
Section 6.03. Other Remedies..............................84
Section 6.04. Waiver of Past Defaults and Events of
Default...................................85
Section 6.05. Control by Majority.........................85
Section 6.06. Limitation on Suits.........................86
Section 6.07. Rights of Holders to Receive Payment........87
Section 6.08. Collection Suit by Trustee..................87
Section 6.09. Trustee May File Proofs of Claim............87
Section 6.10. Priorities..................................88
Section 6.11. Undertaking for Costs.......................89
Section 6.12. Restoration of Rights and Remedies..........89
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee...........................90
Section 7.02. Rights of Trustee...........................92
Section 7.03. Individual Rights of Trustee................93
Section 7.04. Trustee's Disclaimer........................93
Section 7.05. Notice of Defaults..........................93
Section 7.06. Reports by Trustee to Holders...............94
Section 7.07. Compensation and Indemnity..................94
Section 7.08. Replacement of Trustee......................96
Section 7.09. Successor Trustee by Consolidation,
Merger, Etc...............................97
Section 7.10. Eligibility; Disqualification...............97
Section 7.11. Preferential Collection of Claims
Against Company...........................98
Section 7.12. Paying Agents...............................98
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders..................99
Section 8.02. With Consent of Holders....................100
Section 8.03. Compliance with Trust Indenture Act........102
Section 8.04. Revocation and Effect of Consents..........102
Section 8.05. Notation on or Exchange of Notes...........103
Section 8.06. Trustee to Sign Amendments, etc............103
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture.....................104
Section 9.02. Legal Defeasance...........................105
Section 9.03. Covenant Defeasance........................105
Section 9.04. Conditions to Defeasance or Covenant
Defeasance...............................106
Section 9.05. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other
Miscellaneous Provisions.................109
Section 9.06. Reinstatement..............................109
Section 9.07. Moneys Held by Paying Agent................110
Section 9.08. Moneys Held by Trustee.....................110
ARTICLE 10
GUARANTEE OF NOTES
Section 10.01. Guarantee..................................111
Section 10.02. Execution and Delivery of Guarantees.......112
Section 10.03. Limitation of Guarantee....................113
Section 10.04. Release of Guarantor.......................113
Section 10.05. Guarantee Obligations Subordinated to
Guarantor Senior Indebtedness............114
Section 10.06. Payment Over of Proceeds upon
Dissolution, etc., of a Guarantor........115
Section 10.07. Suspension of Guarantee Obligations When
Guarantor Senior Indebtedness in
Default..................................117
Section 10.08. Subrogation to Rights of Holders of
Guarantor Senior Indebtedness............120
Section 10.09. Guarantee Subordination Provisions
Solely To Define Relative Rights.........120
Section 10.10. Application of Certain Article 11
Provisions...............................121
ARTICLE 11
SUBORDINATION OF NOTES
Section 11.01. Notes Subordinate to Senior Indebtedness...122
Section 11.02. Payment Over of Proceeds upon
Dissolution, etc.........................123
Section 11.03. Suspension of Payment When Senior
Indebtedness in Default..................124
Section 11.04. Trustee's Relation to Senior
Indebtedness.............................127
Section 11.05. Subrogation to Rights of Holders of
Senior Indebtedness......................128
Section 11.06. Provisions Solely To Define Relative
Rights...................................128
Section 11.07. Trustee To Effectuate Subordination........129
Section 11.08. No Waiver of Subordination Provisions......130
Section 11.09. Notice to Trustee..........................131
Section 11.10. Reliance on Judicial Order or
Certificate of Liquidating Agent.........132
Section 11.11. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of
Trustee's Rights.........................133
Section 11.12. Article Applicable to Paying Agents........133
Section 11.13. No Suspension of Remedies..................133
SECTION 11.14. Authorization to Effect Subordination......134
SECTION 11.15. Amendments.................................134
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls...............134
Section 12.02. Notices....................................135
Section 12.03. Communications by Holders with Other
Holders..................................136
Section 12.04. Certificate and Opinion as to Conditions
Precedent................................136
Section 12.05. Statements Required in Certificate and
Opinion..................................137
Section 12.06. Rules by Trustee and Agents................138
Section 12.07. Business Days; Legal Holidays..............138
Section 12.08. Governing Law..............................138
Section 12.09. No Adverse Interpretation of Other
Agreements...............................139
Section 12.10. No Recourse Against Others.................139
Section 12.11. Successors.................................140
Section 12.12. Multiple Counterparts......................140
Section 12.13. Table of Contents, Headings, etc...........140
Section 12.14. Separability...............................140
<PAGE>
EXHIBITS
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
<PAGE>
INDENTURE, dated as of March 24, 1999, between UNITED INDUSTRIES
CORPORATION, a Delaware corporation (the "Issuer"), and STATE STREET BANK AND
TRUST COMPANY, a Massachusetts Trust Company, 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 Issuer's 9-7/8% Senior
Subordinated Notes due
2009 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Accrued Bankruptcy Interest" means, with respect to any Indebtedness
of any Person, all interest accrued or accruing on such Indebtedness after the
commencement of any bankruptcy, reorganization, insolvency, receivership or
similar proceeding, whether voluntary or involuntary, against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such proceeding.
"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 the outstanding
equity interests on, or assets from, such Person.
"Additional Interest" means additional interest on the Notes which the
Issuer agrees 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.
"Agent" means the Registrar, any Paying Agent, or
agent for service of notices and demands.
"Asset Acquisition" means (a) an Investment by the Issuer or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged with or into the Issuer or any
Restricted Subsidiary or (b) the acquisition by the Issuer or any Restricted
Subsidiary of the assets of any Person (other than a Restricted Subsidiary)
which constitute all or substantially all of the assets of such Person or
comprise any division or line of business of such Person or any other properties
or assets of such Person other than in the ordinary course of business.
"Asset Drop-Down" means the contribution of all or substantially all
of the Issuer's assets to a newly-created Wholly-Owned Subsidiary, which would
also assume all or substantially all of the Issuer's liabilities.
"Asset Sale" means the sale, transfer or other disposition (including
any Sale and Lease-Back Transaction) (other than to the Issuer or any of its
Restricted Subsidiaries) in any single transaction or series of related
transactions having a fair market value in excess of $1,500,000 of (a) any
Capital Stock of or other equity interest in any Restricted Subsidiary of the
Issuer or (b) any other property or assets of the Issuer or of any Restricted
Subsidiary thereof; provided that Asset Sales shall not include (i) sales,
leases, conveyances, transfers or other dispositions to the Issuer 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; (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); (iii) the sale, transfer or other
disposition of all or substantially all of the assets of the Issuer or any
Guarantor as permitted under Section 5.01, including without limitation, an
Asset Drop-Down; (iv) the sale or discount, in each case without recourse, of
accounts receivable arising in the ordinary course of business, but only in
connection with the compromise or collection thereof; (v) the factoring of
accounts receivable arising in the ordinary course of business pursuant to
arrangements customary in the industry; (vi) the licensing of intellectual
property; (vii) disposals or replacements of obsolete equipment in the ordinary
course of business; (viii) leases or subleases to third persons not interfering
in any material respect with the business of the Issuer or any of its Restricted
Subsidiaries; (ix) a disposition of Temporary Cash Investments or goods held for
sale in the ordinary course of business consistent with past practices of the
Issuer; (x) a disposition that constitutes a Change of Control; and (xi) any
foreclosures on assets.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Issuer 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 measured by or resulting from such Asset
Sale, (b) payment of all brokerage commissions, underwriting and other fees
(including legal and accounting fees) and expenses (including relocation
expenses) related to such Asset Sale, (c) any consideration for an Asset Sale
(which would otherwise constitute Asset Sale Proceeds) that is required to be
held in escrow pending determination of whether a purchase price adjustment will
be made, but amounts under this clause (c) will become Asset Sale Proceeds at
such time and to the extent such amounts are released to the Issuer or a
Restricted Subsidiary, (d) repayment of Indebtedness that either (i) is secured
by a Lien on the property or assets sold or (ii) is required to be repaid in
connection with such Asset Sale (in order to obtain a consent required in
connection therewith), (e) provision for minority interest holders in any
Restricted Subsidiary as a result of such Asset Sale and (f) deduction of
appropriate amounts to be provided by the Issuer 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 Issuer 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
Issuer 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 such arrangement (as determined by the Board of
Directors of the Issuer) and (ii) the present value of the total obligations
(discounted at the rate borne by the Notes, 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 previously 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
corporation, the board of directors of such Person or any committee authorized
to act therefore, (ii) 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) 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
the Issuer or a Guarantor, as appropriate, and to be in full force and effect,
and delivered to the Trustee.
"Capital Stock" means, with respect to any Person any and all shares
or other equivalents (however designated and whether or not voting,) 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.
"Change of Control" means, at any time after the Issue Date, 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 power of the Common Stock of the Issuer, (ii) there shall be consummated
any consolidation or merger of the Issuer in which the Issuer is not the
continuing or surviving corporation or pursuant to which the Common Stock of the
Issuer would be converted into cash, securities or other property, other than a
merger or consolidation of the Issuer in which the beneficial owners of the
Common Stock of the 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
(iii) during any period of two consecutive years commencing after the Issue
Date, individuals who at the beginning of such period constituted the Board of
Directors of the Issuer (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Issuer 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 the Issuer.
"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 Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of EBITDA of such Person during the four full fiscal quarters
(the "Four Quarter Period") ending on or prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "Transaction Date") for which financial statements are available to
Consolidated Fixed Charges of such Person for the Four Quarter Period. In
addition to and without limitation of the foregoing, for purposes of this
definition, "EBITDA" and "Consolidated Fixed Charges" shall be calculated after
giving effect on a pro forma basis for the period of such calculation to:
(1) the incurrence or repayment of any Indebtedness
of such Person or any of its Restricted
Subsidiaries (and the application of the
proceeds thereof) giving rise to the need to
make such calculation and any incurrence or
repayment of other Indebtedness (and the
application of the proceeds thereof), other
than the incurrence or repayment of
Indebtedness in the ordinary course of business
for working capital purposes pursuant to
revolving credit facilities, occurring during
the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date,
as if such incurrence or repayment, as the case
may be (and the application of the proceeds
thereof), occurred on the first day of the Four
Quarter Period;
(2) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset
Acquisition giving rise to the need to make
such calculation as a result of such Person or
one of its Restricted Subsidiaries (including
any Person who becomes a Restricted Subsidiary
as a result of the Asset Acquisition)
incurring, assuming or otherwise being liable
for Acquired Indebtedness and also including
any EBITDA (provided that such EBITDA shall be
included only to the extent includable pursuant
to the definition of "Consolidated Net Income")
attributable to the assets which are the
subject of the Asset Acquisition during the
Four Quarter Period) occurring during the Four
Quarter Period or at any time subsequent to the
last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such Asset
Sale or Asset Acquisition (including the
incurrence, assumption or liability for any
such Acquired Indebtedness) occurred on the
first day of the Four Quarter Period;
(3) with respect to any such Four Quarter Period commencing prior to
the Recapitalization, the Recapitalization, which shall be deemed
to have taken place on the first day of such Four Quarter Period;
and
(4) any asset sales or asset acquisitions
(including any EBITDA attributable to the
assets which are the subject of the asset
acquisition or asset sale during the Four
Quarter Period (provided that such EBITDA shall
be included only to the extent includable
pursuant to the definition of "Consolidated Net
Income")) that have been made by any Person
that has become a Restricted Subsidiary of the
Issuer or has been merged with or into the
Issuer or any Restricted Subsidiary of the
Issuer during the Four Quarter Period or at any
time subsequent to the last day of the Four
Quarter Period and on or prior to the
Transaction Date that would have constituted
Asset Sales or Asset Acquisitions had such
transactions occurred when such Person was a
Restricted Subsidiary of the Issuer or
subsequent to such Person's merger into the
Issuer, as if such asset sale or asset
acquisition (including the incurrence,
assumption or liability for any Indebtedness or
Acquired Indebtedness in connection therewith)
occurred on the first day of the Four Quarter
Period. If such Person or any of its
Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the
preceding sentence shall give effect to the
incurrence of such guaranteed Indebtedness as
if such Person or any Restricted Subsidiary of
such Person had directly incurred or otherwise
assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes
of determining the denominator (but not the numerator) of this "Consolidated
Fixed Charge Coverage Ratio,"
(1) interest on outstanding Indebtedness determined
on a fluctuating basis as of the Transaction
Date and which will continue to be so
determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the
rate of interest on such Indebtedness in effect
on the Transaction Date; and
(2) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis,
to the extent such interest is covered by one
or more Interest Rate Agreements, shall be
deemed to accrue at the rate per annum
resulting after giving effect to the operation
of such agreements.
"Consolidated Fixed Charges" means, with respect to
any Person, for any period, the sum of
(1) Consolidated Interest Expense (excluding
amortization or write-off of debt issuance
costs relating to the Recapitalization and the
financing therefor or relating to retired or
existing Indebtedness and amortization or
write-off of customary debt issuance costs
relating to future Indebtedness incurred in the
ordinary course of business), plus
(2) without duplication, the product of (a) the
amount of all dividend payments on any series
of Preferred Stock of such Person or any
Restricted Subsidiary, determined on a
consolidated basis (other than dividends paid
in Capital Stock (other than Disqualified
Capital Stock)) paid, accrued or scheduled to
be paid or accrued during such period times (b)
a fraction, the numerator of which is one and
the denominator of which is one minus the then
current effective consolidated federal, state
and local tax rate of such Person, expressed as
a decimal.
"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 Restricted Subsidiaries on a
consolidated basis (including, but not limited to, 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 (other than any such discount arising from
the issuance of warrants to purchase Common Stock to purchasers of the Issuer's
debt securities simultaneously with the issuance thereof) 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 Issuer), 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;
provided, however, that (1) (a) the Net Income of any Person (the "other
Person") in which the Person in question or any of its Registered 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) and (2) Unrestricted Subsidiary shall be
included only to the extent of the amount of dividends or distributions paid to
the Person in question or the Restricted Subsidiary, (2) the Net Income of any
Restricted 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, (3) (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
Restricted Subsidiaries other than in the ordinary course of business shall be
excluded, (4) extraordinary, unusual and non-recurring gains and losses
(including any related tax effects on the Issuer) shall be excluded, (5) income
or loss attributable to discontinued operations (including without limitation
operations disposed of during such period whether or not such operations were
classified as discontinued) shall be excluded, (6) to the extent not otherwise
excluded in accordance with GAAP, the Net Income of any Restricted Subsidiary in
an amount that corresponds to the percentage ownership interest in the income of
such Restricted Subsidiary not owned on the last day of such period, directly or
indirectly, by such Person shall be excluded, (7) dividends, distributions and
any other payments constituting return of capital from Investments shall in any
event be excluded to the extent used to increase the amount available for
Investment under clause (xv) of the definition of "Permitted Investments" in
accordance with the terms thereof, (8) non-cash compensation charges, including
any arising from existing stock options resulting from any merger or
recapitalization transaction, shall be excluded, and (9) without duplication,
any charges related to the Recapitalization shall be excluded.
"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 225 Asylum Street, 23rd Street, Hartford, CT 06103.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement, which may include the
use of derivatives, designed to protect against fluctuations in currency values.
"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 Issuer, which Person must be a clearing agency
registered under the Exchange Act.
"Designated Senior Indebtedness," as to the Issuer or any Guarantor,
as the case may be, means (1) so long as Indebtedness under or in respect of the
Senior Credit Facility is outstanding or has commitments for the extension of
credit, such Senior Indebtedness and (2) any other Senior Indebtedness (a) 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, (b) which is specifically designated in
the instrument evidencing such Senior Indebtedness as "Designated Senior
Indebtedness" by such Person, and (c) as to which the Trustee has been given
written notice of such designation and, so long as there is a Representative
with respect to the Senior Credit Facility, such Representative shall have
concurred in such designation.
"Disqualified Capital Stock" means any Capital Stock of the Issuer 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, (1) matures on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness; or (2) is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, on or prior to the maturity date of the Notes, for cash
or securities constituting Indebtedness; or (3) 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 Issuer that is held by a current or former employee of the Issuer
subject to a put option and/or a call option with the Issuer triggered by the
termination of such employee's employment with the Issuer and/or the Issuer'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 will be deemed to include (a) any
Preferred Stock of a Restricted Subsidiary of the Issuer and (b) any Preferred
Stock of the Issuer, with respect to either of which, under the terms of such
Preferred Stock, by agreement or otherwise, the Issuer is obligated to pay
current dividends or distributions in cash during the period prior to the
maturity date of the Notes; provided, however, that Capital Stock of the Issuer
or any Restricted Subsidiary that is issued with the benefit of provisions
requiring (i) a change of control offer or asset sale proceeds offer to be made
for such Capital Stock in the event of a change of control of or asset sale by
the Issuer or such Restricted Subsidiary, which provisions have substantially
the same effect as Section 4.10 or Section 4.19, as the case may be or (ii)
payment of dividends or redemption only after the Notes have been fully paid,
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 (excluding any such
non-cash item to the extent that it represents an accrual of or a reserve for
cash expense in any period subsequent to the period for which EBIDTA is being
calculated) reducing or not included in the definition of Consolidated Net
Income for such period, plus, (vii) without duplication, all cash and non-cash
expenses and restructuring charges 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 Issuer each of the
foregoing items shall be determined on a consolidated basis with respect to the
Issuer and its 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) to the extent that 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 Investor" means UIC Holdings, L.L.C., a Delaware limited
liability company.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exchange Notes" shall have the meaning assigned thereto in the
Registration Rights Agreement.
"fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction.
"Financing Documents" means this Indenture, the
Notes, and the Guarantees.
"Foreign Subsidiary" means a Restricted Subsidiary of the Company (a)
that is organized in a jurisdiction other than the United States of America or a
state thereof or the District of Columbia and (b) with respect to which at least
90% of its sales (as determined in accordance with GAAP) are generated by
operations located in jurisdictions outside the United States of America.
"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
Issuer 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 Issuer that
hereafter becomes a Guarantor pursuant to Section 4.14, and "Guarantors" means
such entities, collectively.
"Guarantor Representative" means (1) so long as the Senior Credit
Facility remains outstanding or any commitments thereunder remain in effect, the
agent (or if there is more than one agent therefor, the administrative agent for
the lender parties thereunder) and (2) thereafter the agent, the indenture
trustee, other trustee or other representative for any Guarantor Senior
Indebtedness.
"Guarantor Senior Indebtedness" means the principal of and premium, if
any, and interest (including, without limitation, Accrued Bankruptcy Interest)
on, and any and all other fees, expense reimbursement obligations, indemnities
and other amounts and obligations incurred or owing 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 Issuer or any Restricted Subsidiaries, in each case, 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 expressly provide that it is to rank pari passu with or subordinate to
the Guarantees and (e) all deferrals, renewals, extensions, refinancings,
replacements and refundings in whole or in part of, and amendments,
modifications, restatements and supplements to, any of the 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 except to the extent such Indebtedness is
pledged as security under the Senior Credit Facility, (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 other item of Indebtedness of
the Company (although this clause (iii) shall not apply to the subordination of
liens or security interests covering property or assets securing Guaranteed
Senior Indebtedness of the Company); (iv) any trade payable arising from the
purchase of goods or materials or for services obtained in the ordinary course
of business, or (v) liability for federal, state, local or other taxes owed or
owing by the Issuer.
"Holding Company" means the parent company of the New Operating
Company following the Asset Drop-Down.
"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 Issuer
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 Issuer, Disqualified
Capital Stock of the Issuer 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 Issuer 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.
"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 Issuer 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. For
the purposes of Section 4.09, "Investment" shall include and be valued at the
fair market value of the net assets of any Restricted Subsidiary at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary and
shall exclude the fair market value of the net assets of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary. If the Issuer or any Restricted Subsidiary of the Issuer
sells or otherwise disposes of any Common Stock of any direct or indirect
Restricted Subsidiary of the Issuer such that, after giving effect to any such
sale or disposition, the Issuer no longer owns, directly or indirectly, greater
than 50% of the outstanding Common Stock of such Restricted Subsidiary, the
Issuer shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Common Stock of such
Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date the Notes are first issued by the Issuer
and authenticated by the Trustee under this Indenture.
"Issuer Request" means any written request signed in the names of each
of the Issuer by the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer or the Treasurer of the Issuer and attested to by
the Secretary or any Assistant Secretary of the Issuer.
"Issuer" means the party 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 (other than a
Guarantor) on the Notes. In the event of an Asset Drop-Down, the New Operating
Company shall be the "Issuer" for all purposes hereunder.
"Letter of Credit Obligations" means all Obligations in respect of
Indebtedness of the Issuer or any of its Restricted Subsidiaries with respect to
letters of credit issued pursuant to the Senior Indebtedness which Indebtedness
shall be deemed to consist of (a) the aggregate maximum amount then available to
be drawn under all such letters of credit (the determination of such maximum
amount to assume compliance with all conditions for drawing) and (b) the
aggregate amount that has then been paid by, and not reimbursed to, the issuers
under such letters of credit.
"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 Issuer in the ordinary course of business), security
interest, lien, charge, easement or encumbrance 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).
"Maturity Date" means April 1, 2009.
"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
any Person, the aggregate net proceeds received by such Person, 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 Person,
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 any Person 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 any Person 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 Issuer in connection
therewith).
"New Operating Company" means the newly-formed Wholly-Owned Subsidiary
of United Industries Corporation, which becomes the "Issuer" hereunder pursuant
to the Asset Drop-Down.
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles (or, in the case of any of the events
described in clause (7) of Section 6.01, with the passage of time would entitle)
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.
"Obligations" means, with respect to any Indebtedness, any principal,
premium, interest, penalties, fees, indemnifications, reimbursements, damages
and other expenses and liabilities payable under the documentation governing
such Indebtedness.
"Offering Memorandum" means the Final Offering Memorandum dated March
19, 1999 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.
"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 Obligations
payable in connection with Designated Senior Indebtedness.
"Permitted Holders" means, collectively, (i) the Issuer and, in the
event of the Asset Drop-Down, the Holding Company, (ii) any THL Group Member,
(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, and (iv) any underwriter during the course of an
underwritten public offering until completion of the initial distribution
thereof.
"Permitted Indebtedness" means:
(i) Indebtedness of the Issuer or any Restricted Subsidiary arising
under or in connection with the Senior Credit Facility in an amount not to
exceed the sum of (a) $225,000,000 plus (b) the greater of (i) $110,000,000
or (ii) the aggregate of 80% of the accounts receivable and 50% of the
inventory of the Issuer and its consolidated Restricted Subsidiaries, which
sum 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;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness of Foreign Subsidiaries not to exceed $5,000,000 in
the aggregate at any one time outstanding;
(iv) Indebtedness not covered by any other clause of this definition
which is outstanding on the date of this Indenture including for purposes
of this clause (iv) Capitalized Lease Obligations in an amount not to
exceed $10,000,000 incurred in the leasing of an aircraft for use by the
Issuer, which lease is entered into on or before September 30, 1999;
(v) Indebtedness of the Issuer to any Restricted Subsidiary of the
Issuer and Indebtedness of any Restricted Subsidiary of the Issuer to the
Issuer or another Restricted Subsidiary of the Issuer; provided that (a) if
the Issuer or any Guarantor is the obligor on such Indebtedness, such
Indebtedness is unsecured and expressly subordinated to the payment in full
to all obligations in respect of the Notes and the Guarantee of such
Guarantor on terms substantially in the form provided in this Indenture and
(b)(i) any subsequent issuance or transfer of equity interests that results
in any such Indebtedness being held by a Person other than the Issuer or a
Restricted Subsidiary of the Issuer, and (ii) any sale or transfer of any
such Indebtedness to a Person other than the Issuer or a Restricted
Subsidiary of the Issuer, shall be deemed to constitute an incurrence of
Indebtedness by the Issuer or such Restricted Subsidiary not permitted by
this clause (v);
(vi) Interest Rate Agreements;
(vii) Refinancing Indebtedness;
(viii) Indebtedness under Commodity Hedge Agreements and Currency
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 Issuer or its Subsidiaries of obligations of the Issuer
or any of its Subsidiaries, which obligations are not otherwise prohibited
under this Indenture;
(x) contingent obligations of the Issuer 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 Issuer and its
Subsidiaries in connection with such Asset Sale;
(xi) Indebtedness incurred in respect of performance, surety and other
similar bonds and completion guarantees provided by the Issuer and the
Restricted Subsidiaries in the ordinary course of business, and extensions,
refinancings and replacements thereof;
(xii) Indebtedness incurred by the Issuer or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including, without
limitation, letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation or other similar claims;
(xiii) Purchase Money Indebtedness and Capitalized Lease Obligations of
the Issuer and its Subsidiaries incurred to acquire, construct of improve
property and assets 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 (xiii)), the
principal amount of which Purchase Money Indebtedness and Capitalized Lease
Obligations shall not in the aggregate at any one time outstanding exceed
$15,000,000; and
(xiv) additional Indebtedness of the Issuer or any of its Subsidiaries
(other than Indebtedness specified in clauses (i) through (xiii) above) not
to exceed $25,000,000 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 Issuer, or by a Restricted
Subsidiary thereof, in the Issuer or a Restricted
Subsidiary;
(ii) Temporary Cash Investments;
(iii) Investments by the Issuer, 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 Issuer, (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 Issuer or a
Restricted Subsidiary thereof or (c) such business or assets are owned by
the Issuer or a Restricted Subsidiary;
(iv) an Investment that is made by the Issuer 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 Issuer 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 $2,000,000 in the aggregate at any one time
outstanding, (b) loans to employees of the Issuer or its Subsidiaries for
the sole purpose of purchasing equity of the Issuer, (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 Issuer under Interest Rate
Agreements;
(x) Investments under Commodity Hedge Agreements and Currency
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;
(xii) Investments in suppliers or customers that are in bankruptcy,
receivership or similar proceedings or as a result of foreclosure on a
secured Investment in a third party received in exchange for or
cancellation of an existing obligation of such supplier or customer to the
Issuer or a Restricted Subsidiary;
(xiii) Investments paid for solely with Capital Stock (other than
Disqualified Capital Stock) of the Issuer;
(xiv) Investments in joint venture arrangements (which may be structured
as corporations, partnerships, trusts, limited liability companies or other
Persons), or in a Person which as a result of such Investment becomes a
joint venture arrangement, in an aggregate amount, as valued at the time
each such Investment is made, not exceeding $10,000,000 for all such
Investments from and after the date hereof; and
(xv) Investments (other than Investments specified in clauses (i)
through (xiv) above) in an aggregate amount, as valued at the time each
such Investment is made, not exceeding $10,000,000 for all such Investments
from and after the Issue Date; provided that the amount available for
Investments to be made pursuant to this clause (xv) shall be increased from
time to time (a) to the extent any return of capital is received by the
Issuer or a Restricted Subsidiary on an Investment previously made in
reliance on this clause (xv), in each case, up to, but not exceeding, the
amount of the original Investment but only to the extent such return of
capital is excluded from Consolidated Net Income and (b) by 100% of the
aggregate net proceeds of any equity contribution received by the Issuer
(other than in return for Disqualified Capital Stock) from a holder of the
Issuer's Capital Stock, net of any amounts thereof used to calculate
amounts available for Restricted Payments pursuant to clause (a)(iii) of
Section 4.09 or previously relied upon to make any Permitted Investments
pursuant to this clause (xv).
Not later than the date of making of any Permitted Investment made in
reliance on clause (xv) above that includes proceeds described in clause (b)
thereof, the Issuer shall deliver to the Trustee an Officers' Certificate
stating that such Permitted Investment is permitted and setting forth in
reasonable detail the date, amount and nature of the purchase or contribution
being relied upon.
"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 Issuer or at the time such corporation or other entity is merged into the
Issuer 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 Issuer or merging into the Issuer 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 Issuer or any of its
Restricted Subsidiaries and (iv) Liens existing on the Issue Date.
"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.
"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.
"Purchase Money Indebtedness" means any Indebtedness incurred by a
Person to finance (within 90 days from incurrence) the cost (including the cost
of construction or improvement) 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.
"Qualified Public Offering" means a public offering and sale by the
Issuer (or, in the event of the Asset Drop-Down, the New Operating Company or
the Holding Company) 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 pursuant to a registration statement registered
pursuant to the Securities Act; provided that the aggregate Net Proceeds to the
Issuer or the Holding Company in the event of an Asset Drop-Down, from such
offering and sale is at least $25,000,000 and, provided, further that, in the
event of the Asset Drop-Down and a subsequent Qualified Public Offering by the
Holding Company, the Holding Company will contribute to the capital of the New
Operating Company that portion of the Net Proceeds thereof necessary to pay the
aggregate redemption price (including accrued interest) of the Notes to be
redeemed.
"Recapitalization" means the transactions described
in the Recapitalization Agreement.
"Recapitalization Agreement" means the Agreement and Plan of
Recapitalization, Purchase and Redemption Agreement dated as of December 24,
1998 as amended by Amendment No. 1 dated January 20, 1999 and Amendment No. 2
dated January 25, 1999 by and among the Sellers named therein, the Issuer, and
the Equity Investor.
"Redeemable Dividend" means, for any dividend or distribution 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.
"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 is issued in
exchange for, or refunds, refinances, renews, replaces, defeases or extends in
whole or in part any Indebtedness of the Issuer outstanding on the Issue Date or
other Indebtedness permitted to be incurred by the Issuer 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 exchanged for, refunded, refinanced,
renewed, replaced, defeased 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
Reifnancing Indebtedness is incurred by the same Person that initially incurred
the Indebtedness being refunded, refinanced or extended, except that the Issuer
or a Wholly-Owned Subsidiary thereof may incur Refinancing Indebtedness to
refund, refinance or extend Indebtedness of the Issuer or any Wholly-Owned
Subsidiary of the Issuer.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of March 24, 1999 among the Issuer and CIBC Oppenheimer Corp.
and NationsBanc Montgomery Securities, LLC, as Initial Purchasers.
"Regulation S" means Regulation S promulgated under
the Securities Act.
"Representative" means (a) so long as the Senior Credit Facility
remains outstanding or any commitments thereunder remain in effect, the agent
(or if there is more than one agent therefor, the administrative agent for the
lender parties thereunder) and (b) thereafter the agent, indenture trustee,
other trustee or other representative for any Senior Indebtedness.
"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.
"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 Issuer or any Restricted Subsidiary of the Issuer or any payment made to
the direct or indirect holders (in their capacities as such) of Capital Stock of
the Issuer or any Restricted Subsidiary of the Issuer (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) and (y) in the case of Restricted
Subsidiaries of the Issuer, dividends or distributions payable to the Issuer or
to a Wholly-Owned Subsidiary of the Issuer), (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of the Issuer or
any of its Restricted Subsidiaries (other than Capital Stock owned by the Issuer
or a Wholly-Owned Subsidiary of the Issuer, 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) the
making of any Investment or guarantee of any Investment in any Person other than
a Permitted Investment, (v) any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary on the basis of the Investment by the Issuer therein and
(vi) forgiveness of any Indebtedness of an Affiliate of the Issuer (other than a
Restricted Subsidiary) to the Issuer 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 Issuer's Board of
Directors.
"Restricted Subsidiary" means a Subsidiary of the Issuer other than an
Unrestricted Subsidiary. The Board of Directors of the Issuer may designate any
Unrestricted Subsidiary or any Person that is to become a Subsidiary as a
Restricted Subsidiary if: (i) immediately after giving effect to such action
(and treating any Acquired Indebtedness as having been incurred at the time of
such action), the Issuer could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.06 and
(ii) no Default or Event of Default shall have occurred and be continuing. The
Issuer shall deliver an Officers' Certificate to the Holders upon designating
any Unrestricted Subsidiary as a Restricted Subsidiary.
"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 Issuer or any Restricted Subsidiary of
the Issuer of any real or tangible personal Property, which Property has been or
is to be sold or transferred by the Issuer or such Restricted Subsidiary to such
Person in contemplation of such leasing.
"S&P" means Standard & Poor's Ratings Services, a
division of the McGraw-Hill Company, Inc. 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 Amended and Restated Credit
Agreement, dated as of March 24, 1999, among the Issuer, the banks, financial
institutions and other institutional lenders from time to time party thereto,
NationsBank, N.A., as the Swing Line Bank and the Initial Issuing Bank
thereunder, NationsBanc Montgomery Securities LLC and Morgan Stanley Senior
Funding, Inc., as the Co-Arrangers therefor, Canadian Imperial Bank of Commerce,
as Documentation Agent therefor, Morgan Stanley Senior Funding, Inc., as
Syndication Agent thereunder, NationsBanc Montgomery Securities LLC, as Lead
Arranger and Book Manager therefor, and NationsBank, N.A., as Administrative
Agent for the lender parties thereunder, together with all "Loan Documents" as
defined therein and all other documents related thereto (including, without
limitation, any notes, guarantee agreements, security documents and Interest
Rate Agreements), 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,
renewing, replacing or otherwise restructuring (including increasing the amount
of available borrowings thereunder or adding Subsidiaries of the Issuer as
additional borrowers or guarantors thereunder), in whole or in part, all or any
portion of the Indebtedness under such agreement or any successor or replacement
and whether by the same or any other agent, lender or group of lenders or other
party thereto.
"Senior Indebtedness" means the principal of and premium, if any, and
interest (including, without limitation, Accrued Bankruptcy Interest) on, and
any and all other fees, expense reimbursement obligations, indemnities and other
amounts and Obligations incurred or owing 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 Issuer under the Senior Credit Facility, (b) all obligations of the Issuer
with respect to any Interest Rate Agreement, (c) all obligations of the Issuer
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 Issuer which does not expressly provide that it is to rank pari passu
with or subordinate to the Notes and (e) all deferrals, renewals, extensions,
refinancings, replacements and refundings in whole or in part of, and
amendments, modifications, restatements 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 Issuer
to any of its Subsidiaries, except to the extent such Indebtedness is pledged as
security under the Senior Credit Facility, (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 other item of Indebtedness of the Issuer (although
this clause (iii) shall not apply to the subordination of liens or security
interests covering property or assets securing 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) liability for federal,
state, local or other taxes owed or owing by the Issuer.
"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 and
time deposits issued by a lender under the Senior Credit Facility or by a bank
(or subsidiary of a bank holding company) 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) commercial paper
issued by any Person organized under the laws of any state of the United States
of America and rated at least "Prime-1" (or the then equivalent grade) by
Moody's or at least "A-1" (or the then equivalent grade) by S&P, in each case
with a maturity of not more than 180 days from the date of acquisition thereof;
or (iv) 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), (ii), and (iii).
"THL" means Thomas H. Lee Equity Fund IV, L.P.
"THL Fees" means (i) management fees under the management agreement
between the Issuer and THL and its Affiliates and successors and assigns that do
not exceed $750,000 per year and the reimbursement of expenses pursuant thereto,
provided that the amount of such management fees paid per year shall increase to
$1,500,000 if at the time of such payment the Issuer could incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.06 and (ii) one time fees to THL in connection with each acquisition
of a company or a line of business by the Issuer or its Subsidiaries, such fees
to be payable at the time of each such acquisition and not to exceed 1% of the
aggregate consideration paid by the Issuer and its Subsidiaries for any such
acquisition.
"THL Group Member" means THL and any Affiliate thereof (including any
equity fund advised by any such Affiliate) (other than any of their portfolio
companies).
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
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" of any Person means (i) any Subsidiary of
such Person that at the time of determination shall be or continue to be
designated an Unrestricted Subsidiary by the Board of Directors of such Person
in the manner provided below; and (ii) any Subsidiary of an Unrestricted
Subsidiary.
The Board of Directors may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Issuer or any other Subsidiary of the Issuer that is not a
Subsidiary of the Subsidiary to be so designated; provided that (i) such
designation complies with Section 4.09; and (ii) each Subsidiary to be so
designated and each of its Subsidiaries has not at the time of designation, and
does not thereafter, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Issuer or any of its
Restricted Subsidiaries.
The Board of Directors may designate any Unrestricted Subsidiary to be
a Restricted Subsidiary only if (i) immediately after giving effect to such
designation and treating all Indebtedness of such Unrestricted Subsidiary as
being incurred on such date, the Issuer is able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.06; and (ii) immediately before and immediately after giving effect to
such designation, no Default or Event of Default shall have occurred and be
continuing.
Any such designation by the Board of Directors shall be evidenced by
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
The Trustee shall be given prompt notice by the Issuer of each Board
Resolution of the Issuer 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 Issuer, 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:
Term Defined in Section
- ---- ------------------
"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)
"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)
"Restricted Global Note"................... 2.16(a)
"Restricted Period"........................ 2.16(f)
"Rule 144A Notes".......................... 2.02
"Subordinated Obligations"................. 11.01
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
Issuer, 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:
(1) a term has the meaning assigned to it herein,
whether defined expressly or by reference;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) words used herein implying any gender shall apply to every gender;
and
(6) 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 the aggregate principal amount of $150,000,000, upon a written order of
the Issuer in the form of an Officers' Certificate of the Issuer. 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 $150,000,000 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
Issuer 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
Issuer 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.
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 the Issuer 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 Issuer, and the Issuer 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 Issuer 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 Issuer and Affiliates of the Issuer.
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 Issuer 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 Issuer, if any, in respect of the Notes and this Indenture may be
served. The Issuer hereby initially designates the office of State Street Bank
and Trust Company, 61 Broadway, New York, New York, ATTN: Corporate Trust
Division, 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 Issuer may have one or more additional Paying Agents. The term
"Paying Agent" includes any additional Paying Agent. Neither the Issuer nor any
Affiliate thereof may act as Paying Agent. The Issuer may change any Paying
Agent or Registrar without notice to any Noteholder.
The Issuer 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 Issuer shall notify the Trustee of the name and
address of any such Agent. If the Issuer 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 Issuer 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 Issuer or any other obligor on the Notes), and the Issuer and
the Paying Agent shall notify the Trustee of any default by the Issuer (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 Issuer 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 Issuer 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 Issuer and the Registrar, duly executed by the Holder
thereof or his attorneys duly authorized in writing. To permit registrations of
transfers and exchanges, the Issuer 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 Issuer 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 Issuer 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 Issuer, the Registrar
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 Issuer's compliance with or have
any responsibility with respect to the Issuer's 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 Issuer shall issue and the Trustee shall authenticate a
replacement Note if the Holder of such Note furnishes to the Issuer 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 Issuer, an indemnity bond
shall be posted, sufficient in the judgment of both to protect the Issuer, the
Trustee or any Paying Agent from any loss that any of them may suffer if such
Note is replaced. The Issuer may charge such Holder for the Issuer' reasonable
out-of-pocket expenses in replacing such Note and the Trustee may charge the
Issuer 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 Issuer, subject to
Section 2.09.
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 Issuer.
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.
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
Issuer, 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 Issuer
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 Issuer consider appropriate for temporary Notes. Without unreasonable
delay, the Issuer 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 Issuer 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 Issuer. The Issuer may not
reissue or resell, or issue new Notes to replace, Notes that the Issuer have
redeemed or paid, or that have been delivered to the Trustee for cancellation.
Section 2.13. Defaulted Interest.
If the Issuer defaults 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 special record date, which date
shall be at least five Business Days prior to the payment date. The Issuer 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 Issuer 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 Issuer 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 Issuer 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 Issuer 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 Issuer 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 Issuer shall promptly
notify the Trustee of any such CUSIP number used by the Issuer in connection
with the issuance of the Notes and of any change in the CUSIP number.
Section 2.15. Deposit of Moneys.
Prior to 11:00 a.m., New York City time, on each Interest Payment Date
and Maturity Date, the Issuer 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 Issuer 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.
(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
Issuer, the Trustee and any agent of the Issuer 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 Issuer
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 Issuer
that it is unwilling or unable to continue as depository for such Global Note
and the Issuer thereupon fail to appoint a successor depository or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Issuer, 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).
(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 Issuer
shall execute, and the Trustee shall upon receipt of a written order from the
Issuer 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 Issuer 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 Issuer
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 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 March 24, 2001 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 Issuer 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 Issuer 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
Issuer 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 Issuer 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 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 Issuer 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 Issuer to such effect.
(d) 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 Issuer 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 Issuer elects to redeem Notes pursuant to paragraph 6 of the
Notes, at least 30 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 Issuer 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.
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
Issuer 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 Qualified Public 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 Issuer 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 Issuer 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:
(1) the Redemption Date;
(2) the redemption price and the amount of premium and accrued
interest to be paid;
(3) 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;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(6) that unless the Issuer defaults in making the redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
Redemption Date;
(7) the provision of paragraph 6 of the Notes pursuant to which the
Notes called for redemption are being redeemed; and
(8) the aggregate principal amount of Notes that are being redeemed.
At the Issuer's 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 Issuer's name and at the Issuer's 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 11:00 A.M., New York City time, on each Redemption
Date, the Issuer 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 Issuer to
the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay the
redemption price of, premium, if any, 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, premium, if any, 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 Issuer 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 Issuer 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 Issuer 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, whether or not the Issuer is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act; provided, however, that the Issuer
shall not be required to make any such filings prior to the date on which the
Issuer's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1999 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 Issuer 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 Issuer
(at its own expense) will file with the Trustee within 15 days after the Issuer
files 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 Issuer files with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act. Upon qualification
of this Indenture under the TIA, the Issuer shall also comply with the
provisions of TIA ss. 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 Issuer's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(b) At the Issuer's expense, regardless of whether the Issuer is
required to furnish such reports and other information referred to in paragraph
(a) above to its equityholders pursuant to the Exchange Act, the Issuer 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 Issuer shall, upon request, provide to any Holder of Notes or
any prospective transferee of any such Holder any information concerning the
Issuer (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 Issuer 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 Issuer or (ii) the date such Note (or any predecessor Note)
was last acquired from an "affiliate" of the Issuer within the meaning of Rule
144 under the Securities Act.
Section 4.03. Waiver of Stay, Extension or Usury Laws.
The Issuer covenants (to the extent that it may lawfully do so) that
it 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
Issuer 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 it may lawfully do so)
the Issuer hereby expressly waives all benefit or advantage of any such law and
covenants that it 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 Issuer shall deliver to the Trustee, within 100 days after the
end of each fiscal year and on or before 55 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 the Issuer of which shall be the principal executive
officer, principal financial officer or principal accounting officer of the
Issuer) stating that a review of the activities of the Issuer and its
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 Issuer has kept, observed, performed and fulfilled its
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 Issuer
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is 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
Issuer is 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 Issuer's 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 Issuer has 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.
(c) The Issuer 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 Issuer is taking or proposes to take with respect
thereto.
(d) The Issuer's fiscal year currently ends on December 31. The Issuer
will provide notice to the Trustee of any change in fiscal year.
Section 4.05. Taxes.
The Issuer shall, and shall cause each of its Subsidiaries to, pay
prior to delinquency all material taxes, assessments, and governmental levies
except as contested in good faith and by appropriate proceedings or where such
failure to effect such payment will not have a Material Adverse Effect.
Section 4.06. Limitation on Additional Indebtedness.
(a) The Issuer shall not, and shall not permit any Restricted
Subsidiary of the Issuer to, directly or indirectly, incur any Indebtedness
(including Acquired Indebtedness and including Disqualified Capital Stock);
provided that the Issuer or any of the Guarantors may incur Indebtedness
(including Acquired Indebtedness or Disqualified Capital Stock) if (1) after
giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, the Issuer's Consolidated Fixed Charge
Coverage Ratio is at least 2.0 to 1 and (2) 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.
(b) Notwithstanding the foregoing, the Issuer and its Restricted
Subsidiaries may incur Permitted Indebtedness; provided that the Issuer will not
incur any Permitted Indebtedness that ranks junior in right of payment to the
Notes that has a maturity or mandatory sinking fund payment prior to the
maturity of the Notes.
(c) For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness or is entitled to be incurred pursuant to
paragraph (a) of this Section 4.06, the Issuer will, in its sole discretion,
classify such item of Indebtedness in any manner that complies with this
covenant and such item of Indebtedness will be treated as having been incurred
pursuant to only one of the clauses in the definition of Permitted Indebtedness
or pursuant to paragraph (a) hereof. Accrual of interest and the accretion of
accreted value will not be deemed to be an incurrence of Indebtedness for
purposes of this Section 4.06.
Section 4.07. Limitation on Preferred Stock of
Restricted Subsidiaries.
The Issuer shall not permit any Restricted Subsidiary to issue any
Preferred Stock (except Preferred Stock to the Issuer or a Restricted
Subsidiary) or permit any Person (other than the Issuer or a Restricted
Subsidiary) to hold any such Preferred Stock unless the Issuer or such
Restricted Subsidiary would be entitled to incur or assume Indebtedness under
paragraph (a) 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 Issuer shall not (i) sell, pledge, hypothecate or otherwise convey
or dispose of any Capital Stock of a Subsidiary (other than Liens under the
Senior Credit Facility or under the terms of any Designated Senior Indebtedness
and Liens not prohibited by Section 4.12) other than to the Issuer or another
Restricted Subsidiary or (ii) permit any of its Subsidiaries to issue any
Capital Stock (other than director's qualifying shares), other than (a) to the
Issuer or a Wholly-Owned Subsidiary of the Issuer or (b) to any other
shareholder of such Subsidiary (including to another Subsidiary) in an amount
not to exceed such shareholders' proportionate share of any dividend,
distribution or other issuance to all shareholders. 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.
Section 4.09. Limitation on Restricted Payments.
(a) The Issuer shall not make, and shall not permit any of its
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 Issuer 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 Issuer 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 Issuer from the issue or sale, after the
Issue Date, of Capital Stock (other than Disqualified Capital Stock or
Capital Stock of the Issuer issued to any Subsidiary of the Issuer) of the
Issuer or any Indebtedness or other securities of the Issuer convertible
into or exercisable or exchangeable for Capital Stock (other than
Disqualified Capital Stock) of the Issuer which has been so converted or
exercised or exchanged, as the case may be, net of any amounts thereof
previously relied upon or to be relied upon to make any Permitted
Investments pursuant to clause (xv) of the definition thereof, 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 Issuer (other than in return for Disqualified Capital Stock) from a
holder of the Issuer's Capital Stock, net of any amounts thereof previously
relied upon or to be relied upon to make any Permitted Investments pursuant
to clause (xv) of the definition thereof, plus (4) $7,500,000. For purposes
of determining under this clause (iii) 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 Issuer.
(b) 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 repurchase, redemption or other
acquisition or retirement of any shares of Capital Stock of the Issuer or
Indebtedness subordinated to the Notes 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 Issuer) of other shares of Capital Stock of the Issuer (other
than Disqualified Capital Stock); (iii) the redemption or retirement of
Indebtedness of the Issuer 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 Issuer that is Refinancing Indebtedness; (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 Issuer) 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 Issuer or, in the event
of the Asset Drop-Down, the Holding Company (other than Disqualified Capital
Stock) or options on such shares held by the Issuer's or its Subsidiaries' (or,
in the event of the Asset Drop-Down, the Holding Company's or its Subsidiaries)
officers, employees or directors or former officers, employees or directors (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; provided that the aggregate cash
consideration paid, or distributions or payments made, pursuant to this clause
shall not exceed $3,000,000 in any fiscal year (provided, that the Issuer may
carry over and make in a subsequent fiscal year, in addition to the amounts
permitted for such fiscal year, the amount of such distributions permitted to
have been made, but not made, in any preceding fiscal year) or $15,000,000 in
the aggregate from and after the Issue Date, provided that the foregoing amounts
shall be increased by (A) the amount of any payments by officers, employees or
directors of the Holding Company, the Issuer or a Subsidiary thereof for the
purchase of Capital Stock of the Issuer (other than in connection with the
Recapitalization) or, in the event of the Asset Drop-Down, the Holding Company
except to the extent such payments consist of proceeds from loans by the Issuer
or a Subsidiary thereof and (B) the amount of any cash capital contributions to
the Issuer by THL or any Affiliate thereof used by the Issuer to purchase,
redeem or otherwise acquire for value shares of such capital stock; (vi) the
payment of THL Fees; (vii) so long as no Default or Event of Default shall have
occurred and be continuing, payments not to exceed $100,000 in the aggregate to
enable the Issuer to make payments to holders of its Capital Stock in lieu of
issuance of fractional shares of its Capital Stock; (viii) Restricted Payments
made pursuant to the Recapitalization Agreement; (ix) the Issuer or any
Restricted Subsidiary from purchasing all (but not less than all), excluding
directors' qualifying shares, of the Capital Stock or other ownership interests
in a Subsidiary of the Issuer which Capital Stock or other ownership interests
were not theretofore owned by the Issuer or a Subsidiary of the Issuer, such
that after giving effect to such purchase such Subsidiary becomes a Restricted
Subsidiary of the Issuer; (x) the payment of distributions (A) to the Equity
Investor solely for the purpose of enabling the Equity Investor to pay its
reasonable, ordinary course operating and administrative expenses and taxes in
any fiscal year will not exceed $250,000, and (B) in the event of the Asset
Drop-Down, to the Holding Company for the purpose of enabling the Holding
Company to pay its reasonable, ordinary course operating and administrative
expenses, the amount of which distributions pursuant to subclauses (A) and (B)
of this clause (x) in any fiscal year will not exceed $500,000; and (xi) in the
event of the Asset Drop-Down, the payment of distributions to the Holding
Company solely for the purpose of enabling the Holding Company to pay taxes
attributable to the operations of the New Operating Company and its Subsidiaries
to the extent such taxes are actually owed and the Holding Company is permitted
or required to make such payments.
(c) Notwithstanding the foregoing, (i) the amount of any payments made
in reliance on clause (i) and clause (v) of paragraph (b) above shall reduce the
amount otherwise available for Restricted Payments pursuant to paragraph (a)
above and (ii) in the event of the Asset Drop-Down, the amount of any payments
that could otherwise have been made in reliance on clauses (v), (vi), (vii), and
(x)(A) of paragraph (b) above may be paid for the respective purposes set forth
therein by the New Operating Company as dividends or distributions to the
Holding Company.
(d) Not later than the date of making any Restricted Payment, the
Issuer shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth in reasonable detail the basis
upon which the calculations required by this covenant were computed (including
without limitation the date, amount and nature of any purchase or contribution
referred to in clauses (a)(iii)(2) or (3) above), which calculations may be
based upon the Issuer's 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.
Section 4.10. Limitation on Certain Asset Sales.
(a) The Issuer shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the 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 of the
equity interests, property or assets constituting such Asset Sale (as determined
in good faith by the Board of Directors of the Issuer, and evidenced by a Board
Resolution); (ii) not less than 75% of the consideration received by the Issuer
or its Subsidiaries, as the case may be, is in the form of cash or Temporary
Cash Investments; and (iii) the Asset Sale Proceeds received by the Issuer or
such Restricted Subsidiary are applied (a) first, to the extent the Issuer
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 Issuer or
any Restricted Subsidiary within 365 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 or be applied to secure Letter
of Credit Obligations; and (b) second, to the extent of the balance of Asset
Sale Proceeds after application as described above, to the extent the Issuer 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 Issuer or such Restricted Subsidiary
as conducted at the time of such Asset Sale, provided that such investment
occurs or the Issuer 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 365th day following receipt
of such Asset Sale Proceeds (the "Reinvestment Date") and Asset Sale Proceeds
contractually committed are so applied within 365 days following the receipt of
such Asset Sale Proceeds.
Pending the final application of any such available Asset Sale
Proceeds, the Issuer or such Restricted Subsidiary may temporarily reduce
Indebtedness under a revolving credit facility or otherwise invest such
Available Asset Sale Proceeds in any manner not prohibited under this Indenture.
If, on the Reinvestment Date with respect to any Asset Sale, the
Available Asset Sale Proceeds exceed $10,000,000, the Issuer 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 Issuer is required to make an Excess Proceeds Offer, the
Issuer shall mail, within 30 days following the Reinvestment Date, a notice to
the Holders stating: (1) that such Holders have the right to require the Issuer
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 Issuer, 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, in addition to the foregoing, shall also
state:
(1) that any Note not tendered or accepted for payment will continue
to accrue interest;
(2) 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;
(3) 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 Issuer, a depositary, if appointed by the Issuer, 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;
(4) that Holders will be entitled to withdraw their election if the
Issuer, 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;
(5) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Available Asset Sale Proceeds, the Issuer shall select
the Notes to be purchased on a pro rata basis (with such adjustments as may
be deemed appropriate by the Issuer so that only Notes in denominations of
$1,000, or integral multiples thereof, shall be purchased); and
(6) 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.
On or before the Purchase Date, the Issuer 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 Issuer 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 from the
amount deposited by the Issuer an amount equal to the purchase price of the Note
tendered by such Holder and accepted by the Issuer for purchase, and the Issuer
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 Issuer to the Holder thereof.
If an Excess Proceeds Offer is not fully subscribed, the Issuer 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 Issuer shall not, and shall not permit any of its 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 Issuer 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, replacement, 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 Issuer and/or its Restricted
Subsidiaries and/or, in the event of the Asset Drop-Down, the Holding Company;
or (ii) the terms of such Affiliate Transaction are fair and reasonable to the
Issuer 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 Issuer 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 $2,000,000 which is not permitted under clause (i) above, the Issuer
must obtain a resolution of the Board of Directors of the Issuer certifying that
such Affiliate Transaction complies with clause (ii) above. In any Affiliate
Transaction with a value in excess of $10,000,000 which is not permitted under
clause (i) above (other than any sale by the Issuer of its Capital Stock that is
not Disqualified Capital Stock), the Issuer 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 or
Permitted Investment permitted by Section 4.13 hereof, (ii) any transaction
pursuant to an agreement, arrangement or understanding existing on the Issue
Date, (iii) any transaction, compensation or agreement approved by the Board of
Directors of the Issuer, with an officer or director of or consultant to the
Issuer or of any Subsidiary in his or her capacity as officer or director
entered into in the ordinary course of business, (iv) transactions permitted by
Section 5.01 hereof, (v) any transaction (a) between the Issuer and any THL
Group Member solely in its capacity as a holder or buyer of the Issuer's Capital
Stock or (b) in the event of the Asset Drop-Down, between the New Operating
Company and the Holding Company solely in its capacity as a holder or buyer of
the New Operating Company's Capital Stock, provided that any such transaction
described in this clause (v) is not otherwise prohibited by this Indenture, or
(vi) in the event of the Asset Drop-Down, any commercially reasonable
transaction between the New Operating Company and the Holding Company solely in
its capacity as a holder or buyer of the New Operating Company's Indebtedness
provided that any such transaction is not otherwise prohibited by this
Indenture.
Section 4.12. Limitations on Liens.
The Issuer shall not, and shall not permit any of its 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 Issuer or any Restricted Subsidiary or any shares of stock or
debt of any Restricted Subsidiary which owns property or assets, now owned or
hereafter acquired, which secures Indebtedness pari passu with or subordinated
to the Notes 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 in the same collateral as that securing such
Lien to the same extent as such subordinated Indebtedness is subordinated to the
Notes.
Section 4.13. Limitations on Investments.
The Issuer shall not, and shall not permit any of its 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 Issuer shall not create or acquire, nor permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than (i) a
Restricted Subsidiary that is acquired or created in connection with an
acquisition by the Issuer 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 $200,000
execute a guarantee in the form attached as Exhibit G to this Indenture,
pursuant to which such Restricted Subsidiary shall become a Guarantor which
Guarantee shall be subordinated to such Restricted Subsidiary's guarantee of or
pledge to secure any other Indebtedness that constitutes Senior Indebtedness to
the same extent as Notes are subordinated to Senior Indebtedness.
Notwithstanding the foregoing, any such Guarantee shall provide by its terms
that it shall be automatically and unconditionally released and discharged upon
certain mergers, consolidations, sales and other dispositions (including,
without limitation, by foreclosure) in accordance with this Indenture.
Section 4.15. Limitation on Other Senior Subordinated
Debt.
The Issuer shall not, and shall not permit any of its 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
Issuer or its 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 Issuer 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 Issuer and (ii) the Issuer or such Restricted Subsidiary, as
the case may be, 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 Issuer nor any of its 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 4.18. Legal Existence.
Subject to Article 5 hereof, the Issuer shall do or cause to be done
all things necessary to preserve and keep in full force and effect its 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 the Issuer any such Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Issuer and its Restricted Subsidiaries; provided, however, that the Issuer
shall not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Restricted Subsidiaries
if the Board of Directors of the Issuer shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Issuer and
its 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) In the event of a Change of Control, the Issuer 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
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 30 days following the first date on which the
Issuer has knowledge of any Change of Control, the Issuer covenants 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 Issuer must first comply with the covenant
described in the preceding sentence before it shall be required to purchase
Notes in the event of a Change of Control; provided that the Issuer's failure to
comply with the covenant described in the preceding sentence constitutes an
Event of Default described in clause (3) of Section 6.01 hereof if not cured
within 60 days after the notice required by such clause.
(b) Within 30 days prior to the expiration date stated in such Notice
of any Change of Control, the Issuer shall 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 validly 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 timely tendered in accordance with such notice
will remain outstanding and continue to accrue interest;
(iv) that, unless the Issuer defaults 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 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 or before the Change of Control Payment Date, the Issuer 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 Issuer. The Paying Agent shall promptly mail to each
Holder of Notes so accepted from the amount deposited by the Issuer payment in
an amount equal to the purchase price for such Notes, and the Issuer 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 the 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 Issuer shall not consummate any such offer or distribution with
respect to such subordinated Indebtedness or Preferred Stock until such time as
the Issuer shall have paid the Change of Control Purchase Price in full to the
Holders of Notes that have accepted the Issuer's Change of Control Offer and
shall otherwise have consummated the Change of Control Offer made to Holders of
the Notes and (ii) the Issuer 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 Issuer to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Issuer 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 Issuer 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 Issuer in respect of the
Notes and this Indenture may be served. The Issuer 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 Issuer 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
12.02.
The Issuer 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
Issuer 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 Issuer hereby initially designates the Corporate Trust Office of
the Trustee as such office of the Issuer.
Section 4.21. Maintenance of Properties; Insurance;
Books and Records; Compliance with Law.
(a) The Issuer shall, and shall cause each of its Restricted
Subsidiaries to, at all times cause all material properties used or useful in
the conduct of its 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 Issuer 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 Issuer shall, and shall cause each of its 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 Issuer
and each Subsidiary of the Issuer, in accordance with GAAP consistently applied
to the Issuer and their Subsidiaries taken as a whole.
(d) The Issuer shall and shall cause each of its 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 Issuer and
its Subsidiaries taken as a whole.
Section 4.22. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted
Subsidiaries.
The Issuer shall not, and shall not permit any of its 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 Issuer to (a)(i) pay dividends or make any other
distributions to the Issuer or any Restricted Subsidiary of the Issuer (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 Issuer or any Restricted Subsidiary of the Issuer, (b)
make loans or advances or capital contributions to the Issuer or any of its
Restricted Subsidiaries or (c) transfer any of its properties or assets to the
Issuer or any of its 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 or are no more restrictive in any
material respect (including without limitation pursuant to the Senior Credit
Facility), (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) any agreement or
instrument governing Indebtedness (whether or not outstanding) of Foreign
Subsidiaries, (vi) customary non-assignment provisions in leases, licenses or
other agreements entered in the ordinary course of business and consistent with
past practices, (vii) Refinancing Indebtedness; provided that such payment
restrictions are no more restrictive in any material respect than those
contained in the agreements governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded, (viii) customary
restrictions in security agreements or mortgages or similar agreements securing
Indebtedness of the Issuer or a Restricted Subsidiary to the extent such
restrictions restrict the transfer of the property subject to such security
agreements and mortgages or (ix) customary restrictions with respect to a
Restricted Subsidiary of the Issuer 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 Issuer 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.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and
Sale of Assets.
(a) The Issuer shall not, nor shall it 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
Issuer or any Guarantor): (i) the Issuer or such Guarantor, as the case may be,
shall be the continuing Person, or the Person (if other than the Issuer or such
Guarantor) formed by such consolidation or into which the Issuer or such
Guarantor, as the case may be, is merged or to which the properties and assets
of the Issuer or such Guarantor, as the case may be, are transferred shall be a
corporation, limited liability company 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 Issuer or such
Guarantor, as the case may be, under the Notes and this Indenture or Guarantee,
as applicable, and the obligations under this Indenture shall remain in full
force and effect; provided that at any time the Issuer or its successor is a
limited partnership or 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; and (iii) unless the merger or consolidation is
with, or the transfer of all or substantially all its assets is to a
Wholly-Owned Subsidiary, immediately after giving effect to such transaction on
a pro forma basis the Issuer or such Person could incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.06 hereof.
Nothing in this Section 5.01 will prohibit the consolidation, merger
or transfer of all or substantially all the assets of any Guarantor that is
otherwise permitted by and conducted in accordance with the other applicable
sections of this Indenture. In connection with any consolidation, merger or
transfer of assets contemplated by this Section 5.01, the Issuer 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 Issuer or any Guarantor in accordance
with Section 5.01 above, the successor corporation formed by such consolidation
or into which the Issuer 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 Issuer or such Guarantor under this Indenture with the same effect as if
such successor corporation had been named as the Issuer or such Guarantor
herein, and thereafter the predecessor corporation 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
(1) 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;
(2) 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;
(3) the Issuer 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;
(4) there is a default in the payment at final maturity of principal
in an aggregate amount of $10,000,000 or more with respect to any
Indebtedness of the Issuer or any Restricted Subsidiary thereof, or there
is an acceleration of any such Indebtedness aggregating $10,000,000 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
Issuer of such Default by the Trustee or any Holder;
(5) the entry of a final judgment or judgments which can no longer be
appealed or stayed for the payment of money in excess of $10,000,000 (net
of amounts covered by insurance for which coverage is not being challenged
or denied) against the Issuer or any Restricted Subsidiary thereof and such
judgment remains undischarged, paid or otherwise satisfied, for a period of
60 consecutive days during which a stay of enforcement of such judgment
shall not be in effect;
(6) the Issuer 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;
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Issuer or any Restricted Subsidiary
in an involuntary case,
(B) appoints a Custodian of the Issuer or any Restricted
Subsidiary or for all or substantially all of the property of either
of the Issuer or any Restricted Subsidiary, or
(C) orders the liquidation of the Issuer or any Restricted
Subsidiary,
and the order or decree remains unstayed and in effect
for 60 days; or
(8) 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 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 Issuer
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 the Issuer) occurs and is continuing, the
Trustee by notice to the Issuer, or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding may by written notice
to the Issuer 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 or
owing under or in respect of the Senior Credit Facility or any commitments
remain in effect under 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 Issuer 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 the Issuer 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 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:
(1) the Holder gives to the Trustee written notice
of a continuing Event of Default;
(2) 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;
(3) such Holder or Holders offer and if requested provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(4) 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
(5) 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 Issuer 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 Issuer or the
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 Issuer 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 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 Issuer, 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 a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise 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 Person would exercise or use under the same circumstances in the conduct
of such Person's own affairs.
(b) Except during the continuance of a Default or an Event of Default
of which a Responsible Officer of the Trustee has actual knowledge:
(1) The Trustee undertakes to perform such duties and only such duties
that are specifically set forth in this Indenture 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. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(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:
(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.
(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.
(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 shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer or any
Guarantor.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by the law.
(g) 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.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
Section 7.02. Rights of Trustee.
Subject to Section 7.01 hereof:
(1) The Trustee may rely and shall be protected in acting or
refraining from acting 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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 Issuer 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 Issuer's or any Guarantor's use of the
proceeds from the sale of Notes or any money paid to the Issuer or any Guarantor
pursuant to the terms of this Indenture and it shall not be 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 or Event of 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 ss. 313(a), within 60 days after May 15 of any
year, commencing May 15, 2000, the Trustee shall mail to each Noteholder a brief
report dated as of such May 15 that complies with TIA ss. 313(a). The Trustee
also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA ss. 313(c) and TIA ss. 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by mail:
(1) to all registered Holders of Notes, as the names and addresses of
such Holders appear on the Registrar's books; and
(2) 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
Issuer shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.07. Compensation and Indemnity.
The Issuer and the Guarantors shall pay to the Trustee and Agents from
time to time such compensation as shall be agreed in writing between the Issuer
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 Issuer and the Guarantors 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 Issuer 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 Issuer 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 Issuer shall not relieve the
Issuer of its obligations hereunder except to the extent the Issuer are
prejudiced thereby.
Notwithstanding the foregoing, the Issuer 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 Issuer 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 Issuer 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 Issuer 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.
Section 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Issuer 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 Issuer's written consent which consent
shall not be unreasonably withheld. The Issuer may remove the Trustee at their
election if:
(1) the Trustee fails to comply with Section 7.10
hereof;
(2) the Trustee is adjudged a bankrupt or an
insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property;
(4) the Trustee otherwise becomes incapable of acting; or
(5) 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 Issuer 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 Issuer.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer 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 Issuer. 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 Issuer 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 ss. 310(a)(1) and (2) in every respect. The Trustee shall
have a combined capital and surplus of at least $150,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA ss. 310(b), including the provision in ss. 310(b)(1).
Section 7.11. Preferential Collection of Claims Against
Issuer.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311 (b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
Section 7.12. Paying Agents.
The Issuer 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 Issuer 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 Issuer (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 Issuer 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:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to consummate the Asset Drop-Down;
(4) to comply with any requirements of the SEC under the TIA;
(5) to cure any ambiguity, defect or inconsistency;
(6) to make any other change that does not adversely affect the rights
of any Noteholders hereunder; or
(7) to add a Guarantor.
The Trustee is hereby authorized to join with the Issuer 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.
Section 8.02. With Consent of Holders.
The Issuer (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
Issuer 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:
(1) reduce the amount of Notes whose Holders must consent to an
amendment, supplement or waiver to this Indenture or the Notes;
(2) reduce the rate of or change the time for payment of interest on
any Note;
(3) reduce the principal of or premium on or change the stated
maturity of any Note;
(4) waive a default in the payment of the principal of, interest on,
or redemption payment with respect to any Note;
(5) make any Note payable in money other than that stated in the Note
or change the place of payment from New York, New York;
(6) make any change in provisions of the Indenture protecting the
right of each holder of Notes to receive payment of principal of and
interest on such Note on or after the due date thereof or to bring suit to
enforce such payment, or permitting holders of a majority in principal
amount of Notes to waive Defaults or Events of Default;
(7) amend, change or modify in any material respect the obligation of
the Issuer to make and consummate a Change of Control Offer in the event of
a Change of Control or make and consummate an Excess Proceeds Offer with
respect to any Asset Sale that has been consummated or modify any of the
provisions or definitions with respect thereto;
(8) affect the ranking of the Notes or the Guarantees in a manner
adverse to the holders;
(9) change any provision of this Indenture relating to the redemption
of Notes;
(10) release any Guarantor from any of its obligations under its
Guarantee or this Indenture otherwise than in accordance with the terms of
this Indenture.
After an amendment, supplement or waiver under this Section 8.02 or
Section 8.01 becomes effective, the Issuer shall mail to the Holders a notice
briefly describing the amendment, supplement or waiver.
Upon the written request of the Issuer, accompanied by Board
Resolutions authorizing the execution of any such supplemental indenture by the
Issuer and the Guarantors, 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 Issuer 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 Issuer 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 Issuer)
shall request the Holder of the Note (in accordance with the specific written
direction of the Issuer) 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 Issuer or the Trustee so
determines, the Issuer 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 Issuer and the Guarantors,
enforceable against the Issuer and the Guarantors in accordance with its terms
(subject to customary exceptions).
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture.
The Issuer 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 2.08 hereof) and the Issuer 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 Issuer' 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 Issuer and Guarantors in Sections 7.07, 9.05 and 9.06 hereof
shall survive.
Section 9.02. Legal Defeasance.
The Issuer may at its option, by Board Resolution of the Board of
Directors of the Issuer, 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 Issuer 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 Issuer, shall, subject to
Section 9.06 hereof, execute instruments in form and substance reasonably
satisfactory to the Trustee and Issuer 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 Issuer's 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 hereof) and (D) this Article 9. Subject to compliance
with this Article 9, the Issuer may exercise its 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 Issuer, pursuant to a Board Resolution of the
Board of Directors of the Issuer, the Issuer 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) and (iii) 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 Issuer 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:
(1) the Issuer 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;
(2) 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 Issuer in respect of such deposit (it
being understood that this condition shall not be deemed satisfied until
the expiration of such period);
(3) 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 Issuer;
(4) 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 Issuer is a party or by which it is bound;
(5) the Issuer 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;
(6) in the case of an election under Section 9.02 above, the Issuer
shall have delivered to the Trustee an Opinion of Counsel stating that (i)
the Issuer has 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;
(7) in the case of an election under Section 9.03 hereof, the Issuer
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;
(8) the Issuer shall have delivered to the Trustee an Officers'
Certificate stating that the deposit under clause (1) was not made by the
Issuer with the intent of defeating, hindering, delaying or defrauding any
creditors of the Issuer or others;
(9) the Issuer shall have paid or duly provided for payment under
terms mutually satisfactory to the Issuer and the Trustee all amounts then
due to the Trustee pursuant to Section 7.07 hereof; and
(10) the Issuer 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 Issuer
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 Issuer 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.
Anything in this Article 9 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer 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 Issuer's 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 Issuer 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 Issuer 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 Issuer, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to Section 9.01 hereof, to the
Issuer 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 Issuer 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 Issuer (or, if
appropriate, the Guarantors) upon an Issuer Request, or if such moneys are then
held by the Issuer or the 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 Issuer 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 Issuer 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 Issuer. After payment to the
Issuer or the Guarantors or the release of any money held in trust by the Issuer
or any Guarantors, as the case may be, Noteholders entitled to the money must
look only to the Issuer 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 Issuer 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 Issuer
with respect thereto by 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 Issuer, any right to require a proceeding first
against the Issuer, 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.
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 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 Issuer and its Restricted Subsidiaries have sold at least 80% 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; provided that in the
event of a sale of less than all of the Capital Stock of a Guarantor, the
release hereunder shall not be effective unless and until such Guarantor is
similarly released from its guarantee under the Senior Credit Facility; or
(ii) the Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, the Issuer 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, interest, indemnification payments, expenses and
other amounts on the Notes pursuant to the Guarantee by such Guarantor and under
or in respect of the Financing Documents 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 (as hereinafter defined) 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 Guarantor; and such holders are made
obligees hereunder and they or each of them may enforce such provisions.
For all purposes of this Article X, all Guarantor Senior Indebtedness
now or hereafter existing and all other Obligations relating thereto shall not
be deemed to have been paid in full unless and until all of the Obligations of
any holder thereof shall have been indefeasibly paid in full in cash (including,
without limitation, all Accrued Bankruptcy Interest) and all of the commitments
thereunder shall have been terminated and, in the case of any Letter of Credit
Obligations, such Obligations shall have been fully drawn and paid in full in
cash or 100% cash collateralized.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
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
marshalling of assets or liabilities of any Guarantor, then and in any such
event:
(1) the holders of all Guarantor Senior Indebtedness of such Guarantor
shall be entitled to receive payment in full of all obligations due on or
in respect of all such Guarantor Senior Indebtedness (including Accrued
Bankruptcy Interest) and all outstanding Letter of Credit Obligations cash
collateralized, 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
(2) 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 X including any such
distribution that is payable or deliverable by reason of the payment of any
other Indebtedness of the Issuer being subordinated to the payment of the
Notes 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 the Guarantor
Representative, 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 of all such Guarantor
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payments or distribution, or provisions thereof, to the Holders of such
Guarantor Senior Indebtedness; and
(3) 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 Indebtedness
of such Guarantor is paid in full, 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, or provision thereof 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 on Designated Senior Indebtedness which
constitutes Guarantor Senior Indebtedness, the occurrence of a Non-Payment
Default on Designated Senior Indebtedness which constitutes Guarantor Senior
Indebtedness and the acceleration of the maturity of Designated Senior
Indebtedness which constitutes Guarantor Senior Indebtedness in accordance with
its terms, or if any judicial proceeding is pending to determine whether any
such default has occurred, no payment or distribution of any assets or
securities of a Guarantor (or any 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 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 no holder
or owner of any Notes shall take or receive from any Guarantor (or any
Subsidiary of such Guarantor), directly or indirectly in any manner, payment in
respect of all or any portion of its Obligations on its Guarantee (and, in any
such event, such prohibition shall continue) until such Payment Default is
cured, waived in writing or ceases to exist, such acceleration has been
rescinded or otherwise cured, or such judicial proceeding shall be discharged,
vacated or settled. At such time as the prohibition set forth in the preceding
sentence shall no longer be in effect and, 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 including any missed
payments.
(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 or
securities of such Guarantor or any of its Subsidiaries 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 or on behalf of such Guarantor or any of its
Subsidiaries, 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 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 (subject, however, to the
provisions of Section 11.09), 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, unless
another default, event of default or other event that would prohibit such
payment, distribution or acquisition under Section 10.07(a) has occurred and is
continuing (y) such Non-Payment Event of Default shall have been cured or waived
in writing or shall have ceased to exist unless another default, event of
default or other event that would prohibit such payment, distribution or
acquisition under Section 10.07(a) has occurred and is continuing 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,
including any missed payments. 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 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) If, notwithstanding the provisions of Sections 10.06 and 10.07,
any direct or indirect payment or distribution on account of principal of or
interest on or other Obligations with respect to the Guarantees or acquisition,
repurchase, redemption, retirement or defeasance of any of the Guarantees shall
be made by or on behalf of the Issuer (including any payments or distribution by
any liquidating trustee or agent or other Person in a proceeding referred to in
Section 10.06) and received by any Holder at a time when such payment or
distribution was prohibited by the provisions of Section 10.06 or 10.07 or such
payment or distribution was required to be made to holders of Guarantor Senior
Indebtedness or their Guarantor Representative, then, unless and until such
payment or distribution is no longer prohibited by Section 10.06 or 10.07, such
payment or distribution shall be received, segregated from other funds or assets
and held in trust by the Holders, for the benefit of, and shall be immediately
paid or delivered over to, the holders of Guarantor Senior Indebtedness or their
Guarantor Representative, ratably in accordance with the respective amounts of
the principal of such Guarantor Senior Indebtedness, interest (including Accrued
Bankruptcy Interest) thereon and all other Obligations with respect thereto held
or represented by each, until the principal of all Guarantor Senior
Indebtedness, interest (including Accrued Bankruptcy Interest) thereon and all
other Obligations with respect thereto have been paid in full and all
outstanding Letter of Credit Obligations have been fully cash collateralized.
Any distribution to the holders of Guarantor Senior Indebtedness or their
Guarantor Representative of assets other than cash may be held by such holders
or such Guarantor Representative as additional collateral without any duty to
the Holders to liquidate or otherwise realize on such assets or to apply such
assets to any Guarantor Senior Indebtedness or other Obligations relating
thereto.
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 and until the Notes are paid in
full, 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 applicable to 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.
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 Issuer 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, 11.11
11.12, 11.13, 11.14 and 11.15 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.
ARTICLE 11
SUBORDINATION OF NOTES
Section 11.01. Notes Subordinate to Senior Indebtedness.
The Issuer covenants and agrees, 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, and premium, if
any, interest, indemnification payments, expenses and other amounts on the Notes
and under or in respect of the Financing Documents (collectively, the
"Subordinated Obligations") 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 (as hereinafter defined) 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.
For all purposes of this Article XI, all Senior Indebtedness now or
hereafter existing and all other Obligations relating thereto shall not be
deemed to have been paid in full unless and until all of the Obligations of any
holder thereof shall have been indefeasibly paid in full in cash (including,
without limitation, all Accrued Bankruptcy Interest) and all of the commitments
thereunder shall have been terminated and, in the case of any Letter of Credit
Obligations, such Obligations shall have been fully drawn and paid in full in
cash or 100% cash collateralized.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
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 Issuer or to its
creditors, as such, or to its assets, whether voluntary or involuntary or (b)
any liquidation, dissolution or other winding-up of the Issuer, 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
marshalling of assets or liabilities of the Issuer, then and in any such event:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full of all obligations due on or in respect of all Senior
Indebtedness (including Accrued Bankruptcy Interest) and all outstanding
Letter of Credit Obligations cash collateralized, before the Holders of the
Notes are entitled to receive or retain any payment or distribution of any
kind or character on account of any of the Subordinated Obligations; and
(2) any payment or distribution of assets of the Issuer 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 XI (including any such distribution that is
payable or deliverable by reason of the payment of any other Indebtedness
of the Issuer being subordinated to the payment of the Notes) 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 Senior Indebtedness or
their Representative, 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
(3) 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 Issuer 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 the
Subordinated Obligations 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 Issuer 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 the Issuer with, or the merger of Issuer with or
into, another Person or the liquidation or dissolution of the 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 the Issuer for the purposes of this Article XI 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 on Designated Senior Indebtedness, the
occurrence of a Non-Payment Default on Designated Senior Indebtedness and the
acceleration of the maturity of Designated Senior Indebtedness in accordance
with its terms, or if any judicial proceeding is pending to determine whether
any such default has occurred, no payment or distribution of any assets or
securities of the Issuer (or any Subsidiary of the Issuer) 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 Issuer being subordinated to the payment of the Notes
by the Issuer) may be made by or on behalf of the Issuer (or any Subsidiary of
the Issuer), including, without limitation, by way of set-off or otherwise, for
or on account of any of the Subordinated Obligations or for or on account of the
purchase, redemption or other acquisition of the Notes, and no holder or owner
of any Notes shall take or receive from the Issuer or any Subsidiary of the
Issuer, directly or indirectly in any manner, payment in respect of all or any
portion of any of the Subordinated Obligations (and, in any such event, such
prohibition shall continue) until such Payment Default is cured, waived in
writing or ceases to exist or such judicial proceeding shall be discharged,
vacated or settled, 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 and, subject to the provisions of the following paragraph (b), the
Issuer shall resume making any and all required payments in respect of the
Subordinated Obligations, 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 Issuer or any of
its Subsidiaries 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 Issuer being subordinated
to the payment of the Notes by the Issuer) may be made by or on behalf of the
Issuer or any of its subsidiaries, including, without limitation, by way of
set-off or otherwise, for or on account of any of the Subordinated Obligations,
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 Issuer or any of its Subsidiaries, directly or
indirectly in any manner, payment in respect of all or any portion of the
Subordinated Obligations 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 (subject, however, to the provisions of
Section 11.09) 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, unless another default, event
of default or other event that would prohibit such payment, distribution or
acquisition under Section 11.03(a) has occurred and is continuing (y) such
Non-Payment Event of Default shall have been cured or waived in writing or shall
have ceased to exist , unless another default, event of default or other event
that would prohibit such payment, distribution or acquisition under Section
11.03(a) has occurred and is continuing or such Designated Senior Indebtedness
shall have been paid in full or (z) such Payment Blockage Period shall have been
discharged or terminated by written notice to the Issuer or the Trustee from the
Representative, after which, in the case of clause (x), (y) or (z), the Issuer
shall resume making any and all required payments in respect of the Subordinated
Obligations, including any missed payments. 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 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 under this Section 11.03(b) (and no Guarantee Payment Blockage Period
may be commenced under Section 10.07(b) hereof) until at least 180 consecutive
days have elapsed from the last day of the Initial Blockage Period.
(c) If, notwithstanding the provisions of Sections 11.02 and 11.03,
any direct or indirect payment or distribution on account of any of the
Subordinated Obligations or acquisition, repurchase, redemption, retirement or
defeasance of any of the Notes shall be made by or on behalf of the Issuer
(including any payments or distribution by any liquidating trustee or agent or
other Person in a proceeding referred to in Section 11.02) and received by any
Holder at a time when such payment or distribution was prohibited by the
provisions of Section 11.02 or 11.03 or such payment or distribution was
required to be made to holders of Senior Indebtedness or their Representative,
then, unless and until such payment or distribution is no longer prohibited by
Section 11.02 or 11.03, such payment or distribution shall be received,
segregated from other funds or assets and held in trust by the Holders, for the
benefit of, and shall be immediately paid or delivered over to, the holders of
Senior Indebtedness or their Representative, ratably in accordance with the
respective amounts of the principal of such Senior Indebtedness, interest
(including Accrued Bankruptcy Interest) thereon and all other Obligations with
respect thereto held or represented by each, until the principal of all Senior
Indebtedness, interest (including Accrued Bankruptcy Interest) thereon and all
other Obligations with respect thereto have been paid in full and all
outstanding Letter of Credit Obligations have been fully cash collateralized.
Any distribution to the holders of Senior Indebtedness or their Representative
of assets other than cash may be held by such holders or such Representative as
additional collateral without any duty to the Holders to liquidate or otherwise
realize on such assets or to apply such assets to any Senior Indebtedness or
other Obligations relating thereto.
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 Issuer 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 and until the
Notes are paid in full, 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 Subordinated Obligations 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 Issuer, its creditors other than holders of Senior Indebtedness and
the Holders of the Notes, be deemed to be a payment or distribution by the
Issuer to or on account of the Senior Indebtedness.
Section 11.06. Provisions Solely To Define Relative
Rights.
The provisions of this Article XI 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 XI or elsewhere in this Indenture or in the Notes is intended to
or shall (a) impair, as among the Issuer, its creditors other than holders of
Senior Indebtedness and the Holders of the Notes, the obligation of the Issuer,
which is absolute and unconditional, to pay to the Holders of the Subordinated
Obligations as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Issuer or the Holders
of the Notes and creditors of the Issuer 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 Issuer
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.
The failure to make a payment on account of any Subordinated
Obligations 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 Issuer whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the indebtedness of the Issuer 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 of the Subordinated Obligations 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 Issuer or any Holder or by any act or failure
to act, in good faith, by any such holder, or by any non-compliance by the
Issuer or any Holder 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 extended, restate,
refinance, amend, supplement, renew or alter, Senior Indebtedness, any security
thereof 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 Issuer 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 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.
(c) Each Holder by its acceptance of any Note: (1) acknowledges and
agrees that the holders of any Senior Indebtedness or their Representative, in
its or their discretion, and without affecting any rights of any holder of
Senior Indebtedness under this Article XI, may foreclose any mortgage or deed of
trust covering interest in real property securing such Senior Indebtedness or
any guarantee thereof by judicial or nonjudicial sale, even though such action
may release the Issuer or any guarantor of such Senior Indebtedness from further
liability under such Senior Indebtedness or any guarantee thereof or may
otherwise limit the remedies available to the holders thereof; and (2) hereby
waives any defense that such Holder may otherwise have to the enforcement by any
holder of any Senior Indebtedness or any Representative of such holder against
such Holder of this Article XI after or as a result of any action, including any
such defense based on any loss or impairment of rights of subrogation.
(d) If at any time any payment of Obligations with respect to any
Senior Indebtedness is rescinded or must otherwise be returned upon the
insolvency, bankruptcy, reorganization or liquidation of the Issuer or
otherwise, the provisions of this Article 11 shall continue to be effective or
reinstated, as the case may be, to the same extent as though such payments had
not been made.
Section 11.09. Notice to Trustee.
(a) The Issuer shall give prompt written notice to the Trustee of any
fact known to the Issuer 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 Issuer 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 Issuer 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 Issuer 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.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative. Upon any payment or distribution of assets of the Issuer
referred to in this Article XI, 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 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 Issuer, 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 Issuer 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 XI 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 XI of
the holders, from time to time, of Senior Indebtedness.
SECTION 11.14. Authorization to Effect Subordination.
If any of the Holders does not file a proper proof of claim of debt in
the form required in any proceeding referred to in Section 6.01(6) or 6.01(7)
with respect to the Issuer at least 30 days before the expiration of the time to
file such claim, the Representative is hereby authorized to file an appropriate
claim for, and on behalf of, the Holders; provided that nothing herein shall be
deemed to give the Representative any rights to vote or otherwise act on behalf
of any Holder in such proceeding other than to make such filing.
SECTION 11.15. Amendments.
The provisions of this Article XI shall not be amended or modified in
any manner without the written consent of the holders of all Senior Indebtedness
unless such amendment or modification could not adversely affect the holders of
such 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.
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 Issuer or any Guarantor:
United Industries Corporation
8825 Page Boulevard
St. Louis, Missouri 63114
Attention: Chief Financial Officer
Fax Number: (314) 253-5964
Copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Carter Emerson, P.C.
William S. Kirsch, P.C.
If to the Trustee:
State Street Bank and Trust Company
225 Asylum Street, 23rd Floor
Hartford, CT 06103
Attention: Corporate Trust Administration
Fax Number: (860) 244-1896
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 Issuer 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 ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Issuer, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
Section 12.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Issuer or any Guarantor to the
Trustee to take any action under this Indenture, the Issuer or such Guarantor
shall furnish to the Trustee:
(1) 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
(2) 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:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(2) 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;
(3) 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
(4) 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.
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 Massachusetts. If a payment date is a Legal Holiday payment may
be made 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 Issuer 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 Issuer 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 Issuer
or of any successor corporation or against the property or assets of any such
stockholder, officer, employee or director, either directly or through the
Issuer 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 Issuer 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 Issuer 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 Issuer in this Indenture and the Notes shall
bind its successor. 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>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed all as of the date and year first written above.
UNITED INDUSTRIES CORPORATION
By:
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
By:
Name:
Title:
<PAGE>
A-9
EXHIBIT A
[FORM OF FACE OF NOTE]
Number CUSIP
UNITED INDUSTRIES CORPORATION
9-7/8% SENIOR SUBORDINATED NOTE DUE 2009
United Industries Corporation (the "Issuer"), for value received
promise to pay to or registered assigns the principal sum of ONE HUNDRED FIFTY
MILLION DOLLARS ($150,000,000), on April 1, 2009.
Interest Payment Dates: April 1 and October 1,
commencing October 1, 1999
Record Dates: March 15 and September 15
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.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized Officers.
UNITED INDUSTRIES CORPORATION
By:
Name:
Title:
By:
Name:
Title:
Certificate of Authentication:
This is one of the 9-7/8% Senior
Subordinated Notes due 2009 referred to in
the within-mentioned Indenture
Dated:
STATE STREET BANK AND TRUST COMPANY, as Trustee
By:
Authorized Signatory
<PAGE>
(REVERSE SIDE)
UNITED INDUSTRIES CORPORATION
9-7/8% SENIOR SUBORDINATED NOTE DUE 2009
1. INTEREST.
UNITED INDUSTRIES CORPORATION, a Delaware corporation (the "Issuer"),
promises to pay interest on the principal amount of this Note semiannually on
April 1 and October 1 of each year (each an "Interest Payment Date"), commencing
on October 1, 1999, at the rate of 9-7/8% 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 Issuer 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 Issuer 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 March 15 or September 15 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
Issuer 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 Issuer 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, State Street Bank and Trust Company (the "Trustee") will
act as Paying Agent and Registrar. The Issuer may change any Paying Agent or
Registrar without notice to the Holders of the Notes. Neither the Issuer nor any
of its Subsidiaries or Affiliates may act as Paying Agent but may act as
Registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Issuer issued this Note under an Indenture dated as of March 24,
1999 (the "Indenture") among the Issuer, 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
ss.ss. 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 Issuer limited to
$150,000,000 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
Issuer, mergers and sale of assets, the payments of dividends on, or the
repurchase of, capital stock of the Issuer and their Restricted Subsidiaries,
certain other restricted payments by the Issuer and their Restricted
Subsidiaries, certain transactions with, and investments in, its 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 Issuer, at its option, may redeem the Notes, in whole or in part,
at any time on or after April 1, 2004 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 April 1 of each year listed below:
Year Redemption Price
2004............................... 104.938%
2005............................... 103.292%
2006............................... 101.646%
2007 and thereafter................ 100.000%
Notwithstanding the foregoing, the Issuer may redeem in the aggregate
up to 40% of the original principal amount of Notes at any time and from time to
time prior to April 1, 2002 at a redemption price equal to 109.875% of the
aggregate principal amount so redeemed, plus accrued interest to the Redemption
Date out of the Net Proceeds of one or more Qualified Public Offerings; provided
that at least 60% 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 Qualified
Public 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 Issuer 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 Issuer 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 Issuer, CIBC
Oppenheimer Corp. and NationsBanc Montgomery Securities LLC, as initial
purchasers of the Notes, the Issuer 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 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 Issuer at its written request. After that, Holders entitled to money
must look to the Issuer 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 Issuer, 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 Issuer, 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 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.
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 the Issuer) occurs and is continuing, the Trustee
by notice to the Issuer, 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 Issuer 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 Issuer 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 ISSUER
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuer, any Guarantor or their Affiliates, and may otherwise deal with the
Issuer 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 Issuer or any Guarantor shall not have
any liability for any obligations of the Issuer 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 Issuer 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 Issuer has 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 ISSUER WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN REQUEST
AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO: UNITED
INDUSTRIES CORPORATION, 8825 Page Boulevard, St. Louis, Missouri 63114,
Attention:
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.
<PAGE>
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 Issuer. 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>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
the Issuer 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 (in amounts of $1,000 or an integral multiple thereof):
$
Date:
Your Signature:
(Sign exactly as your name appears on
the face of this Note)
Signature Guaranteed
<PAGE>
B-3
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 ISSUER OR ANY AFFILIATE OF THE ISSUER, 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.
<PAGE>
[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 Issuer. 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: ____________________________________
<PAGE>
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 Issuer 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
<PAGE>
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.
<PAGE>
[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 Issuer. 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: ____________________________________
<PAGE>
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 Issuer 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
<PAGE>
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 ISSUER
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.
<PAGE>
EXHIBIT E
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------, ----
State Street Bank and Trust Company
225 Asylum Street, 23rd Floor
Hartford, CT
Attention:
Re: UNITED INDUSTRIES CORPORATION (the
"Issuer") 9-7/8% Senior Subordinated
Notes due 2009 (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 March 24, 1999 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 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 Issuer such certifications, legal
opinions and other information as you and the Issuer 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 Issuer 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
<PAGE>
EXHIBIT F
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
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State Street Bank and Trust Company
225 Asylum Street, 23rd Floor
Hartford, CT
Attention:
Re: UNITED INDUSTRIES CORPORATION (the "Issuer")
9-7/8% Senior Subordinated Notes due 2009 (the
"Notes")
Dear Sirs:
In connection with our proposed sale of $150,000,000 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
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Issuer 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
<PAGE>
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 March 24, 1999 by and among United Industries
Corporation, a Delaware corporation (the "Issuer"), and State Street Bank and
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 Issuer 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.
This guarantee shall be automatically and unconditionally released and
discharged upon certain mergers, consolidations, sales and other dispositions
(including, without limitation, by foreclosure) in accordance with the
Indenture.
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:
Exhibit 10.1
------------
UNITED INDUSTRIES CORPORATION
DEFERRED COMPENSATION PLAN
(Effective January 20, 1999)
<PAGE>
CERTIFICATE
-----------
I, _______________________, the_____________________ of United
Industries Corporation, do hereby certify that the attached is a true and
correct copy of the United Industries Corporation Deferred Compensation Plan as
in effect January 20, 1999.
By: __________________________________
Dated this 20th day of January, 1999
<PAGE>
UNITED INDUSTRIES CORPORATION
DEFERRED COMPENSATION PLAN
(Effective January 20, 1999)
Table of Contents
<TABLE>
<S> <C>
ARTICLE I
Introduction..........................................................1
1.1 Name........................................................1
1.2 Purpose.....................................................1
1.3 Administration of the Plan..................................1
ARTICLE II
Definitions...........................................................1
ARTICLE III
Plan Participation....................................................3
3.1 Eligibility.................................................3
3.2 Participation...............................................3
ARTICLE IV
Deferral Contributions................................................3
4.1 Deferral Contributions......................................3
4.2 Deferral Contribution Account...............................4
ARTICLE V
Earnings on Account Balances..........................................4
5.1 Investments.................................................4
5.2 Crediting of Deferrals......................................4
ARTICLE VI
Establishment of Trust................................................5
6.1 Establishment of Trust......................................5
6.2 Status of Trust.............................................5
ARTICLE VII
Distribution of Account Balances......................................5
7.1 Vesting.....................................................5
7.2 Timing of Distributions.....................................5
7.3 Form of Distribution of Accounts............................6
7.4 Involuntary Distributions...................................6
7.5 Designation of Beneficiaries................................7
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ARTICLE VIII
Amendment and Termination.............................................7
8.1 Amendment...................................................7
8.2 Plan Termination............................................7
ARTICLE IX
General Provisions....................................................7
9.1 Non-Alienation of Benefits..................................7
9.2 Withholding for Taxes.......................................8
9.3 Immunity of Committee Members...............................8
9.4 Plan Not to Affect Employment Relationship..................8
9.5 Assumption of Company Liability.............................8
9.6 Notices.....................................................8
9.7 Gender and Number; Headings.................................8
9.8 Controlling Law.............................................8
9.9 Successors..................................................9
9.10 Severability................................................9
9.11 Action by Company...........................................9
9.12 Review of Benefit Determinations............................9
</TABLE>
ii
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UNITED INDUSTRIES CORPORATION
DEFERRED COMPENSATION PLAN
ARTICLE I
Introduction
1.1 Name. The name of this plan shall be the "United
Industries Corporation Deferred Compensation Plan." Unless otherwise expressly
provided herein, the capitalized terms used in this Plan shall have the meanings
set forth in Article II.
1.2 Purpose. This Plan shall constitute an unfunded
nonqualified deferred compensation arrangement established for the purpose of
providing deferred compensation to the Participants in connection with the
recapitalization of the Company.
1.3 Administration of the Plan. The Plan shall be
administered by the Committee. The duties and authority of the Committee under
the Plan shall include (i) the interpretation of the provisions of the Plan,
(ii) the adoption of any rules and regulations which may become necessary or
advisable in the operation of the Plan, (iii) the making of such determinations
as may be permitted or required pursuant to the Plan, and (iv) the taking of
such other actions as may be required for the proper administration of the Plan
in accordance with its terms. Any decision of the Committee with respect to any
matter within the authority of the Committee shall be final, binding and
conclusive upon the Company and each Participant, former Participant, designated
beneficiary, and each person claiming under or through any Participant or
designated beneficiary; and no additional authorization or ratification by the
Board of Directors or stockholders of the Company shall be required. Any action
taken by the Committee with respect to any one or more Participants shall not be
binding on the Committee as to any action to be taken with respect to any other
Participant. A member of the Committee may be a Participant, but no member of
the Committee may participate in any decision directly affecting his rights or
the computation of his benefits under the Plan. Each determination required or
permitted under the Plan shall be made by the Committee in the sole and absolute
discretion of the Committee.
ARTICLE II
Definitions
2.1 "Account" means a bookkeeping account maintained by the
Company for a Participant under the Plan.
2.2 "Account Balance" means the value, as of a specified
date, of any of the Accounts of a Participant.
2.3 "Affiliate" of any Person means any other Person,
directly or indirectly controlling, controlled by or under common control with
such Person.
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2.4 "Cause" for termination by the Company of a
Participant's employment shall have the meaning set forth in such Participant's
Management Agreement.
2.5 "Code" means the Internal Revenue Code of 1986, as
amended.
2.6 "Committee" means the persons who have been designated
by the Board of Directors of the Company to administer the Plan; provided that
each Participant shall be a member of the Committee and Participants shall
constitute a majority of the Committee so long as there are at least two
Participants, unless otherwise determined by the Board of Directors of the
Company.
2.7 "Company" means United Industries Corporation, a
Delaware corporation, or its successors or assigns under the Plan.
2.8 "Deferral Contributions" means the contributions made on
behalf of a Participant pursuant to Section 4.1 of this Plan.
2.9 "Deferral Contribution Account" has the meaning set
forth in Section 4.2 of the Plan.
2.10 "Fair Market Value" shall have the meaning set forth in
such Participant's Management Agreement.
2.11 "Good Reason" for termination by a Participant of such
Participant's employment shall have the meaning set forth in such Participant's
Management Agreement.
2.12 "Management Agreements" means, collectively, the
Management Agreements, dated as of January 20, 1999 between the Company and each
of Richard A. Bender, William P. Johnson and Daniel J. Johnston, as each may be
subsequently amended. Each such agreement is individually referred to herein as
a "Management Agreement."
2.13 "Marketable Securities" means any securities which are,
or will be immediately after distribution hereunder, (i) covered by an effective
registration statement filed pursuant to the Securities Act of 1933, as amended
from time to time, (ii) listed for trading on a national securities exchange and
(iii) otherwise freely tradable.
2.14 "Participant" means any eligible employee of the
Company who is participating under the Plan pursuant to Article III.
2.15 "Participant Securities" means, with respect to each
Participant, the Permitted Investments in which a Participant's Account is
deemed to be invested.
2.16 "Permitted Investment" means an investment of 50% in
Class A voting common stock of the Company ("Class A") and 50% in Class B
nonvoting common stock of the Company ("Class B"), including any cash or
property received in exchange for, or with respect to the Class A or Class B, in
connection with a merger of the Company, a sale of substantially all of the
stock of the Company, or any similar transaction.
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2.17 "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
2.18 "Plan" means this "United Industries Corporation
Deferred Compensation Plan," as amended from time to time.
2.19 "Public Offering" shall have the meaning set forth in
such Participant's Management Agreement.
2.20 "Public Sale" shall have the meaning set forth in such
Participant's Management Agreement.
2.21 "Sale of the Company" shall have the meaning set forth
in such Participant's Management Agreement.
2.22 "Stockholders" shall have the meaning set forth in such
Participant's Management Agreement.
2.23 "Subsidiary" shall have the meaning set forth in such
Participant's Management Agreement.
2.24 "Transfer" shall have the meaning set forth in such
Participant's Management Agreement.
ARTICLE III
Plan Participation
3.1 Eligibility. Richard A. Bender, William P. Johnson and
Daniel J. Johnston are eligible to participate under this Plan.
3.2 Participation. Each person eligible to participate in
this Plan shall become a Participant hereunder by timely executing a deferral
election form with the Committee in accordance with the requirements of Article
IV.
ARTICLE IV
Deferral Contributions
4.1 Deferral Contributions. Each person who is eligible to
participate in this Plan may elect to reduce the amount that such person would
otherwise be entitled to be paid in connection with the recapitalization of the
Company pursuant to such person's Contract for Release in Event of Sale (as
accelerated by such person's Management Agreement) by an amount less than or
equal to the amount to be paid to such Participant pursuant to such contract.
Each Participant desiring to
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defer compensation hereunder shall file an election with the Committee in such
form and at such time as the Committee may determine. The completion of such an
election shall evidence the Participant's authorization of the Company to reduce
the amount payable to such Participant and shall thereafter be irrevocable.
4.2 Deferral Contribution Account. The Committee shall
establish and maintain an account (the "Deferral Contribution Account") with
respect to each Participant who has elected to make a Deferral Contribution
under this Article IV. The Participant's Deferral Contribution Account shall be
a bookkeeping account maintained by the Company and shall reflect the amount the
Participant has elected to defer under the Plan. The amount of any deemed
investment earnings and losses on the amounts reflected in a Participant's
Deferral Contribution Account shall be credited or charged to his Deferral
Contribution Account in accordance with Article V.
ARTICLE V
Earnings on Account Balances
5.1 Investments.
(a) Permitted Investments. Except as provided in Section
5.1(b), all of a Participant's Deferral Contribution Account shall be deemed to
be invested in the Permitted Investments. Such amounts shall be deemed to be
invested as of the time the amount payable to each Participant pursuant to such
person's Contract for Release in Event of Sale (as accelerated by such person's
Management Agreement) is reduced pursuant to Section 4.1.
(b) Receipts. Each Account shall be deemed to receive all
interest, dividends, earnings and other payments of cash or property which would
have been received with respect to or in exchange for a Permitted Investment
deemed to be held in such Account if such Account was actually invested in such
Permitted Investment (including with respect to a Sale of the Company) to the
extent that such amounts are not previously included in the definition of
Permitted Investment. Any such payments of cash or of property consisting of
Marketable Securities shall be paid (in the case of property consisting of
Marketable Securities, at the option of the Company, in kind or in cash in an
amount equal to the Fair Market Value of such Marketable Securities) to the
Participant to whose Account it is attributable not more than ten days after the
date it would have been received with respect to the Permitted Investment.
(c) Actual Investment Not Required. The Company need not
actually make any Permitted Investment. If the Company should from time to time
make any investment similar to a Permitted Investment, such investment shall be
solely for the Company's own account and the Participant shall have no right,
title or interest therein. Accordingly, each Participant is solely an unsecured
creditor of the Company with respect to any amount distributable to him under
the Plan.
5.2 Crediting of Deferrals. The Company shall credit all
Deferral Contributions to a Participant's Deferral Contribution Account as of
the date such Deferral Contribution is made.
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ARTICLE VI
Establishment of Trust
6.1 Establishment of Trust. The Company shall establish a
grantor trust (as described in Section 671 of the Code) for the purpose of
accumulating assets to provide for the obligations hereunder (the "Trust"). The
assets and income of the Trust shall be subject to the claims of the general
creditors of the Company. The establishment of the Trust shall not affect the
Company's liability to pay benefits hereunder except that any such liability
shall be offset by any payments actually made to a Participant under the Trust.
The Company shall cause an amount in cash equal to each Participant's Deferral
Contributions (determined pursuant to Section 4.1) to be contributed to the
Trust, and the Trust shall use such cash to purchase Permitted Investments from
the Company as described in Section 7(a) of each Participant's Management
Agreement. Any additional amount to be contributed to the Trust shall be
determined by the Company and the investment of such assets shall be made in
accordance with the trust document.
6.2 Status of Trust. Participants shall have no direct or
secured claim in any asset of the Trust or in specific assets of the Company and
will have the status of general unsecured creditors of the Company for any
amounts due under this Plan. The assets and income of the Trust will be subject
to the claims of the Company's creditors.
ARTICLE VII
Distribution of Account Balances
7.1 Vesting. A Participant's benefit under his Deferral
Contribution Account shall be 100% vested and nonforfeitable and shall be
distributable to the Participant or, in the event of the Participant's death, to
his beneficiary, as provided in Section 7.2 below.
7.2 Timing of Distributions. Each Participant's Account
shall be distributable as soon as administratively practicable following
December 31, 2009. Any Participant which is a member of the Committee shall have
no right to participate in any decision regarding the effect of, or amend the
provisions in, this Section 7.2. The amount and time of a distribution shall be
accelerated and changed only as described below.
(a) Distribution if Marketable. If at any time any
Permitted Investments deemed to be held in a Participant's Account consist of
cash or Marketable Securities, such Marketable Securities or, at the option of
the Company, cash in an amount equal to the Fair Market Value of such Marketable
Securities, shall be distributed to such Participant as soon as administratively
possible.
(b) Optional Distribution Following Termination. In the
event any Participant ceases to be employed by the Company or its Subsidiaries
for any reason (including, without limitation, the death of the Participant)
(the "Termination"), the Company may, but shall not be required to, distribute
to such Participant all or a portion of the balance of such Participant's
Account as of the date of the applicable Company Distribution Notice, as defined
in Section 7.2(c) or at any time thereafter. Any amount distributed to such
Participant pursuant to this Section 7.2(b)
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shall be paid, at the option of the Company, in the form of (i) cash in an
amount equal to the Fair Market Value of the Permitted Investments deemed to be
held in the portion of such Participant's Account being distributed, (ii)
Permitted Investments deemed to be held in the portion of such Participant's
Account being distributed, or (iii) a combination of (i) and (ii) above,
provided that, if the Permitted Investments deemed to be held in the portion of
such Participant's Account being distributed do not consist of Marketable
Securities, the distribution shall be made in the form of cash to the extent
necessary, in the reasonable determination of the Committee, to allow such
Participant to pay applicable income taxes imposed on the amount being
distributed (including, without limitation, any penalties or interest assessed
against such Participant with respect to his Account). Any capital stock of the
Company distributed pursuant to this Section 7.2(b) shall be subject to
repurchase by the Company pursuant to Section 8 of the Management Agreement.
(c) Notice of Distribution. The Company may elect to
distribute all or a portion of a Participant's Account pursuant to Section
7.2(b) at any time after a Participant's Termination by delivering written
notice (the "Company Distribution Notice") to the Participant. The Company
Distribution Notice shall set forth the portion of such Participant's Account to
be distributed, the portion of such distribution to be made in the form of cash,
the Fair Market Value of the Permitted Investments deemed to be held in the
portion of such Participant's Account being distributed and the time of such
distribution. The distribution shall be made on the date designated by the
Company in the Company Distribution Notice, which date shall not be more than 60
days nor less than 10 days after the delivery of such notice. Any distribution
of cash shall be made by delivery of a check or wire transfer of funds.
7.3 Form of Distribution of Accounts. Subject to Section
5.3(b) and Section 7.2, each Participant's benefit under this Plan shall be
distributed in a lump sum payment in cash or in-kind, in the Committee's
discretion (excluding from this decision any Committee members who are also
Participants).
7.4 Involuntary Distributions. Notwithstanding the foregoing
provisions of this Article VII, the Committee (excluding from this decision any
Committee members who are also Participants) may on its own initiative authorize
and instruct the Company to distribute to any Participant (or to a designated
beneficiary in the event of the Participant's death) all or any portion of the
Participant's Account Balances. Such payment must be specifically authorized in
the event that the Committee determines in good faith that a Participant has or
is reasonably likely to recognize income for federal income tax purposes with
respect to amounts deferred under this Plan prior to the time such amounts
otherwise would be paid to such Participant, or in the event the Internal
Revenue Service formally notifies such Participant in writing of its position
that such Participant has recognized income for federal income tax purposes with
respect to such amounts. Any amount distributed to such Participant pursuant to
this Section 7.4 shall be paid, at the option of the Company, in the form of (i)
cash in an amount equal to the Fair Market Value of the Permitted Investments
deemed to be held in such Participant's Account, (ii) Permitted Investments
deemed to be held in such Participant's Account, or (iii) a combination of (i)
and (ii) above, provided that, if the Permitted Investments deemed to be held in
such Participant's Account do not consist of Marketable Securities, the
distribution shall be made in the form of cash to the extent necessary and to
the extent permissible under the restrictive covenants in the Company's debt
documents, in the reasonable determination of the Committee, to allow such
Participant to pay applicable income taxes
6
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imposed on the amount being distributed (including, without limitation, any
penalties or interest assessed against such Participant with respect to his
Account). Any capital stock of the Company distributed pursuant to this Section
7.4 shall be subject to repurchase by the Company pursuant to Section 8 of the
Management Agreement.
7.5 Designation of Beneficiaries. Each Participant may name
any person (who may be named concurrently, contingently or successively) to whom
the Participant's Account Balance under the Plan is to be paid if the
Participant dies before such Account Balance is fully distributed. Each such
beneficiary designation will revoke all prior designations by the Participant,
shall not require the consent of any previously named beneficiary, shall be in a
form prescribed by the Committee and will be effective only when filed with the
Committee during the Participant's lifetime. If a Participant fails to designate
a beneficiary before his death, as provided above, or if the beneficiary
designated by a Participant dies before the date of the Participant's death or
before complete payment of the Participant's Account Balance, the Committee, in
its discretion, may pay the Participant's Account Balance to either (i) one or
more of the Participant's relatives by blood, adoption or marriage and in such
proportions as the Committee determines, or (ii) the legal representative or
representatives of the estate of the last to die of the Participant and his
designated beneficiary.
ARTICLE VIII
Amendment and Termination
8.1 Amendment. The Company, in its discretion, shall have
the right to amend the Plan from time to time, except that no such amendment
shall, without the consent of the Participant to whom deferred compensation has
been credited to any Account under this Plan, adversely affect the right of the
Participant (or his beneficiary) to receive payments of such deferred
compensation under the terms of this Plan, including, but not limited to, the
timing and amount of such payments.
8.2 Plan Termination. The Company may, in its discretion,
terminate the Plan at any time, however, no termination of this Plan shall alter
the right of a Participant (or his beneficiary) to payments of deferred
compensation previously credited to such Participant's Accounts under the Plan,
including, but not limited to, the timing and amount of such payments.
ARTICLE IX
General Provisions
9.1 Non-Alienation of Benefits. A Participant's rights to
the amounts credited to his Accounts under the Plan shall not be grantable,
transferable, pledgeable or otherwise assignable, in whole or in part, by the
voluntary or involuntary acts of any person, or by operation of law, and shall
not be liable or taken for any obligation of such person. Any such attempted
grant, transfer, pledge or assignment shall be null and void and without any
legal effect.
7
<PAGE>
9.2 Withholding for Taxes. Notwithstanding anything
contained in this Plan to the contrary, the Company shall withhold from any
distribution made under the Plan such amount or amounts as may be required for
purposes of complying with the tax withholding provisions of the Code or any
State income tax act for purposes of paying any estate, inheritance or other tax
attributable to any amounts distributable or creditable under the Plan.
9.3 Immunity of Committee Members. The members of the
Committee may rely upon any information, report or opinion supplied to them by
any officer of the Company or any legal counsel, independent public accountant
or actuary, and shall be fully protected in relying upon any such information,
report or opinion. No member of the Committee shall have any liability to the
Company or any Participant, former Participant, designated beneficiary, person
claiming under or through any Participant or designated beneficiary or other
person interested or concerned in connection with any decision made by such
member of the Committee pursuant to the Plan which was based upon any such
information, report or opinion if such member of the Committee relied thereon in
good faith.
9.4 Plan Not to Affect Employment Relationship. Neither the
adoption of the Plan nor its operation shall in any way affect the right and
power of the Company to dismiss or otherwise terminate the employment or change
the terms of the employment or amount of compensation of any Participant at any
time for any reason or without cause. By deferring compensation under this Plan,
each Participant, former Participant, designated beneficiary and each person
claiming under or through such person, shall be conclusively bound by any action
or decision taken or made under the Plan by the Committee.
9.5 Assumption of Company Liability. The obligations of the
Company under the Plan may be assumed by any Affiliate of the Company, in which
case such Affiliate shall be obligated to satisfy all of the Company's
obligations under the Plan and the Company shall be released from any continuing
obligation under the Plan. At the Company's request, a Participant or designated
beneficiary shall sign such documents as the Company may require in order to
effectuate the purposes of this Section 9.5.
9.6 Notices. Any notice required to be given by the Company
or the Committee hereunder shall be in writing and shall be delivered in person,
by reputable overnight courier with charges prepaid or by registered mail,
return receipt requested. Any notice given by courier or registered mail shall
be deemed to have been given upon the date of delivery, correctly addressed to
the last known address of the person to whom such notice is to be given.
9.7 Gender and Number; Headings. Wherever any words are used
herein in the masculine gender they shall be construed as though they were also
used in the feminine gender in all cases where they would so apply; and wherever
any words are used herein in the singular form they shall be construed as though
they were also used in the plural form in all cases where they would so apply.
Headings of sections and subsections of the Plan are inserted for convenience of
reference and are not part of the Plan and are not to be considered in the
construction thereof.
9.8 Controlling Law. The Plan shall be construed in
accordance with the laws of the State of Delaware, to the extent not preempted
by any applicable federal law.
8
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9.9 Successors. The Plan is binding on all persons entitled
to benefits hereunder and their respective heirs and legal representatives, on
the Committee and its successor and on the Company and its successor, whether by
way of merger, consolidation, purchase or otherwise.
9.10 Severability. If any provision of the Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of the Plan, and the Plan shall be enforced as
if the invalid provisions had never been set forth therein.
9.11 Action by Company. Any action required or permitted by
the Company under the Plan shall be by resolution of its Board of Directors or
by a duly authorized committee of its Board of Directors, or by a person or
persons authorized by resolution of its Board of Directors or such committee.
9.12 Review of Benefit Determinations. If a claim for
benefits made by a Participant or his or her beneficiary is denied, the
Committee shall within 90 days (or 180 days if special circumstances require an
extension of time) after the claim is made furnish the person making the claim
with a written notice specifying the reasons for the denial. Such notice shall
also refer to the pertinent Plan provisions on which the denial is based,
describe any additional material or information necessary for properly
completing the claim and explain why such material or information is necessary,
and explain the Plan's claim review procedures. If requested in writing, the
Committee shall afford each claimant whose claim has been denied a full and fair
review of the Committee's decision and, within 60 days (120 days if special
circumstances require additional time) of the request for reconsideration of the
denied claim, the Committee shall notify the claimant in writing of the
Committee's final decision.
9
Exhibit 10.2
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UNITED INDUSTRIES CORPORATION
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement"), dated as of
January 20, 1999, is entered into by and among United Industries Corporation, a
Delaware corporation (the "Company") and Stephen R. Brian ("Executive"). Certain
capitalized terms used but not otherwise defined herein are defined in Section
11.
The Company and Executive desire to enter into an agreement
relating to Executive's employment by the Company and pursuant to which
Executive shall purchase, and the Company shall sell, for an aggregate purchase
price of $1,000,000.00, 100,000 shares of Class A Voting Common Stock and
100,000 shares of Class B Non-Voting Common Stock (collectively, the "Common
Stock"). The Common Stock and all other capital stock of the Company hereafter
acquired by Executive (including, without limitation, shares of Common Stock
purchased upon the exercise of the Options) are sometimes collectively referred
to as "Executive Securities." The Executive Securities are subject to certain
transfer restrictions and repurchase rights as set forth herein.
Simultaneously with the execution of this Agreement, the
parties hereto have entered into a Stock Option Agreement in the form of Annex A
attached hereto.
The parties hereto, in exchange for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
PART I. EMPLOYMENT TERMS
1. Employment and Duties.
(a) The Company shall employ Executive, and Executive hereby
accepts employment with the Company, as the Company's President and Chief
Executive Officer pursuant to the terms and conditions of this Agreement. At
such time as David Pratt is no longer serving as Chairman of the Board,
Executive shall also become the Chairman of the Board for the remainder of the
Term.
(b) Executive shall devote his best efforts to the interests
of the Company, which interests may change from time to time, and shall devote
such time to his employment as the duties and responsibilities of his position
reasonably require.
(c) Executive shall perform such duties and functions
commensurate with his position as may be reasonably assigned or delegated to him
from time to time by the Company's Board. Executive acknowledges that such
executive duties and functions may or may not involve performance of services
for or on behalf of affiliates of the Company.
<PAGE>
(d) The principal office of the Company at the date hereof
is situated in St. Louis, Missouri. Executive agrees to relocate his primary
residence to the St. Louis, Missouri, area as soon as possible after February 1,
1999 but in no event later than July 20, 1999 at the Company's expense as
provided in Schedule 1.1(d) (subject to the Company's expense reimbursement
policies). Prior to the date of such relocation, the Company shall reimburse
Executive for his costs incurred in commuting each week between his current
primary residence and St. Louis, Missouri including temporary housing in the St.
Louis area, such housing to be of a size sufficient to accommodate Executive and
his wife and of a location and quality consistent with Executive's position with
the Company (subject to the Company's expense reimbursement policies with
respect to reporting and documentation). While the duties of Executive will
require him to travel, Executive shall not be required to change his principal
residence from St. Louis to a locale other than a locale in which the Company's
principal office may be situated at the time.
2. Term and Termination.
(a) Term. The "Term" of Executive's employment is from the
date hereof until the "Termination Date", which is defined as the earlier of (i)
January 31, 2002 or (ii) the date of termination of Executive's employment
pursuant to any one or more of Sections 2(b), 2(c), 2(d) or 2(e) of this
Agreement; provided that the date in clause (i) above shall be automatically
extended by one year on January 31, 2002, and on each subsequent anniversary
thereof. Executive is an at-will employee of the Company and such employment may
be terminated by Executive, in his sole and arbitrary discretion, at any time
with or without Good Reason, or by the Company, in the Company's sole and
arbitrary discretion, at any time with or without Cause, by delivery of a
written termination notice to the other party, in each case subject to the
consequences in Section 4.
(b) Death. If Executive dies during the Term, the
Termination Date shall be the date of his death.
(c) Disability. If Executive becomes Disabled during the
Term, the Termination Date shall be the date as of which such Disability is
determined. Subject to applicable law, "Disability" means such physical, mental
or psychological condition or other impairment that prevents Executive from
effectively performing the duties of his employment for more than ninety (90)
calendar days in any six (6) consecutive months commencing on the initial date
of such impairment commencing on the initial date of such impairment. In
connection with any Disability (or possible Disability):
(i) Executive shall cooperate with any physicians
engaged by the Company to examine Executive to determine whether or
not Executive is Disabled, and each of Executive and the Company
irrevocably consents to disclosure to each of them by any such
physicians of all matters relating to such examinations.
(ii) The determination of Disability shall be by
agreement of the Company and Executive, or if Executive's condition
is such that he is unable to participate in such determination, then
by agreement of the Company and Executive's spouse or whoever else
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is then acting on his behalf, and if the parties involved in such
determination are unable to reach agreement within 10 days of a
request by either party, then the issue shall be decided by a
physician chosen by the Company and reasonably acceptable to
Executive. The Company will pay all expenses incurred in the
determination of whether Executive is Disabled.
(d) Termination By Executive. If Executive terminates his
employment, with or without Good Reason, the Termination Date shall be the date
on which Executive's termination notice is given to the Company, or such later
date indicated on such termination notice, which may not be more than thirty
(30) days nor less than fourteen (14) days from its receipt by the Company;
provided that upon receipt of Executive's termination notice, the Company may,
in its sole discretion, request that Executive cease his employment activities
prior to the date referenced in such notice and Executive shall promptly comply
with such request, it being understood that such request will not change the
Termination Date specified in this Section 2(d) or affect the characterization
of the termination of Executive's employment.
(e) Termination by the Company. If the Company terminates
the employment of Executive, with or without Cause, the Termination Date shall
be the date on which the Company's termination notice is given to Executive, or
such later date indicated on such termination notice, which may not be more than
thirty (30) days from its receipt by Executive.
(f) Reversal of Determination. If Executive's employment is
terminated by the Company for Cause or by Executive for Good Reason, and it is
thereafter judicially determined that Cause or Good Reason as appropriate for
such termination does not exist, then Executive's employment shall be deemed to
have been terminated without Cause or Good Reason as appropriate as of the
Termination Date. If matters constituting Cause or Good Reason as appropriate
become known to the Company or to Executive subsequent to the time that
Executive's employment is terminated, then either party may, by delivery of
written notice to the other party, treat such termination as being for Cause or
Good Reason as appropriate.
(g) Definition of Cause. "Cause" for termination by the
Company of Executive's employment means:
(i) the commission by Executive of any willful
act against the interests of the Company which causes or is intended
to cause harm to the Company or any of its Stockholders. For purposes
of this definition, no act or failure to act on the part of Executive
shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon specific instructions
given pursuant to a resolution duly adopted by the Board or based upon
the written advice of regular outside counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by Executive
in good faith and in the best interests of the Company;
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<PAGE>
(ii) Executive has been convicted of, or pleads
nolo contendere with respect to, any felony, or of any lesser crime
or offense having as its predicate element fraud, dishonesty or
misappropriation of the property of the Company;
(iii) the habitual drug addiction or habitual
intoxication of Executive which negatively impacts his job
performance; or
(iv) Executive breaches any of the terms of this
Agreement or any other agreement between Executive and the Company
which breach is not cured within twenty (20) days after the delivery
of notice in writing from the Board to Executive of such breach,
which notice indicates the Company's intention to terminate
Executive's employment hereunder if such breach is not cured within
such twenty (20) day period and describes the nature of such breach.
(h) Definition of Good Reason. "Good Reason" for termination
by Executive of Executive's employment means (i) a material breach by the
Company of its obligations under this Agreement which is not cured (if curable)
within twenty (20) days after written notice by Executive to the Company, (ii)
the Company requiring Executive to move his primary place of employment by more
than seventy-five (75) miles, if such move increases Executive's commute from
his primary residence, without Executive's written consent thereto; provided
that Executive must notify the Company in writing of his intent to terminate his
employment pursuant to this Section 2(h)(ii) prior to the sixtieth day after the
earlier of (x) the date that the Company notifies Executive in writing of its
intent to relocate and (y) the date that such relocation occurs, and (iii) the
failure of any successor to the Company to assume this Agreement as set forth in
Section 13(k).
3. Compensation.
(a) Executive's compensation for his services hereunder
shall consist of (a) Base Salary, plus (b) Incentive Compensation, if any, plus
(c) Benefits.
(b) "Base Salary" shall be paid by the Company to Executive
at an annual rate of $437,000, payable in arrears in equal monthly installments,
subject to periodic review by the compensation committee of the Board for
increase only, any such increased salary thereafter constituting "Base Salary."
(c) "Incentive Compensation," if any, is equal to the sum of
the following three amounts, up to a maximum of 75% of Base Salary in any given
year, it being understood that no Incentive Compensation is required to be paid
in any year in which the Company's actual EBITDA for the year in question is not
at least 90% of Target EBITDA for such year:
(i) If the Company's actual EBITDA for the year
in question equals or exceeds 90% of Target EBITDA for such
year, Incentive Compensation will equal the product of (A)
Base Salary multiplied by (B) 25%; plus
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(ii) Incentive Compensation will increase by an
amount equal to the product of (A) Base Salary multiplied
by (B) 2.5% multiplied by (C) the number of percentage
points by which the Company's actual EBITDA for the year in
question exceeds 90% of Target EBITDA for such year (for
example, if the Company's actual EBITDA was 93% of Target
EBITDA for the year in question, the number derived in
clause (C) would be 3 (i.e., 93%-90% = 3)), up to a maximum
of 25% of Base Salary in any year; plus
(iii) Incentive Compensation will increase by an
amount equal to the product of (A) Base Salary multiplied
by (B) 2% multiplied by (C) the number of percentage points
by which the Company's actual EBITDA for the year in
question exceeds 100% of the Target EBITDA for such year
(for example, if the Company's actual EBITDA was 103% of
Target EBITDA for the year in question, the number derived
in clause (C) would be 3 (i.e., 103%-100% = 3)).
All Incentive Compensation due hereunder shall be payable promptly after the
Company has received audited financial statements from its independent
accountants for the year in question which set forth such accountant's
determination of actual EBITDA for such year and not later than at or about the
time bonuses are paid to the Company's other senior executives whose bonuses are
determined based on the receipt of the Company's audited financial statements..
The formula for determining Incentive Compensation provided for in this Section
3 shall not be changed during the Term without Executive's consent. The minimum
amount of Incentive Compensation in respect of 1999 shall be $95,000.
(d) "Benefits" consist of whatever, if any, health,
hospitalization, sick pay, life insurance, disability insurance, profit sharing,
pension, 401(k), and deferred compensation plans and programs that the Company
may have in effect from time to time for its employees who are not members of a
collective bargaining unit, all of which Executive shall be entitled to
participate in on a basis commensurate with his position. Executive shall also
be entitled to four (4) calendar weeks paid vacation each year, in addition to
regularly scheduled holidays. The Company may initiate, change and discontinue
any such plans and programs at any time; provided that no such change shall be
effective as to Executive unless it is also effective as to the other senior
managers of the Company. If any of such plans or programs require contributions
by employees, Executive shall pay the contributions required by his
participation at a rate no greater than that applicable to any senior executive
of the Company.
(e) Stock Options. The Company shall grant Executive options
(the "Options") to purchase 1,200,000 shares of Common Stock, all on the terms
and conditions contained in the Company's 1999 Stock Option Plan approved by the
Board and in a Stock Option Agreement in the form of Annex A attached hereto.
Shares of Common Stock acquired through the exercise of options shall be
referred to herein as "Option Shares."
(f) Signing Bonus. Upon the beginning of Executive's
employment with the Company, the Company shall pay to Executive a signing bonus
of $100,000.
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<PAGE>
(g) Setoff. Executive shall be entitled to direct the
Company to setoff any amounts owing to Executive pursuant to Section 3(f) (net
of all withholding obligations) against the amounts owed by Executive to the
Company pursuant to Section 7(a).
4. Termination Provisions.
(a) If the Company terminates Executive's employment for
Cause, or if Executive terminates his employment without Good Reason, then in
any such case
(i) Executive shall be entitled to Base Salary and
Benefits for the period ending on the Termination Date; and
(ii) Executive shall be entitled to any unpaid
Incentive Compensation for any calendar year ending prior to
the year in which the Termination Date occurs, as well as
any Incentive Compensation for the calendar year in which
the Termination Date occurs pro-rated based on the portion
of Base Salary paid to Executive by the Company in such
year.
(b) If the Company terminates Executive's employment without
Cause, if Executive terminates his employment for Good Reason or if Executive's
employment terminates by reason of his death or Disability, then in any such
case
(i) Executive shall be entitled to Base Salary and
Benefits for the period ending on the Termination Date;
(ii) Executive shall be entitled to any unpaid
Incentive Compensation for any calendar year ending prior to
the year in which the Termination Date occurs, as well as
Incentive Compensation for the calendar year in which the
Termination Date occurs pro-rated based on the portion of
Base Salary paid to Executive the Company in such year (it
being agreed that if the Termination Date is prior to
January 1, 2000, in no event shall the amount of Executive's
Incentive Compensation payable pursuant to this Section
4(b)(ii) be less than the amount referenced in the last
sentence of Section 3(c)); and
(iii) if, and only if, Executive (or his estate,
guardian or personal representative, as the case may be)
signs and delivers to the Company a complete general release
of claims in the form of Annex B attached hereto, then
Executive shall be entitled to his Base Salary (but no
Incentive Compensation) for the period commencing on the
Termination Date and ending on the later of (x) January 31,
2002 and (y) the date which is one year after the
Termination Date together with any other Benefits as may be
provided under the terms of any applicable written plan,
program or arrangement of the Company applicable to senior
executives of the Company.
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<PAGE>
(c) Any amounts owed by the Company to Executive pursuant to
Section 4(b)(iii) shall be paid at such times and in such manner as if the
termination giving rise to such payments had not occurred (with the Company
retaining the right to prepay all or any portion of such amount at any time in
its sole discretion). The Company's obligation to make any payments pursuant to
Section 4(b) shall be conditioned upon Executive's continued and continuing
compliance with the terms and conditions of this Agreement (including, without
limitation, Section 6 hereof).
(d) Except as otherwise specified herein, if Executive's
employment terminates on any date other than the last day of a month,
Executive's compensation for that month shall be calculated on the basis of a
fraction, the numerator of which is the number of calendar days during that
month that Executive is in the Company's employ and the denominator of which is
the number of days in that month.
5. Expenses.
(a) The Company shall reimburse Executive for all reasonable
expenses incurred in the performance of his duties in accordance with the
expense reimbursement policy of the Company with respect to senior executives of
the Company in effect at the time.
(b) If the Company requires Executive to locate outside of
St. Louis, then the Company shall reimburse Executive for his reasonable
relocation expenses in accordance with the expense reimbursement policy of the
Company in effect at the time.
6. Noncompetition, Nonsolicitation, Confidentiality.
As a material inducement to the Company to enter into this
Agreement and in consideration of the payment by the Company of the compensation
detailed herein to Executive:
(a) During the period (the "Noncompete Period") beginning on
the date hereof and ending on the later of (x) the first anniversary of the
Termination Date and (y) if severance payments are owed to Executive by the
Company pursuant to Section 4(b)(iii), above, the last date on which such
payments are due to be paid to Executive (notwithstanding any reduction in such
payments pursuant to Section 4(c)), Executive shall not, without the prior
written consent of the Company (which consent may be granted or withheld in the
Company's sole discretion) directly or indirectly, Participate in any line of
business in which the Business is actively engaged or any line of business
competitive with the Business anywhere in the United States and any other
country in which the Company does business as of the Closing (the "Competitive
Activities"). For purposes of this Agreement, the term "Participate" includes
any direct or indirect interest in, or providing any direct or indirect
assistance (whether financial, advisory or otherwise) to, any enterprise (or any
affiliate thereof), whether as an officer, director, employee, partner, member,
sole proprietor, agent, representative, independent contractor, consultant,
creditor, stockholders, unitholder, owner or otherwise; provided that the term
"Participate" shall not include ownership of less than 2% of the Common Stock of
a publicly-held corporation whose Common Stock is traded on a national
securities exchange or in the over-the-counter market. The parties agree that,
without violating this
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<PAGE>
Section 6(a), Executive may accept employment with any Person which engages in
Competitive Activities; provided that such Person's business is diversified (and
has separate and distinct divisions) and Executive is employed in a part of its
business which does not engage in Competitive Activities; provided further that
the Company, prior to Executive accepting such employment, shall receive
separate written assurances satisfactory to the Company from the board of
directors of such Person and Executive acknowledging that Executive is bound by
this Section 6, the terms of which such Person has read, and covenanting that
Executive will not render services directly or indirectly in connection with any
product, process, system or service of any person or organization other than the
Company, in existence or under development, which is the same as or competes
with a product, process, system or service upon which Executive has worked
during the last two years of Executive's employment by the Company or about
which Executive acquires Confidential Information.
(b) During the Noncompete Period, Executive (a) shall not,
directly or indirectly contact, approach or solicit for the purpose of offering
employment to or hiring (whether as an employee, consultant, agent, independent
contractor or otherwise) or actually hire any person employed by the Company
during the Noncompete Period and (b) shall not induce or attempt to induce any
customer or other business relation of the Company to cease doing business with
the Company or to engage in any business relationship which might materially
harm the Company.
(c) Executive acknowledges that certain of the information,
observations and data relating to the Company which he possesses or has obtained
as an employee, officer, director or stockholder of the Company is the
confidential and proprietary property of the Company ("Confidential
Information"). Executive agrees that he shall not, directly or indirectly, use
for his own purposes or use for or disclose to any third party any of such
Confidential Information without the prior written consent of the Company,
unless and to the extent that the aforementioned matters (i) become generally
known to and available for use by the public other than as a result of a
Executive's acts or omissions to act, or (ii) Executive is required by order of
a court of competent jurisdiction (by subpoena or similar process) to disclose
or discuss any Confidential Information (provided that in such case, Executive
shall promptly inform the Company of such order, shall cooperate with the
Company at the Company's expense in attempting to obtain a protective order or
to otherwise restrict such disclosure, and shall only disclose Confidential
Information to the minimum extent necessary to comply with any such court
order). This Section 6(c) shall not apply to disclosures of Confidential
Information by Executive during his employment with the Company in the ordinary
course of business that he reasonably believes are necessary or appropriate and
in the Company's best interests.
(d) The parties hereto acknowledge and agree that the
Company will suffer irreparable harm from a breach by Executive of any of the
covenants or agreements contained in this Section 6. In the event of an alleged
or threatened breach by Executive of any of the provisions of this Section 6,
the Company or their successors or assigns may, in addition to all other rights
and remedies existing in its or their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other equitable
relief in order to enforce or prevent any violations of the provisions hereof.
Executive acknowledges and agrees that the restrictions contained in this
Section 6 are reasonable.
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<PAGE>
(e) If, at the time enforcement is sought of any of the
provisions of this Section 6, a court holds that the restrictions stated herein
are unreasonable under the circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Executive agrees that the covenants made in this Section 6 shall be construed as
an agreement independent of any other provision of this Agreement and shall
survive any order of a court of competent jurisdiction terminating any other
provision of this Agreement.
PART II. PURCHASE OF EXECUTIVE SECURITIES
7. Purchase and Sale of Executive Securities.
(a) Common Stock. Upon execution of this Agreement,
Executive shall purchase, and the Company shall sell, 100,000 shares of the
Company's Class A Voting Common Stock and 100,000 shares of the Company's Class
B Non-Voting Common Stock at a price of $5.00 per share (the "Purchased Stock").
Executive shall deliver to the Company a cashier's or certified check or wire
transfer of funds in the aggregate amount of $250,000, a promissory note in the
form of Annex C attached hereto with a principal amount of $250,000 and a
promissory note in the form of Annex D attached hereto with a principal amount
of $500,000 (each of these promissory notes is referred to as an "Executive
Note" and collectively as the "Executive Notes"). Executive's obligations under
the Executive Notes shall be secured by a pledge to the Company of all of the
shares of Executive Securities, and in connection therewith, Executive shall
enter into a pledge agreement in the form of Annex E attached hereto.
(b) 83(b) Election. Within 30 days after the date hereof,
Executive shall make an effective election with the Internal Revenue Service
under Section 83(b) of the Internal Revenue Code and the regulations promulgated
thereunder in the form of Annex F attached hereto.
(c) Certain Representations and Warranties. In connection
with the purchase and sale of the Executive Securities hereunder, Executive
hereby represents and warrants to the Company that:
(i) The Executive Securities to be acquired by
Executive pursuant to this Agreement shall be acquired for his own
account and not with a view to, or intention of, distribution thereof
in violation of the Securities Act, or any applicable state
securities laws, and the Executive Securities shall not be disposed
of in contravention of the Securities Act or any applicable state
securities laws;
(ii) Executive is an executive officer of the
Company, is sophisticated in financial matters and is able to
evaluate the risks and benefits of the investment in the Executive
Securities;
(iii) Executive is an "accredited investor" as
defined under Regulation D promulgated under the Securities Act;
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<PAGE>
(iv) Executive is able to bear the economic risk
of his investment in the Executive Securities for an indefinite
period of time because the Executive Securities have not been
registered under the Securities Act and, therefore, cannot be sold
unless subsequently registered under the Securities Act or an
exemption from such registration is available;
(v) Executive has had an opportunity to ask
questions and receive answers concerning the terms and conditions of
the offering of Executive Securities and has had full access to such
other information concerning the Company as he has requested.
Executive has reviewed, or has had an opportunity to review, a copy
of the Recapitalization Agreement, the Stockholders Agreement, all of
the exhibits thereto and all of the other agreements contemplated
hereby and thereby;
(vi) 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 do not and shall not conflict with, violate or
cause a breach of any material agreement, contract or instrument to
which Executive is a party or any judgment, order or decree to which
he is subject; and
(vii) Executive is a United States citizen and a
resident of the State of Illinois.
(d) Certain Representations and Warranties of the Company.
In connection with the purchase and sale of the Executive Securities hereunder,
the Company hereby represents and warrants to Executive that:
(i) The Company is duly organized, validly
existing and in good standing under the laws of the State of
Delaware;
(ii) The execution, delivery and performance of
this Agreement will not violate, conflict with or result in any
breach of the Company's organizational documents or any terms or
conditions of any material agreements to which the Company is a
party;
(iii) Any Executive Securities to be delivered
pursuant to this Agreement, including the shares of Common Stock
issuable upon exercise of the Options, shall, when delivered, be duly
authorized, validly issued, fully paid and non-assessable and will
not be subject to pre-emptive or similar rights; and
(iv) The holders of least 75% of the Company's
voting common stock have reviewed this Agreement and the Stock Option
Agreement attached hereto as Annex A and have approved the terms and
conditions contained herein and therein, including, without
limitation, those terms and conditions relating to contingent
payments that may be due to Executive upon a Sale of the Company and
may have otherwise constituted an "excess
- 10 -
<PAGE>
parachute payment" pursuant to Section 280G of the Internal Revenue
Code of 1986, as amended and a copy of such consent is attached
hereto as Exhibit 7(c)(iv).
(e) Additional Representation and Warranty. As an inducement
to the Company to sell the Executive Securities to Executive, and as a condition
thereto, Executive acknowledges and agrees that neither the issuance of the
Executive Securities to Executive nor any provision contained herein shall
entitle him to remain in the employment of the Company and its Subsidiaries or
affect the right of the Company or Executive to terminate his employment at any
time, in accordance with the provisions of Section 4 hereof.
(f) Compensation Arrangements. The Company and Executive
acknowledge and agree that this Agreement has been executed and delivered, and
the Executive Securities have been issued hereunder, in connection with and as a
part of the compensation and incentive arrangements between the Company and
Executive.
8. Repurchase Option.
(a) Right of Repurchase. In the event Executive ceases to be
employed by the Company and its Subsidiaries for any reason or in the event that
Executive's employment with the Company never commences (the "Termination"), the
Executive Securities (whether held by Executive or one or more of Executive's
transferees) shall be subject to repurchase by the Company pursuant to the terms
and conditions set forth in this Section 8 (the "Repurchase Option").
(b) Purchase Price. Any repurchase of Executive Securities
pursuant to the Repurchase Option shall be at the "Repurchase Price" described
in this Section 8(b) determined as of the date of the Termination. If
Executive's employment is terminated by Executive without Good Reason prior to
the fifth anniversary of the date hereof or by the Company for Cause, the
Repurchase Price for all of the Option Shares shall be the lower of (i) the Fair
Market Value therefor and (ii) the Original Cost therefor. If Executive's
employment is terminated for any other reason, the Repurchase Price for all
Option Shares shall be the Fair Market Value therefor. Notwithstanding the
reason for the termination of Executive's employment, the Repurchase Price for
all Purchased Shares shall be the Fair Market Value therefor.
(c) Repurchase by the Company. The Company may elect to
purchase all or any portion of the Executive Securities at the Repurchase Price
by delivering written notice (the "Repurchase Notice") to Executive within 120
days after the Termination. The Repurchase Notice shall set forth the number of
shares to be acquired from Executive and/or his transferees (if any), the
aggregate consideration to be paid for such securities, and the time and place
for the closing of the transaction (the "Repurchase Closing"). The Company may,
in its sole discretion, assign its rights pursuant to this Section 8 to the
holders of its capital stock (other than Executive and any other Stockholder
whose shares are being repurchased) pro rata on the basis of the number of
shares owned (with subsequent re-offer in the event of under subscription);
provided that any such assignee shall comply with the terms of this Section 8.
- 11 -
<PAGE>
(d) Repurchase Closing. The closing of the purchase of the
Executive Securities pursuant to the Repurchase Option shall take place on the
date designated by the Company in the Repurchase Notice which date shall not be
more than 60 days nor less than 10 days after the delivery of such notice
delivered. Subject to Section 8(e), the Company shall pay for the Executive
Securities to be purchased pursuant to the Repurchase Option by delivery of a
check or wire transfer of funds. The Company shall be entitled to receive
customary representations and warranties regarding good title to such
securities, free and clear of any liens or encumbrances, power and authority,
due execution, and enforceability.
(e) Certain Restrictions. Notwithstanding anything to the
contrary contained in this Agreement, all repurchases of Executive Securities by
the Company shall be subject to applicable restrictions contained in the
Delaware General Corporation Law and in the Company's and its Subsidiaries' debt
and equity financing agreements. If any such restrictions prohibit the
repurchase of Executive Securities hereunder which the Company is otherwise
entitled or required to make, the time periods provided in this Section 8 shall
be suspended, and the Company shall make such repurchases as soon as it is
permitted to do so under such restrictions with interest at an annual rate of
7%. In addition, the Company may pay the Repurchase Price for such Executive
Securities by offsetting any bona fide debts owed by Executive to the Company.
(f) Termination of Repurchase Option. The Repurchase Option
set forth in this Section 8 shall continue with respect to all Executive
Securities following any Transfer thereof; provided that such Repurchase Option
shall terminate effective immediately after the consummation of a Sale of the
Company or a Public Offering of the Company's equity securities in which the
Company receives net proceeds of at least $100 million; and provided further
that, with respect to each share of Executive Securities, the Repurchase Option
with respect to such share shall terminate immediately upon the Transfer of such
share pursuant to a Public Sale.
9. Restrictions on Transfer.
(a) Stockholders Agreement. The Executive Securities are
subject to the restrictions on Transfer set forth in the Stockholders Agreement.
(b) Legend. The certificates representing the Executive
Securities shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON JANUARY 20, 1999 HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, TRANSFERRED
OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION
UNDER THE ACT OR AN EXEMPTION THEREFROM. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON
- 12 -
<PAGE>
TRANSFER, CERTAIN REPURCHASE OPTIONS, AND CERTAIN OTHER
AGREEMENTS SET FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE
COMPANY AND STEPHEN R. BRIAN DATED AS OF JANUARY 20, 1999,
AS AMENDED AND MODIFIED FROM TIME TO TIME. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
10. Survival. Section 4 and Sections 6 through 13 shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
11. Definitions. The following definitions shall be applied to the
capitalized terms used in this Agreement for all purposes, unless otherwise
clearly indicated:
(a) Defined Terms.
"Board" means the Company's board of directors.
"Business" means the business conducted by the Company
including, without limitation, (a) the production and sale of termiticide
products and (b) the business conducted by the Company's Spectrum and Chemsico
Divisions.
"EBITDA" means, for a given period, the consolidated
Company's accounting earnings of the Company and its consolidated Subsidiaries
before taking into account any interest expense, provision for income taxes or
depreciation or amortization expense, excluding for this purpose extraordinary
gains and losses unless included in the determination of Target EBITDA.
"Executive Securities" has the meaning set forth in the
Preamble. Executive Securities shall continue to be Executive Securities in the
hands of any holder other than Executive and except as otherwise provided
herein, each such other holder of Executive Securities shall succeed to all
rights and obligations attributable to Executive as a holder of Executive
Securities hereunder. Executive Securities shall also include securities of the
Company issued with respect to Executive Securities by way of a stock split,
stock dividend or other recapitalization.
"Fair Market Value" of each share of any class or type of
Executive Security means the fair value of such shares or such class or type of
Executive Security determined in good faith by the Board, based on the
assumption of an arms-length transaction between a willing buyer and a willing
seller, taking into account all reasonable and customary factors relevant to
value including, without limitation, the fact that there may be no public market
for the Company's securities, but not including any minority discount; provided
that, until the first anniversary hereof, the "Fair Market Value" of each share
of Executive Securities shall not be less than the Original Cost of such share.
- 13 -
<PAGE>
"Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 50% of the
Company's voting common stock on a fully-diluted basis (a "50% Owner"), who is
not an affiliate of any such 50% Owner, who is not the spouse or descendent (by
birth or adoption) of any such 50% Owner or a trust for the benefit of any such
50% Owner and/or such other Persons, and who is not a Person who through
contract or other arrangements (other than arrangements entered into in
connection with the contemplated transactions) would be an affiliate immediately
after the contemplated transaction.
"Original Cost" for each share of Common Stock shall be
equal to $5.00 (as proportionately adjusted for all subsequent stock splits,
stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of any class of the
Company's Common Stock.
"Public Sale" means any sale pursuant to a Public Offering
or any sale to the public pursuant to Rule 144 promulgated under the Securities
Act effected through a broker, dealer or market maker.
"Sale of the Company" means (a) the acquisition by an
Independent Third Party of voting securities of (x) the Company or (y) the
surviving entity in any reorganization, merger or consolidation (each an
"Acquisition") involving the Company (any such entity referred to herein as the
"Corporation") where such Acquisition causes such Independent Third Party to own
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors, other than acquisitions by the Thomas H. Lee Company
or its affiliates, (b) the approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company, (c) the acquisition by an
Independent Third Party of more than 50% of the Company's assets determined on a
consolidated basis or (d) if individuals who constitute the Board on the date of
the Company's initial Public Offering of equity securities (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board
thereafter, it being understood that any individual becoming a director
subsequent to such date whose election, or nomination for election, is, at any
time, approved by a vote of at least a majority of the directors comprising the
Incumbent Board shall be considered a member of the Incumbent Board.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Stockholders" means the Persons holding the outstanding
Common Stock or other equity interests of the Company at the time in question.
- 14 -
<PAGE>
"Stockholders Agreement" means that certain Stockholders
Agreement, dated as of the date hereof, by and among the Company, Executive and
certain other Persons listed on the signature pages thereto.
"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 limited liability company, 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 the
managing director or general partner of such limited liability company,
partnership, association or other business entity.
"Target EBITDA" means the annual performance goal for the
Company approved by the Board in its reasonable discretion with the input of
Executive, with Target EBITDA for fiscal 1999 being $85,400,000. The Board shall
use reasonable efforts to determine Target EBITDA for any fiscal year after 1999
no later than the 90th day of the fiscal year of the Company to which it
relates.
"Transfer" has the meaning ascribed to such term in the
Stockholders Agreement.
(b) Other Definitions. The terms set forth below are defined
on the following pages of this Agreement:
<TABLE>
<S> <C>
Agreement ................................................................. - 1 -
Base Salary ............................................................... - 4 -
Benefits .................................................................. - 5 -
Cause ..................................................................... - 3 -
Common Stock .............................................................. - 1 -
Company ................................................................... - 1 -
Competitive Activities..................................................... - 7 -
Confidential Information................................................... - 8 -
Disability ................................................................ - 2 -
Executive ................................................................. - 1 -
Executive Note ............................................................ - 9 -
Executive Notes ........................................................... - 9 -
Executive Securities ...................................................... - 1 -
Good Reason ............................................................... - 4 -
Incentive Compensation..................................................... - 4 -
Noncompete Period ......................................................... - 7 -
Option Shares ............................................................. - 5 -
Options ................................................................... - 5 -
Participate ............................................................... - 7 -
Purchased Stock ........................................................... - 9 -
Repurchase Closing ........................................................ - 11 -
Repurchase Notice ......................................................... - 11 -
Repurchase Option ......................................................... - 11 -
Repurchase Price .......................................................... - 11 -
Stock ..................................................................... - 1 -
Term ...................................................................... - 2 -
Termination ............................................................... - 11 -
Termination Date .......................................................... - 2 -
</TABLE>
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<PAGE>
12. Indemnification. During the Term, the Company shall provide
Executive with indemnification at least as broad as the indemnification provided
pursuant to the Company's constituent documents on the date hereof.
13. 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 Company
United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Telecopy: (314) 253-5941
Attention: Chief Financial Officer
with a copy to
Thomas H. Lee Equity Fund IV, L.P.
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
Telecopy: (617) 227-3514
Attention: C. Hunter Boll
Scott Schoen
To Executive
Stephen R. Brian
c/o Stephan G. Bachelder
Stephan G. Bachelder & Associates, P.A.
22 Free Street, Suite 201
Portland, Maine 04112-8594
Telecopy: (207) 775-6441
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 shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
- 16 -
<PAGE>
14. General Provisions.
(a) Expenses. The Company will pay the reasonable and
documented hourly legal fees and legal expenses of Executive's counsel in
connection with the negotiation and execution of this Agreement and the
agreements contemplated hereby.
(b) Severability. Whenever possible, each provision of this
Agreement shall 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 shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) 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.
(d) 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.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company and their respective successors and assigns (including
subsequent holders of Executive Securities); provided that the rights and
obligations of Executive under this Agreement shall not be assignable except in
connection with a permitted Transfer of Executive Securities.
(f) Governing Law. The laws of the state of Missouri shall
govern all issues and questions concerning the employment of Executive, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Missouri or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Missouri. All other issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
(g) Remedies. Each of the parties to this Agreement shall 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 would not be
an adequate remedy for any breach of the provisions of this Agreement and that
any party may
- 17 -
<PAGE>
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.
(h) Amendment and Waiver. The provisions of this Agreement
may be amended and waived only with the prior written consent of the Company and
Executive.
(i) Third-Party Beneficiary. There are no beneficiaries to
this Agreement other than the signatories hereto.
(j) Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Company's chief executive office is located,
the time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or legal holiday.
(k) Assignment. Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation; provided that the
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Company to assume this Agreement. As used in this Agreement,
"Company" shall mean the Company, as defined above, and any successor to its
business and/or assets as aforesaid which assumes this Agreement by operation of
law or otherwise.
(l) Withholding. All amounts payable to Executive as
compensation hereunder shall be subject to customary withholding by the Company.
(m) Mitigation by Executive. In no event shall Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not Executive obtains
other employment.
* * * *
- 18 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
UNITED INDUSTRIES CORPORATION
By:
---------------------------
Its:
---------------------------
--------------------------------
STEPHEN R. BRIAN
- 19 -
Exhibit 10.3
------------
UNITED INDUSTRIES CORPORATION
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement"), dated as of
January 20, 1999, is entered into by and among United Industries Corporation, a
Delaware corporation (the "Company"), Richard Bender ("Executive") and the Trust
established by that certain Trust Agreement, dated as of the date hereof, by and
between the Company and Stephen R. Brian, as trustee (the "Trust"). Certain
capitalized terms used but not otherwise defined herein are defined in Section
11.
The Company, Executive and the Trust desire to enter into an
agreement relating to Executive's employment by the Company and pursuant to
which the Trust shall purchase, and the Company shall sell, for an aggregate
purchase price of $700,000.00, 70,000 shares of Class A Voting Common Stock and
70,000 shares of Class B Non-Voting Common Stock (collectively, the "Common
Stock"). The Common Stock and all other capital stock of the Company hereafter
acquired by Executive and/or the Trust (including, without limitation, shares of
Common Stock purchased upon the exercise of the Options) are sometimes
collectively referred to as "Executive Securities." The Executive Securities are
subject to certain transfer restrictions and repurchase rights as set forth
herein.
Simultaneously with the execution of this Agreement, the
parties hereto have entered into a Stock Option Agreement in the form of Annex A
attached hereto.
The parties hereto, in exchange for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
PART I. EMPLOYMENT TERMS
1. Employment and Duties.
(a) The Company shall employ Executive, and Executive hereby
accepts employment with the Company, as a Senior Vice President pursuant to the
terms and conditions of this Agreement. Executive shall report to the President
of the Company and/or the Board. The Company shall not assign to Executive
duties or functions which are outside of Executive's areas of competence in
order to use Executive's failure to perform as a basis for termination for
Cause.
(b) Executive shall devote his best efforts to the interests
of the Company, which interests may change from time to time, and shall devote
such time to his employment as the duties and responsibilities of his position
reasonably require.
<PAGE>
(c) Executive shall perform such duties and functions
commensurate with his position as may be reasonably assigned or delegated to him
from time to time by the Company's President or Board. Executive acknowledges
that such executive duties and functions may or may not involve performance of
services for or on behalf of affiliates of the Company.
(d) The principal office of the Company at the date hereof,
which is Executive's primary place of employment, is situated in St. Louis,
Missouri. While the duties of Executive will require him to travel, Executive
shall not be required to change his principal residence from St. Louis to a
locale other than a locale in which the Company's principal office may be
situated at the time.
(e) The provisions of Exhibit 1(e) are hereby acknowledged
as obligations of Executive both during the Term of his employment and
thereafter.
2. Term and Termination.
(a) Term. The "Term" of Executive's employment is from the
date hereof until the "Termination Date", which is defined as the earlier of (i)
December 31, 2001 or (ii) the date of termination of Executive's employment
pursuant to any one or more of Sections 2(b), 2(c), 2(d) or 2(e) of this
Agreement; provided that the date in clause (i) above shall be automatically
extended by one year on December 31, 2001, and on each subsequent anniversary
thereof. Executive is an at-will employee of the Company and such employment may
be terminated by Executive, in his sole and arbitrary discretion, at any time
with or without Good Reason, or by the Company, in the Company's sole and
arbitrary discretion, at any time with or without Cause, by delivery of a
written termination notice to the other party, in each case subject to the
consequences in Section 4.
(b) Death. If Executive dies during the Term, the
Termination Date shall be the date of his death.
(c) Disability. If Executive becomes Disabled during the
Term, the Termination Date shall be the date as of which such Disability is
determined. Subject to applicable law, "Disability" means such physical, mental
or psychological condition or other impairment that prevents Executive from
effectively performing the duties of his employment for more than ninety (90)
calendar days in any six (6) consecutive months commencing on the initial date
of such impairment commencing on the initial date of such impairment. In
connection with any Disability (or possible Disability):
(i) Executive shall cooperate with any physicians
engaged by the Company to examine Executive to determine whether or
not Executive is Disabled, and each of Executive and the Company
irrevocably consents to disclosure to each of them by any such
physicians of all matters relating to such examinations.
(ii) The determination of Disability shall be by
agreement of the Company and Executive, or if Executive's condition
is such that he is unable to participate in such
- 2 -
<PAGE>
determination, then by agreement of the Company and Executive's
spouse or whoever else is then acting on his behalf, and if the
parties involved in such determination are unable to reach agreement
within 10 days of a request by either party, then the issue shall be
decided by a physician chosen by the Company and reasonably
acceptable to Executive. The Company will pay all expenses incurred
in the determination of whether Executive is Disabled.
(d) Termination By Executive. If Executive terminates his
employment, with or without Good Reason, the Termination Date shall be the date
on which Executive's termination notice is given to the Company, or such later
date indicated on such termination notice, which may not be more than thirty
(30) days nor less than fourteen (14) days from its receipt by the Company;
provided that upon receipt of Executive's termination notice, the Company may,
in its sole discretion, request that Executive cease his employment activities
prior to the date referenced in such notice and Executive shall promptly comply
with such request, it being understood that such request will not change the
Termination Date specified in this Section 2(d) or affect the characterization
of the termination of Executive's employment.
(e) Termination by the Company. If the Company terminates
the employment of Executive, with or without Cause, the Termination Date shall
be the date on which the Company's termination notice is given to Executive, or
such later date indicated on such termination notice, which may not be more than
thirty (30) days from its receipt by Executive.
(f) Reversal of Determination. If Executive's employment is
terminated by the Company for Cause or by Executive for Good Reason, and it is
thereafter judicially determined that Cause or Good Reason as appropriate for
such termination does not exist, then Executive's employment shall be deemed to
have been terminated without Cause or Good Reason as appropriate as of the
Termination Date. If matters constituting Cause or Good Reason as appropriate
become known to the Company or to Executive subsequent to the time that
Executive's employment is terminated, then either party may, by delivery of
written notice to the other party, treat such termination as being for Cause or
Good Reason as appropriate.
(g) Definition of Cause. "Cause" for termination by the
Company of Executive's employment means:
(i) the commission by Executive of any willful
act against the interests of the Company which causes or is intended
to cause harm to the Company or any of its Stockholders. For purposes
of this definition, no act or failure to act on the part of Executive
shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon specific instructions
given pursuant to a resolution duly adopted by the Board or directed
by the President of the Company or based upon the written advice of
regular outside counsel for the Company shall be
- 3 -
<PAGE>
conclusively presumed to be done, or omitted to be done, by Executive
in good faith and in the best interests of the Company;
(ii) Executive has been convicted of, or pleads
nolo contendere with respect to, any felony, or of any lesser crime
or offense having as its predicate element fraud, dishonesty or
misappropriation of the property of the Company;
(iii) the habitual drug addiction or habitual
intoxication of Executive which negatively impacts his job
performance; or
(iv) Executive breaches any of the terms of this
Agreement or any other agreement between Executive and the Company
which breach is not cured within twenty (20) days after the delivery
of notice in writing from the Board to Executive of such breach,
which notice indicates the Company's intention to terminate
Executive's employment hereunder if such breach is not cured within
such twenty (20) day period and describes the nature of such breach.
(h) Definition of Good Reason. "Good Reason" for termination
by Executive of Executive's employment means (i) a material breach by the
Company of its obligations under this Agreement which is not cured (if curable)
within twenty (20) days after written notice by Executive to the Company, (ii)
the Company requiring Executive to move his primary place of employment by more
than seventy-five (75) miles, if such move increases Executive's commute from
his primary residence, without Executive's written consent thereto; provided
that Executive must notify the Company in writing of his intent to terminate his
employment pursuant to this Section 2(h)(ii) prior to the sixtieth day after the
earlier of (x) the date that the Company notifies Executive in writing of its
intent to relocate and (y) the date that such relocation occurs, and (iii) the
failure of any successor to the Company to assume this Agreement as set forth in
Section 13(k).
3. Compensation.
(a) Executive's compensation for his services hereunder
shall consist of (a) Base Salary, plus (b) Incentive Compensation, if any, plus
(c) Benefits.
(b) "Base Salary" shall be paid by the Company to Executive
at an annual rate of $300,000, payable in arrears in equal monthly installments.
Under no circumstances may the Base Salary be decreased during the Term.
(c) "Incentive Compensation," if any, is equal to the sum of
the following three amounts, up to a maximum of 60% of Base Salary in any given
year, it being understood that no Incentive Compensation is required to be paid
in any year in which the Company's actual EBITDA for the year in question is not
at least 90% of Target EBITDA for such year:
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(i) If the Company's actual EBITDA for the year
in question equals or exceeds 90% of Target EBITDA for such
year, Incentive Compensation will equal the product of (A)
Base Salary multiplied by (B) 25%; plus
(ii) Incentive Compensation will increase by an
amount equal to the product of (A) Base Salary multiplied
by (B) 2.5% multiplied by (C) the number of percentage
points by which the Company's actual EBITDA for the year in
question exceeds 90% of Target EBITDA for such year (for
example, if the Company's actual EBITDA was 93% of Target
EBITDA for the year in question, the number derived in
clause (C) would be 3 (i.e., 93%-90% = 3)), up to a maximum
of 25% of Base Salary in any year; plus
(iii) Incentive Compensation will increase by an
amount equal to the product of (A) Base Salary multiplied
by (B) 2% multiplied by (C) the number of percentage points
by which the Company's actual EBITDA for the year in
question exceeds 100% of the Target EBITDA for such year
(for example, if the Company's actual EBITDA was 103% of
Target EBITDA for the year in question, the number derived
in clause (C) would be 3 (i.e., 103%-100% = 3)).
All Incentive Compensation due hereunder shall be payable promptly after the
Company has received audited financial statements from its independent
accountants for the year in question which set forth such accountant's
determination of actual EBITDA for such year and not later than at or about the
time bonuses are paid to the Company's other senior executives whose bonuses are
determined based on the receipt of the Company's audited financial statements.
The formula for determining Incentive Compensation provided for in this Section
3 shall not be changed during the Term without Executive's consent. The minimum
amount of Incentive Compensation in respect of 1999 shall be $65,000.
(d) "Benefits" consist of whatever, if any, health,
hospitalization, sick pay, life insurance, disability insurance, profit sharing,
pension, 401(k), and deferred compensation plans and programs that the Company
may have in effect from time to time for its employees who are not members of a
collective bargaining unit, all of which Executive shall be entitled to
participate in on a basis commensurate with his position. Executive shall also
be entitled to four (4) calendar weeks paid vacation each year, in addition to
regularly scheduled holidays. The Company may initiate, change and discontinue
any such plans and programs at any time; provided that no such change shall be
effective as to Executive unless it is also effective as to the other senior
managers of the Company. If any of such plans or programs require contributions
by employees, Executive shall pay the contributions required by his
participation at a rate no greater than that applicable to any senior executive
of the Company.
(e) Stock Options. The Company shall grant Executive options
(the "Options") to purchase 600,000 shares of Common Stock, all on the terms and
conditions contained in the Company's 1999 Stock Option Plan approved by the
Board and in a Stock Option Agreement in the
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form of Annex A attached hereto. Shares of Common Stock acquired
through the exercise of options shall be referred to herein as "Option
Shares."
(f) Signing Bonus. Upon the beginning of Executive's
employment with the Company, the Company shall pay to Executive a signing bonus
of $40,000.
4. Termination Provisions.
(a) If the Company terminates Executive's employment for
Cause, or if Executive terminates his employment without Good Reason, then in
any such case
(i) Executive shall be entitled to Base Salary and
Benefits for the period ending on the Termination Date; and
(ii) Executive shall be entitled to any unpaid
Incentive Compensation for any calendar year ending prior to
the year in which the Termination Date occurs, as well as
any Incentive Compensation for the calendar year in which
the Termination Date occurs pro-rated based on the portion
of Base Salary paid to Executive by the Company in such
year.
(b) If the Company terminates Executive's employment without
Cause, if Executive terminates his employment for Good Reason or if Executive's
employment terminates by reason of his death or Disability, then in any such
case
(i) Executive shall be entitled to Base Salary and
Benefits for the period ending on the Termination Date;
(ii) Executive shall be entitled to any unpaid
Incentive Compensation for any calendar year ending prior to
the year in which the Termination Date occurs, as well as
Incentive Compensation for the calendar year in which the
Termination Date occurs pro-rated based on the portion of
Base Salary paid to Executive by the Company in such year
(it being agreed that if the Termination Date is prior to
January 1, 2000, in no event shall the amount of Executive's
Incentive Compensation payable pursuant to this Section
4(b)(ii) be less than the amount referenced in the last
sentence of Section 3(c)); and
(iii) if, and only if, Executive (or his estate,
guardian or personal representative, as the case may be)
signs and delivers to the Company a complete general release
of claims in the form of Annex B attached hereto, then
Executive shall be entitled to his Base Salary (but no
Incentive Compensation) for the period commencing on the
Termination Date and ending on the later of (x) December 31,
2001 and (y) the date which is one year after the
Termination Date, together with any other Benefits as may be
provided under the terms of any applicable written plan,
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program or arrangement of the Company applicable to senior
executives of the Company.
If Executive does not comply with the terms of Section 4(b)(iii), above, within
30 days after the Termination Date, then Executive shall only be entitled to
payments as set forth in Sections 4(b)(i), and 4(b)(ii), above, and the Company
shall not be responsible for any further payments to Executive.
(c) Any amounts owed by the Company to Executive pursuant to
Section 4(b)(iii) shall be paid at such times and in such manner as if the
termination giving rise to such payments had not occurred (with the Company
retaining the right to prepay all or any portion of such amount at any time in
its sole discretion). The Company's obligation to make any payments pursuant to
Section 4(b) shall be conditioned upon Executive's continued and continuing
compliance with the terms and conditions of this Agreement (including, without
limitation, Section 6 hereof).
(d) Except as otherwise specified herein, if Executive's
employment terminates on any date other than the last day of a month,
Executive's compensation for that month shall be calculated on the basis of a
fraction, the numerator of which is the number of calendar days during that
month that Executive is in the Company's employ and the denominator of which is
the number of days in that month.
5. Expenses.
(a) The Company shall reimburse Executive for all reasonable
expenses incurred in the performance of his duties in accordance with the
expense reimbursement policy of the Company with respect to senior executives of
the Company in effect at the time.
(b) If the Company requires Executive to locate outside of
St. Louis, then the Company shall reimburse Executive for his reasonable
relocation expenses in accordance with the expense reimbursement policy of the
Company in effect at the time.
6. Noncompetition, Nonsolicitation, Confidentiality.
As a material inducement to the Company to enter into this
Agreement and in consideration of the payment by the Company of the compensation
detailed herein to Executive:
(a) During the period (the "Noncompete Period") beginning on
the date hereof and ending on the later of (x) the first anniversary of the
Termination Date and (y) if severance payments are owed to Executive by the
Company pursuant to Section 4(b)(iii), above, the last date on which such
payments are due to be paid to Executive (notwithstanding any reduction in such
payments pursuant to Section 4(c)), Executive shall not, without the prior
written consent of the Company (which consent may be granted or withheld in the
Company's sole discretion), directly or indirectly, Participate in any line of
business in which the Business is actively engaged or any line of business
competitive with the Business anywhere in the United States and any other
country in
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which the Company does business as of the Closing (the "Competitive
Activities"). For purposes of this Agreement, the term "Participate" includes
any direct or indirect interest in, or providing any direct or indirect
assistance (whether financial, advisory or otherwise) to, any enterprise (or any
affiliate thereof), whether as an officer, director, employee, partner, member,
sole proprietor, agent, representative, independent contractor, consultant,
creditor, stockholders, unitholder, owner or otherwise; provided that the term
"Participate" shall not include ownership of less than 2% of the Common Stock of
a publicly-held corporation whose Common Stock is traded on a national
securities exchange or in the over-the-counter market. The parties agree that,
without violating this Section 6(a), Executive may accept employment with any
Person which engages in Competitive Activities; provided that such Person's
business is diversified (and has separate and distinct divisions) and Executive
is employed in a part of its business which does not engage in Competitive
Activities; provided further that the Company, prior to Executive accepting such
employment, shall receive separate written assurances satisfactory to the
Company from the board of directors of such Person and Executive acknowledging
that Executive is bound by this Section 6, the terms of which such Person has
read, and covenanting that Executive will not render services directly or
indirectly in connection with any product, process, system or service of any
person or organization other than the Company, in existence or under
development, which is the same as or competes with a product, process, system or
service upon which Executive has worked during the last two years of Executive's
employment by the Company or about which Executive acquires Confidential
Information.
(b) During the Noncompete Period, Executive (a) except with
respect to Executive's personal secretary, shall not, directly or indirectly
contact, approach or solicit for the purpose of offering employment to or hiring
(whether as an employee, consultant, agent, independent contractor or otherwise)
or actually hire any person employed by the Company during the Noncompete Period
and (b) shall not induce or attempt to induce any customer or other business
relation of the Company to cease doing business with the Company or to engage in
any business relationship which might materially harm the Company.
(c) Executive acknowledges that certain of the information,
observations and data relating to the Company which he possesses or has obtained
as an employee, officer, director or stockholder of the Company is the
confidential and proprietary property of the Company ("Confidential
Information"). Executive agrees that he shall not, directly or indirectly, use
for his own purposes or use for or disclose to any third party any of such
Confidential Information without the prior written consent of the Company,
unless and to the extent that the aforementioned matters (i) become generally
known to and available for use by the public other than as a result of a
Executive's acts or omissions to act, or (ii) Executive is required by order of
a court of competent jurisdiction (by subpoena or similar process) to disclose
or discuss any Confidential Information (provided that in such case, Executive
shall promptly inform the Company of such order, shall cooperate with the
Company at the Company's expense in attempting to obtain a protective order or
to otherwise restrict such disclosure, and shall only disclose Confidential
Information to the minimum extent necessary to comply with any such court
order). This Section 6(c) shall not apply to disclosures of Confidential
Information by Executive during his employment with the Company
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<PAGE>
in the ordinary course of business that he reasonably believes are necessary or
appropriate and in the Company's best interests.
(d) The parties hereto acknowledge and agree that the
Company will suffer irreparable harm from a breach by Executive of any of the
covenants or agreements contained in this Section 6. In the event of an alleged
or threatened breach by Executive of any of the provisions of this Section 6,
the Company or their successors or assigns may, in addition to all other rights
and remedies existing in its or their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other equitable
relief in order to enforce or prevent any violations of the provisions hereof.
Executive acknowledges and agrees that the restrictions contained in this
Section 6 are reasonable.
(e) If, at the time enforcement is sought of any of the
provisions of this Section 6, a court holds that the restrictions stated herein
are unreasonable under the circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Executive agrees that the covenants made in this Section 6 shall be construed as
an agreement independent of any other provision of this Agreement and shall
survive any order of a court of competent jurisdiction terminating any other
provision of this Agreement.
PART II. PURCHASE OF EXECUTIVE SECURITIES
7. Purchase and Sale of Executive Securities.
(a) Common Stock. Upon execution of this Agreement, the
Trust shall purchase, and the Company shall sell, 70,000 shares of the Company's
Class A Voting Common Stock and 70,000 shares of the Company's Class B
Non-Voting Common Stock at a price of $5.00 per share (the "Purchased Stock").
The Company shall deliver to the Trust the certificates representing such shares
of Common Stock, and the Trust shall deliver to the Company the aggregate amount
of $700,000 (the "Purchase Price").
(b) Certain Representations and Warranties. In connection
with the purchase and sale of the Executive Securities hereunder, Executive
hereby represents and warrants to the Company that:
(i) The Executive Securities to be beneficially
acquired by Executive pursuant to this Agreement shall be acquired
for his own account and not with a view to, or intention of,
distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Securities shall
not be disposed of in contravention of the Securities Act or any
applicable state securities laws;
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(ii) Executive is an executive officer of the
Company, is sophisticated in financial matters and is able to
evaluate the risks and benefits of the investment in the Executive
Securities;
(iii) Executive is an "accredited investor" as
defined under Regulation D promulgated under the Securities Act;
(iv) Executive is able to bear the economic risk
of his investment in the Executive Securities for an indefinite
period of time because the Executive Securities have not been
registered under the Securities Act and, therefore, cannot be sold
unless subsequently registered under the Securities Act or an
exemption from such registration is available;
(v) Executive has had an opportunity to ask
questions and receive answers concerning the terms and conditions of
the offering of Executive Securities and has had full access to such
other information concerning the Company as he has requested.
Executive has reviewed, or has had an opportunity to review, a copy
of the Recapitalization Agreement, the Stockholders Agreement, all of
the exhibits thereto and all of the other agreements contemplated
hereby and thereby;
(vi) 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 do not and shall not conflict with, violate or
cause a breach of any material agreement, contract or instrument to
which Executive is a party or any judgment, order or decree to which
he is subject; and
(vii) Executive is a United States citizen and a
resident of the State of Missouri.
(c) Certain Representations and Warranties of the Company.
In connection with the purchase and sale of the Executive Securities hereunder,
the Company hereby represents and warrants to Executive that:
(i) The Company is duly organized, validly
existing and in good standing under the laws of the State of
Delaware;
(ii) The execution, delivery and performance of
this Agreement will not violate, conflict with or result in any
breach of the Company's organizational documents or any terms or
conditions of any material agreements to which the Company is a
party;
(iii) Any Executive Securities to be delivered
pursuant to this Agreement, including the shares of Common Stock
issuable upon exercise of the Options, shall, when
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<PAGE>
delivered, be duly authorized, validly issued, fully paid and
non-assessable and will not be subject to pre-emptive or similar
rights; and
(iv) The holders of least 75% of the Company's
voting common stock have reviewed this Agreement and the Stock Option
Agreement attached hereto as Annex A and have approved the terms and
conditions contained herein and therein, including, without
limitation, those terms and conditions relating to contingent
payments that may be due to Executive upon a Sale of the Company and
may have otherwise constituted an "excess parachute payment" pursuant
to Section 280G of the Internal Revenue Code of 1986, as amended and
a copy of such consent is attached hereto as Exhibit 7(c)(iv).
(d) Additional Representation and Warranty. As an inducement
to the Company to sell the Executive Securities to Executive, and as a condition
thereto, Executive acknowledges and agrees that neither the issuance of the
Executive Securities to Executive nor any provision contained herein shall
entitle him to remain in the employment of the Company and its Subsidiaries or
affect the right of the Company or Executive to terminate his employment at any
time, in accordance with the provisions of Section 4 hereof.
(e) Compensation Arrangements. The Company and Executive
acknowledge and agree that this Agreement has been executed and delivered, and
the Executive Securities have been issued hereunder, in connection with and as a
part of the compensation and incentive arrangements between the Company and
Executive.
(f) Payments to the Trust. In consideration of Executive's
agreement to continue employment with the Company, the Company hereby agrees to
accelerate the payment of all amounts owed to Executive by the Company pursuant
to that certain Contract for Release in Event of Sale dated as of January 1,
1997 by and between the Company and Executive. Notwithstanding the terms of such
agreement, the Company shall pay to the Trust, on behalf of Executive, a portion
of the Share (as defined therein) equal to the Purchase Price immediately upon
the execution of the election attached as Annex C hereto. The Company shall pay
the remainder of the Share (net of any withholding obligations) to Executive
immediately upon the execution of such election (the aggregate amount paid on
the date hereof to the Trust and Executive (prior to withholding) with respect
to the Share is referred to as the "Estimated Share Amount"). The amounts paid
to the Trust on behalf of Executive pursuant to such election are for the sole
benefit of the Trust, and Executive has no right or ability to receive such
amounts except as provided in the Trust's constituent documents. Executive and
the Company acknowledge and agree that the final determination of the amount of
the Share is contingent upon the final determination by the Company of the
Company's Stockholders Equity as of December 31, 1998, as reflected on the
Company's audited financial statements. If the amount of the Share as finally
determined (based on the final determination of 12/31/98 Stockholders Equity) is
less than the Estimated Share Amount, Executive shall promptly pay to the
Company an amount of cash equal to such shortfall. If the amount of the Share as
finally determined (based on the final determination of 12/31/98 Stockholders
Equity) is greater than the
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Estimated Share Amount, the Company shall promptly pay to Executive an amount of
cash equal to such excess, net of any withholding obligations.
8. Repurchase Option.
(a) Right of Repurchase. In the event Executive ceases to be
employed by the Company and its Subsidiaries for any reason (the "Termination"),
the Executive Securities (whether held by Executive or the Trust or one or more
of their transferees) shall be subject to repurchase by the Company pursuant to
the terms and conditions set forth in this Section 8 (the "Repurchase Option").
(b) Purchase Price. Any repurchase of Executive Securities
pursuant to the Repurchase Option shall be at the "Repurchase Price" described
in this Section 8(b) determined as of the date of the Termination. If
Executive's employment is terminated by Executive without Good Reason prior to
the fifth anniversary of the date hereof or by the Company for Cause, the
Repurchase Price for all of the Option Shares shall be the lower of (i) the Fair
Market Value therefor and (ii) the Original Cost therefor. If Executive's
employment is terminated for any other reason, the Repurchase Price for all
Option Shares shall be the Fair Market Value therefor. Notwithstanding the
reason for the termination of Executive's employment, the Repurchase Price for
all Purchased Shares shall be the Fair Market Value therefor.
(c) Repurchase by the Company. The Company may elect to
purchase all or any portion of the Executive Securities at the Repurchase Price
by delivering written notice (the "Repurchase Notice") to Executive within 120
days after the Termination. The Repurchase Notice shall set forth the number of
shares to be acquired from Executive and/or the Trust and/or their transferees
(if any), the aggregate consideration to be paid for such securities, and the
time and place for the closing of the transaction (the "Repurchase Closing").
The Company may, in its sole discretion, assign its rights pursuant to this
Section 8 to the holders of its capital stock (other than Executive and any
other Stockholder whose shares are being repurchased) pro rata on the basis of
the number of shares owned (with subsequent re-offer in the event of under
subscription); provided that any such assignees shall comply with the terms of
this Section 8.
(d) Repurchase Closing. The closing of the purchase of the
Executive Securities pursuant to the Repurchase Option shall take place on the
date designated by the Company in the Repurchase Notice which date shall not be
more than 60 days nor less than 10 days after the delivery of such notice
delivered. Subject to Section 8(e), the Company shall pay for the Executive
Securities to be purchased pursuant to the Repurchase Option by delivery of a
check or wire transfer of funds. The Company shall be entitled to receive
customary representations and warranties regarding good title to such
securities, free and clear of any liens or encumbrances, power and authority,
due execution, and enforceability.
(e) Certain Restrictions. Notwithstanding anything to the
contrary contained in this Agreement, all repurchases of Executive Securities by
the Company shall be subject to
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applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries' debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Executive Securities hereunder
which the Company is otherwise entitled or required to make, the time periods
provided in this Section 8 shall be suspended, and the Company shall make such
repurchases as soon as it is permitted to do so under such restrictions with
interest at an annual rate of 7%. In addition, the Company may pay the
Repurchase Price for such Executive Securities by offsetting any bona fide debts
owed by Executive to the Company.
(f) Termination of Repurchase Option. The Repurchase Option
set forth in this Section 8 shall continue with respect to all Executive
Securities following any Transfer thereof; provided that such Repurchase Option
shall terminate effective immediately after the consummation of a Sale of the
Company or a Public Offering of the Company's equity securities in which the
Company receives net proceeds of at least $100 million; and provided further
that, with respect to each share of Executive Securities, the Repurchase Option
with respect to such share shall terminate immediately upon the Transfer of such
share pursuant to a Public Sale.
9. Restrictions on Transfer.
(a) Stockholders Agreement. The Executive Securities are
subject to the restrictions on Transfer set forth in the Stockholders Agreement.
(b) Legend. The certificates representing the Executive
Securities shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON JANUARY 20, 1999 HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE
REGISTRATION UNDER THE ACT OR AN EXEMPTION THEREFROM. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE
OPTIONS, AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND RICHARD BENDER
DATED AS OF JANUARY 20, 1999, AS AMENDED AND MODIFIED FROM
TIME TO TIME. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY
THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
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<PAGE>
10. Survival. Section 4 and Sections 6 through 13 shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
11. Definitions. The following definitions shall be applied to the
capitalized terms used in this Agreement for all purposes, unless otherwise
clearly indicated:
(a) Defined Terms.
"Board" means the Company's board of directors.
"Business" means the business conducted by the Company
including, without limitation, (a) the production and sale of termiticide
products and (b) the business conducted by the Company's Spectrum and Chemsico
Divisions.
"EBITDA" means, for a given period, the consolidated
Company's accounting earnings of the Company and its consolidated Subsidiaries
before taking into account any interest expense, provision for income taxes or
depreciation or amortization expense, excluding for this purpose extraordinary
gains and losses unless included in the determination of Target EBITDA.
"Executive Securities" has the meaning set forth in the
Preamble. Executive Securities shall continue to be Executive Securities in the
hands of any holder other than Executive and except as otherwise provided
herein, each such other holder of Executive Securities shall succeed to all
rights and obligations attributable to Executive as a holder of Executive
Securities hereunder. Executive Securities shall also include securities of the
Company issued with respect to Executive Securities by way of a stock split,
stock dividend or other recapitalization.
"Fair Market Value" of each share of any class or type of
Executive Security means the fair value of such shares or such class or type of
Executive Security determined in good faith by the Board, based on the
assumption of an arms-length transaction between a willing buyer and a willing
seller, taking into account all reasonable and customary factors relevant to
value including, without limitation, the fact that there may be no public market
for the Company's securities, but not including any minority discount; provided
that, until the first anniversary hereof, the "Fair Market Value" of each share
of Executive Securities shall not be less than the Original Cost of such share.
"Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 50% of the
Company's voting common stock on a fully-diluted basis (a "50% Owner"), who is
not an affiliate of any such 50% Owner, who is not the spouse or descendent (by
birth or adoption) of any such 50% Owner or a trust for the benefit of any such
50% Owner and/or such other Persons, and who is not a Person who through
contract or other arrangements (other than arrangements entered into in
connection with the contemplated transactions) would be an affiliate immediately
after the contemplated transaction.
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"Original Cost" for each share of Common Stock shall be
equal to $5.00 (as proportionately adjusted for all subsequent stock splits,
stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of any class of the
Company's Common Stock.
"Public Sale" means any sale pursuant to a Public Offering
or any sale to the public pursuant to Rule 144 promulgated under the Securities
Act effected through a broker, dealer or market maker.
"Sale of the Company" means (a) the acquisition by an
Independent Third Party of voting securities of (x) the Company or (y) the
surviving entity in any reorganization, merger or consolidation (each an
"Acquisition") involving the Company (any such entity referred to herein as the
"Corporation") where such Acquisition causes such Independent Third Party to own
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors, other than acquisitions by the Thomas H. Lee Company
or its affiliates, (b) the approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company, (c) the acquisition by an
Independent Third Party of more than 50% of the Company's assets determined on a
consolidated basis or (d) if individuals who constitute the Board on the date of
the Company's initial Public Offering of equity securities (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board
thereafter, it being understood that any individual becoming a director
subsequent to such date whose election, or nomination for election, is, at any
time, approved by a vote of at least a majority of the directors comprising the
Incumbent Board shall be considered a member of the Incumbent Board.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Stockholders" means the Persons holding the outstanding
Common Stock or other equity interests of the Company at the time in question.
"Stockholders Agreement" means that certain Stockholders
Agreement, dated as of the date hereof, by and among the Company, Executive and
certain other Persons listed on the signature pages thereto.
"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
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<PAGE>
Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the limited
liability company, 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 the managing director or general partner of such limited
liability company, partnership, association or other business entity.
"Target EBITDA" means the annual performance goal for the
Company approved by the Board in its reasonable discretion with the input of
Executive, with Target EBITDA for fiscal 1999 being $85,400,000. The Board shall
use reasonable efforts to determine Target EBITDA for any fiscal year after 1999
no later than the 90th day of the fiscal year of the Company to which it
relates.
"Transfer" has the meaning ascribed to such term in the
Stockholders Agreement.
(b) Other Definitions. The terms set forth below are defined
on the following pages of this Agreement:
<TABLE>
<S> <C>
Agreement ........................................................... - 1 -
Base Salary ......................................................... - 4 -
Benefits ............................................................ - 5 -
Cause ............................................................... - 3 -
Common Stock ........................................................ - 1 -
Company ............................................................. - 1 -
Competitive Activities............................................... - 8 -
Confidential Information............................................. - 8 -
Disability .......................................................... - 2 -
Executive ........................................................... - 1 -
Executive Securities ................................................ - 1 -
Good Reason ......................................................... - 4 -
Incentive Compensation............................................... - 4 -
Noncompete Period ................................................... - 7 -
Option Shares ....................................................... - 6 -
Options ............................................................. - 5 -
Participate ......................................................... - 8 -
Purchase Price ...................................................... - 9 -
Purchased Stock ..................................................... - 9 -
Repurchase Closing .................................................. - 12 -
Repurchase Notice ................................................... - 12 -
Repurchase Option ................................................... - 12 -
Repurchase Price .................................................... - 12 -
Term ................................................................ - 2 -
Termination ......................................................... - 12 -
Termination Date .................................................... - 2 -
Trust ............................................................... - 1 -
</TABLE>
12. 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:
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<PAGE>
To the Company
United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Telecopy: (314) 253-5941
Attention: Chief Executive Officer
To Executive
Richard Bender
1563 Dietrich Ridge Drive
Manchester, MO 63021
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 shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
13. General Provisions.
(a) Expenses. The Company will pay the reasonable and
documented hourly legal fees and legal expenses of Executive's counsel in
connection with the negotiation and execution of this Agreement and the
agreements contemplated hereby.
(b) Severability. Whenever possible, each provision of this
Agreement shall 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 shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) 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, that certain Employment Agreement by and
between the Company and Executive dated as of January 1, 1998 and that certain
Contract for Release in the Event of Sale by and between the Company and
Executive dated as of January 1, 1997.
- 17 -
<PAGE>
(d) 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.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company and their respective successors and assigns (including
subsequent holders of Executive Securities); provided that the rights and
obligations of Executive under this Agreement shall not be assignable except in
connection with a permitted Transfer of Executive Securities.
(f) Governing Law. The laws of the state of Missouri shall
govern all issues and questions concerning the employment of Executive, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Missouri or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Missouri. All other issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
(g) Remedies. Each of the parties to this Agreement shall 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 would 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.
(h) Amendment and Waiver. The provisions of this Agreement
may be amended and waived only with the prior written consent of the Company,
the Trust and Executive.
(i) Third-Party Beneficiary. There are no beneficiaries to
this Agreement other than the signatories hereto.
(j) Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Company's chief executive office is located,
the time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or legal holiday.
(k) Assignment. Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another
- 18 -
<PAGE>
corporation; provided that the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume this
Agreement. As used in this Agreement, "Company" shall mean the Company, as
defined above, and any successor to its business and/or assets as aforesaid
which assumes this Agreement by operation of law or otherwise.
(l) Withholding. All amounts payable to Executive as
compensation hereunder shall be subject to customary withholding by the Company.
(m) Mitigation by Executive. In no event shall Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not Executive obtains
other employment.
* * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
UNITED INDUSTRIES CORPORATION
By:
----------------------------------------
Its:
----------------------------------------
--------------------------------------------
RICHARD BENDER
--------------------------------------------
STEPHEN R. BRIAN, in his capacity as trustee
of that certain Trust Agreement, dated as of
January 20, 1999, by and between the Company
and Stephen R. Brian, as trustee
- 20 -
Exhibit 10.4
------------
UNITED INDUSTRIES CORPORATION
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement"), dated as of
January 20, 1999, is entered into by and among United Industries Corporation, a
Delaware corporation (the "Company"), William Johnson ("Executive") and the
Trust established by that certain Trust Agreement, dated as of the date hereof,
by and between the Company and Stephen R. Brian, as trustee (the "Trust").
Certain capitalized terms used but not otherwise defined herein are defined in
Section 11.
The Company, Executive and the Trust desire to enter into an
agreement relating to Executive's employment by the Company and pursuant to
which the Trust shall purchase, and the Company shall sell, for an aggregate
purchase price of $1,000,000.00, 100,000 shares of Class A Voting Common Stock
and 100,000 shares of Class B Non-Voting Common Stock (collectively, the "Common
Stock"). The Common Stock and all other capital stock of the Company hereafter
acquired by Executive and/or the Trust (including, without limitation, shares of
Common Stock purchased upon the exercise of the Options) are sometimes
collectively referred to as "Executive Securities." The Executive Securities are
subject to certain transfer restrictions and repurchase rights as set forth
herein.
Simultaneously with the execution of this Agreement, the
parties hereto have entered into a Stock Option Agreement in the form of Annex A
attached hereto.
The parties hereto, in exchange for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
PART I. EMPLOYMENT TERMS
1. Employment and Duties.
(a) The Company shall employ Executive, and Executive hereby
accepts employment with the Company, as a Senior Vice President pursuant to the
terms and conditions of this Agreement. Executive shall report to the President
of the Company and/or the Board. The Company shall not assign to Executive
duties or functions which are outside of Executive's areas of competence in
order to use Executive's failure to perform as a basis for termination for
Cause.
(b) Executive shall devote his best efforts to the interests
of the Company, which interests may change from time to time, and shall devote
such time to his employment as the duties and responsibilities of his position
reasonably require.
<PAGE>
(c) Executive shall perform such duties and functions
commensurate with his position as may be reasonably assigned or delegated to him
from time to time by the Company's President or Board. Executive acknowledges
that such executive duties and functions may or may not involve performance of
services for or on behalf of affiliates of the Company.
(d) The principal office of the Company at the date hereof,
which is Executive's primary place of employment, is situated in St. Louis,
Missouri. While the duties of Executive will require him to travel, Executive
shall not be required to change his principal residence from St. Louis to a
locale other than a locale in which the Company's principal office may be
situated at the time.
(e) The provisions of Exhibit 1(e) are hereby acknowledged
as obligations of Executive both during the Term of his employment and
thereafter.
2. Term and Termination.
(a) Term. The "Term" of Executive's employment is from the
date hereof until the "Termination Date", which is defined as the earlier of (i)
December 31, 2001 or (ii) the date of termination of Executive's employment
pursuant to any one or more of Sections 2(b), 2(c), 2(d) or 2(e) of this
Agreement; provided that the date in clause (i) above shall be automatically
extended by one year on December 31, 2001, and on each subsequent anniversary
thereof. Executive is an at-will employee of the Company and such employment may
be terminated by Executive, in his sole and arbitrary discretion, at any time
with or without Good Reason, or by the Company, in the Company's sole and
arbitrary discretion, at any time with or without Cause, by delivery of a
written termination notice to the other party, in each case subject to the
consequences in Section 4.
(b) Death. If Executive dies during the Term, the
Termination Date shall be the date of his death.
(c) Disability. If Executive becomes Disabled during the
Term, the Termination Date shall be the date as of which such Disability is
determined. Subject to applicable law, "Disability" means such physical, mental
or psychological condition or other impairment that prevents Executive from
effectively performing the duties of his employment for more than ninety (90)
calendar days in any six (6) consecutive months commencing on the initial date
of such impairment commencing on the initial date of such impairment. In
connection with any Disability (or possible Disability):
(i) Executive shall cooperate with any physicians
engaged by the Company to examine Executive to determine
whether or not Executive is Disabled, and each of Executive
and the Company irrevocably consents to disclosure to each
of them by any such physicians of all matters relating to
such examinations.
(ii) The determination of Disability shall be by
agreement of the Company and Executive, or if Executive's
condition is such that he is unable to participate in such
- 2 -
<PAGE>
determination, then by agreement of the Company and
Executive's spouse or whoever else is then acting on his
behalf, and if the parties involved in such determination
are unable to reach agreement within 10 days of a request by
either party, then the issue shall be decided by a physician
chosen by the Company and reasonably acceptable to
Executive. The Company will pay all expenses incurred in the
determination of whether Executive is Disabled.
(d) Termination By Executive. If Executive terminates his
employment, with or without Good Reason, the Termination Date shall be the date
on which Executive's termination notice is given to the Company, or such later
date indicated on such termination notice, which may not be more than thirty
(30) days nor less than fourteen (14) days from its receipt by the Company;
provided that upon receipt of Executive's termination notice, the Company may,
in its sole discretion, request that Executive cease his employment activities
prior to the date referenced in such notice and Executive shall promptly comply
with such request, it being understood that such request will not change the
Termination Date specified in this Section 2(d) or affect the characterization
of the termination of Executive's employment.
(e) Termination by the Company. If the Company terminates
the employment of Executive, with or without Cause, the Termination Date shall
be the date on which the Company's termination notice is given to Executive, or
such later date indicated on such termination notice, which may not be more than
thirty (30) days from its receipt by Executive.
(f) Reversal of Determination. If Executive's employment is
terminated by the Company for Cause or by Executive for Good Reason, and it is
thereafter judicially determined that Cause or Good Reason as appropriate for
such termination does not exist, then Executive's employment shall be deemed to
have been terminated without Cause or Good Reason as appropriate as of the
Termination Date. If matters constituting Cause or Good Reason as appropriate
become known to the Company or to Executive subsequent to the time that
Executive's employment is terminated, then either party may, by delivery of
written notice to the other party, treat such termination as being for Cause or
Good Reason as appropriate.
(g) Definition of Cause. "Cause" for termination by the
Company of Executive's employment means:
(i) the commission by Executive of any willful act
against the interests of the Company which causes or is
intended to cause harm to the Company or any of its
Stockholders. For purposes of this definition, no act or
failure to act on the part of Executive shall be considered
"willful" unless it is done, or omitted to be done, by
Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of
the Company. Any act, or failure to act, based upon specific
instructions given pursuant to a resolution duly adopted by
the Board or directed by the President of the Company or
based upon the written advice of regular outside counsel for
the Company shall be
- 3 -
<PAGE>
conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interests of the
Company;
(ii) Executive has been convicted of, or pleads
nolo contendere with respect to, any felony, or of any
lesser crime or offense having as its predicate element
fraud, dishonesty or misappropriation of the property of the
Company;
(iii) the habitual drug addiction or habitual
intoxication of Executive which negatively impacts his job
performance; or
(iv) Executive breaches any of the terms of this
Agreement or any other agreement between Executive and the
Company which breach is not cured within twenty (20) days
after the delivery of notice in writing from the Board to
Executive of such breach, which notice indicates the
Company's intention to terminate Executive's employment
hereunder if such breach is not cured within such twenty
(20) day period and describes the nature of such breach.
(h) Definition of Good Reason. "Good Reason" for termination
by Executive of Executive's employment means (i) a material breach by the
Company of its obligations under this Agreement which is not cured (if curable)
within twenty (20) days after written notice by Executive to the Company, (ii)
the Company requiring Executive to move his primary place of employment by more
than seventy-five (75) miles, if such move increases Executive's commute from
his primary residence, without Executive's written consent thereto; provided
that Executive must notify the Company in writing of his intent to terminate his
employment pursuant to this Section 2(h)(ii) prior to the sixtieth day after the
earlier of (x) the date that the Company notifies Executive in writing of its
intent to relocate and (y) the date that such relocation occurs, and (iii) the
failure of any successor to the Company to assume this Agreement as set forth in
Section 13(k).
3. Compensation.
(a) Executive's compensation for his services hereunder
shall consist of (a) Base Salary, plus (b) Incentive Compensation, if any, plus
(c) Benefits.
(b) "Base Salary" shall be paid by the Company to Executive
at an annual rate of $300,000, payable in arrears in equal monthly installments.
Under no circumstances may the Base Salary be decreased during the Term.
(c) "Incentive Compensation," if any, is equal to the sum of
the following three amounts, up to a maximum of 60% of Base Salary in any given
year, it being understood that no Incentive Compensation is required to be paid
in any year in which the Company's actual EBITDA for the year in question is not
at least 90% of Target EBITDA for such year:
- 4 -
<PAGE>
(i) If the Company's actual EBITDA for the year in
question equals or exceeds 90% of Target EBITDA for such
year, Incentive Compensation will equal the product of (A)
Base Salary multiplied by (B) 25%; plus
(ii) Incentive Compensation will increase by an
amount equal to the product of (A) Base Salary multiplied by
(B) 2.5% multiplied by (C) the number of percentage points
by which the Company's actual EBITDA for the year in
question exceeds 90% of Target EBITDA for such year (for
example, if the Company's actual EBITDA was 93% of Target
EBITDA for the year in question, the number derived in
clause (C) would be 3 (i.e., 93%-90% = 3)), up to a maximum
of 25% of Base Salary in any year; plus
(iii) Incentive Compensation will increase by an
amount equal to the product of (A) Base Salary multiplied by
(B) 2% multiplied by (C) the number of percentage points by
which the Company's actual EBITDA for the year in question
exceeds 100% of the Target EBITDA for such year (for
example, if the Company's actual EBITDA was 103% of Target
EBITDA for the year in question, the number derived in
clause (C) would be 3 (i.e., 103%-100% = 3)).
All Incentive Compensation due hereunder shall be payable promptly after the
Company has received audited financial statements from its independent
accountants for the year in question which set forth such accountant's
determination of actual EBITDA for such year and not later than at or about the
time bonuses are paid to the Company's other senior executives whose bonuses are
determined based on the receipt of the Company's audited financial statements.
The formula for determining Incentive Compensation provided for in this Section
3 shall not be changed during the Term without Executive's consent. The minimum
amount of Incentive Compensation in respect of 1999 shall be $65,000.
(d) "Benefits" consist of whatever, if any, health,
hospitalization, sick pay, life insurance, disability insurance, profit sharing,
pension, 401(k), and deferred compensation plans and programs that the Company
may have in effect from time to time for its employees who are not members of a
collective bargaining unit, all of which Executive shall be entitled to
participate in on a basis commensurate with his position. Executive shall also
be entitled to four (4) calendar weeks paid vacation each year, in addition to
regularly scheduled holidays. The Company may initiate, change and discontinue
any such plans and programs at any time; provided that no such change shall be
effective as to Executive unless it is also effective as to the other senior
managers of the Company. If any of such plans or programs require contributions
by employees, Executive shall pay the contributions required by his
participation at a rate no greater than that applicable to any senior executive
of the Company.
(e) Stock Options. The Company shall grant Executive options
(the "Options") to purchase 600,000 shares of Common Stock, all on the terms and
conditions contained in the Company's 1999 Stock Option Plan approved by the
Board and in a Stock Option Agreement in the
- 5 -
<PAGE>
form of Annex A attached hereto. Shares of Common Stock acquired through the
exercise of options shall be referred to herein as "Option Shares."
(f) Signing Bonus. Upon the beginning of Executive's
employment with the Company, the Company shall pay to Executive a signing bonus
of $40,000.
4. Termination Provisions.
(a) If the Company terminates Executive's employment for
Cause, or if Executive terminates his employment without Good Reason, then in
any such case
(i) Executive shall be entitled to Base Salary and
Benefits for the period ending on the Termination Date; and
(ii) Executive shall be entitled to any unpaid
Incentive Compensation for any calendar year ending prior to
the year in which the Termination Date occurs, as well as
any Incentive Compensation for the calendar year in which
the Termination Date occurs pro-rated based on the portion
of Base Salary paid to Executive by the Company in such
year.
(b) If the Company terminates Executive's employment without
Cause, if Executive terminates his employment for Good Reason or if Executive's
employment terminates by reason of his death or Disability, then in any such
case
(i) Executive shall be entitled to Base Salary and
Benefits for the period ending on the Termination Date;
(ii) Executive shall be entitled to any unpaid
Incentive Compensation for any calendar year ending prior to
the year in which the Termination Date occurs, as well as
Incentive Compensation for the calendar year in which the
Termination Date occurs pro-rated based on the portion of
Base Salary paid to Executive by the Company in such year
(it being agreed that if the Termination Date is prior to
January 1, 2000, in no event shall the amount of Executive's
Incentive Compensation payable pursuant to this Section
4(b)(ii) be less than the amount referenced in the last
sentence of Section 3(c)); and
(iii) if, and only if, Executive (or his estate,
guardian or personal representative, as the case may be)
signs and delivers to the Company a complete general release
of claims in the form of Annex B attached hereto, then
Executive shall be entitled to his Base Salary (but no
Incentive Compensation) for the period commencing on the
Termination Date and ending on the later of (x) December 31,
2001 and (y) the date which is one year after the
Termination Date, together with any other Benefits as may be
provided under the terms of any applicable written plan,
- 6 -
<PAGE>
program or arrangement of the Company applicable to senior
executives of the Company.
If Executive does not comply with the terms of Section 4(b)(iii), above, within
30 days after the Termination Date, then Executive shall only be entitled to
payments as set forth in Sections 4(b)(i), and 4(b)(ii), above, and the Company
shall not be responsible for any further payments to Executive.
(c) Any amounts owed by the Company to Executive pursuant to
Section 4(b)(iii) shall be paid at such times and in such manner as if the
termination giving rise to such payments had not occurred (with the Company
retaining the right to prepay all or any portion of such amount at any time in
its sole discretion). The Company's obligation to make any payments pursuant to
Section 4(b) shall be conditioned upon Executive's continued and continuing
compliance with the terms and conditions of this Agreement (including, without
limitation, Section 6 hereof).
(d) Except as otherwise specified herein, if Executive's
employment terminates on any date other than the last day of a month,
Executive's compensation for that month shall be calculated on the basis of a
fraction, the numerator of which is the number of calendar days during that
month that Executive is in the Company's employ and the denominator of which is
the number of days in that month.
5. Expenses.
(a) The Company shall reimburse Executive for all reasonable
expenses incurred in the performance of his duties in accordance with the
expense reimbursement policy of the Company with respect to senior executives of
the Company in effect at the time.
(b) If the Company requires Executive to locate outside of
St. Louis, then the Company shall reimburse Executive for his reasonable
relocation expenses in accordance with the expense reimbursement policy of the
Company in effect at the time.
6. Noncompetition, Nonsolicitation, Confidentiality.
As a material inducement to the Company to enter into this
Agreement and in consideration of the payment by the Company of the compensation
detailed herein to Executive:
(a) During the period (the "Noncompete Period") beginning on
the date hereof and ending on the later of (x) the first anniversary of the
Termination Date and (y) if severance payments are owed to Executive by the
Company pursuant to Section 4(b)(iii), above, the last date on which such
payments are due to be paid to Executive (notwithstanding any reduction in such
payments pursuant to Section 4(c)), Executive shall not, without the prior
written consent of the Company (which consent may be granted or withheld in the
Company's sole discretion), directly or indirectly, Participate in any line of
business in which the Business is actively engaged or any line of business
competitive with the Business anywhere in the United States and any other
country in
- 7 -
<PAGE>
which the Company does business as of the Closing (the "Competitive
Activities"). For purposes of this Agreement, the term "Participate" includes
any direct or indirect interest in, or providing any direct or indirect
assistance (whether financial, advisory or otherwise) to, any enterprise (or any
affiliate thereof), whether as an officer, director, employee, partner, member,
sole proprietor, agent, representative, independent contractor, consultant,
creditor, stockholders, unitholder, owner or otherwise; provided that the term
"Participate" shall not include ownership of less than 2% of the Common Stock of
a publicly-held corporation whose Common Stock is traded on a national
securities exchange or in the over-the-counter market. The parties agree that,
without violating this Section 6(a), Executive may accept employment with any
Person which engages in Competitive Activities; provided that such Person's
business is diversified (and has separate and distinct divisions) and Executive
is employed in a part of its business which does not engage in Competitive
Activities; provided further that the Company, prior to Executive accepting such
employment, shall receive separate written assurances satisfactory to the
Company from the board of directors of such Person and Executive acknowledging
that Executive is bound by this Section 6, the terms of which such Person has
read, and covenanting that Executive will not render services directly or
indirectly in connection with any product, process, system or service of any
person or organization other than the Company, in existence or under
development, which is the same as or competes with a product, process, system or
service upon which Executive has worked during the last two years of Executive's
employment by the Company or about which Executive acquires Confidential
Information.
(b) During the Noncompete Period, Executive (a) except with
respect to Executive's personal secretary, shall not, directly or indirectly
contact, approach or solicit for the purpose of offering employment to or hiring
(whether as an employee, consultant, agent, independent contractor or otherwise)
or actually hire any person employed by the Company during the Noncompete Period
and (b) shall not induce or attempt to induce any customer or other business
relation of the Company to cease doing business with the Company or to engage in
any business relationship which might materially harm the Company.
(c) Executive acknowledges that certain of the information,
observations and data relating to the Company which he possesses or has obtained
as an employee, officer, director or stockholder of the Company is the
confidential and proprietary property of the Company ("Confidential
Information"). Executive agrees that he shall not, directly or indirectly, use
for his own purposes or use for or disclose to any third party any of such
Confidential Information without the prior written consent of the Company,
unless and to the extent that the aforementioned matters (i) become generally
known to and available for use by the public other than as a result of a
Executive's acts or omissions to act, or (ii) Executive is required by order of
a court of competent jurisdiction (by subpoena or similar process) to disclose
or discuss any Confidential Information (provided that in such case, Executive
shall promptly inform the Company of such order, shall cooperate with the
Company at the Company's expense in attempting to obtain a protective order or
to otherwise restrict such disclosure, and shall only disclose Confidential
Information to the minimum extent necessary to comply with any such court
order). This Section 6(c) shall not apply to disclosures of Confidential
Information by Executive during his employment with the Company
- 8 -
<PAGE>
in the ordinary course of business that he reasonably believes are necessary or
appropriate and in the Company's best interests.
(d) The parties hereto acknowledge and agree that the
Company will suffer irreparable harm from a breach by Executive of any of the
covenants or agreements contained in this Section 6. In the event of an alleged
or threatened breach by Executive of any of the provisions of this Section 6,
the Company or their successors or assigns may, in addition to all other rights
and remedies existing in its or their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other equitable
relief in order to enforce or prevent any violations of the provisions hereof.
Executive acknowledges and agrees that the restrictions contained in this
Section 6 are reasonable.
(e) If, at the time enforcement is sought of any of the
provisions of this Section 6, a court holds that the restrictions stated herein
are unreasonable under the circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Executive agrees that the covenants made in this Section 6 shall be construed as
an agreement independent of any other provision of this Agreement and shall
survive any order of a court of competent jurisdiction terminating any other
provision of this Agreement.
PART II. PURCHASE OF EXECUTIVE SECURITIES
7. Purchase and Sale of Executive Securities.
(a) Common Stock. Upon execution of this Agreement, the
Trust shall purchase, and the Company shall sell, 100,000 shares of the
Company's Class A Voting Common Stock and 100,000 shares of the Company's Class
B Non-Voting Common Stock at a price of $5.00 per share (the "Purchased Stock").
The Company shall deliver to the Trust the certificates representing such shares
of Common Stock, and the Trust shall deliver to the Company the aggregate amount
of $1,000,000 (the "Purchase Price").
(b) Certain Representations and Warranties. In connection
with the purchase and sale of the Executive Securities hereunder, Executive
hereby represents and warrants to the Company that:
(i) The Executive Securities to be beneficially
acquired by Executive pursuant to this Agreement shall be
acquired for his own account and not with a view to, or
intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and
the Executive Securities shall not be disposed of in
contravention of the Securities Act or any applicable state
securities laws;
- 9 -
<PAGE>
(ii) Executive is an executive officer of the
Company, is sophisticated in financial matters and is able
to evaluate the risks and benefits of the investment in the
Executive Securities;
(iii) Executive is an "accredited investor" as
defined under Regulation D promulgated under the Securities
Act;
(iv) Executive is able to bear the economic risk
of his investment in the Executive Securities for an
indefinite period of time because the Executive Securities
have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered
under the Securities Act or an exemption from such
registration is available;
(v) Executive has had an opportunity to ask
questions and receive answers concerning the terms and
conditions of the offering of Executive Securities and has
had full access to such other information concerning the
Company as he has requested. Executive has reviewed, or has
had an opportunity to review, a copy of the Recapitalization
Agreement, the Stockholders Agreement, all of the exhibits
thereto and all of the other agreements contemplated hereby
and thereby;
(vi) 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 do not and shall
not conflict with, violate or cause a breach of any material
agreement, contract or instrument to which Executive is a
party or any judgment, order or decree to which he is
subject; and
(vii) Executive is a United States citizen and a
resident of the State of Missouri.
(c) Certain Representations and Warranties of the Company.
In connection with the purchase and sale of the Executive Securities hereunder,
the Company hereby represents and warrants to Executive that:
(i) The Company is duly organized, validly
existing and in good standing under the laws of the State of
Delaware;
(ii) The execution, delivery and performance of
this Agreement will not violate, conflict with or result in
any breach of the Company's organizational documents or any
terms or conditions of any material agreements to which the
Company is a party;
(iii) Any Executive Securities to be delivered
pursuant to this Agreement, including the shares of Common
Stock issuable upon exercise of the Options, shall, when
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<PAGE>
delivered, be duly authorized, validly issued, fully paid
and non-assessable and will not be subject to pre-emptive or
similar rights; and
(iv) The holders of least 75% of the Company's
voting common stock have reviewed this Agreement and the
Stock Option Agreement attached hereto as Annex A and have
approved the terms and conditions contained herein and
therein, including, without limitation, those terms and
conditions relating to contingent payments that may be due
to Executive upon a Sale of the Company and may have
otherwise constituted an "excess parachute payment" pursuant
to Section 280G of the Internal Revenue Code of 1986, as
amended and a copy of such consent is attached hereto as
Exhibit 7(c)(iv).
(d) Additional Representation and Warranty. As an inducement
to the Company to sell the Executive Securities to Executive, and as a condition
thereto, Executive acknowledges and agrees that neither the issuance of the
Executive Securities to Executive nor any provision contained herein shall
entitle him to remain in the employment of the Company and its Subsidiaries or
affect the right of the Company or Executive to terminate his employment at any
time, in accordance with the provisions of Section 4 hereof.
(e) Compensation Arrangements. The Company and Executive
acknowledge and agree that this Agreement has been executed and delivered, and
the Executive Securities have been issued hereunder, in connection with and as a
part of the compensation and incentive arrangements between the Company and
Executive.
(f) Payments to the Trust. In consideration of Executive's
agreement to continue employment with the Company, the Company hereby agrees to
accelerate the payment of all amounts owed to Executive by the Company pursuant
to that certain Contract for Release in Event of Sale dated as of January 1,
1997 by and between the Company and Executive. Notwithstanding the terms of such
agreement, the Company shall pay to the Trust, on behalf of Executive, a portion
of the Share (as defined therein) equal to the Purchase Price immediately upon
the execution of the election attached as Annex C hereto. The Company shall pay
the remainder of the Share (net of any withholding obligations) to Executive
immediately upon the execution of such election (the aggregate amount paid on
the date hereof to the Trust and Executive (prior to withholding) with respect
to the Share is referred to as the "Estimated Share Amount"). The amounts paid
to the Trust on behalf of Executive pursuant to such election are for the sole
benefit of the Trust, and Executive has no right or ability to receive such
amounts except as provided in the Trust's constituent documents. Executive and
the Company acknowledge and agree that the final determination of the amount of
the Share is contingent upon the final determination by the Company of the
Company's Stockholders Equity as of December 31, 1998, as reflected on the
Company's audited financial statements. If the amount of the Share as finally
determined (based on the final determination of 12/31/98 Stockholders Equity) is
less than the Estimated Share Amount, Executive shall promptly pay to the
Company an amount of cash equal to such shortfall. If the amount of the Share as
finally determined (based on the final determination of 12/31/98 Stockholders
Equity) is greater than the
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<PAGE>
Estimated Share Amount, the Company shall promptly pay to Executive an amount of
cash equal to such excess, net of any withholding obligations.
8. Repurchase Option.
(a) Right of Repurchase. In the event Executive ceases to be
employed by the Company and its Subsidiaries for any reason (the "Termination"),
the Executive Securities (whether held by Executive or the Trust or one or more
of their transferees) shall be subject to repurchase by the Company pursuant to
the terms and conditions set forth in this Section 8 (the "Repurchase Option").
(b) Purchase Price. Any repurchase of Executive Securities
pursuant to the Repurchase Option shall be at the "Repurchase Price" described
in this Section 8(b) determined as of the date of the Termination. If
Executive's employment is terminated by Executive without Good Reason prior to
the fifth anniversary of the date hereof or by the Company for Cause, the
Repurchase Price for all of the Option Shares shall be the lower of (i) the Fair
Market Value therefor and (ii) the Original Cost therefor. If Executive's
employment is terminated for any other reason, the Repurchase Price for all
Option Shares shall be the Fair Market Value therefor. Notwithstanding the
reason for the termination of Executive's employment, the Repurchase Price for
all Purchased Shares shall be the Fair Market Value therefor.
(c) Repurchase by the Company. The Company may elect to
purchase all or any portion of the Executive Securities at the Repurchase Price
by delivering written notice (the "Repurchase Notice") to Executive within 120
days after the Termination. The Repurchase Notice shall set forth the number of
shares to be acquired from Executive and/or the Trust and/or their transferees
(if any), the aggregate consideration to be paid for such securities, and the
time and place for the closing of the transaction (the "Repurchase Closing").
The Company may, in its sole discretion, assign its rights pursuant to this
Section 8 to the holders of its capital stock (other than Executive and any
other Stockholder whose shares are being repurchased) pro rata on the basis of
the number of shares owned (with subsequent re-offer in the event of under
subscription); provided that any such assignees shall comply with the terms of
this Section 8.
(d) Repurchase Closing. The closing of the purchase of the
Executive Securities pursuant to the Repurchase Option shall take place on the
date designated by the Company in the Repurchase Notice which date shall not be
more than 60 days nor less than 10 days after the delivery of such notice
delivered. Subject to Section 8(e), the Company shall pay for the Executive
Securities to be purchased pursuant to the Repurchase Option by delivery of a
check or wire transfer of funds. The Company shall be entitled to receive
customary representations and warranties regarding good title to such
securities, free and clear of any liens or encumbrances, power and authority,
due execution, and enforceability.
(e) Certain Restrictions. Notwithstanding anything to the
contrary contained in this Agreement, all repurchases of Executive Securities by
the Company shall be subject to
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<PAGE>
applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries' debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Executive Securities hereunder
which the Company is otherwise entitled or required to make, the time periods
provided in this Section 8 shall be suspended, and the Company shall make such
repurchases as soon as it is permitted to do so under such restrictions with
interest at an annual rate of 7%. In addition, the Company may pay the
Repurchase Price for such Executive Securities by offsetting any bona fide debts
owed by Executive to the Company.
(f) Termination of Repurchase Option. The Repurchase Option
set forth in this Section 8 shall continue with respect to all Executive
Securities following any Transfer thereof; provided that such Repurchase Option
shall terminate effective immediately after the consummation of a Sale of the
Company or a Public Offering of the Company's equity securities in which the
Company receives net proceeds of at least $100 million; and provided further
that, with respect to each share of Executive Securities, the Repurchase Option
with respect to such share shall terminate immediately upon the Transfer of such
share pursuant to a Public Sale.
9. Restrictions on Transfer.
(a) Stockholders Agreement. The Executive Securities are
subject to the restrictions on Transfer set forth in the Stockholders Agreement.
(b) Legend. The certificates representing the Executive
Securities shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON JANUARY 20, 1999 HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE
REGISTRATION UNDER THE ACT OR AN EXEMPTION THEREFROM. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE
OPTIONS, AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND WILLIAM
JOHNSON DATED AS OF JANUARY 20, 1999, AS AMENDED AND
MODIFIED FROM TIME TO TIME. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE."
- 13 -
<PAGE>
10. Survival. Section 4 and Sections 6 through 13 shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
11. Definitions. The following definitions shall be applied to the
capitalized terms used in this Agreement for all purposes, unless otherwise
clearly indicated:
(a) Defined Terms.
"Board" means the Company's board of directors.
"Business" means the business conducted by the Company
including, without limitation, (a) the production and sale of termiticide
products and (b) the business conducted by the Company's Spectrum and Chemsico
Divisions.
"EBITDA" means, for a given period, the consolidated
Company's accounting earnings of the Company and its consolidated Subsidiaries
before taking into account any interest expense, provision for income taxes or
depreciation or amortization expense, excluding for this purpose extraordinary
gains and losses unless included in the determination of Target EBITDA.
"Executive Securities" has the meaning set forth in the
Preamble. Executive Securities shall continue to be Executive Securities in the
hands of any holder other than Executive and except as otherwise provided
herein, each such other holder of Executive Securities shall succeed to all
rights and obligations attributable to Executive as a holder of Executive
Securities hereunder. Executive Securities shall also include securities of the
Company issued with respect to Executive Securities by way of a stock split,
stock dividend or other recapitalization.
"Fair Market Value" of each share of any class or type of
Executive Security means the fair value of such shares or such class or type of
Executive Security determined in good faith by the Board, based on the
assumption of an arms-length transaction between a willing buyer and a willing
seller, taking into account all reasonable and customary factors relevant to
value including, without limitation, the fact that there may be no public market
for the Company's securities, but not including any minority discount; provided
that, until the first anniversary hereof, the "Fair Market Value" of each share
of Executive Securities shall not be less than the Original Cost of such share.
"Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 50% of the
Company's voting common stock on a fully-diluted basis (a "50% Owner"), who is
not an affiliate of any such 50% Owner, who is not the spouse or descendent (by
birth or adoption) of any such 50% Owner or a trust for the benefit of any such
50% Owner and/or such other Persons, and who is not a Person who through
contract or other arrangements (other than arrangements entered into in
connection with the contemplated transactions) would be an affiliate immediately
after the contemplated transaction.
- 14 -
<PAGE>
"Original Cost" for each share of Common Stock shall be
equal to $5.00 (as proportionately adjusted for all subsequent stock splits,
stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of any class of the
Company's Common Stock.
"Public Sale" means any sale pursuant to a Public Offering
or any sale to the public pursuant to Rule 144 promulgated under the Securities
Act effected through a broker, dealer or market maker.
"Sale of the Company" means (a) the acquisition by an
Independent Third Party of voting securities of (x) the Company or (y) the
surviving entity in any reorganization, merger or consolidation (each an
"Acquisition") involving the Company (any such entity referred to herein as the
"Corporation") where such Acquisition causes such Independent Third Party to own
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors, other than acquisitions by the Thomas H. Lee Company
or its affiliates, (b) the approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company, (c) the acquisition by an
Independent Third Party of more than 50% of the Company's assets determined on a
consolidated basis or (d) if individuals who constitute the Board on the date of
the Company's initial Public Offering of equity securities (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board
thereafter, it being understood that any individual becoming a director
subsequent to such date whose election, or nomination for election, is, at any
time, approved by a vote of at least a majority of the directors comprising the
Incumbent Board shall be considered a member of the Incumbent Board.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Stockholders" means the Persons holding the outstanding
Common Stock or other equity interests of the Company at the time in question.
"Stockholders Agreement" means that certain Stockholders
Agreement, dated as of the date hereof, by and among the Company, Executive and
certain other Persons listed on the signature pages thereto.
"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
- 15 -
<PAGE>
Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the limited
liability company, 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 the managing director or general partner of such limited
liability company, partnership, association or other business entity.
"Target EBITDA" means the annual performance goal for the
Company approved by the Board in its reasonable discretion with the input of
Executive, with Target EBITDA for fiscal 1999 being $85,400,000. The Board shall
use reasonable efforts to determine Target EBITDA for any fiscal year after 1999
no later than the 90th day of the fiscal year of the Company to which it
relates.
"Transfer" has the meaning ascribed to such term in the
Stockholders Agreement.
- 16 -
<PAGE>
(b) Other Definitions. The terms set forth below are defined
on the following pages of this Agreement:
<TABLE>
<S> <C>
Agreement ................................................................. - 1 -
Base Salary ............................................................... - 4 -
Benefits .................................................................. - 5 -
Cause ..................................................................... - 3 -
Common Stock .............................................................. - 1 -
Company ................................................................... - 1 -
Competitive Activities .................................................... - 8 -
Confidential Information .................................................. - 8 -
Disability ................................................................ - 2 -
Executive ................................................................. - 1 -
Executive Securities ...................................................... - 1 -
Good Reason ............................................................... - 4 -
Incentive Compensation .................................................... - 4 -
Noncompete Period ......................................................... - 7 -
Option Shares ............................................................. - 6 -
Options ................................................................... - 5 -
Participate ............................................................... - 8 -
Purchase Price ............................................................ - 9 -
Purchased Stock ........................................................... - 9 -
Repurchase Closing ........................................................ - 12 -
Repurchase Notice ......................................................... - 12 -
Repurchase Option ......................................................... - 12 -
Repurchase Price .......................................................... - 12 -
Term ..................................................................... - 2 -
Termination ............................................................... - 12 -
Termination Date .......................................................... - 2 -
Trust ..................................................................... - 1 -
</TABLE>
12. 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 Company
United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Telecopy: (314) 253-5941
Attention: Chief Executive Officer
To Executive
William Johnson
1411 Highland Valley Ct.
Chesterfield, MO 63005
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 shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
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<PAGE>
13. General Provisions.
(a) Expenses. The Company will pay the reasonable and
documented hourly legal fees and legal expenses of Executive's counsel in
connection with the negotiation and execution of this Agreement and the
agreements contemplated hereby.
(b) Severability. Whenever possible, each provision of this
Agreement shall 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 shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) 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, that certain Employment Agreement by and
between the Company and Executive dated as of January 1, 1998 and that certain
Contract for Release in the Event of Sale by and between the Company and
Executive dated as of January 1, 1997.
(d) 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.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company and their respective successors and assigns (including
subsequent holders of Executive Securities); provided that the rights and
obligations of Executive under this Agreement shall not be assignable except in
connection with a permitted Transfer of Executive Securities.
(f) Governing Law. The laws of the state of Missouri shall
govern all issues and questions concerning the employment of Executive, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Missouri or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Missouri. All other issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of
- 18 -
<PAGE>
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(g) Remedies. Each of the parties to this Agreement shall 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 would 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.
(h) Amendment and Waiver. The provisions of this Agreement
may be amended and waived only with the prior written consent of the Company,
the Trust and Executive.
(i) Third-Party Beneficiary. There are no beneficiaries to
this Agreement other than the signatories hereto.
(j) Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Company's chief executive office is located,
the time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or legal holiday.
(k) Assignment. Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation; provided that the
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Company to assume this Agreement. As used in this Agreement,
"Company" shall mean the Company, as defined above, and any successor to its
business and/or assets as aforesaid which assumes this Agreement by operation of
law or otherwise.
(l) Withholding. All amounts payable to Executive as
compensation hereunder shall be subject to customary withholding by the Company.
(m) Mitigation by Executive. In no event shall Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not Executive obtains
other employment.
* * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
UNITED INDUSTRIES CORPORATION
By:
--------------------------------------------
Its:
--------------------------------------------
------------------------------------------------
WILLIAM JOHNSON
------------------------------------------------
STEPHEN R. BRIAN, in his capacity as trustee of
that certain Trust Agreement, dated as of
January 20, 1999, by and between the Company and
Stephen R. Brian, as trustee
- 20 -
Exhibit 10.5
------------
UNITED INDUSTRIES CORPORATION
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement"), dated as of
January 20, 1999, is entered into by and among United Industries Corporation, a
Delaware corporation (the "Company"), Daniel Johnston ("Executive") and the
Trust established by that certain Trust Agreement, dated as of the date hereof,
by and between the Company and Stephen R. Brian, as trustee (the "Trust").
Certain capitalized terms used but not otherwise defined herein are defined in
Section 11.
The Company, Executive and the Trust desire to enter into an
agreement relating to Executive's employment by the Company and pursuant to
which the Trust shall purchase, and the Company shall sell, for an aggregate
purchase price of $1,000,000.00, 100,000 shares of Class A Voting Common Stock
and 100,000 shares of Class B Non-Voting Common Stock (collectively, the "Common
Stock"). The Common Stock and all other capital stock of the Company hereafter
acquired by Executive and/or the Trust (including, without limitation, shares of
Common Stock purchased upon the exercise of the Options) are sometimes
collectively referred to as "Executive Securities." The Executive Securities are
subject to certain transfer restrictions and repurchase rights as set forth
herein.
Simultaneously with the execution of this Agreement, the
parties hereto have entered into a Stock Option Agreement in the form of Annex A
attached hereto.
The parties hereto, in exchange for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
PART I. EMPLOYMENT TERMS
1. Employment and Duties.
(a) The Company shall employ Executive, and Executive hereby
accepts employment with the Company, as a Senior Vice President pursuant to the
terms and conditions of this Agreement. Executive shall report to the President
of the Company and/or the Board. The Company shall not assign to Executive
duties or functions which are outside of Executive's areas of competence in
order to use Executive's failure to perform as a basis for termination for
Cause.
(b) Executive shall devote his best efforts to the interests
of the Company, which interests may change from time to time, and shall devote
such time to his employment as the duties and responsibilities of his position
reasonably require.
<PAGE>
(c) Executive shall perform such duties and functions
commensurate with his position as may be reasonably assigned or delegated to him
from time to time by the Company's President or Board. Executive acknowledges
that such executive duties and functions may or may not involve performance of
services for or on behalf of affiliates of the Company.
(d) The principal office of the Company at the date hereof,
which is Executive's primary place of employment, is situated in St. Louis,
Missouri. While the duties of Executive will require him to travel, Executive
shall not be required to change his principal residence from St. Louis to a
locale other than a locale in which the Company's principal office may be
situated at the time.
(e) The provisions of Exhibit 1(e) are hereby acknowledged
as obligations of Executive both during the Term of his employment and
thereafter.
2. Term and Termination.
(a) Term. The "Term" of Executive's employment is from the
date hereof until the "Termination Date", which is defined as the earlier of (i)
December 31, 2001 or (ii) the date of termination of Executive's employment
pursuant to any one or more of Sections 2(b), 2(c), 2(d) or 2(e) of this
Agreement; provided that the date in clause (i) above shall be automatically
extended by one year on December 31, 2001, and on each subsequent anniversary
thereof. Executive is an at-will employee of the Company and such employment may
be terminated by Executive, in his sole and arbitrary discretion, at any time
with or without Good Reason, or by the Company, in the Company's sole and
arbitrary discretion, at any time with or without Cause, by delivery of a
written termination notice to the other party, in each case subject to the
consequences in Section 4.
(b) Death. If Executive dies during the Term, the
Termination Date shall be the date of his death.
(c) Disability. If Executive becomes Disabled during the
Term, the Termination Date shall be the date as of which such Disability is
determined. Subject to applicable law, "Disability" means such physical, mental
or psychological condition or other impairment that prevents Executive from
effectively performing the duties of his employment for more than ninety (90)
calendar days in any six (6) consecutive months commencing on the initial date
of such impairment commencing on the initial date of such impairment. In
connection with any Disability (or possible Disability):
(i) Executive shall cooperate with any physicians
engaged by the Company to examine Executive to determine whether or
not Executive is Disabled, and each of Executive and the Company
irrevocably consents to disclosure to each of them by any such
physicians of all matters relating to such examinations.
(ii) The determination of Disability shall be by
agreement of the Company and Executive, or if Executive's condition
is such that he is unable to participate in such
- 2 -
<PAGE>
determination, then by agreement of the Company and Executive's
spouse or whoever else is then acting on his behalf, and if the
parties involved in such determination are unable to reach agreement
within 10 days of a request by either party, then the issue shall be
decided by a physician chosen by the Company and reasonably
acceptable to Executive. The Company will pay all expenses incurred
in the determination of whether Executive is Disabled.
(d) Termination By Executive. If Executive terminates his
employment, with or without Good Reason, the Termination Date shall be the date
on which Executive's termination notice is given to the Company, or such later
date indicated on such termination notice, which may not be more than thirty
(30) days nor less than fourteen (14) days from its receipt by the Company;
provided that upon receipt of Executive's termination notice, the Company may,
in its sole discretion, request that Executive cease his employment activities
prior to the date referenced in such notice and Executive shall promptly comply
with such request, it being understood that such request will not change the
Termination Date specified in this Section 2(d) or affect the characterization
of the termination of Executive's employment.
(e) Termination by the Company. If the Company terminates
the employment of Executive, with or without Cause, the Termination Date shall
be the date on which the Company's termination notice is given to Executive, or
such later date indicated on such termination notice, which may not be more than
thirty (30) days from its receipt by Executive.
(f) Reversal of Determination. If Executive's employment is
terminated by the Company for Cause or by Executive for Good Reason, and it is
thereafter judicially determined that Cause or Good Reason as appropriate for
such termination does not exist, then Executive's employment shall be deemed to
have been terminated without Cause or Good Reason as appropriate as of the
Termination Date. If matters constituting Cause or Good Reason as appropriate
become known to the Company or to Executive subsequent to the time that
Executive's employment is terminated, then either party may, by delivery of
written notice to the other party, treat such termination as being for Cause or
Good Reason as appropriate.
(g) Definition of Cause. "Cause" for termination by the
Company of Executive's employment means:
(i) the commission by Executive of any willful
act against the interests of the Company which causes or is intended
to cause harm to the Company or any of its Stockholders. For purposes
of this definition, no act or failure to act on the part of Executive
shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon specific instructions
given pursuant to a resolution duly adopted by the Board or directed
by the President of the Company or based upon the written advice of
regular outside counsel for the Company shall be
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conclusively presumed to be done, or omitted to be done, by Executive
in good faith and in the best interests of the Company;
(ii) Executive has been convicted of, or pleads
nolo contendere with respect to, any felony, or of any lesser crime
or offense having as its predicate element fraud, dishonesty or
misappropriation of the property of the Company;
(iii) the habitual drug addiction or habitual
intoxication of Executive which negatively impacts his job
performance; or
(iv) Executive breaches any of the terms of this
Agreement or any other agreement between Executive and the Company
which breach is not cured within twenty (20) days after the delivery
of notice in writing from the Board to Executive of such breach,
which notice indicates the Company's intention to terminate
Executive's employment hereunder if such breach is not cured within
such twenty (20) day period and describes the nature of such breach.
(h) Definition of Good Reason. "Good Reason" for termination
by Executive of Executive's employment means (i) a material breach by the
Company of its obligations under this Agreement which is not cured (if curable)
within twenty (20) days after written notice by Executive to the Company, (ii)
the Company requiring Executive to move his primary place of employment by more
than seventy-five (75) miles, if such move increases Executive's commute from
his primary residence, without Executive's written consent thereto; provided
that Executive must notify the Company in writing of his intent to terminate his
employment pursuant to this Section 2(h)(ii) prior to the sixtieth day after the
earlier of (x) the date that the Company notifies Executive in writing of its
intent to relocate and (y) the date that such relocation occurs, and (iii) the
failure of any successor to the Company to assume this Agreement as set forth in
Section 13(k).
3. Compensation.
(a) Executive's compensation for his services hereunder
shall consist of (a) Base Salary, plus (b) Incentive Compensation, if any, plus
(c) Benefits.
(b) "Base Salary" shall be paid by the Company to Executive
at an annual rate of $300,000, payable in arrears in equal monthly installments.
Under no circumstances may the Base Salary be decreased during the Term.
(c) "Incentive Compensation," if any, is equal to the sum of
the following three amounts, up to a maximum of 60% of Base Salary in any given
year, it being understood that no Incentive Compensation is required to be paid
in any year in which the Company's actual EBITDA for the year in question is not
at least 90% of Target EBITDA for such year:
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(i) If the Company's actual EBITDA for the year
in question equals or exceeds 90% of Target EBITDA for such
year, Incentive Compensation will equal the product of (A)
Base Salary multiplied by (B) 25%; plus
(ii) Incentive Compensation will increase by an
amount equal to the product of (A) Base Salary multiplied
by (B) 2.5% multiplied by (C) the number of percentage
points by which the Company's actual EBITDA for the year in
question exceeds 90% of Target EBITDA for such year (for
example, if the Company's actual EBITDA was 93% of Target
EBITDA for the year in question, the number derived in
clause (C) would be 3 (i.e., 93%-90% = 3)), up to a maximum
of 25% of Base Salary in any year; plus
(iii) Incentive Compensation will increase by an
amount equal to the product of (A) Base Salary multiplied
by (B) 2% multiplied by (C) the number of percentage points
by which the Company's actual EBITDA for the year in
question exceeds 100% of the Target EBITDA for such year
(for example, if the Company's actual EBITDA was 103% of
Target EBITDA for the year in question, the number derived
in clause (C) would be 3 (i.e., 103%-100% = 3)).
All Incentive Compensation due hereunder shall be payable promptly after the
Company has received audited financial statements from its independent
accountants for the year in question which set forth such accountant's
determination of actual EBITDA for such year and not later than at or about the
time bonuses are paid to the Company's other senior executives whose bonuses are
determined based on the receipt of the Company's audited financial statements.
The formula for determining Incentive Compensation provided for in this Section
3 shall not be changed during the Term without Executive's consent. The minimum
amount of Incentive Compensation in respect of 1999 shall be $65,000.
(d) "Benefits" consist of whatever, if any, health,
hospitalization, sick pay, life insurance, disability insurance, profit sharing,
pension, 401(k), and deferred compensation plans and programs that the Company
may have in effect from time to time for its employees who are not members of a
collective bargaining unit, all of which Executive shall be entitled to
participate in on a basis commensurate with his position. Executive shall also
be entitled to four (4) calendar weeks paid vacation each year, in addition to
regularly scheduled holidays. The Company may initiate, change and discontinue
any such plans and programs at any time; provided that no such change shall be
effective as to Executive unless it is also effective as to the other senior
managers of the Company. If any of such plans or programs require contributions
by employees, Executive shall pay the contributions required by his
participation at a rate no greater than that applicable to any senior executive
of the Company.
(e) Stock Options. The Company shall grant Executive options
(the "Options") to purchase 600,000 shares of Common Stock, all on the terms and
conditions contained in the Company's 1999 Stock Option Plan approved by the
Board and in a Stock Option Agreement in the
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form of Annex A attached hereto. Shares of Common Stock acquired through the
exercise of options shall be referred to herein as "Option Shares."
(f) Signing Bonus. Upon the beginning of Executive's
employment with the Company, the Company shall pay to Executive a signing bonus
of $40,000.
4. Termination Provisions.
(a) If the Company terminates Executive's employment for
Cause, or if Executive terminates his employment without Good Reason, then in
any such case
(i) Executive shall be entitled to Base Salary
and Benefits for the period ending on the Termination Date;
and
(ii) Executive shall be entitled to any unpaid
Incentive Compensation for any calendar year ending prior
to the year in which the Termination Date occurs, as well
as any Incentive Compensation for the calendar year in
which the Termination Date occurs pro-rated based on the
portion of Base Salary paid to Executive by the Company in
such year.
(b) If the Company terminates Executive's employment without
Cause, if Executive terminates his employment for Good Reason or if Executive's
employment terminates by reason of his death or Disability, then in any such
case
(i) Executive shall be entitled to Base Salary
and Benefits for the period ending on the Termination Date;
(ii) Executive shall be entitled to any unpaid
Incentive Compensation for any calendar year ending prior
to the year in which the Termination Date occurs, as well
as Incentive Compensation for the calendar year in which
the Termination Date occurs pro-rated based on the portion
of Base Salary paid to Executive by the Company in such
year (it being agreed that if the Termination Date is prior
to January 1, 2000, in no event shall the amount of
Executive's Incentive Compensation payable pursuant to this
Section 4(b)(ii) be less than the amount referenced in the
last sentence of Section 3(c)); and
(iii) if, and only if, Executive (or his estate,
guardian or personal representative, as the case may be)
signs and delivers to the Company a complete general
release of claims in the form of Annex B attached hereto,
then Executive shall be entitled to his Base Salary (but no
Incentive Compensation) for the period commencing on the
Termination Date and ending on the later of (x) December
31, 2001 and (y) the date which is one year after the
Termination Date, together with any other Benefits as may
be provided under the terms of any applicable written plan,
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program or arrangement of the Company applicable to senior
executives of the Company.
If Executive does not comply with the terms of Section 4(b)(iii), above, within
30 days after the Termination Date, then Executive shall only be entitled to
payments as set forth in Sections 4(b)(i), and 4(b)(ii), above, and the Company
shall not be responsible for any further payments to Executive.
(c) Any amounts owed by the Company to Executive pursuant to
Section 4(b)(iii) shall be paid at such times and in such manner as if the
termination giving rise to such payments had not occurred (with the Company
retaining the right to prepay all or any portion of such amount at any time in
its sole discretion). The Company's obligation to make any payments pursuant to
Section 4(b) shall be conditioned upon Executive's continued and continuing
compliance with the terms and conditions of this Agreement (including, without
limitation, Section 6 hereof).
(d) Except as otherwise specified herein, if Executive's
employment terminates on any date other than the last day of a month,
Executive's compensation for that month shall be calculated on the basis of a
fraction, the numerator of which is the number of calendar days during that
month that Executive is in the Company's employ and the denominator of which is
the number of days in that month.
5. Expenses.
(a) The Company shall reimburse Executive for all reasonable
expenses incurred in the performance of his duties in accordance with the
expense reimbursement policy of the Company with respect to senior executives of
the Company in effect at the time.
(b) If the Company requires Executive to locate outside of
St. Louis, then the Company shall reimburse Executive for his reasonable
relocation expenses in accordance with the expense reimbursement policy of the
Company in effect at the time.
6. Noncompetition, Nonsolicitation, Confidentiality.
As a material inducement to the Company to enter into this
Agreement and in consideration of the payment by the Company of the compensation
detailed herein to Executive:
(a) During the period (the "Noncompete Period") beginning on
the date hereof and ending on the later of (x) the first anniversary of the
Termination Date and (y) if severance payments are owed to Executive by the
Company pursuant to Section 4(b)(iii), above, the last date on which such
payments are due to be paid to Executive (notwithstanding any reduction in such
payments pursuant to Section 4(c)), Executive shall not, without the prior
written consent of the Company (which consent may be granted or withheld in the
Company's sole discretion), directly or indirectly, Participate in any line of
business in which the Business is actively engaged or any line of business
competitive with the Business anywhere in the United States and any other
country in
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which the Company does business as of the Closing (the "Competitive
Activities"). For purposes of this Agreement, the term "Participate" includes
any direct or indirect interest in, or providing any direct or indirect
assistance (whether financial, advisory or otherwise) to, any enterprise (or any
affiliate thereof), whether as an officer, director, employee, partner, member,
sole proprietor, agent, representative, independent contractor, consultant,
creditor, stockholders, unitholder, owner or otherwise; provided that the term
"Participate" shall not include ownership of less than 2% of the Common Stock of
a publicly-held corporation whose Common Stock is traded on a national
securities exchange or in the over-the-counter market. The parties agree that,
without violating this Section 6(a), Executive may accept employment with any
Person which engages in Competitive Activities; provided that such Person's
business is diversified (and has separate and distinct divisions) and Executive
is employed in a part of its business which does not engage in Competitive
Activities; provided further that the Company, prior to Executive accepting such
employment, shall receive separate written assurances satisfactory to the
Company from the board of directors of such Person and Executive acknowledging
that Executive is bound by this Section 6, the terms of which such Person has
read, and covenanting that Executive will not render services directly or
indirectly in connection with any product, process, system or service of any
person or organization other than the Company, in existence or under
development, which is the same as or competes with a product, process, system or
service upon which Executive has worked during the last two years of Executive's
employment by the Company or about which Executive acquires Confidential
Information.
(b) During the Noncompete Period, Executive (a) except with
respect to Executive's personal secretary, shall not, directly or indirectly
contact, approach or solicit for the purpose of offering employment to or hiring
(whether as an employee, consultant, agent, independent contractor or otherwise)
or actually hire any person employed by the Company during the Noncompete Period
and (b) shall not induce or attempt to induce any customer or other business
relation of the Company to cease doing business with the Company or to engage in
any business relationship which might materially harm the Company.
(c) Executive acknowledges that certain of the information,
observations and data relating to the Company which he possesses or has obtained
as an employee, officer, director or stockholder of the Company is the
confidential and proprietary property of the Company ("Confidential
Information"). Executive agrees that he shall not, directly or indirectly, use
for his own purposes or use for or disclose to any third party any of such
Confidential Information without the prior written consent of the Company,
unless and to the extent that the aforementioned matters (i) become generally
known to and available for use by the public other than as a result of a
Executive's acts or omissions to act, or (ii) Executive is required by order of
a court of competent jurisdiction (by subpoena or similar process) to disclose
or discuss any Confidential Information (provided that in such case, Executive
shall promptly inform the Company of such order, shall cooperate with the
Company at the Company's expense in attempting to obtain a protective order or
to otherwise restrict such disclosure, and shall only disclose Confidential
Information to the minimum extent necessary to comply with any such court
order). This Section 6(c) shall not apply to disclosures of Confidential
Information by Executive during his employment with the Company
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<PAGE>
in the ordinary course of business that he reasonably believes are necessary or
appropriate and in the Company's best interests.
(d) The parties hereto acknowledge and agree that the
Company will suffer irreparable harm from a breach by Executive of any of the
covenants or agreements contained in this Section 6. In the event of an alleged
or threatened breach by Executive of any of the provisions of this Section 6,
the Company or their successors or assigns may, in addition to all other rights
and remedies existing in its or their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other equitable
relief in order to enforce or prevent any violations of the provisions hereof.
Executive acknowledges and agrees that the restrictions contained in this
Section 6 are reasonable.
(e) If, at the time enforcement is sought of any of the
provisions of this Section 6, a court holds that the restrictions stated herein
are unreasonable under the circumstances then existing, the parties hereto agree
that the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Executive agrees that the covenants made in this Section 6 shall be construed as
an agreement independent of any other provision of this Agreement and shall
survive any order of a court of competent jurisdiction terminating any other
provision of this Agreement.
PART II. PURCHASE OF EXECUTIVE SECURITIES
7. Purchase and Sale of Executive Securities.
(a) Common Stock. Upon execution of this Agreement, the
Trust shall purchase, and the Company shall sell, 100,000 shares of the
Company's Class A Voting Common Stock and 100,000 shares of the Company's Class
B Non-Voting Common Stock at a price of $5.00 per share (the "Purchased Stock").
The Company shall deliver to the Trust the certificates representing such shares
of Common Stock, and the Trust shall deliver to the Company the aggregate amount
of $1,000,000 (the "Purchase Price").
(b) Certain Representations and Warranties. In connection
with the purchase and sale of the Executive Securities hereunder, Executive
hereby represents and warrants to the Company that:
(i) The Executive Securities to be beneficially
acquired by Executive pursuant to this Agreement shall be acquired
for his own account and not with a view to, or intention of,
distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Securities shall
not be disposed of in contravention of the Securities Act or any
applicable state securities laws;
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(ii) Executive is an executive officer of the
Company, is sophisticated in financial matters and is able to
evaluate the risks and benefits of the investment in the Executive
Securities;
(iii) Executive is an "accredited investor" as
defined under Regulation D promulgated under the Securities Act;
(iv) Executive is able to bear the economic risk
of his investment in the Executive Securities for an indefinite
period of time because the Executive Securities have not been
registered under the Securities Act and, therefore, cannot be sold
unless subsequently registered under the Securities Act or an
exemption from such registration is available;
(v) Executive has had an opportunity to ask
questions and receive answers concerning the terms and conditions of
the offering of Executive Securities and has had full access to such
other information concerning the Company as he has requested.
Executive has reviewed, or has had an opportunity to review, a copy
of the Recapitalization Agreement, the Stockholders Agreement, all of
the exhibits thereto and all of the other agreements contemplated
hereby and thereby;
(vi) 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 do not and shall not conflict with, violate or
cause a breach of any material agreement, contract or instrument to
which Executive is a party or any judgment, order or decree to which
he is subject; and
(vii) Executive is a United States citizen and a
resident of the State of Missouri.
(c) Certain Representations and Warranties of the Company.
In connection with the purchase and sale of the Executive Securities hereunder,
the Company hereby represents and warrants to Executive that:
(i) The Company is duly organized, validly
existing and in good standing under the laws of the State of
Delaware;
(ii) The execution, delivery and performance of
this Agreement will not violate, conflict with or result in any
breach of the Company's organizational documents or any terms or
conditions of any material agreements to which the Company is a
party;
(iii) Any Executive Securities to be delivered
pursuant to this Agreement, including the shares of Common Stock
issuable upon exercise of the Options, shall, when
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delivered, be duly authorized, validly issued, fully paid and
non-assessable and will not be subject to pre-emptive or similar
rights; and
(iv) The holders of least 75% of the Company's
voting common stock have reviewed this Agreement and the Stock Option
Agreement attached hereto as Annex A and have approved the terms and
conditions contained herein and therein, including, without
limitation, those terms and conditions relating to contingent
payments that may be due to Executive upon a Sale of the Company and
may have otherwise constituted an "excess parachute payment" pursuant
to Section 280G of the Internal Revenue Code of 1986, as amended and
a copy of such consent is attached hereto as Exhibit 7(c)(iv).
(d) Additional Representation and Warranty. As an inducement
to the Company to sell the Executive Securities to Executive, and as a condition
thereto, Executive acknowledges and agrees that neither the issuance of the
Executive Securities to Executive nor any provision contained herein shall
entitle him to remain in the employment of the Company and its Subsidiaries or
affect the right of the Company or Executive to terminate his employment at any
time, in accordance with the provisions of Section 4 hereof.
(e) Compensation Arrangements. The Company and Executive
acknowledge and agree that this Agreement has been executed and delivered, and
the Executive Securities have been issued hereunder, in connection with and as a
part of the compensation and incentive arrangements between the Company and
Executive.
(f) Payments to the Trust. In consideration of Executive's
agreement to continue employment with the Company, the Company hereby agrees to
accelerate the payment of all amounts owed to Executive by the Company pursuant
to that certain Contract for Release in Event of Sale dated as of January 1,
1997 by and between the Company and Executive. Notwithstanding the terms of such
agreement, the Company shall pay to the Trust, on behalf of Executive, a portion
of the Share (as defined therein) equal to the Purchase Price immediately upon
the execution of the election attached as Annex C hereto. The Company shall pay
the remainder of the Share (net of any withholding obligations) to Executive
immediately upon the execution of such election (the aggregate amount paid on
the date hereof to the Trust and Executive (prior to withholding) with respect
to the Share is referred to as the "Estimated Share Amount"). The amounts paid
to the Trust on behalf of Executive pursuant to such election are for the sole
benefit of the Trust, and Executive has no right or ability to receive such
amounts except as provided in the Trust's constituent documents. Executive and
the Company acknowledge and agree that the final determination of the amount of
the Share is contingent upon the final determination by the Company of the
Company's Stockholders Equity as of December 31, 1998, as reflected on the
Company's audited financial statements. If the amount of the Share as finally
determined (based on the final determination of 12/31/98 Stockholders Equity) is
less than the Estimated Share Amount, Executive shall promptly pay to the
Company an amount of cash equal to such shortfall. If the amount of the Share as
finally determined (based on the final determination of 12/31/98 Stockholders
Equity) is greater than the
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Estimated Share Amount, the Company shall promptly pay to Executive an amount of
cash equal to such excess, net of any withholding obligations.
8. Repurchase Option.
(a) Right of Repurchase. In the event Executive ceases to be
employed by the Company and its Subsidiaries for any reason (the "Termination"),
the Executive Securities (whether held by Executive or the Trust or one or more
of their transferees) shall be subject to repurchase by the Company pursuant to
the terms and conditions set forth in this Section 8 (the "Repurchase Option").
(b) Purchase Price. Any repurchase of Executive Securities
pursuant to the Repurchase Option shall be at the "Repurchase Price" described
in this Section 8(b) determined as of the date of the Termination. If
Executive's employment is terminated by Executive without Good Reason prior to
the fifth anniversary of the date hereof or by the Company for Cause, the
Repurchase Price for all of the Option Shares shall be the lower of (i) the Fair
Market Value therefor and (ii) the Original Cost therefor. If Executive's
employment is terminated for any other reason, the Repurchase Price for all
Option Shares shall be the Fair Market Value therefor. Notwithstanding the
reason for the termination of Executive's employment, the Repurchase Price for
all Purchased Shares shall be the Fair Market Value therefor.
(c) Repurchase by the Company. The Company may elect to
purchase all or any portion of the Executive Securities at the Repurchase Price
by delivering written notice (the "Repurchase Notice") to Executive within 120
days after the Termination. The Repurchase Notice shall set forth the number of
shares to be acquired from Executive and/or the Trust and/or their transferees
(if any), the aggregate consideration to be paid for such securities, and the
time and place for the closing of the transaction (the "Repurchase Closing").
The Company may, in its sole discretion, assign its rights pursuant to this
Section 8 to the holders of its capital stock (other than Executive and any
other Stockholder whose shares are being repurchased) pro rata on the basis of
the number of shares owned (with subsequent re-offer in the event of under
subscription); provided that any such assignees shall comply with the terms of
this Section 8.
(d) Repurchase Closing. The closing of the purchase of the
Executive Securities pursuant to the Repurchase Option shall take place on the
date designated by the Company in the Repurchase Notice which date shall not be
more than 60 days nor less than 10 days after the delivery of such notice
delivered. Subject to Section 8(e), the Company shall pay for the Executive
Securities to be purchased pursuant to the Repurchase Option by delivery of a
check or wire transfer of funds. The Company shall be entitled to receive
customary representations and warranties regarding good title to such
securities, free and clear of any liens or encumbrances, power and authority,
due execution, and enforceability.
(e) Certain Restrictions. Notwithstanding anything to the
contrary contained in this Agreement, all repurchases of Executive Securities by
the Company shall be subject to
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applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries' debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Executive Securities hereunder
which the Company is otherwise entitled or required to make, the time periods
provided in this Section 8 shall be suspended, and the Company shall make such
repurchases as soon as it is permitted to do so under such restrictions with
interest at an annual rate of 7%. In addition, the Company may pay the
Repurchase Price for such Executive Securities by offsetting any bona fide debts
owed by Executive to the Company.
(f) Termination of Repurchase Option. The Repurchase Option
set forth in this Section 8 shall continue with respect to all Executive
Securities following any Transfer thereof; provided that such Repurchase Option
shall terminate effective immediately after the consummation of a Sale of the
Company or a Public Offering of the Company's equity securities in which the
Company receives net proceeds of at least $100 million; and provided further
that, with respect to each share of Executive Securities, the Repurchase Option
with respect to such share shall terminate immediately upon the Transfer of such
share pursuant to a Public Sale.
9. Restrictions on Transfer.
(a) Stockholders Agreement. The Executive Securities are
subject to the restrictions on Transfer set forth in the Stockholders Agreement.
(b) Legend. The certificates representing the Executive
Securities shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON JANUARY 20, 1999 HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE
REGISTRATION UNDER THE ACT OR AN EXEMPTION THEREFROM. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE
OPTIONS, AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND DANIEL
JOHNSTON DATED AS OF JANUARY 20, 1999, AS AMENDED AND
MODIFIED FROM TIME TO TIME. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE."
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<PAGE>
10. Survival. Section 4 and Sections 6 through 13 shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.
11. Definitions. The following definitions shall be applied to the
capitalized terms used in this Agreement for all purposes, unless otherwise
clearly indicated:
(a) Defined Terms.
"Board" means the Company's board of directors.
"Business" means the business conducted by the Company
including, without limitation, (a) the production and sale of termiticide
products and (b) the business conducted by the Company's Spectrum and Chemsico
Divisions.
"EBITDA" means, for a given period, the consolidated
Company's accounting earnings of the Company and its consolidated Subsidiaries
before taking into account any interest expense, provision for income taxes or
depreciation or amortization expense, excluding for this purpose extraordinary
gains and losses unless included in the determination of Target EBITDA.
"Executive Securities" has the meaning set forth in the
Preamble. Executive Securities shall continue to be Executive Securities in the
hands of any holder other than Executive and except as otherwise provided
herein, each such other holder of Executive Securities shall succeed to all
rights and obligations attributable to Executive as a holder of Executive
Securities hereunder. Executive Securities shall also include securities of the
Company issued with respect to Executive Securities by way of a stock split,
stock dividend or other recapitalization.
"Fair Market Value" of each share of any class or type of
Executive Security means the fair value of such shares or such class or type of
Executive Security determined in good faith by the Board, based on the
assumption of an arms-length transaction between a willing buyer and a willing
seller, taking into account all reasonable and customary factors relevant to
value including, without limitation, the fact that there may be no public market
for the Company's securities, but not including any minority discount; provided
that, until the first anniversary hereof, the "Fair Market Value" of each share
of Executive Securities shall not be less than the Original Cost of such share.
"Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 50% of the
Company's voting common stock on a fully-diluted basis (a "50% Owner"), who is
not an affiliate of any such 50% Owner, who is not the spouse or descendent (by
birth or adoption) of any such 50% Owner or a trust for the benefit of any such
50% Owner and/or such other Persons, and who is not a Person who through
contract or other arrangements (other than arrangements entered into in
connection with the contemplated transactions) would be an affiliate immediately
after the contemplated transaction.
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"Original Cost" for each share of Common Stock shall be
equal to $5.00 (as proportionately adjusted for all subsequent stock splits,
stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of any class of the
Company's Common Stock.
"Public Sale" means any sale pursuant to a Public Offering
or any sale to the public pursuant to Rule 144 promulgated under the Securities
Act effected through a broker, dealer or market maker.
"Sale of the Company" means (a) the acquisition by an
Independent Third Party of voting securities of (x) the Company or (y) the
surviving entity in any reorganization, merger or consolidation (each an
"Acquisition") involving the Company (any such entity referred to herein as the
"Corporation") where such Acquisition causes such Independent Third Party to own
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors, other than acquisitions by the Thomas H. Lee Company
or its affiliates, (b) the approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company, (c) the acquisition by an
Independent Third Party of more than 50% of the Company's assets determined on a
consolidated basis or (d) if individuals who constitute the Board on the date of
the Company's initial Public Offering of equity securities (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board
thereafter, it being understood that any individual becoming a director
subsequent to such date whose election, or nomination for election, is, at any
time, approved by a vote of at least a majority of the directors comprising the
Incumbent Board shall be considered a member of the Incumbent Board.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Stockholders" means the Persons holding the outstanding
Common Stock or other equity interests of the Company at the time in question.
"Stockholders Agreement" means that certain Stockholders
Agreement, dated as of the date hereof, by and among the Company, Executive and
certain other Persons listed on the signature pages thereto.
"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
- 15 -
<PAGE>
Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the limited
liability company, 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 the managing director or general partner of such limited
liability company, partnership, association or other business entity.
"Target EBITDA" means the annual performance goal for the
Company approved by the Board in its reasonable discretion with the input of
Executive, with Target EBITDA for fiscal 1999 being $85,400,000. The Board shall
use reasonable efforts to determine Target EBITDA for any fiscal year after 1999
no later than the 90th day of the fiscal year of the Company to which it
relates.
"Transfer" has the meaning ascribed to such term in the
Stockholders Agreement.
- 16 -
<PAGE>
(b) Other Definitions. The terms set forth below are defined
on the following pages of this Agreement:
<TABLE>
<S> <C>
Agreement ................................................................... - 1 -
Base Salary ................................................................. - 4 -
Benefits .................................................................... - 5 -
Cause ....................................................................... - 3 -
Common Stock ................................................................ - 1 -
Company ..................................................................... - 1 -
Competitive Activities....................................................... - 8 -
Confidential Information..................................................... - 8 -
Disability .................................................................. - 2 -
Executive ................................................................... - 1 -
Executive Securities ........................................................ - 1 -
Good Reason ................................................................. - 4 -
Incentive Compensation....................................................... - 4 -
Noncompete Period ........................................................... - 7 -
Option Shares ............................................................... - 6 -
Options ..................................................................... - 5 -
Participate ................................................................. - 8 -
Purchase Price .............................................................. - 9 -
Purchased Stock ............................................................. - 9 -
Repurchase Closing .......................................................... - 12 -
Repurchase Notice ........................................................... - 12 -
Repurchase Option ........................................................... - 12 -
Repurchase Price ............................................................ - 12 -
Term ........................................................................ - 2 -
Termination ................................................................. - 12 -
Termination Date ............................................................ - 2 -
Trust ....................................................................... - 1 -
</TABLE>
12. 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 Company
United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Telecopy: (314) 253-5941
Attention: Chief Executive Officer
To Executive
Daniel Johnston
1939 Newberryport
Chesterfield, MO 63005
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 shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
- 17 -
<PAGE>
13. General Provisions.
(a) Expenses. The Company will pay the reasonable and
documented hourly legal fees and legal expenses of Executive's counsel in
connection with the negotiation and execution of this Agreement and the
agreements contemplated hereby.
(b) Severability. Whenever possible, each provision of this
Agreement shall 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 shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) 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, that certain Employment Agreement by and
between the Company and Executive dated as of January 1, 1998 and that certain
Contract for Release in the Event of Sale by and between the Company and
Executive dated as of January 1, 1997.
(d) 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.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company and their respective successors and assigns (including
subsequent holders of Executive Securities); provided that the rights and
obligations of Executive under this Agreement shall not be assignable except in
connection with a permitted Transfer of Executive Securities.
(f) Governing Law. The laws of the state of Missouri shall
govern all issues and questions concerning the employment of Executive, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Missouri or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Missouri. All other issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of
- 18 -
<PAGE>
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(g) Remedies. Each of the parties to this Agreement shall 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 would 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.
(h) Amendment and Waiver. The provisions of this Agreement
may be amended and waived only with the prior written consent of the Company,
the Trust and Executive.
(i) Third-Party Beneficiary. There are no beneficiaries to
this Agreement other than the signatories hereto.
(j) Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Company's chief executive office is located,
the time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or legal holiday.
(k) Assignment. Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation; provided that the
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Company to assume this Agreement. As used in this Agreement,
"Company" shall mean the Company, as defined above, and any successor to its
business and/or assets as aforesaid which assumes this Agreement by operation of
law or otherwise.
(l) Withholding. All amounts payable to Executive as
compensation hereunder shall be subject to customary withholding by the Company.
(m) Mitigation by Executive. In no event shall Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not Executive obtains
other employment.
* * * *
- 19 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
UNITED INDUSTRIES CORPORATION
By:
----------------------------------------
Its:
----------------------------------------
--------------------------------------------
DANIEL JOHNSTON
--------------------------------------------
STEPHEN R. BRIAN, in his capacity as trustee
of that certain Trust Agreement, dated as of
January 20, 1999, by and between the Company
and Stephen R. Brian, as trustee
- 20 -
Exhibit 10.6
UNITED INDUSTRIES CORPORATION
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into
as of January 20, 1999, by and between David Jones ("Consultant") and United
Industries Corporation, a Delaware corporation (the "Company"). The Company and
Consultant are sometimes collectively referred to herein as the "Parties" and
individually as a "Party." Capitalized terms used herein and not otherwise
defined are defined in Section 13.
The Company, UIC Holdings, L.L.C. and certain stockholders of
the Company, are parties to an Agreement and Plan of Recapitalization, Purchase
and Redemption dated as of December 24, 1998 (the "Recapitalization Agreement").
Upon the closing of the transaction contemplated thereunder, the Company desires
to obtain the services of Consultant to consult with and perform services as an
independent contractor for the Company with respect to its businesses, and
Consultant desires to provide services to the Company upon the terms and
conditions set forth in this Agreement. In addition, pursuant to the terms of
this Agreement, Consultant shall purchase, and the Company shall sell, for an
aggregate purchase price of $1,000,000.00, 100,000.00 shares of Class A Voting
Common Stock and 100,000.00 shares of Class B Non-Voting Common Stock
(collectively, the "Common Stock"). The Common Stock and all other capital stock
of the Company hereafter acquired by Consultant (including, without limitation,
shares of Common Stock purchased upon the exercise of the Options (as defined in
Section 2(b) below) are sometimes collectively referred to as "Consultant
Securities." The Consultant Securities are subject to certain transfer
restrictions as set forth herein.
In consideration of the mutual covenants and agreements set
forth herein, the Parties agree as follows:
PART I. CONSULTING TERMS
1. Consulting Services. The Company hereby engages Consultant
as an independent contractor, and not as an employee, to render consulting
services to the Company as hereinafter provided, and Consultant hereby accepts
such engagement, for a period commencing on the Closing Date (as defined in the
Recapitalization Agreement) and terminating one year after the Closing Date, or
such later date as may be mutually agreed upon in writing by the Parties (the
"Consulting Period"). During the Consulting Period, Consultant shall render such
consulting services to the Company in connection with the Company's business as
the Company from time to time reasonably requests. The Consultant shall devote
reasonable time and efforts to the performance of the consulting services
contemplated by this Agreement as mutually agreed by the Company and Consultant.
Consultant shall not have any authority to bind or act on behalf of the Company.
In the event that after the expiration of the Consulting Period, the Company
desires to engage Consultant for broader or more extensive services than as set
forth in this Section 1,
-1-
<PAGE>
Consultant and the Company shall enter into a mutually satisfactory arrangement
relating to the additional services and the compensation thereof.
2. Compensation; Reimbursement.
(a) In consideration of Consultant's consulting services set
forth in Section 1 above, during the Consulting Period the Company shall pay to
Consultant a monthly fee of $6,250.00 (pro-rated for any partial month)(the
"Consulting Payment"), payable on the last day of each month in which consulting
services are rendered. Consultant shall be entitled to receive the full
Consulting Payment regardless of the amount and frequency of consulting services
actually requested of him by the Company. The Company shall reimburse Consultant
for all reasonable expenses incurred by him in the course of performing his
duties under this Agreement which are consistent with the Company's policies in
effect from time to time with respect to travel, entertainment and other
business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses.
(b) Stock Options. The Company shall grant Consultant options
(the "Options") to purchase 300,000 shares of Common Stock, all on the terms and
conditions contained in the Company's 1999 Stock Option Plan approved by the
Board.
(c) Signing Bonus. Upon the Company's and Consultant's
execution hereof, the Company shall pay to Consultant a signing bonus of
$500,000.
3. Confidential Information. Consultant acknowledges that the
information, observations and data relating to the business of the Company and
its subsidiaries which Consultant shall obtain during the course of his
association with the Company and its subsidiaries and his performance under this
Agreement are the property of the Company and its subsidiaries. Consultant
agrees that he shall not use for his own purposes or disclose to any third party
any of such information, observations or data without the prior written consent
of the Board, unless and to the extent that (i) the aforementioned matters
become generally known to or generally available for use by the public, in each
case other than as a result of Consultant's acts or omissions, (ii) disclosure
is compelled by law or judicial, administrative or regulatory action or
proceeding or (iii) disclosure is reasonably necessary in order for Consultant
to enforce his rights under this Agreement or to defend himself in any judicial,
administrative or regulatory action or proceeding to which the Company or its
affiliates are directly or indirectly a party.
4. Board Membership. Consultant shall be a member of the Board
of Directors of the Company (the "Board") for a period of three years, unless
earlier removed by a vote of the directors or stockholders of the Company. In
consideration of Consultant's services as a member of the Board, the Company
shall pay to Consultant $25,000 per year (pro-rated for any partial year) or
such greater amount as may be established from time to time by the Company as
its payment to non-employee directors in consideration of their services as
members of the Board.
-2-
<PAGE>
5. Tax Returns. It is intended that the fees paid to
Consultant hereunder shall constitute revenues to Consultant and (unless
otherwise required by law) the Company will not withhold any amounts therefrom
as federal income tax withholding from wages or as employee contributions under
the Federal Insurance Contribution Act or any other state or federal law.
Consultant shall file all tax returns and reports required to be filed by him on
the basis that Consultant is an independent contractor, rather than an employee,
as defined in Treasury Regulation ss.31.3121(d)-1(c)(2).
6. Indemnification. Without prejudice to (or enlargement or
other modification of) any existing rights of indemnification as an officer or
director enjoyed by Consultant, the Company will defend and indemnify and hold
Consultant harmless for serving as a consultant and as a director to the same
extent as the Company indemnifies its officers and directors under the Company's
articles of incorporation and bylaws as in effect on the Closing Date, and
Consultant shall be entitled to the protection of any insurance policies the
Company may elect to maintain generally for the benefit of its consultants,
directors or officers (and to the extent the Company maintains such an insurance
policy or policies, Consultant shall be covered by such policy or policies, in
accordance with its or their terms to the maximum extent of the coverage
provided for any other Company consultant, officer or director). No amendment to
the Company's Certificate of Incorporation or bylaws after the date of this
Agreement which reduces the scope of indemnification of officers and directors
shall affect the rights of Consultant under this Agreement.
7. Consultant's Representations. Consultant represents and
warrants to the Company that (i) his execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which he is a party or by which he is bound, (ii) he is not a party to or bound
by any employment agreement or confidentiality agreement with any other person
or entity which is in conflict with or would be breached by the execution,
delivery and performance of this Agreement and (iii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of his, enforceable in accordance with its terms.
8. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company and its affiliates, successors and
assigns and shall be binding upon and inure to the benefit of Consultant and his
legal representatives and assigns (including subsequent holders of Consultant
Securities); provided that (i) in no event shall Consultant delegate or transfer
his obligations to perform future services for the Company without the prior
written consent of the Company (which consent may be withheld in its sole
discretion) and (ii) the Company may not assign or transfer its rights
hereunder, other than to any of its affiliates or to a successor corporation in
the event of merger, consolidation or transfer or sale of all or substantially
all of the assets of the Company.
9. Modification or Waiver. No amendment, modification or
waiver of this Agreement shall be binding or effective for any purpose unless it
is made in a writing signed by the Party against whom enforcement of such
amendment, modification or waiver is sought. No course
-3-
<PAGE>
of dealing between the Parties to this Agreement shall be deemed to affect or to
modify, amend or discharge any provision or term of this Agreement. No delay on
the part of the Company or Consultant in the exercise of any of their respective
rights or remedies shall operate as a waiver thereof, and no single or partial
exercise by the Company or Consultant of any such right or remedy shall preclude
other or further exercises thereof. A waiver of right or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right or
remedy on any other occasion.
PART II. PURCHASE OF CONSULTANT SECURITIES
10. Purchase and Sale of Consultant Securities.
(a) Common Stock. Upon execution of this Agreement, Consultant
shall purchase, and the Company shall sell, 100,000.00 shares of the Company's
Class A Voting Common Stock and $100,000.00 shares of the Company's Class B
Non-Voting Common Stock at a price of $5.00 per share. Consultant shall deliver
to the Company a cashier's or certified check or wire transfer of funds in the
aggregate amount of $1,000,000.00 (provided that Consultant shall be permitted
to net against such payment amounts owed to Consultant pursuant to Section
2(c)).
(b) Certain Representations and Warranties. In connection with
the purchase and sale of the Consultant Securities hereunder, Consultant hereby
represents and warrants to the Company that:
The Consultant Securities to be acquired by
Consultant pursuant to this Agreement shall be acquired for his own
account and not with a view to, or intention of, distribution thereof
in violation of the Securities Act, or any applicable state securities
laws, and the Consultant Securities shall not be disposed of in
contravention of the Securities Act or any applicable state securities
laws;
Consultant is sophisticated in financial matters and
is able to evaluate the risks and benefits of the investment
in the Consultant Securities;
Consultant is an "accredited investor" as defined
under Regulation D promulgated under the Securities Act;
Consultant is able to bear the economic risk of his
investment in the Consultant Securities for an indefinite period of
time because the Consultant Securities have not been registered under
the Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available;
Consultant has had an opportunity to ask questions
and receive answers concerning the terms and conditions of the offering
of Consultant Securities and has had full access to such other
information concerning the Company as he has requested. Consultant has
reviewed, or has had an opportunity to review, a copy of the
Recapitalization Agreement,
-4-
<PAGE>
the Stockholders Agreement, all of the exhibits thereto and all of the
other agreements contemplated hereby and thereby;
This Agreement constitutes the legal, valid and
binding obligation of Consultant, enforceable in accordance with its
terms, and the execution, delivery and performance of this Agreement by
Consultant do not and shall not conflict with, violate or cause a
breach of any material agreement, contract or instrument to which
Consultant is a party or any judgment, order or decree to which he is
subject; and
Consultant is a United States citizen and a resident
of the State of Wisconsin.
(c) Additional Representation and Warranty. As an inducement
to the Company to issue Consultant Securities to Consultant, and as a condition
thereto, Consultant acknowledges and agrees that neither the issuance of the
Consultant Securities to Consultant nor any provision contained herein shall
entitle him to remain as a consultant to the Company and its Subsidiaries other
than as specifically set forth in this Agreement.
(d) Compensation Arrangements. The Company and Consultant
acknowledge and agree that this Agreement has been executed and delivered, and
the Consultant Securities have been issued hereunder, in connection with and as
a part of the compensation and incentive arrangements between the Company and
Consultant.
11. Restrictions on Transfer.
(a) Stockholders Agreement. The Consultant Securities are
subject to the restrictions on Transfer set forth in the Stockholders Agreement.
(b) Legend. The certificates representing the Consultant
Securities shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON JANUARY 20, 1999, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION UNDER
THE ACT OR AN EXEMPTION THEREFROM. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS, AND
CERTAIN OTHER AGREEMENTS SET FORTH IN A CONSULTING AGREEMENT
BETWEEN THE COMPANY AND DAVID JONES DATED AS OF JANUARY 20,
1999, AS AMENDED AND MODIFIED FROM TIME TO TIME. A COPY
-5-
<PAGE>
OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE
OF BUSINESS WITHOUT CHARGE."
12. Survival. Sections 3 and 6 and Sections 8 through 15 shall
survive and continue in full force in accordance with their terms
notwithstanding any termination of the Consulting Period.
13. Definitions. The following definitions shall be applied to
the capitalized terms used in this Agreement for all purposes, unless otherwise
clearly indicated:
(a) Defined Terms.
"Consultant Securities" has the meaning set forth in the
Preamble. Consultant Securities shall continue to be Consultant Securities in
the hands of any holder other than Consultant and except as otherwise provided
herein, each such other holder of Consultant Securities shall succeed to all
rights and obligations attributable to Consultant as a holder of Consultant
Securities hereunder. Consultant Securities shall also include securities of the
Company issued with respect to Consultant Securities by way of a stock split,
stock dividend or other recapitalization.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Stockholders Agreement" means that certain Stockholders
Agreement, dated as of the date hereof, by and among the Company, Consultant and
certain other Persons listed on the signature pages thereto, as amended from
time to time.
"Transfer" has the meaning ascribed to such term in the
Stockholders Agreement.
(b) Other Definitions. The terms set forth below are defined
on the following pages of this Agreement:
Agreement............................................- 1 -
Board................................................- 2 -
Common Stock.........................................- 1 -
Company..............................................- 1 -
Consultant...........................................- 1 -
Consulting Payment...................................- 2 -
Consulting Period....................................- 1 -
Options..............................................- 2 -
Party................................................- 1 -
-6-
<PAGE>
Parties..............................................- 1 -
Recapitalization Agreement...........................- 1 -
14. 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 Company
United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Telecopy: (314) 253-5941
Attention: President
To Consultant
David Jones
4596 Signature Drive
Middleton, WI 53562
Telecopy: (608) 828-9721
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 shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
15. General Provisions.
(a) Severability. Whenever possible, each provision of this
Agreement shall 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 shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) 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.
-7-
<PAGE>
(c) Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
(d) Remedies. Each of the parties to this Agreement shall 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 would 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.
(e) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and
Consultant.
(f) Third-Party Beneficiary. There are no beneficiaries to
this Agreement other than the signatories hereto.
(g) No Strict Construction. The language used in this
Agreement shall be deemed to be the language chosen by the Parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against any Party.
(h) Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Company's chief executive office is located,
the time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or legal holiday.
(i) Assignment. Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation which assumes this
Agreement and all obligations and undertakings of the Company hereunder. Upon
such a consolidation, merger, or sale of assets the term "the Company" will mean
the other corporation and this Agreement shall continue in full force and
effect.
(j) Captions. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
* * * * *
-8-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
UNITED INDUSTRIES CORPORATION
By:________________________________
Its:________________________________
-----------------------------------
DAVID JONES
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<PAGE>
CONSENT
The undersigned spouse of Consultant hereby acknowledges that
I have read the foregoing Consulting Agreement and that I understand its
contents. I am aware that the Consulting Agreement imposes restrictions on the
transfer of my spouse's Consultant Securities. I agree that my spouse's interest
in the Consultant Securities is subject to this Agreement and any interest I may
have in such Consultant Securities shall be irrevocably bound by this Agreement
and further that my community property interest, if any, shall be similarly
bound by this Agreement.
I am aware that the legal, financial and other matters
contained in this Agreement are complex and I am free to seek advice with
respect thereto from independent counsel. I have either sought such advice or
determined after carefully reviewing this Agreement that I will waive such
right.
Date: January __, 1999
Name of Consultant: David Jones
Name of Spouse:
Signature of Spouse:
Name of Witness:
Signature of Witness:
-10-
Exhibit 10.7
------------
UNITED INDUSTRIES CORPORATION
1999 STOCK OPTION PLAN
1. Purpose: Restrictions on Amount Available under the Plan.
This United Industries Corporation 1999 Stock Option Plan (the
"Plan") is intended to afford an incentive to selected employees, consultants
and directors of United Industries Corporation ("UIC") or any Subsidiary (as
defined in Section 2 hereof) (collectively referred to as the "Company"), to
acquire a proprietary interest in the Company, to continue to perform services
for the Company, to increase their efforts on behalf of the Company and to
promote the success of the Company's business.
2. Definitions.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
"Board" shall mean the Board of Directors of UIC.
"Cause" shall have the meaning set forth in the applicable
Option Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Disability" shall mean a Participant's disability within
the meaning of Section 22(e)(3) of the Code or any
successor provision.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Fair Market Value" per share as of a particular date shall
mean (i) the closing sales price per share of Common Stock
(as defined in Section 5 hereof) on the New York Stock
Exchange for the last preceding date on which there was a
sale of such Common Stock on such exchange, or (ii) if the
shares of Common Stock are not then admitted for trading on
the New York Stock Exchange, the closing price for the
shares of Common Stock in such other national securities
exchange or interdealer quotation system on which the
Common Stock is then traded for the last preceding date on
which there was a sale of such Common Stock in such market,
or (iii) if the shares of Common Stock are not then listed
on a national securities exchange or interdealer quotation
system, such value as the Committee (as defined in Section
3 hereof) in good faith may determine.
"Option" shall mean the right, granted pursuant to this
Plan, of a holder to purchase shares of Common Stock at a
price and upon the terms to be specified by the Committee.
<PAGE>
"Option Agreement" shall mean any written agreement,
contract or other instrument or document between the
Company and a Participant evidencing an Option.
"Participant" shall mean an officer, employee, director or
consultant of the Company who is, pursuant to Section 4 of
the Plan, selected to participate herein.
"Subsidiary" shall mean any corporation (other than UIC) in
an unbroken chain of corporations beginning with UIC if, at
the time of granting an Option, each of such corporation
other than the last corporation in the unbroken chain owns
stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the
other corporations in such chain.
3. Administration
Unless otherwise determined by the Board, the Plan shall be
administered by a committee of the Board ("Compensation Committee"), which shall
consist of two or more members of the Board. Following such time that Common
Stock is registered pursuant to Section 12 of the Exchange Act, members of the
Compensation Committee shall be "non-employee directors" as defined in Rule
16b-3 under the Exchange Act. The Compensation Committee may, in its discretion,
delegate to a subcommittee its duties hereunder, including the grant of Options.
The full Board shall also have the authority, in its discretion, to grant
Options under the Plan and to administer the Plan. For all purposes under the
Plan, any entity which performs the duties described herein, shall be referred
to as the "Committee."
The Committee shall have the authority in its discretion, subject to
and not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically granted
to it under the Plan or necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Options; to
determine the persons to whom and the time or times at which Options shall be
granted; to determine the type and number of Options to be granted, the number
of shares of Common Stock to which an Option may relate and the terms,
conditions and restrictions relating to any Option; to determine whether, to
what extent and under what circumstances an Option may be settled, canceled,
forfeited, exchanged or surrendered; to construe and interpret the Plan and any
Option; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of Option Agreements; and to make
all other determinations deemed necessary or advisable for the administration of
the Plan.
No member of the Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
2
<PAGE>
4. Eligibility
Options may be granted to employees, consultants and directors of the
Company or a Subsidiary. In determining the persons to whom Options shall be
granted and the number of shares to be covered by each Option, the Committee
shall take into account the duties of the respective persons, their present and
potential contributions to the success of the Company and such other factors as
the Committee shall deem relevant in connection with accomplishing the purpose
of the Plan.
5. Stock.
The stock subject to Options hereunder shall be shares of UIC's Class
A Voting Common Stock, par value $0.01 per share and Class B Non-Voting Common
Stock, par value $0.01 per share (referred to herein, collectively, as "Common
Stock"). Such shares may, in whole or in part, be authorized but unissued shares
or shares that shall have been or that may be reacquired by the Company. The
aggregate number of shares of Common Stock as to which Options may be granted
from time to time under the Plan shall not exceed 4,000,000. The limitations
established by the preceding two sentences shall be subject to adjustment as
provided in Section 7 hereof.
6. Stock Options.
The Committee shall have authority to grant Options to Participants
on the following terms and conditions:
(a) Number of Shares. Each Option Agreement shall state the
number of shares of Common Stock to which the Option relates.
(b) Type of Option. No Option granted pursuant to this Plan
shall be an incentive stock option within the meaning of Section 422 of the
Code.
(c) Exercise Price. Each Option Agreement shall state the
Exercise Price. The Exercise Price per share of Common Stock purchasable under
an Option shall be determined by the Committee. The date as of which the
Committee adopts a resolution expressly granting an Option shall be considered
the day on which such Option is granted.
(d) Method and Time of Payment. The Exercise Price shall be
paid in full, at the time of exercise, (i) in cash, (ii) in shares of Common
Stock, valued at then Fair Market Value, which either (A) were purchased by the
Participant in other than a compensatory transaction, (B) have been held by the
Participant free and clear for at least six (6) months prior to the use thereof
to pay part or all of the Exercise Price or (C) otherwise are considered
"mature" shares for purposes of generally accepted accounting principles, as
determined by the Company's outside auditors, or (iii) so long as the Common
Stock is publicly traded, by delivery to the Committee of irrevocable
instructions to a stockbroker to deliver promptly to the Company an amount of
sale or loan proceeds
3
<PAGE>
sufficient to pay a portion of the Exercise Price subject to this clause (iii),
or a combination of the methods specified in clauses (i), (ii) and (iii), or, in
the sole discretion of the Committee, through a cashless exercise procedure.
(e) Term and Exercisability of Options. Options shall be
exercisable over the exercise period, at such times and upon such conditions as
the Committee may determine, as reflected in the Option Agreement; provided
that, the Committee shall have the authority to accelerate the exercisability of
any outstanding Option at such time and under such circumstances as it, in its
sole discretion, deems appropriate. An Option may be exercised, as to any or all
full shares of Common Stock as to which the Option has become exercisable, by
written notice delivered in person or by mail to the Compensation Committee or
as it shall direct, specifying the number of shares of Common Stock with respect
to which the Option is being exercised. The exercise period shall be subject to
earlier termination as provided in Section 6(f) hereof. At the time any Option
granted under the Plan is exercised, the Company shall be entitled to legend the
certificates representing the shares of Common Stock purchased pursuant to the
Option to clearly identify them as representing shares purchased upon exercise
of an Option.
(f) Termination. If a Participant's employment by, or
service as a consultant to or director with, the Company terminates:
(i) Unless provided otherwise in the applicable
Option Agreement, upon a Participant's termination of
employment or service as a consultant to or director with
the Company or a Subsidiary by reason of death or
Disability or by the Company without Cause, all Options
that are not then exercisable shall immediately terminate
and all Options that are then exercisable shall remain
exercisable for a period of one year following such
termination and shall terminate thereafter;
(ii) Unless provided otherwise in the applicable
Option Agreement, if a Participant's employment or service
as a consultant to or director with the Company is
terminated by the Company for Cause, all Options shall
immediately terminate; and
(iii) Unless provided otherwise in the applicable
Option Agreement, upon any termination of Participant's
employment or service as a consultant to or director with
the Company other than for Cause, without Cause or by
reason of death or Disability, all Options that are not
than exercisable shall immediately terminate and all
Options that are then exercisable shall remain exercisable
for a period of thirty days from the date of such
termination and shall terminate thereafter.
(g) Other Provisions. Options may be subject to such other
conditions including, but not limited to, restrictions on transferability of the
shares acquired upon exercise of such Options, as the Committee may prescribe in
the Option Agreement in its discretion.
4
<PAGE>
7. Effect of Certain Changes.
If there is any change in the number of outstanding shares of Common
Stock by reason of any stock dividend, stock split, recapitalization,
combination, exchange of shares, merger, consolidation, liquidation, split-up,
spin-off or other similar change in capitalization, any distribution to common
shareholders, including a rights offering, other than cash dividends which are
not extraordinary in frequency or amount, or any like change, then the number of
shares of Common Stock available for Options, the number of such shares covered
by outstanding Options and/or the Exercise Price of such Options shall be
proportionately adjusted by the Committee to reflect such change or distribution
with the intent of preserving the rights granted by, and value and economic
benefits of, such Options; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated. In the event of a change in
the Common Stock of the Company as presently constituted, which is limited to a
change of all of its authorized shares with par value into the same number of
shares with a different par value or without par value, the shares resulting
from any such change shall be deemed to be the Common Stock within the meaning
of the Plan. To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive.
8. General Provisions.
(a) Restrictions on Delivery and Sale of Shares. Each
Option granted under the Plan is subject to the condition that if at any time
the Committee, in its discretion, shall determine that the listing, registration
or qualification of the shares covered by such Option upon any securities
exchange or under any state or federal law is necessary as a condition of or in
connection with the purchase or delivery of shares thereunder, the delivery of
any or all shares pursuant to such Option may be withheld unless and until such
listing, registration or qualification shall have been effected, and the Company
shall use its reasonable best efforts to effectuate such listing, registration
or qualification as promptly as reasonably practicable. If a registration
statement is not in effect under the Securities Act of 1933, as amended (the
"Securities Act"), or any applicable state securities laws with respect to the
shares of Common Stock purchasable or otherwise deliverable under Options then
outstanding, the Committee may require, as a condition of exercise of any
Option, that the Option holder or other recipient of an Option represent, in
writing, that the shares received pursuant to the Option are being acquired for
investment and not with a view to distribution and agree that the shares will
not be disposed of except pursuant to an effective registration statement,
unless the Company shall have received an opinion of counsel that such
disposition is exempt from such requirement under the Securities Act and any
applicable state securities laws. The Company may endorse on certificates
representing shares delivered pursuant to an Option such legends referring to
the foregoing representation or restrictions or any other applicable
restrictions on resale as the Company, in its discretion, shall deem
appropriate.
(b) Nontransferability. Except to the extent provided
otherwise in the applicable Option Agreement, Options shall not be transferable
by a Participant except by will or the laws of
5
<PAGE>
descent and distribution and shall be exercisable during the lifetime of a
Participant only by such Participant or his guardian or legal representative.
(c) No Right To Continued Employment. Nothing in the Plan
or in any Option granted or any Option Agreement or other agreement entered into
pursuant hereto shall confer upon any Participant the right to continue in the
employ or service of the Company or to be entitled to any remuneration or
benefits not set forth in the Plan or such Option Agreement or other agreement
or to interfere with or limit in any way the right of the Company to terminate
such Participant's employment.
(d) Withholding Taxes. Where a Participant or other person
is entitled to receive shares of Common Stock pursuant to an Option hereunder,
the Company shall have the right to require the Participant or such other person
to pay to the Company the amount of any taxes which the Company may be required
to withhold before delivery to such Participant or other person of cash or a
certificate or certificates representing such shares. Unless otherwise
prohibited by applicable law, a Participant may satisfy any such withholding tax
obligation by either of the following methods, or by a combination of such
methods: (a) tendering a cash payment; or (b) delivering to the Company
previously acquired shares of Common Stock, or having the Company withhold
shares of Common Stock otherwise deliverable upon exercise of an Option, in
either case having an aggregate Fair Market Value, determined as of the date the
withholding tax obligation arises, less than or equal to the amount of the total
withholding tax obligation.
(e) Amendment and Termination of the Plan. The Board or the
Committee may at any time and from time to time alter, amend, suspend or
terminate the Plan in whole or in part; provided that, no amendment which
requires stockholder approval under applicable law or in order for the Plan to
continue to comply with section 162(m) of the Code shall be effective unless the
same shall be approved by the requisite vote of the stockholders of the Company.
Notwithstanding the foregoing, no amendment shall affect adversely any of the
rights of any Participant, without such Participant's consent, under any Option
theretofore granted under the Plan. The power to grant Options under the Plan
will automatically terminate ten years after the adoption of the Plan by the
Board. If the Plan is terminated, any unexercised Option shall continue to be
exercisable in accordance with its terms and the terms of the Plan in effect
immediately prior to such termination.
(f) Participant Rights. No Participant shall have any claim
to be granted any Option under the Plan, and there is no obligation for
uniformity of treatment for Participants. Except as provided specifically
herein, a Participant or a transferee of an Option shall have no rights as a
stockholder with respect to any shares covered by any Option until the date of
the issuance of a stock certificate to him for such shares.
(g) No Fractional Shares. No fractional shares of Common
Stock shall be issued or delivered pursuant to the Plan or any Option. The
Committee shall determine (in its sole discretion) whether cash, other Options
or other property shall be issued or paid in lieu of such
6
<PAGE>
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
(h) Pro Rata Exercise. In the event that any Option
Agreement grants a Participant Options to acquire more than one class of Common
Stock, such Option Agreement shall (unless otherwise determined by the
Committee) provide that Options may only be exercised with respect to shares of
Common Stock of all such classes on a pro rata basis, based on the aggregate
number of shares of each class of Common Stock subject to the Options granted
pursuant to such Option Agreement.
(i) Governing Law. The Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of the State of
Delaware, without giving effect to the conflict of laws principles thereof.
(j) Headings. The section and subsection headings contained
herein are for convenience only and shall not affect the construction hereof.
9. Effectiveness
The Plan shall take effect upon its adoption by the Board.
7
Exhibit 10.8
------------
UNITED INDUSTRIES CORPORATION
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered
into as of January 20, 1999, by and between UNITED INDUSTRIES CORPORATION, a
Delaware corporation (the "Company"), and Stephan R. Brian ("Optionee") pursuant
to the United Industries Corporation 1999 Stock Option Plan (the "Plan"). The
Company and Optionee are referred to collectively herein as the "Parties."
Capitalized terms used but not defined herein shall have the meaning set forth
in the Plan.
Simultaneously with the execution of this Agreement, the
parties hereto have executed a Management Agreement, dated as of the date hereof
(the "Management Agreement"), to which this Agreement is attached as Annex A.
THE PARTIES AGREE AS FOLLOWS:
1. Grant of Options and Effective Date.
1.1 Grant. The Company hereby grants to Optionee pursuant to the
Plan an option (the "Option") to purchase all or any part of
an aggregate of 600,000 shares (the "Class A Shares") of the
Company's Class A Voting Common Stock, par value $0.01 per
share, and 600,000 shares (the "Class B Shares" and,
together with the Class A Shares (the "Shares")) of the
Company's Class B Non-Voting Common Stock, par value $0.01
per share (collectively, "Common Stock"), on the terms and
conditions set forth herein and in the Plan as in effect on
the Grant Date (as defined below), the terms of which are
incorporated herein by reference.
1.2 Grant Date. The Grant Date of this Option is January 20,
1999 (the "Grant Date").
2. Exercise Price. The exercise price for the Shares of Common Stock
covered by this Option shall be $5.00 per share (the "Exercise
Price").
3. Adjustment and Termination of Options. Subject to the restrictions,
and under the circumstances described, in the Plan and this Agreement,
the Company shall adjust the number and kind of Shares and the
Exercise Price thereof, and this Option shall be terminated in certain
circumstances, in accordance with the provisions of the Plan.
4. Exercise of Options.
4.1 When Exercisable.
(a) Rate of Exercise for 5-Year Options. Optionee's
right to exercise this Option as to 400,000 of the
Shares (200,000 Class A Shares and 200,000
Class B Shares) subject thereto (the "5 Year
Options") shall vest ratably over
<PAGE>
the five (5) year period commencing on the Grant
Date in accordance with the following schedule if
(but only if) Optionee is employed by the Company
or any of its Subsidiaries as of each such date:
<TABLE>
<CAPTION>
Cumulative Shares of
Date 5 Year Option Vested
<S> <C>
1st Anniversary of Grant Date 80,000
2nd Anniversary of Grant Date 160,000
3rd Anniversary of Grant Date 240,000
4th Anniversary of Grant Date 320,000
5th Anniversary of Grant Date 400,000
</TABLE>
(b) Rate of Exercise on TARSAP Options.
(i) Optionee shall not be vested with the right to
exercise this Option with respect to 800,000 of the Shares
(400,000 Class A Shares and 400,000 Class B Shares) (the
"TARSAP Shares") subject thereto (the "TARSAP Options")
until ten (10) years after the Grant Date, at which time
Optionee shall acquire the vested right to exercise the
TARSAP Options and purchase one hundred percent (100%) of
the TARSAP Shares if (but only if) Optionee is an employee
of the Company or any of its Subsidiaries as of such date.
(ii) Acceleration of TARSAP Options.
Notwithstanding the foregoing, if on and after the
publication of each written determination by the Board of
Directors of the Company (the "Board") or a committee
thereof which is authorized to do so that the Company has
met at least ninety percent (90%) of its objective for
EBITDA (as defined below) (100% of the Company's objective
referred to herein as the "Performance Goals") with respect
to any fiscal year commencing with the fiscal year ending
December 31, 1999 and continuing for each of the four fiscal
years thereafter (which Performance Goals are set forth on
Annex I attached hereto), then (subject to the other
restrictions in the Plan and this Agreement), Optionee shall
acquire the vested right to exercise the TARSAP Options to
purchase ten percent (10%) of the TARSAP Shares, and for
each additional one percent (1%) achievement over ninety
percent (90%) of the Performance Goals for any such fiscal
year, as so determined, Optionee shall acquire the vested
right to exercise the TARSAP Options to purchase an
additional one percent (1%) of the TARSAP Shares, but no
more than twenty percent (20%) of the TARSAP Shares in
respect of each full fiscal year. Additionally, on and after
publication of a written determination by the Board or a
committee thereof which is authorized to do so that the
Company has met at least eighty seven and one-half percent
(87.5%) of its Performance Goals for the fiscal year ending
December 31, 2003 and at least ninety percent (90%) of its
cumulative Performance Goals for the five fiscal years
- 2 -
<PAGE>
ending December 31, 2003 ("Five Year Performance Goals"),
then subject to the other restrictions in the Plan and this
Agreement, (i) Optionee shall acquire the vested right to
exercise the TARSAP Options to purchase fifty percent (50%)
of the TARSAP Shares as to which Optionee had not otherwise
acquired the vested right to exercise, and (ii) for each
additional one percent (1%) achievement over ninety percent
(90%) of the Five Year Performance Goals, as so determined,
Optionee shall acquire the vested right to exercise this
TARSAP Option to purchase an additional five percent (5%) of
the TARSAP Shares as to which Optionee has not otherwise
acquired the vested right to exercise (such additional
exercise rights pursuant to clauses (i) and (ii) above are
referred to herein as the "Additional Exercise Rights").
Such determinations shall be made by the Board or such
committee within ten (10) days after receipt of audited
financial statements for each fiscal year. The Board's or
committee's determination as to whether the Company has met
such objectives shall be final and not subject to dispute.
In addition, the Board or a committee thereof shall have
complete discretion to modify such objectives from time to
time for any year or years to reflect business combinations
or dispositions, fiscal year changes, purchases or sales of
assets or any other circumstances the Board or committee
thereof deems relevant. For purposes hereof, "EBITDA" shall
mean earnings before interest, taxes, depreciation and
amortization, excluding any non-recurring or extraordinary
items, as determined in accordance with generally accepted
accounting principles, consistently applied.
(iii) Acceleration Upon Sale. Notwithstanding any
provision to the contrary in this Section 4.1(b), but
subject to the other restrictions in the Plan and this
Agreement, in the event of a Sale (as defined below) prior
to December 31, 2003, the TARSAP Options shall become vested
and immediately exercisable to the extent set forth below.
On and after publication of a written determination by the
Board or a committee thereof which is authorized to do so
that the Company has met at least eighty seven and one-half
percent (87.5%) of its Performance Goals for the last
twelve (12) full months and at least ninety percent (90%) of
its cumulative Performance Goals for the completed fiscal
years (if any) and the Interim Period (as defined below)
(based on months elapsed), the Board or such committee shall
treat the percentage of cumulative Performance Goals
achieved through the completed fiscal years (if any) and
Interim Period as the percentage of Five Year Performance
Goals achieved and on that basis shall determine the
Additional Exercise Rights with respect to all 800,000
TARSAP Options as to which Optionee had not otherwise
acquired the vested right to exercise consistent with the
method set forth in the second sentence of Section
4.1(b)(ii) above. The percentage of Five Year Performance
Goals for such period shall be computed by dividing (i) the
sum of EBITDA achieved for the completed fiscal years (if
any) and the Interim Period by (ii) the annual Performance
Goals for the completed fiscal years (if any) and the
monthly Performance Goals for the Interim Period. For
purposes hereof, the term "Interim Period" shall mean the
period beginning on the first day of the then current fiscal
year and ending on the last full month of that uncompleted
fiscal year.
For purposes hereof, the term "Sale" shall mean:
- 3 -
<PAGE>
(w) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of voting securities of (a)
the Company or (b) the surviving entity in any reorganization, merger
or consolidation (each an "Acquisition") involving the Company (any
such entity referred to herein as the "Corporation") where such
Acquisition causes such Person to own more than fifty percent (50%) of
the combined voting power of the then outstanding voting securities of
the Corporation entitled to vote generally in the election of
directors, other than acquisitions by the Thomas H. Lee Company or its
affiliates;
(x) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company;
(y) the acquisition by a third party not affiliated with the
Company of all or substantially all of the Company's assets; or
(z) individuals who constitute the Board on the date of the
Company's initial public sale of equity securities registered under
the Securities Act (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board thereafter. Any person
becoming a director subsequent to such date whose, election, or
nomination for election, is, at any time, approved by a vote of at
least a majority of the directors comprising the Incumbent Board shall
be considered a member of the Incumbent Board.
The accelerated vesting provided in this Section 4.1(b)(iii) shall
take effect immediately prior to but contingent upon the Sale giving rise to
such accelerated vesting. The phrase "immediately prior to the Sale" shall be
understood to mean sufficiently in advance of a Sale to permit the Optionee to
take all steps reasonably necessary to permit the Optionee to become a
shareholder of the Company as of the consummation of such Sale with respect to
the TARSAP Shares subject to the accelerated vesting provided in this Section
4.1(b)(iii). The Board or committee thereof may in good faith shorten the
Interim Period or make approximations of EBITDA during the Interim Period in
order to comply with the preceding sentence.
(c) Partial Exercise. Subject to the other
restrictions in the Plan and this Agreement, the
Options may be exercised for all or a part of the
Shares with respect to which each Option is
exercisable under Section 4.1(a) and (b) above.
4.2 Method of Exercise; Stockholders Agreement. Subject to
Section 4.1 and the other restrictions in the Plan and this
Agreement, Options are exercisable from time to time by
Optionee, who shall complete, execute and deliver to the
Company a Form of Exercise and Stock Transfer Power
substantially in the form attached hereto or in such other
form as the Company may require. Except as otherwise
permitted by
- 4 -
<PAGE>
Section 6(d) of the Plan, such notice shall be accompanied
by payment in full for the Shares to be purchased. Payment
of the Exercise Price may be made: (i) in cash, (ii) in
shares of Common Stock which either (A) were purchased by
Optionee in other than a compensatory transaction, (B) have
been held by Optionee free and clear for at least six (6)
months prior to the use thereof to pay part or all of the
Exercise Price or (C) otherwise are considered "mature"
shares for purposes of generally accepted accounting
principles, as determined by the Company's outside auditors,
or (iii) so long as the Common Stock is publicly traded, by
delivery to the Committee of irrevocable instructions to a
stockbroker to deliver promptly to the Company an amount of
sale or loan proceeds sufficient to pay a portion of the
Exercise Price subject to this clause (iii), or a
combination of the methods specified in clauses (i), (ii)
and (iii), or in the sole discretion of the Committee,
through a cashless exercise procedure. Optionee shall also
execute and deliver to the Company a copy of the Company's
Stockholders Agreement, dated as of January 20, 1999, in the
form in effect at the time of exercise (as amended and
modified from time to time, the "Stockholders Agreement"),
if Optionee has not previously done so. Upon due exercise of
any Option and (if required) execution and delivery of the
Stockholders Agreement, subject to the terms and conditions
in this Agreement, the Company shall issue in the name of
Optionee and deliver to Optionee a certificate for the
Shares in respect of which such Option shall have been
exercised, but no Shares will be issued until arrangements
satisfactory to Company have been made for appropriate
income tax withholding, if any, pursuant to Section 12
hereof.
4.3 Exercise After Termination of Employment; Termination of
Options.
(a) Definitions. For purposes of this Section 4.3, the
capitalized terms Good Reason, Cause, and
Disability shall have the meanings set forth in
the Management Agreement.
(b) Termination Without Good Reason. Upon any
termination of employment by Optionee without Good
Reason, the Options may, to the extent exercisable
and not terminated pursuant to Section 4.3(e), be
exercised only within thirty (30) days after the
date of such employment termination. This Section
4.3(b) shall not, however, extend the term of the
Options beyond that specified in Section 4.3(e).
For purposes of this Section 4.3(b), the extent to
which the Options are exercisable shall be
determined as of the date of termination of
employment.
(c) Termination by Virtue of Death or Disability or
Without Cause or With Good Reason. Upon any
termination of employment of Optionee by virtue of
Optionee's death or Disability or upon any
termination of employment by Optionee with Good
Reason, or by the Company without Cause, the
Options may, to the extent exercisable and not
terminated pursuant to Section 4.3(e), be
exercised only within twelve (12) months after the
date
- 5 -
<PAGE>
of such termination. This Section 4.3 (c) shall
not extend the term of the Options beyond that
specified in Section 4.3(e). For purposes of this
Section 4.3(c), the extent to which the Options
are exercisable shall be determined as of the date
of termination of employment.
(d) Termination for Cause. The Option shall terminate
immediately upon termination of the employment of
Optionee for Cause.
(e) Other Termination. The Options shall not be
exercisable after the earliest of (i) a Sale
(provided that Optionee has at least five (5)
business days prior to the Sale to exercise the
Options or the Options are treated as exercised in
connection with such Sale) or (ii) January 20,
2009.
(f) Company Repurchase; Extension of Exercise Period.
If Optionee properly elects to exercise all or any
portion of the Option following a termination of
Optionee's employment as described in Section
4.3(c) (a "Post-Termination Exercise"), at the
written request of Optionee delivered to the
Company prior to or simultaneously with the
attempted exercise of such Option, the Company
shall either:
(i) offer to purchase from Optionee, within
fifteen (15) days following its receipt of such request, at
a purchase price equal to Fair Market Value, such portion of
the Shares obtained by Optionee through the Post-Termination
Exercise having an aggregate Fair Market Value equal to the
excess of (A) Optionee's aggregate federal, state and local
income tax obligations in respect of the Post-Termination
Exercise over (B) any amounts related to income tax
previously withheld by the Company with respect to such
Post-Termination Exercise; or
(ii) extend the period during which Optionee may
exercise the Options specified in Optionee's notice until
the earlier of (A) such time as the Company elects to comply
with Section 4.3(f)(i), above (disregarding the fifteen (15)
day period referenced therein), and (B) such time as the
Shares to be received by Optionee upon the exercise of the
Options specified in Optionee's notice are registered under
the Securities Act and freely tradable.
5. Non-transferability of Options. The Options shall not be transferable
or assignable except upon Optionee's death by will or the laws of
descent and distribution and shall be exercisable, during Optionee's
lifetime, only by Optionee.
6. Purchase for Investment; Other Representations of Optionee; Legends.
6.1 Investment Intent. As provided in the Plan, in the event
that the offering of Shares with respect to which the
Options are being exercised is not registered under the
Securities Act, but an exemption is available that requires
an investment
- 6 -
<PAGE>
representation or other representation, Optionee, if
electing to purchase Shares, will be required to represent
that such Shares are being acquired for investment and not
with a view to distribution thereof, and to make such other
reasonable and customary representations regarding matters
relevant to compliance with applicable securities laws as
are deemed necessary by counsel to the Company. Stock
certificates evidencing such unregistered Shares that are
acquired upon exercise of the Options shall bear restrictive
legends in substantially the following form and such other
restrictive legends as are required or advisable under the
provisions of any applicable laws or are provided for in the
Stockholders Agreement or any other agreement to which
Optionee is a party:
THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAWS AND SHALL NOT
BE TRANSFERRED AT ANY TIME IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS WITH RESPECT TO SUCH SHARES AT SUCH TIME, OR (II) AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL, TO THE
EFFECT THAT SUCH TRANSFER AT SUCH TIME WILL NOT VIOLATE THE SECURITIES
ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
6.2 Other Representations. Optionee hereby represents and
warrants to the Company as follows:
(a) Access to Information. Because of Optionee's
business relationship with the Company and with
the management of the Company, Optionee has had
access to all material and relevant information
concerning the Company, thereby enabling Optionee
to make an informed investment decision with
respect to his investment in the Company, and all
pertinent data and information requested by
Optionee from the Company or its representatives
concerning the business and financial condition of
the Company and the terms and conditions of this
Agreement have been furnished. Optionee
acknowledges that Optionee has had the opportunity
to ask questions of and receive answers from and
to obtain additional information from the Company
and its representatives concerning the present and
proposed business and financial condition of the
Company.
(b) Financial Sophistication. Optionee has such
knowledge and experience in financial and business
matters that Optionee is capable of evaluating the
merits and risks of investing in the Shares.
(c) Understanding the Investment Risks. Optionee
understands that:
- 7 -
<PAGE>
(i) An investment in the Shares
represents a highly speculative investment, and
there can be no assurance as to the success of the
Company in its business; and
(ii) There is at present no market for
the Shares and there can be no assurance that a
market will develop in the future.
(d) Understanding of the Nature of the Shares.
Optionee understands and agrees that:
(i) There can be no assurance that the
Shares will be registered under the Securities Act
or any state securities laws and if they are not
so registered, they will only be issued and sold
in reliance upon certain exemptions contained in
the Securities Act and applicable state securities
laws, and the representations and warranties of
Optionee contained herein, which will have to be
renewed as to the Shares at the times of exercise
of the Options, are essential to any claim of
exemption by the Company under the Securities Act
and such state laws;
(ii) If the Shares are not so
registered, the Shares will be "restricted
securities" as that term is defined in Rule 144
promulgated under the Securities Act;
(iii) The Option cannot be exercised and
the Shares will not be sold to Optionee and
Optionee cannot resell or transfer the Shares
without registration under the Securities Act and
applicable state securities laws unless the
Company receives an opinion of counsel acceptable
to it (as to both counsel and the opinion) that
such registration is not necessary, the cost of
such opinion to be borne by the Company;
(iv) Only the Company can register the
Shares under the Securities Act and applicable
state securities laws;
(v) The Company has not made any
representations to Optionee that the Company will
register the Shares under the Securities Act or
- 8 -
<PAGE>
any applicable state securities laws, or with
respect to compliance with any exemption
therefrom;
(vi) Optionee is aware of the conditions
for Optionee's obtaining an exemption for the
resale of the Shares under the Securities Act and
any applicable state securities laws; and
(vii) The Company may, from time to
time, make stop transfer notations in its transfer
records to ensure compliance with the Securities
Act and any applicable state securities laws, and
any additional restrictions imposed by state
securities administrators.
(e) Investment Intent. Optionee acknowledges that:
(i) Optionee is acquiring the Option for
Optionee's own account and not on behalf of any
other person;
(ii) Optionee is acquiring the option
for investment and not with a view to distribution
or with the intent to divide Optionee's
participation with others or resell or otherwise
distribute the Options or the Shares;
(iii) Neither Optionee nor anyone acting
on Optionee's behalf has paid or will pay a
commission or other remuneration to any person in
connection with the acquisition of the Options or
the Shares; and
(iv) At the time of exercise of any
Option, Optionee will have to make all the
representations and warranties contained in this
Section 6 with respect to the Shares to be issued
and other representations concerning investment
intent as a condition of the issuance of the
Shares by the Company.
7. Restriction on Issuance of Shares. The Company shall not be obligated
to sell or issue any Shares pursuant to this Agreement if such
issuance would result in the violation of any laws, including the
Securities Act or any applicable state securities laws. The Company
agrees to use its reasonable best efforts to qualify for available
exemptions under the Securities Act or any applicable state
securities laws which will enable it to issue Shares hereunder in
compliance with applicable law.
8. Rights as a Shareholder. Optionee shall have no rights as a
shareholder with respect to any Shares covered by the Options until
the date of exercise and payment of the Exercise Price in accordance
with the terms of this Agreement. Subject to Section 3 hereof, no
adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
9. No Employment Rights. This Agreement shall not confer upon Optionee
any right with respect to the continuance as an employee of the
Company or any Subsidiary, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate such employment
at any time.
- 9 -
<PAGE>
10. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Delaware, without giving effect to any choice of law or conflict of
law rules or provisions (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
11. Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on
the date of delivery if delivered personally or when received if
mailed to the party to whom notice is to be given, by certified mail,
return receipt requested, postage prepaid, or by reputable overnight
courier service (charges prepaid), or transmitted by facsimile with
answer-back confirmation to the following address, or any other
address specified, by notice duly given:
To Optionee at: Stephan R. Brian
401 E. Ontario, Unit #2810
Chicago, IL 60601
To the Company at: United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Attention: President
Telecopy: (314) 253-5941
12. Withholdings. Except to the extent prohibited by applicable law,
Optionee may satisfy any required withholding obligation upon the
exercise of an Option hereunder by either of the following methods, or
by a combination of such methods: (a) tendering a cash payment or (b)
delivering to the Company previously acquired Shares, or having the
Company withhold Shares otherwise deliverable upon the exercise of an
Option, in either case having an aggregate Fair Market Value,
determined as of the date the withholding obligation arises, less than
or equal to the amount of the total withholding obligation.
13. Pro Rata Exercise. The Shares of Common Stock covered by this Option
shall only be exercised, if at all, ratably among the Class A Shares
and Class B Shares, based on the aggregate number of Class A Shares
and Class B Shares subject to the Options granted hereunder.
14. Registration of Shares. At any time after UIC Holdings, L.L.C.,
together with its affiliates, holds less than 25% of the Common Stock
held by such entities as of the date hereof, Optionee shall have the
right to cause the Company to register all of the Shares on a Form
S-8, along with a Form S-3 reoffer prospectus, under the Securities
Act of 1933, as amended from time to time, or any successor form
thereto, and the Company shall use its reasonable best efforts to
comply with such request in a timely manner.
* * * * *
- 10 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
UNITED INDUSTRIES CORPORATION
By
--------------------------
Name:
-------------------
Title:
-------------------
OPTIONEE:
-----------------------------
Stephan R. Brian
- 11 -
Exhibit 10.9
------------
UNITED INDUSTRIES CORPORATION
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered
into as of January 20, 1999, by and between UNITED INDUSTRIES CORPORATION, a
Delaware corporation (the "Company"), and Richard A. Bender ("Optionee")
pursuant to the United Industries Corporation 1999 Stock Option Plan (the
"Plan"). The Company and Optionee are referred to collectively herein as the
"Parties." Capitalized terms used but not defined herein shall have the meaning
set forth in the Plan.
Simultaneously with the execution of this Agreement, the
parties hereto have executed a Management Agreement, dated as of the date hereof
(the "Management Agreement"), to which this Agreement is attached as Annex A.
THE PARTIES AGREE AS FOLLOWS:
1. Grant of Options and Effective Date.
1.1 Grant. The Company hereby grants to Optionee pursuant to the
Plan an option (the "Option") to purchase all or any part of
an aggregate of 300,000 shares (the "Class A Shares") of the
Company's Class A Voting Common Stock, par value $0.01 per
share, and 300,000 shares (the "Class B Shares" and,
together with the Class A Shares (the "Shares")) of the
Company's Class B Non-Voting Common Stock, par value $0.01
per share (collectively, "Common Stock"), on the terms and
conditions set forth herein and in the Plan as in effect on
the Grant Date (as defined below), the terms of which are
incorporated herein by reference.
1.2 Grant Date. The Grant Date of this Option is January 20,
1999 (the "Grant Date").
2. Exercise Price. The exercise price for the Shares of Common Stock
covered by this Option shall be $5.00 per share (the "Exercise
Price").
3. Adjustment and Termination of Options. Subject to the restrictions,
and under the circumstances described, in the Plan and this Agreement,
the Company shall adjust the number and kind of Shares and the
Exercise Price thereof, and this Option shall be terminated in certain
circumstances, in accordance with the provisions of the Plan.
4. Exercise of Options.
4.1 When Exercisable.
(a) Rate of Exercise for 5-Year Options. Optionee's
right to exercise this Option as to 200,000 of the
Shares (100,000 Class A Shares and 100,000 Class B
Shares) subject thereto (the "5 Year Options")
shall vest ratably over
<PAGE>
the five (5) year period commencing on the Grant
Date in accordance with the following schedule if
(but only if) Optionee is employed by the Company
or any of its Subsidiaries as of each such date:
<TABLE>
<CAPTION>
Cumulative Shares of
Date 5 Year Option Vested
---- --------------------
<S> <C>
1st Anniversary of Grant Date 40,000
2nd Anniversary of Grant Date 80,000
3rd Anniversary of Grant Date 120,000
4th Anniversary of Grant Date 160,000
5th Anniversary of Grant Date 200,000;
</TABLE>
provided that if Optionee's employment by the Company terminates by virtue of
the expiration of the "Term" (as defined in the Management Agreement) (i.e.,
Optionee's employment terminates due to the passage of the date referenced in
Section 2(a)(i) thereof (as extended pursuant to the provision in such Section
2(a)) as opposed to any termination by the Company or Optionee or by virtue of
Optionee's death or disability), then Optionee shall be credited with an
additional 21 days of vesting (for example, if Optionee's employment with the
Company terminates as described above on December 31, 2001, the 5 Year Options
will vest through January 20, 2002). Notwithstanding any provision to the
contrary in this Section 4.1(a), but subject to the other restrictions in the
Plan and this Agreement, in the event of a Sale (as defined below) prior to
December 31, 2003, the 5 Year Options shall become vested and immediately
exercisable.
(b) Rate of Exercise on TARSAP Options.
(i) Optionee shall not be vested with the right to
exercise this Option with respect to 400,000 of the Shares
(200,000 Class A Shares and 200,000 Class B Shares) (the
"TARSAP Shares") subject thereto (the "TARSAP Options")
until ten (10) years after the Grant Date, at which time
Optionee shall acquire the vested right to exercise the
TARSAP Options and purchase one hundred percent (100%) of
the TARSAP Shares if (but only if) Optionee is an employee
of the Company or any of its Subsidiaries as of such date.
(ii) Acceleration of TARSAP Options.
Notwithstanding the foregoing, if on and after the
publication of each written determination by the Board of
Directors of the Company (the "Board") or a committee
thereof which is authorized to do so that the Company has
met at least ninety percent (90%) of its objective for
EBITDA (as defined below) (100% of the Company's objective
referred to herein as the "Performance Goals") with respect
to any fiscal year commencing with the fiscal year ending
December 31, 1999 and continuing for each of the four fiscal
years thereafter (which Performance Goals are set forth on
Annex I attached hereto), then (subject to the other
restrictions in the Plan
- 2 -
<PAGE>
and this Agreement), Optionee shall acquire the vested right
to exercise the TARSAP Options to purchase ten percent (10%)
of the TARSAP Shares, and for each additional one percent
(1%) achievement over ninety percent (90%) of the
Performance Goals for any such fiscal year, as so
determined, Optionee shall acquire the vested right to
exercise the TARSAP Options to purchase an additional one
percent (1%) of the TARSAP Shares, but no more than twenty
percent (20%) of the TARSAP Shares in respect of each full
fiscal year. Additionally, on and after publication of a
written determination by the Board or a committee thereof
which is authorized to do so that the Company has met at
least eighty seven and one-half percent (87.5 %) of its
Performance Goals for the fiscal year ending December 31,
2003 and at least ninety percent (90%) of its cumulative
Performance Goals for the five fiscal years ending December
31, 2003 ("Five Year Performance Goals"), then subject to
the other restrictions in the Plan and this Agreement, (i)
Optionee shall acquire the vested right to exercise the
TARSAP Options to purchase fifty percent (50%) of the TARSAP
Shares as to which Optionee had not otherwise acquired the
vested right to exercise, and (ii) for each additional one
percent (1%) achievement over ninety percent (90%) of the
Five Year Performance Goals, as so determined, Optionee
shall acquire the vested right to exercise this TARSAP
Option to purchase an additional five percent (5%) of the
TARSAP Shares as to which Optionee has not otherwise
acquired the vested right to exercise (such additional
exercise rights pursuant to clauses (i) and (ii) above are
referred to herein as the "Additional Exercise Rights").
Such determinations shall be made by the Board or such
committee within ten (10) days after receipt of audited
financial statements for each fiscal year. The Board's or
committee's determination as to whether the Company has met
such objectives shall be final and not subject to dispute.
In addition, the Board or a committee thereof shall have
complete discretion to modify such objectives from time to
time for any year or years to reflect business combinations
or dispositions, fiscal year changes, purchases or sales of
assets or any other circumstances the Board or committee
thereof deems relevant. For purposes hereof, "EBITDA" shall
mean earnings before interest, taxes, depreciation and
amortization, excluding any non-recurring or extraordinary
items, as determined in accordance with generally accepted
accounting principles, consistently applied.
(iii) Acceleration Upon Sale. Notwithstanding any
provision to the contrary in this Section 4.1(b), but
subject to the other restrictions in the Plan and this
Agreement, in the event of a Sale (as defined below) prior
to December 31, 2003, the TARSAP Options shall become vested
and immediately exercisable to the extent set forth below.
On and after publication of a written determination by the
Board or a committee thereof which is authorized to do so
that the Company has met at least eighty seven and one-half
percent (87.5 %) of its Performance Goals for the last
twelve (12) full months and at least ninety percent (90%) of
its cumulative Performance Goals for the completed fiscal
years (if any) and the Interim Period (as defined below)
(based on months elapsed), the Board or such committee shall
treat the percentage of cumulative Performance Goals
achieved through the completed fiscal years (if any) and
Interim Period as the percentage of Five Year Performance
Goals achieved and on that basis shall determine the
Additional Exercise Rights with respect to all 400,000
TARSAP Options as to which Optionee had not otherwise
acquired the vested right to exercise consistent with the
method set forth in the second
- 3 -
<PAGE>
sentence of Section 4.1(b)(ii) above. The percentage of Five
Year Performance Goals for such period shall be computed by
dividing (i) the sum of EBITDA achieved for the completed
fiscal years (if any) and the Interim Period by (ii) the
annual Performance Goals for the completed fiscal years (if
any) and the monthly Performance Goals for the Interim
Period. For purposes hereof, the term "Interim Period" shall
mean the period beginning on the first day of the then
current fiscal year and ending on the last full month of
that uncompleted fiscal year.
For purposes hereof, the term "Sale" shall mean:
(w) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of voting securities of (a) the Company or (b)
the surviving entity in any reorganization, merger or
consolidation (each an "Acquisition") involving the Company
(any such entity referred to herein as the "Corporation")
where such Acquisition causes such Person to own more than
fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the Corporation entitled to
vote generally in the election of directors, other than
acquisitions by the Thomas H. Lee Company or its affiliates;
(x) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company;
(y) the acquisition by a third party not
affiliated with the Company of all or substantially all of
the Company's assets; or
(z) individuals who constitute the Board on the
date of the Company's initial public sale of equity
securities registered under the Securities Act (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board thereafter. Any person
becoming a director subsequent to such date whose, election,
or nomination for election, is, at any time, approved by a
vote of at least a majority of the directors comprising the
Incumbent Board shall be considered a member of the
Incumbent Board.
The accelerated vesting provided in this Section 4.1(b)(iii) shall
take effect immediately prior to but contingent upon the Sale giving rise to
such accelerated vesting. The phrase "immediately prior to the Sale" shall be
understood to mean sufficiently in advance of a Sale to permit the Optionee to
take all steps reasonably necessary to permit the Optionee to become a
shareholder of the Company as of the consummation of such Sale with respect to
the TARSAP Shares subject to the accelerated vesting provided in this Section
4.1(b)(iii). The Board or committee thereof may in good faith shorten the
Interim Period or make approximations of EBITDA during the Interim Period in
order to comply with the preceding sentence.
- 4 -
<PAGE>
(c) Partial Exercise. Subject to the other
restrictions in the Plan and this Agreement, the
Options may be exercised for all or a part of the
Shares with respect to which each Option is
exercisable under Section 4.1(a) and (b) above.
4.2 Method of Exercise; Stockholders Agreement. Subject to
Section 4.1 and the other restrictions in the Plan and this
Agreement, Options are exercisable from time to time by
Optionee, who shall complete, execute and deliver to the
Company a Form of Exercise and Stock Transfer Power
substantially in the form attached hereto or in such other
form as the Company may require. Except as otherwise
permitted by Section 6(d) of the Plan, such notice shall be
accompanied by payment in full for the Shares to be
purchased. Payment of the Exercise Price may be made: (i) in
cash, (ii) in shares of Common Stock which either (A) were
purchased by Optionee in other than a compensatory
transaction, (B) have been held by Optionee free and clear
for at least six (6) months prior to the use thereof to pay
part or all of the Exercise Price or (C) otherwise are
considered "mature" shares for purposes of generally
accepted accounting principles, as determined by the
Company's outside auditors, or (iii) so long as the Common
Stock is publicly traded, by delivery to the Committee of
irrevocable instructions to a stockbroker to deliver
promptly to the Company an amount of sale or loan proceeds
sufficient to pay a portion of the Exercise Price subject to
this clause (iii), or a combination of the methods specified
in clauses (i), (ii) and (iii), or in the sole discretion of
the Committee, through a cashless exercise procedure.
Optionee shall also execute and deliver to the Company a
copy of the Company's Stockholders Agreement, dated as of
January 20, 1999, in the form in effect at the time of
exercise (as amended and modified from time to time, the
"Stockholders Agreement"), if Optionee has not previously
done so. Upon due exercise of any Option and (if required)
execution and delivery of the Stockholders Agreement,
subject to the terms and conditions in this Agreement, the
Company shall issue in the name of Optionee and deliver to
Optionee a certificate for the Shares in respect of which
such Option shall have been exercised, but no Shares will be
issued until arrangements satisfactory to Company have been
made for appropriate income tax withholding, if any,
pursuant to Section 12 hereof.
4.3 Exercise After Termination of Employment; Termination of
Options.
(a) Definitions. For purposes of this Section 4.3, the
capitalized terms Good Reason, Cause, and
Disability shall have the meanings set forth in
the Management Agreement.
(b) Termination Without Good Reason. Upon any
termination of employment by Optionee without Good
Reason, the Options may, to the extent exercisable
and not terminated pursuant to Section 4.3(e), be
exercised only within thirty (30) days after the
date of such employment termination. This Section
4.3(b) shall not, however, extend the term of the
Options beyond that specified in Section 4.3(e).
For purposes of this Section 4.3(b), the extent to
which the Options are exercisable shall be
determined as of the date of termination of
employment.
(c) Termination by Virtue of Death or Disability or
Without Cause or With Good Reason. Upon any
termination of employment of Optionee by virtue of
Optionee's death or Disability or upon any
termination of employment by Optionee with Good
Reason, or by the
- 5 -
<PAGE>
Company without Cause, the Options may, to the
extent exercisable and not terminated pursuant to
Section 4.3(e), be exercised only within twelve
(12) months after the date of such termination.
This Section 4.3 (c) shall not extend the term of
the Options beyond that specified in Section
4.3(e). For purposes of this Section 4.3(c), the
extent to which the Options are exercisable shall
be determined as of the date of termination of
employment.
(d) Termination for Cause. The Option shall terminate
immediately upon termination of the employment of
Optionee for Cause.
(e) Other Termination. The Options shall not be
exercisable after the earliest of (i) a Sale
(provided that Optionee has at least five (5)
business days prior to the Sale to exercise the
Options or the Options are treated as exercised in
connection with such Sale) or (ii) January 20,
2009.
(f) Company Repurchase; Extension of Exercise Period.
If Optionee properly elects to exercise all or any
portion of the Option following a termination of
Optionee's employment as described in Section
4.3(c) (a "Post-Termination Exercise"), at the
written request of Optionee delivered to the
Company prior to or simultaneously with the
attempted exercise of such Option, the Company
shall either:
(i) offer to purchase from Optionee, within
fifteen (15) days following its receipt of such request, at
a purchase price equal to Fair Market Value, such portion of
the Shares obtained by Optionee through the Post-Termination
Exercise having an aggregate Fair Market Value equal to the
excess of (A) Optionee's aggregate federal, state and local
income tax obligations in respect of the Post-Termination
Exercise over (B) any amounts related to income tax
previously withheld by the Company with respect to such
Post-Termination Exercise; or
(ii) extend the period during which Optionee may
exercise the Options specified in Optionee's notice until
the earlier of (A) such time as the Company elects to comply
with Section 4.3(f)(i), above (disregarding the fifteen (15)
day period referenced therein), and (B) such time as the
Shares to be received by Optionee upon the exercise of the
Options specified in Optionee's notice are registered under
the Securities Act and freely tradable.
5. Non-transferability of Options. The Options shall not be transferable
or assignable except upon Optionee's death by will or the laws of
descent and distribution and shall be exercisable, during Optionee's
lifetime, only by Optionee.
6. Purchase for Investment; Other Representations of Optionee; Legends.
6.1 Investment Intent. As provided in the Plan, in the event
that the offering of Shares with respect to which the
Options are being exercised is not registered under the
Securities Act, but an exemption is available that requires
an investment representation or other
- 6 -
<PAGE>
representation, Optionee, if electing to purchase Shares,
will be required to represent that such Shares are being
acquired for investment and not with a view to distribution
thereof, and to make such other reasonable and customary
representations regarding matters relevant to compliance
with applicable securities laws as are deemed necessary by
counsel to the Company. Stock certificates evidencing such
unregistered Shares that are acquired upon exercise of the
Options shall bear restrictive legends in substantially the
following form and such other restrictive legends as are
required or advisable under the provisions of any applicable
laws or are provided for in the Stockholders Agreement or
any other agreement to which Optionee is a party:
THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAWS AND SHALL NOT
BE TRANSFERRED AT ANY TIME IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS WITH RESPECT TO SUCH SHARES AT SUCH TIME, OR (II) AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL, TO THE
EFFECT THAT SUCH TRANSFER AT SUCH TIME WILL NOT VIOLATE THE SECURITIES
ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
6.2 Other Representations. Optionee hereby represents and
warrants to the Company as follows:
(a) Access to Information. Because of Optionee's
business relationship with the Company and with
the management of the Company, Optionee has had
access to all material and relevant information
concerning the Company, thereby enabling Optionee
to make an informed investment decision with
respect to his investment in the Company, and all
pertinent data and information requested by
Optionee from the Company or its representatives
concerning the business and financial condition of
the Company and the terms and conditions of this
Agreement have been furnished. Optionee
acknowledges that Optionee has had the opportunity
to ask questions of and receive answers from and
to obtain additional information from the Company
and its representatives concerning the present and
proposed business and financial condition of the
Company.
(b) Financial Sophistication. Optionee has such
knowledge and experience in financial and business
matters that Optionee is capable of evaluating the
merits and risks of investing in the Shares.
(c) Understanding the Investment Risks. Optionee
understands that:
(i) An investment in the Shares represents a
highly speculative investment, and there can be no assurance
as to the success of the Company in its business; and
- 7 -
<PAGE>
(ii) There is at present no market for the Shares
and there can be no assurance that a market will develop in
the future.
(d) Understanding of the Nature of the Shares.
Optionee understands and agrees that:
(i) There can be no assurance that the Shares will
be registered under the Securities Act or any state
securities laws and if they are not so registered, they will
only be issued and sold in reliance upon certain exemptions
contained in the Securities Act and applicable state
securities laws, and the representations and warranties of
Optionee contained herein, which will have to be renewed as
to the Shares at the times of exercise of the Options, are
essential to any claim of exemption by the Company under the
Securities Act and such state laws;
(ii) If the Shares are not so registered, the
Shares will be "restricted securities" as that term is
defined in Rule 144 promulgated under the Securities Act;
(iii) The Option cannot be exercised and the
Shares will not be sold to Optionee and Optionee cannot
resell or transfer the Shares without registration under the
Securities Act and applicable state securities laws unless
the Company receives an opinion of counsel acceptable to it
(as to both counsel and the opinion) that such registration
is not necessary, the cost of such opinion to be borne by
the Company;
(iv) Only the Company can register the Shares
under the Securities Act and applicable state securities
laws;
(v) The Company has not made any representations
to Optionee that the Company will register the Shares under
the Securities Act or any applicable state securities laws,
or with respect to compliance with any exemption therefrom;
(vi) Optionee is aware of the conditions for
Optionee's obtaining an exemption for the resale of the
Shares under the Securities Act and any applicable state
securities laws; and
(vii) The Company may, from time to time, make
stop transfer notations in its transfer records to ensure
compliance with the Securities Act and any applicable state
securities laws, and any additional restrictions imposed by
state securities administrators.
(e) Investment Intent. Optionee acknowledges that:
(i) Optionee is acquiring the Option for
Optionee's own account and not on behalf of any other
person;
- 8 -
<PAGE>
(ii) Optionee is acquiring the option for
investment and not with a view to distribution or with the
intent to divide Optionee's participation with others or
resell or otherwise distribute the Options or the Shares;
(iii) Neither Optionee nor anyone acting on
Optionee's behalf has paid or will pay a commission or other
remuneration to any person in connection with the
acquisition of the Options or the Shares; and
(iv) At the time of exercise of any Option,
Optionee will have to make all the representations and
warranties contained in this Section 6 with respect to the
Shares to be issued and other representations concerning
investment intent as a condition of the issuance of the
Shares by the Company.
7. Restriction on Issuance of Shares. The Company shall not be obligated
to sell or issue any Shares pursuant to this Agreement if such
issuance would result in the violation of any laws, including the
Securities Act or any applicable state securities laws. The Company
agrees to use its reasonable best efforts to qualify for available
exemptions under the Securities Act or any applicable state securities
laws which will enable it to issue Shares hereunder in compliance with
applicable law.
8. Rights as a Shareholder. Optionee shall have no rights as a
shareholder with respect to any Shares covered by the Options until
the date of exercise and payment of the Exercise Price in accordance
with the terms of this Agreement. Subject to Section 3 hereof, no
adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
9. No Employment Rights. This Agreement shall not confer upon Optionee
any right with respect to the continuance as an employee of the
Company or any Subsidiary, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate such employment at
any time.
10. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Delaware, without giving effect to any choice of law or conflict of
law rules or provisions (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
11. Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on
the date of delivery if delivered personally or when received if
mailed to the party to whom notice is to be given, by certified mail,
return receipt requested, postage prepaid, or by reputable overnight
courier service (charges prepaid), or transmitted by facsimile with
answer-back confirmation to the following address, or any other
address specified, by notice duly given:
- 9 -
<PAGE>
To Optionee at: Richard A. Bender
1563 Dietrich Ridge Drive
Manchester, MO 63021
To the Company at: United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Attention: President
Telecopy: (314) 253-5941
12. Withholdings. Except to the extent prohibited by applicable law,
Optionee may satisfy any required withholding obligation upon the
exercise of an Option hereunder by either of the following methods, or
by a combination of such methods: (a) tendering a cash payment or (b)
delivering to the Company previously acquired Shares, or having the
Company withhold Shares otherwise deliverable upon the exercise of an
Option, in either case having an aggregate Fair Market Value,
determined as of the date the withholding obligation arises, less than
or equal to the amount of the total withholding obligation.
13. Pro Rata Exercise. The Shares of Common Stock covered by this Option
shall only be exercised, if at all, ratably among the Class A Shares
and Class B Shares, based on the aggregate number of Class A Shares
and Class B Shares subject to the Options granted hereunder.
14. Registration of Shares. At any time after UIC Holdings, L.L.C.,
together with its affiliates, holds less than 25% of the Common Stock
held by such entities as of the date hereof, Optionee shall have the
right to cause the Company to register all of the Shares on a Form
S-8, along with a Form S-3 reoffer prospectus, under the Securities
Act of 1933, as amended from time to time, or any successor form
thereto, and the Company shall use its reasonable best efforts to
comply with such request in a timely manner.
* * * * *
- 10 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
UNITED INDUSTRIES CORPORATION
By
------------------------------
Name:
------------------------
Title:
------------------------
OPTIONEE:
---------------------------------
Richard A. Bender
- 11 -
<PAGE>
ANNEX I
-------
The Performance Goal with respect to each fiscal year from 1999 through 2003 is
as follows:
<TABLE>
<CAPTION>
Fiscal Year Performance Goal
----------- ----------------
<S> <C>
1999* $ 85,400,000
2000 111,200,000
2001 123,100,000
2002 133,000,000
2003 143,800,000
------------
Aggregate $596,500,000
</TABLE>
*Including any portion of calendar 1999 prior to closing.
These Performance Goals have been calculated without deduction for any
expenses associated with the recapitalization being effectuated by the Company
on the date hereof or any relocation expenses of the Company's new president,
and the measurement of the Company's actual performance shall similarly be
calculated without deduction for such items. These Performance Goals have
already been reduced to reflect (i) the Company's revised aviation budget, (ii)
management fees payable to Thomas H. Lee Company and/or its affiliates, (iii)
consulting and directors fees payable to David Jones and David Pratt and (iv)
the salary and bonus payable to the Company's new president.
- 12 -
<PAGE>
UNITED INDUSTRIES CORPORATION
FORM OF EXERCISE AND STOCK TRANSFER POWER
United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Ladies and Gentlemen:
Reference is made to the Stock Option Agreement between United
Industries Corporation (the "Company") and me (the "Option Agreement"), whereby
on January 20, 1999, I was granted an option to purchase all or any part of an
aggregate of 300,000 shares (the "Class A Shares") of the Company's Class A
Voting Common Stock, par value $0.01 per share and 300,000 shares (the "Class B
Shares" and, together with the Class A Shares (the "Shares")) of the Company's
Class B Non-Voting Common Stock, par value $0.01 per share (collectively,
"Common Stock"), at $5.00 per share. I hereby exercise my right to purchase
Shares (on a pro rata basis among the Class A Shares and the Class B Shares)
(the "Exercised Shares") of Common Stock at said price and deliver to you
herewith the full purchase price of such Exercised Shares, as follows:
[ ] Cash or check in the amount $ ;
-----------------------------
[ ] Previously owned shares of Common Stock having a Fair
Market Value (as defined in the Option Agreement) equal to
$_______ as of the date hereof, and otherwise in accordance
with Section 4.2 of the Option Agreement; and/or
[ ] If the Common Stock is publicly traded, by delivery to the
Company of the attached copy of irrevocable broker
instructions to deliver promptly to the Company $_______ of
loan proceeds, or $_________ of proceeds of the sale of
Exercised Shares of Common Stock deliverable upon exercise
of the option represented by the Option Agreement.
I understand that no Exercised Shares will be issued until
arrangements satisfactory to the Company have been made for appropriate income
tax withholding, if any, and I have executed the Company's Stockholders
Agreement (the "Stockholders Agreement").
The Exercised Shares will be subject to certain rights of
repurchase and other restrictions, as more particularly set forth in the
Management Agreement by and between the Company and me dated as of January 20,
1999 and the Stockholders Agreement.
- 1 -
<PAGE>
In the event that the Exercised Shares have not been
registered under the Securities Act of 1933, as amended from time to time, upon
the date hereof, I hereby represent and warrant to the Company as follows:
1. Because of my business relationship with the Company and with the
management of the Company, I have had access to all material and
relevant information concerning the Company, thereby enabling me to
make an informed investment decision with respect to my investment in
the Company, and all pertinent data and information requested by me
from the Company or its representatives concerning the business and
financial condition of the Company and the terms and conditions of the
Option Agreement have been furnished. I acknowledge that I have had
the opportunity to ask questions of and receive answers from and to
obtain additional information from the Company and its representatives
concerning the present and proposed business and financial condition
of the Company.
2. I have such knowledge and experience in financial and business matters
that I am capable of evaluating the merits and risks of investing in
the Exercised Shares.
3. I understand that:
(a) An investment in the Exercised Shares represents a highly
speculative investment, and there can be no assurance as to
the success of the company in its business; and
(b) There is at present no market for the Exercised Shares and
there can be no assurance that a market will develop in the
future.
4. I understand and agree that:
(a) There can be no assurance that the Exercised Shares will be
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws and if they
are not so registered, they will only be issued and sold in
reliance upon certain exemptions contained in the Securities
Act and applicable state securities laws, and my
representations and warranties contained herein are
essential to any claim of exemption by the Company under the
Securities Act and such state laws;
(b) If the Exercised Shares are not so registered, the Exercised
Shares will be "restricted securities" as that term is
defined in Rule 144 promulgated under the Securities Act;
(c) I cannot resell or transfer the Exercised Shares without
registration under the Securities Act and applicable state
securities laws unless the Company receives an opinion of
counsel acceptable to it (as to both counsel and the
opinion) that such registration is not necessary, the cost
of such opinion to be borne by the Company;
(d) Only the Company can register the Exercised Shares under the
Securities Act and applicable state securities laws;
- 2 -
<PAGE>
(e) The Company has not made any representations to me that the
Company will register the Exercised Shares under the
Securities Act or any applicable state securities laws, or
with respect to compliance with any exemption therefrom;
(f) I am aware of the conditions for obtaining an exemption for
the resale of the Exercised Shares under the Securities Act
and any applicable state securities laws;
(g) The Company may, from time to time, make stop transfer
notations in its transfer records to ensure compliance with
the Securities Act, and any applicable state securities
laws, and any additional restrictions imposed by state
securities administrators; and
(h) I understand that stock certificates evidencing the
Exercised Shares shall bear restrictive legends as more
particularly described in the Option Agreement and the
Stockholders Agreement.
5. I acknowledge that:
(a) I am acquiring the Exercised Shares for my own account and
not on behalf of any other person;
(b) I am acquiring the Exercised Shares for investment and not
with a view to distribution or with the intent to divide my
participation with others or resell or otherwise distribute
the Exercised Shares; and
(c) Neither I nor anyone acting on my behalf has paid or will
pay a commission or other remuneration to any person in
connection with the acquisition of the Exercised Shares.
Signature
-------------------------------
Address:
-------------------------------
-------------------------------
-------------------------------
Social Security No.:
--------------------
- 3 -
Exhibit 10.10
-------------
UNITED INDUSTRIES CORPORATION
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered
into as of January 20, 1999, by and between UNITED INDUSTRIES CORPORATION, a
Delaware corporation (the "Company"), and William P. Johnson ("Optionee")
pursuant to the United Industries Corporation 1999 Stock Option Plan (the
"Plan"). The Company and Optionee are referred to collectively herein as the
"Parties." Capitalized terms used but not defined herein shall have the meaning
set forth in the Plan.
Simultaneously with the execution of this Agreement, the
parties hereto have executed a Management Agreement, dated as of the date hereof
(the "Management Agreement"), to which this Agreement is attached as Annex A.
THE PARTIES AGREE AS FOLLOWS:
1. Grant of Options and Effective Date.
1.1 Grant. The Company hereby grants to Optionee pursuant to
the Plan an option (the "Option") to purchase all or any
part of an aggregate of 300,000 shares (the "Class A
Shares") of the Company's Class A Voting Common Stock, par
value $0.01 per share, and 300,000 shares (the "Class B
Shares" and, together with the Class A Shares
(the "Shares")) of the Company's Class B Non-Voting Common
Stock, par value $0.01 per share (collectively, "Common
Stock"), on the terms and conditions set forth herein and
in the Plan as in effect on the Grant Date (as defined
below), the terms of which are incorporated herein by
reference.
1.2 Grant Date. The Grant Date of this Option is January 20,
1999 (the "Grant Date").
2. Exercise Price. The exercise price for the Shares of Common Stock
covered by this Option shall be $5.00 per share (the "Exercise
Price").
3. Adjustment and Termination of Options. Subject to the restrictions,
and under the circumstances described, in the Plan and this
Agreement, the Company shall adjust the number and kind of Shares and
the Exercise Price thereof, and this Option shall be terminated in
certain circumstances, in accordance with the provisions of the Plan.
4. Exercise of Options.
4.1 When Exercisable.
(a) Rate of Exercise for 5-Year Options. Optionee's
right to exercise this Option as to 200,000 of
the Shares (100,000 Class A Shares and 100,000
Class B Shares) subject thereto (the "5 Year
Options") shall vest ratably over
<PAGE>
the five (5) year period commencing on the
Grant Date in accordance with the following
schedule if (but only if) Optionee is employed
by the Company or any of its Subsidiaries as of
each such date:
<TABLE>
<CAPTION>
Cumulative Shares of
Date 5 Year Option Vested
---- --------------------
<S> <C>
1st Anniversary of Grant Date 40,000
2nd Anniversary of Grant Date 80,000
3rd Anniversary of Grant Date 120,000
4th Anniversary of Grant Date 160,000
5th Anniversary of Grant Date 200,000;
</TABLE>
provided that if Optionee's employment by the Company terminates by virtue of
the expiration of the "Term" (as defined in the Management Agreement) (i.e.,
Optionee's employment terminates due to the passage of the date referenced in
Section 2(a)(i) thereof (as extended pursuant to the provision in such Section
2(a)) as opposed to any termination by the Company or Optionee or by virtue of
Optionee's death or disability), then Optionee shall be credited with an
additional 21 days of vesting (for example, if Optionee's employment with the
Company terminates as described above on December 31, 2001, the 5 Year Options
will vest through January 20, 2002). Notwithstanding any provision to the
contrary in this Section 4.1(a), but subject to the other restrictions in the
Plan and this Agreement, in the event of a Sale (as defined below) prior to
December 31, 2003, the 5 Year Options shall become vested and immediately
exercisable.
(b) Rate of Exercise on TARSAP Options.
(i) Optionee shall not be vested with the right
to exercise this Option with respect to 400,000 of the
Shares (200,000 Class A Shares and 200,000 Class B Shares)
(the "TARSAP Shares") subject thereto (the "TARSAP
Options") until ten (10) years after the Grant Date, at
which time Optionee shall acquire the vested right to
exercise the TARSAP Options and purchase one hundred
percent (100%) of the TARSAP Shares if (but only if)
Optionee is an employee of the Company or any of its
Subsidiaries as of such date.
(ii) Acceleration of TARSAP Options.
Notwithstanding the foregoing, if on and after the
publication of each written determination by the Board of
Directors of the Company (the "Board") or a committee
thereof which is authorized to do so that the Company has
met at least ninety percent (90%) of its objective for
EBITDA (as defined below) (100% of the Company's objective
referred to herein as the "Performance Goals") with
respect to any fiscal year commencing with the fiscal year
ending December 31, 1999 and continuing for each of the
four fiscal years thereafter (which Performance Goals are
set forth on Annex I attached hereto), then (subject to
the other restrictions in the Plan
- 2 -
<PAGE>
and this Agreement), Optionee shall acquire the vested
right to exercise the TARSAP Options to purchase ten
percent (10%) of the TARSAP Shares, and for each
additional one percent (1%) achievement over ninety
percent (90%) of the Performance Goals for any such fiscal
year, as so determined, Optionee shall acquire the vested
right to exercise the TARSAP Options to purchase an
additional one percent (1%) of the TARSAP Shares, but no
more than twenty percent (20%) of the TARSAP Shares in
respect of each full fiscal year. Additionally, on and
after publication of a written determination by the Board
or a committee thereof which is authorized to do so that
the Company has met at least eighty seven and one-half
percent (87.5 %) of its Performance Goals for the fiscal
year ending December 31, 2003 and at least ninety percent
(90%) of its cumulative Performance Goals for the five
fiscal years ending December 31, 2003 ("Five Year
Performance Goals"), then subject to the other
restrictions in the Plan and this Agreement, (i) Optionee
shall acquire the vested right to exercise the TARSAP
Options to purchase fifty percent (50%) of the TARSAP
Shares as to which Optionee had not otherwise acquired the
vested right to exercise, and (ii) for each additional one
percent (1%) achievement over ninety percent (90%) of the
Five Year Performance Goals, as so determined, Optionee
shall acquire the vested right to exercise this TARSAP
Option to purchase an additional five percent (5%) of the
TARSAP Shares as to which Optionee has not otherwise
acquired the vested right to exercise (such additional
exercise rights pursuant to clauses (i) and (ii) above are
referred to herein as the "Additional Exercise Rights").
Such determinations shall be made by the Board or such
committee within ten (10) days after receipt of audited
financial statements for each fiscal year. The Board's or
committee's determination as to whether the Company has
met such objectives shall be final and not subject to
dispute. In addition, the Board or a committee thereof
shall have complete discretion to modify such objectives
from time to time for any year or years to reflect
business combinations or dispositions, fiscal year
changes, purchases or sales of assets or any other
circumstances the Board or committee thereof deems
relevant. For purposes hereof, "EBITDA" shall mean
earnings before interest, taxes, depreciation and
amortization, excluding any non-recurring or extraordinary
items, as determined in accordance with generally accepted
accounting principles, consistently applied.
(iii) Acceleration Upon Sale. Notwithstanding
any provision to the contrary in this Section 4.1(b), but
subject to the other restrictions in the Plan and this
Agreement, in the event of a Sale (as defined below) prior
to December 31, 2003, the TARSAP Options shall become
vested and immediately exercisable to the extent set forth
below. On and after publication of a written determination
by the Board or a committee thereof which is authorized to
do so that the Company has met at least eighty seven and
one-half percent (87.5 %) of its Performance Goals for the
last twelve (12) full months and at least ninety percent
(90%) of its cumulative Performance Goals for the
completed fiscal years (if any) and the Interim Period (as
defined below) (based on months elapsed), the Board or
such committee shall treat the percentage of cumulative
Performance Goals achieved through the completed fiscal
years (if any) and Interim Period as the percentage of
Five Year Performance Goals achieved and on that basis
shall determine the Additional Exercise Rights with
respect to all 400,000 TARSAP Options as to which Optionee
had not otherwise acquired the vested right to exercise
consistent with the method set forth in the second
- 3 -
<PAGE>
sentence of Section 4.1(b)(ii) above. The percentage of
Five Year Performance Goals for such period shall be
computed by dividing (i) the sum of EBITDA achieved for
the completed fiscal years (if any) and the Interim Period
by (ii) the annual Performance Goals for the completed
fiscal years (if any) and the monthly Performance Goals
for the Interim Period. For purposes hereof, the term
"Interim Period" shall mean the period beginning on the
first day of the then current fiscal year and ending on
the last full month of that uncompleted fiscal year.
For purposes hereof, the term "Sale" shall mean:
(w) the acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of voting securities of (a) the
Company or (b) the surviving entity in any reorganization,
merger or consolidation (each an "Acquisition") involving
the Company (any such entity referred to herein as the
"Corporation") where such Acquisition causes such Person
to own more than fifty percent (50%) of the combined
voting power of the then outstanding voting securities of
the Corporation entitled to vote generally in the election
of directors, other than acquisitions by the Thomas H. Lee
Company or its affiliates;
(x) approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company;
(y) the acquisition by a third party not
affiliated with the Company of all or substantially all of
the Company's assets; or
(z) individuals who constitute the Board on the
date of the Company's initial public sale of equity
securities registered under the Securities Act (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board thereafter. Any person
becoming a director subsequent to such date whose,
election, or nomination for election, is, at any time,
approved by a vote of at least a majority of the directors
comprising the Incumbent Board shall be considered a
member of the Incumbent Board.
The accelerated vesting provided in this Section
4.1(b)(iii) shall take effect immediately prior to but contingent upon the Sale
giving rise to such accelerated vesting. The phrase "immediately prior to the
Sale" shall be understood to mean sufficiently in advance of a Sale to permit
the Optionee to take all steps reasonably necessary to permit the Optionee to
become a shareholder of the Company as of the consummation of such Sale with
respect to the TARSAP Shares subject to the accelerated vesting provided in this
Section 4.1(b)(iii). The Board or committee thereof may in good faith shorten
the Interim Period or make approximations of EBITDA during the Interim Period in
order to comply with the preceding sentence.
- 4 -
<PAGE>
(c) Partial Exercise. Subject to the other
restrictions in the Plan and this Agreement, the
Options may be exercised for all or a part of the
Shares with respect to which each Option is
exercisable under Section 4.1(a) and (b) above.
4.2 Method of Exercise; Stockholders Agreement. Subject to
Section 4.1 and the other restrictions in the Plan and this
Agreement, Options are exercisable from time to time by
Optionee, who shall complete, execute and deliver to the
Company a Form of Exercise and Stock Transfer Power
substantially in the form attached hereto or in such other
form as the Company may require. Except as otherwise
permitted by Section 6(d) of the Plan, such notice shall be
accompanied by payment in full for the Shares to be
purchased. Payment of the Exercise Price may be made: (i)
in cash, (ii) in shares of Common Stock which either (A)
were purchased by Optionee in other than a compensatory
transaction, (B) have been held by Optionee free and clear
for at least six (6) months prior to the use thereof to pay
part or all of the Exercise Price or (C) otherwise are
considered "mature" shares for purposes of generally
accepted accounting principles, as determined by the
Company's outside auditors, or (iii) so long as the Common
Stock is publicly traded, by delivery to the Committee of
irrevocable instructions to a stockbroker to deliver
promptly to the Company an amount of sale or loan proceeds
sufficient to pay a portion of the Exercise Price subject
to this clause (iii), or a combination of the methods
specified in clauses (i), (ii) and (iii), or in the sole
discretion of the Committee, through a cashless exercise
procedure. Optionee shall also execute and deliver to the
Company a copy of the Company's Stockholders Agreement,
dated as of January 20, 1999, in the form in effect at the
time of exercise (as amended and modified from time to
time, the "Stockholders Agreement"), if Optionee has not
previously done so. Upon due exercise of any Option and (if
required) execution and delivery of the Stockholders
Agreement, subject to the terms and conditions in this
Agreement, the Company shall issue in the name of Optionee
and deliver to Optionee a certificate for the Shares in
respect of which such Option shall have been exercised, but
no Shares will be issued until arrangements satisfactory to
Company have been made for appropriate income tax
withholding, if any, pursuant to Section 12 hereof.
4.3 Exercise After Termination of Employment; Termination of
Options.
(a) Definitions. For purposes of this Section 4.3,
the capitalized terms Good Reason, Cause, and
Disability shall have the meanings set forth in
the Management Agreement.
(b) Termination Without Good Reason. Upon any
termination of employment by Optionee without
Good Reason, the Options may, to the extent
exercisable and not terminated pursuant to
Section 4.3(e), be exercised only within thirty
(30) days after the date of such employment
termination. This Section 4.3(b) shall not,
however, extend the term of the Options beyond
- 5 -
<PAGE>
that specified in Section 4.3(e). For purposes
of this Section 4.3(b), the extent to which the
Options are exercisable shall be determined as
of the date of termination of employment.
(c) Termination by Virtue of Death or Disability or
Without Cause or With Good Reason. Upon any
termination of employment of Optionee by virtue
of Optionee's death or Disability or upon any
termination of employment by Optionee with Good
Reason, or by the Company without Cause, the
Options may, to the extent exercisable and not
terminated pursuant to Section 4.3(e), be
exercised only within twelve (12) months after
the date of such termination. This Section 4.3
(c) shall not extend the term of the Options
beyond that specified in Section 4.3(e). For
purposes of this Section 4.3(c), the extent to
which the Options are exercisable shall be
determined as of the date of termination of
employment.
(d) Termination for Cause. The Option shall
terminate immediately upon termination of the
employment of Optionee for Cause.
(e) Other Termination. The Options shall not be
exercisable after the earliest of (i) a Sale
(provided that Optionee has at least five (5)
business days prior to the Sale to exercise the
Options or the Options are treated as exercised
in connection with such Sale) or (ii) January
20, 2009.
(f) Company Repurchase; Extension of Exercise Period.
If Optionee properly elects to exercise all or
any portion of the Option following a termination
of Optionee's employment as described in Section
4.3(c) (a "Post-Termination Exercise"), at the
written request of Optionee delivered to the
Company prior to or simultaneously with the
attempted exercise of such Option, the Company
shall either:
(i) offer to purchase from Optionee, within
fifteen (15) days following its receipt of such request,
at a purchase price equal to Fair Market Value, such
portion of the Shares obtained by Optionee through the
Post-Termination Exercise having an aggregate Fair Market
Value equal to the excess of (A) Optionee's aggregate
federal, state and local income tax obligations in respect
of the Post-Termination Exercise over (B) any amounts
related to income tax previously withheld by the Company
with respect to such Post-Termination Exercise; or
(ii) extend the period during which Optionee
may exercise the Options specified in Optionee's notice
until the earlier of (A) such time as the Company elects
to comply with Section 4.3(f)(i), above (disregarding the
fifteen (15) day period referenced therein), and (B) such
time as the Shares to be received by Optionee upon the
exercise of the Options specified in Optionee's notice are
registered under the Securities Act and freely tradable.
- 6 -
<PAGE>
5. Non-transferability of Options. The Options shall not be transferable
or assignable except upon Optionee's death by will or the laws of
descent and distribution and shall be exercisable, during Optionee's
lifetime, only by Optionee.
6. Purchase for Investment; Other Representations of Optionee; Legends.
6.1 Investment Intent. As provided in the Plan, in the event
that the offering of Shares with respect to which the
Options are being exercised is not registered under the
Securities Act, but an exemption is available that requires
an investment representation or other representation,
Optionee, if electing to purchase Shares, will be required
to represent that such Shares are being acquired for
investment and not with a view to distribution thereof, and
to make such other reasonable and customary representations
regarding matters relevant to compliance with applicable
securities laws as are deemed necessary by counsel to the
Company. Stock certificates evidencing such unregistered
Shares that are acquired upon exercise of the Options shall
bear restrictive legends in substantially the following
form and such other restrictive legends as are required or
advisable under the provisions of any applicable laws or
are provided for in the Stockholders Agreement or any other
agreement to which Optionee is a party:
THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAWS AND SHALL
NOT BE TRANSFERRED AT ANY TIME IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS WITH RESPECT TO SUCH SHARES AT SUCH TIME, OR (II) AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL, TO
THE EFFECT THAT SUCH TRANSFER AT SUCH TIME WILL NOT VIOLATE THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
6.2 Other Representations. Optionee hereby represents and
warrants to the Company as follows:
(a) Access to Information. Because of Optionee's
business relationship with the Company and with
the management of the Company, Optionee has had
access to all material and relevant information
concerning the Company, thereby enabling
Optionee to make an informed investment
decision with respect to his investment in the
Company, and all pertinent data and information
requested by Optionee from the Company or its
representatives concerning the business and
financial condition of the Company and the
terms and conditions of this Agreement have
been furnished. Optionee acknowledges that
Optionee has had the opportunity to ask
questions of and receive answers from and to
obtain additional information from the Company
- 7 -
<PAGE>
and its representatives concerning the present
and proposed business and financial condition
of the Company.
(b) Financial Sophistication. Optionee has such
knowledge and experience in financial and
business matters that Optionee is capable of
evaluating the merits and risks of investing in
the Shares.
(c) Understanding the Investment Risks. Optionee
understands that:
(i) An investment in the Shares
represents a highly speculative
investment, and there can be no
assurance as to the success of the
Company in its business; and
(ii) There is at present no market for
the Shares and there can be no
assurance that a market will develop
in the future.
(d) Understanding of the Nature of the Shares.
Optionee understands and agrees that:
(i) There can be no assurance that the
Shares will be registered under the
Securities Act or any state
securities laws and if they are not
so registered, they will only be
issued and sold in reliance upon
certain exemptions contained in the
Securities Act and applicable state
securities laws, and the
representations and warranties of
Optionee contained herein, which
will have to be renewed as to the
Shares at the times of exercise of
the Options, are essential to any
claim of exemption by the Company
under the Securities Act and such
state laws;
(ii) If the Shares are not so registered,
the Shares will be "restricted
securities" as that term is defined
in Rule 144 promulgated under the
Securities Act;
(iii) The Option cannot be exercised and
the Shares will not be sold to
Optionee and Optionee cannot resell
or transfer the Shares without
registration under the Securities
Act and applicable state securities
laws unless the Company receives an
opinion of counsel acceptable to it
(as to both counsel and the opinion)
that such registration is not
necessary, the cost of such opinion
to be borne by the Company;
(iv) Only the Company can register the
Shares under the Securities Act and
applicable state securities laws;
- 8 -
<PAGE>
(v) The Company has not made any
representations to Optionee that the
Company will register the Shares
under the Securities Act or any
applicable state securities laws, or
with respect to compliance with any
exemption therefrom;
(vi) Optionee is aware of the conditions
for Optionee's obtaining an
exemption for the resale of the
Shares under the Securities Act and
any applicable state securities
laws; and
(vii) The Company may, from time to time,
make stop transfer notations in its
transfer records to ensure
compliance with the Securities Act
and any applicable state securities
laws, and any additional
restrictions imposed by state
securities administrators.
(e) Investment Intent. Optionee acknowledges that:
(i) Optionee is acquiring the Option for
Optionee's own account and not on
behalf of any other person;
(ii) Optionee is acquiring the option for
investment and not with a view to
distribution or with the intent to
divide Optionee's participation with
others or resell or otherwise
distribute the Options or the
Shares;
(iii) Neither Optionee nor anyone acting
on Optionee's behalf has paid or
will pay a commission or other
remuneration to any person in
connection with the acquisition of
the Options or the Shares; and
(iv) At the time of exercise of any
Option, Optionee will have to make
all the representations and
warranties contained in this Section
6 with respect to the Shares to be
issued and other representations
concerning investment intent as a
condition of the issuance of the
Shares by the Company.
7. Restriction on Issuance of Shares. The Company shall not be obligated
to sell or issue any Shares pursuant to this Agreement if such
issuance would result in the violation of any laws, including the
Securities Act or any applicable state securities laws. The Company
agrees to use its reasonable best efforts to qualify for available
exemptions under the Securities Act or any applicable state
securities laws which will enable it to issue Shares hereunder in
compliance with applicable law.
8. Rights as a Shareholder. Optionee shall have no rights as a
shareholder with respect to any Shares covered by the Options until
the date of exercise and payment of the Exercise Price in accordance
with the terms of this Agreement. Subject to Section 3 hereof, no
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<PAGE>
adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
9. No Employment Rights. This Agreement shall not confer upon Optionee
any right with respect to the continuance as an employee of the
Company or any Subsidiary, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate such employment
at any time.
10. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Delaware, without giving effect to any choice of law or conflict
of law rules or provisions (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Delaware.
11. Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on
the date of delivery if delivered personally or when received if
mailed to the party to whom notice is to be given, by certified mail,
return receipt requested, postage prepaid, or by reputable overnight
courier service (charges prepaid), or transmitted by facsimile with
answer-back confirmation to the following address, or any other
address specified, by notice duly given:
To Optionee at: William P. Johnson
1411 Highland Valley Cr.
Chesterfield, MO 63005
To the Company at: United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Attention: President
Telecopy: (314) 253-5941
12. Withholdings. Except to the extent prohibited by applicable law,
Optionee may satisfy any required withholding obligation upon the
exercise of an Option hereunder by either of the following methods,
or by a combination of such methods: (a) tendering a cash payment or
(b) delivering to the Company previously acquired Shares, or having
the Company withhold Shares otherwise deliverable upon the exercise
of an Option, in either case having an aggregate Fair Market Value,
determined as of the date the withholding obligation arises, less
than or equal to the amount of the total withholding obligation.
13. Pro Rata Exercise. The Shares of Common Stock covered by this Option
shall only be exercised, if at all, ratably among the Class A Shares
and Class B Shares, based on the
- 10 -
<PAGE>
aggregate number of Class A Shares and Class B Shares subject to the
Options granted hereunder.
14. Registration of Shares. At any time after UIC Holdings, L.L.C.,
together with its affiliates, holds less than 25% of the Common Stock
held by such entities as of the date hereof, Optionee shall have the
right to cause the Company to register all of the Shares on a Form
S-8, along with a Form S-3 reoffer prospectus, under the Securities
Act of 1933, as amended from time to time, or any successor form
thereto, and the Company shall use its reasonable best efforts to
comply with such request in a timely manner.
* * * * *
- 11 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
UNITED INDUSTRIES CORPORATION
By
--------------------------
Name:
--------------------
Title:
--------------------
OPTIONEE:
-----------------------------
William P. Johnson
- 12 -
Exhibit 10.12
-------------
UNITED INDUSTRIES CORPORATION
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered
into as of January 20, 1999, by and between UNITED INDUSTRIES CORPORATION, a
Delaware corporation (the "Company"), and David Jones ("Optionee") pursuant to
the United Industries Corporation 1999 Stock Option Plan (the "Plan"). The
Company and Optionee are referred to collectively herein as the "Parties."
Capitalized terms used but not defined herein shall have the meaning set forth
in the Plan.
THE PARTIES AGREE AS FOLLOWS:
1. Grant of Options and Effective Date.
1.1 Grant. The Company hereby grants to Optionee pursuant to the
Plan an option (the "Option") to purchase all or any part of
an aggregate of 150,000 shares (the "Class A Shares") of the
Company's Class A Voting Common Stock, par value $0.01 per
share and 150,000 shares (the "Class B Shares" and, together
with the Class A Shares (the "Shares")) of the Company's
Class B Non-Voting Common Stock, par value $0.01 per share
(collectively, "Common Stock"), on the terms and conditions
set forth herein and in the Plan as in effect on the Grant
Date (as defined below), the terms of which are incorporated
herein by reference.
1.2 Grant Date. The Grant Date of this Option is January 20,
1999 (the "Grant Date").
2. Exercise Price. The exercise price for the Shares of Common Stock
covered by this Option shall be $5.00 per share (the "Exercise
Price").
3. Adjustment and Termination of Options. Subject to the restrictions,
and under the circumstances described, in the Plan and this Agreement,
the Company shall adjust the number and kind of Shares and the
Exercise Price thereof, and this Option shall be terminated in certain
circumstances, in accordance with the provisions of the Plan.
4. Exercise of Options.
4.1 When Exercisable.
(a) Rate of Exercise for 5-Year Options. Optionee's
right to exercise this Option as to 100,000 of the
Shares (50,000 Class A Shares and 50,000 Class B
Shares) subject thereto (the "5 Year Options")
shall vest ratably over the five (5) year period
commencing on the Grant Date in accordance with
the following schedule if (but only if) Optionee
is a director of the Company or any of its
Subsidiaries as of each such date:
<PAGE>
<TABLE>
<CAPTION>
Cumulative Shares of
Date 5 Year Option Vested
---- --------------------
<S> <C>
1st Anniversary of Grant Date 20,000
2nd Anniversary of Grant Date 40,000
3rd Anniversary of Grant Date 60,000
4th Anniversary of Grant Date 80,000
5th Anniversary of Grant Date 100,000
</TABLE>
Notwithstanding any provision to the contrary in this Section 4.1(a), but
subject to the other restrictions in the Plan and this Agreement, in the event
of a Sale (as defined below) prior to December 31, 2003, the 5 Year Options
shall become vested and immediately exercisable.
(b) Rate of Exercise on TARSAP Options.
(i) Optionee shall not be vested with the right to
exercise this Option with respect to 200,000 of the Shares
(100,000 Class A Shares and 100,000 Class B Shares) (the
"TARSAP Shares") subject thereto (the "TARSAP Options")
until ten (10) years after the Grant Date, at which time
Optionee shall acquire the vested right to exercise the
TARSAP Options and purchase one hundred percent (100%) of
the TARSAP Shares if (but only if) Optionee is a director of
the Company or any of its Subsidiaries as of such date.
(ii) Acceleration of TARSAP Options.
Notwithstanding the foregoing, if on and after the
publication of each written determination by the Board of
Directors of the Company (the "Board") or a committee
thereof which is authorized to do so that the Company has
met at least ninety percent (90%) of its objective for
EBITDA (as defined below) (100% of the Company's objective
referred to herein as the "Performance Goals") with respect
to any fiscal year commencing with the fiscal year ending
December 31, 1999 and continuing for each of the four fiscal
years thereafter (which Performance Goals are set forth on
Annex I attached hereto), then (subject to the other
restrictions in the Plan and this Agreement), Optionee shall
acquire the vested right to exercise the TARSAP Options to
purchase ten percent (10%) of the TARSAP Shares, and for
each additional one percent (1%) achievement over ninety
percent (90%) of the Performance Goals for any such fiscal
year, as so determined, Optionee shall acquire the vested
right to exercise the TARSAP Options to purchase an
additional one percent (1%) of the TARSAP Shares, but no
more than twenty percent (20%) of the TARSAP Shares in
respect of each full fiscal year. Additionally, on and after
publication of a written determination by the Board or a
committee thereof which is authorized to do so that the
Company has met at least eighty seven and one-half percent
(87.5 %) of its Performance Goals for the fiscal year ending
December 31, 2003 and at least ninety percent (90%) of its
cumulative Performance Goals for the five fiscal years
ending December 31, 2003 ("Five Year Performance Goals"),
then subject to the other restrictions in the Plan and this
Agreement, (i) Optionee shall acquire the vested right to
- 2 -
<PAGE>
exercise the TARSAP Options to purchase fifty percent (50%)
of the TARSAP Shares as to which Optionee had not otherwise
acquired the vested right to exercise, and (ii) for each
additional one percent (1%) achievement over ninety percent
(90%) of the Five Year Performance Goals, as so determined,
Optionee shall acquire the vested right to exercise this
TARSAP Option to purchase an additional five percent (5%) of
the TARSAP Shares as to which Optionee has not otherwise
acquired the vested right to exercise (such additional
exercise rights pursuant to clauses (i) and (ii) above are
referred to herein as the "Additional Exercise Rights").
Such determinations shall be made by the Board or such
committee within ten (10) days after receipt of audited
financial statements for each fiscal year. The Board's or
committee's determination as to whether the Company has met
such objectives shall be final and not subject to dispute.
In addition, the Board or a committee thereof shall have
complete discretion to modify such objectives from time to
time for any year or years to reflect business combinations
or dispositions, fiscal year changes, purchases or sales of
assets or any other circumstances the Board or committee
thereof deems relevant. For purposes hereof, "EBITDA" shall
mean earnings before interest, taxes, depreciation and
amortization, excluding any non-recurring or extraordinary
items, as determined in accordance with generally accepted
accounting principles, consistently applied.
(iii) Acceleration Upon Sale. Notwithstanding any
provision to the contrary in this Section 4.1(b), but
subject to the other restrictions in the Plan and this
Agreement, in the event of a Sale (as defined below) prior
to December 31, 2003, the TARSAP Options shall become vested
and immediately exercisable to the extent set forth below.
On and after publication of a written determination by the
Board or a committee thereof which is authorized to do so
that the Company has met at least eighty seven and one-half
percent (87.5 %) of its Performance Goals for the last
twelve (12) full months and at least ninety percent (90%) of
its cumulative Performance Goals for the completed fiscal
years (if any) and the Interim Period (as defined below)
(based on months elapsed), the Board or such committee shall
treat the percentage of cumulative Performance Goals
achieved through the completed fiscal years (if any) and
Interim Period as the percentage of Five Year Performance
Goals achieved and on that basis shall determine the
Additional Exercise Rights with respect to all 200,000
TARSAP Options as to which Optionee had not otherwise
acquired the vested right to exercise consistent with the
method set forth in the second sentence of Section
4.1(b)(ii) above. The percentage of Five Year Performance
Goals for such period shall be computed by dividing (i) the
sum of EBITDA achieved for the completed fiscal years (if
any) and the Interim Period by (ii) the annual Performance
Goals for the completed fiscal years (if any) and the
monthly Performance Goals for the Interim Period. For
purposes hereof, the term "Interim Period" shall mean the
period beginning on the first day of the then current fiscal
year and ending on the last full month of that uncompleted
fiscal year.
For purposes hereof, the term "Sale" shall mean:
(w) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated
- 3 -
<PAGE>
under the Exchange Act) of voting securities of (a) the
Company or (b) the surviving entity in any reorganization,
merger or consolidation (each an "Acquisition") involving
the Company (any such entity referred to herein as the
"Corporation") where such Acquisition causes such Person to
own more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of
directors, other than acquisitions by the Thomas H. Lee
Company or its affiliates;
(x) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company;
(y) the acquisition by a third party not
affiliated with the Company of all or substantially all of
the Company's assets; or
(z) individuals who constitute the Board on the
date of the Company's initial public sale of equity
securities registered under the Securities Act (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board thereafter. Any person
becoming a director subsequent to such date whose, election,
or nomination for election, is, at any time, approved by a
vote of at least a majority of the directors comprising the
Incumbent Board shall be considered a member of the
Incumbent Board.
The accelerated vesting provided in this Section 4.1(b)(iii) shall
take effect immediately prior to but contingent upon the Sale giving rise to
such accelerated vesting. The phrase "immediately prior to the Sale" shall be
understood to mean sufficiently in advance of a Sale to permit the Optionee to
take all steps reasonably necessary to permit the Optionee to become a
shareholder of the Company as of the consummation of such Sale with respect to
the TARSAP Shares subject to the accelerated vesting provided in this Section
4.1(b)(iii). The Board or committee thereof may in good faith shorten the
Interim Period or make approximations of EBITDA during the Interim Period in
order to comply with the preceding sentence.
(c) Partial Exercise. Subject to the other
restrictions in the Plan and this Agreement, the
Options may be exercised for all or a part of the
Shares with respect to which each Option is
exercisable under Section 4.1(a) and (b) above.
4.2 Method of Exercise; Stockholders Agreement. Subject to
Section 4.1 and the other restrictions in the Plan and this
Agreement, Options are exercisable from time to time by
Optionee, who shall complete, execute and deliver to the
Company a Form of Exercise and Stock Transfer Power
substantially in the form attached hereto or in such other
form as the Company may require. Except as otherwise
permitted by Section 6(d) of the Plan, such notice shall be
accompanied by payment in full for the Shares to be
purchased. Payment of the Exercise Price may be made: (i) in
cash, (ii) in shares of Common Stock which either (A) were
purchased by Optionee in other than a compensatory
transaction, (B) have been held by Optionee free and clear
for
- 4 -
<PAGE>
at least six (6) months prior to the use thereof to pay part
or all of the Exercise Price or (C) otherwise are considered
"mature" shares for purposes of generally accepted
accounting principles, as determined by the Company's
outside auditors, or (iii) so long as the Common Stock is
publicly traded, by delivery to the Committee of irrevocable
instructions to a stockbroker to deliver promptly to the
Company an amount of sale or loan proceeds sufficient to pay
a portion of the Exercise Price subject to this clause
(iii), or a combination of the methods specified in clauses
(i), (ii) and (iii), or in the sole discretion of the
Committee, through a cashless exercise procedure. Optionee
shall also execute and deliver to the Company a copy of the
Company's Stockholders Agreement, dated as of January 20,
1999, in the form in effect at the time of exercise (as
amended and modified from time to time, the "Stockholders
Agreement"), if Optionee has not previously done so. Upon
due exercise of any Option and (if required) execution and
delivery of the Stockholders Agreement, subject to the terms
and conditions in this Agreement, the Company shall issue in
the name of Optionee and deliver to Optionee a certificate
for the Shares in respect of which such Option shall have
been exercised, but no Shares will be issued until
arrangements satisfactory to Company have been made for
appropriate income tax withholding, if any, pursuant to
Section 12 hereof.
4.3 Exercise After Termination of Directorship; Termination of
Options.
(a) Termination of Vesting. Upon any termination of
Optionee as a director of the Company or any of
its Subsidiaries for any reason, the Options may,
to the extent exercisable as of the date of
termination and not terminated pursuant to
Section 4.3(b), be exercised by Optionee until
termination pursuant to Section 4.3(b).
(b) Termination of Options. The Options shall not be
exercisable after the earliest of (i) a Sale
(provided that Optionee has at least five (5)
business days prior to the Sale to exercise the
Options or the Options are treated as exercised
in connection with such Sale) or (ii) January 20,
2009.
5. Non-transferability of Options. The Options shall not be transferable
or assignable except upon Optionee's death by will or the laws of
descent and distribution and shall be exercisable, during Optionee's
lifetime, only by Optionee.
6. Purchase for Investment; Other Representations of Optionee; Legends.
6.1 Investment Intent. As provided in the Plan, in the event
that the offering of Shares with respect to which the
Options are being exercised is not registered under the
Securities Act, but an exemption is available that requires
an investment representation or other representation,
Optionee, if electing to purchase Shares, will be required
to represent that such Shares are being acquired for
investment and not with a view to distribution thereof, and
to make such other reasonable and customary representations
regarding matters relevant to compliance with applicable
securities
- 5 -
<PAGE>
laws as are deemed necessary by counsel to the Company.
Stock certificates evidencing such unregistered Shares that
are acquired upon exercise of the Options shall bear
restrictive legends in substantially the following form and
such other restrictive legends as are required or advisable
under the provisions of any applicable laws or are provided
for in the Stockholders Agreement or any other agreement to
which Optionee is a party:
THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAWS AND SHALL NOT
BE TRANSFERRED AT ANY TIME IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS WITH RESPECT TO SUCH SHARES AT SUCH TIME, OR (II) AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL, TO THE
EFFECT THAT SUCH TRANSFER AT SUCH TIME WILL NOT VIOLATE THE SECURITIES
ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
6.2 Other Representations. Optionee hereby represents and
warrants to the Company as follows:
(a) Access to Information. Because of Optionee's
business relationship with the Company and with
the management of the Company, Optionee has had
access to all material and relevant information
concerning the Company, thereby enabling Optionee
to make an informed investment decision with
respect to his investment in the Company, and all
pertinent data and information requested by
Optionee from the Company or its representatives
concerning the business and financial condition of
the Company and the terms and conditions of this
Agreement have been furnished. Optionee
acknowledges that Optionee has had the opportunity
to ask questions of and receive answers from and
to obtain additional information from the Company
and its representatives concerning the present and
proposed business and financial condition of the
Company.
(b) Financial Sophistication. Optionee has such
knowledge and experience in financial and business
matters that Optionee is capable of evaluating the
merits and risks of investing in the Shares.
(c) Understanding the Investment Risks. Optionee
understands that:
(i) An investment in the Shares represents a
highly speculative investment, and there
can be no assurance as to the success of
the Company in its business; and
- 6 -
<PAGE>
(ii) There is at present no market for the
Shares and there can be no assurance
that a market will develop in the
future.
(d) Understanding of the Nature of the Shares.
Optionee understands and agrees that:
(i) There can be no assurance that the
Shares will be registered under the
Securities Act or any state securities
laws and if they are not so registered,
they will only be issued and sold in
reliance upon certain exemptions
contained in the Securities Act and
applicable state securities laws, and
the representations and warranties of
Optionee contained herein, which will
have to be renewed as to the Shares at
the times of exercise of the Options,
are essential to any claim of exemption
by the Company under the Securities Act
and such state laws;
(ii) If the Shares are not so registered, the
Shares will be "restricted securities"
as that term is defined in Rule 144
promulgated under the Securities Act;
(iii) The Option cannot be exercised and the
Shares will not be sold to Optionee and
Optionee cannot resell or transfer the
Shares without registration under the
Securities Act and applicable state
securities laws unless the Company
receives an opinion of counsel
acceptable to it (as to both counsel and
the opinion) that such registration is
not necessary, the cost of such opinion
to be borne by the Company;
(iv) Only the Company can register the Shares
under the Securities Act and applicable
state securities laws;
(v) The Company has not made any
representations to Optionee that the
Company will register the Shares under
the Securities Act or any applicable
state securities laws, or with respect
to compliance with any exemption
therefrom;
(vi) Optionee is aware of the conditions for
Optionee's obtaining an exemption for
the resale of the Shares under the
Securities Act and any applicable state
securities laws; and
(vii) The Company may, from time to time, make
stop transfer notations in its transfer
records to ensure compliance with the
Securities Act and any applicable state
securities laws, and any additional
restrictions imposed by state securities
administrators.
- 7 -
<PAGE>
(e) Investment Intent. Optionee acknowledges that:
(i) Optionee is acquiring the Option for
Optionee's own account and not on behalf
of any other person;
(ii) Optionee is acquiring the option for
investment and not with a view to
distribution or with the intent to
divide Optionee's participation with
others or resell or otherwise distribute
the Options or the Shares;
(iii) Neither Optionee nor anyone acting on
Optionee's behalf has paid or will pay a
commission or other remuneration to any
person in connection with the
acquisition of the Options or the
Shares; and
(iv) At the time of exercise of any Option,
Optionee will have to make all the
representations and warranties contained
in this Section 6 with respect to the
Shares to be issued and other
representations concerning investment
intent as a condition of the issuance of
the Shares by the Company.
7. Restriction on Issuance of Shares. The Company shall not be obligated
to sell or issue any Shares pursuant to this Agreement if such
issuance would result in the violation of any laws, including the
Securities Act or any applicable state securities laws. The Company
agrees to use its reasonable best efforts to qualify for available
exemptions under the Securities Act or any applicable state securities
laws which will enable it to issue Shares hereunder in compliance with
applicable law.
8. Rights as a Shareholder. Optionee shall have no rights as a
shareholder with respect to any Shares covered by the Options until
the date of exercise and payment of the Exercise Price in accordance
with the terms of this Agreement. Subject to Section 3 hereof, no
adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
9. No Directorship Rights. This Agreement shall not confer upon Optionee
any right with respect to the continuance as a director of the Company
or any Subsidiary, nor shall it interfere in any way with the right of
the Company or any Subsidiary to terminate such directorship at any
time.
10. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Delaware, without giving effect to any choice of law or conflict of
law rules or provisions (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
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<PAGE>
11. Notices. All notices and other communications under this Agreement
shall be in writing, and shall be deemed to have been duly given on
the date of delivery if delivered personally or when received if
mailed to the party to whom notice is to be given, by certified mail,
return receipt requested, postage prepaid, or by reputable overnight
courier service (charges prepaid), or transmitted by facsimile with
answer-back confirmation to the following address, or any other
address specified, by notice duly given:
To Optionee at: David Jones
4596 Signature Drive
Middleton, WI 53562
Telecopy (608) 828-9721
To the Company at: United Industries Corporation
8825 Page Boulevard
St. Louis, MO 63114
Attention: President
Telecopy: (314) 253-5941
12. Withholdings. Except to the extent prohibited by applicable law,
Optionee may satisfy any required withholding obligation upon the
exercise of an Option hereunder by either of the following methods, or
by a combination of such methods: (a) tendering a cash payment or (b)
delivering to the Company previously acquired Shares, or having the
Company withhold Shares otherwise deliverable upon the exercise of an
Option, in either case having an aggregate Fair Market Value,
determined as of the date the withholding obligation arises, less than
or equal to the amount of the total withholding obligation.
13. Pro Rata Exercise. The Shares of Common Stock covered by this Option
shall only be exercised, if at all, ratably among the Class A Shares
and Class B Shares, based on the aggregate number of Class A Shares
and Class B Shares subject to the Options granted hereunder.
14. Registration of Shares. At any time after UIC Holdings, L.L.C.,
together with its affiliates, holds less than 25% of the Common Stock
held by such entities as of the date hereof, Optionee shall have the
right to cause the Company to register all of the Shares on a Form
S-8, along with a Form S-3 reoffer prospectus, under the Securities
Act of 1933, as amended from time to time, or any successor form
thereto, and the Company shall use its reasonable best efforts to
comply with such request in a timely manner.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
UNITED INDUSTRIES CORPORATION
By
--------------------------
Name:
--------------------
Title:
--------------------
OPTIONEE:
-----------------------------
David Jones
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Exhibit 10.13
-------------
UNITED INDUSTRIES CORPORATION
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as of
January 20, 1999, by and among United Industries Corporation, a Delaware
corporation (the "Company"), UIC Holdings, L.L.C., a Delaware limited liability
company ("Holdings"), and certain other stockholders of the Company who are from
time to time party hereto (Holdings and such other stockholders who are parties
hereto from time to time are collectively referred to as the "Stockholders" and
individually as a "Stockholder"). Each Stockholder and the Company are referred
to individually as a "Party" and collectively as the "Parties." Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to
such terms in Section 6 hereof.
The execution and delivery of this Agreement by certain of
the Stockholders, the Company and Holdings is a condition to closing under that
certain Agreement and Plan of Recapitalization, Purchase and Redemption, dated
as of December 24, 1998 (as amended from time to time, the "Recapitalization
Agreement"), by and among the Company, Holdings and certain sellers listed
therein.
NOW, THEREFORE, 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 hereby agree as
follows:
Section 1. Representations and Warranties; No Inconsistent
Agreements.
(a) Each Stockholder represents and warrants that (i) such
Stockholder is the record owner of the number of Stockholder Shares set forth
opposite its name on the Schedule of Stockholders attached hereto, (ii) in the
case of any Stockholder that it not a natural person, this Agreement has been
duly authorized, and in the case of all Stockholders, this Agreement has been
duly executed and delivered by such Stockholder and constitutes the valid and
binding obligation of such Stockholder, enforceable in accordance with its
terms, and (iii) such Stockholder has not granted and is not a party to any
proxy, voting trust or other agreement which is inconsistent with, conflicts
with or violates any provision of this Agreement.
(b) No holder of Stockholder Shares shall grant any proxy or
become party to any voting trust or other agreement which is inconsistent with,
conflicts with or violates any provision of this Agreement.
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<PAGE>
Section 2. Restrictions on Transfer of Stockholder Shares.
(a) Restrictions on Transfer Applicable to All Stockholders
Other Than Holdings. No Stockholder (other than Holdings) may, directly or
indirectly, Transfer Stockholder Shares except (i) with the prior written
consent of the Board of Directors of the Company, which consent may be withheld
in its sole discretion, or (ii) pursuant to Sections 2(b), 2(c), 3 or 5 below.
(b) Restrictions on Transfer Applicable to Holdings;
Participation Rights. Holdings may Transfer its Stockholder Shares in its sole
discretion; provided that Holdings shall comply with the provisions of this
Section 2(b) in connection with any such Transfer (other than pursuant to a
Public Sale or to a Permitted Transferee). At least 15 days prior to any
Transfer of Stockholder Shares by Holdings (other than pursuant to a Public Sale
or to a Permitted Transferee), Holdings shall deliver a written notice (the
"Sale Notice") to the Company and each other Stockholder, specifying in
reasonable detail the number of shares to be Transferred and the terms and
conditions of the Transfer. Each Stockholder may elect to participate in the
contemplated Transfer at the same price per share and on the same terms by
delivering written notice to Holdings within 15 days after delivery of the Sale
Notice. If any Stockholder elects to participate in such Transfer, such
Stockholder shall be entitled to Transfer in the contemplated Transfer, at the
same price and on the same terms as Holdings, a number of Stockholder Shares
equal to the product of (i) the percentage of the total number of outstanding
Stockholder Shares owned by such Stockholder and (ii) the number of Stockholder
Shares to be Transferred in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100
Stockholder Shares by Holdings, and if one Stockholder
elects to participate and owns 10% of the total number of
outstanding Stockholder Shares, such Stockholder would be
entitled to sell 10 shares (10% x 100 shares).
Holdings shall not Transfer any of its Stockholder Shares to any prospective
transferee if such prospective transferee(s) declines to allow the participation
of electing Stockholders. Each Stockholder Transferring Stockholder Shares
pursuant to this Section 2(b) shall pay its pro rata share (based on the number
of Stockholder Shares to be sold) of the expenses incurred by the Stockholders
in connection with such Transfer (other than transaction fees paid to Holdings
or its Affiliates) and shall be obligated to join on a pro rata basis (based on
the number of Stockholder Shares to be sold) in any representations, warranties,
indemnification provisions or other obligations (including without limitation
any escrow arrangements) that Holdings agrees to provide in connection with such
Transfer (other than any such obligations that relate specifically to a
particular Stockholder such as indemnification with respect to representations
and warranties given by a Stockholder regarding such Stockholder's title to and
ownership of Stockholder Shares); provided that no Stockholder shall be
obligated in connection with such Transfer to agree to indemnify or hold
harmless the transferees with respect to an amount in excess of the sum of the
net cash and value of other proceeds paid to such Stockholder in connection with
such Transfer. Notwithstanding anything to the contrary contained in this
Section 2(b), no Stockholder shall be entitled to participate in such Transfer
(other than a Transfer which constitutes a Sale of the Company) if the Company's
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<PAGE>
independent accountants advise the Company in writing (copies of which the
Company will promptly provide to any Stockholder upon request therefor) that the
inclusion of such Stockholder will adversely affect the recapitalization
accounting treatment of the transactions contemplated by the Recapitalization
Agreement; provided, that the foregoing is intended solely to protect the
recapitalization accounting treatment of the transactions contemplated by the
Recapitalization Agreement and shall not be deemed to allow Holdings, without
sufficient basis in the form of written advice from the Company's independent
accountants, to prohibit any Stockholder from participating in a Transfer if
such participation will not adversely affect such recapitalization accounting
treatment.
(c) Permitted Transfers. The restrictions set forth in this
Section 2 shall not apply with respect to any Transfer of Stockholder Shares (i)
by Holdings to any of its Affiliates (ii) by Holdings to the Company within 180
days after the date hereof of Stockholder Shares with a purchase price not to
exceed in the aggregate $2,000,000, or (iii) by a Stockholder to members of such
Stockholder's Family Group (such transferees are collectively referred to herein
as "Permitted Transferees"); provided that the restrictions contained in this
Section 2 shall continue to be applicable to the Stockholder Shares after any
such Transfer; and provided further that prior to or in connection with such
Transfer, the transferee of such Stockholder Shares shall have executed a
Transfer Notice in the form attached hereto as Exhibit A pursuant to which such
transferee agrees to be bound by the provisions of this Agreement affecting the
Stockholder Shares so Transferred. Notwithstanding the foregoing, no Party shall
avoid the provisions of this Agreement by making one or more Transfers to one or
more Permitted Transferees and then disposing of all or any portion of such
Party's interest in any such Permitted Transferee, or, in the case of an entity
Stockholder, by permitting a Transfer of any ownership interests in such entity
Stockholder.
Section 3. Sale of Company; Reorganization Prior to Public
Offering.
(a) Approved Sale. Subject to Section 3(c) below, if the
Company's Board of Directors recommends or approves or the holders of a majority
of the outstanding shares of Common Stock (the "Majority Holders") approve a
Sale of the Company (an "Approved Sale"), each Stockholder agrees to vote for,
consent to and raise no objections against the Approved Sale. If the Approved
Sale is structured as a (i) merger or consolidation, each Stockholder shall
waive any dissenters' rights, appraisal rights or similar rights in connection
with such merger or consolidation or (ii) sale of stock, each Stockholder shall
agree to sell all of its shares of Common Stock on the terms and conditions
approved by the Majority Holders. Each Stockholder shall take all necessary or
desirable actions in connection with the consummation of the Approved Sale as
reasonably requested by the Majority Holders and/or the Company.
(b) Reorganization Prior to Public Offering. Subject to
Section 3(c) below, if the Company's Board of Directors recommends or approves
or the Majority Holders approve a reorganization of the Company in connection
with a proposed initial Public Offering by the Company (the "Approved
Reorganization"), each Stockholder agrees to vote for, consent to and raise no
objections against the Approved Reorganization. If the Approved Reorganization
is structured
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<PAGE>
as a (i) merger or consolidation, each Stockholder shall waive any dissenters'
rights, appraisal rights or similar rights in connection with such merger or
consolidation or (ii) sale of stock, each Stockholder shall agree to sell all of
its shares of Common Stock on the terms and conditions approved by the Majority
Holders. Each Stockholder shall take all necessary or desirable actions in
connection with the consummation of the Approved Reorganization as reasonably
requested by the Majority Holders and/or the Company.
(c) Obligations of Stockholders. In connection with an
Approved Sale or Approved Reorganization: (i) upon the consummation of the
Approved Sale or Approved Reorganization, all of the Stockholders shall receive
the same form and amount of consideration per share of Common Stock, or if any
Stockholders are given an option as to the form and amount of consideration to
be received, all Stockholders shall be given the same option; provided, that if
any consideration to be paid in connection with such Approved Sale or Approved
Reorganization takes the form of restricted securities of another entity and any
Stockholder is granted registration rights with respect thereto in connection
with such Approved Sale or Approved Reorganization, then all Stockholders shall
be entitled to similar registration rights (it being understood that if the
holders (or former holders) of Holdings Stockholder Shares are granted demand
registration rights and the holders (or former holders) of other Stockholder
Shares are granted piggyback registration rights similar to the provisions set
forth in Section 5 hereto, such rights shall qualify as "similar registration
rights"); and (ii) all Stockholders who hold then currently exercisable rights
to acquire shares of Common Stock shall be given an opportunity to either (A)
exercise such rights prior to the consummation of the Approved Sale or Approved
Reorganization and participate in such sale as Stockholders or (B) upon the
consummation of the Approved Sale or Approved Reorganization, receive in
exchange for such rights consideration equal to the amount determined by
multiplying (1) the same amount of consideration per share of Common Stock
received by the Stockholders in connection with the Approved Sale or Approved
Reorganization less the exercise price per share of Common Stock of such rights
to acquire Common Stock by (2) the number of shares of Common Stock represented
by such rights.
(d) Purchaser Representative. If any transaction undertaken
pursuant to this Section 3 involves entering into any negotiation or transaction
for which Rule 506 under the Securities Act (or any similar rule then in effect)
promulgated by the Securities and Exchange Commission may be available with
respect to such negotiation or transaction (including a merger, consolidation or
other reorganization), those Stockholders involved in such transaction who are
not "accredited investors" (as such term is defined in Rule 501 under the
Securities Act) (the "Unaccredited Stockholders") shall, at the request of the
Company or the Majority Holders, appoint one "purchaser representative" (as such
term is defined in Rule 501 under the Securities Act (or any similar rule then
in effect)) for all such Unaccredited Stockholders reasonably acceptable to the
Company. The Company shall first propose a purchaser representative to the
Unaccredited Stockholders. If holders of a majority of the Stockholders Shares
held by the Unaccredited Stockholders do not approve the purchaser
representative designated by the Company, such holders shall appoint one
purchaser representative to represent all Unaccredited Stockholders, subject to
the
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<PAGE>
approval of the Company (which approval shall not be unreasonably withheld). The
Company shall be responsible for the fees of the purchaser representative so
appointed.
(e) Transaction Costs and Indemnity. Each Stockholder
involved in any transaction pursuant to this Section 3 shall be required to bear
its pro rata share (based upon the number of shares sold or the number of shares
to be acquired pursuant to options or other rights) of the expenses incurred by
the Stockholders in connection with such transaction (other than transaction
fees paid to Holdings or its Affiliates) to the extent such costs are incurred
for the benefit of all such Stockholders and are not otherwise paid by the
Company or the acquiring party and each Stockholder shall be obligated to join
on a pro rata basis (based on the number of shares sold or the number of shares
to be acquired pursuant to options or other rights) in any representations,
warranties, indemnification provisions or other obligations (including without
limitation any escrow arrangements) that Holdings agrees to provide in
connection with such transaction (other than any such obligations that relate
specifically to a particular Stockholder such as indemnification with respect to
representations and warranties given by a Stockholder regarding such
Stockholder's title to and ownership of Stockholder Shares); provided that no
Stockholder shall be obligated in connection with such transaction to agree to
indemnify or hold harmless the transferees with respect to an amount in excess
of the net cash proceeds paid to such Stockholder in connection with such
transaction. The Company will use its reasonable best efforts to provide a draft
of any agreement to be signed by any Stockholder in connection with any such
transaction to be sent to each Stockholder at least five days prior to the date
of execution and delivery of such agreement. Costs incurred by any such
Stockholder on its own behalf shall not be considered costs of the transaction
hereunder.
Section 4. Additional Restrictions on Transfer.
(a) Restricted Securities Legend. The Stockholder Shares
have not been registered under the Securities Act and, therefore, in addition to
the other restrictions on Transfer contained in this Agreement, cannot be sold
unless subsequently registered under the Securities Act or an exemption from
such registration is then available. Each certificate evidencing Stockholder
Shares and each certificate issued in exchange for or upon the Transfer of any
Stockholder Shares shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON ___________, AND 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 SPECIFIED IN THE STOCKHOLDERS
AGREEMENT, DATED AS OF JANUARY 20, 1999 (THE "STOCKHOLDERS
AGREEMENT"), AS AMENDED AND MODIFIED FROM
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<PAGE>
TIME TO TIME, AMONG THE ISSUER (THE "COMPANY"), AND CERTAIN
INVESTORS, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER
OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH
RESPECT TO ANY TRANSFER. A COPY OF THE STOCKHOLDERS AGREEMENT SHALL
BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST
AND WITHOUT CHARGE."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares. The legend set forth above shall be removed from the certificates
evidencing any securities of the Company which cease to be Stockholder Shares in
accordance with the definition thereof.
(b) Opinion of Counsel. No holder of Stockholder Shares may
Transfer any Securities (except (i) pursuant to an effective registration
statement under the Securities Act, (ii) to a wholly-owned Affiliate or (iii) as
part of a Public Sale) without first delivering to the Company (unless waived by
the Board of Directors) an opinion of counsel (reasonably acceptable in form and
substance to the Board of Directors) that neither registration nor qualification
under the Securities Act and applicable state securities laws is required in
connection with such Transfer. The conditions to Transfer set forth in this
Section 4(b) are in addition to any other restrictions on Transfer contained in
this Agreement.
(c) Actions By Transferee. Prior to Transferring any
Stockholder Shares (other than pursuant to a Public Sale), the Transferring
holder of Stockholder Shares shall cause the prospective transferee to be bound
by this Agreement and to execute and deliver to the Company and the other
holders of Stockholder Shares counterparts to this Agreement.
(d) Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
Section 5. Registration Rights.
(a) Demand Registrations.
(i) Requests for Registration. At any time, the
holders of a majority of Holdings Stockholder Shares may
request registration under the Securities Act of (x) all or
any portion of their Stockholder Shares on Form S-1 or any
similar long-form registration ("Long-Form Registrations"),
or (y) all or any portion of its Stockholder Shares on Form
S-2 or S-3 (including pursuant to Rule 415 under the
Securities Act) or any similar short-form registration
("Short-Form Registrations"), if available. All
registrations requested pursuant to this Section 5(a) are
referred to herein as "Demand Registrations." Each request
for a Demand Registration shall specify the approximate
number of Stockholder Shares requested
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<PAGE>
to be registered and the anticipated per share price range
for such offering. Within 10 days after receipt of any such
request, the Company shall give written notice of such
requested registration to all other holders of Stockholder
Shares and, subject to Section 5(a)(iv) below, shall include
in such registration all Stockholder Shares with respect to
which the Company has received written requests for
inclusion therein within 15 days after the receipt of the
Company's notice. In connection with a Demand Registration
or Piggyback Registration (as defined below), Stockholder
Shares which are options, warrants or other securities which
are exerciseable, convertible or exchangeable for Common
Stock shall be required to be exercised, converted or
exchanged prior to being included in such registration;
provided that the Company shall permit such exercise,
conversion or exchange to be conditioned upon inclusion in
such registration.
(ii) Long-Form Registrations. The holders of a
majority of Holdings Stockholder Shares shall be entitled to
request unlimited Long-Form Registrations in which the
Company shall pay all Registration Expenses (as defined in
Section 5(e) below). All Long-Form Registrations shall be
underwritten registrations.
(iii) Short-Form Registrations. In addition to the
Long-Form Registrations provided pursuant to Section
5(a)(ii), the holders of a majority of Holdings Stockholder
Shares shall be entitled to request an unlimited number of
Short-Form Registrations in which the Company shall pay all
Registration Expenses. Notwithstanding anything contained
herein to the contrary, Demand Registrations shall be
Short-Form Registrations whenever the Company is permitted
to use any applicable short form. After the Company has
become subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, the Company
shall use its best efforts to make Short-Form Registrations
on Form S-3 available for the sale of Stockholder Shares. If
the Company is qualified to and, pursuant to the request of
the holders of Stockholder Shares entitled to demand a
registration as permitted above, has filed with the
Securities and Exchange Commission a registration statement
under the Securities Act on Form S-3 pursuant to Rule 415
under the Securities Act (the "Required Registration"), the
Company shall use its best efforts to cause the Required
Registration to be declared effective under the Securities
Act as soon as practicable after filing, and once effective,
the Company shall cause such Required Registration to remain
effective for a period ending on the earlier of (x) the date
on which all Stockholder Shares have been sold pursuant to
the Required Registration or (y) the date which is 90 days
following the declaration of effectiveness of the Required
Registration (the "Effective Period").
(iv) Priority on Demand Registrations. The Company
shall not include in any Demand Registration any securities
which are not Stockholder Shares without the prior written
consent of the holders of a majority of Holdings Stockholder
Shares, unless the Company has granted Piggyback
Registration rights to the holder of such securities. If a
Demand Registration is an underwritten offering and the
managing underwriters advise the Company in writing (with a
copy to each party hereto requesting registration of
Stockholder
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<PAGE>
Shares) that in their opinion the number of Stockholder
Shares and, if permitted hereunder, other securities
requested to be included in such offering exceeds the number
of Stockholder Shares and other securities, if any, which
can be sold without adversely affecting the marketability of
the offering, the Company shall include in such registration
(x) first, Stockholder Shares requested to be included in
such registration and Warrant Shares requested to be
included in such registration, pro rata among the holders of
such shares on the basis of the number of shares owned by
each such holder and (y) second, the other securities
requested to be included in such registration.
(v) Restrictions on Demand Registrations. The
Company shall not be obligated to effect any Demand
Registration within 180 days after the effective date of a
previous Demand Registration or within 90 days prior to the
proposed effective date of any such registration statement.
The Company shall be entitled to postpone, for up to 180
days, the filing or the effectiveness of a registration
statement for a Demand Registration if the Company
determines, through its Board of Directors, that such Demand
Registration would be reasonably expected (x) to have an
adverse effect on any proposal or plan by the Company or any
of its Subsidiaries to engage in any acquisition of assets
(other than in the ordinary course of business) or any
merger, consolidation, tender offer or similar transaction
or (y) to otherwise be detrimental to the Company or its
securityholders.
(vi) Selection of Underwriters. The holders of a
majority of Holdings Stockholder Shares included in any
Demand Registration will have the right to select the
investment banker(s) and manager(s) to administer the
offering.
(vii) Other Registration Rights. Except as
provided in this Agreement, the Company shall not grant to
any Persons the right to request the Company to register any
equity securities of the Company, or any securities
convertible or exchangeable into or exercisable for such
securities, without the prior written consent of the holders
of a majority of Holdings Stockholder Shares.
(b) Piggyback Registrations.
(i) Right to Piggyback. Whenever the Company
proposes to register any of its equity securities under the
Securities Act (other than pursuant to any Demand
Registration and other than a registration on Forms S-4 or
S-8 (or any successor forms thereto) or any other form for
which Stockholder Shares are not eligible under the
Securities Act for registration) (a "Piggyback
Registration"), the Company shall give prompt written notice
to all holders of Stockholder Shares of its intention to
effect such a registration and shall include in such
registration all Stockholder Shares with respect to which
the Company has received written requests for inclusion
therein within 15 days after the receipt of the Company's
notice.
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<PAGE>
(ii) Piggyback Expenses. The Registration Expenses
of the holders of Stockholder Shares shall be paid by the
Company in all Piggyback Registrations.
(iii) Priority on Piggyback Registrations. If a
Piggyback Registration is an underwritten registration on
behalf of the Company or any other Person, and the managing
underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in
such registration exceeds the number which can be sold in
such offering without adversely affecting the marketability
of the offering, the Company shall include in such
registration (w) first, the securities the Company proposes
to sell, (x) second, all Common Stock hereafter issued to
Persons (other than Holdings or its Affiliates) who exercise
demand registration rights pursuant to agreements binding
upon the Company, (y) third, the Stockholder Shares held by
all Stockholders requested to be included in such
registration and Warrant Shares requested to be included in
such registration, pro rata among the holders of such shares
on the basis of the number of shares owned by each such
holder, and (z) fourth, other securities requested to be
included in such registration.
(c) Holdback Agreement. Each holder of Stockholder Shares
shall not effect any public sale or distribution (including sales pursuant to
Rule 144) of equity securities of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, during the seven days
prior to and the 180-day period beginning on the effective date of any
underwritten registration of the Company's securities (except as part of such
underwritten registration), unless the underwriters managing the Public Offering
otherwise agree.
(d) Registration Procedures. Whenever the holders of
Stockholder Shares have requested that any Stockholder Shares be registered
pursuant to this Agreement, the Company shall use its reasonable best efforts to
effect the registration and the sale of such Stockholder Shares in accordance
with the intended method of disposition thereof, and pursuant thereto the
Company shall as expeditiously as possible:
(i) prepare and file with the Securities and
Exchange Commission a registration statement with respect to
such Stockholder Shares and use its reasonable best efforts
to cause such registration statement to become effective
(provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the
Company shall furnish to the counsel selected by the holders
of a majority of the Stockholder Shares covered by such
registration statement copies of all such documents proposed
to be filed, which documents shall be subject to the review
and comment before filing of such counsel);
(ii) notify each holder of Stockholder Shares of
the effectiveness of each registration statement filed
hereunder and prepare and file with the Securities and
Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration
statement effective for a period of not less than 180 days
and comply with the provisions of
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<PAGE>
the Securities Act with respect to the disposition of all
securities covered by such registration statement during
such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such
registration statement;
(iii) furnish to each seller of Stockholder Shares
such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary
prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of
the Stockholder Shares owned by such seller;
(iv) use its reasonable best efforts to register
or qualify such Stockholder Shares under such other
securities or blue sky laws of such jurisdictions as any
seller reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such
jurisdictions of the Stockholder Shares owned by such seller
(provided that the Company shall not be required to (x)
qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this
subsection, (y) subject itself to taxation in any such
jurisdiction or (z) consent to general service of process in
any such jurisdiction);
(v) notify each seller of such Stockholder Shares,
at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in
such registration statement contains an untrue statement of
a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of
any such seller, the Company shall prepare a supplement or
amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Stockholder Shares, such
prospectus shall not contain an untrue statement of a
material fact or omit to state any fact necessary to make
the statements therein not misleading;
(vi) cause all such Stockholder Shares to be
listed on each securities exchange on which similar
securities issued by the Company are then listed and, if not
so listed, to be listed on the NASD automated quotation
system;
(vii) provide a transfer agent and registrar for
all such Stockholder Shares not later than the effective
date of such registration statement;
(viii) enter into such customary agreements
(including underwriting agreements in customary form)
approved by the holders of a majority of the Stockholder
Shares and take all such other actions as the holders of a
majority of the Stockholder Shares being sold or the
underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Stockholder
Shares (including effecting a stock split or a combination
of shares);
- 10 -
<PAGE>
(ix) make available for inspection by any seller
of Stockholder Shares, any underwriter participating in any
disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration
statement;
(x) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the
Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve
months beginning with the first day of the Company's first
full calendar quarter after the effective date of the
registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder;
(xi) use its reasonable best efforts to cause such
Stockholder Shares covered by such registration statement to
be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such
Stockholder Shares; and
(xii) cause representatives of the Company to
participate in any "road show" or "road shows" reasonably
requested by any underwriter.
(e) Registration Expenses.
(i) All expenses incident to the Company's
performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws,
printing expenses, travel expenses, filing expenses,
messenger and delivery expenses, fees and disbursements of
custodians, fees and disbursements of counsel for the
Company and fees and disbursements of all independent
certified public accountants, underwriters (excluding
discounts and commissions) and other Persons retained by the
Company (all such expenses being herein called "Registration
Expenses"), shall be borne by the Company, except as
otherwise expressly provided in this Agreement, except that
the Company shall, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting
duties), the expense of any audit or quarterly review, the
expense of any liability insurance and the expenses and fees
for listing the securities to be registered on each
securities exchange on which similar securities issued by
the Company are then listed or on the NASD automated
quotation system (or any successor or similar system).
(ii) In connection with each Demand Registration
and each Piggyback Registration, the Company shall reimburse
the holders of Stockholder Shares included in
- 11 -
<PAGE>
such registration for the reasonable fees and disbursements
of one counsel (in addition to local counsel) chosen by the
holders of a majority of the Stockholder Shares included in
such registration.
(iii) To the extent Registration Expenses are not
required to be paid by the Company, each holder of
securities included in any registration hereunder shall pay
those Registration Expenses allocable to the registration of
such holder's securities so included (other than transaction
fees paid to Holdings or its Affiliates), and any
Registration Expenses not so allocable shall be borne by all
sellers of securities included in such registration in
proportion to the aggregate selling price of the securities
to be so registered (other than transaction fees paid to
Holdings or its Affiliates).
(f) Indemnification.
(i) The Company agrees to indemnify, to the extent
permitted by law, each holder of Stockholder Shares, its
officers and directors and each Person who controls such
holder (within the meaning of the Securities Act) against
all losses, claims, damages, liabilities and expenses caused
by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar
as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly
for use therein or by such holder's failure to deliver a
copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of
the same. In connection with an underwritten offering, the
Company shall indemnify such underwriters, their officers
and directors and each Person who controls such underwriters
(within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification
of the holders of Stockholder Shares.
(ii) In connection with any registration statement
in which a holder of Stockholder Shares is participating,
each such holder shall furnish to the Company in writing
such information and affidavits as the Company reasonably
requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law,
shall indemnify the Company, its directors and officers and
each Person who controls the Company (within the meaning of
the Securities Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information
or affidavit so furnished in writing by such holder;
provided that the obligation to indemnify shall be
individual, not joint and several, for each holder and shall
be limited to the net
- 12 -
<PAGE>
amount of proceeds received by such holder from the sale of
Stockholder Shares pursuant to such registration statement.
(iii) Any Person entitled to indemnification
hereunder shall (i) give prompt written notice to the
indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to
indemnification hereunder to the extent such failure has not
prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties
may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party shall not be
subject to any liability for any settlement made by the
indemnified party without its consent (but such consent
shall not be unreasonably withheld). An indemnifying party
who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties
with respect to such claim.
(iv) The indemnification provided for under this
Agreement shall remain in full force and effect regardless
of any investigation made by or on behalf of the indemnified
party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of
securities. The Company also agrees to make such provisions,
as are reasonably requested by any indemnified party, for
contribution to such party in the event the Company's
indemnification is unavailable for any reason.
(g) Participation in Underwritten Registrations. No Person
may participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
Section 6. Definitions.
(a) Defined Terms. The following definitions shall be
applied to the capitalized terms used in this Agreement for all purposes, unless
otherwise clearly indicated to the contrary.
"Affiliate" of any Person means any other Person, directly
or indirectly controlling, controlled by or under common control with such
Person.
"Common Stock" means the Company's Class A Voting Common
Stock, par value $0.01 per share and the Company's Class B Non-Voting Common
Stock. par value $0.01 per share.
- 13 -
<PAGE>
"Family Group" means a Stockholder's spouse, siblings,
parents and descendants (whether natural or adopted), any trust solely for the
benefit of such Stockholder and/or the Stockholder's spouse and/or descendants
(and the beneficiaries of such trusts upon their dissolution), a Stockholder's
heirs, devises or estate upon such Stockholder's death and any corporation,
partnership or limited liability company controlled (as defined below) by one or
more Stockholders; provided that in the case of such a corporation, partnership
or limited liability company, such entity shall be part of a Family Group only
so long as such Stockholder(s) continue(s) to control such entity, and if for
any reason such Stockholder(s) no longer control such entity, such
Stockholder(s) shall be required to cause the Stockholder Shares owned by such
entity to be Transferred back to such Stockholder(s). For purposes of this
definition, "control" shall mean record and beneficial ownership of more than
50% of both (i) the outstanding shares of common stock or other equity
securities of such entity and (ii) the combined voting power of the such
entity's then outstanding voting securities entitled to vote generally in the
election of directors of such entity.
"Holdings Stockholder Shares" means the Stockholder Shares
originally issued to Holdings pursuant to the Recapitalization Agreement.
"Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 50% of the
Class A Voting Common Stock on a fully-diluted basis (a "50% Owner"), who is not
an Affiliate of any such 50% Owner, who is not the spouse or descendent (by
birth or adoption) of any such 50% Owner or a trust for the benefit of any such
50% Owner and/or such other Persons, and who is not a Person who through
contract or other arrangements (other than arrangements entered into in
connection with the contemplated transactions) would be an Affiliate immediately
after the contemplated transaction.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of any class of the
Common Stock.
"Public Sale" means any sale of Stockholder Shares to the
public pursuant to an offering registered under the Securities Act or to the
public through a broker, dealer or market maker pursuant to the provisions of
Rule 144 under the Securities Act.
"Sale of the Company" means the sale of the Company to an
Independent Third Party or group of Independent Third Parties pursuant to which
such party or parties acquire (i) capital stock of the Company possessing the
voting power under normal circumstances to elect a majority of the Company's
Board of Directors (whether by merger, consolidation, sale or transfer of the
Company's capital stock) or (ii) more than 50% of the Company's assets
determined on a consolidated basis.
- 14 -
<PAGE>
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Stockholder Shares" means (i) any Common Stock purchased or
otherwise acquired by any Stockholder, (ii) any Common Stock issued or (to
extent vested and exerciseable) issuable to any Stockholder upon exercise of any
options, warrants or other convertible or exchangeable securities and (iii) any
Common Stock issued or issuable to any Stockholder with respect to the
securities referred to in clauses (i) and (ii) above by way of stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular shares
constituting Stockholder Shares, such shares shall cease to be Stockholder
Shares when they have been (x) effectively registered under the Securities Act
and disposed of in accordance with the registration statement covering them, (y)
sold to the public through a broker, dealer or market maker pursuant to Rule 144
(or any similar provision then in force) under the Securities Act or (z) or
repurchased by the Company or any Subsidiary.
"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 limited liability company, 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 the
managing director or general partner of such limited liability company,
partnership, association or other business entity.
"Transfer" means any sale, transfer, assignment, pledge or
other disposition (whether with or without consideration and whether voluntarily
or involuntarily or by operation of law).
"Warrant Shares" means shares of Common Stock issued or
issuable upon exercise of any warrants issued by the Company in connection with
the Senior Subordinated Increasing Rate Notes issued in connection with the
consummation of the transactions contemplated by the Recapitalization Agreement
(or any warrants issued in connection with other debt securities which are used
to refinance the Subordinated Increasing Rate Notes).
(b) Other Definitions. The terms set forth below are defined
on the following pages of this Agreement.
<TABLE>
<S> <C>
Agreement.......................................................... - 1 -
Approved Reorganization............................................ - 3 -
- 15 -
<PAGE>
Approved Sale ..................................................... - 3 -
Company............................................................ - 1 -
Demand Registration................................................ - 6 -
Effective Period................................................... - 7 -
50% Owner.......................................................... - 14 -
Holdings........................................................... - 1 -
Long-Form Registrations............................................ - 6 -
Majority Holders................................................... - 3 -
Parties ........................................................... - 1 -
Party ............................................................. - 1 -
Permitted Transferees.............................................. - 3 -
Piggyback Registration............................................. - 8 -
Recapitalization Agreement......................................... - 1 -
Registration Expenses.............................................. - 11 -
Required Registration.............................................. - 7 -
Sale Notice........................................................ - 2 -
Short-Form Registrations........................................... - 6 -
Stockholder........................................................ - 1 -
Stockholders....................................................... - 1 -
Unaccredited Stockholder........................................... - 4 -
</TABLE>
Section 7. Amendment and Waiver. Except as otherwise
provided herein, no modification, amendment or waiver of any provision of this
Agreement shall be effective against the Company or the Stockholders unless such
modification, amendment or waiver is approved in writing by the Company,
Holdings and the holders of a majority of the Stockholder Shares held by all
Stockholders (other than Holdings); provided that without the prior written
consent of a Stockholder, no modification, amendment or waiver shall be
effective against such Stockholder if it adversely affects in any material
respect the rights or obligations of such Stockholder under this Agreement. The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
Section 8. Termination. This Agreement shall continue in
effect until the earlier of: (a) the consummation of a Sale of the Company and
(b) January 20, 2009, after which time this Agreement shall terminate
automatically and shall have no further force and effect; provided that the
restrictions set forth in Section 2 and Section 3(b) shall terminate earlier
upon the consummation of a Public Offering by the Company; provided further that
(notwithstanding anything contained in this Section 8) the provisions of Section
5 shall not terminate until the consummation of a Sale of the Company.
- 16 -
<PAGE>
Section 9. Severability. Whenever possible, each provision
of this Agreement shall 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 shall
not affect the validity, legality or enforceability of any other provision of
this Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
Section 10. Entire Agreement. Except as otherwise expressly
set forth herein, this Agreement embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes and preempts 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.
Section 11. Successors and Assigns. Except as otherwise
provided herein, this Agreement shall bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns and the Stockholders
and any subsequent holders of Stockholder Shares and the respective successors
and assigns of each of them, so long as they hold Stockholder Shares.
Section 12. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
Section 13. Remedies. The Company and each Stockholder shall
be entitled to enforce their rights under this Agreement specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in their favor. The parties hereto agree
and acknowledge that money damages would not be an adequate remedy for any
breach of the provisions of this Agreement and that the Company and any
Stockholder may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief
(without posting a bond or other security) in order to enforce or prevent any
violation of the provisions of this Agreement.
Section 14. Notices. Any notice provided for in this
Agreement shall be in writing and shall be either personally delivered, or
mailed first class mail (postage prepaid) or sent by reputable overnight courier
service (charges prepaid) to the Company at the address set forth below and to
any other recipient at the address indicated on the Schedule of Stockholders
attached hereto and to any subsequent holder of Stockholder Shares subject to
this Agreement at such address as indicated by the Company's records, or at such
address or to the attention of such other person as
- 17 -
<PAGE>
the recipient party has specified by prior written notice to the sending party.
Notices shall be deemed to have been given hereunder when delivered personally,
five days after deposit in the U.S. mail and one day after deposit with a
reputable overnight courier service. The Company's address is:
United Industries Corporation
8825 Page Boulevard
St. Louis, Missouri 63114
Telecopy: (314) 253-5941
Attention: President
With copies to:
UIC Holdings, L.L.C.
75 State Street
Boston, Massachusetts 02109
Attention: C. Hunter Boll, Scott A. Schoen
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Attention: William S. Kirsch, P.C.
Section 15. Governing Law. All issues and questions
concerning the relative rights and obligations of the Company and its
stockholders, or the construction, validity, enforcement and interpretation of
this Agreement and the exhibits and schedules hereto, shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
Section 16. Business Days. If any time period for giving
notice or taking action hereunder expires on a day which is a Saturday, Sunday
or legal holiday in the state in which the Company's chief-executive office is
located, the time period shall automatically be extended to the first business
day immediately following such Saturday, Sunday or legal holiday.
Section 17. Descriptive Headings. The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
Section 18. No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
* * * *
- 18 -
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date and year first above written.
THE COMPANY: UNITED INDUSTRIES CORPORATION
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
HOLDINGS: UIC HOLDINGS, L.L.C.
By:
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
OTHER STOCKHOLDERS:
----------------------------------------
DAVID C. PRATT
DAVID C. PRATT GRANTOR RETAINED
INTEREST TRUST
----------------------------------------
Name:
Title:
MARK R. GALE REVOCABLE TRUST
----------------------------------------
Name:
Title:
- 19 -
<PAGE>
----------------------------------------
M. ROBERT GALE
----------------------------------------
CHARLES R. GALE
----------------------------------------
RANDOLPH D. GALE
RALPH EDWARDS REVOCABLE TRUST
----------------------------------------
Name:
Title:
DAVID C. PRATT RETAINED ANNUITY TRUST
----------------------------------------
Name:
Title:
RYDER PRATT GRANTOR RETAINED
ANNUITY TRUST
----------------------------------------
Name:
Title:
1994 RYDER PRATT GRANTOR RETAINED
ANNUITY TRUST
----------------------------------------
Name:
Title:
- 20 -
<PAGE>
1998 GALE FAMILY NEVADA IRREVOCABLE
TRUST
----------------------------------------
Name:
Title:
By: Ternion Corporation as Trustee
----------------------------------------
Name:
Title:
----------------------------------------
RICHARD A. BENDER
----------------------------------------
STEPHEN R. BRIAN
----------------------------------------
WILLIAM P. JOHNSON
----------------------------------------
DANIEL J. JOHNSTON
----------------------------------------
DAVID JONES
- 21 -
<PAGE>
LOUIS D. DWORSKY, TRUSTEE UNDER THE
JONES FAMILY TRUST FBO JEFFREY D. JONES
----------------------------------------
Louis D. Dworsky, Trustee
LOUIS D. DWORSKY, TRUSTEE UNDER THE
JONES FAMILY TRUST FBO LESLIE A. JONES
----------------------------------------
Louis D. Dworsky, Trustee
LOUIS D. DWORSKY, TRUSTEE UNDER THE
JONES FAMILY TRUST FBO DANA M. SMITH
----------------------------------------
Louis D. Dworsky, Trustee
LOUIS D. DWORSKY, TRUSTEE UNDER THE
JONES FAMILY TRUST FBO BRENTON A.
KINDLE
----------------------------------------
Louis D. Dworsky, Trustee
LOUIS D. DWORSKY, TRUSTEE UNDER THE
JONES FAMILY TRUST FBO BROOKE M.
KINDLE
----------------------------------------
Louis D. Dworsky, Trustee
- 22 -
<PAGE>
STEPHEN R. BRIAN, TRUSTEE UNDER THAT
CERTAIN TRUST AGREEMENT, DATED
JANUARY 20, 1999 BETWEEN THE COMPANY
AND STEPHAN A. BRIAN, TRUSTEE FBO
RICHARD A. BENDER
----------------------------------------
Name: Stephen R. Brian, Trustee
STEPHEN R. BRIAN, TRUSTEE UNDER THAT
CERTAIN TRUST AGREEMENT, DATED
JANUARY 20, 1999 BETWEEN THE COMPANY
AND STEPHAN A. BRIAN, TRUSTEE FBO
WILLIAM P. JOHNSON
----------------------------------------
Name: Stephen R. Brian, Trustee
STEPHEN R. BRIAN, TRUSTEE UNDER THAT
CERTAIN TRUST AGREEMENT, DATED
JANUARY 20, 1999 BETWEEN THE COMPANY
AND STEPHAN A. BRIAN, TRUSTEE FBO
DANIEL J. JOHNSTON
----------------------------------------
Name: Stephen R. Brian, Trustee
- 23 -
Exhibit 10.14
-------------
UNITED INDUSTRIES CORPORATION
PROFESSIONAL SERVICES AGREEMENT
THIS PROFESSIONAL SERVICES AGREEMENT (this "Agreement") is
entered into as of January 20, 1999, by and among THL Equity Advisors IV,
L.L.C., a Massachusetts limited liability company with its principal place of
business at 75 State Street, Boston, Massachusetts 02109 and Thomas H. Lee
Capital, L.L.C., a Delaware limited liability company with its principal place
of business at 75 State Street, Boston, Massachusetts 02109 and United
Industries Corporation, a Delaware corporation (the "Company"). THL Equity
Advisors IV, L.L.C. and Thomas H. Lee Capital, L.L.C. are each referred to
herein as a "Consultant" and collectively as the "Consultants."
WHEREAS, the Consultants have staff specially skilled in
corporate finance, strategic corporate planning and other management skills and
services;
WHEREAS, as the date hereof, the Company has completed its
recapitalization (the "Recapitalization") pursuant to the Agreement and Plan of
Recapitalization, Purchase and Redemption dated as of December 24, 1998 by and
among the Company, certain Sellers listed therein and UIC Holdings, L.L.C.;
WHEREAS, the Company will require the Consultants' special
skills and management advisory services in connection with its general business
operations; and
WHEREAS, the Consultants are willing to provide such skills
and services to the Company on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:
1. Engagement. The Company hereby engages the Consultants
for the Term (as hereinafter defined in Section 2 below) and upon the terms and
conditions herein set forth to provide consulting and management advisory
services to the Company, as requested by the Company from time to time. These
services will be in connection with financial and strategic corporate planning
and such other management services as each Consultant and the Company shall
mutually agree. In consideration of the remuneration herein specified, each
Consultant accepts such engagement and agrees to perform the services specified
herein.
2. Term. The engagement hereunder shall be for a term
commencing on the date hereof and expiring on the third (3rd) anniversary hereof
(as such period may be extended, the "Term"). Upon expiration of the Term, this
Agreement shall automatically extend for successive periods of one (1) year,
unless the Consultants or the Company's Board of Directors shall give notice to
the other at least thirty (30) days prior to the end of the Term (including any
annual extension
<PAGE>
thereof) indicating that such party does not intend to renew the Agreement. Upon
final expiration of the Term (including any annual extension thereof) all
obligations as between the parties and/or any third party beneficiaries shall be
extinguished without recourse to any party under this Agreement.
3. Services to be Performed. The Consultants shall devote
reasonable time and efforts to the performance of the consulting and management
advisory services contemplated by this Agreement. However, no precise number of
hours is to be devoted by the Consultants on a weekly or monthly basis. The
Consultants may perform services under this Agreement directly, through their
employees or agents, or with such outside consultants as the Consultants may
engage for such purpose.
4. Compensation; Expense Reimbursement.
(a) Closing Fee. In connection with the closing of the
Recapitalization, on the date hereof, the Company shall pay or cause to be paid
to the Consultants a closing fee of Twelve Million Dollars ($12,000,000.00) to
be paid as follows: Six Million Seven Hundred Twenty Thousand Dollars
($6,720,000.00) to THL Equity Advisors IV, L.L.C. and Five Million Two Hundred
Eighty Thousand Dollars ($5,280,000.00) to Thomas H. Lee Capital, L.L.C.
(b) Management Fee. In consideration of the management
advisory services provided by Consultants hereunder, the Company shall pay or
cause to be paid to the Consultants a monthly management fee of Sixty-Two
Thousand Five Hundred Dollars ($62,500.00) on the last day of each month during
the Term (the "Management Fee") to be paid as follows: Thirty-Five Thousand
Dollars ($35,000.00) to THL Equity Advisors IV, L.L.C. and Twenty-Seven Thousand
Five Hundred Dollars ($27,500.00) to Thomas H. Lee Capital, L.L.C. Payment of
the Management Fee shall be subject to the terms of that certain Subordination
Agreement of even date herewith executed and delivered by Consultants in favor
of the Administrative Agent and the other Secured Parties under that certain
Credit Agreement dated as of January 20, 1999 among the Company, the banks,
financial institutions and other institutional lenders from time to time party
thereto, NationsBank, N.A. as Swing Line Bank and Initial Issuing Bank
thereunder, NationsBanc Montgomery Securities LLC and Morgan Stanley Senior
Funding, Inc., as Co-Arrangers therefor, Canadian Imperial Bank of Commerce, as
Documentation Agent therefor, Morgan Stanley Senior Funding, Inc. as Syndication
Agent thereunder, NationsBanc Montgomery Securities LLC, as Lead Arranger
therefor, and NationsBank, N.A., as Administrative Agent for the Lender Parties
(the "THL Subordination Agreement").
(c) Expense Reimbursement. The Company shall promptly
reimburse the Consultants for all reasonable out-of-pocket expenses incurred in
connection with management advisory services to be provided by the Consultants
hereunder, including, without limitation, reasonable travel, lodging and similar
out-of-pocket costs reasonably incurred by it in connection with or on account
of its performance of services for the Company hereunder. Reimbursement shall
-2-
<PAGE>
be made only upon presentation to the Company by the Consultants of reasonably
itemized documentation therefor.
5. Liability. Neither of the Consultants nor any of their
respective affiliates, officers, directors, stockholders, partners, employees,
agents, representatives, successors or assigns (collectively, "Consultant
Parties") shall be liable to the Company or any of its subsidiaries, affiliates,
stockholders, employees, agents, representatives, successors or assigns, for any
loss, liability, damage or expense (collectively, "Losses") arising out of or in
connection with the performance of services contemplated by this Agreement,
except to the extent such Losses are finally judicially determined to result
from actions taken by the Consultant Parties due primarily to the Consultant
Parties' gross negligence or willful misconduct.
6. Indemnification. The Company agrees to defend, indemnify
and hold harmless each of the Consultant Parties from and against any and all
claims and Losses (or actions in respect thereof), in any way related to or
arising out of the performance by the Consultant Parties of services under this
Agreement, and to reimburse each of the Consultant Parties for reasonable
out-of-pocket legal and other expenses incurred by it in connection with or
relating to investigating, preparing to defend, or defending any actions, claims
or other proceedings (including any investigation or inquiry) arising in any
manner out of or in connection with this Agreement (whether or not such
indemnified person is a named party in such proceeding); provided, however, that
the Company shall not be responsible under this Section 6 for any Losses to the
extent that they are finally judicially determined to result from actions taken
by the Consultant Parties due primarily to the Consultant Parties' gross
negligence or willful misconduct.
7. Notice. All notices hereunder, to be effective, shall be
in writing and shall be mailed by certified mail, postage prepaid as follows (or
to such other address as shall be given by one party to the other in writing):
(i) To the Consultants:
THL Equity Advisors IV, L.L.C.
75 State Street
Boston, Massachusetts 02109
Attention: C. Hunter Boll, Scott A. Schoen
Thomas H. Lee Capital, L.L.C.
75 State Street
Boston, Massachusetts 02109
Attention: C. Hunter Boll, Scott A. Schoen
(iii) To the Company:
United Industries Corporation
8825 Page Boulevard
St. Louis, Missouri 63114
Telecopy: (314) 253-5941
Attention: President
-3-
<PAGE>
8. Modifications. This Agreement and the THL Subordination
Agreement constitute the entire agreement between the parties hereto with regard
to the subject matter hereof, superseding all prior understandings and
agreements whether written or oral. This Agreement may not be amended or revised
except by a writing signed by each of the parties.
9. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns but may not be assigned by either party without the prior written
consent of the other party.
10. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
11. Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the Commonwealth
of Massachusetts, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the Commonwealth of Massachusetts or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the Commonwealth of Massachusetts.
12. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
THL EQUITY ADVISORS IV, L.L.C.
By:
----------------------------
Name:
----------------------
Title:
----------------------
THOMAS H. LEE CAPITAL, L.L.C.
By:
----------------------------
Name:
----------------------
Title:
----------------------
UNITED INDUSTRIES CORPORATION
By:
----------------------------
Name:
----------------------
Title:
----------------------
-5-
================================================================================
$335,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of March 24, 1999
Among
UNITED INDUSTRIES CORPORATION,
as Borrower,
and
THE INITIAL LENDERS, THE SWING LINE BANK AND
THE INITIAL ISSUING BANK NAMED HEREIN,
as Initial Lender Parties,
and
NATIONSBANC MONTGOMERY SECURITIES LLC
and
MORGAN STANLEY SENIOR FUNDING, INC.,
as Co-Arrangers,
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as Documentation Agent,
and
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agent,
and
NATIONSBANC MONTGOMERY SECURITIES LLC,
as Lead Arranger and Book Manager,
and
NATIONSBANK, N.A.,
as Administrative Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
SECTION 1.01. Certain Defined Terms...................................................................-3-
SECTION 1.02. Computation of Time Periods; Other Constructional Provisions...........................-42-
SECTION 1.03. Accounting Terms.......................................................................-43-
SECTION 1.04. Currency Equivalents Generally.........................................................-43-
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances and the Letters of Credit...............................-43-
SECTION 2.02. Making the Advances....................................................................-46-
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit.....................-49-
SECTION 2.04. Repayment of Advances..................................................................-51-
SECTION 2.05. Termination or Reduction of the Commitments............................................-54-
SECTION 2.06. Prepayments............................................................................-55-
SECTION 2.07. Interest...............................................................................-59-
SECTION 2.08. Fees...................................................................................-60-
SECTION 2.09. Conversion of Advances.................................................................-60-
SECTION 2.10. Increased Costs, Etc...................................................................-62-
SECTION 2.11. Payments and Computations..............................................................-64-
SECTION 2.12. Taxes..................................................................................-67-
SECTION 2.13. Sharing of Payments, Etc...............................................................-70-
SECTION 2.14. Defaulting Lenders.....................................................................-70-
SECTION 2.15. Use of Proceeds........................................................................-73-
ARTICLE III
CONDITIONS OF LENDING AND
ISSUANCE OF LETTERS OF CREDIT
SECTION 3.01. Conditions Precedent to Initial Extension of Credit....................................-73-
SECTION 3.02. Conditions Precedent to Effectiveness of this Agreement................................-81-
SECTION 3.03. Conditions Precedent to Each Borrowing, Issuance and Renewal...........................-83-
SECTION 3.04. Determinations Under Section 3.02......................................................-84-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties.........................................................-84-
<PAGE>
-ii-
ARTICLE V
COVENANTS OF THE BORROWER
<CAPTION>
<S> <C> <C>
SECTION 5.01. Affirmative Covenants..................................................................-93-
SECTION 5.02. Negative Covenants.....................................................................-99-
SECTION 5.03. Reporting Requirements................................................................-120-
SECTION 5.04. Financial Covenants...................................................................-126-
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default.....................................................................-130-
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default..............................-133-
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action..............................................................-133-
SECTION 7.02. Administrative Agent's Reliance, Etc..................................................-134-
SECTION 7.03. NationsBank, NMS, MSSF, CIBC and Affiliates...........................................-135-
SECTION 7.04. Lender Credit Decision................................................................-135-
SECTION 7.05. Indemnification.......................................................................-135-
SECTION 7.06. Successor Administrative Agent........................................................-137-
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc.......................................................................-138-
SECTION 8.02. Notices, Etc..........................................................................-139-
SECTION 8.03. No Waiver; Remedies...................................................................-140-
SECTION 8.04. Costs and Expenses; Indemnification...................................................-140-
SECTION 8.05. Right of Setoff.......................................................................-142-
SECTION 8.06. Binding Effect........................................................................-142-
SECTION 8.07. Assignments and Participations........................................................-142-
SECTION 8.08. No Liability of the Issuing Bank......................................................-147-
SECTION 8.09. Confidentiality.......................................................................-147-
SECTION 8.10. Execution in Counterparts.............................................................-148-
SECTION 8.11. Governing Law; Jurisdiction, Etc......................................................-148-
SECTION 8.12. Waiver of Jury Trial..................................................................-148-
<PAGE>
-iii-
SCHEDULES
<CAPTION>
<S> <C>
Schedule I - Existing Letters of Credit; Commitments and Applicable Lending Offices
Schedule 3.01(f) - Surviving Indebtedness
Schedule 3.02(b) - Disclosed Litigation
Schedule 4.01(b) - Subsidiaries; Equity Interests in the Borrower
Schedule 4.01(d) - Required Authorizations, Approvals, Etc.
Schedule 4.01(y) - Open Years
Schedule 4.01(cc) - Existing Liens
Schedule 4.01(dd) - Owned and Leased Real Property
Schedule 4.01(ee) - Existing Investments
Schedule 5.02(j) - Existing Dividend and Other Payment Restrictions
EXHIBITS
Exhibit A-1 - Form of Term A Note
Exhibit A-2 - Form of Term B Note
Exhibit A-3 - Form of Revolving Credit Note
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Swing Line Borrowing
Exhibit B-3 - Form of Notice of Conversion
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Security Agreement
Exhibit E - Form of Holdings LLC Agreement
Exhibit F-1 - Form of Solvency Opinion
Exhibit F-2 - Form of Solvency Certificate
Exhibit G-1 - Form of Opinion of Special Counsel to the Loan Parties
Exhibit G-2 - Form of Opinion of Special Missouri Counsel for the Lender Parties
Exhibit H - Terms of Subordination
Exhibit I - Form of Subsidiaries Guarantee
</TABLE>
<PAGE>
Exhibit 10.15
-------------
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of March 24, 1999 among
UNITED INDUSTRIES CORPORATION, a Delaware corporation (the "Borrower"), the
banks, financial institutions and other institutional lenders listed on the
signature pages hereof under the caption "Initial Lenders" (the "Initial
Lenders"), NATIONSBANK, N.A. ("NationsBank"), as provider of the Swing Line
Facility (as hereinafter defined) (in such capacity, the "Swing Line Bank") and
initial issuer of Letters of Credit (as hereinafter defined) (in such capacity,
the "Initial Issuing Bank"), NATIONSBANC MONTGOMERY SECURITIES LLC ("NMS") and
MORGAN STANLEY SENIOR FUNDING, INC. ("MSSF"), as co-arrangers (the
"Co-Arrangers") for the Facilities (as hereinafter defined), CANADIAN IMPERIAL
BANK OF COMMERCE ("CIBC"), as documentation agent (the "Documentation Agent")
for the Facilities, MSSF, as syndication agent (the "Syndication Agent") for the
Facilities, NMS, as lead arranger and book manager (the "Lead Arranger and Book
Manager") for the Facilities, and NationsBank, as administrative and collateral
agent (together with any successor thereto appointed pursuant to Article VII,
the "Administrative Agent") for the Lender Parties (as hereinafter defined).
PRELIMINARY STATEMENTS
(1) The Thomas H. Lee Company, a sole proprietorship ("THL"), organized UIC
Holdings, L.L.C., a Delaware limited liability company ("Holdings LLC"), which
upon consummation of the Recapitalization (as hereinafter defined) acquired
control of the Borrower.
(2) Pursuant to the terms of the Recapitalization Agreement (as hereinafter
defined) and the Agreement dated as of January 1, 1999 (the "Reorganization
Agreement") between the Borrower and its wholly owned subsidiary, DW-Wej-it,
Inc., a Delaware corporation ("DW"), on or prior to the Closing Date (as
hereinafter defined), the Borrower (a) contributed all of its assets primarily
used in or related to the manufacturing and marketing of construction anchoring
fasteners and providing contract manufacturing services in metals fabrication
(collectively, the "Metals Business") to DW, and DW assumed all of the
liabilities and Obligations (as hereinafter defined) of the Borrower related to
the Metals Business and (b) distributed to certain of the Sellers (as
hereinafter defined) all of the outstanding shares of capital stock of DW owned
by the Borrower (such contribution and distribution being, collectively, the
"Pre-Closing Reorganization").
(3) Furthermore, pursuant to the terms of the Agreement and Plan of
Recapitalization, Purchase and Redemption dated as of December 24, 1998 (as
amended by Amendment No. 1 dated as of January 20, 1999 and Amendment No. 2
dated January 25, 1999 and as further amended, supplemented or otherwise
modified from time to time hereafter in accordance with its terms, to the extent
permitted under the terms of the Loan Documents (as hereinafter defined), the
"Recapitalization Agreement") among Holdings LLC, the Borrower and the sellers
of the Borrower listed on Exhibit A thereto (the "Sellers"), as of the Closing
Date, (a) THL contributed to Holdings LLC $254,680,000 in exchange for all of
the outstanding Equity Interests (as hereinafter defined) in Holdings LLC, and
the Borrower lent to Holdings LLC $5,700,000 in exchange for (i) a promissory
note in an original principal amount equal to $4,700,000 (the "Managers Note")
and (ii) a promissory note in an original principal amount equal to $1,000,000,
which promissory note was co-signed by certain of the THL Entities (as
hereinafter defined) (the "Employees Note"), (b) Holdings LLC purchased from the
Sellers in the aggregate 312.2872 shares of outstanding Class A voting common
stock of the Borrower, par value $1.00 per share (the "UIC Class A Common
Stock"),
<PAGE>
-2-
and 312.2872 shares of outstanding Class B nonvoting common stock of the
Borrower, par value $1.00 per share (the "UIC Class B Common Stock" and,
together with the UIC Class A Common Stock, the "UIC Common Stock"), for an
aggregate purchase price of $260,380,000 and (c) the Borrower redeemed 407.7796
shares of outstanding UIC Class A Common Stock and 407.7796 shares of
outstanding UIC Class B Common Stock for an aggregate redemption price of
$340,000,000, as adjusted pursuant to Section 2.1 of the Recapitalization
Agreement. In connection with the transactions described in the immediately
preceding sentence, (A) the Borrower immediately thereafter effected a stock
split of approximately 83,378 to one, in the case of each of the UIC Class A
Common Stock and the UIC Class B Common Stock, (B) certain executive officers of
the Borrower purchased in the aggregate 470,000 shares of UIC Class A Common
Stock and 470,000 shares of UIC Class B Common Stock for an aggregate purchase
price of $4,700,000, whereupon an equal number of shares of UIC Class A Common
Stock and UIC Class B Common Stock were contributed by Holdings LLC to the
Borrower in full satisfaction of the Managers Note, and (C) the Borrower agreed
to sell to certain employees of the Borrower (at their option) on or prior to
April 20, 1999 100,000 shares of UIC Class A Common Stock and 100,000 shares of
UIC Class B Common Stock, whereupon an equal number of shares of UIC Class A
Common Stock and UIC Class B Common Stock will be contributed by Holdings LLC to
the Borrower in full satisfaction of the Employees Note (and, if on April 20,
1999 all such shares have not been so purchased by such employees of the
Borrower, then Holdings LLC will contribute to the Borrower an amount equal to
the product of (1) the number of such shares not so purchased multiplied by (2)
$5.00 (which obligation of Holdings LLC to make such contribution has been
guaranteed by certain of the THL Entities)). The contribution and loan described
above in clause (a) of this Preliminary Statement (3), the purchase described
above in clause (b) of this Preliminary Statement (3), the redemption described
above in clause (c) of this Preliminary Statement (3), the stock splits
described above in clause (A) of the immediately preceding sentence and the
purchases, contributions and sales described above in clauses (B) and (C) of the
immediately preceding sentence are, collectively, the "Recapitalization". Upon
consummation of the Recapitalization (and assuming that all shares offered in
connection with the transaction described above in clause (C) have been
purchased by employees of the Borrower, but without giving effect to the
dilution, if any, caused by an option pool exercisable into 2,000,000 shares of
UIC Class A Common Stock and 2,000,000 shares of UIC Class B Common Stock),
Holdings LLC owned 91.94% of the outstanding UIC Class A Common Stock and 91.94%
of the outstanding UIC Class B Common Stock, and the Sellers retained 6% of the
outstanding UIC Class A Common Stock and 6% of the outstanding UIC Class B
Common Stock.
(4) In connection with the consummation of the Recapitalization, the
Borrower entered into a Credit Agreement dated as of January 20, 1999 (the
"Existing Credit Agreement") with the banks, financial institutions and other
institutional lenders party thereto (the "Existing Lenders"), NationsBank, as
provider of the swing line facility and initial issuer of letters of credit
thereunder, NMS and MSSF, as co- arrangers therefor, CIBC, as documentation
agent therefor, MSSF, as syndication agent thereunder, NMS, as lead arranger
therefor, and NationsBank, as administrative and collateral agent for the
Existing Lenders and the other existing lender parties. Pursuant to the terms of
the Existing Credit Agreement, the Existing Lenders made advances available to
the Borrower and the Initial Issuing Bank issued letters of credit for the
account of the Borrower from time to time prior to the date of this Agreement in
an aggregate outstanding principal amount of $242,887,000 ($2,887,000 of which
are outstanding Swing Line Advances made by the Swing Line Bank) in order to
finance the redemption of 55.11% of each class of outstanding UIC Common Stock
from the Sellers as part of the Recapitalization, to pay fees and expenses
incurred in connection with the consummation of the Transaction (as hereinafter
defined) and to provide working capital to, and for other general corporate
purposes of, the Borrower and its Subsidiaries (as hereinafter defined).
<PAGE>
-3-
(5) The Borrower has requested that the Lender Parties amend and restate
the terms of the Existing Credit Agreement in its entirety and agree to lend to
the Borrower from time to time up to $335,000,000 at any time outstanding in
order to refinance all of the outstanding advances (the "Existing Advances")
made to the Borrower by the Existing Lenders under the Existing Credit
Agreement, to pay certain fees and expenses incurred in connection with the
consummation of the Transaction and to provide working capital to, and for other
general corporate purposes of, the Borrower and its Subsidiaries not otherwise
prohibited under the terms of the Loan Documents. The Lender Parties have
indicated their willingness to amend and restate the Existing Credit Agreement
in its entirety and to lend such amounts and to issue Letters of Credit on the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined):
"Administrative Agent" has the meaning specified in the recital of
parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with
NationsBank at its office at 101 North Tryon Street, 15th Floor,
NC1-001-15-04, Charlotte, North Carolina 28255, ABA No. 053-000-196,
Account No. 13662122506, Reference: United Industries Corporation,
Attention: Corporate Credit Services, or such other account maintained by
the Administrative Agent and designated by the Administrative Agent as such
in a written notice to the Borrower and each of the Lender Parties.
"Advance" means a Term A Advance, a Term B Advance, a Revolving Credit
Advance, a Swing Line Advance or a Letter of Credit Advance, as the context
may require.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person or,
with respect to an individual, has a relationship with such individual by
blood, adoption or marriage not more remote than first cousin. For purposes
of this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 10% or more of the
Voting Interests in such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Interests, by contract or otherwise.
"Agents" means, collectively, the Administrative Agent, the Lead
Arranger and Book Manager, the Syndication Agent, the Documentation Agent,
the Co-Arrangers and each co-agent or sub-agent appointed by the
Administrative Agent from time to time pursuant to Section 7.01(b).
<PAGE>
-4-
"Agreement Value" means, with respect to each Hedge Agreement on any
date of determination, an amount equal to the greater of:
(a) (i) in the case of any Hedge Agreement documented pursuant to
the ISDA Master Agreement, the amount, if any, that would be payable
by any of the Loan Parties or any of their Subsidiaries to its
counterparty to such Hedge Agreement, as if (A) such Hedge Agreement
was being terminated early on such date of determination, (B) such
Loan Party or such Subsidiary, as the case may be, was the sole
Affected Party (as defined in the applicable Master Agreement) and (C)
the Administrative Agent was the sole party determining such payment
amount (with the Administrative Agent making such determination
pursuant to the provisions of the form of Master Agreement); or (ii)
in the case of a Hedge Agreement traded on an exchange, the
mark-to-market value of such Hedge Agreement, which will be the
unrealized loss on such Hedge Agreement to the Loan Party or the
Subsidiary of a Loan Party party to such Hedge Agreement (determined
by the Administrative Agent based on the settlement price of such
Hedge Agreement on such date); or
(b) in all cases, the mark-to-market value of such Hedge
Agreement, which will be the unrealized loss on such Hedge Agreement
to the Loan Party or the Subsidiary of a Loan Party party to such
Hedge Agreement (determined by the Administrative Agent based on the
amount, if any, by which (i) the present value of the future cash
flows to be paid by such Loan Party or such Subsidiary of a Loan
Party, as the case may be, exceeds (ii) the present value of the
future cash flows to be received by such Loan Party or such Subsidiary
of a Loan Party pursuant to such Hedge Agreement).
"Applicable Lending Office" means (a) with respect to each of the
Lenders, the Base Rate Lending Office of such Lender in the case of a Base
Rate Advance and the Eurodollar Lending Office of such Lender in the case
of a Eurodollar Rate Advance and (b) with respect to the Swing Line Bank or
the Issuing Bank, the Base Rate Lending Office of the Swing Line Bank or
the Issuing Bank, respectively, for all purposes of this Agreement.
"Applicable Margin" means (a) with respect to the Term B Facility, a
rate equal to 2.25% per annum for Base Rate Advances and 3.25% per annum
for Eurodollar Rate Advances and (b) with respect to the Term A Facility
and the Revolving Credit Facility, (i) at any time during the period from
the date of this Agreement through the earlier of (A) the date on which the
Required Financial Information for the Fiscal Quarter ending September 30,
1999 is delivered to the Administrative Agent and the Lender Parties
pursuant to Section 5.03(c) and (B) November 15, 1999, a rate equal to
1.75% per annum for Base Rate Advances and 2.75% per annum for Eurodollar
Rate Advances and (ii) at any time and from time to time thereafter, a rate
per annum equal to the percentage set forth below opposite the applicable
Performance Level at such time:
<TABLE>
<CAPTION>
===========================================================================
Performance Term A/Revolving Credit Term A/Revolving Credit
Level Eurodollar Rate Advances Base Rate Advances
---------------------------------------------------------------------------
<S> <C> <C>
1 2.00% 1.00%
---------------------------------------------------------------------------
II 2.25% 1.25%
---------------------------------------------------------------------------
III 2.50% 1.50%
---------------------------------------------------------------------------
<PAGE>
-5-
<CAPTION>
===========================================================================
Performance Term A/Revolving Credit Term A/Revolving Credit
Level Eurodollar Rate Advances Base Rate Advances
<S> <C> <C>
---------------------------------------------------------------------------
IV 2.75% 1.75%
===========================================================================
</TABLE>
For purposes of subclause (b)(ii) of the immediately preceding sentence,
the Applicable Margin for each Base Rate Advance shall be determined by
reference to the Performance Level in effect from time to time and the
Applicable Margin for each Eurodollar Rate Advance shall be determined by
reference to the Performance Level in effect on the first day of each
Interest Period.
"Applicable Percentage" means, with respect to the Commitment Fee, (a)
at any time during the period from the date of this Agreement through the
earlier of (i) the date on which the Required Financial Information for the
Fiscal Quarter ending September 30, 1999 is delivered to the Administrative
Agent and the Lender Parties pursuant to Section 5.03(c) and (ii) November
15, 1999, 0.500% per annum and (b) at any time and from time to time
thereafter, a percentage per annum equal to the applicable percentage set
forth below for the Performance Level set forth below:
<TABLE>
<CAPTION>
===========================================================================
Performance Level Commitment Fee
---------------------------------------------------------------------------
<S> <C>
I 0.375%
---------------------------------------------------------------------------
II 0.500%
---------------------------------------------------------------------------
III 0.500%
---------------------------------------------------------------------------
IV 0.500%
===========================================================================
</TABLE>
For purposes of clause (b) of the immediately preceding sentence, the
Applicable Percentage for the Commitment Fee shall be determined by
reference to the Performance Level in effect from time to time.
"Application Date" has the meaning specified in Section 2.06(b)(vii).
"Appropriate Lender" means, at any time, (a) with respect to either of
the Term Facilities or the Revolving Credit Facility, a Lender that has a
Commitment with respect to such Facility at such time, (b) with respect to
the Swing Line Facility, (i) the Swing Line Bank and (ii) if the Revolving
Credit Lenders have made Swing Line Advances pursuant to Section
2.02(b)(ii) that are outstanding at such time, each such Revolving Credit
Lender and (c) with respect to the Letter of Credit Facility, (i) the
Issuing Bank and (ii) if the Revolving Credit Lenders have made Letter of
Credit Advances pursuant to Section 2.03(c)(i) that are outstanding at such
time, each such Revolving Credit Lender.
"Approved Fund" means, with respect to any Lender that is a fund that
invests in syndicated bank loans, any other fund that also invests in
syndicated bank loans and is advised or managed by the same investment
advisor as such Lender or an Affiliate of such investment advisor.
"Assigned Agreements" has the meaning specified in Section 1(d) of the
Security Agreement.
<PAGE>
-6-
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender Party and an Eligible Assignee, and accepted by the
Administrative Agent and, if applicable, the Borrower, in accordance with
Section 8.07 and in substantially the form of Exhibit C hereto.
"Available Amount" means, with respect to any Letter of Credit at any
time, the maximum amount available to be drawn under such Letter of Credit
at such time (assuming compliance at such time with all conditions to
drawing).
"Base Rate" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the
higher of:
(a) the rate of interest established by NationsBank from time to time
as its prime rate (which rate of interest may not be the lowest rate of
interest charged by NationsBank to its customers); and
(b) the Federal Funds Rate plus 0.50%.
Any change in the Base Rate resulting from a change in the prime rate
established by NationsBank shall become effective on the Business Day on
which such change in the prime rate is announced by NationsBank.
"Base Rate Advance" means an Advance that bears interest as provided
in Section 2.07(a)(i).
"Base Rate Lending Office" means, with respect to each of the Lender
Parties, the office of such Lender Party specified as its "Base Rate
Lending Office" opposite its name on Part B of Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party, as
the case may be, or such other office of such Lender Party as such Lender
Party may from time to time specify to the Borrower and the Administrative
Agent for such purpose.
"Borrower" has the meaning specified in the recital of parties to this
Agreement.
"Borrower's Account" means the account of the Borrower maintained by
the Borrower with NationsBank at its offices at 800 Market Street, St.
Louis, Missouri 63101, Account No. 010100131794, Reference: United
Industries Corporation, or such other account of the Borrower as is agreed
in writing from time to time between the Borrower and the Administrative
Agent.
"Borrowing" means a Term A Borrowing, a Term B Borrowing, a Revolving
Credit Borrowing or a Swing Line Borrowing, as the context may require.
"Business Day" means a day of the year on which banks are not required
or authorized by law to close in New York, New York or Charlotte, North
Carolina and, if the applicable Business Day relates to any Eurodollar Rate
Advances, on which dealings are carried on in U.S. dollar deposits in the
London interbank market.
"Capital Assets" means, with respect to any Person, all equipment,
fixed assets and real property or improvements of such Person, or
replacements or substitutions therefor or additions
<PAGE>
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thereto, that, in accordance with GAAP, have been or should be reflected as
additions to property, plant or equipment on the balance sheet of such
Person.
"Capital Expenditures" means, with respect to any Person for any
period, (a) all expenditures made directly or indirectly by such Person
during such period for Capital Assets (whether paid in cash or other
consideration or accrued as a liability, and including, without limitation,
all expenditures for maintenance and repairs which, in accordance with
GAAP, have been or should be capitalized on the balance sheet of such
Person) and (b) solely to the extent not otherwise included in clause (a)
of this definition, the aggregate principal amount of all Indebtedness
(including, without limitation, Obligations in respect of Capitalized
Leases) assumed or incurred during such period in connection with any such
expenditures for Capital Assets. For purposes of this definition, the
purchase price of equipment that is purchased with the trade-in of existing
equipment or the cash proceeds of the sale or other disposition of existing
equipment pursuant to Section 5.02(d)(iv) or with insurance proceeds shall
be included in Capital Expenditures only to the extent of the gross amount
by which such purchase price exceeds the credit granted by the seller of
such equipment for the equipment being traded in, the amount of the cash
proceeds of any such sale or other disposition or the amount of such
insurance proceeds, as the case may be.
"Capitalized Lease" means any lease with respect to which the lessee
is required to recognize concurrently the acquisition of property or an
asset and the incurrence of a liability in accordance with GAAP.
"Carryover Capital Expenditure Amount" has the meaning specified in
Section 5.02(g).
"Cash Collateral Account" has the meaning specified in Preliminary
Statement (3) to the Security Agreement.
"Cash Distributions" means, with respect to any Person for any period,
all dividends and other distributions on any of the outstanding Equity
Interests in such Person, all purchases, redemptions, retirements,
defeasances or other acquisitions of any of the outstanding Equity
Interests in such Person and all returns of capital to the stockholders,
partners or members (or the equivalent persons) of such Person, in each
case to the extent paid in cash by or on behalf of such Person during such
period.
"Cash Equivalents" means any of the following types of Investments, to
the extent owned by the Borrower or any of its Subsidiaries free and clear
of all Liens (other than Liens created under the Collateral Documents):
(a) readily marketable obligations issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than 360 days
from the date of acquisition thereof; provided that the full faith and
credit of the United States of America is pledged in support thereof;
(b) time deposits with, or insured certificates of deposit or
bankers' acceptances of, any commercial bank that (i) (A) is a Lender
Party or (B) is organized under the laws of the United States of
America, any state thereof or the District of Columbia, or is the
principal banking subsidiary of a bank holding company organized under
the laws of the
<PAGE>
-8-
United States of America, any state thereof or the District of
Columbia, and is a member of the Federal Reserve System, (ii) issues
(or the parent of which issues) commercial paper rated as described
below in clause (c) of this definition and (iii) has combined capital
and surplus of at least $1,000,000,000, in each case with a maturity
of not more than one year from the date of acquisition thereof;
(c) commercial paper issued by any Person organized under the
laws of any state of the United States of America and rated at least
"Prime-1" (or the then equivalent grade) by Moody's Investors Service,
Inc. or at least "A-1" (or the then equivalent grade) by Standard &
Poor's Ratings Group, in each case with a maturity of not more than
180 days from the date of acquisition thereof; and
(d) Investments, classified as Current Assets of the Borrower or
any of its Subsidiaries, in money market investment programs
registered under the Investment Company Act of 1940, as amended, which
are administered by financial institutions that have the highest
rating obtainable from either Moody's Investors Service, Inc. or
Standard & Poor's Ratings Group, and the portfolios of which are
limited solely to Investments of the character and quality described
in clauses (a), (b) and (c) of this definition, in each case with a
maturity of not more than one year from the date of such Investment.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the United States
Environmental Protection Agency.
"Change of Control" means, at any time:
(a) the THL Entities shall cease to own and control legally and
beneficially, either directly or indirectly, Voting Interests in the
Borrower representing at least 51% of the combined voting power of all
of the Voting Interests in the Borrower (on a fully diluted basis);
(b) the THL Entities shall cease to have the ability, whether by
voting power, contract or otherwise, to elect a majority of the board
of directors of the Borrower;
(c) any Lien shall be created, incurred, assumed or otherwise
suffered to exist on any of the Equity Interests in the Borrower
(other than (i) Liens consisting solely of restrictions on the sale,
transfer or other disposition of the UIC Common Stock set forth in the
Stockholders Agreement and (ii) Liens on the UIC Common Stock owned or
otherwise controlled by one of more of the Equity Investors and
representing less than 20% of the outstanding UIC Common Stock (on a
fully diluted basis)); or
(d) with respect to any pledge or other security agreement
covering all or any portion of the Equity Interests in Holdings LLC
that are owned beneficially and of record by any of the THL Entities
or their nominees, any secured party or pledgee thereunder shall
become the holder of record of any such shares (except in the case of
a registration of the
<PAGE>
-9-
pledge of such Equity Interests to such secured party or pledgee
solely in its capacity as a pledgee) or shall exercise voting or other
consensual rights in respect thereof (whether by proxy, voting or
other similar arrangement or otherwise), or shall otherwise commence
to realize upon such shares.
"CIBC" has the meaning specified in the recital of parties to this
Agreement.
"Clean-Down Period" means a period of 30 consecutive days occurring
during the period between August 1 and November 30 in each calendar year.
"Closing Date" means January 20, 1999, the date on which the Initial
Extension of Credit occurred following the satisfaction of all of the
conditions precedent thereto set forth in Sections 3.01 and 3.03.
"Co-Arrangers" has the meaning specified in the recital of parties to
this Agreement.
"Collateral" means all of the "Collateral" referred to in the
Collateral Documents and all of the other property and assets that are or
are intended under the terms of the Collateral Documents to be subject to
Liens in favor of the Administrative Agent for the benefit of the Secured
Parties.
"Collateral Documents" means, collectively, the Security Agreement,
each of the mortgages, collateral assignments, Security Agreement
Supplements, security agreements, pledge agreements or other similar
agreements delivered to the Administrative Agent and the Lender Parties
pursuant to Section 5.01(k) or 5.02(k), and each of the other agreements
that creates or purports to create a Lien in favor of the Administrative
Agent for the benefit of the Secured Parties.
"Commitment" means a Term A Commitment, a Term B Commitment, a
Revolving Credit Commitment, a Swing Line Commitment or a Letter of Credit
Commitment, as the context may require.
"Commitment Date" has the meaning specified in Section 2.06(b)(vii).
"Commitment Fee" has the meaning specified in Section 2.08(a).
"Confidential Information" means any information that is furnished to
any of the Agents or any of the Lender Parties by or on behalf of the
Borrower or any of its Subsidiaries in a writing that either is
conspicuously marked as confidential or that a reasonable person would
believe is confidential or proprietary in nature, but does not include any
such information that (a) is or becomes generally available to the public
(other than as a result of a breach by any such Agent or any such Lender
Party of its confidentiality obligations under this Agreement) or (b) is or
becomes available to any of the Agents or any of the Lender Parties from a
source other than the Borrower or any of its Subsidiaries that is not, to
the knowledge of such Agent or such Lender Party, acting in violation of a
confidentiality agreement with the Borrower or any such Subsidiary.
"Consolidated" refers to the consolidation of accounts in accordance
with GAAP.
<PAGE>
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"Consolidated Cash Interest Expense" means, with respect to any Person
for any period, the interest expense paid or payable on all Indebtedness of
such Person and its Subsidiaries (net of all interest income of such Person
and its Subsidiaries) for such period, determined on a Consolidated basis
and in accordance with GAAP, including, without limitation, (a) in the case
of the Borrower, (i) interest expense paid or payable in respect of
Indebtedness resulting from Advances and (ii) all fees paid or payable
pursuant to Section 2.08(a), (b) the interest component of all Obligations
in respect of Capitalized Leases, (c) commissions, discounts and other fees
and charges paid or payable in connection with letters of credit
(including, without limitation, the Letters of Credit) and (d) the net
payment, if any, paid or payable in connection with Hedge Agreements less
the net credit, if any, received in connection with Hedge Agreements, but
excluding (A) any amortization of original issue discount, (B) the interest
portion of any deferred payment obligation and (C) any other interest not
payable in cash.
"Consolidated EBITDA" means, with respect to any Person for any
period, (a) the Consolidated Net Income of such Person and its Subsidiaries
for such period plus (b) the sum of each of the following expenses that
have been deducted from the determination of the Consolidated Net Income of
such Person and its Subsidiaries for such period: (i) all interest expense
of such Person and its Subsidiaries (net of (A) all interest income of such
Person and its Subsidiaries for such period and (B) solely to the extent
otherwise excluded from the determination of the Consolidated interest
expense of such Person and its Subsidiaries for such period in accordance
with GAAP, any unrealized gains or losses on any interest rate Hedge
Agreements of such Person and its Subsidiaries resulting from the
mark-to-market value thereof as of the last day of such period), (ii) all
income tax expense (whether federal, state, local, foreign or otherwise) of
such Person and its Subsidiaries for such period, (iii) all depreciation
expense of such Person and its Subsidiaries for such period, (iv) all
amortization expense of such Person and its Subsidiaries for such period
and (v)(A) all noncash losses and noncash charges otherwise deducted from
the determination of the Consolidated Net Income of such Person and its
Subsidiaries for such period (other than any such noncash losses or noncash
charges that require an accrual or reserve for cash charges or cash
expenses paid or payable (or to be paid or payable) at any time during such
period and any write-downs or write-offs of accounts receivables) less (B)
all noncash gains and noncash credits otherwise added in the determination
of the Consolidated Net Income of such Person and its Subsidiaries for such
period, in each case determined on a Consolidated basis and in accordance
with GAAP for such period; provided, however, that, in the case of the
Borrower and its Subsidiaries, Consolidated EBITDA shall be increased to
include, solely to the extent any such amount is otherwise deducted in the
determination of the Consolidated Net Income of the Borrower and its
Subsidiaries for such period, (A) any nonrecurring cash restructuring
charges taken in accordance with GAAP in connection with the consummation
of the Recapitalization, (B) the aggregate amount of all transaction fees
paid in cash to the THL Entities during such period to the extent otherwise
permitted under Section 5.01(j)(vi) and (C) the nonrecurring cash charges
taken in accordance with GAAP during the Fiscal Year ended December 31,
1998 for severance payments to, and redemptions and repurchases of
outstanding UIC Common Stock (or warrants, rights or options to acquire UIC
Common Stock) from, former senior officers of the Borrower in an aggregate
amount of $2,955,000.
"Consolidated Net Income" means, for any period, the net income (or
net loss) of any Person and its Subsidiaries for such period, determined on
a Consolidated basis and in accordance with GAAP, but excluding for each
such period (without duplication):
<PAGE>
-11-
(a) the income (or loss) of any other Person accrued prior to the
date on which it became a Subsidiary of such Person or was merged into
or consolidated with such Person or any of its Subsidiaries or all or
substantially all of the property and assets of such other Person were
acquired by such Person or any of its Subsidiaries;
(b) the income (or loss) of any other Person (other than a
Subsidiary of such Person) in which a Person other than such Person or
any of its Subsidiaries owns or otherwise holds an Equity Interest,
except to the extent such income (or loss) shall have been received in
the form of cash dividends or other distributions actually paid to
such Person or any of its Subsidiaries by such other Person during
such period;
(c) the income of any Subsidiary of such Person to the extent
that the declaration or payment of any dividends or other
distributions of such income by such Subsidiary is not permitted to be
made or paid (whether by contract or otherwise) on the last day of
such period;
(d) any gains or losses (on an after-tax basis) attributable to
the sale, lease, transfer or other disposition of any property or
assets of such Person or any of its Subsidiaries (other than inventory
sold in the ordinary course of business of such Person or its
applicable Subsidiary);
(e) any earnings or charges resulting from the write-up or
write-down of any property or assets of such Person or any of its
Subsidiaries other than in the ordinary course of business; and
(f) any gains attributable to the collection of proceeds of
insurance policies (other than any such proceeds collected from the
business interruption insurance policies of such Person or any of its
Subsidiaries during such period which are applied to the recoupment of
losses otherwise included in the determination of the Consolidated Net
Income of such Person and its Subsidiaries for such period).
"Constitutive Documents" means, with respect to any Person, the
certificate of incorporation, formation or registration (including, if
applicable, certificate of change of name), articles of incorporation or
association, memorandum of association, charter, bylaws, partnership
agreement, trust agreement, limited liability company operating or members
agreement, joint venture agreement or one or more similar agreements,
instruments or documents constituting the organization or formation of such
Person.
"Consulting Agreements" means (a) the Consulting Agreement dated as of
January 20, 1999 between the Borrower and David Pratt and (b) the
Consulting Agreement dated as of January 20, 1999 among the Borrower and
David Jones, in each case as such agreement may be amended, supplemented or
otherwise modified hereafter from time to time in accordance with the terms
thereof, but solely to the extent permitted under the terms of the Loan
Documents.
"Contingent Obligation" means, with respect to any Person, any
obligation of such Person to guarantee or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly
<PAGE>
-12-
or indirectly, including, without limitation, (a) the direct or indirect
guaranty, endorsement (other than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of a primary obligor, (b) the
obligation to make take-or-pay or similar payments, if required, regardless
of nonperformance by any other party or parties to an agreement or (c) any
obligation of such 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 (A) for the purchase or
payment of any such primary obligation or (B) to maintain working capital,
equity capital, net worth or any other balance sheet condition or any
income statement condition of the primary obligor or otherwise to maintain
the solvency of the primary obligor, (iii) to purchase, lease or otherwise
acquire property, assets, 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 holder of such primary obligation
against loss in respect thereof. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Contingent Obligation is
made (or, if less, the maximum amount of such primary obligation for which
such Person may be liable pursuant to the terms of the agreement,
instrument or other document evidencing such Contingent Obligation) or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder),
as determined by such Person in good faith.
"Conversion", "Convert" and "Converted" each refers to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section
2.09 or 2.10.
"Copyrights" has the meaning specified in Section 1(h) of the Security
Agreement.
"Current Assets" means, with respect to any Person, all assets of such
Person that, in accordance with GAAP, would be classified as current assets
on the balance sheet of a Person conducting a business the same as or
similar to that of such Person, after deducting appropriate and adequate
reserves therefrom in accordance with GAAP.
"Current Liabilities" means, with respect to any Person, (a) all
Indebtedness of such Person that by its terms is payable on demand or
matures within one year after the date of determination (excluding any
Indebtedness renewable or extendible, at the option of such Person, to a
date more than one year from such date or arising under a revolving credit
or similar agreement that obligates the lender or lenders to extend credit
during a period of more than one year from such date), (b) all amounts of
Funded Indebtedness of such Person required to be paid or prepaid within
one year after such date and (c) all other items (including, without
limitation, taxes accrued as estimated and trade payables otherwise
excluded from Indebtedness under clause (b) of the definition thereof set
forth below in this Section 1.01) that, in accordance with GAAP, would be
classified on the balance sheet of such Person as current liabilities of
such Person.
"Declined Prepayment Amount" has the meaning specified in Section
2.06(b)(ix).
"Declining Term B Lender" has the meaning specified in Section
2.06(b)(ix).
<PAGE>
-13-
"Default" means any Event of Default or any event or condition that
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Defaulted Advance" means, with respect to any of the Lender Parties
at any time, the portion of any Advance required to be made by such Lender
Party to the Borrower pursuant to Section 2.01 at or prior to such time
that has not been made by such Lender Party or by the Administrative Agent
for the account of such Lender Party pursuant to Section 2.02(e) as of such
time. If a portion of a Defaulted Advance shall be deemed made pursuant to
Section 2.14(a), the remaining portion of such Defaulted Advance shall be
considered a Defaulted Advance originally required to be made pursuant to
Section 2.01 on the same date as the Defaulted Advance so deemed made in
part.
"Defaulted Amount" means, with respect to any of the Lender Parties at
any time, any amount required to be paid by such Lender Party to the
Administrative Agent or any of the other Lender Parties under this
Agreement or any of the other Loan Documents at or prior to such time that
has not been so paid as of such time, including, without limitation, any
amount required to be paid by such Lender Party to (a) the Swing Line Bank
pursuant to Section 2.02(b)(ii) to purchase a portion of a Swing Line
Advance made by the Swing Line Bank, (b) the Issuing Bank pursuant to
Section 2.03(c)(i) to purchase a portion of a Letter of Credit Advance made
by the Issuing Bank, (c) the Administrative Agent pursuant to Section
2.02(e) to reimburse the Administrative Agent for the amount of any Advance
made by the Administrative Agent for the account of such Lender Party, (d)
any of the other Lender Parties pursuant to Section 2.13 to purchase any
participation in Advances owing to such other Lender Party and (e) the
Administrative Agent or the Issuing Bank pursuant to Section 7.05 to
reimburse the Administrative Agent or the Issuing Bank, as the case may be,
for such Lender Party's ratable share of any amount required to be paid by
the Lender Parties to the Administrative Agent or the Issuing Bank as
provided therein. If a portion of a Defaulted Amount shall be deemed paid
pursuant to Section 2.14(b), the remaining portion of such Defaulted Amount
shall be considered a Defaulted Amount originally required to be paid under
this Agreement or any of the other applicable Loan Documents on the same
date as the Defaulted Amount so deemed paid in part.
"Defaulting Lender" means, at any time, any of the Lender Parties
that, at such time, (a) owes a Defaulted Advance or a Defaulted Amount or
(b) shall take any action or be the subject of any action or proceeding of
a type described in Section 6.01(f).
"Disclosed Litigation" has the meaning specified in Section 3.02(b).
"Documentation Agent" has the meaning specified in the recital of
parties to this Agreement.
"Domestic Subsidiary" means, at any time, each of the direct or
indirect Subsidiaries of the Borrower that is incorporated or organized
under the laws of any state of the United States of America or the District
of Columbia.
"DW" has the meaning specified in Preliminary Statement (2) to this
Agreement.
"Effective Date" has the meaning specified in Section 3.02.
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"Eligible Assignee" means (a) with respect to either of the Term
Facilities or the Revolving Credit Facility, (i) a Lender; (ii) an
affiliate or an Approved Fund of a Lender; or (iii) any other Person
approved by the Administrative Agent and, so long as no Default under
Section 6.01(a) or 6.01(f) or Event of Default has occurred and is
continuing at the time the related assignment is effected pursuant to
Section 8.07, the Borrower (in either case such approval not to be
unreasonably withheld or delayed and, in the case of the Borrower, such
approval to be deemed to have been given if no objection thereto is
received by the Administrative Agent and the assigning Lender within two
Business Days after the date on which notice of the proposed assignment is
received by the Borrower); and (b) with respect to the Letter of Credit
Facility, a Person that is an Eligible Assignee under clause (a) of this
definition and is a commercial bank organized under the laws of the United
States of America or any state thereof; provided, however, that neither any
of the Loan Parties nor any of the Affiliates of a Loan Party shall qualify
as an Eligible Assignee under this definition.
"Employees Note" has the meaning specified in Preliminary Statement
(3) to this Agreement.
"Environmental Action" means any action, suit, demand, demand letter,
claim, notice of noncompliance or violation, notice of liability or
potential liability, investigation, proceeding, consent order or consent
agreement, abatement order or other order or directive (conditional or
otherwise) relating in any way to any Environmental Law, any Environmental
Permit or any Hazardous Materials or arising from alleged injury or threat
to health, safety, natural resources or the environment, including, without
limitation, (a) by any Governmental Authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b) by any
applicable Governmental Authority or other third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive
relief.
"Environmental Law" means any Requirement of Law, any judicial or
agency interpretation, policy or guideline having the force or effect of
law or any other requirement of any Governmental Authority relating to (a)
the generation, use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Materials, (b) the protection
of the environment, occupational health or safety or natural resources or
(c) pollution (including, without limitation , any release to land, surface
water, ground water or any other medium), including CERCLA, the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act
(42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
ss. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act
(7 U.S.C. ss. 136 et seq.), the Occupational Safety and Health Act (29
U.S.C. ss. 651 et seq.), the Oil Pollution Act (33 U.S.C. ss. 2701 et seq.)
and the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss.
11001 et seq.), in each case as amended from time to time, and including
the regulations promulgated and the rulings issued from time to time
thereunder.
"Environmental Permit" means any permit, approval, license,
identification number or other authorization required under any
Environmental Law.
"Equity Interests" means, with respect to any Person, all of the
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
other acquisition from such Person of shares of capital stock of (or other
ownership or
<PAGE>
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profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase
or other acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust
interests therein), whether voting or nonvoting, and whether or not such
shares, warrants, options, rights or other interests are authorized or
otherwise existing on any date of determination.
"Equity Investors" means, at any time, Holdings LLC and each other
Person that owns or otherwise holds any of the UIC Common Stock or the
Permitted Preferred Stock at such time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued from time to time thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of any of the Loan Parties, or
under common control with any of the Loan Parties, within the meaning of
Section 414 of the Internal Revenue Code.
"ERISA Event" means:
(a) (i) the occurrence of a reportable event, within the meaning
of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the
PBGC or (ii) the requirements of Section 4043(b) of ERISA apply with
respect to a contributing sponsor, as defined in Section 4001(a)(13)
of ERISA, of a Plan, and an event described in paragraph (9), (10),
(11), (12) or (13) of Section 4043(c) of ERISA could reasonably be
expected to occur with respect to such Plan within the following 30
days;
(b) the application for a minimum funding waiver with respect to
a Plan;
(c) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred
to in Section 4041(e) of ERISA);
(d) the cessation of operations at a facility of any of the Loan
Parties or any of the ERISA Affiliates in the circumstances described
in Section 4062(e) of ERISA;
(e) the withdrawal by any of the Loan Parties or any of the ERISA
Affiliates from a Multiple Employer Plan during a plan year for which
it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA;
(f) the conditions for imposition of a lien under Section 302(f)
of ERISA shall have been met with respect to any Plan;
(g) the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA;
or
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(h) the institution by the PBGC of proceedings to terminate a
Plan pursuant to Section 4042 of ERISA, or the occurrence of any event
or condition described in Section 4042 of ERISA that constitutes
grounds for the termination of, or the appointment of a trustee to
administer, a Plan.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to each of the
Lenders, the office of such Lender specified as its "Eurodollar Lending
Office" opposite its name on Part B of Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender, as the case
may be (or, if no such office is specified, its Base Rate Lending Office),
or such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Administrative Agent for such purpose.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing, an interest rate per
annum equal to the rate per annum (rounded upwards, if necessary, to the
nearest 1/00 of 1%) obtained by dividing (a) the rate per annum at which
deposits in U.S. dollars appear on page 3750 (or any successor page
thereto) of the Dow Jones Markets Telerate Screen two Business Days before
the first day of such Interest Period and for a term comparable to such
Interest Period or, if such rate does not so appear on the Dow Jones
Markets Telerate Screen on any date of determination, on the Reuters Screen
LIBO Page two Business Days before the first day of such Interest Period
and for a term comparable to such Interest Period by (b) a percentage equal
to 100% minus the Eurodollar Rate Reserve Percentage for such Interest
Period; provided, however, that, if the Reuters Screen LIBO Page is being
used to determine the Eurodollar Rate at any date of determination and more
than one rate is specified thereon as the London interbank offered rate for
deposits in U.S. dollars for a term comparable to such Interest Period, the
applicable rate shall be the arithmetic mean (rounded upward, if necessary,
to the nearest whole multiple of 1/100 of 1% per annum) of all such rates.
"Eurodollar Rate Advance" means an Advance that bears interest as
provided in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" means, for any Interest Period
for all of the Eurodollar Rate Advances comprising part of the same
Borrowing, the reserve percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any
successor thereto) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve
System in New York, New York with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to any
other category of liabilities that includes deposits by reference to which
the interest rate on Eurodollar Rate Advances is determined) having a term
comparable to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Cash Flow" means, for any period (without duplication):
<PAGE>
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(a) Consolidated pre-tax income (or pre-tax loss) of the Borrower
and its Subsidiaries for such period, less
(b) Consolidated income tax and franchise tax expense of the
Borrower and its Subsidiaries for such period, plus
(c) an amount equal to the aggregate amount of all noncash
charges deducted in determining the Consolidated Net Income of the
Borrower and its Subsidiaries for such period, plus
(d) an amount (whether positive or negative) equal to the change
in Consolidated Current Liabilities of the Borrower and its
Subsidiaries during such period, less
(e) an amount equal to the aggregate amount of all noncash
credits included in determining the Consolidated Net Income of the
Borrower and its Subsidiaries for such period, less
(f) an amount (whether positive or negative) equal to the change
in Consolidated Current Assets (excluding cash and Cash Equivalents)
of the Borrower and its Subsidiaries during such period, less
(g) an amount equal to the aggregate amount of all Capital
Expenditures made in cash by the Borrower and its Subsidiaries during
such period, less
(h) to the extent not otherwise excluded from the determination of Excess
Cash Flow for such period, an amount equal to the aggregate cash
consideration paid by the Borrower and its Subsidiaries during such
period to any Person other than the Borrower or any of its Affiliates
for the purchase or other acquisition of Equity Interests in, or
property and assets of, any other Person in accordance with Section
5.02(e)(ix) or 5.02(e)(x), less
(i) to the extent not otherwise excluded from the determination
of Excess Cash Flow for such period, an amount equal to the aggregate
amount of all indemnification payments (A) made to the Seller for the
incremental tax liability incurred thereby as a result of the election
by the Borrower under Section 338(H)(10) of the Internal Revenue Code
in connection with the consummation of the Recapitalization in an
amount not to exceed $12,000,000 and (B) made by the Borrower and its
Subsidiaries during such period to one or more purchasers of property
and assets thereof that have been sold, leased, transferred or
otherwise disposed of pursuant to Section 5.02(d)(viii) or 5.02(d)(ix)
for liabilities existing prior to the date of consummation of such
sale, lease, transfer or other disposition, provided that the
indemnification obligations giving rise to such payments were included
in the original documentation for such sale, lease, transfer or other
disposition, less
(j) an amount equal to the aggregate amount of all Scheduled
Principal Payments made by the Borrower and its Subsidiaries, and the
aggregate principal amount of all optional prepayments of Advances
made pursuant to Section 2.06(a) and all mandatory prepayments of
Advances made pursuant to Sections 2.06(b)(i), 2.06(b)(ii) and
2.06(b)(vii),
<PAGE>
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during such period (so long as each such optional and mandatory
prepayment resulted in a corresponding permanent commitment reduction
at the time of such prepayment), less
(k) an amount equal to the aggregate amount of all Cash
Distributions paid by the Borrower during such period.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder.
"Existing Advances" has the meaning specified in Preliminary Statement
(5) to this Agreement.
"Existing Credit Agreement" has the meaning specified in Preliminary
Statement (4) to this Agreement.
"Existing Lenders" has the meaning specified in Preliminary Statement
(4) to this Agreement.
"Existing Letters of Credit" means the irrevocable standby letters of
credit and trade letters of credit issued by the Issuing Bank under the
terms of the Existing Credit Agreement and outstanding on the Effective
Date, in each case as more fully described on Part A of Schedule I hereto.
"Existing Revolving Credit Advances" means the Existing Advances that
constitute "Revolving Credit Advances" under the Existing Credit Agreement
and are outstanding on the Effective Date immediately prior to giving
effect to the assignments and assumptions thereof described in Section
2.01(c).
"Existing Term A Advances" means the Existing Advances that constitute
"Term A Advances" under the Existing Credit Agreement and are outstanding
on the Effective Date immediately prior to giving effect to the assignments
and assumptions thereof described in Section 2.01(a)
"Existing Term B Advances" means the Existing Advances that constitute
"Term B Advances" under the Existing Credit Agreement and are outstanding
on the Effective Date immediately prior to giving effect to the assignments
and assumptions thereof described in Section 2.01(b)
"Extraordinary Receipt" means any cash received by or paid to or for
the account of any Person other than in the ordinary course of business,
including, without limitation, tax refunds, pension plan reversions,
proceeds of insurance (other than proceeds of business interruption
insurance to the extent such proceeds constitute compensation for lost
earnings), condemnation awards (and payments in lieu thereof), indemnity
payments, purchase price adjustments received in connection with any
purchase agreement (or other similar agreement) and payments in respect of
judgments or settlements of claims, litigation or proceedings; provided,
however, that Extraordinary Receipts shall not include cash receipts
received from proceeds of insurance, condemnation awards (or payments in
lieu thereof), indemnity payments or payments in respect of judgments or
<PAGE>
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settlements of claims, litigation or proceedings to the extent that such
proceeds, awards or payments (a) are received by any Person in respect of
any third party claim against or loss by such Person and promptly applied
to pay (or to reimburse such Person for its prior payment of) such claim or
loss and the costs and expenses of such Person with respect thereto and (b)
are applied (or are in respect of expenditures that were previously
incurred) to replace or repair Capital Assets in respect of which such
proceeds were received (or to reimburse such amounts previously paid), in
each case in accordance with the terms of the Loan Documents and so long as
such application is commenced within 270 days after the receipt of such
proceeds, awards or payments; provided that, in the case of clause (a) or
(b) of this definition, any third party being so reimbursed shall not be a
Loan Party or an Affiliate of a Loan Party.
"Facility" means the Term A Facility, the Term B Facility, the
Revolving Credit Facility, the Swing Line Facility or the Letter of Credit
Facility, as the context may require.
"Fair Market Value" means, with respect to any property or assets
(including, without limitation, any of the Equity Interests) of any Person
on any date of determination, the value of the consideration obtainable in
a sale of such property or asset in the open market on such date assuming
an arm's-length sale that has been arranged without duress or compulsion
between a willing seller and a willing and knowledgeable purchaser in a
commercially reasonable manner over a reasonable period of time under all
conditions necessary or desirable for a fair sale (taking into account the
nature and characteristics of such property or asset); provided that the
Fair Market Value of any of the property or assets of any of the Loan
Parties or any of their respective Subsidiaries shall be determined in good
faith by the board of directors (or the persons performing similar
functions) of such Loan Party or such Subsidiary, as the case may be, and
certified by a Responsible Officer of such Loan Party or such Subsidiary in
a certificate delivered to the Administrative Agent, on behalf of the
Lender Parties.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates (rounded upward, if necessary, to the nearest whole
multiple of 1/100 of 1% per annum) on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published for such day (or, if such day is not a Business Day,
for the immediately preceding Business Day) by the Federal Reserve Bank of
New York or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"Fiscal Quarter" means, with respect to the Borrower or any of its
Subsidiaries, the period commencing January 1 in any Fiscal Year and ending
on the next succeeding March 31, the period commencing April 1 in any
Fiscal Year and ending on the next succeeding June 30, the period
commencing July 1 in any Fiscal Year and ending on the next succeeding
September 30 or the period commencing October 1 in any Fiscal Year and
ending on the next succeeding December 31, as the context may require, or,
if any such Subsidiary was not in existence on the first day of any such
period, the period commencing on the date on which such Subsidiary is
incorporated, organized, formed or otherwise created and ending on the last
day of such period.
"Fiscal Year" means, with respect to the Borrower or any of its
Subsidiaries, the period commencing on January 1 in any calendar year and
ending on the next succeeding December 31 or,
<PAGE>
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if any such Subsidiary was not in existence on January 1 in any calendar
year, the period commencing on the date on which such Subsidiary is
incorporated, organized, formed or otherwise created and ending on the next
succeeding December 31.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (a)
(i) Consolidated EBITDA of the Borrower and its Subsidiaries (or, solely
for purposes of determining compliance with the applicable requirements of
Section 5.02(c), 5.02(d) or 5.02(e), Pro Forma Consolidated EBITDA) for
such period less (ii) the aggregate amount of all Capital Expenditures made
in cash by or on behalf of the Borrower and its Subsidiaries during such
period to (b) the sum of (i) Consolidated Cash Interest Expense of the
Borrower and its Subsidiaries for such period, (ii) the aggregate principal
amount (or the equivalent thereto) of all Scheduled Principal Payments of
the Borrower and its Subsidiaries for such period and (iii) the aggregate
amount of all Cash Distributions made by or on behalf of the Borrower
during such period (other than redemptions or repurchases of UIC Common
Stock, or warrants, rights or options to acquire UIC Common Stock, from
retired, terminated, deceased or departing executives and managers made
during such period to the extent otherwise permitted under Section
5.02(f)(vii)); provided that, solely for the purposes of determining the
Fixed Charge Coverage Ratio for the first three Measurement Periods ending
after the Closing Date, (A) the Consolidated Cash Interest Expense of the
Borrower and its Subsidiaries for such Measurement Period shall be equal to
(1) the Consolidated Cash Interest Expense for the completed Fiscal
Quarters since the Closing Date multiplied by (2) a fraction the numerator
of which is four and the denominator of which is equal to the number of
completed Fiscal Quarters since the Closing Date and (B) the aggregate
principal amount of all Scheduled Principal Payments of the Borrower and
its Subsidiaries for such Measurement Period shall be the aggregate
principal amount of all Advances scheduled to be repaid under Sections
2.04(a) and 2.04(b) during the period from the Closing Date to the first
anniversary thereof; and provided further that, solely for purposes of
determining the Fixed Charge Coverage Ratio for the first four Measurement
Periods ending after the Closing Date, the Consolidated Cash Interest
Expense of the Borrower and its Subsidiaries for such Measurement Period
shall be increased by $2,000,000.
"Foreign Corporation" means each Foreign Subsidiary that constitutes a
"controlled foreign corporation" under Section 957 of the Internal Revenue
Code.
"Foreign Subsidiary" means, at any time, each of the direct or
indirect Subsidiaries of the Borrower that is not a Domestic Subsidiary at
such time.
"Funded Indebtedness" means, with respect to any Person (without
duplication), Indebtedness in respect of the Advances in the case of the
Borrower, and all other Indebtedness of such Person that by its terms
matures more than one year after any date of determination or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year after such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
after such date, in each case determined on a Consolidated basis in
accordance with GAAP; provided, however, that the term "Funded
Indebtedness" shall not include any Contingent Obligations of such Person
(if and to the extent such Contingent Obligations would otherwise be
included in such term on any date of determination) that are incurred
solely to support Indebtedness of one or more Subsidiaries of such Person
so long as such Contingent Obligations are otherwise expressly permitted to
be incurred under the terms of the Loan Documents.
<PAGE>
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"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America and applied on a consistent
basis, subject, however, to the terms of Section 1.03.
"Governmental Authority" means any nation or government, any state,
province, city, municipal entity or other political subdivision thereof,
and any governmental, executive, legislative, judicial, administrative or
regulatory agency, department, authority, instrumentality, commission,
board or similar body, whether federal, state, territorial, local or
foreign.
"Governmental Authorization" means any authorization, approval,
consent, franchise, license, covenant, order, ruling, permit,
certification, exemption, notice, declaration or similar right, undertaking
or other action of, to or by, or any filing, qualification or registration
with, any Governmental Authority.
"Guarantee Supplement" has the meaning specified in Section 8 of the
Subsidiaries Guarantee.
"Guaranteed Obligations" has the meaning specified in Section 1(a) of
the Subsidiaries Guarantee.
"Hazardous Materials" means: (a) any chemical, material or substance
at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste", "acutely hazardous waste", "radioactive waste",
"biohazardous waste", "pollutant", "toxic pollutant", "contaminant",
"restricted hazardous waste", "infectious waste", "toxic substances", or
any other term or expression intended to define, list or classify
substances by reason of properties harmful to health, safety or the indoor
or outdoor environment (including, without limitation, such harmful
properties as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words
of similar meaning and regulatory effect under any applicable Environmental
Laws); (b) any oil, petroleum, petroleum fraction or petroleum derived
substance; (c) any drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil,
natural gas or geothermal resources; (d) any flammable substances or
explosives; (e) any radioactive materials; (f) any asbestos-containing
materials; (g) any urea formaldehyde foam insulation; (h) any electrical
equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls; (i) any pesticides; (j) any radon gas; and (k)
any other chemical, material or substance designated, classified or
regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.
"Hedge Agreements" means, collectively, interest rate swap, cap or
collar agreements, interest rate future or option contracts, commodity
future or option contracts, currency swap agreements, currency future or
option contracts and other similar agreements.
"Hedge Bank" means any Person that is a Lender Party or an affiliate
of a Lender Party, in its capacity as a party to a Secured Hedge Agreement.
"Holdings LLC" has the meaning specified in Preliminary Statement (1)
to this Agreement.
<PAGE>
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"Holdings LLC Agreement" has the meaning specified in Section
3.02(e)(iii).
"Indebtedness" means, with respect to any Person (without
duplication):
(a) all indebtedness of such Person for borrowed money;
(b) all Obligations of such Person for the deferred purchase
price of property and assets or services (other than trade payables or
other accounts payable incurred in the ordinary course of such
Person's business and not past due, by their respective terms, for
more than 90 days);
(c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, or upon which interest
payments are customarily made;
(d) all Obligations of such Person created or arising under any
conditional sale or other title retention agreement with respect to
property or assets acquired by such Person (even though the rights and
remedies of the seller or the lender under such agreement in the event
of default are limited to repossession or sale of such property or
assets);
(e) all Obligations of such Person as lessee under Capitalized
Leases;
(f) all Obligations, contingent or otherwise, of such Person
under acceptance, letter of credit or similar facilities;
(g) all Obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Equity
Interests in such Person or any other Person, valued, in the case of
Redeemable Preferred Interests, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends;
(h) all Obligations, contingent or otherwise, of such Person in
respect of Hedge Agreements, in each case valued at the Agreement
Value thereof, take-or-pay agreements or other similar agreements;
(i) all Obligations of such Person under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing, if the transaction giving rise to such
Obligation is considered indebtedness for borrowed money for tax
purposes but is classified as an operating lease in accordance with
GAAP;
(j) all Contingent Obligations of such Person; and
(k) all Indebtedness referred to in clauses (a) through (j) above
and other payment Obligations of another Person secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property or
assets (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness or other payment
Obligations, valued, in the case of any such Indebtedness as to which
recourse for the payment thereof is expressly limited to the
<PAGE>
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property or assets on which such Lien is granted, at the lesser of (i)
the stated or determinable amount of the Indebtedness that is so
secured or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) and (ii) the Fair Market Value of such
property or assets.
The Indebtedness of any Person shall include (i) all Obligations of the
types described in clauses (a) through (k) above of any partnership in
which such Person is a general partner and (ii) all Obligations of the
types described in clauses (a) through (k) above of such Person to the
extent such Person remains legally liable in respect thereof,
notwithstanding that any such Obligation is deemed to be extinguished under
GAAP at any date of determination.
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Initial Extension of Credit" means, collectively, the initial
Borrowings made under one or more of the Facilities and/or the initial
issuances of one or more Letters of Credit made on the Closing Date.
"Initial Issuing Bank" has the meaning specified in the recital of
parties to this Agreement.
"Initial Lenders" has the meaning specified in the recital of parties
to this Agreement.
"Initial Pledged Indebtedness" has the meaning specified in
Preliminary Statement (2) of the Security Agreement.
"Initial Pledged Interests" has the meaning specified in Preliminary
Statement (2) of the Security Agreement.
"Interest Coverage Ratio" means, for any period, the ratio of (a)
Consolidated EBITDA of the Borrower and its Subsidiaries (or, solely for
purposes of determining compliance with the applicable requirements of
Section 5.02(c), 5.02(d) or 5.02(e), Pro Forma Consolidated EBITDA) for
such period to (b) Consolidated Cash Interest Expense of the Borrower and
its Subsidiaries for such period; provided that, solely for the purposes of
determining the Interest Coverage Ratio for the first three Measurement
Periods ending after the Closing Date, the Consolidated Cash Interest
Expense of the Borrower and its Subsidiaries for such Measurement Period
shall be equal to (A) the Consolidated Cash Interest Expense for the
completed Fiscal Quarters since the Closing Date multiplied by (B) a
fraction the numerator of which is four and the denominator of which is
equal to the number of completed Fiscal Quarters since the Closing Date;
and provided further that, solely for purposes of determining the Interest
Coverage Ratio for the first four Measurement Periods ending after the
Closing Date, the Consolidated Cash Interest Expense of the Borrower and
its Subsidiaries for such Measurement Period shall be increased by
$2,000,000.
"Interest Period" means, for each of the Eurodollar Rate Advances
comprising part of the same Borrowing, the period commencing on the date of
such Eurodollar Rate Advance or the date of the Conversion of any Base Rate
Advance into such Eurodollar Rate Advance, as the case may be, and ending
on the last day of the period selected by the Borrower pursuant to the
provisions set forth below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant
<PAGE>
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to the provisions set forth below. The duration of each such Interest
Period shall be one, two, three or six months and, subject to clause (c) of
this definition, nine or twelve months as the Borrower may, upon notice
received by the Administrative Agent not later than 1:00 P.M. (Charlotte,
North Carolina time) on the third Business Day prior to the first day of
such Interest Period, select; provided, however, that:
(a) the Borrower may not select any Interest Period with respect
to any Eurodollar Rate Advance under a Facility that ends after (i)
any principal repayment installment date for such Facility unless,
after giving effect to such selection, the aggregate principal amount
of Base Rate Advances and of Eurodollar Rate Advances having Interest
Periods that end on or prior to such principal repayment installment
date for such Facility shall be at least equal to the aggregate
principal amount of Advances under such Facility due and payable on or
prior to such date or (ii) the scheduled Termination Date for such
Facility;
(b) Interest Periods commencing on the same date for Eurodollar
Rate Advances comprising part of the same Borrowing shall be of the
same duration;
(c) the Borrower shall not be entitled to select an Interest
Period having a duration of nine or twelve months unless, by 3:00 P.M.
(New York City time) on the third Business Day prior to the first day
of such Interest Period, each of the Appropriate Lenders notifies the
Administrative Agent that such Lender will be providing funding for
such Borrowing with such Interest Period (the failure of any of the
Appropriate Lenders to so respond by such time being deemed for all
purposes of this Agreement as an objection by such Lender to the
requested duration of such Interest Period); provided that if any of
the Appropriate Lenders objects (or is deemed to have objected) to the
requested duration of such Interest Period, the duration of the
Interest Period for such Borrowing shall be one, two, three or six
months, as specified by the Borrower in the applicable Notice of
Borrowing or Notice of Conversion as the desired alternative to the
requested Interest Period of nine or twelve months therefor;
(d) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding
Business Day; provided, however, that if such extension would cause
the last day of such Interest Period to occur in the next succeeding
calendar month, the last day of such Interest Period shall occur on
the immediately preceding Business Day; and
(e) whenever the first day of any Interest Period occurs on a day
of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"Investment" means, with respect to any Person, (a) any direct or
indirect purchase or other acquisition (whether for cash, securities,
property, services or otherwise) by such Person of, or of
<PAGE>
-25-
a beneficial interest in, any Equity Interests or Indebtedness of any other
Person, (b) any direct or indirect purchase or other acquisition (whether
for cash, securities, property, services or otherwise) by such Person of
all or substantially all of the property and assets of any other Person or
of any division, branch or other unit of operation of any other Person, (c)
any direct or indirect redemption, retirement, purchase or other
acquisition for value by such Person from any other Person of any Equity
Interests in such Person, (d) the making of a deposit by such Person with,
or any direct or indirect loan, advance, other extension of credit or
capital contribution by such Person to, or any other investment by such
Person in, any other Person (including, without limitation, any
indebtedness or accounts receivable from such other Person that are not
current assets or did not arise from sales to such other Person in the
ordinary course of business and any arrangement pursuant to which the
investor incurs Indebtedness of the types referred to in clause (j) or (k)
of the definition of "Indebtedness" set forth above in this Section 1.01 in
respect of such other Person) and (e) any agreement to make any Investment
(including any "short sale" or any sale of any securities at a time when
such securities are not owned by the Person entering into such sale). The
amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment.
"IP Security Agreements--Short Form" means, collectively, the
Copyright Security Agreement--Short Form, the Trademark Security
Agreement--Short Form and the Patent Security Agreement--Short Form, in
each case as referred to in Section 15 of the Security Agreement.
"ISDA Master Agreement" means the Master Agreement
(Multicurrency-Cross Border) published by the International Swap and
Derivatives Association, Inc., as in effect from time to time.
"Issuing Bank" means the Initial Issuing Bank and each other Person to
which the Letter of Credit Commitment has been assigned pursuant to Section
8.07, in each case for so long as the Initial Issuing Bank or such other
Person, as the case may be, shall be a party to this Agreement in such
capacity.
"L/C Cash Collateral Account" has the meaning specified in Preliminary
Statement (6) to the Security Agreement.
"L/C Related Documents" has the meaning specified in Section
2.03(c)(ii).
"Lead Arranger and Book Manager" has the meaning specified in the
recital of parties to this Agreement.
"Lender Party" means any Lender, the Swing Line Bank or the Issuing
Bank, as the context may require.
"Lenders" means, collectively, the Initial Lenders and each Person
that becomes a Lender pursuant to Section 8.07, in each case for so long as
such Initial Lender or such other Person, as the case may be, shall be a
party to this Agreement in such capacity.
"Letter of Credit" has the meaning specified in Section 2.01(e).
<PAGE>
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"Letter of Credit Advance" means an advance made by the Issuing Bank
or any of the Revolving Credit Lenders pursuant to Section 2.03(c)(i).
"Letter of Credit Agreement" has the meaning specified in Section
2.03(a).
"Letter of Credit Commitment" means, with respect to the Issuing Bank
at any time, the amount set forth opposite the Issuing Bank's name on Part
B of Schedule I hereto under the caption "Letter of Credit Commitment" or,
if the Issuing Bank has entered into one or more Assignment and
Acceptances, the amount set forth for the Issuing Bank in the Register
maintained by the Administrative Agent pursuant to Section 8.07(f) as the
Issuing Bank's "Letter of Credit Commitment", as such amount may be reduced
at or prior to such time pursuant to Section 2.05.
"Letter of Credit Facility" means, at any time, an amount equal to the
lesser of (a) the amount of the Letter of Credit Commitment at such time
and (b) $5,000,000, as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
"Leverage Ratio" means, at any date of determination, the ratio of (a)
(i) all Funded Indebtedness of the Borrower and its Subsidiaries (other
than the aggregate principal amount of all Revolving Credit Advances, Swing
Line Advances and Letter of Credit Advances outstanding on such date) plus
(ii) the average daily aggregate principal amount of all Revolving Credit
Advances, Swing Line Advances and Letter of Credit Advances outstanding
during the most recently completed Measurement Period prior to such date
plus (iii) to the extent not otherwise included in subclause (a)(i) or
(a)(ii) of this definition, all Indebtedness of the Borrower and its
Subsidiaries outstanding on such date that would (or would be required to)
appear on the Consolidated balance sheet of the Borrower and its
Subsidiaries (other than any such outstanding Indebtedness evidenced by the
Permitted Preferred Stock) to (b) Pro Forma Consolidated EBITDA of the
Borrower and its Subsidiaries for the most recently completed Measurement
Period prior to such date.
"Lien" means, with respect to any Person, (a) any mortgage, lien
(statutory or other), pledge, hypothecation, security interest, charge or
other preference or encumbrance of any kind (including, without limitation,
any agreement to give any of the foregoing), (b) any sale of accounts
receivable or chattel paper, or any assignment, deposit arrangement or
lease intended as, or having the effect of, security, (c) any easement,
right of way or other encumbrance on title to real property or (d) any
other interest or title of any vendor, lessor, lender or other secured
party to or of such Person under any conditional sale or other title
retention agreement or any Capitalized Lease or otherwise upon or with
respect to any property or asset of such Person (including, in the case of
Equity Interests, voting trust agreements and other similar arrangements).
"Loan Documents" means, collectively, (a) for all purposes of this
Agreement and the Notes and any amendment, supplement or other modification
hereof or thereof and for all other purposes other than for purposes of the
Subsidiaries Guarantee and the Collateral Documents, (i) this Agreement,
(ii) the Notes, (iii) the Subsidiaries Guarantee, (iv) the Collateral
Documents, (v) each Letter of Credit Agreement, (vi) the Holdings LLC
Agreement and (vii) each of the other agreements evidencing any of the
Obligations of any of the Loan Parties secured by the Collateral Documents
(other than the Secured Hedge Agreements) and (b) for all purposes of the
Subsidiaries Guarantee and the Collateral Documents, (i) this Agreement,
(ii) the Notes, (iii) the Subsidiaries Guarantee, (iv) the Collateral
Documents, (v) each Letter of Credit Agreement, (vi) the Holdings LLC
Agreement,
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(vii) the Secured Hedge Agreements and (viii) each of the other agreements
evidencing any of the Obligations of any of the Loan Parties secured by the
Collateral Documents, in each case as amended, supplemented or otherwise
modified hereafter from time to time in accordance with the terms thereof
and Section 8.01; provided, however, that, solely for purposes of Section
3.01, the term "Loan Documents" shall have the meaning specified therefor
in the Existing Credit Agreement.
"Loan Parties" means, collectively, the Borrower and each of the
Restricted Subsidiaries.
"Management Agreements" means collectively, the Management Agreement
dated as of January 20, 1999 between the Borrower and Richard A. Bender,
the Management Agreement dated as of January 20, 1999 between the Borrower
and Stephan R. Brian, the Management Agreement dated as of January 20, 1999
between the Borrower and William P. Johnson and the Management Agreement
dated as of January 20, 1999 between the Borrower and Daniel J. Johnston,
in each case as such agreement may be amended, supplemented or otherwise
modified hereafter from time to time in accordance with the terms thereof,
but solely to the extent permitted under the terms of the Loan Documents.
"Managers Note" has the meaning specified in Preliminary Statement (3)
to this Agreement.
"Mandatory Prepayment Amount" has the meaning specified in Section
2.06(b)(ix).
"Mandatory Prepayment Date" has the meaning specified in Section
2.06(b)(ix).
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, liabilities
(actual or contingent), properties or prospects of the Borrower and its
Subsidiaries, taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, liabilities
(actual or contingent), properties or prospects of the Borrower and its
Subsidiaries, taken as a whole, (b) the rights and remedies of the
Administrative Agent or any of the Lender Parties under any of the Loan
Documents or the Related Documents or (c) the ability of any of the Loan
Parties to perform its Obligations under any of the Loan Documents or the
Related Documents to which it is or is to be a party (including, for
purposes of clauses (a) and (b) of this definition, the imposition of
materially burdensome conditions thereon).
"Measurement Period" means, at any date of determination, the most
recently completed four consecutive Fiscal Quarters on or immediately prior
to such date.
"Metals Business" has the meaning specified in Preliminary Statement
(2) to this Agreement.
"MSSF" has the meaning specified in the recital of parties to this
Agreement.
"Multiemployer Plan" means a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) to which any of the Loan Parties or any of the ERISA
Affiliates is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions.
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"Multiple Employer Plan" means a single employer plan (as defined in
Section 4001(a)(15) of ERISA) that (a) is maintained for employees of any
of the Loan Parties or any of the ERISA Affiliates and at least one Person
other than the Loan Parties and the ERISA Affiliates or (b) was so
maintained and in respect of which any of the Loan Parties or any of the
ERISA Affiliates could reasonably be expected to have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"NationsBank" has the meaning specified in the recital of parties to
this Agreement.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any property or assets, or the incurrence or
issuance of any Indebtedness, or the sale or issuance of any Equity
Interests in any Person, or any Extraordinary Receipt received by or paid
to or for the account of any Person, as the case may be, the aggregate
amount of cash received from time to time (whether as initial consideration
or through payment or disposition of deferred consideration) by or on
behalf of such Person for its own account in connection with any such
transaction, after deducting therefrom only:
(a) reasonable and customary brokerage commissions, underwriting
fees and discounts, legal fees, finder's fees and other similar fees,
costs and commissions;
(b) the amount of taxes payable in connection with or as a result
of such transaction;
(c) in the case of any sale, lease, transfer or other disposition
of any property or asset, the outstanding principal amount of, the
premium or penalty, if any, on, and any accrued and unpaid interest
on, any Indebtedness (other than Indebtedness under or in respect of
the Loan Documents) that is secured by a Lien on the property and
assets subject to such sale, lease, transfer or other disposition and
is required to be repaid under the terms of such Indebtedness as a
result of such sale, lease, transfer or other disposition; and
(d) in the case of the sale, lease, transfer or other disposition
of any property and assets of the Borrower or any of its Subsidiaries
pursuant to Section 5.02(d)(viii) or 5.02(d)(ix), the aggregate amount
of all reasonable and customary post-closing purchase price
adjustments to the cash consideration received by such Person or any
of its Subsidiaries for such sale, lease, transfer or other
disposition to the extent (and only to the extent) that (i) such
purchase price adjustments are solely for working capital
reconciliations determined on the basis of actual (as opposed to
estimated) financial statement information delivered pursuant to the
terms of the documentation for such sale, lease, transfer or other
disposition, (ii) such Person or its applicable Subsidiary reasonably
believes that it will be obligated to remit the amount of such
purchase price adjustments to the purchaser of the related property
and assets within 180 days of the date of consummation of such sale,
lease, transfer or other disposition and (iii) the amount of any such
purchase price adjustment so deducted from any determination of Net
Cash Proceeds shall not exceed 10% of the total cash consideration
received (or to be received) by such Person and its Subsidiaries for
such sale, lease, transfer or other disposition;
<PAGE>
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in each case to the extent, but only to the extent, that the amounts
so deducted are properly attributable to such transaction or to the
property or asset that is the subject thereof and (i) in the case of
clauses (a) and (c) of this definition, are actually paid at the time
of receipt of such cash to a Person that is not an Affiliate of such
Person or any of the Loan Parties or of any Affiliate of any of the
Loan Parties, (ii) in the case of clause (b) of this definition, are
actually paid at the time of receipt of such cash to a Person that is
not an Affiliate of such Person or any of the Loan Parties or of any
Affiliate of any of the Loan Parties or, so long as such Person is not
otherwise indemnified therefor, are reserved for in accordance with
GAAP, as in effect at the time of receipt of such cash (based upon
such Person's reasonable estimate of such taxes), and paid to the
applicable taxation authority or other Governmental Authority within
360 days after the date of consummation of the related transaction and
(iii) in the case of clause (d) of this definition, are actually paid
to the purchaser of the related property and assets within 180 days of
the date of consummation of such sale, lease, transfer or other
disposition to a Person that is not an Affiliate of such Person or any
of the Loan Parties or of any Affiliate of any of the Loan Parties;
provided, however, that if, at the time any such taxes or post-closing
purchase price adjustments are actually paid or otherwise satisfied,
the reserve therefor or the amount otherwise retained by such Person
or its applicable Subsidiary for the payment thereof exceeds the
amount paid or otherwise satisfied, then the amount of such excess
reserve or retained amount, as the case may be, shall constitute "Net
Cash Proceeds" on and as of the date of such payment or other
satisfaction for all purposes of this Agreement and, to the extent
required under Sections 2.05(b) and 2.06(b), the Borrower shall reduce
the Commitments on such date in accordance with the terms of Section
2.05(b), and shall prepay the Advances and cash collateralize the
Letters of Credit outstanding on such date in accordance with the
terms of Section 2.06(b), in an amount equal to the amount of such
excess reserve or retained amount.
"New Subsidiary" has the meaning specified in Section 5.02(k).
"NMS" has the meaning specified in the recital of parties to this
Agreement.
"Note" means a Term A Note, a Term B Note or a Revolving Credit Note,
as the context may require.
"Note Purchase Agreement" means the Note Purchase Agreement dated as
of January 20, 1999 among the Borrower and the purchasers of the Senior
Subordinated Notes party thereto, as such agreement may be amended,
supplemented or otherwise modified hereafter from time to time in
accordance with the terms thereof, but solely to the extent permitted under
the terms of the Loan Documents.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Conversion" has the meaning specified in Section 2.09(a).
"Notice of Issuance" has the meaning specified in Section 2.03(a).
"Notice of Renewal" has the meaning specified in Section 2.01(e).
"Notice of Swing Line Borrowing" has the meaning specified in Section
2.02(b).
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"Notice of Termination" has the meaning specified in Section 2.01(e).
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any action
or proceeding of the type referred to in Section 6.01(f). Without limiting
the generality of the immediately preceding sentence, the Obligations of
the Loan Parties under or in respect of the Loan Documents include (a) the
obligation to pay principal, interest, Letter of Credit commissions,
charges, expenses, fees, attorneys' fees and disbursements, indemnity
payments and other amounts payable by any of the Loan Parties under or in
respect of any of the Loan Documents and (b) the obligation of any of the
Loan Parties to reimburse any amount in respect of any of the items
described above in clause (a) of this definition that the Administrative
Agent or any of the Lender Parties, in its sole discretion, may elect to
pay or advance on behalf of such Loan Party.
"Open Year" means, with respect to any Person, any year for which
United States federal income tax returns have been filed by or on behalf of
such Person and for which the expiration of the applicable statute of
limitations for assessment, reassessment or collection has not occurred
(whether by reason of extension or otherwise).
"Operating Lease" means, with respect to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee
at any time) of any property (whether real, personal or mixed) that is not
a Capitalized Lease or a lease under which such Person is the lessor.
"Other Taxes" has the meaning specified in Section 2.12(b).
"Patents" has the meaning specified in Section 1(j) of the Security
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Performance Level" means Performance Level I, Performance Level II,
Performance Level III or Performance Level IV, as the context may require.
For the purposes of determining the Performance Level at any date of
determination:
(a) not more than two decreases in the Performance Level (each
thereby resulting in a decrease in the Applicable Margin) shall occur
in any three-month period; and
(b) no change in the Performance Level shall be effective until
three Business Days after the date on which the Administrative Agent
and the Lender Parties receive the Required Financial Information
reflecting such change; provided, however, that if the Borrower has
not delivered to the Administrative Agent and the Lender Parties all
of the information required under this clause (b) within five Business
Days after the date on which such information is otherwise required
under Section 5.03(c) or 5.03(d), as applicable, and
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Section 5.03(e), the Performance Level shall be deemed to be
Performance Level IV for so long as such information has not been
submitted.
"Performance Level I" means, at any date of determination, that the
Borrower and its Subsidiaries shall have maintained a Leverage Ratio of
less than 4.00:1 for the most recently completed Measurement Period prior
to such date.
"Performance Level II" means, at any date of determination, that (a)
the Performance Level does not meet the requirements of Performance Level I
and (b) the Borrower and its Subsidiaries shall have maintained a Leverage
Ratio of less than 4.50:1 for the most recently completed Measurement
Period prior to such date.
"Performance Level III" means, at any date of determination, that (a)
the Performance Level does not meet the requirements of Performance Level I
or Performance Level II and (b) the Borrower and its Subsidiaries shall
have maintained a Leverage Ratio of less than 5.50:1 for the most recently
completed Measurement Period prior to such date.
"Performance Level IV" means, at any date of determination, that the
Performance Level does not meet the requirements of Performance Level I,
Performance Level II or Performance Level III.
"Permitted Affiliate Investment" means (a) any capital contributions
to the Borrower made by one or more of the Equity Investors or (b) the Net
Cash Proceeds received by the Borrower from the issuance and sale of UIC
Common Stock or Permitted Preferred Stock to one or more of the Equity
Investors; provided that on the date on which any such Permitted Affiliate
Investment is made, the Borrower shall deliver to the Administrative Agent,
on behalf of the Lender Parties, a certificate of a Responsible Officer of
the Borrower, certifying that such capital contributions or the Net Cash
Proceeds received by the Borrower from such issuance and sale are intended
to constitute, and are to be used for, one or more Investments to be made
in accordance with the terms of Section 5.02(e)(ix) or 5.02(e)(x), or one
or more redemptions or repurchases of UIC Common Stock, or warrants, rights
or options to acquire UIC Common Stock, from retired, terminated, deceased
or departing executives and managers to be made in accordance with the
terms of Section 5.02(f)(vii).
"Permitted Liens" means the following types of Liens (excluding any
such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA or any such Lien relating to or imposed in
connection with any Environmental Action), in each case as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced:
(a) Liens for taxes, assessments and governmental charges or
levies to the extent not otherwise required to be paid under Section
5.01(b);
(b) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's, storage and repairmen's Liens and other similar
Liens arising in the ordinary course of business and securing
obligations (other than Indebtedness for borrowed money) (i) that are
not overdue for a period of more than 60 days or (ii) the amount,
applicability or validity of which is being contested in good faith
and by appropriate proceedings
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diligently conducted and with respect to which the Borrower or its
applicable Subsidiary, as the case may be, has established reserves in
accordance with GAAP;
(c) pledges or deposits to secure obligations incurred in the
ordinary course of business under workers' compensation laws,
unemployment insurance or other similar social security legislation
(other than in respect of employee benefit plans subject to ERISA) or
to secure public or statutory obligations;
(d) Liens securing the performance of, or payment in respect of,
bids, tenders, government or utility contracts (other than for the
repayment of borrowed money), surety and appeal bonds and other
obligations of a similar nature incurred in the ordinary course of
business;
(e) any interest or title of a lessor or sublessor or a licensor
and any restriction or encumbrance to which the interest or title of
such lessor, sublessor or licensor may be subject that is incurred in
the ordinary course of business and, either individually or when
aggregated with all other Permitted Liens in effect on any date of
determination, could not reasonably be expected to have a Material
Adverse Effect;
(f) Liens arising out of judgments or awards that do not
constitute an Event of Default under Section 6.01(g) or 6.01(h) and in
respect of which the Borrower or any of its Subsidiaries subject
thereto shall be prosecuting an appeal or proceeding for review in
good faith and, pending such appeal or proceeding, shall have secured
within ten days after the entry thereof a subsisting stay of execution
and shall be maintaining reserves, in accordance with GAAP, with
respect to any such judgment or award;
(g) Liens in favor of customs and revenue authorities arising as
a matter of law or pursuant to a bond to secure payment of customs
duties in connection with the importation of goods;
(h) customary rights of setoff upon deposits of cash in favor of
banks or other depository institutions in which such cash is
maintained in the ordinary course of business; and
(i) easements, rights-of-way, zoning restrictions and other
encumbrances and survey exceptions, minor defects or irregularities in
title and other similar restrictions on title to, or the use of, real
property that do not, either individually or in the aggregate, (i)
materially detract from the value of such real property or (ii)
materially and adversely affect the use of such real property for its
intended purposes or the conduct of the business of the Borrower and
its Subsidiaries in the ordinary course and, in any case, that were
not incurred in connection with and do not secure Indebtedness or
other extensions of credit.
"Permitted Preferred Stock" means Preferred Interests in the Borrower
issued from time to time to one or more of the Equity Investors that have
(a) no dividends or other distributions required to be paid in cash, and no
scheduled or mandatory redemption or repurchase dates, in whole or in part,
prior to March 31, 2009, (b) no voting rights and (c) no other conditions,
covenants, events of default or redemption or liquidation events that could
reasonably be expected to adversely
<PAGE>
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affect the rights or interests of the Administrative Agent or any of the
other Secured Parties in any manner.
"Permitted Preferred Stock Documents" means, collectively, the
Certificate of Designation for the Permitted Preferred Stock, any
subscription agreements therefor and all of the other agreements,
instruments and other documents pursuant to which the Permitted Preferred
Stock will be issued or otherwise setting forth the terms of the Permitted
Preferred Stock, in each case as such agreement, instrument or other
document may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof, but to the extent permitted
under the terms of the Loan Documents.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, unlimited liability company,
joint stock company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or agency
thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan, as
the context may require.
"Pledged Indebtedness" has the meaning specified in Section 1(c)(iv)
of the Security Agreement.
"Pre-Closing Reorganization" has the meaning specified in Preliminary
Statement (2) to this Agreement.
"Pre-Commitment Information" means all of the information furnished to
the Agents and the Existing Lenders by or on behalf of THL, Holdings LLC or
the Borrower prior to December 23, 1998 and relating to the Loan Documents
or the Related Documents, any aspect of the Transaction or any of the
transactions contemplated hereby or thereby or to the structuring of the
Transaction or the syndication of the Facilities.
"Preferred Interests" means, with respect to any Person, Equity
Interests issued by such Person that are entitled to a preference or
priority over any other Equity Interests issued by such Person upon any
distribution of such Person's property and assets, whether by dividend or
upon liquidation.
"primary obligations" has the meaning specified in the definition of
"Contingent Obligation" set forth above in this Section 1.01.
"primary obligor" has the meaning specified in the definition of
"Contingent Obligation" set forth above in this Section 1.01.
"Pro Forma Consolidated EBITDA" means, at any date of determination,
an amount equal to the Consolidated EBITDA of the Borrower and its
Subsidiaries for the most recently completed Measurement Period prior to
such date for which the Borrower has delivered the Required Financial
Information; provided that, with respect to any purchase or other
acquisition of any property or assets of any Person by the Borrower or any
of its Subsidiaries pursuant to Section 5.02(e)(ix) or
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5.02(e)(x) or any sale, lease, transfer or other disposition of property or
assets by the Borrower or any of its Subsidiaries pursuant to Section
5.02(d)(viii) or 5.02(d)(ix) or otherwise, if the Borrower or any of its
Subsidiaries shall have purchased or otherwise acquired or shall have sold,
leased, transferred or otherwise disposed of any property or assets at any
time on or after the first day of such Measurement Period and prior to such
date, such Consolidated EBITDA shall be increased (in the case of each such
purchase or other acquisition) or reduced (in the case of each such sale,
lease, transfer or other disposition) by the Consolidated EBITDA of the
Borrower and its Subsidiaries that would have been contributed thereto by
such property or assets during such Measurement Period, as determined in
good faith by the board of directors of the Borrower on a pro forma basis
as though the Borrower or the Subsidiary of the Borrower that is effecting
such transaction had purchased or otherwise acquired or had sold,
transferred or otherwise disposed of such property or assets on the first
day of such Measurement Period and after giving effect to all of the pro
forma cost savings of the Borrower and its Subsidiaries that are to be
recognized as a result of such transaction during such Measurement Period.
"Pro Rata Share" of any amount means, with respect to any of the
Lenders at any time, the product of (a) a fraction the numerator of which
is the amount of such Lender's Commitment(s) under the applicable Facility
or Facilities at such time (or, if the Commitments shall have been
terminated pursuant to Section 2.05 or 6.01 at or prior to such time, such
Lender's Commitment(s) under the applicable Facility or Facilities as in
effect immediately prior to such termination) and the denominator of which
is the aggregate amount of such Facility or Facilities at such time (or, if
the Commitments shall have been terminated pursuant to Section 2.05 or 6.01
at or prior to such time, the applicable Facility or Facilities as in
effect immediately prior to such termination) multiplied by (b) such
amount.
"Professional Services Agreement" means the Professional Services
Agreement dated as of January 20, 1999 by and among THL Equity Advisors IV,
L.L.C., Thomas H. Lee Capital, L.L.C. and the Borrower, as such agreement
may be amended, supplemented or otherwise modified hereafter from time to
time in accordance with the terms thereof, but solely to the extent
permitted under the terms of the Loan Documents.
"Recapitalization" has the meaning specified in Preliminary Statement
(3) to this Agreement.
"Recapitalization Agreement" has the meaning specified in Preliminary
Statement (3) to this Agreement.
"Redeemable" means, with respect to any Equity Interest, any
Indebtedness or any other right or Obligation, any such Equity Interest,
Indebtedness, right or Obligation that (a) the issuer has undertaken to
redeem at a fixed or determinable date or dates, whether by operation of a
sinking fund or otherwise, or upon the occurrence of a condition not solely
within the control of the issuer or (b) is redeemable at the option of the
holder.
"Reduction Amount" has the meaning specified in Section 2.06(b)(vi).
"Register" has the meaning specified in Section 8.07(f).
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"Related Documents" means the Recapitalization Agreement, the
Reorganization Agreement, the Stockholders Agreement, the Consulting
Agreements, the Management Agreements, the Professional Services Agreement
and THL Subordination Agreement.
"Related Indemnified Party" means, with respect to any of the
Indemnified Parties, each of the officers, directors, employees, agents and
advisors of such Indemnified Party.
"Reorganization Agreement" has the meaning specified in Preliminary
Statement (2) to this Agreement.
"Required Financial Information" means, at any date of determination,
the Consolidated financial statements of the Borrower and its Subsidiaries
most recently delivered to the Administrative Agent and the Lender Parties
on or prior to such date pursuant to, and satisfying all of the
requirements of, Section 5.03(c) or 5.03(d) and accompanied by the
certificates and other information required to be delivered therewith
pursuant to Section 5.03(e).
"Required Lenders" means, at any time, Lenders owed or holding more
than 50% of the sum of (a) the aggregate principal amount of all Advances
outstanding at such time, (b) the aggregate Available Amount of all Letters
of Credit outstanding at such time and (c) the aggregate Unused Revolving
Credit Commitments at such time; provided, however, that if any Lender
shall be a Defaulting Lender at such time, there shall be excluded from the
determination of Required Lenders at such time (i) the aggregate principal
amount of all Advances owing to such Lender (in its capacity as a Lender)
and outstanding at such time, (ii) if such Defaulting Lender is a Revolving
Credit Lender, such Lender's Pro Rata Share of the aggregate Available
Amount of all Letters of Credit outstanding at such time and (iii) the
Unused Revolving Credit Commitment of such Lender at such time. For
purposes of this definition, the aggregate principal amount of all Swing
Line Advances owing to the Swing Line Bank and outstanding at such time and
all Letter of Credit Advances owing to the Issuing Bank and outstanding at
such time and the Available Amount of all Letters of Credit outstanding at
such time shall be deemed to be owed to the Revolving Credit Lenders in
accordance with their respective Revolving Credit Commitments at such time.
"Requirements of Law" means, with respect to any Person, all laws,
constitutions, statutes, treaties, ordinances, rules and regulations, all
orders, writs, decrees, injunctions, judgments, determinations and awards
of an arbitrator, a court or any other Governmental Authority, and all
Governmental Authorizations, binding upon or applicable to such Person or
any of its Subsidiaries or to any of their property, assets or businesses.
"Responsible Officer" means the chief executive officer, the
president, the chief financial officer, the principal accounting officer or
the treasurer (or the equivalent of any of the foregoing) of the Borrower
or any of its Subsidiaries or any other officer, partner or member (or
person performing similar functions) of the Borrower or any of its
Subsidiaries responsible for overseeing the administration of, or reviewing
compliance with, all or any portion of this Agreement and the other Loan
Documents.
"Restricted Subsidiary" means (a) each of the wholly owned Domestic
Subsidiaries and each of the other Subsidiaries of the Borrower that is
organized, purchased or otherwise acquired after the Effective Date,
whether pursuant to Section 5.02(e)(ix) or otherwise (other than any non-
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wholly owned Domestic Subsidiary or any Foreign Subsidiary that is
organized, purchased or otherwise acquired pursuant to Section 5.02(e)(x)),
or (b) each of the other Subsidiaries of the Borrower that, at the option
of the Borrower (i) executes and delivers the Subsidiaries Guarantee or a
Guarantee Supplement and a Security Agreement Supplement, (ii) in which
100% of the issued and outstanding Equity Interests are pledged to the
Administrative Agent, on behalf of the Secured Parties, pursuant to the
applicable Collateral Documents and (iii) delivers such other agreements,
opinions, certificates and other documents as are required or requested
under Section 5.01(k) or 5.02(k).
"Revolving Credit Advance" means, with respect to each of the
Revolving Credit Lenders, any advance made (or deemed to have been made on
the Effective Date) by such Revolving Credit Lender to the Borrower
pursuant to Section 2.01(c).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made (or deemed to
have been made) by the Revolving Credit Lenders.
"Revolving Credit Commitment" means, with respect to any of the
Revolving Credit Lenders at any time, the amount set forth opposite such
Revolving Credit Lender's name on Part B of Schedule I hereto under the
caption "Revolving Credit Commitment" or, if such Revolving Credit Lender
has entered into one or more Assignment and Acceptances, the amount set
forth for such Revolving Credit Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(f) as such Revolving Credit
Lender's "Revolving Credit Commitment", as such amount may be reduced at or
prior to such time pursuant to Section 2.05.
"Revolving Credit Facility" means, at any time, the aggregate
Revolving Credit Commitments of all of the Revolving Credit Lenders at such
time.
"Revolving Credit Lender" means, at any time, any of the Lenders that
has a Revolving Credit Commitment at such time.
"Revolving Credit Note" means a promissory note of the Borrower
payable to the order of any of the Revolving Credit Lenders, in
substantially the form of Exhibit A-3 hereto, evidencing the aggregate
indebtedness of the Borrower to such Revolving Credit Lender resulting from
the Revolving Credit Advances made (or deemed to have been made) by such
Revolving Credit Lender.
"Scheduled Principal Payments" means, with respect to any Person for
any period, the sum of all regularly scheduled principal payments or
repurchases, redemptions or similar acquisitions for value of outstanding
Indebtedness made or required to be made during such period, including,
without limitation, all repayments of Advances outstanding hereunder
pursuant to Section 2.04(a), 2.04(b) or 2.04(c).
"Secured Hedge Agreement" means any interest rate Hedge Agreement
permitted under Article V that is entered into by and between the Borrower
and any of the Hedge Banks.
"Secured Obligations" has the meaning specified in Section 2 of the
Security Agreement.
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"Secured Parties" means, collectively, the Agents, the Lender Parties,
the Hedge Banks and the other Persons, if any, the Obligations owing to
which are or are purported to be secured by the Collateral under the terms
of the Collateral Documents.
"Securities Act" means the Securities Act of 1933, as amended, and the
regulations promulgated and the rulings issued thereunder.
"Security Agreement" has the meaning specified in Section 3.02(e)(ii).
"Security Agreement Supplement" has the meaning specified in Section
22(b) of the Security Agreement.
"Sellers" has the meaning specified in Preliminary Statement (3) to
this Agreement.
"Senior Financial Officer" means the chief financial officer, the
principal accounting officer or the treasurer of the Borrower.
"Senior Subordinated Notes" means, collectively, (a) the senior
unsecured subordinated increasing rate notes of the Borrower due January
20, 2009 in an aggregate principal amount of $150,000,000 that were issued
and sold by the Borrower on the Closing Date pursuant to the terms of the
Note Purchase Agreement and (b) the senior unsecured subordinated notes of
the Borrower due no earlier than January 20, 2009 to be issued and sold in
an aggregate principal amount of not more than $150,000,000, the proceeds
of which shall be applied to redeem or refinance the senior unsecured
subordinated increasing rate notes of the Borrower referred to in clause
(a) above; provided that the senior unsecured subordinated notes of the
Borrower described in this clause (b) (i) shall not accrue interest at a
rate per annum of more than 12.50%, (ii) shall not be subject to any
covenants or agreements that are not set forth in the Preliminary Offering
Memorandum therefor (and such covenants and agreements shall be on terms no
less favorable to any of the Loan Parties or any of their Subsidiaries or
to the Administrative Agent or the Lender Parties than the comparable
covenants and agreements set forth in such Preliminary Offering
Memorandum), except for defeasance provisions, provisions regarding the
rights and obligations of the trustee for such senior unsecured
subordinated notes of the Borrower and other customary indenture provisions
that are reasonably satisfactory to the Lender Parties, and (iii) shall not
be subject to any of the covenants or agreements set forth in the Note
Purchase Agreement which, by the terms of the Note Purchase Agreement, are
to be discharged upon the "Conversion Date" (as defined in the Note
Purchase Agreement).
"Senior Subordinated Notes Documents" means the Note Purchase
Agreement, the Senior Subordinated Notes, all indentures, securities
purchase agreements, warrant agreements and registration rights agreements
entered into in connection with the redemption or refinancing of the
initial Senior Subordinated Notes and all of the other agreements,
instruments and other documents pursuant to which the Senior Subordinated
Notes have been issued or otherwise setting forth the terms of the Senior
Subordinated Notes, in each case as such agreement, instrument or other
document may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof, but solely to the extent
permitted under the terms of the Loan Documents.
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"Single Employer Plan" means a single employer plan (as defined in
Section 4001(a)(15) of ERISA) that (a) is maintained for employees of any
of the Loan Parties or any of the ERISA Affiliates and no Person other than
the Loan Parties and the ERISA Affiliates or (b) was so maintained and in
respect of which any of the Loan Parties or any of the ERISA Affiliates
could reasonably be expected to have liability under Section 4069 of ERISA
in the event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on any date
of determination, that, on such date:
(a) the fair value of the property and assets of such Person is
greater than the total amount of liabilities (including, without
limitation, contingent liabilities) of such Person;
(b) the present fair salable value of the property and assets of
such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become
absolute and matured;
(c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay
such debts and liabilities as they mature; and
(d) such Person is not engaged in business or in a transaction,
and is not about to engage in business or in a transaction, for which
such Person's property and assets would constitute an unreasonably
small capital.
The fair value and the present fair salable value of the property and
assets of any such Person shall be computed taking into account the
aggregate amount of all payments in respect of reimbursement, contribution
and indemnification claims against any other Person (other than an
Affiliate of such Person) that, in light of the circumstances existing at
such time, such Person reasonably believes in good faith it will receive
with reasonable promptness. The amount of contingent liabilities of any
such Person at any time shall be computed as the amount that, in the light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"Standby Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Facility other than a Trade Letter of Credit.
"Stockholders Agreement" means the Stockholders Agreement dated as of
January 20, 1999 among the Borrower, Holdings LLC, the Sellers and each of
the other Equity Investors from time to time party thereto, as such
agreement may be amended, supplemented or otherwise modified hereafter from
time to time in accordance with the terms thereof, but solely to the extent
permitted under the terms of the Loan Documents.
"Subsidiaries Guarantee" has the meaning specified in Section 5.02(k).
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"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture, limited liability company, unlimited liability
company, trust or estate of which (or in which) more than 50% of:
(a) the issued and outstanding shares of capital stock having
ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at the time shares of
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency);
(b) the interest in the capital or profits of such partnership,
joint venture, limited liability company or unlimited liability
company; or
(c) the beneficial interest in such trust or estate,
is at the time directly or indirectly owned or controlled by such Person,
by such Person and one or more of its other Subsidiaries or by one or more
of such Person's other Subsidiaries.
"Surviving Indebtedness" has the meaning specified in Section 3.01(f).
"Swing Line Advance" means an advance made by (a) the Swing Line Bank
pursuant to Section 2.01(d) or (b) any of the Revolving Credit Lenders
pursuant to Section 2.02(b)(ii).
"Swing Line Bank" has the meaning specified in the recital of parties
to this Agreement.
"Swing Line Borrowing" means a borrowing consisting of (a) a Swing
Line Advance made by the Swing Line Bank pursuant to Section 2.01(d) or (b)
simultaneous Swing Line Advances made by the Revolving Credit Lenders
pursuant to Section 2.02(b)(ii).
"Swing Line Commitment" means, with respect to the Swing Line Bank at
any time, the amount set forth opposite the Swing Line Bank's name on Part
B of Schedule I hereto under the caption "Swing Line Commitment", as such
amount may be reduced at or prior to such time pursuant to Section 2.05.
"Swing Line Facility" means, at any time, an amount equal to the
lesser of (a) the amount of the Swing Line Commitment at such time and (b)
$10,000,000, as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
"Syndication Agent" has the meaning specified in the recital of
parties to this Agreement.
"Taxes" has the meaning specified in Section 2.12(a).
"Term A Advance" means, with respect to each of the Term A Lenders,
the single advance deemed to have been made on the Effective Date by such
Term A Lender to the Borrower pursuant to Section 2.01(a).
"Term A Borrowing" means a borrowing consisting of simultaneous Term A
Advances of the same Type made (or deemed to have been made) by the Term A
Lenders.
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"Term A Commitment" means, with respect to any of the Term A Lenders
at any time, the amount set forth opposite such Term A Lender's name on
Part B of Schedule I hereto under the caption "Term A Commitment" or, if
such Term A Lender has entered into one or more Assignment and Acceptances,
the amount set forth for such Term A Lender in the Register maintained by
the Administrative Agent pursuant to Section 8.07(f) as such Term A
Lender's "Term A Commitment", as such amount may be reduced at or prior to
such time pursuant to Section 2.05.
"Term A Facility" means, at any time, the aggregate Term A Commitments
of all of the Term A Lenders at such time.
"Term A Lender" means, at any time, any of the Lenders that has a Term
A Commitment at such time.
"Term A Note" means a promissory note of the Borrower payable to the
order of any of the Term A Lenders, in substantially the form of Exhibit
A-1 hereto, evidencing the indebtedness of the Borrower to such Term A
Lender resulting from the Term A Advance made (or deemed to have been made)
by such Term A Lender.
"Term Advance" means a Term A Advance or a Term B Advance, as the
context may require.
"Term B Advance" means, with respect to each of the Term B Lenders,
the single advance deemed to have been made on the Effective Date by such
Term B Lender to the Borrower pursuant to Section 2.01(b).
"Term B Borrowing" means a borrowing consisting of simultaneous Term B
Advances of the same Type made (or deemed to have been made) by the Term B
Lenders.
"Term B Commitment" means, with respect to any of the Term B Lenders
at any time, the amount set forth opposite such Term B Lender's name on
Part B of Schedule I hereto under the caption "Term B Commitment" or, if
such Term B Lender has entered into one or more Assignment and Acceptances,
the amount set forth for such Term B Lender in the Register maintained by
the Administrative Agent pursuant to Section 8.07(f) as such Term B
Lender's "Term B Commitment", as such amount may be reduced at or prior to
such time pursuant to Section 2.05.
"Term B Facility" means, at any time, the aggregate Term B Commitments
of all of the Term B Lenders at such time.
"Term B Lender" means, at any time, any of the Lenders that has a Term
B Commitment at such time.
"Term B Note" means a promissory note of the Borrower payable to the
order of any of the Term B Lenders, in substantially the form of Exhibit
A-2 hereto, evidencing the indebtedness of the Borrower to such Term B
Lender resulting from the Term B Advance made (or deemed to have been made)
by such Term B Lender.
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"Term Commitment" means a Term A Commitment or a Term B Commitment, as
the context may require.
"Term Facility" means the Term A Facility or the Term B Facility, as
the context may require.
"Term Lender" means a Term A Lender or a Term B Lender, as the context
may require.
"Termination Date" means the earlier of (a) the date of termination in
whole of all of the Commitments of the Lender Parties pursuant to Section
2.05 or 6.01 and (b) (i) with respect to the Term A Facility, the Revolving
Credit Facility, the Swing Line Facility and the Letter of Credit Facility,
January 20, 2005 and (ii) with respect to the Term B Facility, January 20,
2006.
"THL" has the meaning specified in Preliminary Statement (1) to this
Agreement.
"THL Entities" means, collectively, the Thomas H. Lee Equity Fund IV,
L.P. and the Thomas H. Lee Foreign Fund IV, L.P.
"THL Subordination Agreement" means the Subordination Agreement dated
as of January 20, 1999 made by THL Equity Advisors IV, L.L.C. and Thomas H.
Lee Capital, L.L.C. in favor of the Administrative Agent, on behalf of the
Secured Parties, as such agreement may be amended, supplemented or
otherwise modified hereafter from time to time in accordance with the terms
thereof, but solely to the extent permitted under the terms of the Loan
Documents.
"Trade Letter of Credit" means any Letter of Credit that is issued
under the Letter of Credit Facility for the benefit of a supplier of
inventory to the Borrower or any of the Restricted Subsidiaries to effect
payment for such inventory.
"Transaction" means, collectively, (a) the consummation of the
Pre-Closing Reorganization and the Recapitalization, (b) the entering into
by the Borrower and its Subsidiaries of the Loan Documents and the Related
Documents to which they are or are intended to be a party, (c) the issuance
and sale of the initial Senior Subordinated Notes, (d) the redemption or
refinancing of the initial Senior Subordinated Notes with the proceeds of
the issuance and sale of the permanent Senior Subordinated Notes and, if
applicable, the issuance and sale of the Warrants related thereto, (e) the
payment of the fees and expenses incurred in connection with the
consummation of the foregoing and (f) on or after the Effective Date, the
issuance and sale of the Permitted Preferred Stock.
"Type" refers to the distinction between Advances bearing interest at
the Base Rate and Advances bearing interest at the Eurodollar Rate.
"UIC Class A Common Stock" has the meaning specified in Preliminary
Statement (3) to this Agreement.
"UIC Class B Common Stock" has the meaning specified in Preliminary
Statement (3) to this Agreement.
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"UIC Common Stock" has the meaning specified in Preliminary Statement
(3) to this Agreement.
"Unrestricted Subsidiary" means, at any time, each of the Subsidiaries
of the Borrower that does not constitute a Restricted Subsidiary at such
time.
"Unused Revolving Credit Commitment" means, with respect to any of the
Revolving Credit Lenders at any time, (a) the Revolving Credit Commitment
of such Revolving Credit Lender at such time less (b) the sum of:
(i) the aggregate principal amount of all Revolving Credit
Advances, Swing Line Advances and Letter of Credit Advances made (or
deemed to have been made) by such Revolving Credit Lender (in its
capacity as a Lender) and outstanding at such time; and
(ii) such Revolving Credit Lender's Pro Rata Share of (A) the
aggregate Available Amount of all Letters of Credit outstanding at
such time, (B) the aggregate principal amount of all Letter of Credit
Advances made by the Issuing Bank (in its capacity as the Issuing
Bank) pursuant to Section 2.03(c)(i) and outstanding at such time and
(C) the aggregate principal amount of all Swing Line Advances made by
the Swing Line Bank (in its capacity as the Swing Line Bank) pursuant
to Section 2.01(d) and outstanding at such time.
"Voting Equity Interests" has the meaning specified in Section
5.02(k)(v).
"Voting Interests" means shares of capital stock issued by a
corporation, or equivalent Equity Interests in any other Person, the
holders of which are ordinarily, in the absence of contingencies, entitled
to vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been suspended
by the happening of such a contingency.
"Warrants" means the warrants to purchase UIC Common Stock
representing up to 5% of all of the UIC Common Stock (on a fully diluted
basis) to be issued, if required, to the purchasers of the Senior
Subordinated Notes in accordance with the provisions of the Note Purchase
Agreement.
"Welfare Plan" means a welfare plan, as defined in Section 3(l) of
ERISA, that is maintained for employees of any Loan Party or in respect of
which any Loan Party could have liability.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
"Year 2000 Problem" has the meaning specified in Section 4.01(aa).
SECTION 1.02. Computation of Time Periods; Other Constructional Provisions.
In this Agreement and the other Loan Documents, in the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including", the word "through" means "through and including" and the
words "to" and "until" each mean "to but excluding". References in this
Agreement or
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any of the other Loan Documents to any agreement, instrument or other document
"as amended" shall mean and be a reference to such agreement, instrument or
other document as amended, amended and restated, supplemented or otherwise
modified hereafter from time to time in accordance with its terms.
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP; provided, however,
that, if any changes in accounting principles from those used in the preparation
of the Consolidated financial statements of the Borrower and its Subsidiaries
for the Fiscal Year ended December 31, 1998 (as delivered to the Lender Parties
pursuant to Section 4.01(f)) occur by reason of the promulgation of rules,
regulations, pronouncements, opinions or other requirements of the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions) and such
changes would affect (or would result in a change in the method of calculation
of) any of the covenants set forth in Section 5.02 or 5.03, the determination of
Excess Cash Flow for any Fiscal Year or any of the defined terms related to the
foregoing contained in Section 1.01, then, upon the request of any party hereto,
the Borrower, the Administrative Agent and the Lender Parties shall enter into
negotiations in good faith, if and to the extent necessary, to amend in
accordance with Section 8.01 all such covenants or terms as would be affected by
such changes in GAAP in such manner as would maintain the economic and credit
terms of such covenants as in effect under this Agreement, prior to giving
effect to the occurrence of any such changes; and provided further, however,
that until the amendment of the covenants and the defined terms referred to in
the immediately preceding proviso becomes effective, all covenants and defined
terms shall be performed, observed and determined, and any determination of
compliance with any such covenant shall be made, as though no such changes in
accounting principles had been made and the Borrower shall deliver to the Lender
Parties, in addition to the Consolidated financial statements of the Borrower
and its Subsidiaries otherwise required to be delivered to the Lenders under
Sections 5.03(b), 5.03(c) and 5.03(d) during such period, a statement of
reconciliation conforming such Consolidated financial statements of the Borrower
and its Subsidiaries to GAAP as in effect prior to such changes.
SECTION 1.04. Currency Equivalents Generally. Any amount specified in this
Agreement (other than in Articles II, VII and VIII) or any of the other Loan
Documents to be in U.S. dollars shall also include and be a reference to the
equivalent of such amount in any currency other than U.S. dollars, such
equivalent amount to be determined at the rate of exchange quoted by NationsBank
in Charlotte, North Carolina at the close of business on the Business Day
immediately preceding any date of determination thereof to prime banks in New
York, New York for the spot purchase in the New York foreign exchange market of
such amount in U.S. dollars with such other currency.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances and the Letters of Credit. (a) The Term A
Advances. Each of the Existing Lenders will, as of the Effective Date, sell and
assign to the other Term A Lenders an undivided interest in and to all of its
respective rights and obligations under and in respect of the Existing Term A
Advances (other than that portion of the Existing Term A Advances that is equal
to the amount of such Existing Lender's Term A Commitment on the Effective
Date), and each of the other Term A Lenders severally agrees, on the terms and
conditions hereinafter set forth, to purchase and assume an undivided
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interest in that portion of all Existing Term A Advances being so sold and
assigned by the Existing Lenders on the Effective Date that is equal to its Term
A Commitment on such date. The Existing Term A Advance owing to each of the Term
A Lenders on the Effective Date immediately after giving effect to all of the
assignments and assumptions described in the immediately preceding sentence
shall be deemed to be a Term A Advance made by such Term A Lender to the
Borrower hereunder on the Effective Date for all purposes of this Agreement.
Amounts purchased and assumed (or, in the case of any Term A Lender that is also
an Existing Lender, retained) by the Term A Lenders under this Section 2.01(a)
and repaid or prepaid may not be reborrowed.
(b) The Term B Advances. Each of the Existing Lenders will, as
of the Effective Date, sell and assign to the other Term B Lenders an undivided
interest in and to all of its respective rights and obligations under and in
respect of the Existing Term B Advances (other than that portion of the Existing
Term B Advances that is equal to the amount of such Existing Lender's Term B
Commitment on the Effective Date), and each of the other Term B Lenders
severally agrees, on the terms and conditions hereinafter set forth, to purchase
and assume an undivided interest in that portion of all Existing Term B Advances
being so sold and assigned by the Existing Lenders on the Effective Date that is
equal to its Term B Commitment on such date. The Existing Term B Advance owing
to each of the Term B Lenders on the Effective Date immediately after giving
effect to all of the assignments and assumptions described in the immediately
preceding sentence shall be deemed to be a Term B Advance made by such Term B
Lender to the Borrower hereunder on the Effective Date for all purposes of this
Agreement. Amounts purchased and assumed (or, in the case of any Term B Lender
that is also an Existing Lender, retained) by the Term B Lenders under this
Section 2.01(b) and repaid or prepaid may not be reborrowed.
(c) The Revolving Credit Advances. Each of the Existing
Lenders will, as of the Effective Date, sell and assign to the other Revolving
Credit Lenders an undivided interest in and to all of its respective rights and
obligations under and in respect of the Existing Revolving Credit Advances
(other than the portion of the Existing Revolving Credit Advances that is equal
to such Existing Lender's Pro Rata Share (based on its Revolving Credit
Commitment on the Effective Date) of all Existing Revolving Credit Advances
being so sold and assigned by the Existing Lenders on such date), and each of
the other Revolving Credit Lenders severally agrees, on the terms and conditions
hereinafter set forth, to purchase and assume an undivided interest in its Pro
Rata Share (based on its Revolving Credit Commitment on the Effective Date) of
all Existing Revolving Credit Advances outstanding on such date. The Existing
Revolving Credit Advance owing to each of the Revolving Credit Lenders on the
Effective Date immediately after giving effect to all of the assignments and
assumptions described in the immediately preceding sentence shall be deemed to
be a Revolving Credit Advance made by such Revolving Credit Lender to the
Borrower hereunder on the Effective Date for all purposes of this Agreement.
Each of the Revolving Credit Lenders severally further agrees, on the terms and
conditions hereinafter set forth, to make additional Revolving Credit Advances
to the Borrower from time to time on any Business Day during the period from the
Effective Date until the Termination Date for the Revolving Credit Facility in
an amount for each such Revolving Credit Advance not to exceed the Unused
Revolving Credit Commitment of such Revolving Credit Lender at such time. Each
of the Revolving Credit Borrowings shall be in an aggregate amount of $3,000,000
or an integral multiple of $500,000 in excess thereof (other than a Revolving
Credit Borrowing the proceeds of which shall be used solely to repay or prepay
in full the Swing Line Advances and the Letter of Credit Advances outstanding at
such time) or, if less, the amount of the aggregate Unused Revolving Credit
Commitments at the time of such Revolving Credit Borrowing. Each of the
Revolving Credit Borrowings shall consist of Revolving Credit Advances made
simultaneously by the Revolving Credit Lenders in accordance with their
respective Pro Rata Shares of the Revolving Credit Facility. Within the limits
of the Unused Revolving Credit Commitments
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of the Revolving Credit Lenders in effect from time to time, the Borrower may
borrow under this Section 2.01(c), prepay pursuant to Section 2.06(a) and
reborrow under this Section 2.01(c).
(d) The Swing Line Advances. The Borrower may request the
Swing Line Bank to make, and the Swing Line Bank shall make, unless it promptly
notifies the Borrower of its reasonable objection to doing so, on the terms and
conditions hereinafter set forth, Swing Line Advances to the Borrower from time
to time on any Business Day during the period from the Effective Date until the
Termination Date for the Swing Line Facility in an amount (i) for all
outstanding Swing Line Advances not to exceed the Swing Line Facility on such
Business Day and (ii) for each such Swing Line Advance not to exceed the
aggregate Unused Revolving Credit Commitments of the Revolving Credit Lenders on
such Business Day. No Swing Line Advance shall be used for the purpose of
funding the payment of principal of any other Swing Line Advance. Each Swing
Line Advance shall be in an amount of $250,000 or an integral multiple of
$50,000 in excess thereof and shall be comprised of a Base Rate Advance. Within
the limits of the first sentence of this Section 2.01(d), so long as the Swing
Line Bank has not notified the Borrower of its reasonable objection to making
Swing Line Advances, the Borrower may borrow under this Section 2.01(d), repay
pursuant to Section 2.04(d) or prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(d).
(e) Letters of Credit. The Borrower, the Issuing Bank and each
of the Revolving Credit Lenders hereby agree that each of the Existing Letters
of Credit shall, on and after the Effective Date, continue as and be deemed for
all purposes of this Agreement to be a Letter of Credit issued and outstanding
under the terms of this Agreement. The Issuing Bank agrees, on the terms and
conditions hereinafter set forth, to issue letters of credit (each a "Letter of
Credit") in U.S. dollars for the account of the Borrower from time to time on
any Business Day during the period from the Effective Date to ten days prior to
the scheduled Termination Date for the Letter of Credit Facility (i) in an
aggregate Available Amount for all outstanding Letters of Credit not to exceed
the Letter of Credit Facility on such Business Day and (ii) in an Available
Amount for each such Letter of Credit not to exceed the aggregate Unused
Revolving Credit Commitment of the Revolving Credit Lenders on such Business
Day. No Trade Letter of Credit shall have an expiration date later than the
earlier of (A) ten days prior to the scheduled Termination Date for the Letter
of Credit Facility and (B) 60 days after the date of issuance thereof. No
Standby Letter of Credit shall have an expiration date (including all rights of
the Borrower or the beneficiary of such Letter of Credit to require renewal)
later than the earlier of (1) 30 days prior to the scheduled Termination Date
for the Letter of Credit Facility and (2) one year after the date of issuance
thereof, but any such Standby Letter of Credit may by its terms be renewable
annually upon notice (a "Notice of Renewal") given to the Issuing Bank and the
Administrative Agent on or prior to any date for notice of renewal set forth in
such Standby Letter of Credit, but in any event at least three Business Days
prior to the date of the proposed renewal of such Standby Letter of Credit and
upon fulfillment of the applicable conditions set forth in Article III, unless
the Issuing Bank has notified the Borrower (with a copy to the Administrative
Agent) on or prior to the date for notice of termination set forth in such
Standby Letter of Credit but in any event at least ten Business Days prior to
the date of automatic renewal of its election not to renew such Standby Letter
of Credit (a "Notice of Termination"); provided that the terms of each of the
Standby Letters of Credit that is automatically renewable annually (1) shall
require the Issuing Bank to give the beneficiary of such Standby Letter of
Credit notice of any Notice of Termination, (2) shall permit such beneficiary,
upon receipt of such notice, to draw under such Standby Letter of Credit prior
to the date on which such Standby Letter of Credit otherwise would have been
automatically renewed and (3) shall not permit the expiration date (after giving
effect to any renewal) of such Standby Letter of Credit in any event to be
extended to a date that is later than 30 days prior to the scheduled Termination
Date for the Letter of Credit Facility. If either a Notice of Renewal is not
given
<PAGE>
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by the Borrower or a Notice of Termination is given by the Issuing Bank pursuant
to the immediately preceding sentence, the related Standby Letter of Credit
shall expire on the date on which it otherwise would have been automatically
renewed; provided, however, that in the absence of receipt of a Notice of
Renewal the Issuing Bank may in its discretion, unless instructed to the
contrary by the Administrative Agent or the Borrower, deem that a Notice of
Renewal had been timely delivered and, in such case, a Notice of Renewal shall
be deemed to have been so delivered for all purposes under this Agreement.
Within the limits of the Letter of Credit Facility, and subject to the limits
referred to above in this Section 2.01(e), the Borrower may request the issuance
of Letters of Credit under this Section 2.01(e), repay any Letter of Credit
Advances resulting from drawings thereunder pursuant to Section 2.03(c) and
request the issuance of additional Letters of Credit under this Section 2.01(e).
(f) Clean-Down. Notwithstanding any of the provisions of
Sections 2.01(c), 2.01(d) and 2.01(e), no Borrowing may be made under Section
2.01(c) or 2.01(d) and no new Letter of Credit may be issued under Section
2.01(e) during any Clean-Down Period unless, in each case, the aggregate
principal amount of all Revolving Credit Advances, Swing Line Advances and
Letter of Credit Advances outstanding (or to be outstanding) after giving effect
to any such Borrowing or any such issuance, as the case may be, shall not exceed
$10,000,000.
SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b) or 2.03 or in respect of any Borrowing requested to
be made on the Effective Date, in which case notice shall be given on the
Effective Date, each Borrowing shall be made on notice, given not later than
1:00 P.M. (Charlotte, North Carolina time) on the third Business Day prior to
the date of the proposed Borrowing in the case of any Borrowing comprised of
Eurodollar Rate Advances, or on the first Business Day prior to the date of the
proposed Borrowing in the case of any Borrowing comprised of Base Rate Advances,
by the Borrower to the Administrative Agent, which shall give prompt notice
thereof to each of the Appropriate Lenders by telex or telecopier. Each notice
of a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed
immediately in writing, or by telex or telecopier, shall be in substantially the
form of Exhibit B-1 hereto and duly executed by a Responsible Officer of the
Borrower, and shall specify therein: (i) the requested date of such Borrowing
(which shall be a Business Day); (ii) the Facility under which such Borrowing is
requested to be made; (iii) the Type of Advances requested to comprise such
Borrowing; (iv) the requested aggregate principal amount of such Borrowing; and
(v) in the case of a Borrowing comprised of Eurodollar Rate Advances, the
requested duration of the initial Interest Period for each such Eurodollar Rate
Advance (and, if the requested duration of such initial Interest Period is
specified to be nine or twelve months, the desired alternative Interest Period
for each such Eurodollar Rate Advance). Each Appropriate Lender shall, before
1:00 P.M. (Charlotte, North Carolina time) on the date of such Borrowing, make
available for the account of its Applicable Lending Office to the Administrative
Agent at the Administrative Agent's Account, in same day funds, such Lender's
Pro Rata Share of such Borrowing. After the Administrative Agent's receipt of
such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Administrative Agent will make such funds available to the
Borrower by crediting the Borrower's Account; provided, however, that, in the
case of any Revolving Credit Borrowing, the Administrative Agent shall first
make a portion of such funds equal to the aggregate principal amount of all
Swing Line Advances and Letter of Credit Advances made by the Swing Line Bank
and the Issuing Bank, respectively, and by any of the Revolving Credit Lenders
and outstanding on the date of such Revolving Credit Borrowing, together with
all accrued and unpaid interest thereon to and as of such date, available to the
Swing Line Bank or the Issuing Bank, as the case may be, and to each such
Revolving Credit Lender for repayment of such outstanding Swing Line Advances
and Letter of Credit Advances made thereby.
<PAGE>
-47-
(b) (i) Each Swing Line Borrowing shall be made initially by
the Swing Line Bank on notice, given not later than 2:00 P.M. (Charlotte, North
Carolina time) on the date of the proposed Swing Line Borrowing, by the Borrower
to the Swing Line Bank and the Administrative Agent. Each notice of a Swing Line
Borrowing (a "Notice of Swing Line Borrowing") shall be by telephone, confirmed
immediately in writing, or by telex or telecopier, shall be in substantially the
form of Exhibit B-2 hereto and duly executed by a Responsible Officer of the
Borrower, and shall specify therein: (A) the requested date of such Swing Line
Borrowing (which shall be a Business Day); (B) the requested amount of such
Swing Line Borrowing; and (C) the requested maturity of such Swing Line
Borrowing (which maturity shall be no later than the 30th day after the
requested date of such Swing Line Borrowing). Unless the Swing Line Bank
promptly notifies the Borrower of its reasonable objection to making such Swing
Line Borrowing, the Swing Line Bank will make the amount thereof available for
the account of its Applicable Lending Office to the Administrative Agent at the
Administrative Agent's Account, in same day funds. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Administrative Agent will make such funds
available to the Borrower by crediting the Borrower's Account.
(ii) Upon demand by the Swing Line Bank, with a copy of such
demand to the Administrative Agent (which shall give prompt notice thereof to
each of the Revolving Credit Lenders), each of the Revolving Credit Lenders
shall purchase from the Swing Line Bank, and the Swing Line Bank shall sell and
assign to each of the Revolving Credit Lenders, such Revolving Credit Lender's
Pro Rata Share of each of the outstanding Swing Line Advances owing to the Swing
Line Bank as of the date of such demand, by making available for the account of
its Applicable Lending Office to the Administrative Agent at the Administrative
Agent's Account for the account of the Swing Line Bank, in same day funds, an
amount equal to its Pro Rata Share of each such outstanding Swing Line Advance.
Promptly after receipt of such funds, the Administrative Agent shall transfer
such funds to the Swing Line Bank at its Applicable Lending Office. Each of the
Revolving Credit Lenders hereby agrees to purchase its Pro Rata Share of each
outstanding Swing Line Advance owing to the Swing Line Bank for which a demand
for the purchase thereof has been made on (A) the Business Day on which demand
therefor is made by the Swing Line Bank so long as notice of such demand is
given not later than 1:00 P.M. (Charlotte, North Carolina time) on such Business
Day or (B) the first Business Day next succeeding such demand if notice of such
demand is given after such time. The Borrower hereby agrees to each such sale
and assignment. Upon any such assignment by the Swing Line Bank to any of the
Revolving Credit Lenders of a portion of a Swing Line Advance owing to the Swing
Line Bank, the Swing Line Bank represents and warrants to such Revolving Credit
Lender that the Swing Line Bank is the legal and beneficial owner of such
interest being assigned by it, free and clear of any adverse claim, but makes no
other representation or warranty and assumes no responsibility with respect to
such Swing Line Advance, any of the Loan Documents or any of the Loan Parties.
If and to the extent that any of the Revolving Credit Lenders shall not have so
made its Pro Rata Share of any applicable Swing Line Advance available to the
Administrative Agent in accordance with the foregoing provisions of this Section
2.02(b)(ii), such Revolving Credit Lender hereby agrees to pay to the
Administrative Agent forthwith on demand the amount of its Pro Rata Share of
such Swing Line Advance, together with all accrued and unpaid interest thereon,
for each day from the date of demand therefor by the Swing Line Bank until the
date on which such amount is paid to the Administrative Agent, at the Federal
Funds Rate. If any of the Revolving Credit Lenders shall pay to the
Administrative Agent the amount of its Pro Rata Share of any applicable Swing
Line Advance for the account of the Swing Line Bank on any Business Day, such
amount so paid in respect of principal shall constitute a Swing Line Advance
made by such Revolving Credit Lender on such Business Day for all purposes of
this Agreement, and the outstanding principal amount of the applicable Swing
Line Advance made by the Swing Line Bank shall be reduced by such amount on such
Business Day.
<PAGE>
-48-
(iii) The Obligation of each of the Revolving Credit Lenders
to purchase their respective Pro Rata Shares of each outstanding Swing Line
Advance owing to the Swing Line Bank upon demand for the purchase thereof
pursuant to clause (ii) of this Section 2.02(b) shall be absolute, unconditional
and irrevocable, and shall be made strictly in accordance with the terms thereof
under all circumstances, including, without limitation, the following
circumstances:
(A) any lack of validity or enforceability of any of the Loan
Documents or any of the other agreements or instruments relating
thereto;
(B) the existence of any claim, setoff, defense or other right
that such Revolving Credit Lender may have at any time against the
Swing Line Bank, the Borrower or any other Person, whether in
connection with the transactions contemplated by the Loan Documents or
any unrelated transaction;
(C) the occurrence and continuance of any Default; or
(D) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
(iv) The failure of any of the Revolving Credit Lenders to
purchase its Pro Rata Share of any outstanding Swing Line Advance owing to the
Swing Line Bank for which a demand for the purchase thereof has been made
pursuant to clause (ii) of this Section 2.02(b) shall not relieve any of the
other Revolving Credit Lenders of its obligation to purchase its Pro Rata Share
of such outstanding Swing Line Advance on the date of demand therefor, but none
of the Revolving Credit Lenders shall be responsible for the failure of any of
the other Revolving Credit Lenders to purchase its Pro Rata Share of such
outstanding Swing Line Advance on the date of demand therefor.
(c) Anything in subsection (a) of this Section 2.02 to the
contrary notwithstanding, the Borrower may not select Eurodollar Rate Advances
for any Borrowing (i) made on the Effective Date (it being understood and agreed
that the Existing Advances that are purchased and assumed (or, in the case of
any of the Initial Lenders that is also an Existing Lender, retained) by the
Appropriate Lenders under each of the Facilities on the Effective Date may
continue as (or otherwise be Converted into) Eurodollar Rate Advances on such
date), (ii) if the aggregate amount of such Borrowing is less than $3,000,000 or
(iii) if the obligation of the Appropriate Lenders to make Eurodollar Rate
Advances shall then be suspended pursuant to Section 2.09(b) or 2.10. In
addition, the Term A Advances may not be outstanding as part of more than three
separate Term A Borrowings comprised of Eurodollar Rate Advances, the Term B
Advances may not be outstanding as part of more than three separate Term B
Borrowings comprised of Eurodollar Rate Advances, and the Revolving Credit
Advances may not be outstanding as part of more than eight separate Revolving
Credit Borrowings comprised of Eurodollar Rate Advances.
(d) Each Notice of Borrowing and Notice of Swing Line
Borrowing shall be irrevocable and binding on the Borrower. In the case of any
Borrowing that the related Notice of Borrowing specifies is to be comprised of
Eurodollar Rate Advances, the Borrower shall indemnify each of the Appropriate
Lenders against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified in the Notice of
Borrowing for such Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss (excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender
<PAGE>
-49-
to fund the Eurodollar Rate Advance to be made by such Lender as part of such
Borrowing when such Eurodollar Rate Advance, as a result of such failure, is not
made on such date. A certificate of the Lender requesting compensation pursuant
to this Section 2.02(d), submitted to the Borrower by such Lender (with a copy
to the Administrative Agent) and specifying therein the amount of such
additional compensation (including the basis of calculation thereof), shall be
conclusive and binding for all purposes, absent manifest error.
(e) Unless the Administrative Agent shall have received notice
from an Appropriate Lender prior to the date of any Borrowing under a Facility
under which such Lender has a Commitment that such Lender will not make
available to the Administrative Agent such Lender's Pro Rata Share of such
Borrowing, the Administrative Agent may assume that such Lender has made the
amount of such Pro Rata Share available to the Administrative Agent on the date
of such Borrowing in accordance with subsection (a) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make a corresponding
amount available to the Borrower on such date. If and to the extent that such
Lender shall not have so made the amount of such Pro Rata Share available to the
Administrative Agent, such Lender and the Borrower severally agree to repay or
to pay to the Administrative Agent forthwith on demand such corresponding
amount, together with all accrued and unpaid interest thereon, for each day from
the date on which such corresponding amount is made available to the Borrower
until the date on which such corresponding amount is repaid or paid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable under Section 2.07 at such time to Advances comprising part of such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall pay to the Administrative Agent such corresponding amount, such
corresponding amount so paid shall constitute such Lender's Advance as part of
such Borrowing for all purposes under this Agreement.
(f) The failure of any of the Lenders to make the Advance to
be made by it as part of any Borrowing shall not relieve any of the other
Lenders of its obligation, if any, hereunder to make its Advance on the date of
such Borrowing, but none of the Lenders shall be responsible for the failure of
any of the other Lenders to make the Advance to be made by such other Lender on
the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
issued upon notice, given not later than 3:00 P.M. (Charlotte, North Carolina
time) on the fifth Business Day prior to the date of the proposed issuance of
such Letter of Credit (or such later day as the Issuing Bank in its sole
discretion shall agree), by the Borrower to the Issuing Bank, which shall give
the Administrative Agent and each of the Revolving Credit Lenders prompt notice
thereof by telex or telecopier. Each notice of issuance of a Letter of Credit (a
"Notice of Issuance") shall be by telephone, confirmed immediately in writing,
or by telex or telecopier, shall be duly executed by a Responsible Officer of
the Borrower, and shall specify therein: (i) the requested date of such issuance
(which shall be a Business Day); (ii) the requested type and Available Amount of
such Letter of Credit; (iii) the requested expiration date of such Letter of
Credit (which shall comply with the requirements of Section 2.01(e)); (iv) the
name and address of the proposed beneficiary of such Letter of Credit; and (v)
the proposed form of such Letter of Credit, and shall be accompanied by such
application and agreement for letters of credit as the Issuing Bank may specify
to the Borrower for use in connection with such requested Letter of Credit (a
"Letter of Credit Agreement"). If the requested form of such Letter of Credit is
acceptable to the Issuing Bank in its sole discretion, the Issuing Bank will,
upon fulfillment of the applicable conditions set forth in Article III, make
such Letter of Credit available to the Borrower at its office referred to in
Section 8.02 or as otherwise agreed with the Borrower in connection with such
issuance. If
<PAGE>
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and to the extent that the provisions of any Letter of Credit Agreement shall
conflict with this Agreement, the provisions of this Agreement shall govern.
(b) Letter of Credit Reports. The Issuing Bank shall furnish
to the Administrative Agent and each of the Revolving Credit Lenders on the
first Business Day of each calendar quarter a written report setting forth (i)
the issuance and expiration dates of all Letters of Credit issued during the
immediately preceding calendar quarter and the drawings under all Letters of
Credit outstanding during such immediately preceding calendar quarter and (ii)
the average daily aggregate Available Amount of all Letters of Credit
outstanding during the immediately preceding calendar quarter.
(c) Drawing and Reimbursement. (i) The payment by the Issuing
Bank of a draft drawn under any Letter of Credit shall constitute for all
purposes of this Agreement the making by the Issuing Bank of a Letter of Credit
Advance, which shall be a Base Rate Advance, in the amount of such draft. Upon
demand by the Issuing Bank, with a copy of such demand to the Administrative
Agent, each of the Revolving Credit Lenders shall purchase from the Issuing
Bank, and the Issuing Bank shall sell and assign to each of the Revolving Credit
Lenders, such Revolving Credit Lender's Pro Rata Share of each of the
outstanding Letter of Credit Advances owing to the Issuing Bank as of the date
of such demand, by making available for the account of its Applicable Lending
Office to the Administrative Agent for the account of the Issuing Bank, at the
Administrative Agent's Account, in same day funds, an amount equal to its Pro
Rata Share of each such outstanding Letter of Credit Advance. Promptly after
receipt of such funds, the Administrative Agent shall transfer such funds to the
Issuing Bank at its Applicable Lending Office. Each of the Revolving Credit
Lenders hereby agrees to purchase its Pro Rata Share of each outstanding Letter
of Credit Advance owing to the Issuing Bank for which a demand for the purchase
thereof has been made on (A) the Business Day on which demand therefor is made
by the Issuing Bank so long as notice of such demand is given not later than
1:00 P.M. (Charlotte, North Carolina time) on such Business Day or (B) the first
Business Day next succeeding such demand if notice of such demand is given after
such time. The Borrower hereby agrees to each such sale and assignment. Upon any
such assignment by the Issuing Bank to any of the Revolving Credit Lenders of a
portion of a Letter of Credit Advance owing to the Issuing Bank, the Issuing
Bank represents and warrants to such Revolving Credit Lender that the Issuing
Bank is the legal and beneficial owner of such interest being assigned by it,
free and clear of any adverse claim, but makes no other representation or
warranty and assumes no responsibility with respect to such Letter of Credit
Advance, any of the Loan Documents or any of the Loan Parties. If and to the
extent that any of the Revolving Credit Lenders shall not have so made its Pro
Rata Share of any applicable Letter of Credit Advance available to the
Administrative Agent in accordance with the foregoing provisions of this Section
2.03(c)(i), such Revolving Credit Lender hereby agrees to pay to the
Administrative Agent forthwith on demand the amount of its Pro Rata Share of
such Letter of Credit Advance, together with all accrued and unpaid interest
thereon, for each day from the date of demand therefor by the Issuing Bank until
the date on which such amount is paid to the Administrative Agent, at the
Federal Funds Rate. If any of the Revolving Credit Lenders shall pay to the
Administrative Agent the amount of its Pro Rata Share of any applicable Letter
of Credit Advance for the account of the Issuing Bank on any Business Day, such
amount so paid in respect of principal shall constitute a Letter of Credit
Advance made by such Revolving Credit Lender on such Business Day for all
purposes of this Agreement, and the outstanding principal amount of the
applicable Letter of Credit Advance made by the Issuing Bank shall be reduced by
such amount on such Business Day.
(ii) The Obligation of each of the Revolving Credit Lenders to
purchase their respective Pro Rata Shares of each outstanding Letter of Credit
Advance owing to the Issuing Bank upon demand for the purchase thereof pursuant
to clause (i) of this Section 2.03(c) shall be absolute, unconditional and
<PAGE>
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irrevocable, and shall be made strictly in accordance with the terms thereof
under all circumstances, including, without limitation, the following
circumstances:
(A) any lack of validity or enforceability of any of the Loan
Documents, any of the Letter of Credit Agreements, any of the Letters of
Credit or any of the other agreements or instruments relating thereto
(collectively, the "L/C Related Documents");
(B) the existence of any claim, setoff, defense or other right that
such Revolving Credit Lender may have at any time against any beneficiary
or any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank, the
Borrower or any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction;
(C) the occurrence and continuance of any Default; or
(D) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
(d) Failure to Make Letter of Credit Advances. The failure of any of the
Revolving Credit Lenders to purchase its Pro Rata Share of any outstanding
Letter of Credit Advance owing to the Issuing Bank for which a demand for the
purchase thereof has been made pursuant to Section 2.03(c)(i) shall not relieve
any of the other Revolving Credit Lenders of its obligation to purchase its Pro
Rata Share of such outstanding Letter of Credit Advance on the date of demand
therefor, but none of the Revolving Credit Lenders shall be responsible for the
failure of any of the other Revolving Credit Lenders to purchase its Pro Rata
Share of such outstanding Letter of Credit Advance on the date of demand
therefor.
SECTION 2.04. Repayment of Advances. (a) Term A Advances. The Borrower
shall repay to the Administrative Agent for the ratable account of the Term A
Lenders the aggregate principal amount of all Term A Advances outstanding on the
following dates in the respective amounts set forth opposite such dates (which
amounts shall be reduced as a result of the application of prepayments in
accordance with the order of priority set forth in Section 2.05):
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
June 30, 1999 $2,500,000
September 30, 1999 2,500,000
December 31, 1999 2,500,000
March 31, 2000 2,500,000
June 30, 2000 2,500,000
September 30, 2000 2,500,000
December 31, 2000 2,500,000
March 31, 2001 2,500,000
June 30, 2001 2,500,000
September 30, 2001 2,500,000
December 31, 2001 2,500,000
<PAGE>
-52-
<CAPTION>
Date Amount
---- ------
<S> <C>
March 31, 2002 2,500,000
June 30, 2002 2,500,000
September 30, 2002 $2,500,000
December 31, 2002 2,500,000
March 31, 2003 2,500,000
June 30, 2003 4,375,000
September 30, 2003 4,375,000
December 31, 2003 4,375,000
March 31, 2004 4,375,000
June 30, 2004 4,375,000
September 30, 2004 4,375,000
December 31, 2004 4,375,000
January 20, 2005 4,375,000
</TABLE>
provided, however, that the final principal repayment installment of the Term A
Advances shall be repaid on the Termination Date for the Term A Facility and in
any event shall be in an amount equal to the aggregate principal amount of all
Term A Advances outstanding on such date.
(b) Term B Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Term B Lenders the aggregate
principal amount of all Term B Advances outstanding on the following dates in
the respective amounts set forth opposite such dates (which amounts shall be
reduced as a result of the application of prepayments in accordance with the
order of priority set forth in Section 2.05):
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
June 30, 1999 $375,000
September 30, 1999 375,000
December 31, 1999 375,000
March 31, 2000 375,000
June 30, 2000 375,000
September 30, 2000 375,000
December 31, 2000 375,000
March 31, 2001 375,000
June 30, 2001 375,000
September 30, 2001 375,000
December 31, 2001 375,000
March 31, 2002 375,000
June 30, 2002 375,000
</TABLE>
<PAGE>
-53-
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
September 30, 2002 375,000
December 31, 2002 375,000
March 31, 2003 375,000
June 30, 2003 $ 375,000
September 30, 2003 375,000
December 31, 2003 375,000
March 31, 2004 375,000
June 30, 2004 375,000
September 30, 2004 375,000
December 31, 2004 375,000
March 31, 2005 375,000
June 30, 2005 35,250,000
September 30, 2005 35,250,000
December 31, 2005 35,250,000
January 20, 2006 35,250,000
</TABLE>
provided, however, that the final principal repayment installment of the Term B
Advances shall be repaid on the Termination Date for the Term B Facility and in
any event shall be in an amount equal to the aggregate principal amount of all
Term B Advances outstanding on such date.
(c) Revolving Credit Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Termination Date for the Revolving Credit Facility the aggregate principal
amount of all Revolving Credit Advances outstanding on such date.
(d) Swing Line Advances. The Borrower shall repay to the
Administrative Agent for the account of the Swing Line Bank and, if applicable,
each of the Revolving Credit Lenders on the earlier of (i) the maturity date for
each Swing Line Advance as specified in the related Notice of Swing Line
Borrowing (which maturity shall be no later than the 30th day after the date on
which such Swing Line Borrowing was initially made by the Swing Line Bank) and
(ii) the Termination Date for the Swing Line Facility the principal amount of
each such Swing Line Advance made by the Swing Line Bank and each such Revolving
Credit Lender and outstanding on such date.
(e) Letter of Credit Advances. (i) The Borrower shall repay to
the Administrative Agent for the account of the Issuing Bank and, if applicable,
each of the Revolving Credit Lenders on the earlier of (A) the date of demand
therefor and (B) the Termination Date for the Letter of Credit Facility the
principal amount of each such Letter of Credit Advance made by the Issuing Bank
and each such Revolving Credit Lender and outstanding on such date.
(ii) The Obligations of the Borrower under this Agreement, any
of the Letter of Credit Agreements and any of the other agreements or
instruments relating to any Letter of Credit shall be absolute, unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances (subject to the
<PAGE>
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rights afforded to the Borrower under Section 8.08), including, without
limitation, the following circumstances:
(A) any lack of validity or enforceability of any of the L/C Related
Documents;
(B) any change in the time, manner or place of payment of, or in any
of the other terms of, all or any of the Obligations of the Borrower in
respect of any of the L/C Related Documents or any other amendment or
waiver of or any consent to departure from all or any of the L/C Related
Documents;
(C) the existence of any claim, setoff, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank or any other Person,
whether in connection with the transactions contemplated by the L/C Related
Documents or any unrelated transaction;
(D) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(E) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit, unless such draft is substantially
different from the applicable form specified by such Letters of Credit;
(F) any exchange, release or nonperfection of any Collateral or other
collateral, or any release or amendment or waiver of or consent to
departure from the Subsidiaries Guarantee or any other guarantee, for all
or any of the Obligations of the Borrower under or in respect of the L/C
Related Documents; or
(G) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor.
SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional.
The Borrower may, upon at least one Business Day's notice to the Administrative
Agent, terminate in whole or reduce in part the unused portion of the Letter of
Credit Facility or the Unused Revolving Credit Commitments; provided that each
partial reduction of a Facility shall be in an aggregate amount of $3,000,000 or
an integral multiple of $500,000 in excess thereof or, if less, the aggregate
amount of such Facility.
(b) Mandatory. (i) The Term A Facility shall be automatically and
permanently reduced on each date on which the Term A Advances outstanding
thereunder are repaid or prepaid by an amount equal to the amount, if any, by
which (A) the Term A Facility immediately prior to such reduction exceeds (B)
the aggregate principal amount of all Term A Advances outstanding on such date
(after giving effect to such repayment or prepayment).
<PAGE>
-55-
(ii) The Term B Facility shall be automatically and
permanently reduced on each date on which the Term B Advances outstanding
thereunder are repaid or prepaid by an amount equal to the amount, if any, by
which (A) the Term B Facility immediately prior to such reduction exceeds (B)
the aggregate principal amount of all Term B Advances outstanding on such date
(after giving effect to such repayment or prepayment).
(iii) The Revolving Credit Facility shall be automatically and
permanently reduced on each date on which the prepayment of Revolving Credit
Advances outstanding thereunder is required to be made pursuant to Section
2.06(b)(i), 2.06(b)(ii) or 2.06(b)(vii) by an amount equal to the applicable
Reduction Amount.
(iv) The Swing Line Facility shall be automatically and
permanently reduced on the date of each reduction in the Revolving Credit
Facility by an amount equal to the amount, if any, by which (A) the Swing Line
Facility on such date exceeds (B) the Revolving Credit Facility on such date
(after giving effect to such reduction of the Revolving Credit Facility on such
date).
(v) The Letter of Credit Facility shall be automatically and
permanently reduced on the date of each reduction in the Revolving Credit
Facility by an amount equal to the amount, if any, by which (A) the Letter of
Credit Facility on such date exceeds (B) the Revolving Credit Facility on such
date (after giving effect to such reduction of the Revolving Credit Facility).
(c) Application of Commitment Reductions. Upon each reduction
of a Facility pursuant to this Section 2.05, the Commitment of each of the
Appropriate Lenders under such Facility shall be reduced by such Lender's Pro
Rata Share of the amount by which such Facility is reduced.
SECTION 2.06. Prepayments. (a) Optional. The Borrower may,
upon at least three Business Days' notice to the Administrative Agent stating
the proposed date and aggregate principal amount of the prepayment, and if such
notice is given the Borrower shall, prepay the aggregate principal amount of the
Advances comprising part of the same Borrowing and outstanding on such date, in
whole or ratably in part; provided, however, that (i) each partial prepayment
shall be in an aggregate principal amount of $3,000,000 or an integral multiple
of $500,000 in excess thereof and (ii) in the case of any such prepayment of a
Eurodollar Rate Advance on a date other than the last day of an Interest Period
therefor, the Borrower shall also pay any amounts owing in respect of such
Eurodollar Rate Advance pursuant to Section 8.04(c). Each prepayment of Term
Advances pursuant to this Section 2.06(a) shall be applied ratably to the Term
Facilities and, in the case of each of the Term Facilities, first, to the next
two succeeding principal repayment installments thereof in direct order of
maturity until such principal repayment installments are repaid in full and
second, to the remaining principal repayment installments thereof in on a pro
rata basis.
(b) Mandatory. (i) The Borrower shall, on the fifth day
following each date on which the Borrower delivers the Required Financial
Information for any Fiscal Year (but in any event within 95 days after the end
of each Fiscal Year), commencing with the Required Financial Information for the
Fiscal Year ending December 31, 1999, prepay an aggregate principal amount of
the Advances comprising part of the same Borrowings (and, if applicable, deposit
an amount in the L/C Cash Collateral Account) in an amount equal to 50% of the
amount of Excess Cash Flow for such Fiscal Year. Each prepayment of Advances and
deposit into the L/C Cash Collateral Account pursuant to this Section 2.06(b)(i)
shall be applied, first, ratably to the Term Facilities and, in the case of each
of the Term Facilities, to the principal
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repayment installments thereof on a pro rata basis until all Term Advances are
paid in full and, thereafter, to the Revolving Credit Facility in the manner set
forth in clause (vi) of this Section 2.06(b).
(ii) The Borrower shall, on the date of receipt of the Net
Cash Proceeds by the Borrower or any of its Subsidiaries from:
(A) the sale, lease, transfer or other disposition of any
property or assets of the Borrower or any of its Subsidiaries (other
than any property or assets expressly permitted to be sold, leased,
transferred or disposed of under clause (i), (ii) or (iii) of Section
5.02(d) and, except to the extent such prepayment is required
thereunder, under subclauses (iv) and (v) of Section 5.02(d));
(B) the incurrence or issuance by the Borrower or any of its
Subsidiaries of any Indebtedness (other than Indebtedness expressly
permitted to be incurred or issued pursuant to subclause (i)(B),
(ii)(A), (ii)(C) or (ii)(H) of Section 5.02(b));
(C) the issuance or sale by the Borrower or any of its
Subsidiaries of any Equity Interests therein (other than any Permitted
Affiliate Investment or any Equity Interests expressly permitted to be
issued and sold pursuant to clause (i), (ii), (vi), (ix) or (x) of
Section 5.02(f));
(D) the acceptance of any capital contributions by the
Borrower or any of its Subsidiaries (other than any Permitted Affiliate
Investment or clause (viii)(B) of Section 5.02(f)); and
(E) any Extraordinary Receipts received by or paid to or for
the account of the Borrower or any of its Subsidiaries and not
otherwise included in subclause (ii)(A), (ii)(B), (ii)(C) or (ii)(D) of
this Section 2.06(b),
prepay an aggregate principal amount of the Advances comprising part of the same
Borrowings (and, if applicable, deposit an amount in the L/C Cash Collateral
Account) in an amount equal to 50% of the amount of such Net Cash Proceeds, in
the case of subclauses (ii)(C) and (ii)(D) of this Section 2.06(b), and 100% of
the amount of such Net Cash Proceeds, in all other cases under this Section
2.06(b); provided, however, that, notwithstanding the foregoing provisions of
this Section 2.06(b)(ii), the Borrower shall not be required to prepay any
outstanding Advances or to cash collateralize any outstanding Letters of Credit
pursuant to this Section 2.06(b)(ii) with any of the Net Cash Proceeds received
by the Borrower from post-closing purchase price adjustments made pursuant to
Section 2.1 of the Recapitalization Agreement. Each prepayment of Advances and
deposit into the L/C Cash Collateral Account pursuant to this Section
2.06(b)(ii) shall be applied, first, ratably to the Term Facilities and, in the
case of each of the Term Facilities, to the principal repayment installments
thereof on a pro rata basis until all Term Advances are paid in full and,
thereafter, to the Revolving Credit Facility in the manner set forth in clause
(vi) of this Section 2.06(b).
(iii) The Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Revolving Credit Advances comprising part of
the same Borrowings, the Swing Line Advances and the Letter of Credit Advances
(and, if applicable, shall deposit an amount into the L/C Cash Collateral
Account) in an amount equal to the amount, if any, by which (A) the sum of (1)
the aggregate principal amount of all Revolving Credit Advances, Swing Line
Advances and Letter of Credit Advances outstanding on such Business Day and (2)
the aggregate Available Amount of all Letters of Credit outstanding on such
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Business Day exceeds (B) the Revolving Credit Facility on such Business Day
(after giving effect to any permanent reduction thereof pursuant to Section 2.05
on such Business Day).
(iv) The Borrower shall, on each Business Day, pay to the
Administrative Agent for deposit into the L/C Cash Collateral Account an amount
sufficient to cause the aggregate amount on deposit in the L/C Cash Collateral
Account on such Business Day to equal the amount, if any, by which (A) the
aggregate Available Amount of all Letters of Credit outstanding on such Business
Day exceeds (B) the Letter of Credit Facility on such Business Day (after giving
effect to any permanent reduction thereof pursuant to Section 2.05 on such
Business Day).
(v) The Borrower shall, on the first Business Day of each
Clean-Down Period, prepay an aggregate principal amount of the Revolving Credit
Advances comprising part of the same Borrowings, the Swing Line Advances and the
Letter of Credit Advances outstanding on such Business Day in an amount equal to
the amount by which (A) the aggregate principal amount of all Revolving Credit
Advances, Swing Line Advances and Letter of Credit Advances outstanding on such
Business Day exceeds (B) $10,000,000.
(vi) Prepayments of the Revolving Credit Facility made
pursuant to clause (i), (ii), (iii), (v) or (vii) of this Section 2.06(b),
first, shall be applied to prepay Letter of Credit Advances owing to the Issuing
Bank and outstanding at such time until all such Letter of Credit Advances are
paid in full, second, shall be applied to prepay Swing Line Advances owing to
the Swing Line Bank and outstanding at such time until all such Swing Line
Advances are paid in full, third, shall be applied to prepay Letter of Credit
Advances and Swing Line Advances owing to the Revolving Credit Lenders and
outstanding at such time until all such Letter of Credit Advances and Swing Line
Advances are paid in full, fourth, shall be applied to prepay Revolving Credit
Advances comprising part of the same Borrowings and outstanding at such time
until all Revolving Credit Advances are paid in full and, fifth, shall be
deposited in the L/C Cash Collateral Account to cash collateralize 100% of the
Available Amount of all Letters of Credit outstanding at such time; and, in the
case of prepayments of the Revolving Credit Facility required pursuant to clause
(i), (ii) or (vii) of this Section 2.06(b), the amount remaining, if any, after
the prepayment in full of all Advances outstanding at such time and the 100%
cash collateralization of the aggregate Available Amount of all Letters of
Credit outstanding at such time (the sum of such prepayment amounts, cash
collateralization amounts and remaining amount being, collectively, the
"Reduction Amount") may be retained by the Borrower for use by the Borrower and
its Subsidiaries in the ordinary course of their business, and the Revolving
Credit Facility shall be automatically and permanently reduced as set forth in
Section 2.05(b)(iii). Upon the drawing of any Letter of Credit for which funds
are on deposit in the L/C Cash Collateral Account, such funds shall be applied
(without any further action by or notice to or from the Borrower or any of the
other Loan Parties) to reimburse the Issuing Bank or the Revolving Credit
Lenders, as applicable.
(vii) Notwithstanding any of the other provisions of this
Section 2.06, (A) if, following the occurrence of any "Asset Sale" (as defined
in the applicable Senior Subordinated Notes Documents), the Borrower is required
to commit by a particular date (a "Commitment Date") to apply or to cause any of
its Subsidiaries to apply an amount equal to any of the "Asset Sale Proceeds"
(as defined in the applicable Senior Subordinated Notes Documents) thereof in a
particular manner, or to apply or to cause any of its Subsidiaries to apply by a
particular date (an "Application Date") an amount equal to any such "Asset Sale
Proceeds" in a particular manner, in either case in order to excuse the Borrower
from being required to make an offer to redeem or to repurchase all or a portion
of the Senior Subordinated Notes as a result of such "Asset Sale", and the
Borrower shall have failed to so commit or to so apply, or to have caused any of
its Subsidiaries to so commit or to so apply, an amount equal to such "Asset
Sale Proceeds" at least 30 days
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prior to the Commitment Date or the Application Date, as the case may be, or (B)
if the Borrower at any other time shall have failed to apply or to commit, or to
have caused any of its Subsidiaries to apply or to commit, an amount equal to
any such "Asset Sale Proceeds" and within 30 days thereafter (assuming no
further application or commitment of an amount equal to such "Asset Sale
Proceeds"), the Borrower would otherwise be required to make an offer to redeem
or to repurchase all or a portion of the Senior Subordinated Notes as a result
of such "Asset Sale", then, in either such case, the Borrower shall immediately
pay or cause to be paid to the Administrative Agent an amount equal to 100% of
such "Asset Sale Proceeds" to be applied to the prepayment of Advances
outstanding at such time and, if applicable, to cash collateralization of
Letters of Credit outstanding at such time, in each case, in the manner set
forth in clause (ii) of this Section 2.06(b) in such amounts as are required to
excuse the Borrower from making any such offer of redemption or repurchase.
(viii) Notwithstanding any of the other provisions of clause
(ii) of this Section 2.06(b), so long as no Default under Section 6.01(a) or
6.01(f) or Event of Default shall have occurred and be continuing, if any
prepayment of Eurodollar Rate Advances is required to be made under clause (i)
or (ii) of this Section 2.06(b) other than on the last day of the Interest
Period therefor, the Borrower may, in its sole discretion, direct the
Administrative Agent to deposit (and, if so directed, the Administrative Agent
shall deposit) the amount of any such prepayment otherwise required to be made
hereunder into the Cash Collateral Account until the last day of such Interest
Period, at which time the Administrative Agent shall be authorized (without any
further action by or notice to or from the Borrower or any of the other Loan
Parties) to apply such amount to the prepayment of such Advances in accordance
with the applicable provisions of this Section 2.06(b); provided, however, that
all such Eurodollar Rate Advances shall continue to bear interest as set forth
in Section 2.07 until the last day of the applicable Interest Period therefor.
(ix) Any of the Term B Lenders, at its option, may elect not
to accept any prepayment of the outstanding Term B Advances owing to it pursuant
to clause (i), (ii) or (vii) of this Section 2.06(b) so long as a corresponding
amount of Term A Advances remains outstanding at the time of such election, in
which event the provisions set forth in the next three succeeding sentences of
this Section 2.06(b)(ix) shall apply. Promptly upon receipt by the
Administrative Agent of the amount of any Excess Cash Flow pursuant to clause
(i) of this Section 2.06(b) or the amount of any Net Cash Proceeds pursuant to
clause (ii) or (vii) of Section 2.06(b), the Administrative Agent shall, so long
as (and to the extent that) a corresponding amount of aggregate Term A Advances
are outstanding on the date of such receipt, deposit the amount of such Excess
Cash Flow or such Net Cash Proceeds, as the case may be, applicable to the
prepayment of outstanding Term B Advances into the Cash Collateral Account
pending application of such amount on the related Mandatory Prepayment Date, and
promptly after the date of such receipt, the Administrative Agent shall give
written notice to each of the Term B Lenders of (A) the amount of Excess Cash
Flow or Net Cash Proceeds, as the case may be, so prepaid that, pursuant to the
applicable terms of this Section 2.06(b), is applicable to the prepayment of
outstanding Term B Advances (the "Mandatory Prepayment Amount") and (B) the date
on which the related prepayment of outstanding Term B Advances shall be made
(the "Mandatory Prepayment Date"), which date shall be no later than five
Business Days after the date of receipt of the related amount of Excess Cash
Flow or Net Cash Proceeds, as the case may be. Any Term B Lender that wishes to
decline its Pro Rata Share of such Mandatory Prepayment Amount on the related
Mandatory Prepayment Date (each a "Declining Term B Lender") shall give written
notice thereof to the Administrative Agent not later than 1:00 P.M. (Charlotte,
North Carolina time) at least two Business Days prior to the related Mandatory
Prepayment Date. The Administrative Agent shall, not later than 1:00 P.M. (New
York City time) on the related Mandatory Prepayment Date, (1) withdraw from the
Cash Collateral Account an amount equal to the aggregate amount so declined by
all of the Declining Term B Lenders (the
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"Declined Prepayment Amount") and apply such amount to the prepayment of the
Term A Advances outstanding on such Mandatory Prepayment Date, such prepayment
to be applied to the principal repayment installments thereof on a pro rata
basis, and (2) withdraw from the Cash Collateral Account an amount equal to the
difference between (x) the Mandatory Prepayment Amount and (y) the Declined
Prepayment Amount and apply such amount to the prepayment of the Term B Advances
owing to the Term B Lenders other than the Declining Term B Lenders and
outstanding on such Mandatory Prepayment Date, such prepayment to be applied to
the principal repayment installments owing to each such Term B Lender on a pro
rata basis.
(c) Prepayments to Include Accrued Interest, Etc. (i) All
prepayments under this Section 2.06 shall be made together with (A) accrued and
unpaid interest to the date of such prepayment on the principal amount so
prepaid and (B) in the case of any such prepayment of a Eurodollar Rate Advance
on a date other than the last day of an Interest Period therefor, any amounts
owing in respect of such Eurodollar Rate Advance pursuant to 8.04(c).
(ii) Prepayments of Advances outstanding under any Facility
pursuant to this Section 2.06 shall be applied to Base Rate Advances comprising
part of the same Borrowings under such Facility and outstanding at such time
and/or to Eurodollar Rate Advances comprising part of the same Borrowings under
such Facility and outstanding at such time which have an Interest Period then in
effect for which the last day is the same as the date of such prepayment before
any such prepayment shall be applied to any other Eurodollar Rate Advances
comprising part of the same Borrowings under such Facility and outstanding at
such time.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to each
of the Lender Parties from the date of such Advance until such principal amount
shall be paid in full, at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is
a Base Rate Advance, a rate per annum equal at all times to the sum of
(A) the Base Rate in effect from time to time and (B) the Applicable
Margin for such Base Rate Advance in effect from time to time, payable
in arrears quarterly on the last day of each March, June, September and
December during such periods and on the date such Base Rate Advance
shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (A)
the Eurodollar Rate for such Advance for such Interest Period and (B)
the Applicable Margin for such Eurodollar Rate Advance in effect on the
first day of such Interest Period, payable in arrears on the last day
of such Interest Period and, if such Interest Period has a duration of
more than three months, on each day that occurs during such Interest
Period every three months from the first day of such Interest Period
and on the date such Eurodollar Rate Advance shall be Converted or paid
in full.
(b) Default Interest. Upon the occurrence and during the
continuance of a Default under Section 6.01(a) or 6.01(f) or an Event of
Default, the Borrower shall pay interest on (i) the unpaid principal amount of
each Advance owing to each of the Lender Parties, payable in arrears on the
dates referred to in clause (i) or (ii) of Section 2.07(a), as applicable, and
on demand, at a rate per annum equal at all times to 2% per annum above the rate
per annum required to be paid on such Advance pursuant to clause (i) or (ii) of
Section 2.07(a), as applicable, and (ii) to the fullest extent permitted by
applicable law, the amount of any
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interest, fees or other amounts payable under this Agreement or any of the other
Loan Documents to any of the Agents or any of the Lender Parties that is not
paid when due, from the date such amount shall be due until such amount shall be
paid in full, payable in arrears on the date such amount shall be paid in full
and on demand, at a rate per annum equal at all times to 2% per annum above the
rate per annum required to be paid, in the case of interest, on the Type of
Advance on which such interest has accrued pursuant to clause (i) or (ii) of
Section 2.07(a), as applicable, and, in all other cases, on Base Rate Advances
pursuant to clause (i) of Section 2.07(a).
(c) Notice of Interest Rate. Promptly after receipt of a
Notice of Borrowing pursuant to Section 2.02(a) or a Notice of Conversion
pursuant to Section 2.09(a), the Administrative Agent shall give notice to the
Borrower and each of the Appropriate Lenders of the applicable interest rate
determined by the Administrative Agent for purposes of clause (i) or (ii) of
Section 2.07(a), as applicable.
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay
to the Administrative Agent for the account of the Revolving Credit Lenders a
fee (the "Commitment Fee"), from the Closing Date in the case of each of the
Existing Lenders, from the Effective Date in the case of each of the appropriate
Initial Lenders (other than the Existing Lenders) and from the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each of the other Revolving Credit Lenders until, in each case,
the Termination Date, payable in arrears quarterly on the last day of each
March, June, September and December, commencing March 31, 1999, and on the
Termination Date, at the Applicable Percentage in effect from time to time on
the sum of (i) the average daily Unused Revolving Credit Commitment of each of
the Revolving Credit Lenders during such quarter and (ii) each such Revolving
Credit Lender's Pro Rata Share of the average daily outstanding Swing Line
Advances during such quarter; provided, however, that no commitment fee shall
accrue on any of the Revolving Credit Commitments of a Defaulting Lender so long
as such Revolving Credit Lender shall be a Defaulting Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to
the Administrative Agent for the account of each of the Revolving Credit Lenders
a commission, payable in arrears quarterly on the last day of each March, June,
September and December, commencing March 31, 1999, on the earliest to occur of
the full drawing, expiration, termination or cancellation of any Letter of
Credit and on the Termination Date, on such Revolving Credit Lender's Pro Rata
Share of the average daily aggregate Available Amount of all Letters of Credit
outstanding from time to time during such quarter at the rate per annum equal to
the Applicable Margin in effect at such time for Eurodollar Rate Advances under
the Revolving Credit Facility.
(ii) The Borrower shall pay to the Issuing Bank, for its own
account, (A) an issuance fee for each Letter of Credit in an amount equal to
0.25% of the Available Amount of such Letter of Credit, payable on the date of
issuance of such Letter of Credit, and (B) such other commissions, transfer fees
and other fees and charges in connection with the issuance or administration of
each Letter of Credit as the Borrower and the Issuing Bank shall from time to
time agree.
(c) Agent's Fees. The Borrower shall pay to the Administrative
Agent for its account and, if applicable, the account of the other Agents such
fees as may from time to time be agreed between the Borrower and the
Administrative Agent.
SECTION 2.09. Conversion of Advances. (a) Optional. The
Borrower may on any Business Day, upon notice given to the Administrative Agent
not later than 1:00 P.M. (Charlotte, North
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Carolina time) on the third Business Day prior to the date of the proposed
Conversion in the case of a Conversion of Base Rate Advances into Eurodollar
Rate Advances or of Eurodollar Rate Advances of one Interest Period into
Eurodollar Rate Advances of another Interest Period, or 1:00 P.M. (Charlotte,
North Carolina time) on the first Business Day prior to the date of the proposed
Conversion in the case of a Conversion of Eurodollar Rate Advances into Base
Rate Advances, and subject to the provisions of subsection (b) of this Section
2.09 and Section 2.10, Convert all or any portion of the Advances of one Type
comprising the same Borrowing into Advances of the other Type; provided,
however, that:
(i) any Conversion of Eurodollar Rate Advances into Base Rate
Advances shall be made only on the last day of an Interest Period for
such Eurodollar Rate Advances;
(ii) any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be made only if no Default under Section 6.01(a) or
6.01(f) or Event of Default shall have occurred and be continuing and
shall be in an amount not less than the minimum amount specified in
Section 2.02(c);
(iii) no Conversion of any Advances shall result in more
separate Borrowings than permitted under Section 2.02(c); and
(iv) each Conversion of Advances comprising part of the same
Borrowing under any Facility shall be made among the Appropriate
Lenders in accordance with their respective Pro Rata Shares of such
Facility.
Each notice of a Conversion (a "Notice of Conversion") shall be delivered by
telephone, confirmed immediately in writing, or by telex or telecopier, shall be
in substantially the form of Exhibit B-3 hereto and duly executed by a
Responsible Officer of the Borrower, and shall, within the restrictions set
forth in the immediately preceding sentence, specify therein:
(A) the requested date of such Conversion (which shall be a
Business Day);
(B) the Advances requested to be Converted; and
(C) if such Conversion is into Eurodollar Rate Advances, the
requested duration of the Interest Period for such Eurodollar
Rate Advances (and, if the requested duration of such Interest
Period is specified to be nine or twelve months, the desired
alternative Interest Period for such Eurodollar Rate Advances).
The Administrative Agent shall give each of the Appropriate Lenders prompt
notice of each Notice of Conversion received by it, by telex or telecopier. Each
Notice of Conversion shall be irrevocable and binding on the Borrower.
(b) Mandatory. (i) If the Borrower shall fail to select the
duration of any Interest Period for any Eurodollar Rate Advances in accordance
with the provisions contained in the definition of "Interest Period" set forth
in Section 1.01, the Administrative Agent will forthwith so notify the Borrower
and the Appropriate Lenders, whereupon each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance.
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(ii) Upon the occurrence and during the continuance of any
Default under Section 6.01(a) or 6.01(f) or any Event of Default, (A) each
Eurodollar Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance and (B) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change (other than any change by way of the
imposition of or increase in reserve requirements included in the Eurodollar
Rate Reserve Percentage) in or in the interpretation or application of any
Requirement of Law after the date of this Agreement or (ii) the compliance with
any directive, guideline or request from any central bank or other Governmental
Authority or any change therein or in the interpretation, application,
implementation, administration or enforcement thereof, that, in any case under
this clause (ii), becomes effective or is issued or made after the date of this
Agreement (whether or not having the force of law), there shall be any increase
in the cost to any of the Lender Parties of agreeing to make or making, agreeing
to participate in or participating in, agreeing to renew or renewing or funding
or maintaining any Advances of either Type, or of agreeing to issue or of
issuing, maintaining or participating in Letters of Credit or of agreeing to
make or of making or maintaining Swing Line Advances or Letter of Credit
Advances, or any reduction in the amount owing to any of the Lender Parties or
their respective Applicable Lending Offices under this Agreement in respect of
any Advances of either Type or any Letters of Credit (excluding, for purposes of
this Section 2.10, any such increased costs resulting from (A) Taxes or Other
Taxes (as to which Section 2.12 shall govern) and (B) changes in the basis of
taxation of overall net income or overall gross income by the United States of
America or the jurisdiction under the laws of which such Lender Party is
organized or has either of its Applicable Lending Offices or any political
subdivision thereof), then the Borrower hereby agrees to pay, from time to time
upon demand by such Lender Party (with a copy of such demand to the
Administrative Agent), to the Administrative Agent for the account of such
Lender Party additional amounts sufficient to compensate or to reimburse such
Lender Party for all such increased costs or reduced amounts. Each of the Lender
Parties shall, as promptly as practicable after such Lender Party obtains
knowledge of such circumstances and the determination of such Lender Party to
request additional compensation from the Borrower pursuant to this Section
2.10(a), provide notice to the Administrative Agent and the Borrower of the
circumstances entitling such Lender Party to such additional compensation and
the amount of such additional compensation (including the basis of calculation
thereof), which notice shall be conclusive and binding for all purposes, absent
manifest error; provided, however, that none of the Lender Parties shall be
entitled to additional compensation under this Section 2.10(a) for any such cost
incurred or reduced amount suffered from and after the date that is 180 days
prior to the date such Lender Party first delivers such notice to the Borrower.
In determining any such additional compensation, such Lender Party may use
reasonable averaging and attribution methods. If any of the Lenders requests
additional compensation from the Borrower under this Section 2.10(a) in respect
of its making, participating in or renewing Eurodollar Rate Advances, the
Borrower may, upon notice to such Lender (with a copy of such notice to the
Administrative Agent), suspend the obligation of such Lender to make,
participate in and/or renew Eurodollar Rate Advances until the circumstances
giving rise to such request no longer exist and, during such time, all
Eurodollar Rate Advances that would otherwise be made by such Lender as part of
any Borrowing shall be made instead as Base Rate Advances and all payments of
principal of and interest on such Base Rate Advances shall, notwithstanding the
provisions of Section 2.07, be made at the same time as payments on the
Eurodollar Rate Advances otherwise comprising part of such Borrowing.
(b) If any of the Lender Parties determines that compliance
with any Requirements of Law or any directive, guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law), or any change therein or in the interpretation, application,
implementation,
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administration or enforcement thereof, that is enacted or becomes effective, or
is implemented or is first required or expected to be complied with, after the
date of this Agreement, affects the amount of capital required or expected to be
maintained by such Lender Party (or either of the Applicable Lending Offices of
such Lender Party) or by any Person controlling such Lender Party and that the
amount of such capital is increased by or is based upon the existence of the
commitment of such Lender Party to lend hereunder or to issue or participate in
Letters of Credit hereunder and other commitments of such type or the issuance
or maintenance of or participation in the Letters of Credit (or similar
contingent obligations), then the Borrower hereby agrees to pay, upon demand by
such Lender Party (with a copy of such demand to the Administrative Agent), to
the Administrative Agent for the account of such Lender Party, from time to time
as specified by such Lender Party, additional amounts sufficient to compensate
such Lender Party or such Person in light of such circumstances, to the extent
that such Lender Party or such Person reasonably determines such increase in
capital to be allocable to the existence of the commitment of such Lender Party
to lend or to issue or participate in Letters of Credit hereunder or to the
issuance or maintenance of or participation in any Letters of Credit. Each of
the Lender Parties shall, as promptly as practicable after such Lender Party
obtains knowledge of such circumstances and the determination of such Lender
Party to request additional compensation from the Borrower pursuant to this
Section 2.10(b), provide notice to the Administrative Agent and the Borrower of
the circumstances entitling such Lender Party to such additional compensation
and the amount of such additional compensation (including the basis of
calculation thereof), which notice shall be conclusive and binding for all
purposes, absent manifest error; provided, however, that none of the Lender
Parties shall be entitled to additional compensation under this Section 2.10(b)
for any such increases in capital required from and after the date that is 180
days prior to the date such Lender Party first delivers such notice to the
Borrower. In determining any such additional compensation, such Lender Party may
use reasonable averaging and attribution methods.
(c) If, with respect to any Eurodollar Rate Advances under
either of the Term Facilities or the Revolving Credit Facility, Lenders owed or
holding not less than a majority in interest of the aggregate principal amount
of all Advances outstanding under such Facility at any time notify the
Administrative Agent that the Eurodollar Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Lenders of making,
participating in or renewing, or funding or maintaining, their Eurodollar Rate
Advances for such Interest Period, the Administrative Agent shall forthwith so
notify the Borrower and the Appropriate Lenders, whereupon (i) each such
Eurodollar Rate Advance under such Facility will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance
and (ii) the obligation of the Appropriate Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower (promptly following notice
thereof from the Appropriate Lenders) that such Lenders have determined that the
circumstances causing such suspension no longer exist.
(d) Notwithstanding any of the other provisions of this
Agreement, if the introduction of or any change in or in the interpretation of
any Requirements of Law shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender or its
Eurodollar Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate
Advances hereunder, then, upon notice thereof and demand therefor by such Lender
to the Borrower through the Administrative Agent, (i) each Eurodollar Rate
Advance of such Lender will automatically, on the last day of the then existing
Interest Period therefor, if permitted by applicable law, or otherwise upon
demand, Convert into a Base Rate Advance and (ii) the obligation of such Lender
to make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Administrative Agent shall notify the Borrower (promptly
following notice thereof from such Lender) that such Lender has
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determined that the circumstances causing such suspension no longer exist. If
the obligation of a Lender to make Eurodollar Rate Advances is suspended
pursuant to this Section 2.10(d), then, until the circumstances that gave rise
to such suspension no longer apply to such Lender, all Eurodollar Rate Advances
that would otherwise be made by such Lender as part of any Borrowing shall be
made instead as Base Rate Advances and all payments of principal of and interest
on such Base Rate Advances shall, notwithstanding the provisions of Section
2.07, be made at the same time as payments on the Eurodollar Rate Advances
otherwise comprising part of such Borrowing.
(e) Each of the Lender Parties hereby agrees that, upon the
occurrence of any circumstances entitling such Lender Party to additional
compensation or to cease making, participating in or renewing, or funding or
maintaining, Advances under any of the foregoing provisions of this Section
2.10, such Lender Party shall use reasonable efforts (consistent with its
internal policy and with legal and regulatory restrictions) to designate a
different Applicable Lending Office for any Advances affected by such
circumstances if the making of such designation, in the case of subsection (a)
or (b) of this Section 2.10, would avoid the need for, or reduce the amount of,
any such additional amounts that may thereafter accrue or, in the case of
subsection (c) or (d) of this Section 2.10, would allow such Lender Party to
continue to perform its obligations to make, to participate in or renew, or to
fund or maintain, Advances and, in any such case, would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to such Lender
Party.
(f) If (i) any of the Lenders entitled to additional
compensation under any of the foregoing provisions of this Section 2.10 shall
fail to designate a different Eurodollar Lending Office as provided in
subsection (e) of this Section 2.10 or if the circumstances entitling any of the
Lender Parties to additional compensation under subsection (a) or (b) of this
Section 2.10 shall continue to be in effect notwithstanding such designation or
since subsection (e) of this Section 2.10 is inapplicable or (ii) the inadequacy
or illegality contemplated under subsection (c) or (d) of this Section 2.10,
respectively, shall continue with respect to any of the Lenders notwithstanding
such designation, then, so long as no Default shall have occurred and be
continuing and subject to the other terms of Section 8.07(a), the Borrower may
cause such Lender Party to (and, if the Borrower so demands, such Lender Party
shall) assign all of its rights and obligations under this Agreement to one or
more other Persons in accordance with Section 8.07(a); provided that if, upon
such demand by the Borrower, such Lender Party elects to waive its request for
additional compensation pursuant to subsection (a) or (b) of this Section 2.10,
the demand by the Borrower for such Lender Party to so assign all of its rights
and obligations under this Agreement shall thereupon be deemed withdrawn.
Nothing in subsection (e) of this Section 2.10 or this Section 2.10(f) shall
affect or postpone any of the rights of any of the Lender Parties or any of the
Obligations of the Borrower under any of the foregoing provisions of this
Section 2.10 in any manner.
SECTION 2.11. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Notes, irrespective of any right
of counterclaim or setoff (except as otherwise provided in Section 2.14), not
later than 1:00 P.M. (Charlotte, North Carolina time) on the day when due in
U.S. dollars to the Administrative Agent at the Administrative Agent's Account
in same day funds, with payments received by the Administrative Agent after 1:00
P.M. Noon (Charlotte, North Carolina time) on any such day being deemed to have
been received on the next succeeding Business Day. The Administrative Agent will
promptly thereafter cause like funds to be distributed (i) if such payment by
the Borrower is in respect of principal, interest, Commitment Fees or any of the
other Obligations then due and payable hereunder and under the Notes to more
than one of the Lender Parties, to such Lender Parties for the accounts of their
respective Applicable Lending Offices in accordance with their respective Pro
Rata Shares
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of the amounts of such Obligations due and payable to such Lender Parties at
such time and (ii) if such payment by the Borrower is in respect of any of the
Obligations then due and payable hereunder to one Lender Party, to such Lender
Party for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. Upon its acceptance of
an Assignment and Acceptance and recording of the information contained therein
in the Register pursuant to Section 8.07(g), from and after the effective date
of such Assignment and Acceptance the Administrative Agent shall make all
payments hereunder and under the Notes in respect of the interest assigned
thereby to the Lender Party assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) All computations of interest based on clause (a) of the
definition of "Base Rate" set forth in Section 1.01 shall be made by the
Administrative Agent on the basis of a year of 365 or 366 days, as the case may
be, and all computations of interest based on the Eurodollar Rate or the Federal
Funds Rate and all computations of fees and Letter of Credit commissions shall
be made by the Administrative Agent on the basis of a year of 360 days, in each
case for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest, fees or commissions
are payable. Each determination by the Administrative Agent of an interest rate,
fee or Letter of Credit commission hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(c) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or Commitment Fees,
as the case may be; provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be made in
the next succeeding calendar month, such payment shall be made on the
immediately preceding Business Day.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to any of the
Lender Parties hereunder that the Borrower will not make such payment in full,
the Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each such Lender
Party on such due date an amount equal to the amount due such Lender Party on
such date. If and to the extent the Borrower shall not have so made such payment
in full to the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party, together with all accrued and unpaid interest thereon, for each day from
the date such amount is distributed to such Lender Party until the date such
Lender Party repays such amount to the Administrative Agent, at the Federal
Funds Rate.
(e) Whenever any payment received by the Administrative Agent
under this Agreement or any of the other Loan Documents is insufficient to pay
in full all amounts due and payable to the Agents and the Secured Parties under
and in respect of this Agreement and the other Loan Documents on any date, such
payment shall be distributed by the Administrative Agent and applied by the
Agents and the Secured Parties in the following order of priority:
(i) first, to the payment of all of the fees, indemnification
payments, costs and expenses that are due and payable to the Agents
(solely in their respective capacities as Agents) under and in respect
of this Agreement and the other Loan Documents on such date, ratably in
the respective
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aggregate amounts of all such fees, indemnification payments, costs
and expenses owing to the Agents on such date;
(ii) second, to the payment of all of the fees,
indemnification payments, costs and expenses that are due and payable
to the Swing Line Bank and the Issuing Bank (solely in their respective
capacities as Swing Line Bank and Issuing Bank) under and in respect of
this Agreement and the other Loan Documents on such date, ratably in
the respective aggregate amounts of all such fees, indemnification
payments, costs and expenses owing to the Swing Line Bank and the
Issuing Bank on such day;
(iii) third, to the payment of all of the indemnification
payments, costs and expenses that are due and payable to the Lender
Parties under Section 8.04 hereof, Section 12 of the Subsidiaries
Guarantee, Section 25 of the Security Agreement and similar provisions
of the other Loan Documents on such date, ratably in accordance with
the respective aggregate amounts of all such indemnification payments,
costs and expenses owing to the Lender Parties on such date;
(iv) fourth, to the payment of all of the amounts that are due
and payable to the Agents and the Lender Parties under Sections 2.10
and 2.12 hereof and Section 5 of the Subsidiaries Guarantee on such
date, ratably in accordance with the respective aggregate amounts
thereof owing to the Agents and the Lender Parties on such date;
(v) fifth, to the payment of all of the fees that are due and
payable to the Lenders under Section 2.08(a) on such date, ratably in
accordance with the respective aggregate Commitments of the Lenders
under the applicable Facilities on such date;
(vi) sixth, to the payment of all of the accrued and unpaid
interest on the Obligations of the Borrower under and in respect of
this Agreement and the other Loan Documents that is due and payable to
the Administrative Agent and the Lender Parties under Section 2.07(b)
on such date, ratably in accordance with the respective aggregate
amounts of all such interest owing to the Administrative Agent and the
Lender Parties on such date;
(vii) seventh, to the payment of all of the accrued and unpaid
interest on the Advances that is due and payable to the Administrative
Agent and the Lender Parties under Section 2.07(a) on such date,
ratably in accordance with the respective aggregate amounts of all such
interest owing to the Administrative Agent and the Lender Parties on
such date;
(viii) eighth, to the payment of the principal amount of all
of the outstanding Advances that is due and payable to the
Administrative Agent and the Lender Parties on such date, ratably in
accordance with the respective aggregate amounts of all such principal
owing to the Administrative Agent and the Lender Parties on such date;
and
(ix) ninth, to the payment of all other Obligations of the
Secured Parties owing under and in respect of this Agreement and the
other Loan Documents that are due and payable to the Administrative
Agent and the other Secured Parties on such date, ratably in accordance
with the respective aggregate amounts of all such Obligations owing to
the Administrative Agent and the other Secured Parties on such date.
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If the Administrative Agent receives funds for application to the Obligations of
the Loan Parties under or in respect of the Loan Documents under circumstances
for which the Loan Documents do not specify the Advances or the Facility to
which, or the manner in which, such funds are to be applied, the Administrative
Agent may, but shall not be obligated to, elect to distribute such funds to each
of the Lender Parties in accordance with such Lender Party's Pro Rata Share of
the sum of (A) the aggregate principal amount of all Advances outstanding at
such time and (B) the aggregate Available Amount of all Letters of Credit
outstanding at such time, in repayment or prepayment of such of the outstanding
Advances or other Obligations then owing to such Lender Party and, in the case
of the Term Facilities, for application to such principal repayment installments
as the Administrative Agent shall direct.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower
shall be made, in accordance with Section 2.11 (or the applicable provisions of
the other Loan Documents), free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each of the Lender Parties and each of the Agents, taxes that are imposed on
its overall net income by the United States and taxes that are imposed on its
overall net income (and franchise taxes imposed in lieu thereof) by the state or
foreign jurisdiction under the laws of which such Lender Party or such Agent, as
the case may be, is organized or any political subdivision thereof, and, in the
case of each of the Lender Parties, taxes that are imposed on its overall net
income (and franchise taxes imposed in lieu thereof) by the state or foreign
jurisdiction of either of its Applicable Lending Offices or any political
subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges and liabilities in respect of payments under or in respect of the Loan
Documents being, collectively, "Taxes"). If the Borrower shall be required under
any applicable Requirements of Law to deduct any Taxes from or in respect of any
sum payable under or in respect of this Agreement or any of the other Loan
Documents to any of the Lender Parties or any of the Agents, (i) the sum payable
by the Borrower shall be increased as may be necessary so that, after the
Borrower and the Administrative Agent have made all required deductions
(including deductions applicable to additional sums payable under this Section
2.12), such Lender Party or such Agent, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make all such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other Governmental
Authority in accordance with the applicable Requirements of Law.
(b) In addition, the Borrower hereby agrees to pay any present
or future stamp, recording, documentary, excise, property or similar taxes,
charges or levies that arise from any payment made under or in respect of this
Agreement or any of the other Loan Documents or from the execution, delivery or
registration of, any performance under, or otherwise with respect to, this
Agreement or any of the Loan Documents (collectively, "Other Taxes").
(c) The Borrower hereby agrees to indemnify each of the Lender
Parties and each of the Agents for, and hold each of them harmless against, the
full amount of Taxes and Other Taxes, and the full amount of taxes of any kind
imposed by any jurisdiction on amounts payable under this Section 2.12, imposed
on or paid by such Lender Party or such Agent, as the case may be, and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. The indemnity by the Borrower provided for in
this Section 2.12(c) shall apply and be made whether or not the Taxes or Other
Taxes for which indemnification hereunder is sought have been correctly or
legally asserted; provided, however, that such Lender Party or such Agent
seeking such indemnification shall take all reasonable actions (consistent with
its internal policy and legal and regulatory restrictions) requested by the
Borrower to assist the Borrower in recovering the amounts paid thereby pursuant
to this Section 2.12(c) from the relevant
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taxation authority or other Governmental Authority. Amounts payable by the
Borrower under the indemnity set forth in this Section 2.12(c) shall be paid
within 30 days from the date on which the applicable Lender Party or Agent, as
the case may be, makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes by
or on behalf of the Borrower, the Borrower (or the Person making such payment on
behalf of the Borrower) shall furnish to the Administrative Agent, at its
address referred to in Section 8.02, the original or a certified copy of a
receipt evidencing payment thereof, to the extent such a receipt is issued
therefor, or other written proof of payment thereof that is reasonably
satisfactory to the Administrative Agent. In the case of any payment under or in
respect of this Agreement or any of the other Loan Documents by or on behalf of
the Borrower through an account or branch outside the United States, or on
behalf of the Borrower by a payor that is not a United States person, if the
Borrower determines that no Taxes are payable in respect thereof, the Borrower
shall furnish, or shall cause such payor to furnish, to the Administrative
Agent, at its address referred to in Section 8.02, an opinion of counsel
reasonably acceptable to the Administrative Agent stating that such payment is
exempt from Taxes. For purposes of this Section 2.12(d) and subsection (e) of
this Section 2.12, the terms "United States" and "United States person" shall
have the meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each of the Lender Parties organized under the laws of a
jurisdiction outside the United States shall, on or prior to the date of its
execution and delivery of this Agreement in the case of each of the Initial
Lenders, the Swing Line Bank and the Initial Issuing Bank, and on the date of
the Assignment and Acceptance pursuant to which it becomes a Lender Party in the
case of each of the other Lender Parties, and from time to time thereafter as
reasonably requested in writing by the Borrower or the Administrative Agent (but
only so long thereafter as such Lender Party remains lawfully able to do so),
provide each of the Borrower and the Administrative Agent with two original
Internal Revenue Service forms 1001 or 4224 or, in the case of any of the Lender
Parties that is claiming exemption from United States withholding tax under
Section 871(h) or 881(c) of the Internal Revenue Code with respect to payments
of "portfolio interest", form W-8 (and, if such Lender Party delivers a form
W-8, a certificate representing that such Lender Party is not (i) a "bank" for
purposes of Section 881(c) of the Internal Revenue Code, (ii) a ten-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of the Borrower or (iii) a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue Code),
as appropriate), or any successor form, certificate or statement required by the
Internal Revenue Service, certifying that such Lender Party is exempt from or
entitled to a reduced rate of United States withholding tax on payments pursuant
to this Agreement or the other Loan Documents or, in the case of any of the
Lender Parties delivering a form W-8, certifying that such Lender Party is a
foreign corporation, partnership, estate or trust. If the forms referred to
above in this Section 2.12(e) that are provided by a Lender Party at the time
such Lender Party first becomes a party to this Agreement indicate a United
States interest withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from Taxes unless and until such Lender Party
provides the appropriate form certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate shall be considered excluded from Taxes
solely for the periods governed by such form. However, if, on the date of the
Assignment and Acceptance pursuant to which a Lender Party assignee becomes a
party to this Agreement, the Lender Party assignor was entitled to payments
under subsection (a) of this Section 2.12 (whether in its capacity as a Lender
Party or, if applicable, a Hedge Bank) in respect of United States withholding
tax with respect to interest paid at such date, then, to such extent (and only
to such extent), the term "Taxes" shall include (in addition to withholding
taxes that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to such
Lender Party assignee on such
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date. None of the Lender Parties shall be entitled to payment pursuant to
subsection (a) or (c) of this Section 2.12 with respect to any additional Taxes
that resulted solely and directly from a change in either of the Applicable
Lending Offices of such Lender Party (other than any such additional Taxes that
are imposed as a result of a change in the applicable Requirements of Law, or in
the interpretation or application thereof, occurring after the date of such
change), unless such change is made pursuant to the terms of Section 2.10(e) or
subsection (g) of this Section 2.12 or otherwise as a result of a request
therefor by any of the Loan Parties.
(f) For any period with respect to which any of the Lender
Parties has failed to provide the Borrower with the appropriate form,
certificate or other document described in subsection (e) of this Section 2.12
(other than if such failure is due to a change in the applicable Requirements of
Law, or in the interpretation or application thereof, occurring after the date
on which a form, certificate or other document originally was required to be
provided or if such form, certificate or other document otherwise is not
required under subsection (e) of this Section 2.12), such Lender Party shall not
be entitled to payment or indemnification under subsection (a) or (c) of this
Section 2.12 with respect to Taxes imposed by the United States by reason of
such failure; provided, however, that should a Lender Party become subject to
Taxes because of its failure to deliver a form, certificate or other document
required hereunder, the Borrower shall take such steps as such Lender Party
shall reasonably request to assist such Lender Party in recovering such Taxes.
(g) Each of the Lender Parties hereby agrees that, upon the
occurrence of any circumstances entitling such Lender Party to additional
amounts pursuant to this Section 2.12, such Lender Party shall use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a change would avoid the need for, or reduce the amount of, any such
additional amounts that may thereafter accrue and would not, in the reasonable
judgment of such Lender Party, be otherwise disadvantageous to such Lender
Party.
(h) If any of the Lender Parties entitled to additional
compensation under any of the foregoing provisions of this Section 2.12 shall
fail to designate a different Applicable Lending Office as provided in
subsection (g) of this Section 2.12, then, so long as no Default shall have
occurred and be continuing and subject to the other terms of Section 8.07(a),
the Borrower may cause such Lender Party to (and, if the Borrower so demands,
such Lender Party shall) assign all of its rights and obligations under this
Agreement to one or more other Persons in accordance with Section 8.07(a);
provided that if, upon such demand by the Borrower, such Lender Party elects to
waive its request for additional compensation pursuant to this Section 2.12, the
demand by the Borrower for such Lender Party to so assign all of its rights and
obligations under the Agreement shall thereupon be deemed withdrawn. Nothing in
subsection (g) of this Section 2.12 or this Section 2.12(h) shall affect or
postpone any of the rights of any of the Lender Parties or any of the
Obligations of the Borrower under any of the foregoing provisions of this
Section 2.12 in any manner.
(i) If any of the Lender Parties determines, in its sole
discretion, that it has actually and finally realized, by reason of a refund of
any Taxes paid or reimbursed by the Borrower pursuant to subsection (a), (b) or
(c) of this Section 2.12 in respect of payments under the Loan Documents, a
current monetary benefit that such Lender Party would otherwise not have
obtained and that would result in the total payments made to such Lender Party
under this Section 2.12 exceeding the amount needed to make such Lender Party
whole, such Lender Party shall pay to the Borrower, with reasonable promptness
following the date on which it actually and finally realizes such benefit (but
only so long as the making of such payment would leave such Lender Party (after
making such payment) in no worse position than it would have been
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in if the Borrower had not made the deduction or withholding that gave rise to
such refund) an amount equal to the lesser of (i) the amount of such benefit and
(ii) the amount of such excess, in each case net of all out-of-pocket expenses
incurred by or on behalf of such Lender Party in securing such refund. Nothing
contained in this Section 2.12 (A) shall interfere with the right of each of the
Lender Parties and their affiliates to arrange its tax affairs in whatever
manner it deems proper, (B) shall oblige any of the Lender Parties or any of
their affiliates to claim any tax credit or to disclose any information relating
to its tax affairs or any computations in respect thereof, (C) shall require any
of the Lender Parties to contest the imposition of any Taxes or Other Taxes,
regardless of whether such Taxes or Other Taxes were correctly or legally
asserted, or (D) shall require any of the Lender Parties or any of their
affiliates to do anything that would prejudice its ability to benefit from any
other credits, reliefs, remissions or repayments to which such Lender Party or
any of its affiliates may be entitled.
SECTION 2.13. Sharing of Payments, Etc. If any of the Lender
Parties shall obtain at any time any payment (whether voluntary, involuntary,
through the exercise of any right of setoff, or otherwise) (a) on account of
Obligations due and payable to such Lender Party under or in respect of this
Agreement or any of the other Loan Documents at such time (other than pursuant
to Section 2.10, 2.12, 8.04 or 8.07) in excess of its ratable share (according
to the proportion of (i) the amount of such Obligations due and payable to such
Lender Party at such time to (ii) the aggregate amount of the Obligations due
and payable to all of the Lender Parties at such time) of payments on account of
the Obligations due and payable to all of the Lender Parties under or in respect
of this Agreement and the other Loan Documents at such time obtained by all of
the Lender Parties at such time or (b) on account of Obligations owing (but not
due and payable) to such Lender Party under or in respect of this Agreement or
any of the other Loan Documents at such time (other than pursuant to Section
2.10, 2.12, 8.04 or 8.07) in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations owing (but not due and payable)
to such Lender Party at such time to (ii) the aggregate amount of the
Obligations owing (but not due and payable) to all of the Lender Parties under
or in respect of this Agreement and the other Loan Documents at such time) of
payments on account of the Obligations owing (but not due and payable) to all of
the Lender Parties under or in respect of this Agreement and the other Loan
Documents at such time obtained by all of the Lender Parties at such time, such
Lender Party shall forthwith purchase from the other Lender Parties such
interests or participating interests in the Obligations due and payable or owing
to them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender Party, such purchase from each of the
other Lender Parties shall be rescinded and such other Lender Party shall repay
to the purchasing Lender Party the purchase price to the extent of such Lender
Party's ratable share (according to the proportion of (A) the purchase price
paid to such Lender Party to (B) the aggregate purchase price paid to all of the
Lender Parties) of such recovery, together with an amount equal to such Lender
Party's ratable share (according to the proportion of (1) the amount of such
other Lender Party's required repayment to (2) the total amount so recovered
from the purchasing Lender Party) of any such interest or participating interest
or other amount paid or payable by the purchasing Lender Party in respect of the
total amount so recovered. The Borrower hereby agrees that any of the Lender
Parties so purchasing a participation from another Lender Party pursuant to this
Section 2.13 may, to the fullest extent permitted by applicable law, exercise
all of its rights of payment (including the right of setoff) with respect to
such participation as fully as if such Lender Party were the direct creditor of
the Borrower in the amount of such participation.
SECTION 2.14. Defaulting Lenders. (a) If, at any time, (i) any
of the Lender Parties shall be a Defaulting Lender, (ii) such Defaulting Lender
shall owe a Defaulted Advance to the Borrower and
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(iii) the Borrower shall be required to make any payment hereunder or under any
of the other Loan Documents to or for the account of such Defaulting Lender,
then the Borrower may, so long as no Default shall occur or be continuing at
such time and to the fullest extent permitted by applicable law, set off and
otherwise apply the Obligation of the Borrower to make such payment to or for
the account of such Defaulting Lender against the obligation of such Defaulting
Lender to make such Defaulted Advance. If, on any date, the Borrower shall so
set off and otherwise apply its obligation to make any such payment against the
obligation of such Defaulting Lender to make any such Defaulted Advance on or
prior to such date, the amount so set off and otherwise applied by the Borrower
shall constitute for all purposes of this Agreement and the other Loan Documents
an Advance by such Defaulting Lender made on the date of such setoff and
application under the Facility pursuant to which such Defaulted Advance was
originally required to have been made pursuant to Section 2.01. Such Advance
shall be a Base Rate Advance and shall be considered, for all purposes of this
Agreement, to comprise part of the Borrowing in connection with which such
Defaulted Advance was originally required to have been made pursuant to Section
2.01, even if the other Advances comprising such Borrowing shall be Eurodollar
Rate Advances on the date such Advance is deemed to be made pursuant to this
Section 2.14(a). The Borrower shall notify the Administrative Agent at any time
the Borrower exercises its right of setoff pursuant to this Section 2.14(a) and
shall set forth in such notice (A) the name of the Defaulting Lender and the
Defaulted Advance required to be made by such Defaulting Lender and (B) the
amount set off and otherwise applied in respect of such Defaulted Advance
pursuant to this Section 2.14(a). Any portion of such payment otherwise required
to be made by the Borrower to or for the account of such Defaulting Lender which
is paid by the Borrower, after giving effect to the amount set off and otherwise
applied by the Borrower pursuant to this Section 2.14(a), shall be applied by
the Administrative Agent as specified in subsection (b) or (c) of this Section
2.14.
(b) If, at any time, (i) any of the Lender Parties shall be a
Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
any of the Agents or any of the Lender Parties and (iii) the Borrower shall make
any payment hereunder or under any of the other Loan Documents to the
Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Agents or
such other Lender Parties and to the fullest extent permitted by applicable law,
apply at such time the amount so paid by the Borrower to or for the account of
such Defaulting Lender to the payment of each such Defaulted Amount to the
extent required to pay in full such Defaulted Amount. If the Administrative
Agent shall so apply any such amount to the payment of any such Defaulted Amount
on any date, the amount so applied by the Administrative Agent shall constitute
for all purposes of this Agreement and the other Loan Documents payment, to such
extent, of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Agents or such other
Lender Parties, ratably in accordance with the respective portions of such
Defaulted Amounts payable at such time to the Administrative Agent, such other
Agents and such other Lender Parties and, if the amount of such payment made by
the Borrower shall at such time be insufficient to pay all Defaulted Amounts
owing to the Agents and the other Lender Parties at such time, then in the
following order of priority:
(A) first, to the Agents for any Defaulted Amount then owing
to the Agents (solely in their capacities as Agents), ratably in
accordance with the respective Defaulted Amounts owing to the Agents on
such date;
(B) second, to the Swing Line Bank and the Issuing Bank for
any Defaulted Amounts then owing to the Swing Line Bank and the Issuing
Bank (solely in their respective capacities as
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Swing Line Bank and Issuing Bank), ratably in accordance with the
respective Defaulted Amounts owing to the Swing Line Bank and the
Issuing Bank on such date; and
(C) third, to any of the other Lender Parties for any
Defaulted Amounts then owing to such other Lender Parties, ratably in
accordance with such respective Defaulted Amounts owing to such other
Lender Parties on such date.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this Section 2.14(b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.14.
(c) If, at any time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) the Borrower, the Administrative Agent or any of
the other Lender Parties shall be required to pay or distribute any amount
hereunder or under any of the other Loan Documents to or for the account of such
Defaulting Lender, then the Borrower or such other Lender Party shall pay such
amount to the Administrative Agent to be held by the Administrative Agent, to
the fullest extent permitted by applicable law, in escrow or the Administrative
Agent shall, to the fullest extent permitted by applicable law, hold in escrow
such amount otherwise held by it. Any funds held by the Administrative Agent in
escrow under this Section 2.14(c) shall be deposited by the Administrative Agent
in an account with NationsBank, in the name and under the control of the
Administrative Agent, but subject to the provisions of this Section 2.14(c). The
terms applicable to such account, including the rate of interest payable with
respect to the credit balance of such account from time to time, shall be
NationsBank's standard terms applicable to escrow accounts maintained with it.
Any interest credited to such account from time to time shall be held by the
Administrative Agent in escrow under, and applied by the Administrative Agent
from time to time in accordance with the terms of, this Section 2.14(c). The
Administrative Agent shall, to the fullest extent permitted by applicable law,
apply all funds so held in escrow from time to time to the extent necessary to
make any Advances required to be made by such Defaulting Lender and to pay any
amount payable by such Defaulting Lender hereunder and under the other Loan
Documents to the Administrative Agent, any of the other Agents or any of the
other Lender Parties, as and when such Advances or amounts are required to be
made or paid and, if the amount so held in escrow shall at any time be
insufficient to make and pay all such Advances and all such amounts required to
be made or paid to the Agents and the other Lender Parties at such time, then in
the following order of priority:
(A) first, to the Agents for any amounts then due and payable
by such Defaulting Lender to the Agents (solely in their capacities as
Agents) hereunder and under the other Loan Documents, ratably in
accordance with such respective amounts due and payable to the Agents
on such date;
(B) second, to the Swing Line Bank and the Issuing Bank for
any amounts then due and payable by such Defaulting Lender to the Swing
Line Bank and the Issuing Bank (solely in their respective capacities
as Swing Line Bank and Issuing Bank) hereunder and under the other Loan
Documents, ratably in accordance with such respective amounts due and
payable to the Swing Line Bank and the Issuing Bank on such date;
(C) third, to any of the other Lender Parties for any amount
then due and payable by such Defaulting Lender to such other Lender
Parties hereunder and under the other Loan Documents, ratably in
accordance with such respective amounts due and payable to such other
Lender Parties on such date; and
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(D) fourth, to the Borrower for any Advance then required to
be made by such Defaulting Lender pursuant to one or more of the
Commitments of such Defaulting Lender.
If any of the Lender Parties that is a Defaulting Lender shall, at any time,
cease to be a Defaulting Lender, any funds held by the Administrative Agent in
escrow at such time with respect to such Lender Party shall be distributed by
the Administrative Agent to such Lender Party and applied by such Lender Party
to the Obligations owing to such Lender Party at such time under or in respect
of this Agreement and the other Loan Documents, ratably in accordance with the
respective amounts of such Obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under
this Section 2.14 are in addition to other rights and remedies that the Borrower
may have against such Defaulting Lender with respect to any Defaulted Advance
and that the Administrative Agent or any of the other Lender Parties may have
against such Defaulting Lender with respect to any Defaulted Amount.
SECTION 2.15. Use of Proceeds. The proceeds of the Advances
shall be available, and the Borrower hereby agrees that it shall use such
proceeds, solely to finance in part the Recapitalization, to pay certain fees
and expenses incurred in connection with the consummation of the Transaction and
to provide working capital to, and for other general corporate purposes of, the
Borrower and its Subsidiaries not otherwise prohibited under the terms of the
Loan Documents. The Letters of Credit shall be issued, and the Borrower hereby
agrees that it shall request the issuance of Letters of Credit, solely in
support of the Obligations of the Borrower or any of the Restricted Subsidiaries
not otherwise prohibited under the Loan Documents to a Person other than the
Secured Parties which has supplied inventory to, or extended credit or secured
an Obligation on behalf of, the Borrower or any of the Restricted Subsidiaries.
ARTICLE III
CONDITIONS OF LENDING AND
ISSUANCE OF LETTERS OF CREDIT
SECTION 3.01. Conditions Precedent to Initial Extension of
Credit. The obligation of each of the Existing Lenders to have made an Advance
or of the Issuing Bank to have issued a Letter of Credit on the occasion of the
Initial Extension of Credit was subject to the satisfaction of all of the
following conditions precedent prior to or concurrently with the Initial
Extension of Credit:
(a) The Existing Lenders shall have been reasonably satisfied
with the organizational and legal structure and capitalization of the
Borrower (including, without limitation, the terms and conditions of
the Constitutive Documents of and each class of Equity Interests in the
Borrower and of each agreement or instrument relating to such structure
or capitalization). The Borrower did not have, and has not had since it
became an "S Corporation" in April 1982, any Subsidiaries other than DW
(which was disposed of in the Pre-Closing Reorganization).
(b) The Pre-Closing Reorganization shall have been consummated
prior to the Closing Date strictly in accordance with the terms and
conditions of the Recapitalization Agreement and the Reorganization
Agreement, without any waiver of or amendment to any of the provisions
set forth therein not consented to by the Existing Lenders and in
compliance with all applicable Requirements
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of Law. All of the liabilities and Obligations of the Borrower arising
out of or relating to the Metals Business shall have been assumed by
the Sellers or, if not so assumed, the Borrower shall have been fully
and unconditionally indemnified therefor in a manner reasonably
satisfactory to the Existing Lenders. The Recapitalization shall have
been consummated prior to or concurrently with the Initial Extension of
Credit strictly in accordance with the terms and conditions of the
Recapitalization Agreement, without any waiver of or amendment to any
of the provisions set forth therein not consented to by the Existing
Lenders and in compliance with all applicable Requirements of Law. All
of the Related Documents shall have been in full force and effect in
the form received by the Existing Lenders on or prior to the Closing
Date.
(c) All of the Governmental Authorizations, and all of the
consents, approvals and authorizations of, notices and filings to or
with, and other actions by, any other Person necessary in connection
with any aspect of the Transaction, any of the Loan Documents or the
Related Documents or any of the other transactions contemplated thereby
shall have been obtained (without the imposition of any conditions that
are not reasonably acceptable to the Existing Lenders) and shall remain
in full force and effect; all applicable waiting periods shall have
expired without any action being taken by any competent authority; and
no Requirements of Law shall have been applicable in the reasonable
judgment of the Existing Lenders that would restrain, prevent or impose
materially adverse conditions upon any aspect of the Transaction, any
of the Loan Documents or the Related Documents or any of the other
transactions contemplated thereby or the rights of the Borrower freely
to transfer or otherwise dispose of, or to create any Lien on, any
property or assets now or hereafter acquired by any of them.
(d) Before giving effect and immediately after giving pro
forma effect to the Transaction, no Material Adverse Change shall have
occurred since August 31, 1998. The Pre- Commitment Information,
considered as a whole, shall have been complete and correct in all
material respects; and no events, developments or changes shall have
occurred, and no additional information shall have come to the
attention of the Agents or the Existing Lenders, that was inconsistent
with the Pre-Commitment Information and that, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(e) No action, suit, litigation, arbitration or proceeding
shall have been pending or, to the best knowledge of the Borrower,
shall have been threatened (and, to the best knowledge of the Borrower,
no investigation shall have been pending or threatened) against or
affecting the Borrower or any of its property or assets in any court or
before any arbitrator or by or before any Governmental Authority of any
kind that (i) either individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect other than the matters
described on Schedule 3.01(e) to the Existing Credit Agreement or (ii)
could reasonably be expected to adversely affect the legality,
validity, binding effect or enforceability of any aspect of the
Transaction, any of the Loan Documents or the Related Documents or any
of the other transactions contemplated thereby; and there shall have
been no adverse change in the status, or the reasonably anticipated
financial effect on the Borrower, of such action, suit, litigation,
arbitration or proceeding from that described on Schedule 3.01(e) to
the Existing Credit Agreement.
(f) All of the Indebtedness of the Borrower in existence on
the Closing Date other than the Indebtedness described on Schedule
3.01(f) hereto (the "Surviving Indebtedness") shall have been prepaid,
redeemed or defeased in full or otherwise satisfied and extinguished,
and all
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commitments therefor shall have been terminated; and all of the
Surviving Indebtedness shall have been on terms and conditions
reasonably satisfactory to the Existing Lenders.
(g) The Borrower shall have been the legal and beneficial
owner of the Collateral purported to be owned thereby under the
Collateral Documents, free and clear of all Liens, except for the liens
and security interests created or expressly permitted under the terms
of the Loan Documents. The Collateral Documents shall have created
valid and perfected first priority liens on and security interests in
the Collateral (subject to the liens and security interests expressly
permitted under Section 5.02(a)) in favor of the Administrative Agent,
for the benefit of the Secured Parties, securing the payment of the
Secured Obligations. All filings, searches and other actions
(including, without limitation, the payment of all filing and recording
fees and taxes) necessary to perfect and protect the first priority
liens and security interests of the Administrative Agent in the
Collateral shall have been duly made or taken and shall be in full
force and effect or the Existing Lenders shall have been reasonably
satisfied that all such filings, searches and other actions were to
have been made or taken promptly following the Closing Date.
(h) (i) Holdings LLC shall have directly purchased from the
Sellers at least 42% of the UIC Class A Common Stock and 42% of the UIC
Class B Common Stock for a purchase price of not more than $260,380,000
in cash and (ii) the Sellers shall have retained equity in the Borrower
in an amount of at least $16,620,000. The Borrower shall have received
at least $150,000,000 in gross proceeds from the sale and issuance of
the Senior Subordinated Notes which shall have been used to finance in
part the consummation of the Recapitalization and to pay fees and
expenses incurred in connection with the consummation of the
Transaction. Upon consummation of the Recapitalization, Holdings LLC
shall have owned 91.94% of the outstanding UIC Class A Common Stock and
91.94% of outstanding UIC Class B Common Stock, and the Sellers shall
have retained 6% of the outstanding UIC Class A Common Stock and 6% of
outstanding UIC Class B Common Stock. All of the Senior Subordinated
Notes Documents and the Permitted Preferred Stock Documents, if any,
shall have been in form and substance reasonably satisfactory to the
Existing Lenders.
(i) The representations and warranties contained in each of
the Loan Documents shall have been correct in all material respects on
and as of the Closing Date, before and after giving effect to the
Initial Extension of Credit and to the application of proceeds
therefrom, as though made on and as of such date (other than any such
representation and warranty that, by its terms, referred to a specific
date other than the Closing Date, in which case, as of such specific
date). No event shall have occurred and be continuing, or shall have
occurred as a result of the Initial Extension of Credit or the
application of proceeds therefrom, that would constitute a Default.
(j) All of the reasonable and documented fees and expenses of
the Agents and the Lender Parties (including, without limitation, all
of the reasonable fees and expenses of counsel for the Agents and local
counsel for the Lender Parties) shall have been paid in full.
(k) The Administrative Agent shall have received on or before
the Closing Date the following, each dated such date (unless otherwise
specified), in form and substance satisfactory to the Existing Lenders
(unless otherwise specified) and (except for the notes referred to in
clause (i) of this Section 3.01(k)) in sufficient copies for each of
the Existing Lenders:
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(i) The Term A Notes, payable to the order of the
Term A Lenders, the Term B Notes, payable to the order of the
Term B Lenders, and the Revolving Credit Notes, payable to the
order of the Revolving Credit Lenders (each as defined in the
Existing Credit Agreement), respectively.
(ii) Certified copies of the resolutions of the board
of directors (or the persons performing similar functions) of
each of Holdings LLC and the Borrower, approving each of the
Loan Documents and the Related Documents to which it is or is
to be a party, the consummation of each aspect of the
Transaction involving or affecting Holdings LLC or the
Borrower and the other transactions contemplated by any of the
foregoing, and of all documents evidencing necessary
Governmental Authorizations, or other necessary consents,
approvals, authorizations, notices, filings or actions, of or
to any Person with respect to any of the Loan Documents or the
Related Documents to which it is or is to be a party, the
consummation of any aspect of the Transaction involving or
affecting Holdings LLC or the Borrower or any of the other
transactions contemplated by any of the foregoing.
(iii) A copy of the certificate of incorporation (or
similar Constitutive Document) of each of Holdings LLC and the
Borrower, and each amendment thereto, certified (as of a date
reasonably near the Closing Date) as being a true and complete
copy thereof by the Secretary of State of the State of
Delaware.
(iv) Copies of certificates of the Secretary of State
of the State of Delaware, listing the certificate of
incorporation (or similar Constitutive Document) of Holdings
LLC and the Borrower, respectively, and each amendment thereto
on file in the office of such Secretary of State, and
certifying (A) that such amendments are the only amendments to
Holdings LLC's or the Borrower's certificate of incorporation
(or similar Constitutive Document), as the case may be, on
file in its office, (B) that Holdings LLC or the Borrower has
paid all franchise taxes (or the equivalent thereof) to the
date of such certificate and (C) that Holdings LLC or the
Borrower is duly organized and is in good standing under the
laws of the State of Delaware.
(v) Copies of the certificates of the Secretary of
State (or the equivalent Governmental Authority) of each
jurisdiction in which each of Holdings LLC and the Borrower is
qualified or licensed as a foreign corporation or limited
liability company, except where the failure to so qualify or
be licensed, either individually or in the aggregate, could
not reasonably have been expected to have a Material Adverse
Effect, dated reasonably near the Closing Date and stating
that Holdings LLC or the Borrower, as the case may be, was
duly qualified and in good standing as a foreign corporation
or limited liability company, as applicable, and had filed all
annual reports required to be filed, and had paid all
franchise taxes (or the equivalent thereof) required to be
paid, in such jurisdiction to the date of such certificate.
(vi) A certificate of the Borrower, signed on behalf
of the Borrower by its President or a Vice President or its
Secretary or an Assistant Secretary (or the persons performing
similar functions), dated the Closing Date (the statements
made in which certificate shall have been true on and as of
the Closing Date), certifying as to:
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(A) the absence of any amendments to the
certificate of incorporation of the Borrower since
the date of the Secretary of State's certificate
referred to in clause (iv) of this Section 3.01(k),
or any steps taken by the board of directors (or the
persons performing similar functions) or the
stockholders of the Borrower to effect or authorize
any further amendment, supplement or other
modification thereto;
(B) the accuracy and completeness of the
bylaws of the Borrower as in effect on the date on
which the resolutions of the board of directors (or
the persons performing similar functions) of the
Borrower referred to in clause (ii) of this Section
3.01(k) were adopted and on the Closing Date (a copy
of which shall be attached to such certificate);
(C) the absence of any proceedings (either
pending or contemplated) for the dissolution,
liquidation or other termination of the existence of
the Borrower;
(D) since June 30, 1998, the absence of any
change in the jurisdiction of organization of the
Borrower, any merger, consolidation or other similar
transaction directly or indirectly involving the
Borrower or any issuance or sale of any Equity
Interests in the Borrower, except for the issuance of
the UIC Class A Common Stock and UIC Class B Common
Stock to Holdings LLC as part of the
Recapitalization;
(E) the accuracy in all material respects of
the representations and warranties made (or deemed to
have been made) by the Borrower in the Loan Documents
to which it is or is to be a party as though made on
and as of the Closing Date, before and after giving
effect to the Initial Extension of Credit and to the
application of proceeds therefrom (other than any
such representation and warranty that, by its terms,
refers to a specific date other than the Closing
Date, in which case, as of such specific date);
(F) the absence of any event occurring and
continuing, or resulting from the Initial Extension
of Credit or the application of proceeds therefrom,
that would constitute a Default; and
(G) the satisfaction of the conditions
precedent set forth in subsections (a), (b), (c),
(d), (e), (f), (g), (h) and (j) of this Section 3.01.
(vii) A certificate of Holdings LLC, signed on behalf
of Holdings LLC by its President or a Vice President or its
Secretary or an Assistant Secretary (or the persons performing
similar functions), dated the Closing Date (the statements
made in which certificate shall have been true on and as of
the Closing Date), certifying as to the accuracy and
completeness of the limited liability company agreement (or
similar Constitutive Document) of Holdings LLC as in effect on
the date on which the resolutions of the board of directors
(or persons performing similar functions) of Holdings LLC
referred to in clause
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(ii) of this Section 3.01(k) were adopted and on the Closing
Date (a copy of which shall have been attached to such
certificate).
(viii) A certificate of the Secretary or an Assistant
Secretary (or a person performing similar functions) of the
Borrower certifying as to the names and true signatures of the
officers of the Borrower authorized to sign each of the Loan
Documents and the Related Documents to which it is or is to be
a party and the other agreements, instruments and documents to
be delivered hereunder and thereunder.
(ix) A security agreement duly executed by the
Borrower, together with:
(A) certificates representing the Initial
Pledged Interests referred to therein, accompanied by
undated stock powers or other appropriate powers,
duly executed in blank, and instruments evidencing
the Initial Pledged Indebtedness referred to therein,
duly endorsed in blank;
(B) proper termination statements (Form
UCC-3 or a comparable form) or the equivalent thereof
under the Uniform Commercial Code (or any similar
Requirements of Law) of all jurisdictions that may
have been necessary or that the Administrative Agent
may have deemed reasonably desirable in order to
terminate or amend existing liens on and security
interests in the Collateral, in each case completed
in a manner satisfactory to the Existing Lenders and
duly executed by the appropriate secured party;
(C) proper financing statements (Form UCC-1
or a comparable form) or the equivalent thereof under
the Uniform Commercial Code (or any similar
Requirements of Law) of all jurisdictions that may
have been necessary or the Administrative Agent may
have deemed reasonably desirable in order to perfect
and protect the liens and security interests created
or purported to be created under such security
agreement, covering the Collateral described therein,
in each case completed in a manner reasonably
satisfactory to the Existing Lenders and duly
executed by the Borrower;
(D) completed requests for information,
dated reasonably near the Closing Date, listing the
financing statements referred to in subclause (ix)(C)
of this Section 3.01(k) and all other effective
financing statements filed in the jurisdictions
referred to in subclause (ix)(C) of this Section
3.01(k) that named the Borrower as debtor, together
with copies of such other financing statements;
(E) IP Security Agreements--Short Form,
covering all of the Copyrights, if any, Patents and
Trademarks of the Borrower, in each case completed in
a manner satisfactory to the Existing Lenders and
duly executed by the Borrower;
(F) copies of the Assigned Agreements (as
defined in such security agreement), in each case
together with (1) a consent, in form and substance
reasonably satisfactory to the Existing Lenders, to
the assignment of such Assigned Agreement and the
rights and interest of the Borrower thereunder to the
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Administrative Agent pursuant to such security
agreement, duly executed by each party to such
Assigned Agreement other than the Borrower, and (2)
notice from the Borrower to each of the other Persons
party to such Assigned Agreement other than the
Borrower, in form and substance reasonably
satisfactory to the Administrative Agent, of the
assignment of such Assigned Agreement and the rights
and interest of the Borrower thereunder to the
Administrative Agent pursuant to such security
agreement, duly executed by the Borrower; and
(G) evidence that all of the other actions
(including, without limitation, the completion of all
of the other recordings and filings of or with
respect to such security agreement) that may have
been necessary or that the Administrative Agent may
have deemed reasonably desirable in order to perfect
and protect the liens and security interests created
under such security agreement had been taken or would
be taken in accordance with the terms of the Loan
Documents.
(x) A letter from Valuation Research Corporation and
a certificate of the Borrower, duly executed by the chief
financial officer thereof, in each case attesting to the
Solvency of the Borrower, immediately before and immediately
after giving pro forma effect to the Transaction and the other
transactions contemplated by the Loan Documents and the
Related Documents.
(xi) Copies, certified by a Responsible Officer of
the Borrower, of all of the Related Documents and the Senior
Subordinated Notes Documents, duly executed by each of the
parties thereto, together with all agreements, instruments,
opinions and other documents delivered in connection
therewith.
(xii) Copies, certified by a Responsible Officer of
the Borrower, of all of the agreements, instruments and other
documents evidencing or setting forth the terms and conditions
of each item of the Surviving Indebtedness that was
outstanding or had commitments for the extension of credit on
the Closing Date.
(xiii) Such financial, business and other information
regarding the Borrower as the Existing Lenders shall have
requested, including, without limitation, information as to
possible contingent liabilities, tax matters, environmental
matters, obligations under Plans, Multiemployer Plans and
Welfare Plans, collective bargaining agreements and other
arrangements with employees, and copies, certified by a
Responsible Officer of the Borrower, of (A) the audited
financial statements of the Borrower for the Fiscal Years
ended December 31, 1995, December 31, 1996 and December 31,
1997 and for the eight-month period ended August 31, 1998, (B)
the unaudited financial statements of the Borrower for the
eleven-month period ended November 30, 1998, (C) the pro forma
statements of income of the Borrower for the Fiscal Years
ended December 31, 1995, December 31, 1996 and December 31,
1997 and for the eight-month period ended August 31, 1998, in
each case after giving effect to the Pre-Closing
Reorganization, and (D) forecasts prepared by management of
the Borrower, in form and substance reasonably satisfactory to
the Lender Parties, of balance sheets and statements of
income, stockholders' equity and cash flow of the Borrower on
a quarterly basis for the Fiscal Year in which the Closing
Date occurred and on an annual basis for each Fiscal Year
thereafter through December 31, 2003.
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(xiv) One or more Phase I environmental assessment
reports, in form and substance reasonably satisfactory to the
Existing Lenders, from environmental consulting firms
reasonably acceptable to the Administrative Agent, for the
manufacturing and distribution facilities of the Borrower
located at (A) 8464/8494 Chapin Industrial Drive, St. Louis,
Missouri, 377 Amelia Street, Plymouth, Michigan, (B) 8825 Page
Avenue, St. Louis, Missouri, (C) 8530 Page Avenue, St. Louis,
Missouri, (D) 2129 Chapin Industrial Drive, St. Louis,
Missouri, (E) 1242 West Ridge Road, Gainesville, Georgia, (F)
7346 Penn Drive, Allentown, Pennsylvania, (G) 4142 Rider Trail
North, Earth City, Missouri and (H) 15205 East Stafford
Street, City of Industry, California, in each case assessing
any hazards, costs or liabilities under Environmental Laws to
which the Borrower may be subject, the amount and nature of
which and the Borrower's plans with respect to which shall
have been reasonably acceptable to the Existing Lenders,
together with evidence, in form and substance reasonably
satisfactory to the Existing Lenders, that all applicable
Environmental Laws shall have been complied with.
(xv) A consent and agreement executed by the lessor
of each leasehold on which Collateral was located (other than
the leasehold located at 377 Amelia Street, Plymouth,
Michigan) that is reasonably requested by the Existing
Lenders, in each case which provides, among other things, that
such lessor waives any lien or security interest it may now
have or hereafter acquire on the Collateral located on the
premises thereof and that the Administrative Agent has the
right to receive notice of any default by the Borrower under
the lease and to repossess the Collateral located thereon upon
the occurrence and during the continuance of a Default under
Section 6.01(a) or 6.01(f) or an Event of Default, and such
other rights as may have been reasonably requested by the
Existing Lenders in any such consent and agreement.
(xvi) A letter, in form and substance reasonably
satisfactory to the Administrative Agent, from the Borrower to
Rubin, Brown, Gornstein and Co. LLP, its independent public
accountants, advising such accountants that the Administrative
Agent, on behalf of the Lender Parties, has been authorized to
exercise from time to time all rights of the Borrower to
require such accountants to disclose any and all financial
statements and any other information relating to the financial
condition, operations or performance of the Borrower or any of
its Subsidiaries that they may have and directing such
accountants to comply with any reasonable request of the
Administrative Agent for such information.
(xvii) Evidence of all of the insurance of the
Borrower required to be maintained thereby under Section
5.01(d).
(xviii) Certified copies of each of the employment
and other compensation agreements with each senior executive
officer of the Borrower in effect on the Closing Date.
(xix) One or more duly completed and executed Notices
of Borrowing for each Borrowing made on the Closing Date and
one or more duly completed and executed Notices of Issuance
for each Letter of Credit issued on the Closing Date.
(xx) A favorable opinion of Kirkland & Ellis, special
counsel to the Loan Parties.
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(xxi) Favorable opinions of Simpson, Thacher &
Bartlett, special counsel to the Sellers, and Mark R. Gale,
Esq., counsel for the Seller, delivered in connection with the
consummation of the Recapitalization.
(xxii) A favorable opinion of Blackwell Sanders Peper
Martin LLP, special Missouri counsel for the Lender Parties.
SECTION 3.02. Conditions Precedent to Effectiveness of this
Agreement. This Agreement shall become effective on and as of the first date
(the "Effective Date") on which all of the following conditions precedent shall
have been satisfied:
(a) Before giving effect and immediately after giving pro
forma effect to the Transaction, no Material Adverse Change shall have
occurred since August 31, 1998.
(b) There shall exist no action, suit, litigation, arbitration
or proceeding pending or, to the best knowledge of the Borrower,
threatened (and, to the best knowledge of the Borrower, there shall
exist no investigation pending or threatened) against or affecting the
Borrower or any of its property or assets in any court or before any
arbitrator or by or before any Governmental Authority of any kind that
(i) either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect other than the matters
described on Schedule 3.02(b) hereto (the "Disclosed Litigation") or
(ii) could reasonably be expected to adversely affect the legality,
validity, binding effect or enforceability of any aspect of the
Transaction, any of the Loan Documents or the Related Documents or any
of the other transactions contemplated thereby; and there shall have
been no adverse change in the status, or the reasonably anticipated
financial effect on the Borrower, of the Disclosed Litigation from that
described on Schedule 3.02(b) hereto.
(c) The representations and warranties contained in each of
the Loan Documents shall be correct in all material respects on and as
of the Effective Date, as though made on and as of such date (except
for any such representation and warranty that, by its terms, refers to
a specific date other than the Effective Date, in which case as of such
specific date). No event shall have occurred and be continuing, or
shall occur as a result of the Effective Date, therefrom, that
constitutes a Default.
(d) All amounts due and payable to the Agents and the Existing
Lenders under and in respect of the Existing Credit Agreement and each
of the other "Loan Documents" (as defined in the Existing Credit
Agreement) on or prior to the Effective Date shall have been paid in
full. All of the reasonable and documented fees and expenses of the
Agents and the Lender Parties (including, without limitation, all of
the reasonable fees and expenses of counsel for the Agents and local
counsel for the Lender Parties) shall have been paid in full.
(e) The Administrative Agent shall have received on or before
the Effective Date the following, each dated such date (unless
otherwise specified), in form and substance reasonably satisfactory to
the Lender Parties and (except for the Notes) in sufficient copies for
each of the Lender Parties:
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(i) The Term A Notes, payable to the order of the
Term A Lenders, the Term B Notes, payable to the order of the
Term B Lenders, and the Revolving Credit Notes, payable to the
order of the Revolving Credit Lenders, respectively.
(ii) An amended and restated security agreement, in
substantially the form of Exhibit D hereto (together with each
Security Agreement Supplement, as amended, supplemented or
otherwise modified hereafter from time to time in accordance
with the terms thereof and Section 8.01, the "Security
Agreement"), duly executed by the Borrower, together with:
(A) copies of the Assigned Agreements
referred to in the Security Agreement, in each case
together with (1) a consent, in form and substance
reasonably satisfactory to the Lender Parties, to the
assignment of such Assigned Agreement and the rights
and interest of the Borrower thereunder to the
Administrative Agent pursuant to the Security
Agreement, duly executed by each party to such
Assigned Agreement other than the Borrower, and (2)
notice from the Borrower to each of the other Persons
party to such Assigned Agreement other than the
Borrower, in form and substance reasonably
satisfactory to the Administrative Agent, of the
assignment of such Assigned Agreement and the rights
and interest of the Borrower thereunder to the
Administrative Agent pursuant to the Security
Agreement, duly executed by the Borrower; and
(B) evidence that all of the other actions
(including, without limitation, the completion of all
of the other recordings and filings of or with
respect to the Security Agreement) that may be
necessary or that the Administrative Agent may deem
reasonably desirable in order to perfect and protect
the liens and security interests created under the
Security Agreement have been taken.
(iii) A negative pledge agreement, in substantially
the form of Exhibit E hereto (as amended, supplemented or
otherwise modified hereafter from time to time in accordance
with the terms thereof and Section 8.01, the "Holdings LLC
Agreement"), duly executed by Holdings LLC.
(iv) A letter from Valuation Research Corporation, in
substantially the form of Exhibit F-1 hereto, and a
certificate of the Borrower, in substantially the form of
Exhibit F-2 hereto, duly executed by the chief financial
officer thereof, in each case attesting to the Solvency of the
Borrower, immediately before and immediately after giving pro
forma effect to the Transaction and the other transactions
contemplated by the Loan Documents and the Related Documents.
(v) Copies, certified by a Responsible Officer of the
Borrower, of (A) the Preliminary Offering Memorandum and, if
completed, the Final Offering Memorandum and the indenture for
the permanent Senior Subordinated Notes and (B) all
amendments, supplements, modifications, refinancings,
restatements or replacements of the Related Documents and the
Senior Subordinated Notes Documents, duly executed by each of
the parties thereto, together with all agreements,
instruments, opinions and other documents delivered or to be
delivered in connection therewith.
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(vi) Copies, certified by a Responsible Officer of
the Borrower, of the audited financial statements of the
Borrower for the Fiscal Year ended December 31, 1998.
(vii) A letter, in form and substance reasonably
satisfactory to the Administrative Agent, from the Borrower to
PriceWaterhouseCoopers LLP, its independent public
accountants, advising such accountants that the Administrative
Agent, on behalf of the Lender Parties, has been authorized to
exercise from time to time all rights of the Borrower to
require such accountants to disclose any and all financial
statements and any other information relating to the financial
condition, operations or performance of the Borrower or any of
its Subsidiaries that they may have and directing such
accountants to comply with any reasonable request of the
Administrative Agent for such information.
(viii) One or more duly completed and executed
Notices of Borrowing for each Borrowing to be made on the
Effective Date and one or more duly completed and executed
Notices of Issuance for each Letter of Credit to be issued on
the Effective Date.
(ix) A favorable opinion of Kirkland & Ellis, special
counsel to the Loan Parties, in substantially the form of
Exhibit G-1 hereto, and addressing such other matters as any
of the Lender Parties through the Administrative Agent may
reasonably request.
(x) A favorable opinion of Blackwell Sanders Peper
Martin LLP, special Missouri counsel for the Lender Parties,
in substantially the form of Exhibit G-2 hereto, and
addressing such other matters as any of the Lender Parties
through the Administrative Agent may reasonably request.
SECTION 3.03. Conditions Precedent to Each Borrowing, Issuance
and Renewal. The obligation of each of the Appropriate Lenders to make an
Advance (other than a Swing Line Advance made by any of the Revolving Credit
Lenders pursuant to Section 2.02(b)(ii) or a Letter of Credit Advance made by
the Issuing Bank or any of the Revolving Credit Lenders pursuant to Section
2.03(c)(i)) on the occasion of each Borrowing (including the initial
Borrowings), and the obligation of the Issuing Bank to issue a Letter of Credit
(including the initial issuance thereof) or to renew a Letter of Credit, shall
be subject to the further conditions precedent that on the date of such
Borrowing, issuance or renewal (a) the following statements shall be true (and
each of the giving of the applicable Notice of Borrowing, Notice of Issuance or
Notice of Renewal by the Borrower and the acceptance by the Borrower of the
proceeds of such Borrowing or of such Letter of Credit or the renewal of such
Letter of Credit, as the case may be, shall constitute a representation and
warranty by the Borrower that, both on the date of such notice and on the date
of such Borrowing, issuance or renewal, such statements are true):
(i) the representations and warranties contained in each of
the Loan Documents are correct in all material respects on and as of
such date, before and after giving effect to such Borrowing, issuance
or renewal and to the application of the proceeds, if any, therefrom,
as though made on and as of such date (except (A) for any such
representation and warranty that, by its terms, refers to a specific
date other than the date of such Borrowing, issuance or renewal, in
which case as of such specific date, and (B) that the financial
statements of the Borrower referred to in Sections 4.01(f) and 4.01(g)
shall be deemed at any time and from time to time after the Effective
Date to refer to the Consolidated financial statements of the Borrower
and its Subsidiaries comprising part of the Required Financial
Information most recently delivered to the Administrative Agent and the
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Lender Parties pursuant to Sections 5.03(c) and 5.03(d), respectively,
on or prior to the date of such Borrowing, issuance or renewal); and
(ii) no event has occurred and is continuing, or would result
from such Borrowing, issuance or renewal, or from the application of
the proceeds, if any, therefrom, that constitutes a Default;
and (b) the Administrative Agent shall have received such other approvals,
authorizations, opinions, documents and information as any of the Lenders (or,
in the case of the issuance or renewal of a Letter of Credit, the Issuing Bank)
through the Administrative Agent may reasonably request.
SECTION 3.04. Determinations Under Section 3.02. For purposes
of determining compliance with the conditions specified in Section 3.02, each of
the Lender Parties shall be deemed to have consented to, approved or accepted or
to be satisfied with each document or other matter required thereunder to be
consented to or approved by, or acceptable or satisfactory to, the Lender
Parties unless an officer of the Administrative Agent responsible for the
transactions contemplated by the Loan Documents shall have received notice from
such Lender Party prior to the Effective Date specifying its objection thereto
and, in the case of any Lender, such Lender shall not have made available to the
Administrative Agent on the Effective Date such Lender Party's cash
consideration for its purchase of a portion of the Existing Advances or, if
applicable, its Pro Rata Share of any Borrowing to be made on such date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. The Borrower
hereby represents and warrants as follows:
(a) Each of the Loan Parties and each of their Subsidiaries
(i) are corporations, limited partnerships or limited liability
companies duly organized and validly existing under the laws of the
jurisdictions of their respective organization and are in good standing
under the laws of such jurisdiction and (ii) are duly qualified as
foreign corporations, limited partnerships or limited liability
companies and are in good standing in each other jurisdiction in which
the ownership, lease or operation of their respective property and
assets or the conduct of their respective businesses require them to so
qualify or be licensed, except, solely in the case of this clause (ii),
where the failure to so qualify or be licensed or to be in good
standing, either individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect. Each of the Loan Parties
and each of their Subsidiaries have all of the requisite power and
authority, and the legal right, to own or lease and to operate all of
the property and assets they purport to own, lease or operate and to
conduct all of their respective businesses as now conducted and as
proposed to be conducted. Each of the Loan Parties has all of the
requisite power and authority, and the legal right, to execute and
deliver each of the Loan Documents and the Related Documents to which
it is or is to be a party, to perform all of its Obligations hereunder
and thereunder and to consummate the Transaction and all of the other
transactions contemplated hereby and thereby.
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(b) Set forth on Part A of Schedule 4.01(b) hereto is a
complete and accurate list of all of the Subsidiaries of the Borrower
as of the date of this Agreement showing, as to each such Subsidiary,
the correct legal name thereof, the legal structure thereof, the
jurisdiction of its organization, the number and type of each class of
its Equity Interests authorized and the number outstanding, and the
percentage of each such class of its Equity Interests outstanding on
such date that are owned by any of the Loan Parties. All of the
outstanding Equity Interests in each of the Subsidiaries of the
Borrower are owned directly or indirectly by one or more of the Loan
Parties, free and clear of all Liens (including, without limitation,
preemptive or other similar rights of the holders thereof), except
those created under the Collateral Documents. All of the outstanding
Equity Interests in the Borrower and each of its Subsidiaries have been
validly issued and are fully paid and nonassessable. As of the date of
this Agreement, all of the outstanding Equity Interests in the Borrower
are owned by Holdings LLC and the Sellers in the type and amounts
disclosed opposite the names of Holdings LLC and the respective Sellers
on Part B of Schedule 4.01(b) hereto.
(c) The execution, delivery and performance by each of the
Loan Parties of each of the Loan Documents and the Related Documents to
which it is or is to be a party, and the consummation of the
Transaction and the other transactions contemplated hereby and thereby,
have been duly authorized by all necessary action (including, without
limitation, all necessary shareholder, partner, member or other similar
action) and do not:
(i) contravene the Constitutive Documents of such
Loan Party;
(ii) violate any Requirement of Law;
(iii) conflict with or result in the breach of, or
constitute a default under, any loan agreement, indenture,
mortgage, deed of trust, lease, instrument, contract or other
agreement binding on or affecting such Loan Party or any of
its Subsidiaries or any of their respective property or
assets; or
(iv) except for the Liens created under the
Collateral Documents, result in or require the creation or
imposition of any Lien upon or with respect to any of the
property or assets of such Loan Party or any of its
Subsidiaries.
Neither any of the Loan Parties nor any of their respective
Subsidiaries is in violation of any Requirements of Law or in breach of
any loan agreement, indenture, mortgage, deed of trust, lease,
instrument, contract or other agreement referred to in the immediately
preceding sentence, the violation or breach of which, either
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
(d) Each of the Loan Parties and each of their Subsidiaries
own or possess all of the Governmental Authorizations that are
necessary to own or lease and operate their respective property and
assets and to conduct their respective businesses as now conducted and
as proposed to be conducted, except where and to the extent that the
failure to obtain or maintain in effect any such Governmental
Authorization, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. Neither any
of the Loan Parties nor any of their Subsidiaries has received any
notice relating to or threatening the revocation, termination,
cancellation, denial, impairment or modification of any such
Governmental Authorization, or is in
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violation or contravention of, or in default under, any such
Governmental Authorization. No Governmental Authorization and no
consent, approval or authorization of, or notice to or filing with, or
other action by, any other Person is required for:
(i) the due execution, delivery, recordation, filing
or performance by any of the Loan Parties of any of the Loan
Documents or the Related Documents to which it is or is to be
a party, or for the consummation of any aspect of the
Transaction or the other transactions contemplated hereby or
thereby;
(ii) the grant by any of the Loan Parties of the
Liens granted by it pursuant to the Collateral Documents;
(iii) the perfection or maintenance of the Liens
created under the Collateral Documents (including the first
priority nature thereof); or
(iv) the exercise by any of the Agents or any of the
Lender Parties of its rights under the Loan Documents or the
remedies in respect of the Collateral pursuant to the
Collateral Documents,
except for the Governmental Authorizations, and the consents,
approvals, authorizations, notices, filings and other actions,
described on Schedule 4.01(d) hereto. Except as described on Schedule
4.01(d) hereto, all of the Governmental Authorizations and the
consents, approvals, authorizations, notices, filings and other actions
described on Schedule 4.01(d) hereto have been duly obtained, taken,
given or made and are in full force and effect. All applicable waiting
periods in connection with each aspect of the Transaction and the other
transactions contemplated hereby and thereby have expired without any
action having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon any aspect of
the Transaction or the rights of any of the Loan Parties or any of
their Subsidiaries freely to transfer or otherwise dispose of, or to
create any Lien on, any property or assets now owned or hereafter
acquired by any of them.
(e) This Agreement has been, and each of the Notes and each of
the other Loan Documents when delivered hereunder will have been, duly
executed and delivered by each of the Loan Parties intended to be a
party thereto. This Agreement is, and each of the Notes and each of the
other Loan Documents when delivered hereunder will be, the legal, valid
and binding obligations of each of the Loan Parties intended to be a
party thereto, enforceable against such Loan Party in accordance with
their respective terms, except to the extent such enforceability may be
limited by the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of
equity.
(f) The balance sheets of the Borrower as of December 31,
1995, December 31, 1996, December 31, 1997 and December 31, 1998, and
the related statements of income, stockholders' equity and cash flow of
the Borrower for the Fiscal Years then ended, and the balance sheet of
the Borrower as of August 31, 1998, and the related statements of
income, stockholders' equity and cash flow of the Borrower for the
eight-month period then ended, in each case including the schedules and
notes thereto and accompanied by an opinion of Rubin, Brown, Gornstein
and Co. LLP or, in the case of such financial statements of the
Borrower for the Fiscal Year ended December 31, 1998,
PriceWaterhouseCoopers LLP, the independent public accountants of the
Borrower, copies of all
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of which have been furnished to the Lender Parties, fairly present in
all material respects (subject, solely in the case of such financial
statements of the Borrower as of and for the eight-month period ended
August 31, 1998, to normal year-end audit adjustments) the financial
condition of the Borrower as at such dates and the results of
operations and cash flow of the Borrower for the respective periods
ended on such dates. All of the financial statements referred to above
in this Section 4.01(f), including the schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently
throughout the respective periods covered thereby. The Borrower does
not have any material indebtedness or other material fixed or
contingent liabilities, material liabilities for taxes, unusual forward
or long-term material commitments or anticipated material losses from
any unfavorable commitments, except as referred to, or reflected or
provided for in, the financial statements of the Borrower as of and for
the Fiscal Year ended December 31, 1998 described above in this Section
4.01(f) or as otherwise set forth on one or more of the Schedules to
the Loan Documents.
(g) The balance sheet of the Borrower as of November 30, 1998,
and the related statements of income, stockholders' equity and cash
flow of the Borrower for the eleven-month period then ended, duly
certified by a Senior Financial Officer, copies of which have been
furnished to the Lender Parties, fairly present in all material
respects, subject to the absence of footnote disclosure and normal
year-end audit adjustments, the financial condition of the Borrower as
at such date and the results of operations and cash flow of the
Borrower for the period ended on such date. The financial statements
referred to above in this Section 4.01(g) have been prepared, subject
to normal year-end audit adjustments and the absence of notes thereto,
in accordance with GAAP applied consistently throughout the respective
periods covered thereby.
(h) The pro forma statements of income of the Borrower for the
Fiscal Years ended December 31, 1995, December 31, 1996, December 31,
1997 and for the eight-month period ended August 31, 1998, accompanied
by a report of Rubin, Brown, Gornstein and Co. LLP, the independent
public accountants of the Borrower, copies of all of which have been
furnished to the Lender Parties, fairly present in all material
respects the pro forma adjustments to the results of operations of the
Borrower for the respective periods covered thereby, in each case after
giving effect to the Pre-Closing Reorganization.
(i) The forecasted Consolidated balance sheets and statements
of income, stockholders' equity and cash flow of the Borrower and its
Subsidiaries delivered to the Lender Parties pursuant to Section
3.01(k)(xiii)(D) or 5.03(f) were prepared in good faith on the basis of
the assumptions stated therein, which assumptions were fair in the
light of conditions existing at the time of delivery of such forecasts,
and represented, at the time of delivery thereof to the Lender Parties,
the Borrower's reasonable estimate of its future financial performance
(although the actual results during the periods covered by such
forecasts may differ from the forecasted results).
(j) All of the information (other than financial projections
and pro forma information) furnished by or on behalf of any of the Loan
Parties or any of their Subsidiaries to any of the Agents or any of the
Lender Parties or any of their representatives or advisors in
connection with the Loan Documents or the Related Documents or any
aspect of the Transaction or any of the other transactions contemplated
hereby or thereby, considered as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made therein, in light of the circumstances in
which any such statements were made, not misleading. No
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fact, event, condition or circumstance is known to any of the Loan
Parties which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, which has not
been set forth herein or in the financial statements referred to in
subsection (f) or (g) of this Section 4.01.
(k) There is no action, suit, litigation, arbitration or
proceeding pending or, to the best knowledge of the Borrower,
threatened (and, to the best knowledge of the Borrower, there is no
investigation pending or threatened) against or affecting any of the
Loan Parties or any of their Subsidiaries or any of the property or
assets thereof in any court or before any arbitrator or by or before
any Governmental Authority of any kind that (i) either individually or
in the aggregate, could reasonably be expected to have a Material
Adverse Effect (other than the Disclosed Litigation) or (ii) could
reasonably be expected to adversely affect the legality, validity,
binding effect or enforceability of any aspect of the Transaction, any
of the Loan Documents or the Related Documents or any of the other
transactions contemplated thereby; and there shall have been no adverse
change in the status, or in the reasonably anticipated financial effect
on any of the Loan Parties or any of their Subsidiaries, of the
Disclosed Litigation from that described on Schedule 3.02(b) hereto.
(l) Each of the Loan Parties is the legal and beneficial owner
of the Collateral purported to be owned thereby under the Collateral
Documents, free and clear of all Liens, except for the liens and
security interests created or expressly permitted under the Collateral
Documents. The Collateral Documents, together with the filing of
appropriate Uniform Commercial Code financing statements in favor of
the Administrative Agent, on behalf of the Secured Parties, and the
possession of the certificates evidencing the Equity Interests in the
Subsidiaries of the Borrower comprising part of the Collateral, create
valid and perfected first priority liens on and security interests in
the Collateral (subject to the liens and security interests expressly
permitted under Section 5.02(a)) in favor of the Administrative Agent,
for the benefit of the Secured Parties, securing the payment of the
Secured Obligations. Certificates representing all of the Equity
Interests in the Subsidiaries of the Loan Parties that are purported to
comprise part of the Collateral have been delivered to the
Administrative Agent as required under the terms of the Collateral
Documents, together with undated stock powers or other appropriate
powers duly executed in blank; all filings and other actions necessary
to perfect and protect the liens and security interests of the
Administrative Agent in the Collateral have been duly made or taken and
are in full force and effect or will be duly made or taken in
accordance with the terms of the Loan Documents; and all filing fees
and recording taxes have been paid in full.
(m) Each of the Loan Parties and each of their Subsidiaries
own or have the legal right to use all of the patents, licenses,
franchises, copyrights, service marks, trademarks, trade secrets and
trade names that are necessary to own or lease and operate their
respective property and assets and to conduct their respective
businesses as now conducted and as currently proposed to be conducted,
without known conflict with the rights of any other Person (other than
any such patent, licence, franchise, copyright, service mark,
trademark, trade secret, trade name or other right that, both
individually and in the aggregate, is not material to the business,
financial condition or operations of the Loan Party or the Subsidiary
of a Loan Party that owns or possesses it). No action, suit,
litigation, arbitration or proceeding is pending or, to the best
knowledge of the Borrower, threatened (and, to the best knowledge of
the Borrower, no investigation is pending or threatened) challenging
the use by any of the Loan Parties or any of their Subsidiaries of any
such patent, license, franchise, copyright, service mark, trademark,
trade secret, trade name or the validity or effectiveness thereof,
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except for any such action, suit, investigation, litigation,
arbitration or proceeding that, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(n) None of the proceeds of any Advance or the drawings under
any Letter of Credit will be used to acquire any equity security of a
class which is registered pursuant to Section 12 of the Exchange Act.
Neither the Borrower nor any of its Subsidiaries is engaged in the
business of extending credit for the purpose of purchasing or carrying
any "margin stock" (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 207)). None of the
proceeds of any Advance or the drawings under any Letter of Credit will
be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying margin stock.
(o) Neither any of the Loan Parties nor any of their
Subsidiaries is an "investment company" or an "affiliated person" of,
or "promoter" or "principal underwriter" for, an "investment company"
(each as defined in the Investment Company Act of 1940, as amended).
None of the making (or deemed making) of any Advance, the issuance (or
deemed issuance) of any Letter of Credit or the application of the
proceeds therefrom, or the repayment of any Advance by the Borrower, or
the consummation of the Transaction or any of the other transactions
contemplated hereby, will violate any provision of the Investment
Company Act of 1940, as amended, or any rule, regulation or order of
the Securities and Exchange Commission thereunder.
(p) The Borrower is, individually and together with its
Subsidiaries, taken as a whole, Solvent.
(q) Neither any of the Loan Parties nor any of their
Subsidiaries is a party to any loan agreement, indenture, mortgage,
deed of trust, lease, instrument, contract or other agreement or is
subject to any restriction in its Constitutive Documents or any other
corporate, partnership, limited liability company or similar
restriction that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(r) Except as, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, there is
(i) no unfair labor practice complaint pending or, to the best
knowledge of the Borrower, threatened against any of the Loan Parties
or any of their Subsidiaries by or before any Governmental Authority,
and no grievance or arbitration proceeding pending or, to the best
knowledge of the Borrower, threatened against any of the Loan Parties
or any of their Subsidiaries which arises out of or under any
collective bargaining agreement, (ii) no strike, labor dispute,
slowdown, stoppage or similar action or grievance pending or, to the
best knowledge of the Borrower, threatened against any of the Loan
Parties or any of their Subsidiaries and (iii) to the best knowledge of
the Borrower, no union representation question existing with respect to
the employees of any of the Loan Parties or any of their Subsidiaries
and no union organizing activity taking place with respect to any of
the employees of any of them.
(s) Except as, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, there
exists no actual or threatened termination, cancellation or limitation
of, or modification to or change in, the business relationship between
(i) any of the Loan Parties or any of their Subsidiaries, on the one
hand, and any carrier, any customer or any group thereof, on the other
hand, or (ii) any of the Loan Parties or any of their Subsidiaries, on
the one hand, and any supplier thereof, on the other hand; and, to the
best knowledge of the Borrower, there
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exists no present state of facts or circumstances that could reasonably
be expected to give rise to or result in any such termination,
cancellation, limitation, modification or change.
(t) No ERISA Event has occurred or could reasonably be
expected to occur with respect to any Plan that, either individually or
in the aggregate, has had or could reasonably be expected to have, a
Material Adverse Effect. Schedule B (Actuarial Information) to the most
recent annual report (form 5500 series) for each of the Plans, copies
of which have been filed with the Internal Revenue Service and
furnished or made available to the Lender Parties, is complete and
accurate and fairly presents in all material respects the funding
status of such Plan; and, since the date of such Schedule B, there has
been no material adverse change in the funding status of such Plan.
Neither any of the Loan Parties nor any of the ERISA Affiliates (i) has
incurred or could reasonably be expected to incur any Withdrawal
Liability to any Multiemployer Plan in excess of $1,000,000 or (ii) has
been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and, to the best knowledge of the
Loan Parties and the ERISA Affiliates, no such Multiemployer Plan could
reasonably be expected to be in reorganization or to be terminated,
within the meaning of Title IV of ERISA.
(u) The operations and properties of each of the Loan Parties
and each of their Subsidiaries comply in all material respects with all
applicable Environmental Laws and Environmental Permits; all past
noncompliance with such Environmental Laws and Environmental Permits
has been resolved without any material ongoing obligations or costs;
all Environmental Permits that are necessary for the operations or
properties of any of the Loan Parties or any of their Subsidiaries have
been obtained and are in full force and effect, except where and to the
extent that the failure to obtain or maintain in full force and effect
any such Environmental Permit, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect; and
no circumstances exist that, either individually or in the aggregate,
could reasonably be expected to (i) form the basis of an Environmental
Action against any of the Loan Parties or any of their Subsidiaries or
any of the properties thereof that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect or (ii) cause any such property to be subject to any material
restrictions on ownership, occupancy or use or on the transferability
of such property by any of the Loan Parties or any of their
Subsidiaries under any Environmental Law.
(v) (i) None of the properties owned or operated by any of the
Loan Parties or any of their Subsidiaries is listed or, to the best
knowledge of the Borrower, is proposed for listing on the NPL or on the
CERCLIS or any analogous state or local list or, to the best knowledge
of the Borrower, is adjacent to any such property; and (ii) except as,
either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, (A) there are no, and never
have been any, underground or aboveground storage tanks or any surface
impoundments, septic tanks, pits, sumps or lagoons in which Hazardous
Materials are being or have been treated, stored or disposed of on any
property owned or operated by any of the Loan Parties or any of their
Subsidiaries or, to the best knowledge of the Borrower, on any property
formerly owned or operated by any of the Loan Parties or any of their
Subsidiaries, (B) there is no asbestos or asbestos-containing material
on any property owned or operated by any of the Loan Parties or any of
their Subsidiaries and (C) Hazardous Materials have not been released,
discharged or disposed of on any property owned or operated by any of
the Loan Parties or any of their Subsidiaries.
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(w) Neither any of the Loan Parties nor any of their
Subsidiaries is undertaking, and has not completed, either individually
or together with other potentially responsible parties, any
investigation or assessment or remedial or response action relating to
any actual or threatened release, discharge or disposal of Hazardous
Materials at any site, location or operation, either voluntarily or
pursuant to the order of any Governmental Authority or the requirements
of any Environmental Law that, either individually or in the aggregate,
could reasonably be expected to result in material liability to the
Borrower or any of its Subsidiaries. All Hazardous Materials generated,
used, treated, handled or stored at, or transported to or from, any
property owned or operated by any of the Loan Parties or any of their
Subsidiaries have been disposed of in a manner that, either
individually or in the aggregate, could not reasonably be expected to
result in material liability to the Borrower or any of its
Subsidiaries.
(x) Each of the Loan Parties and each of their Subsidiaries
and Affiliates have filed, have caused to be filed or have been
included in all federal and state tax returns, reports and statements,
and all other material tax returns, reports and statements, required to
be filed and have paid or caused to be paid all taxes, assessments,
levies, fees and other charges shown thereon (or on any assessments
received by any such Person or of which any such Person has been
notified) to be due and payable, together with applicable interest and
penalties, except for any such taxes, assessments, levies, fees and
other charges the amount, applicability or validity of which is being
contested in good faith and by appropriate proceedings diligently
conducted and with respect to which the applicable Loan Party or
Subsidiary or Affiliate of a Loan Party, as the case may be, has
established appropriate and adequate reserves in accordance with GAAP.
All of the tax returns, reports and statements referred to in the
immediately preceding sentence have been prepared in good faith and are
complete and accurate in all material respects for each of the Loan
Parties and each of their Subsidiaries for the respective periods
covered thereby.
(y) Set forth on Schedule 4.01(y) hereto is a complete and
accurate list, as of the date of this Agreement, of each of the Open
Years of each of the Loan Parties and each of their Subsidiaries. There
are no adjustments, as of the date of this Agreement, to (i) the
federal income tax liability (including, without limitation, interest
and penalties) of any of the Loan Parties or any of their Subsidiaries
proposed in writing by the Internal Revenue Service with respect to
their respective Open Years or (ii) any foreign, state or local tax
liability (including, without limitation, interest and penalties) of
any of the Loan Parties or any of their Subsidiaries proposed in
writing by any foreign, state or local taxation authority or other
Governmental Authority (other than amounts arising solely from
adjustments to federal income tax returns of the Loan Parties and their
Subsidiaries) that, in the case of clauses (i) and (ii) of this
sentence, have not been fully assumed or retained by (or for which the
Loan Parties and their Subsidiaries are not fully and unconditionally
indemnified for by), the Sellers under the terms of the
Recapitalization Agreement. No issues have been raised by the Internal
Revenue Service in respect of Open Years of any of the Loan Parties or
any of their Subsidiaries or by any such foreign, state or local
taxation authorities or other Governmental Authorities that, either
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect. Neither any of the Loan Parties nor any of
their Subsidiaries has entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute of
limitations relating to the assessment, reassessment, payment or
collection of taxes of any Loan Party or any such Subsidiary, or is
aware of any circumstances that would cause the taxable years or other
taxable periods of any Loan Party or any such Subsidiary to no longer
be subject to the normally applicable statute of limitations. Neither
any of the Loan Parties nor any of
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their Subsidiaries has provided, with respect to itself or any property
held by it, any consent under Section 341(f) of the Internal Revenue
Code.
(z) At all times from 1982 until the Closing Date, the
Borrower had in effect a valid election under Section 1362(a) of the
Internal Revenue Code (or a comparable election under any successor
provision) to be taxed as an "S Corporation" for federal income tax
purposes and comparable elections under state or local law and the
Borrower has not received and is not aware of any proposal from the
Internal Revenue Service or any state or local taxation authority to
disallow such election to be taxed as an "S Corporation" (or any
comparable state or local law election) for any taxable year from 1982
to the short taxable year ending on the day immediately preceding the
Closing Date.
(aa) The Borrower, on behalf of itself and its Subsidiaries,
(i) has initiated a review and assessment of all areas within its own
and each of its Subsidiaries' business and operations (including those
affected by material suppliers, vendors and customers) that could
reasonably be expected to be adversely affected by the risk that
computer applications used by the Borrower or any of its Subsidiaries
(or by their respective material suppliers, vendors and customers) may
be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999
(collectively, the "Year 2000 Problem"), (ii) has developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis and
(iii) has implemented such plan to date in accordance with such
timetable. Based on the foregoing, the Borrower believes that all
computer applications (including those of its own and each of its
Subsidiary's suppliers, vendors and customers) that are material to its
or any of its Subsidiaries' business and operations are reasonably
expected on a timely basis to be able to perform properly
date-sensitive functions for all dates before and after January 1,
2000, except to the extent that a failure to do so, either individually
or in the aggregate, could not reasonably be expected to have Material
Adverse Effect.
(bb) Set forth on Schedule 3.01(f) hereto is a complete and
accurate list as of the Closing Date of all Surviving Indebtedness,
showing, as of such date, the principal amount outstanding thereunder,
the interest rate thereon, the scheduled maturity date thereof and the
amortization schedule, if any, therefor.
(cc) Set forth on Schedule 4.01(cc) hereto is a complete and
accurate list as of the Closing Date of all Liens on the property or
assets of the Borrower, showing as of such date, the lienholder
thereof, the principal amount of the Obligations secured thereby and
the property or assets of the Borrower subject thereto.
(dd) Set forth on (i) Part A of Schedule 4.01(dd) hereto is a
complete and accurate list as of the date of this Agreement or as of
the date of the most recent amendment, supplement or other modification
to Schedule 4.01(dd) hereto (whether pursuant to Section 5.03(g) or
otherwise) of all real property owned by the Borrower or any of its
Subsidiaries, showing as of such date, the street address, county or
other relevant jurisdiction, state, record owner and book and fair
value thereof and (ii) Part B of Schedule 4.01(dd) hereto is a complete
and accurate list as of the date of this Agreement or as of the date of
the most recent amendment, supplement or other modification to Schedule
4.01(dd) hereto (whether pursuant to Section 5.03(g) or otherwise) of
all leases of real property under which any of the Loan Parties or any
of their Subsidiaries is the lessee, showing as of such date, the
street address, county or other relevant jurisdiction, state, lessor,
lessee, expiration date and annual rental cost thereof. The Borrower
and each of its Subsidiaries have good,
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marketable and insurable fee simple title to all of the real property
set forth on Part A of Schedule 4.01(dd) hereto, free and clear of all
Liens other than Liens created or expressly permitted under the Loan
Documents, except for any such real property that has been sold,
leased, transferred or otherwise disposed of in accordance with the
terms of the Loan Documents. All of the leases referred to on Schedule
4.01(dd) hereto are valid and subsisting and in full force and effect,
unless such lease has lapsed, terminated or been canceled in accordance
with the terms of the Loan Documents.
(ee) Set forth on Schedule 4.01(ee) hereto is a complete and
accurate list as of the date of this Agreement or as of the date of the
most recent amendment, supplement or other modification to Schedule
4.01(ee) hereto (whether pursuant to Section 5.03(g) or otherwise) of
all of the Investments (other than cash and Cash Equivalents and
intercompany Investments expressly permitted under Section 5.02(e)(iv))
held by any of the Loan Parties or any of their Subsidiaries, showing,
as of such date, the amount, the obligor or issuer thereof and the
maturity, if any, thereof.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any of the
Advances or any of the other Obligations of any Loan Party under or in respect
of any of the Loan Documents (other than any such Obligations of any of the Loan
Parties under Section 2.10, 2.12 or 8.04 (or other similar provisions of the
other Loan Documents that are specified under the terms thereof to survive the
payment in full of such other Obligations under or in respect of the Loan
Documents) to the extent no demand or claim thereunder has been made) shall
remain unpaid, any of the Letters of Credit shall remain outstanding or any of
the Lender Parties shall have any Commitment hereunder, the Borrower will, at
all times:
(a) Compliance with Laws, Maintenance of Governmental
Authorizations, Etc. (i) Comply, and cause each of its Subsidiaries to
comply, in all material respects, with all applicable Requirements of
Law, such compliance to include, without limitation, compliance with
ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of
the Organized Crime Control Act of 1970 and (ii) except as provided in
Section 5.01(e), obtain and maintain in effect all Governmental
Authorizations that are necessary (A) to own or lease and operate their
respective property and assets and to conduct their respective
businesses as now conducted and as proposed to be conducted, except
where and to the extent that the failure to obtain or maintain in
effect any such Governmental Authorization, either individually or in
the aggregate, could not reasonably be expected to have a Material
Adverse Effect, or (B) for the due execution, delivery or performance
by the Borrower or any of its Subsidiaries of any of the Loan Documents
or the Related Documents to which it is or is to be a party, or for the
consummation of any aspect of the Transaction or any of the other
transactions contemplated hereby and thereby. This Section 5.01(a)
shall not apply to compliance with Environmental Laws or Environmental
Permits (which is the subject of Section 5.01(c)).
(b) Payment of Taxes, Etc. Pay and discharge, and cause each
of its Subsidiaries to pay and discharge, to the extent due and payable
and before the same shall become delinquent, (i) all taxes,
assessments, reassessments, levies and other governmental charges
imposed upon it or upon its property, assets, income or franchises and
(ii) all lawful claims that, if unpaid, might by law
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become a Lien upon its property and assets or any part thereof;
provided, however, that neither the Borrower nor any of its
Subsidiaries shall be required to pay or discharge any such tax,
assessment, reassessment, levy, charge or claim the amount,
applicability or validity of which is being contested in good faith and
by proper proceedings diligently conducted and as to which appropriate
and adequate reserves are being maintained by the Borrower or its
applicable Subsidiary in accordance with GAAP, unless and until any
Lien resulting therefrom attaches to its property and assets and
enforcement, collection, execution, levy or foreclosure proceedings
shall have been commenced with respect thereto.
(c) Compliance with Environmental Laws. (i) Comply (and
require all lessees and other Persons operating or occupying any of its
properties to comply), and cause each of its Subsidiaries to comply
(and to require all lessees and other Persons operating or occupying
any of its properties to comply), in all material respects, with all of
the applicable Environmental Laws and the Environmental Permits
applicable to such Person or its operations or properties; (ii) obtain
and renew, and cause each of its Subsidiaries to obtain and renew, all
of the Environmental Permits necessary for the ownership or operation
of their respective properties or the conduct of their respective
businesses as now conducted and as proposed to be conducted; and (iii)
conduct, and cause each of its Subsidiaries to conduct, any
investigation, study, sampling or testing, and undertake, and cause
each of its Subsidiaries to undertake, any cleanup, removal, remedial
or other action, necessary to remove and clean up all of the Hazardous
Materials from any of its properties in accordance with the
requirements of all applicable Environmental Laws, except, in the case
of clause (ii) or (iii) of this Section 5.01(c), where the failure to
obtain or renew any such Environmental Permit, to conduct any such
investigation, study, sampling or testing or to undertake any such
cleanup, removal, remedial or other action, either individually or in
the aggregate, could not reasonably be expected (A) to have a Material
Adverse Effect or (B) to subject the Borrower or any of its
Subsidiaries to any criminal penalty or liability or to subject the
Administrative Agent or any of the Lender Parties to any criminal
penalty or liability or (except for nonmaterial fines for which the
Administrative Agent or such Lender Party is fully indemnified under
Section 8.04) any civil penalty or liability; provided, however, that
neither the Borrower nor any of its Subsidiaries shall be required to
undertake any such cleanup, removal, remedial or other action otherwise
required under this Section 5.01(c) to the extent that the amount,
applicability or validity thereof is being contested in good faith and
by proper proceedings diligently conducted and appropriate and adequate
reserves are being maintained by the Borrower or its applicable
Subsidiary with respect to such circumstances in accordance with GAAP.
(d) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance for their respective properties,
assets and businesses (i) with insurance companies or associations that
have, or that have directly reinsured such insurance with insurance
companies or associations that have, an A.M. Best Company claims paying
ability rating of at least "A-" (or the then equivalent rating) and
(ii) of such types (including, without limitation, insurance against
theft and fraud and against loss or damage by fire, explosion or hazard
of or to property and general public liability insurance), in such
amounts and with such deductibles, covering such casualties and
contingencies and otherwise on such terms as are at least as favorable
as those usually carried by companies of established reputations
engaged in similar businesses and owning similar properties and assets
in the same general areas in which the Borrower or its applicable
Subsidiary operates or as may otherwise be required by applicable
Requirements of Law; provided, however, that the Borrower and its
Subsidiaries may effect workers' compensation insurance or similar
coverage with respect to their respective operations in any particular
jurisdiction through an insurance fund
<PAGE>
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operated by such jurisdiction or by meeting the self-insurance
requirements of such jurisdiction so long as the Borrower or such
Subsidiary establishes and maintains appropriate and adequate reserves
therefor in accordance with GAAP.
(e) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its existence, legal structure, organization, rights (statutory and
pursuant to its Constitutive Documents), permits, licenses, approvals,
privileges and franchises; provided, however, that the Borrower and its
Subsidiaries (i) may consummate any merger or consolidation otherwise
expressly permitted under Section 5.02(c) and (ii) may amend,
supplement or otherwise modify their rights under their respective
Constitutive Documents to the extent otherwise expressly permitted
under Section 5.02(m); and provided further, however, that neither the
Borrower nor any of its Subsidiaries shall be required to preserve any
permit, license, approval, privilege or franchise if the board of
directors (or the persons performing similar functions) of the Borrower
or such Subsidiary shall determine in good faith that the preservation
thereof is no longer desirable in the conduct of the business of the
Borrower or such Subsidiary, as the case may be, and that the loss
thereof is not disadvantageous in any material respect to the Borrower,
such Subsidiary or the Lender Parties or, solely in the case of any
such permit, license or qualification to do business as a foreign
corporation, limited partnership or limited liability company in any
jurisdiction, that the loss thereof, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(f) Visitation Rights. At any reasonable time and from time to
time, permit any of the Agents or any of the Lender Parties, or any
agents or representatives thereof (so long as such agents or
representatives are or agree to be bound by the provisions of Section
8.09), to examine and make copies of and abstracts from the records and
books of account of, and to visit the properties of, the Borrower and
its Subsidiaries and to discuss the affairs, finances and accounts of
the Borrower and/or any of its Subsidiaries with any of their officers
or directors and with their independent public accountants (and, in
furtherance thereof, the Borrower shall deliver to any independent
public accountants engaged by the Borrower or any of its Subsidiaries
after the date of this Agreement a letter from the Borrower, on behalf
of itself and its Subsidiaries, advising such accountants that the
Administrative Agent, on behalf of the Lender Parties, has been
authorized to exercise all rights of the Borrower to require such
accountants to disclose any and all financial statements and any other
information relating to the financial condition, operations or
performance of the Borrower or any of its Subsidiaries that they may
have and directing such accountants to comply with any reasonable
request of the Administrative Agent for such information).
(g) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account in which full and accurate
entries shall be made of all of the financial transactions and the
property, assets and businesses of the Borrower and each of its
Subsidiaries (including, without limitation, the establishment and
maintenance of adequate and appropriate reserves) in accordance with
GAAP and all applicable Requirements of Law.
(h) Maintenance of Properties, Etc. (i) Maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, all of its
material properties that, either individually or in the aggregate, are
used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear and casualty and condemnation
excepted, and (ii) make, and cause each of its Subsidiaries to make,
from time to time, all repairs, renewals, additions, replacements,
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betterments and improvements of such properties that are reasonably
necessary in order to permit the business and activities carried on in
connection therewith to be properly conducted at all times.
(i) Compliance with Terms of Leaseholds. (i) Make all payments
and otherwise perform all obligations in respect of all leases of real
property to which the Borrower or any of its Subsidiaries is a party,
keep such leases in full force and effect and not allow such leases to
lapse or to be terminated or any rights to renew such leases to be
forfeited or canceled, in each case except to the extent that, in the
reasonable business judgment of the Borrower or the Subsidiary of the
Borrower that is the lessee thereof, it is in the best interest of the
Borrower or such Subsidiary, as the case may be, to allow or to cause
such nonperformance, lapse, termination, forfeiture or cancellation,
and such nonperformance, lapse, termination, forfeiture or
cancellation, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, and (ii)
promptly notify the Administrative Agent, upon obtaining knowledge
thereof, of (A) any default by any party with respect to any lease that
is material to the business, financial condition or operations of the
Borrower or the Subsidiary thereof that occupies the real property
subject to such lease or is otherwise the lessee thereof, and cooperate
with the Administrative Agent to cure any such default, and (B) any
material nonperformance, or any lapse, termination, forfeiture or
cancellation of any lease otherwise permitted to occur under clause (i)
of this Section 5.01(i), and, in respect of each of the foregoing
provisions of this Section 5.01(i), cause each of its Subsidiaries to
do so.
(j) Transactions with Affiliates. Conduct, and cause each of
its Subsidiaries to conduct, directly or indirectly, all transactions
or series of related transactions (including, without limitation, the
purchase, sale, lease, transfer or exchange of property or assets of
any kind or the rendering of services of any kind) otherwise permitted
under the Loan Documents with any of their Affiliates on terms that are
fair and reasonable and no less favorable to the Borrower or any of its
Subsidiaries than it would obtain in a comparable arm's-length
transaction with a Person not an Affiliate thereof, other than:
(i) the consummation of the Recapitalization;
(ii) the performance by the Borrower of its
obligations under the Related Documents, in each case as in
effect on the Closing Date;
(iii) loans and advances by the Borrower or any of
its Subsidiaries to one or more employees thereof, in each
case to the extent permitted under Section 5.02(e)(vi);
(iv) the performance by the Borrower of its
obligations under the Operating Leases under which Rex Realty
Co. or one or more other Affiliates of David Pratt is the
lessor, as in effect on the Closing Date, and any extensions,
renewals or refinancings thereof on terms no less favorable to
the Borrower or any of its Subsidiaries or to the rights or
interests of the Lender Parties than the terms of any such
Operating Lease being so extended, renewed or refinanced;
(v) the payment of management fees in cash to one or
more of the THL Entities pursuant to the terms of the
Professional Services Agreement, as in effect on the Closing
Date, in an aggregate amount not to exceed $1,000,000 in any
Fiscal Year;
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(vi) the payment of nonrecurring transaction fees to
the THL Entities in connection with any purchase or other
acquisition of a Person or a line of business by the Borrower
or any of the Restricted Subsidiaries in an amount not to
exceed 1% of the total consideration being paid by the
Borrower and its Subsidiaries for such purchase or other
acquisition, such fee, in each case, to be payable in full
upon the consummation of the related purchase or other
acquisition; and
(vii) any transaction or series of related
transactions solely between or among the Borrower and one or
more of the Restricted Subsidiaries, between or among one or
more of the Restricted Subsidiaries, or between or among one
or more of the Unrestricted Subsidiaries, in each case to the
extent such transaction or series of related transactions is
otherwise permitted under the terms of the Loan Documents.
Notwithstanding the foregoing provisions of this Section 5.01(j),
neither the Borrower nor any of its Subsidiaries shall conduct any
transaction or series of related transactions (other than any
transaction or series of transactions otherwise permitted under any of
clauses (i) through (vii) of this Section 5.01(j)), directly or
indirectly, with any of its Affiliates (A) having an aggregate value or
involving an aggregate amount of more than $2,000,000 unless the
Borrower obtains a resolution of its board of directors certifying that
such transaction or series of related transactions complies with this
Section 5.01(j) and (B) having an aggregate value or involving an
aggregate amount of more than $10,000,000 (other than any transaction
or series of transactions otherwise permitted under any of clauses (i)
through (vii) of this Section 5.01(j) or any sale by the Borrower of
common Equity Interests therein) unless the Borrower has delivered to
the Administrative Agent, on behalf of the Lender Parties, an opinion
of an independent investment banking firm or appraisal firm of national
standing stating that such transaction or series of related
transactions are fair to the Borrower and/or its applicable
Subsidiaries from a financial point of view.
(k) Covenant to Give Security. Upon (i) the request of the
Administrative Agent following the occurrence and during the
continuance of a Default under Section 6.01(a) or 6.01(f) or an Event
of Default or (ii) the purchase or other acquisition of any real
property or any personal property by any Loan Party, which property, in
the judgment of the Administrative Agent, shall not already be subject
to a valid and perfected first priority lien and security interest in
favor of the Administrative Agent, for the benefit of the Secured
Parties, the Borrower shall, in each case at its own expense:
(A) within ten days after such request or purchase or
other acquisition, furnish to the Administrative Agent a
description of the real and personal properties of each of the
Loan Parties and their respective Subsidiaries in detail
reasonably satisfactory to the Administrative Agent;
(B) within 20 days after such request or purchase or
other acquisition, duly execute and deliver, and cause each
such Subsidiary to duly execute and deliver, to the
Administrative Agent mortgages, collateral assignments,
Security Agreement Supplements and other security agreements,
as specified by and in form and substance reasonably
satisfactory to the Administrative Agent, securing payment of
all of the Obligations of the applicable Loan Party or
Subsidiary of a Loan Party, as the case may be, under and in
respect of the Loan Documents and constituting liens on and
security interests in all such real and personal properties;
<PAGE>
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(C) within 30 days after such request or purchase or
other acquisition, take, and cause each such Subsidiary to
take, whatever action (including, without limitation, the
recording of mortgages, the filing of Uniform Commercial Code
financing statements and IP Security Agreements--Short Form,
the giving of notices and the endorsement of notices on title
documents) may be necessary or in the reasonable opinion of
the Administrative Agent advisable to vest in the
Administrative Agent (or in any co-agent, sub-agent or other
representative of the Administrative Agent designated by it)
valid and subsisting liens on and security interests in the
real and personal properties purported to be subject to the
mortgages, collateral assignments, Security Agreement
Supplements and security agreements delivered pursuant to this
Section 5.01(k), enforceable against all third parties in
accordance with their terms;
(D) within 35 days after such request or purchase or
other acquisition, upon the request of the Administrative
Agent, deliver to the Administrative Agent a signed copy of
one or more favorable opinions of counsel for the applicable
Loan Parties, addressed to the Administrative Agent and the
other Secured Parties and reasonably acceptable to the
Administrative Agent, as to the matters contained in
subclauses (A), (B) and (C) of this Section 5.01(k), as to
such mortgages, collateral assignments, Security Agreement
Supplements and security agreements being legal, valid and
binding obligations of each of the Loan Parties party thereto,
enforceable against such Loan Party in accordance with their
terms, as to such recordings, filings, notices, endorsements
and other actions being sufficient to create valid and
perfected liens on and security interests in such real and
personal properties, and as to such other matters as the
Administrative Agent may reasonably request;
(E) as promptly as practicable after such request or
purchase or other acquisition, deliver, upon the reasonable
request of the Administrative Agent, to the Administrative
Agent with respect to each parcel of real property owned or
held by the Loan Party or the Subsidiary of the Loan Party
that is the subject of such request or such purchase or other
acquisition, title reports, surveys and engineering, soils and
other reports, and Phase I environmental assessment reports,
each in scope, form and substance reasonably satisfactory to
the Administrative Agent, provided, however, that to the
extent that any of the Loan Parties or any of its Subsidiaries
shall have otherwise received any of the foregoing items with
respect to such real property, such items shall, promptly
after the receipt thereof, be delivered to the Administrative
Agent;
(F) upon the occurrence and during the continuance of
a Default under Section 6.01(a) or 6.01(f) or an Event of
Default, promptly execute and deliver, and cause each of its
Subsidiaries to promptly execute and deliver, any and all
instruments and take, and cause each of its Subsidiaries to
take, any and all such other actions as may be necessary or as
the Administrative Agent may deem reasonably desirable in
order to obtain and maintain from and after the time any
dividend or other distribution is paid or payable by any of
the Subsidiaries of the Borrower a valid and perfected first
priority lien on and security interest in such dividend or
other distribution; and
(G) at any time and from time to time, promptly
execute and deliver any and all further instruments and
documents and take all such other action as may be necessary
or as the Administrative Agent may deem reasonably desirable
in obtaining the full benefits of,
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or in perfecting and preserving the Liens created under, such
mortgages, collateral assignments, Security Agreement
Supplements and security agreements.
(l) Further Assurances. Promptly upon the request of the
Administrative Agent, or any of the Lender Parties through the
Administrative Agent, at any time and from time to time, (i) correct,
and cause each of its Subsidiaries to promptly correct, any defect or
error that may be discovered in any of the Loan Documents or in the
execution, acknowledgment, filing or recordation thereof and (ii) do,
execute, acknowledge, deliver, record, re-record, file, re-file,
register and re- register any and all such further acts, deeds,
conveyances, pledge agreements, mortgages, deeds of trust, trust deeds,
collateral assignments, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates,
assurances and other instruments and take such further actions, and
cause each of its Subsidiaries promptly to do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register any
and all such further acts, deeds, conveyances, pledge agreements,
mortgages, deeds of trust, trust deeds, collateral assignments,
financing statements and continuations thereof, termination statements,
notices of collateral assignments, transfers, certificates, assurances
and other instruments and take such further action, as may be necessary
or as the Administrative Agent, or any of the Lender Parties through
the Administrative Agent, may reasonably request from time to time in
order to (A) carry out more effectively the provisions and purposes of
the Loan Documents or assure the Administrative Agent or the Lender
Parties of their rights and interests herein and therein, (B) to the
fullest extent permitted by applicable law, subject any of the Loan
Party's or any of its Subsidiaries' properties, assets, rights or
interests to the Liens now or hereafter intended to be covered by any
of the Collateral Documents, (C) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and any
of the Liens intended to be created thereunder and (D) assure, convey,
grant, assign, transfer, preserve, protect and confirm more effectively
unto the Secured Parties the rights granted or now or hereafter
intended to be granted to the Secured Parties under any of the Loan
Documents or under any other instrument executed in connection with any
of the Loan Documents to which any Loan Party or any of its
Subsidiaries is or is to be a party, and cause each of its Subsidiaries
to do so.
SECTION 5.02. Negative Covenants. So long as any of the
Advances or any of the other Obligations of any Loan Party under or in respect
of any of the Loan Documents (other than any such Obligations of any of the Loan
Parties under Section 2.10, 2.12 or 8.04 (or other similar provisions of the
other Loan Documents that are specified under the terms thereof to survive the
payment in full of such other Obligations under or in respect of the Loan
Documents) to the extent no demand or claim thereunder has been made) shall
remain unpaid, any of the Letters of Credit shall remain outstanding or any of
the Lender Parties shall have any Commitment hereunder, the Borrower shall not,
at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any Lien on or with respect to any of its property or assets of
any character (including, without limitation, accounts), whether now
owned or hereafter acquired, or sign or file or suffer to exist, or
permit any of its Subsidiaries to sign or file or suffer to exist,
under the Uniform Commercial Code or any similar Requirements of Law of
any jurisdiction, a financing statement (or the equivalent thereof)
that names the Borrower or any of its Subsidiaries as debtor, or sign
or suffer to exist, or permit any of its Subsidiaries to sign or suffer
to exist, any security agreement authorizing any secured party
thereunder to file any such financing statement (or the equivalent
thereof), or sign or suffer to exist, or permit any of its Subsidiaries
to sign or suffer to exist, any agreement or arrangement for the sale
of any of its property or assets subject to an
<PAGE>
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understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable with
recourse to the Borrower or any of its Subsidiaries), or assign, or
permit any of its Subsidiaries to assign, any accounts or other right
to receive income, excluding, however, from the operation of the
foregoing restrictions:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the Closing Date and
described on Schedule 4.01(cc) hereto;
(iv) purchase money Liens upon or in real property or
equipment acquired or held by the Borrower or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such real property or equipment or to secure
Indebtedness incurred solely for the purpose of financing the
acquisition, construction or improvement of any such real
property or equipment to be subject to such Liens, or Liens
existing on any such real property or equipment at the time of
its acquisition or the completion of its construction or
improvement (other than any such Liens created in
contemplation of such acquisition, construction or improvement
that do not secure the purchase price of such real property or
equipment); provided, however, that no such Lien shall extend
to or cover any property or assets other than the real
property or equipment being so acquired, constructed or
improved; and provided further that (a) the principal amount
of Indebtedness secured by any such Lien shall not exceed 100%
of the lesser of (1) the cost to the Borrower or the
applicable Subsidiary of the real property or equipment to be
subject to any such Lien (including all such Indebtedness
secured thereby, whether or not assumed) and (2) the Fair
Market Value of such real property or equipment, determined as
of the date of acquisition, construction or improvement
thereof, and (b) any Indebtedness secured by Liens shall
otherwise be expressly permitted under Section 5.02(b)(ii)(D)
and shall not otherwise be prohibited under the terms of the
Loan Documents;
(v) Liens arising solely in connection with
Capitalized Leases otherwise permitted under Section
5.02(b)(ii)(E) and not otherwise prohibited under the terms of
the Loan Documents; provided that no such Lien shall extend to
or cover any property or assets other than property or assets
subject to such Capitalized Leases;
(vi) Liens upon any of the property and assets (other
than any Equity Interests in any Person) existing at the time
such property or asset is purchased or otherwise acquired by
the Borrower or any of its Subsidiaries; provided that any
such Lien was not created in contemplation of such purchase or
other acquisition and does not extend to or cover any property
or assets other than the property or asset being so purchased
or otherwise acquired; and provided further that any
Indebtedness or other Obligations secured by such Liens shall
otherwise be expressly permitted under Section 5.02(b) and
shall not otherwise be prohibited under the terms of the Loan
Documents;
(vii) Liens upon any of the property and assets
(other than any Equity Interests in any Person) of a Person
and its Subsidiaries existing at the time such Person is
merged into or consolidated with any of the Subsidiaries of
the Borrower, or otherwise becomes a
<PAGE>
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Subsidiary of the Borrower, in accordance with the terms of
the Loan Documents; provided that any such Lien was not
created in contemplation of such merger, consolidation or
acquisition and does not extend to or cover any property or
assets other than property and assets of the Person and its
Subsidiaries being so merged into or consolidated with the
applicable Subsidiary of the Borrower or being acquired by the
Borrower or its applicable Subsidiary, as the case may be; and
provided further that any Indebtedness or other Obligations
secured by such Lien shall otherwise be expressly permitted
under Section 5.02(b) and shall not otherwise be prohibited
under the terms of the Loan Documents;
(viii) deposits made, and letters of credit issued,
to secure the performance of Operating Leases of the Borrower
and its Subsidiaries in the ordinary course of business;
provided that no such Lien shall extend to or cover any
property or assets other than such deposit or such letter of
credit and the property and assets subject to such Operating
Lease, as applicable; and provided further that any such
Operating Lease shall not otherwise be prohibited under the
terms of the Loan Documents;
(ix) Liens arising solely from precautionary filings
of financing statements under the Uniform Commercial Code of
the applicable jurisdictions in respect of Operating Leases of
the Borrower or any of its Subsidiaries not otherwise
prohibited under the terms of the Loan Documents;
(x) Liens upon any of the property and assets of the
Foreign Subsidiaries to secure Indebtedness otherwise
permitted under Section 5.02(b)(ii)(H) and not otherwise
prohibited under the terms of the Loan Documents;
(xi) Liens not otherwise permitted under this Section
5.02(a) securing Obligations of the Borrower and its
Subsidiaries (other than Indebtedness for borrowed money) in
an aggregate amount not to exceed $3,000,000 at any time
outstanding; and
(xii) the replacement, extension or renewal of any
Lien otherwise permitted to be created or to exist under
clauses (iii) (except to the extent Schedule 4.01(cc) hereto
provides that any such Lien shall not be replaced, extended or
renewed), (iv), (v), (viii), (x) and (xi) of this Section
5.02(a) upon or in the same property and assets theretofore
subject thereto; provided that no such extension, renewal or
replacement shall extend to or cover any property or assets
not theretofore subject to the Lien being extended, renewed or
replaced and shall not secure any additional Indebtedness or
other Obligations; and provided further that any Indebtedness
secured by such Liens shall otherwise be permitted under the
terms of the Loan Documents.
(b) Indebtedness. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to
exist, directly or indirectly, any Indebtedness other than:
(i) in the case of the Borrower,
(A) Surviving Indebtedness;
<PAGE>
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(B) Indebtedness under the Senior
Subordinated Notes Documents in an aggregate
principal amount not to exceed $150,000,000;
(C) Indebtedness evidenced by the Permitted
Preferred Stock; and
(D) Indebtedness of the Borrower in respect
of interest rate Hedge Agreements entered into from
time to time after the date of this Agreement with
counterparties that are Lender Parties (or affiliates
of Lender Parties) at the time any such interest rate
Hedge Agreement is entered into in an aggregate
notional amount not to exceed (1) 50% of the
aggregate Commitments under all of the Facilities at
the time any such interest rate Hedge Agreement is
entered into less (2) the aggregate notional amount
of all interest rate Hedge Agreements that constitute
Investments made under Section 5.02(e)(iii); provided
that in all cases under this subclause (i)(D), such
interest rate Hedge Agreements shall be
nonspeculative in nature (including, without
limitation, with respect to the term and purpose
thereof); and
(ii) in the case of the Borrower and its
Subsidiaries,
(A) Indebtedness under the Loan Documents;
(B) guarantees of the Senior Subordinated
Notes by the wholly owned Subsidiaries of the
Borrower, so long as (1) each such wholly owned
Subsidiary is party to the Subsidiary Guarantee
(whether directly or through a Guarantee Supplement)
on or prior to the date on which it enters into such
guarantee and (2) the Obligations of each such wholly
owned Subsidiary under such guarantee are
subordinated to the Obligations of such wholly owned
Subsidiary under the Subsidiary Guarantee to at least
the same extent as the Obligations of the Borrower
under the Senior Subordinated Notes Documents are
subordinated to the Obligations of the Borrower under
and in respect of the Loan Documents;
(C) Indebtedness of (1) the Borrower owing
to any of the Restricted Subsidiaries, (2) any of the
Restricted Subsidiaries owing to the Borrower or any
of the other Restricted Subsidiaries, (3) any of the
Unrestricted Subsidiaries owing to the Borrower or
any of the Restricted Subsidiaries to the extent the
Investment in such Unrestricted Subsidiary is
otherwise expressly permitted under Section
5.02(e)(x) and (4) any of the Unrestricted
Subsidiaries owing to any of the other Unrestricted
Subsidiaries; provided that all such intercompany
Indebtedness owing to the Borrower or any of the
Restricted Subsidiaries shall be evidenced by a
promissory note containing subordination provisions
in substantially the form of Exhibit H hereto and
such other terms and conditions as shall be
reasonably acceptable to the Administrative Agent,
which promissory note shall, in each case, be pledged
as Collateral to the Administrative Agent, on behalf
of the Secured Parties, under the applicable
Collateral Documents immediately upon the creation
thereof;
(D) Indebtedness secured by Liens expressly
permitted under Section 5.02(a)(iv) in an aggregate
principal amount not to exceed, when aggregated
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with the principal amount of all Indebtedness
incurred under subclause (ii)(E)(2) of this Section
5.02(b), $10,000,000 at any time outstanding;
(E) (1) a Capitalized Lease replacing or
refinancing prior to September 30, 1999 the Operating
Lease under which David Pratt leases an airplane to
the Borrower on the date of this Agreement, which
Capitalized Lease shall be in an aggregate amount (as
capitalized in accordance with GAAP) not to exceed
$10,000,000, and (2) Capitalized Leases which, when
aggregated with the principal amount of all
Indebtedness incurred under subclause (ii)(D) of this
Section 5.02(b), do not exceed $10,000,000 at any
time outstanding;
(F) Contingent Obligations of the Borrower
guaranteeing all or any portion of the outstanding
Obligations of any of the Restricted Subsidiaries;
provided that each such Obligation is not otherwise
prohibited under the terms of the Loan Documents;
(G) Indebtedness comprised of trade payables
or other accounts payable to trade creditors incurred
in the ordinary course of business to the extent
otherwise included in the definition of
"Indebtedness" set forth in Section 1.01;
(H) Indebtedness of one or more Foreign
Subsidiaries arising in the ordinary course of
business in an aggregate principal amount not to
exceed $5,000,000 at any time outstanding; provided
that all such Indebtedness incurred pursuant to this
subclause (ii)(H) shall be nonrecourse in all
respects to the property and assets of the Loan
Parties and their Subsidiaries (other than one or
more of the Foreign Subsidiaries);
(I) Indebtedness existing at the time that
any property or asset is purchased or otherwise
acquired by the Borrower or any of its Subsidiaries,
or that any Person (other than the Borrower or any of
its Subsidiaries) is merged into or consolidated with
any of the Subsidiaries of the Borrower or otherwise
becomes a Subsidiary of the Borrower, in accordance
with the terms of the Loan Documents in an aggregate
principal amount not to exceed the lesser of (1)
$5,000,000 at any time outstanding and (2) the
aggregate amount of Indebtedness that would be able
to be incurred or assumed at such time under
subclause (ii)(J) of this Section 5.02(b); provided
that (x) no such Indebtedness shall be incurred in
contemplation of any such purchase or other
acquisition or any such merger, consolidation or
acquisition, (y) such Indebtedness shall be secured,
if at all, solely by Liens expressly permitted under
Section 5.02(a)(vi) or 5.02(a)(vii) and (z)
immediately before and immediately after giving pro
forma effect to such Indebtedness, no Default shall
have occurred and be continuing;
(J) Indebtedness not otherwise permitted
under this Section 5.02(b) in an aggregate principal
amount, when aggregated with the aggregate principal
amount of all Indebtedness incurred under subclause
(ii)(I) of this Section 5.02(b), not to exceed
$20,000,000 at any time outstanding; provided that,
with respect to any such Indebtedness issued or
incurred pursuant to this subclause (ii)(J), (1) such
Indebtedness shall not have a maturity date or any
scheduled or mandatory
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redemption or repurchase date prior to at least one
year after the scheduled Termination Date, (2) such
Indebtedness shall not be guaranteed or otherwise
credit enhanced by the Borrower or any of its
Subsidiaries, (3) if such Indebtedness is comprised
of seller financing of all or any portion of the
purchase price of any property or assets purchased or
otherwise acquired by the Borrower or any of its
Subsidiaries pursuant to Section 5.02(e), such
Indebtedness shall be subordinated to the Obligations
of the Borrower or its applicable Subsidiary under
and in respect of the Loan Documents on terms
reasonably satisfactory to the Lender Parties, (4)
the other terms and conditions of such Indebtedness
(and of any agreement entered into and of any
instrument issued in connection therewith) shall be
no less favorable to the Borrower and its
Subsidiaries or to the rights or interests of the
Lender Parties than the terms of the Loan Documents
and (5) immediately before and immediately after
giving pro forma effect to such Indebtedness, no
Default shall have occurred and be continuing;
(K) endorsement of negotiable instruments
for deposit or collection or similar transactions in
the ordinary course of business; and
(L) Indebtedness extending the maturity of,
or refunding, refinancing or replacing, in whole or
in part, any Indebtedness incurred under any of
subclauses (i)(A) (except to the extent Schedule
3.01(f) hereto provides that such Indebtedness shall
not be extended, refunded, refinanced or replaced),
(ii)(D), (ii)(E), (ii)(F), (ii)(H) and (ii)(J) of
this Section 5.02(b); provided, however, that (1) the
aggregate principal amount of such extended,
refunding, refinancing or replacement Indebtedness
shall not be increased above the principal amount
thereof and the premium, if any, payable thereon
outstanding immediately prior to such extension,
refunding, refinancing or replacement, (2) the direct
and contingent obligors therefor shall not be changed
as a result of or in connection with such extension,
refunding, refinancing or replacement, (3) such
extended, refunding, refinancing or replacement
Indebtedness shall not mature prior to the stated
maturity date or mandatory redemption date of the
Indebtedness being so extended, refunded, refinanced
or replaced, (4) if the Indebtedness being so
extended, refunded, refinanced or replaced is
subordinated in right of payment or otherwise to the
Obligations of the Borrower or any of its
Subsidiaries under and in respect of the Loan
Documents, such extended, refunding, refinancing or
replacement Indebtedness shall be subordinated to
such Obligations to at least the same extent, (5) the
terms of any such extending, refunding, refinancing
or replacement Indebtedness (and of any agreement
entered into and of any instrument issued in
connection therewith) shall be no less favorable to
the Borrower and its Subsidiaries or to the rights or
interests of the Lender Parties than the terms of the
Indebtedness being so extended, refunded, refinanced
or replaced and (6) immediately before and
immediately after giving pro forma effect to any such
extension, refunding, refinancing or replacement, no
Default shall have occurred and be continuing.
(c) Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into or consolidate with it, or permit any
of its Subsidiaries to do so, except that:
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(i) any of the Restricted Subsidiaries may merge
into or consolidate with the Borrower; provided that the
Borrower is the surviving corporation;
(ii) any of the Subsidiaries of the Borrower may
merge into or consolidate with any of the Restricted
Subsidiaries; provided that the Person formed by such merger
or consolidation is a Restricted Subsidiary;
(iii) any of the Unrestricted Subsidiaries may merge
into or consolidate with any of the other Unrestricted
Subsidiaries;
(iv) in connection with any purchase or other
acquisition of Equity Interests in, or property and assets of,
any Person permitted under Section 5.02(e)(ix), any of the
Subsidiaries of the Borrower may merge into or consolidate
with any other Person or permit any other Person to merge into
or consolidate with it; provided that (A) if such Subsidiary
of the Borrower is a Restricted Subsidiary, the Person formed
by such merger or consolidation shall be a Restricted
Subsidiary, (B) if such Subsidiary is a non-wholly owned
Domestic Subsidiary, the Person formed by such merger or
consolidation shall be a Domestic Subsidiary and (C) if such
Subsidiary is a Foreign Subsidiary, the Person formed by such
merger or consolidation shall be a Subsidiary of the Borrower;
and provided further that the Person with which such
Subsidiary is merging or consolidating (1) shall be engaged in
substantially the same lines of business as one or more of the
principal businesses of the Borrower and its Subsidiaries in
the ordinary course and (2) shall not have any contingent
liabilities that could reasonably be expected to be material
to the business, financial condition, operations or prospects
of the Borrower and its Subsidiaries, taken as a whole (as
determined in good faith by the board of directors (or the
persons performing similar functions) of the Borrower or such
Subsidiary if the board of directors is otherwise approving
such transaction and, in each other case, by a Senior
Financial Officer); and
(v) in connection with any sale, transfer or other
disposition of all or substantially all of the Equity
Interests in, or the property and assets of, any Person
permitted under Section 5.02(d)(ix), any of the Subsidiaries
of the Borrower may merge into or consolidate with any other
Person or permit any other Person to merge into or consolidate
with it.
In all cases under this Section 5.02(c), (x) such merger or
consolidation shall be effected in compliance with all applicable
Requirements of Law, (y) all Governmental Authorizations, and all
consents, approvals and authorizations of, and notices and filings to
or with, and other actions by, any other Person necessary in connection
with such merger or consolidation shall have been obtained or made and
(z) immediately before and immediately after giving pro forma effect to
such merger or consolidation, no Default shall have occurred and be
continuing. In addition, in the case of any merger or consolidation
effected pursuant to clause (iv) or (v) of this Section 5.02(c),
immediately after giving effect to such merger or consolidation, the
Borrower and its Subsidiaries shall be in pro forma compliance with all
of the covenants set forth in Section 5.04, such compliance to be
determined on the basis of the Required Financial Information most
recently delivered to the Administrative Agent and the Lender Parties
as though such merger or consolidation had been consummated as of the
first day of the fiscal period covered thereby and to give effect to
all of the pro forma cost savings of the Borrower and its Subsidiaries
that are to be recognized as a result of such merger or consolidation.
The Borrower shall notify the Administrative Agent of any proposed
<PAGE>
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merger or consolidation at least five Business Days prior to the date
on which such merger or consolidation is to be effected and shall
deliver to the Administrative Agent, on behalf of the Lender Parties,
at the time such notice is delivered, a certificate of a Senior
Financial Officer, in form and substance reasonably satisfactory to the
Administrative Agent, certifying that all of the applicable
requirements set forth in the two immediately preceding sentences have
been satisfied or will be satisfied prior to the consummation of the
applicable merger or consolidation and, in the case of any merger or
consolidation proposed to be effected pursuant to clause (iv) of this
Section 5.02(c), that all of the matters described in the provisos to
such clause (iv) have been or will be so satisfied and, in any event,
including a schedule that sets forth in reasonable detail all of the
pro forma cost savings of the Borrower and its Subsidiaries that are to
be realized as a result of such merger or consolidation and all of the
computations used by the Borrower in determining compliance with such
requirements.
(d) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease, transfer
or otherwise dispose of, any property or assets (including, without
limitation, any Equity Interests), or grant any option or other right
to purchase, lease or otherwise acquire any property or assets, except
that so long as no Default shall have occurred and be continuing at the
time of any of the transactions described in clauses (v), (viii), (ix)
and (x) or would occur as a result thereof:
(i) the Borrower and its Subsidiaries may sell
Inventory in the ordinary course of business;
(ii) the Borrower and its Subsidiaries may sell,
lease, transfer or otherwise dispose of property and assets in
a transaction otherwise expressly permitted under Section
5.02(a), 5.02(c) (other than clause (v) thereof), 5.02(e) or
5.02(f);
(iii) (A) the Borrower may sell, lease, transfer or
otherwise dispose of any of its property or assets to any of
the Restricted Subsidiaries, (B) any of the Restricted
Subsidiaries may sell, lease, transfer or otherwise dispose of
any of its property or assets to the Borrower or any of the
other Restricted Subsidiaries, (C) any of the Unrestricted
Subsidiaries may sell, lease, transfer or otherwise dispose of
any of its property or assets for Fair Market Value to the
Borrower or any of its Subsidiaries and (D) any of the
Unrestricted Subsidiaries may sell, lease, transfer or
otherwise dispose of any of its property and assets to any of
the Unrestricted Subsidiaries;
(iv) the Borrower and its Subsidiaries may sell any
real property or equipment that is replaced, or the
replacement of which has been commenced and substantially
completed, within 180 days after the date of such sale with
real property or equipment, as the case may be, of equal or
greater value (as determined in good faith by management of
the Borrower); provided, however, that if any such real
property or equipment is not replaced, or the replacement
thereof has not been substantially completed, within such 180
day period, or if at any time during such 180 day period a
Default under Section 6.01(a) or 6.01(f) or an Event of
Default shall have occurred and be continuing, then the Net
Cash Proceeds of such sale shall be applied on the last day of
such period or on the date of such Default or Event of
Default, as the case may be, to reduce the Commitments in
accordance with, and to the extent required under, Section
2.05(b) and to prepay the Advances (and/or to cash
collateralize the Letters of Credit) outstanding at such time
in accordance with, and to the extent required under, Section
2.06(b)(ii);
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(v) the Borrower and its Subsidiaries may sell,
lease, transfer or otherwise dispose of any obsolete, damaged
or worn out equipment that is no longer useful in the conduct
of their businesses and operations in the ordinary course of
business; provided, however, that in the case of each such
sale, lease, transfer or other disposition of obsolete,
damaged or worn out equipment in which the Borrower and its
Subsidiaries receive total consideration in excess of
$2,000,000, all of the Net Cash Proceeds of such sale, lease,
transfer or other disposition shall be applied on the date of
receipt of such Net Cash Proceeds to reduce the Commitments in
accordance with, and to the extent required under, Section
2.05(b) and to prepay the Advances (and/or to cash
collateralize the Letters of Credit) outstanding at such time
in accordance with, and to the extent required under, Section
2.06(b)(ii);
(vi) leases or subleases of real property of the
Borrower or any of its Subsidiaries to any Person so long as
each such lease or sublease, as the case may be, (A) shall not
interfere in any material respect with the business or
operations of the Borrower or any of the Restricted
Subsidiaries and (B) shall be for consideration in an amount
(determined by reference to the lease payments owing from such
Person on an annual basis) at least equal to the lease
payments, if any, owing from the Borrower or such Subsidiary
on such real property or, if less, to the Fair Market Value of
such lease or sublease at the time such lease or sublease is
created;
(vii) nonexclusive licenses of Patents, Trademarks,
computer software and know-how to customers of the Borrower or
any of its Subsidiaries in the ordinary course of business so
long as (A) the Borrower or such Subsidiary retains and
protects the right to use all or any portion of such Patents,
Trademarks, computer software and know-how to the extent
necessary to properly conduct the business of the Borrower and
its Subsidiaries (in each case as determined by management of
the Borrower in good faith) and (B) each such license shall be
for the Fair Market Value thereof or shall be provided to a
customer of the Borrower or any of its Subsidiaries in
connection with the provision of services in the ordinary
course of business;
(viii) the sale, transfer or other disposition of any
property and assets of the Borrower and its Subsidiaries
within 270 days of the date on which such property and assets
were purchased or otherwise acquired pursuant to Section
5.02(e)(ix); provided that:
(A) the gross proceeds received from any
such sale, lease, transfer or other disposition shall
be at least equal to the Fair Market Value of the
property and assets so sold, transferred or otherwise
disposed of, determined at the time of such sale,
transfer or other disposition;
(B) at least 90% of the value of the
aggregate consideration received from any such sale,
transfer or other disposition shall be in cash and
shall be received within ten Business Days after the
date of consummation of such transaction;
(C) all of the noncash consideration
received in any such sale, transfer or other
disposition shall be pledged as Collateral under, and
in accordance with the terms of, the Collateral
Documents promptly upon receipt thereof; and
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(D) all of the Net Cash Proceeds received in
any such sale, transfer or other disposition shall be
applied on the date of receipt thereof by the
Borrower or any of its Subsidiaries to reduce the
Commitments in accordance with, and to the extent
required under, Section 2.05(b) and to prepay the
Advances (and/or to cash collateralize the Letters of
Credit) outstanding at such time in accordance with,
and to the extent required under, Section
2.06(b)(ii);
(ix) the Borrower and its Subsidiaries may sell,
lease, transfer or otherwise dispose of property and assets
not otherwise permitted to be sold, leased, transferred or
disposed of pursuant to this Section 5.02(d) so long as the
aggregate Fair Market Value of all of the property and assets
of the Borrower and its Subsidiaries so sold, leased,
transferred or otherwise disposed of pursuant to this clause
(ix) does not exceed $30,000,000; provided that:
(A) the gross proceeds received from any
such sale, lease, transfer or other disposition shall
be at least equal to the Fair Market Value of the
property and assets so sold, leased, transferred or
otherwise disposed of, determined at the time of such
sale, lease, transfer or other disposition;
(B) at least 90% of the value of the
aggregate consideration received from any such sale,
lease, transfer or other disposition shall be in cash
and shall be received within ten Business Days after
the date of consummation of such transaction;
(C) all of the noncash consideration
received in any such sale, lease, transfer or other
disposition shall be pledged as Collateral under, and
in accordance with the terms of, the Collateral
Documents promptly upon receipt thereof; and
(D) all of the Net Cash Proceeds received in
any such sale, lease, transfer or other disposition
shall be applied on the date of receipt thereof by
the Borrower or any of its Subsidiaries to reduce the
Commitments in accordance with, and to the extent
required under, Section 2.05(b) and to prepay the
Advances (and/or to cash collateralize the Letters of
Credit) outstanding at such time in accordance with,
and to the extent required under, Section
2.06(b)(ii); and
(x) the grant of any option or other right to
purchase any property or asset in a transaction that is
otherwise permitted under clause (iv), (v), (viii) or (ix) of
this Section 5.02(d).
(e) Investments in Other Persons. Purchase, acquire, make or
hold, or permit any of its Subsidiaries to purchase, acquire, make or
hold, any Investment in any Person, except:
(i) Investments existing on the Closing Date and
described on Schedule 4.01(ee) hereto;
(ii) Investments in cash and Cash Equivalents;
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(iii) in the case of the Borrower, Investments in
respect of interest rate Hedge Agreements entered into from
time to time after the date of this Agreement with one or more
counterparties that are Lender Parties (or affiliates of
Lender Parties) at the time any such interest rate Hedge
Agreement is entered into in an aggregate notional amount not
to exceed (A) 50% of the aggregate Commitments under all of
the Facilities at the time any such interest rate Hedge
Agreement is entered into less (B) the aggregate notional
amount of any interest rate Hedge Agreements that constitute
Indebtedness incurred under Section 5.02(b)(i)(D) and
outstanding at such time; provided that all such interest rate
Hedge Agreements shall be nonspeculative in nature (including,
without limitation, with respect to the term and purpose
thereof);
(iv) Investments by (A) the Borrower in any of the
Restricted Subsidiaries, (B) any of the Subsidiaries of the
Borrower in the Borrower or any of the Restricted Subsidiaries
and (C) any of the Unrestricted Subsidiaries in any of the
other Unrestricted Subsidiaries;
(v) Investments by the Borrower and its Subsidiaries
in account debtors received in connection with the bankruptcy
or reorganization, or in settlement of the delinquent
obligations of financially troubled suppliers or customers, in
the ordinary course of business and in accordance with
applicable collection and credit policies established by the
Borrower or such Subsidiary, as the case may be;
(vi) loans and advances by the Borrower and its
Subsidiaries to their respective employees in an aggregate
amount not to exceed $4,750,000 at any time outstanding;
(vii) the acceptance of promissory notes, contingent
payment obligations and other noncash consideration received
as partial payment of the purchase price of any property or
assets sold, leased, transferred or otherwise disposed of in
accordance with Sections 5.02(d)(viii) and 5.02(d)(ix);
(viii) the assumption of Indebtedness of any Person
existing at the time that all or substantially all of the
property and assets of such Person are purchased or otherwise
acquired by the Borrower or any of its Subsidiaries, or that
such Person is merged into or consolidated with any of the
Subsidiaries of the Borrower, or becomes a Subsidiary of the
Borrower; provided that such Indebtedness is otherwise
expressly permitted to be incurred under Section
5.02(b)(ii)(I) and such purchase or other acquisition or such
merger, consolidation or acquisition is otherwise not
prohibited under the terms of the Loan Documents; and
(ix) the purchase or other acquisition of all of the
Equity Interests in, or all or substantially all of the
property and assets of, any Person that, upon the consummation
thereof, will be owned directly by the Borrower or any of the
Restricted Subsidiaries or will be a Restricted Subsidiary
(including, without limitation, as a result of a merger or
consolidation) with or into a Restricted Subsidiary, with the
surviving entity being a Restricted Subsidiary); provided
that, with respect to each purchase or other acquisition made
pursuant to this clause (ix):
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(A) any newly created or acquired Restricted
Subsidiary shall comply with the requirements of
Sections 5.01(k) and 5.02(k);
(B) the lines of business of the Person to
be (or the property and assets of which are to be) so
purchased or otherwise acquired shall be
substantially the same lines of business as one or
more of the principal businesses of the Borrower and
its Subsidiaries in the ordinary course;
(C) such purchase or other acquisition shall
not include or result in any contingent liabilities
that could reasonably be expected to be material to
the business, financial condition, operations or
prospects of the Borrower and its Subsidiaries, taken
as a whole (as determined in good faith by the board
of directors (or the persons performing similar
functions) of the Borrower or such Subsidiary if the
board of directors is otherwise approving such
transaction and, in each other case, by a Senior
Financial Officer);
(D) the total cash and noncash consideration
(including, without limitation, the Fair Market Value
of all Equity Interests issued or transferred to the
sellers thereof, all indemnities, earnouts and other
contingent payment obligations to, and the aggregate
amounts paid or to be paid under noncompete,
consulting and other affiliated agreements with, the
sellers thereof, all write-downs of property and
assets and reserves for liabilities with respect
thereto and all assumptions of debt, liabilities and
other obligations in connection therewith) paid by or
on behalf of the Borrower and its Subsidiaries for
any such purchase or other acquisition, when
aggregated with the total cash and noncash
consideration paid by or on behalf of the Borrower
and its Subsidiaries for all other purchases and
other acquisitions made by the Borrower and its
Subsidiaries pursuant to this clause (ix), shall not
exceed the sum of (1) $25,000,000, (2) the aggregate
amount of all Permitted Affiliate Investments made in
connection with all such purchases and other
acquisitions pursuant to this clause (ix) at or prior
to the time of such purchase or other acquisition and
(3) an amount equal to the aggregate amount of all
Net Cash Proceeds received from the prior sale,
lease, transfer or other disposition of property and
assets purchased or otherwise acquired by the
Borrower and its Subsidiaries pursuant to this clause
(ix) in accordance with the terms of Section
5.02(d)(viii);
(E) (1) immediately before and immediately
after giving pro forma effect to any such purchase or
other acquisition, no Default shall have occurred and
be continuing and (2) immediately after giving effect
to such purchase or other acquisition, the Borrower
and its Subsidiaries shall be in pro forma compliance
with all of the covenants set forth in Section 5.04,
such compliance to be determined on the basis of the
Required Financial Information most recently
delivered to the Administrative Agent and the Lender
Parties as though such purchase or other acquisition
had been consummated as of the first day of the
fiscal period covered thereby and to give effect to
all of the pro forma cost savings of the Borrower and
its Subsidiaries that are to be recognized as a
result of such purchase or other acquisition; and
<PAGE>
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(F) the Borrower shall have delivered to the
Administrative Agent, on behalf of the Lender
Parties, at least five Business Days prior to the
date on which any such purchase or other acquisition
is to be consummated, a certificate of a Senior
Financial Officer, in form and substance reasonably
satisfactory to the Administrative Agent, certifying
that all of the requirements set forth in this clause
(ix) have been satisfied or will be satisfied on or
prior to the consummation of such purchase or other
acquisition (and including a schedule that sets forth
in reasonable detail all of the pro forma cost
savings of the Borrower and its Subsidiaries that are
to be recognized as a result of such purchase or
other acquisition and all of the computations used by
the Borrower in determining compliance with such
requirements); and
(x) Investments by the Borrower and its Subsidiaries
not otherwise permitted under this Section 5.02(e) in an
aggregate amount not to exceed the sum of (A) $15,000,000 and
(B) the aggregate amount of all Permitted Affiliate
Investments made in connection with all such Investments
pursuant to this clause (x) at or prior to the time of such
Investment; provided that, with respect to each Investment
made pursuant to this clause (x):
(1) such Investment shall not include or
result in any contingent liabilities that could
reasonably be expected to be material to the
business, financial condition, operations or
prospects of the Borrower and its Subsidiaries, taken
as a whole (as determined in good faith by the board
of directors (or persons performing similar
functions) of the Borrower or such Subsidiary if the
board of directors is otherwise approving such
transaction and, in each other case, by a Senior
Financial Officer);
(2) such Investment shall be in property and
assets which are part of, or in lines of business
which are, substantially the same lines of business
as one or more of the principal businesses of the
Borrower and its Subsidiaries in the ordinary course;
(3) any determination of the amount of such
Investment shall include all cash and noncash
consideration (including, without limitation, the
Fair Market Value of all Equity Interests issued or
transferred to the sellers thereof, all indemnities,
earnouts and other contingent payment obligations to,
and the aggregate amounts paid or to be paid under
noncompete, consulting and other affiliated
agreements with, the sellers thereof, all write-downs
of property and assets and reserves for liabilities
with respect thereto and all assumptions of debt,
liabilities and other obligations in connection
therewith) paid by or on behalf of the Borrower and
its Subsidiaries in connection with such Investment;
and
(4) immediately before and immediately after
giving pro forma effect to any such purchase or other
acquisition, no Default shall have occurred and be
continuing.
(f) Restricted Payments. Declare or pay any dividends on, or
purchase, redeem, retire, defease or otherwise acquire for value, any
of its Equity Interests, now or hereafter outstanding, return any
capital to its stockholders, partners or members (or the equivalent
Persons thereof) as
<PAGE>
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such, make any distribution of property, assets, Equity Interests,
obligations or securities to its stockholders, partners or members (or
the equivalent Persons thereof) as such, or issue or sell any Equity
Interests therein or accept any capital contributions, or permit any of
its Subsidiaries to do any of the foregoing, or permit any of its
Subsidiaries to purchase, redeem, retire, defease or otherwise acquire
for value any Equity Interests in the Borrower, or to issue or sell any
of its Equity Interests in order to acquire such Equity Interests,
except that so long as no Default shall have occurred and be continuing
at the time of any of the transactions described in clauses (iv), (v)
(vi) or (vii) or would occur as a result thereof:
(i) the Borrower may consummate the
Recapitalization;
(ii) the Borrower may issue and sell the Warrants to
the purchasers of the Senior Subordinated Notes in accordance
with the terms of the Senior Subordinated Notes Documents, and
may issue and sell UIC Common Stock to the purchasers of the
Senior Subordinated Notes upon the exercise of any of the
Warrants in accordance with the terms of the Senior
Subordinated Notes Documents;
(iii) the Borrower may declare and make dividends and
other distributions on its outstanding Equity Interests
payable in UIC Common Stock or, solely in the case of the
Permitted Preferred Stock, payable in additional shares of
Permitted Preferred Stock;
(iv) the Borrower may issue and sell additional UIC
Common Stock so long as (A) the gross proceeds received from
any such issuance and sale are at least equal to the Fair
Market Value of the shares being so issued and sold,
determined at the time of such issuance and sale, (B) either
(1) all of the consideration received from any such issuance
and sale shall be in cash or (2) such UIC Common Stock shall
be issued and transferred as part of the noncash consideration
paid for the purchase or other acquisition by the Borrower or
any of its Subsidiaries of Equity Interests in, or property
and assets of, another Person in a transaction otherwise
permitted under Section 5.02(e)(ix) and (C) such issuance and
sale would not result in a Change of Control;
(v) the Borrower may issue and sell Permitted
Preferred Stock so long as (A) the gross proceeds received
from any such issuance and sale are at least equal to the Fair
Market Value of the shares being so issued and sold,
determined at the time of such issuance and sale, and (B) all
of the consideration received from such sale shall be in cash;
(vi) the Borrower may issue and sell UIC Common
Stock, or warrants, rights or options to acquire UIC Common
Stock, to one or more executives and managers of the Borrower
and its Subsidiaries under any stock option plan or stock
purchase plan adopted by the Borrower and its Subsidiaries so
long as (A) the aggregate number of shares of UIC Common Stock
so issued and sold (or subject to all warrants, rights and
options so issued and sold) does not exceed 10% of the
outstanding UIC Common Stock on the date of the related
issuance and sale (on a fully diluted basis) and (B) the
purchase price for any UIC Common Stock so issued and sold, or
the exercise price for any warrants, rights or options so
issued and sold, shall not be less than the Fair Market Value
of the UIC Common Stock on the date of the issuance of such
UIC Common Stock or such warrants, rights or options, as the
case may be, and shall be paid in cash or with a loan or
advance from the Borrower or its applicable Subsidiary
otherwise permitted under Section 5.02(e)(vi);
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(vii) the Borrower may redeem or repurchase UIC
Common Stock, or warrants, rights or options to acquire UIC
Common Stock, owned by retired, terminated, deceased or
departing executives or managers of the Borrower or any of its
Subsidiaries so long as the aggregate amount paid by the
Borrower and its Subsidiaries for all such redemptions and
repurchases shall not exceed the sum of (A) $5,000,000 and (B)
the aggregate amount of all Permitted Affiliate Investments
made in connection with all such redemptions and repurchases
pursuant to this clause (vii) at or prior to the time of such
redemption or repurchase;
(viii) (A) the Borrower may accept capital
contributions from the Equity Investors (and issue and sell
additional UIC Common Stock and Permitted Preferred Stock to
the applicable Equity Investors in consideration thereof) and
(B) any of the Subsidiaries of the Borrower may accept capital
contributions from their respective equity holders (and issue
and sell additional common Equity Interests therein to their
applicable equity holders in consideration thereof) so long as
such capital contribution is not otherwise prohibited under
Section 5.02(e);
(ix) (A) any of the Subsidiaries of the Borrower may
declare and pay or make dividends and other distributions in
cash or in additional common Equity Interests therein, or
issue or sell additional Equity Interests therein, to the
Borrower or any of the Restricted Subsidiaries; provided that
such additional common Equity Interests shall, to the extent
required under the terms of the applicable Collateral
Documents, be pledged as Collateral thereunder to the
Administrative Agent, on behalf of the Secured Parties,
immediately upon the issuance thereof and (B) any of the
Unrestricted Subsidiaries may declare and make dividends and
other distributions to any of the other Unrestricted
Subsidiaries; and
(x) any of the non-wholly owned Subsidiaries of the
Borrower may declare and pay or make dividends and other
distributions, and may issue and sell additional common Equity
Interests therein, to its shareholders, partners or members
(or the equivalent persons thereof) generally so long as the
Borrower and each of the Restricted Subsidiaries that own any
of the Equity Interests therein receive at least their
respective proportionate shares of any such dividend,
distribution or issuance of common Equity Interests (based
upon their relative holdings of the Equity Interests therein
and taking into account the relative preferences, if any, of
the various classes of the Equity Interests therein).
(g) Capital Expenditures. Make, or permit any of its
Subsidiaries to make, any Capital Expenditures that would cause the
aggregate amount of all such Capital Expenditures made by the Borrower
and its Subsidiaries during any Fiscal Year to exceed $5,000,000;
provided, however, that if, at the end of any Fiscal Year, the
aggregate amount of all Capital Expenditures made by the Borrower and
its Subsidiaries during such Fiscal Year is less than $5,000,000 (the
amount of such difference being the "Carryover Capital Expenditure
Amount"), then, notwithstanding the foregoing provision of this Section
5.02(g), the Borrower and its Subsidiaries shall be permitted to make
additional Capital Expenditures during the next succeeding two Fiscal
Years in an amount not to exceed the Carryover Capital Expenditure
Amount, if any, from such Fiscal Year; provided further, however, that
any Carryover Capital Expenditure Amount carried forward to the next
two succeeding Fiscal Years shall be deemed to have been utilized to
make Capital Expenditures prior to the utilization of the amount set
forth above in this Section 5.02(g) for Capital Expenditures permitted
to be made in such Fiscal Year, and may not be carried forward to any
subsequent Fiscal
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Years; and provided further, however, that (i) the Borrower shall be
permitted to make additional Capital Expenditures during the Fiscal
Year ending December 31, 1999 comprised solely of Indebtedness assumed
or incurred thereby for the Capitalized Lease set forth in, and
otherwise permitted under, Section 5.02(b)(ii)(E)(1) and (ii) no
Capital Expenditures shall be made by the Borrower or any of its
Subsidiaries on or after December 31, 2005 unless the Borrower and its
Subsidiaries have (and then only to the extent of) any Carryover
Capital Expenditure Amount from the two immediately preceding Fiscal
Years.
(h) Prepayments, Etc. of Indebtedness. (i) Prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any
subordination terms of, any Indebtedness other than:
(A) the prepayment of Advances outstanding from time
to time in accordance with the terms of this Agreement;
(B) so long as no Default under Section 6.01(a) or
6.01(f) or Event of Default shall have occurred and be
continuing or shall occur as a result thereof, any regularly
scheduled or required redemption, repurchase or repayment of
Surviving Indebtedness;
(C) the satisfaction of any Indebtedness incurred
under Section 5.02(b)(ii)(D) or 5.02(b)(ii)(E) that is secured
by a Lien on the property or assets of the Borrower or any of
its Subsidiaries that incurred such Indebtedness, which
property or assets are otherwise permitted to be disposed of
under Section 5.02(d);
(D) the regularly scheduled payment or required
prepayment of any Indebtedness that is refunded, refinanced or
replaced in accordance with Section 5.02(b)(ii)(L);
(E) the prepayment, redemption, purchase, defeasance
or other satisfaction of Indebtedness of any Person existing
at the time such Person is purchased or otherwise acquired by
the Borrower or any of its Subsidiaries to the extent that
such prepayment, redemption, purchase, defeasance or other
satisfaction is required by the terms of such Indebtedness
(and not created in contemplation of the purchase or other
acquisition of such Person by the Borrower or its applicable
Subsidiary); provided that the purchase or other acquisition
of such Person is otherwise expressly permitted under the
terms of the Loan Documents; and
(F) so long as no Default under Section 6.01(a) or
6.01(f) or Event of Default shall have occurred and be
continuing or shall occur as a result thereof, the prepayment,
redemption, purchase, defeasance or other satisfaction of
Indebtedness of the Borrower or any of its Subsidiaries (other
than the Senior Subordinated Notes) (1) if the Performance
Level at the time of such prepayment, redemption, purchase,
defeasance or other satisfaction is Performance Level I or
Performance Level II, with any Excess Cash Flow that, under
the terms of this Agreement, is available to the Borrower from
one or more prior Fiscal Years and (2) if the Performance
Level is Performance Level III or Performance Level IV, with
up to $5,000,000 of the aggregate amount of Excess Cash Flow
that, under the terms of this Agreement, is available to the
Borrower from one or more prior Fiscal Years;
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(ii) Amend, modify or change in any manner any of the terms or
conditions of any of the Surviving Indebtedness, the Senior
Subordinated Notes Documents or the Permitted Preferred Stock
Documents, except (A) as could not adversely affect the rights or
interests of the Lender Parties or (B) as otherwise expressly permitted
under Section 5.02(b)(ii)(L); or
(iii) Permit any of its Subsidiaries to do any of the
foregoing, other than to prepay any Indebtedness payable to the
Borrower or, subject to the terms of the Pledged Indebtedness, the
Restricted Subsidiaries.
(i) Negative Pledge. Enter into or suffer to exist, or permit
any of its Subsidiaries to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon
any of its property or assets other than:
(i) any such agreement with or in favor of the
Secured Parties or the Administrative Agent, on behalf of the
Secured Parties;
(ii) any such agreement with or in favor of the
holders of the Senior Subordinated Notes or the trustee for
the Senior Subordinated Notes, on behalf of the holders
thereof, in each case as such agreement was in effect under
the Note Purchase Agreement on the Closing Date;
(iii) in connection with (A) any Surviving
Indebtedness to the extent such agreement is in effect on the
Closing Date, (B) any Indebtedness otherwise permitted to be
incurred under Section 5.02(b)(ii)(L) to the extent such
agreement is on terms that are no less favorable to the
Borrower or any of its Subsidiaries or to the Lender Parties
than the terms in effect for the Indebtedness being refunded,
refinanced or replaced immediately prior to effecting such
refunding, refinancing or replacement and (C) any Indebtedness
outstanding on the date any Person first becomes a Subsidiary
of the Borrower; provided that such agreement was not created
in contemplation of the purchase or other acquisition of such
Person and does not extend to or cover any property or assets
other than property and assets of the Person becoming such
Subsidiary;
(iv) any such agreement prohibiting other
encumbrances on specific property and assets of the Borrower
or any of its Subsidiaries, which agreement secures the
payment of Indebtedness incurred solely to acquire, construct
or improve such property or assets or to finance the purchase
price therefor (including, without limitation, Capitalized
Leases) and which Indebtedness is otherwise permitted to be
incurred under the terms of this Agreement;
(v) any such agreement with or in favor of the
holders of the Indebtedness of one or more of the Foreign
Subsidiaries (or any agent for the holders of such
Indebtedness) incurred pursuant to Section 5.02(b)(ii)(H);
(vi) any agreement setting forth customary
restrictions on the subletting, assignment or transfer of any
property or asset that is a lease, license, conveyance or
contract of similar property or assets; and
(vii) any restriction or encumbrance imposed pursuant
to an agreement that has been entered into by the Borrower or
any of its Subsidiaries for the sale, lease, transfer or
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other disposition of any of its property or assets so long as
such sale, lease, transfer or other disposition is otherwise
permitted to be made under Section 5.02(d).
(j) Dividends and Other Payment Restrictions Affecting
Subsidiaries. Enter into, create, assume or otherwise suffer to exist
or become effective, or permit any of its Subsidiaries to enter into,
create, assume or otherwise suffer to exist or become effective,
directly or indirectly, any encumbrance or restriction of any kind on
the ability of any of its Subsidiaries (i) to pay dividends or to make
any other distributions on any of the Equity Interests in such
Subsidiary owned or otherwise held by the Borrower or any of its
Subsidiaries, (ii) to repay or prepay or to subordinate any
Indebtedness owed to the Borrower or any of its Subsidiaries, (iii) to
make loans or advances to the Borrower or any of its Subsidiaries, (iv)
to transfer any of its property or assets to the Borrower or any of its
Subsidiaries or (v) to otherwise make Investments in the Borrower or
any of its Subsidiaries (whether through a covenant restricting
dividends, loans, asset transfers or investments, a financial covenant
or otherwise); provided, however, that nothing in any of clauses (i)
through (iv) of this Section 5.02(j) shall prohibit or restrict:
(A) this Agreement and the other Loan Documents;
(B) any agreements in effect on the Closing Date and
described on Schedule 5.02(j) hereto;
(C) any applicable law, rule or regulation
(including, without limitation, applicable currency control
laws and applicable state corporate statutes restricting the
payment of dividends in certain circumstances) or Governmental
Authorization;
(D) in the case of clause (iv) of this Section
5.02(j), any agreement setting forth customary restrictions on
the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract of
similar property or assets;
(E) in the case of clause (iv) of this Section
5.02(j), any agreement with the holder of a Lien otherwise
permitted to exist under Section 5.02(a)(iv) or 5.02(a)(v)
restricting on customary terms the transfer of any property or
assets subject thereto;
(F) any such agreement with or in favor of the
holders of the Indebtedness of one or more of the Foreign
Subsidiaries (or any agent for the holders of such
Indebtedness) incurred pursuant to Section 5.02(b)(ii)(H);
provided that any such restrictions set forth therein shall
not apply to any of the Loan Parties or any of their
Subsidiaries (other than one or more of the Foreign
Subsidiaries);
(G) any agreement evidencing Indebtedness outstanding
on the date a Person first becomes a Subsidiary of the
Borrower; provided that such agreement was not created in
contemplation of the purchase or other acquisition of such
Person by the Borrower or any of its Subsidiaries and does not
extend to or cover any property or assets other than the
property or assets of the Person becoming such Subsidiary;
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(H) any agreement evidencing or setting forth the
terms of any refunding, refinancing or replacement
Indebtedness otherwise permitted to be incurred under Section
5.02(b)(ii)(L) that contains any such restrictions to the
extent such restrictions are no less favorable to the Borrower
or any of its Subsidiaries or to the Lender Parties than the
terms in effect in the Indebtedness being so refunded,
refinanced or replaced immediately prior to such refunding,
refinancing or replacement; and
(I) any agreement that has been entered into by the
Borrower or any of its Subsidiaries for the sale, lease,
transfer or other disposition of any of its property or assets
so long as such sale, lease, transfer or other disposition is
otherwise permitted to be made under Section 5.02(d).
(k) New Subsidiaries. Create, organize, incorporate or acquire
any Subsidiary (each a "New Subsidiary"), or permit any of its
Subsidiaries to create, organize, incorporate or acquire any New
Subsidiary, unless:
(i) either (A) such New Subsidiary constitutes a
Restricted Subsidiary or (B) if such New Subsidiary does not
constitute a Restricted Subsidiary, all Investments necessary
for the creation, organization, incorporation or acquisition
of such New Subsidiary are otherwise permitted to be made
pursuant to Section 5.02(e)(x);
(ii) the Administrative Agent shall have approved the
legal structure (if other than a corporation, limited
partnership or limited liability company organized under the
laws of any state of the United States of America) and
capitalization of such New Subsidiary, such approval not to be
unreasonably withheld or delayed;
(iii) such New Subsidiary shall execute and deliver
to the Administrative Agent, on behalf of the Secured Parties,
promptly following the date of its creation, organization,
incorporation or acquisition, (A) if such New Subsidiary
constitutes a Restricted Subsidiary, either a guarantee, in
substantially the form of Exhibit I hereto (together with each
Guarantee Supplement, in each case as amended, supplemented or
otherwise modified hereafter from time to time in accordance
with the terms thereof and Section 8.01, the "Subsidiaries
Guarantee") or a Guarantee Supplement, a Security Agreement
Supplement and, if necessary or in the reasonable opinion of
the Administrative Agent desirable to properly create and
perfect a lien and security interest in the Equity Interests
in, or the property and assets of, such New Subsidiary, one or
more other mortgages, security agreements or pledge agreements
(or other similar documents), in each case in form and
substance reasonably satisfactory to the Lender Parties, all
duly executed by such New Subsidiary, (B) if such New
Subsidiary constitutes a Foreign Corporation, such
documentation as may be necessary or in the reasonable opinion
of the Administrative Agent desirable to properly create and
perfect a lien and security interest in the Equity Interests
of such Foreign Corporation referred to in clause (v) of this
Section 5.02(k), duly executed by such New Subsidiary and (C)
in each case, such other agreements, instruments, certificates
or documents as the Administrative Agent may reasonably
request, in each case in form and substance reasonably
satisfactory to the Lender Parties;
(iv) if such New Subsidiary constitutes a Restricted
Subsidiary, such New Subsidiary and the owners of all of the
Equity Interests therein shall have taken or shall take
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all of the other actions that may be necessary or that the
Administrative Agent may reasonably deem desirable in order
(A) to perfect and protect any Liens granted under the
Security Agreement, the Security Agreement Supplement and the
other mortgages, security agreements and pledge agreements
referred to in Section 5.01(k) and clause (iii) of this
Section 5.02(k) and (B) to enable the Administrative Agent and
the Lender Parties to exercise and enforce their rights and
remedies under the Loan Documents;
(v) if such New Subsidiary constitutes a Foreign
Corporation, such New Subsidiary and the Borrower and each of
the Restricted Subsidiaries that own any of the Equity
Interests therein shall have taken or shall take all of the
other actions that may be necessary or that the Administrative
Agent may reasonably deem desirable in order to perfect and
protect any Liens granted or intended to be granted under the
Collateral Documents in 66% of the Equity Interests in such
New Subsidiary entitled to vote (within the meaning of
Treasury Regulation Section 1.956-2(c)(2) promulgated under
the Internal Revenue Code) (the "Voting Equity Interests") (on
a fully diluted basis) or, if less, all of the Voting Equity
Interests in such New Subsidiary owned by the Borrower and/or
the Restricted Subsidiaries, and all of the Equity Interests
in such New Subsidiary not entitled to vote (within the
meaning of Treasury Regulation Section 1.956-2(c)(2)
promulgated under the Internal Revenue Code) now or hereafter
owned by the Borrower and/or the Restricted Subsidiaries;
provided, however, that, if as a result of any changes in the
tax laws of the United States of America after the date of
this Agreement the pledge by the Borrower or any of its
Subsidiaries of any additional Equity Interests in such New
Subsidiary to the Administrative Agent, on behalf of the
Secured Parties, would not result in an increase in the
aggregate net consolidated tax liabilities of the Borrower and
its Subsidiaries, then, promptly after the changes in such
laws, all such additional Equity Interests shall be pledged to
the Administrative Agent, on behalf of the Secured Parties,
pursuant to the terms and conditions of the Collateral
Documents and/or one or more additional pledge agreements (or
other similar documents), in form and substance reasonably
acceptable to the Lender Parties; and
(vi) upon the reasonable request of the
Administrative Agent, signed copies of one or more favorable
opinions of special and appropriate local and/or foreign
counsel for such New Subsidiary and, if appropriate, counsel
for each of the owners of the Equity Interests therein as the
Administrative Agent shall reasonably request, addressed to
the Administrative Agent, on behalf of the Secured Parties,
and reasonably acceptable to the Administrative Agent and each
of the other Secured Parties, as to the Subsidiaries Guarantee
or the Guarantee Supplement, as the case may be, the Security
Agreement Supplement and, if applicable, one or more other
mortgages, security agreements, pledge agreements, assignment
agreements (or other similar documents) referred to in clause
(ii) of this Section 5.02(k) being the legal, valid and
binding obligations of such New Subsidiary or such owners of
the Equity Interests therein, as the case may be, enforceable
against such New Subsidiary or each such owner in accordance
with their respective terms, as to the creation, perfection
and priority of the liens and security interests created or
purported to be created therein, as to the choice of New York
law being recognized in the courts of the jurisdiction in
which such New Subsidiary is organized and as such other
matters as the Administrative Agent, or any of the Lenders
through the Administrative Agent, may reasonably request.
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(l) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any change in the nature of its business that
would cause the Borrower or such Subsidiary to no longer be primarily
engaged in one or more of the businesses engaged in by the Borrower and
its Subsidiaries on the date of this Agreement.
(m) Amendments to Constitutive Documents. Amend, or permit any
of its Subsidiaries to amend, its Constitutive Documents, except where
such amendment, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect or to
adversely affect the rights or interests of the Lender Parties;
provided that copies of any such amendment to the Constitutive
Documents of the Borrower or any such Subsidiary shall be delivered to
the Administrative Agent at least three Business Days prior to the date
on which such amendment is intended to become effective.
(n) Accounting Changes, Etc. Make or permit, or permit any of
its Subsidiaries to make or permit, any change in (i) its accounting
policies or reporting practices, except as required by GAAP in effect
at the time of such change or by applicable Requirements of Law, or
(ii) its Fiscal Year.
(o) Amendments, Etc. of Related Documents. Cancel or terminate
any Related Document or consent to or accept any cancellation or
termination thereof, amend, modify or change in any manner any term or
condition of any Related Document or give any consent, waiver or
approval thereunder, waive any default under or any breach of any term
or condition of any Related Document, agree in any manner to any other
amendment, modification or change of any term or condition of any
Related Document, or take any other action in connection with any
Related Document that, in each of the foregoing cases under this
Section 5.02(o), either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, or permit any
of its Subsidiaries to do any of the foregoing; provided, however,
that, notwithstanding the foregoing provisions of this Section 5.02(o),
no amendment, modification or change of any term or condition of (i)
any of the Related Documents, and no consent, waiver or approval
thereunder, shall be given on or prior to the Closing Date without the
prior written consent of all of the Lender Parties and (ii) Sections
2.1, 8.1 and 8.3 of the Recapitalization Agreement, Section 3 of the
Reorganization Agreement or any of the terms of the THL Subordination
Agreement shall be made at any time without the prior written consent
of the Required Lenders.
(p) Partnerships, Etc. Be or become a general partner in any
general or limited partnership or joint venture, or permit any of its
Subsidiaries to do so, other than any Subsidiary the sole assets of
which consist of its interest in one or more of such partnerships or
joint ventures.
(q) Speculative Transactions. Engage, or permit any of its
Subsidiaries to engage, in any transaction involving commodity options
or futures contracts or any similar speculative transactions.
SECTION 5.03. Reporting Requirements. So long as any of the
Advances or any of the other Obligations of any Loan Party under or in respect
of any of the Loan Documents (other than any such Obligations of any of the Loan
Parties under Section 2.10, 2.12 or 8.04 (or other similar provisions of the
other Loan Documents that are specified under the terms thereof to survive the
payment in full of such other Obligations under or in respect of the Loan
Documents) to the extent no demand or claim thereunder has been made) shall
remain unpaid, any of the Letters of Credit shall remain outstanding or any of
the Lender
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Parties shall have any Commitment hereunder, the Borrower will furnish to the
Administrative Agent and the Lender Parties:
(a) Default Notices. As soon as possible and in any event
within three Business Days after the occurrence of each Default or any
event, development or occurrence that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect continuing on the date of such statement, a statement of a
Responsible Officer of the Borrower setting forth the details of such
Default or such event, development or occurrence (including, without
limitation, the anticipated effect thereof), the period of time such
Default or such event, development or occurrence has existed and been
continuing and the action that the Borrower has taken and/or proposes
to take with respect thereto.
(b) Monthly Financials. During the period commencing on the
Closing Date and ending on May 20, 1999 (or such later date as the
Borrower agrees to continue to deliver monthly financial information to
the holders of the Senior Subordinated Notes), as soon as available and
in any event within 30 days after the end of the first two months of
each Fiscal Quarter, a Consolidated balance sheet of the Borrower and
its Subsidiaries as of the end of such month and Consolidated
statements of income, stockholders' equity and cash flows of the
Borrower and its Subsidiaries for the period commencing at the end of
the previous month and ending with the end of such month and for the
period commencing at the end of the previous Fiscal Year and ending
with the end of such month, setting forth in comparative form, in the
case of each such Consolidated balance sheet, the corresponding figures
as of the last day of the corresponding month in the immediately
preceding Fiscal Year and, in the case of each such Consolidated
statement of income, stockholders' equity and cash flows, the
corresponding figures for the corresponding month in the immediately
preceding Fiscal Year, all in reasonable detail, together with a
certificate of a Senior Financial Officer, in form and substance
reasonably satisfactory to the Administrative Agent, duly certifying
that, subject to the absence of footnote disclosure and normal year-end
audit adjustments, (i) the Consolidated financial statements of the
Borrower and its Subsidiaries delivered with such certificate fairly
present in all material respects the Consolidated financial condition
of the Borrower and its Subsidiaries as of the last day of such month
and the Consolidated results of operations and cash flows of the
Borrower and its Subsidiaries for the month ended on such date and (ii)
the Consolidated financial statements of the Borrower and its
Subsidiaries delivered with such certificate have been prepared in
accordance with GAAP (or a reconciliation statement has been delivered
together therewith conforming such Consolidated financial statements to
GAAP).
(c) Quarterly Financials. As soon as available and in any
event within 45 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, a Consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such Fiscal Quarter and
Consolidated statements of income, stockholders' equity and cash flows
of the Borrower and its Subsidiaries for the period commencing at the
end of the previous Fiscal Quarter and ending with the end of such
Fiscal Quarter and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Quarter, setting
forth in comparative form, in the case of each such Consolidated
balance sheet, the corresponding figures as of the last day of the
corresponding period in the immediately preceding Fiscal Year and, in
the case of each such Consolidated statement of income, stockholders'
equity and cash flows, the corresponding figures for the corresponding
period in the immediately preceding Fiscal Year, all in reasonable
detail.
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(d) Annual Financials. As soon as available and in any event
within 90 days after the end of each Fiscal Year, a copy of the annual
audit report for such Fiscal Year for the Borrower and its
Subsidiaries, including therein the Consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such Fiscal Year and
Consolidated statements of income, stockholders' equity and cash flows
of the Borrower and its Subsidiaries for such Fiscal Year, accompanied
by an unqualified opinion or an opinion otherwise reasonably acceptable
to the Required Lenders of PriceWaterhouseCoopers LLP or other
independent public accountants of nationally recognized standing,
setting forth in comparative form, in the case of each such
Consolidated balance sheet, the corresponding figures as of the last
day of the immediately preceding Fiscal Year, and, in the case of each
such Consolidated statement of income, stockholders' equity and cash
flows, the corresponding figures for the corresponding period in the
immediately preceding Fiscal Year, together with (i) either (A) a
letter from PriceWaterhouseCoopers LLP or such independent public
accountants of nationally recognized standing stating that, in the
course of their regular audit of the Consolidated financial statements
of the Borrower and its Subsidiaries, which audit was conducted by such
accountants in accordance with generally accepted auditing standards,
such accountants have not obtained any knowledge that a Default has
occurred and is continuing or if, in the opinion of such accountants, a
Default has occurred and is continuing, a statement as to the status
and nature thereof or (B) a schedule in form satisfactory to the
Administrative Agent of the computations used by such accountants in
determining, as of the end of such Fiscal Year, the amount of Excess
Cash Flow, if any, for such Fiscal Year and compliance with the
covenants contained in Sections 5.02(g) and 5.04 (including with
respect to each such Section, where applicable, the calculations of the
maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Section, and the calculation of the
amount, ratio or percentage then in existence) and (ii) in the event of
any change in the generally accepted accounting principles used by such
accountants in the preparation of the Consolidated financial statements
of the Borrower and its Subsidiaries referred to above in this Section
5.03(d) from GAAP, such accountants shall also provide a reasonably
detailed description of such changes and, if and to the extent
necessary for the determination of compliance with Section 5.02(g) or
5.04, a statement of reconciliation conforming such Consolidated
financial statements to GAAP.
(e) Compliance Certificate. Together with each delivery to the
Administrative Agent and Lender Parties of the Consolidated financial
statements of the Borrower and its Subsidiaries referred to in Sections
5.03(c) and 5.03(d), a certificate of a Senior Financial Officer, in
form and substance reasonably satisfactory to the Administrative Agent:
(i) duly certifying that, subject, in the case of any
such Consolidated financial statements delivered to the
Administrative Agent and the Lender Parties pursuant to
Section 5.03(c), to the absence of footnote disclosure and
normal year-end audit adjustments, (A) the Consolidated
financial statements of the Borrower and its Subsidiaries
delivered with such certificate fairly present in all material
respects the Consolidated financial condition of the Borrower
and its Subsidiaries as of the last day of such Fiscal Quarter
or such Fiscal Year, as the case may be, and the Consolidated
results of operations and cash flows of the Borrower and its
Subsidiaries for the Fiscal Quarter or the Fiscal Year ended
on such date and (B) the Consolidated financial statements of
the Borrower and its Subsidiaries delivered with such
certificate have been prepared in accordance with GAAP (or a
reconciliation statement has been delivered together therewith
conforming such Consolidated financial statements to GAAP);
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(ii) duly certifying that no Default has occurred and
is continuing or, if a Default has occurred and is continuing,
a statement as to the nature thereof, the period of time such
Default has existed and been continuing and the action that
the Borrower has taken and/or proposes to take with respect
thereto;
(iii) setting forth a schedule of the computations
used by the Borrower in determining compliance with the
covenants contained in Sections 5.02(g) and 5.04 (including
with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of
such Section, and the calculation of the amount, ratio or
percentage then in existence) and, in the case of any such
Consolidated financial statements delivered to the
Administrative Agent and the Lender Parties pursuant to
Section 5.03(d), the amount of Excess Cash Flow for the Fiscal
Year covered thereby; and
(iv) in the case of any such Consolidated financial
statements delivered to the Administrative Agent and the
Lender Parties pursuant to Section 5.03(c), setting forth (A)
a description in reasonable detail of all of the changes in
the generally accepted accounting principles applied in the
preparation of such financial statements from GAAP and (B) a
statement of reconciliation, if and to the extent necessary
for determining whether any of the changes in the generally
accepted accounting principles applied in the preparation of
such financial statements would affect the calculation of, or
compliance with, Sections 5.02(g) or 5.04, conforming such
Consolidated financial statements to GAAP.
(f) Forecasts. As soon as available and in any event at least
ten days prior to the first day of each Fiscal Year, commencing with
the Fiscal Year ending December 31, 1999, Consolidated forecasts
prepared by management of the Borrower of balance sheets and statements
of income, stockholders' equity and cash flows on a quarterly basis for
such Fiscal Year, in the form of the forecasts delivered by the
Borrower pursuant to Section 3.01(k)(xiii)(D) or otherwise in a form
reasonably satisfactory to the Administrative Agent and setting forth
in comparative form the corresponding figures for the immediately
preceding Fiscal Year.
(g) Schedule Updates. Promptly and in any event within 30 days
of the end of each Fiscal Quarter and together with any amendment,
waiver or other modification of any of the Loan Documents, amendments
and supplements to Schedules 4.01(dd) and 4.01(ee) to this Agreement,
Schedules III and IV to the Security Agreement and such other Schedules
to any of the Loan Documents as the Administrative Agent shall
reasonably request, in each case so as to ensure that, at the time of
the delivery of such amendments and supplements, such Schedules are
accurate and complete as to the subject matter thereof.
(h) Accountants' Letters, Etc. Promptly upon receipt thereof,
copies of all "management letters" submitted to the Borrower or any of
its Subsidiaries by any independent public accountants of the Borrower
or any of its Subsidiaries in connection with each annual audit of its
financial statements made by such accountants.
(i) Licenses, Etc. Promptly and in any event within five
Business Days after receipt thereof, notice of any actual, pending or
threatened suspension, termination or revocation of any of the
Governmental Authorizations of any of the Loan Parties or any of their
Subsidiaries that is necessary to own or lease and operate their
respective property and assets and to conduct their
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respective businesses as now conducted and as proposed to be conducted,
or any enjoinment, barring or suspension of the ability of any Loan
Party or any such Subsidiary to conduct any of its businesses in the
ordinary course.
(j) Litigation. Promptly and in any event within five Business
Days after the commencement thereof, notice of all actions, suits,
investigations, litigation, arbitrations and proceedings against or
affecting any of the Loan Parties or any of their Subsidiaries or any
of the property or assets thereof in any court or before any arbitrator
or by or before any Governmental Authority of any kind (i) in which
there is a reasonable likelihood of an adverse determination and that,
either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect (other than the Disclosed Litigation)
or (ii) that could reasonably be expected to adversely affect the
legality, validity, binding effect or enforceability of any aspect of
the Transaction, any of the Loan Documents or the Related Documents or
any of the other transactions contemplated thereby; and promptly after
the occurrence thereof, notice of any adverse change in the status, or
in the reasonably anticipated financial effect on the Borrower or any
of its Subsidiaries, of any such action, suit, investigation,
litigation, arbitration or proceeding or of any of the Disclosed
Litigation (and, in each case, upon the reasonable request of the
Administrative Agent, any other information available to any of the
Loan Parties or any of their Subsidiaries with respect to any of the
foregoing that would enable the Administrative Agent and the Lender
Parties to more fully evaluate such action, suit, investigation,
litigation, arbitration or proceeding, unless the applicable Loan Party
or Subsidiary of a Loan Party is precluded from disclosing any such
report or statement pursuant to a confidentiality agreement with the
applicable Governmental Authority).
(k) Related Document Notices. Promptly and in any event within
five Business Days after the furnishing or receipt thereof, copies of
all documents and all material notices and requests furnished or
received by the Borrower or any of its Subsidiaries under or pursuant
to any of the Related Documents and, from time to time upon the
reasonable request of the Administrative Agent, such information and
reports regarding the Related Documents as the Administrative Agent, or
any of the Lender Parties through the Administrative Agent, may
reasonably request.
(l) Securities Reports, Etc. Promptly and in any event within
five Business Days after the sending or filing thereof, copies of all
proxy statements, financial statements, change reports and other
reports that the Borrower or any of its Subsidiaries sends to its
stockholders, partners or members (or equivalent persons thereto), and
copies of all regular, periodic and special reports and information
forms, and all registration statements, prospectuses and information
memoranda, that the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any Governmental Authority that
may be substituted therefor, or with any national or international
securities exchange, and copies of all private placement or offering
memoranda pursuant to which securities of the Borrower or any of its
Subsidiaries that are exempt from registration under the Securities Act
are proposed to be issued and sold thereby.
(m) Creditor Reports. Promptly and in any event within three
Business Days after the furnishing or receipt thereof, copies of any
statement or report furnished to or received from any other holder of
the securities of the Borrower or any of its Subsidiaries pursuant to
the terms of any indenture, loan or credit agreement, receivables
purchase agreement or similar agreement of the Borrower or any of its
Subsidiaries with amounts outstanding or having commitments to extend
credit in an aggregate principal amount of at least $1,000,000
(including, without limitation, any amendments, waivers or consents
given or requested in respect thereof and any notices of default,
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acceleration or redemption delivered thereunder) and not otherwise
required to be furnished to the Administrative Agent and the Lender
Parties pursuant to any other clause of this Section 5.03.
(n) ERISA Events and ERISA Reports; Plan Terminations, Etc.
(i) Promptly and in any event within 15 days after any of the Loan
Parties or any of the ERISA Affiliates knows or has reason to know that
any material ERISA Event has occurred, a statement of a Responsible
Officer of the Borrower describing such material ERISA Event and the
action, if any, that the Borrower, such other applicable Loan Party or
such ERISA Affiliate has taken and/or proposes to take with respect
thereto, together with materials or information filed or to be filed
with any Governmental Authority or any trustee for any Plan as a result
of such material ERISA Event; (ii) on the date on which any records,
documents or other information must be furnished to the PBGC with
respect to any Plan pursuant to Section 4010 of ERISA, a copy of such
records, documents and information; (iii) promptly and in any event
within two Business Days after receipt thereof by any of the Loan
Parties or any of the ERISA Affiliates, copies of each notice from the
PBGC stating its intention to terminate any Plan or to have a trustee
appointed to administer any Plan; (iv) promptly following the request
of the Administrative Agent, or any of the Lender Parties through the
Administrative Agent, therefor, a copy of the most recent Schedule B
(Actuarial Information) to the annual report (form 5500) with respect
to each of the Plans; and (v) promptly and in any event within 15
Business Days after receipt thereof by any of the Loan Parties or any
of the ERISA Affiliates from the sponsor of a Multiemployer Plan,
copies of each notice concerning (A) the imposition of Withdrawal
Liability by any such Multiemployer Plan, (B) the reorganization or
termination, within the meaning of Title IV of ERISA, of any such
Multiemployer Plan or (C) the amount of liability incurred, or that
could reasonably be expected to be incurred, by such Loan Party or any
such ERISA Affiliate in connection with any event described in
subclause (v)(A) or (v)(B) of this Section 5.03(n).
(o) Tax Reports and Notices. (i) Within ten Business Days
after receipt thereof, copies of all Revenue Agent Reports (Internal
Revenue Service form 886) or other written proposals of the Internal
Revenue Service that propose, determine or otherwise set forth
adjustments (whether positive or negative) to the United States federal
income tax liability of the affiliated group (within the meaning of
Section 1504(a)(1) of the Internal Revenue Code) of which the Borrower
is a member aggregating $2,500,000 or more; (ii) promptly and in any
event within five Business Days after the due date (after giving effect
to all applicable extensions) for filing the final federal income tax
return in respect of each taxable year of the Borrower, a certificate
of the Borrower, duly executed by a Responsible Officer thereof,
stating that the common parent of the affiliated group (within the
meaning of Section 1504(a)(1) of the Internal Revenue Code) of which
the Borrower is a member has paid to the Internal Revenue Service or
other relevant taxation authority the full amount that such affiliated
group is required to pay in respect of United States federal income
taxes for such taxable year (other than any portion of such amount
which is being contested in good faith and by proper proceedings
diligently conducted and as to which appropriate and adequate reserves
are being maintained in accordance with GAAP) and that the Borrower and
each of its Subsidiaries have received any amount payable to them, and
have not paid amounts in respect of taxes (federal, state, local or
foreign) in excess of the amount the Borrower or such Subsidiary is
required to pay, under the established tax sharing arrangements of the
Borrower and its Affiliates in respect of such taxable year; and (iii)
promptly and in any event within ten Business Days after receipt
thereof, copies of the determination of any request for a ruling or
determination letter from the Internal Revenue Service or any other
taxation authority or Governmental Authority regarding the actual or
asserted tax liability or deficiency of the Borrower or any of its
Subsidiaries.
<PAGE>
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(p) Environmental Conditions. Promptly and in any event within
five Business Days after the assertion or occurrence thereof:
(i) notice of any condition or occurrence on or
arising from any property owned or operated by the Borrower or
any of its Subsidiaries that resulted or is alleged to have
resulted in noncompliance in any material respect by the
Borrower or such Subsidiary with any applicable Environmental
Law or Environmental Permit;
(ii) any condition or occurrence on any property
owned or operated by the Borrower or any of its Subsidiaries
that could reasonably be expected to cause such property to be
subject to any material restrictions on the ownership,
occupancy or use thereof or on the transferability of such
property by the Borrower or its applicable Subsidiary under
any Environmental Law; and
(iii) the taking of any removal or remedial action
involving material costs or liabilities in response to the
actual or alleged presence of any Hazardous Material on any
property owned or operated by the Borrower or any of its
Subsidiaries as required by any Environmental Law, any
Environmental Permit or any Governmental Authority.
All such notices shall describe in reasonable detail the nature of the
condition, occurrence, removal or remedial action described therein,
the period of time such condition or circumstance has existed and been
continuing and, in the case of each such condition or occurrence, the
action that the Borrower or its applicable Subsidiary has taken and/or
proposes to take with respect thereto.
(q) Insurance. As soon as available and in any event within 30
days after the end of each Fiscal Year, commencing with the Fiscal Year
ending December 31, 1999, a report summarizing the insurance coverage
in effect for the Borrower and each of its Subsidiaries, specifying
therein the type, carrier, amount, deductibles and co-insurance
requirements and expiration dates thereof and containing such
additional information as any of the Lender Parties, through the
Administrative Agent, may reasonably request.
(r) Year 2000 Compliance. Promptly upon the discovery or
determination thereof by any Responsible Officer of the Borrower,
notice (in reasonable detail) of any computer application (including
any such computer application of its or any of its Subsidiary's
suppliers, vendors and customers) that will not be able on a timely
basis to perform properly date-sensitive functions for all dates before
and after January 1, 2000, except to the extent that such failure,
either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(s) Other Information. Such other information respecting the
business, condition (financial or otherwise), operations, liabilities
(actual or contingent), performance, properties or prospects of the
Borrower or any of its Subsidiaries as any of the Lender Parties,
through the Administrative Agent, may from time to time reasonably
request.
SECTION 5.04. Financial Covenants. So long as any of the
Advances or any of the other Obligations of any Loan Party under or in respect
of any of the Loan Documents (other than any such Obligations of any of the Loan
Parties under Section 2.10, 2.12 or 8.04 (or other similar provisions of the
other Loan Documents that are specified under the terms thereof to survive the
payment in full of such other Obligations under or in respect of the Loan
Documents) to the extent no demand or claim thereunder has
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been made) shall remain unpaid, any of the Letters of Credit shall remain
outstanding or any of the Lender Parties shall have any Commitment hereunder,
the Borrower will:
(a) Leverage Ratio. Maintain a Leverage Ratio at all times of
not more than the amount set forth below for and during the period set
forth below:
<TABLE>
<CAPTION>
Period Ratio
------ ------
<S> <C>
January 20, 1999 through
March 30, 1999 6.60:1
March 31, 1999 through
June 29, 1999 6.30:1
June 30, 1999 through
September 29, 1999 6.30:1
September 30, 1999 through
December 30, 1999 5.75:1
December 31, 1999 through
March 30, 2000 5.75:1
March 31, 2000 through
June 29, 2000 5.75:1
June 30, 2000 through
September 29, 2000 5.75:1
September 30, 2000 through
December 30, 2000 5.25:1
December 31, 2000 through
March 30, 2001 5.00:1
March 31, 2001 through
June 29, 2001 5.00:1
June 30, 2001 through
September 29, 2001 5.00:1
September 30, 2001 through
December 30, 2001 4.50:1
December 31, 2001 through
March 30, 2002 4.50:1
<PAGE>
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Period Ratio
------ ------
March 31, 2002 through
June 29, 2002 4.50:1
June 30, 2002 through
September 29, 2002 4.50:1
September 30, 2002 through
December 30, 2002 4.00:1
December 31, 2002 through
March 30, 2003 4.00:1
March 31, 2003 through
June 29, 2003 4.00:1
June 30, 2003 through
September 29, 2003 4.00:1
September 30, 2003 and
thereafter 3.50:1
</TABLE>
(b) Fixed Charge Coverage Ratio. Maintain a Fixed Charge
Coverage Ratio as of the last day of each Measurement Period of not
less than the amount set forth below for each Measurement Period set
forth below:
<TABLE>
<CAPTION>
Measurement Period
Ending In Ratio
------------------ ------
<S> <C>
March 1999 1.15:1
June 1999 1.15:1
September 1999 1.15:1
December 1999 1.15:1
March 2000 1.20:1
June 2000 1.20:1
September 2000 1.20:1
December 2000 1.20:1
March 2001 1.35:1
June 2001 1.35:1
September 2001 1.35:1
December 2001 1.35:1
</TABLE>
<PAGE>
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<TABLE>
<CAPTION>
Measurement Period
Ending In Ratio
------------------ ------
<S> <C>
March 2002 1.40:1
June 2002 1.40:1
September 2002 1.40:1
December 2002 1.40:1
March 2003 and
thereafter 1.50:1
</TABLE>
(c) Interest Coverage Ratio. Maintain an Interest Coverage
Ratio as of the last day of each Measurement Period of not less than
the amount set forth below for each Measurement Period set forth below:
<TABLE>
<CAPTION>
Measurement Period
Ending In Ratio
------------------ ------
<S> <C>
March 1999 1.60:1
June 1999 1.60:1
September 1999 1.60:1
December 1999 1.60:1
March 2000 1.70:1
June 2000 1.70:1
September 2000 1.75:1
December 2000 1.75:1
March 2001 1.85:1
June 2001 1.85:1
September 2001 2.00:1
December 2001 2.00:1
March 2002 2.00:1
June 2002 2.20:1
</TABLE>
<PAGE>
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<TABLE>
<CAPTION>
Measurement Period
Ending In Ratio
------------------ ------
<S> <C>
September 2002 2.25:1
December 2002 2.25:1
March 2003 2.40:1
June 2003 2.40:1
September 2003 2.50:1
December 2003 2.50:1
March 2004 2.75:1
June 2004 2.75:1
September 2004 2.75:1
December 2004 2.75:1
March 2005 and 3.00:1
thereafter
</TABLE>
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) (i) the Borrower shall fail to pay any principal of any
Advance when the same shall become due and payable, whether by
scheduled maturity or at a date fixed for prepayment or by
acceleration, demand or otherwise, or (ii) the Borrower shall fail to
pay any interest on any Advances, or any of the Loan Parties shall fail
to make any other payment under or in respect of any of the Loan
Documents required to have been made by it, in each case whether by
scheduled maturity or at a date fixed for prepayment or by
acceleration, demand or otherwise and, in each case under this clause
(ii), such failure remains unremedied for at least three Business Days
after the same becomes due and payable; or
(b) any representation or warranty made by any of the Loan
Parties (or any of their respective officers) under or in connection
with any of the Loan Documents (including, without limitation, in any
certificate, report, statement or other writing at any time furnished
(or deemed to have been furnished) to the Administrative Agent or any
of the Lender Parties by or on behalf of any
<PAGE>
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of the Loan Parties) shall prove to have been incorrect in any material
respect on the date as of which it was made or deemed made; or
(c) (i) the Borrower shall fail to perform or observe any
term, covenant or agreement contained in Section 2.15, 5.01(b)(i),
5.01(e), 5.01(i) or 5.01(j), any of subclauses (A) through (D) of
Section 5.01(k) or Section 5.02, 5.03 or 5.04 on its part to be
performed or observed or (ii) any of the Loan Parties shall fail to
perform or observe any term, covenant or agreement contained in Section
4 of the Subsidiaries Guarantee or Section 4, 5 or 10(a) or any of
Sections 11, 12, 13, 14(a)(i), 14(b), 15(a), 15(b), 15(c) or 16 of the
Security Agreement on its part to be performed or observed; or
(d) any of the Loan Parties shall fail to perform or observe
any term, covenant or agreement contained in any of the Loan Documents
on its part to be performed or observed that is not otherwise referred
to in Section 6.01(c) if such failure shall remain unremedied for at
least ten consecutive days after the earlier of the date on which (i) a
Responsible Officer of the Borrower or any of its Subsidiaries first
becomes aware of such failure and (ii) written notice thereof shall
have been given to the Borrower by the Administrative Agent or any of
the Lender Parties; or
(e) (i) any of the Loan Parties or any of their Subsidiaries
shall fail to pay any principal of, premium or interest on, or any
other amount payable in respect of, one or more items of Indebtedness
of the Loan Parties and their Subsidiaries (excluding Indebtedness
outstanding hereunder) that is outstanding (or under which one or more
Persons have a commitment to extend credit) in an aggregate principal
amount (or, in the case of any Hedge Agreement, having an Agreement
Value) of at least $5,000,000 at the time of such failure, when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreements or instruments relating to all such Indebtedness; or (ii)
any other event shall occur or condition shall exist under the
agreements or instruments relating to one or more items of Indebtedness
of any of the Loan Parties or any of their Subsidiaries (excluding
Indebtedness outstanding hereunder) that is outstanding (or under which
one or more Persons have a commitment to extend credit) in an aggregate
principal amount (or, in the case of any Hedge Agreement, having an
Agreement Value) of at least $5,000,000 at the time of such other event
or condition, and shall continue after the applicable grace period, if
any, specified in all such agreements or instruments, if the effect of
such event or condition is to accelerate, or to permit the acceleration
of, the maturity of such Indebtedness or otherwise to cause, or to
permit the holder thereof to cause, such Indebtedness to mature; or
(iii) one or more items of Indebtedness of any of the Loan Parties or
any of their Subsidiaries (excluding Indebtedness outstanding
hereunder) that is outstanding (or under which one or more Persons have
a commitment to extend credit) in an aggregate principal amount (or, in
the case of any Hedge Agreement, having an Agreement Value) of at least
$5,000,000 shall be declared to be due and payable or required to be
prepaid or redeemed (other than by a regularly scheduled or required
prepayment or redemption), purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Indebtedness shall be required
to be made, in each case prior to the stated maturity thereof; or
(f) any of the Loan Parties or any of their Subsidiaries shall
admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against any of the Loan Parties or
any of their Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
<PAGE>
-131-
arrangement, adjustment, protection, relief, or composition of it or
its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, administrator or
other similar official for it or for any substantial part of its
property and assets and, in the case of any such proceeding instituted
against it (but not instituted by it) that is being diligently
contested by it in good faith, either such proceeding shall remain
undismissed or unstayed for a period of at least 45 consecutive days or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official
for, it or any substantial part of its property and assets) shall
occur; or any event or action analogous to or having a substantially
similar effect to any of the events or actions set forth above in this
Section 6.01(f) (other than a solvent reorganization) shall occur under
the Requirements of Law of any jurisdiction applicable to any of the
Loan Parties or any of their Subsidiaries; or any of the Loan Parties
or any of their Subsidiaries shall take any corporate, partnership,
limited liability company or other similar action to authorize any of
the actions set forth above in this Section 6.01(f); or
(g) one or more judgments or orders for the payment of money
in excess of $5,000,000 in the aggregate shall be rendered against one
or more of the Loan Parties and their Subsidiaries and shall remain
unsatisfied and either (i) enforcement proceedings shall have been
commenced by any creditor upon any such judgment or order and remain
unstayed or (ii) there shall be any period of at least 20 consecutive
days during which a stay of enforcement of any such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect;
provided, however, that any such judgment or order shall not give rise
to an Event of Default under this Section 6.01(g) if and for so long as
(A) the amount of such judgment or order which remains unsatisfied is
covered by a valid and binding policy of insurance between the
defendant and the insurer covering full payment thereof and (B) such
insurer has been notified, and has not disputed the claim made for
payment, of the amount of such judgment or order; or
(h) one or more nonmonetary judgments or orders (including,
without limitation, writs or warrants of attachment, garnishment,
execution, distraint or similar process) shall be rendered against one
or more of the Loan Parties and their Subsidiaries that, either
individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect, and there shall be any period of at least 20
consecutive days during which a stay of enforcement of any such
judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(i) any provision of any of the Loan Documents after delivery
thereof pursuant to Section 3.01, 3.02, 5.01(k) or 5.02(k) shall for
any reason (other than pursuant to the terms thereof) cease to be valid
and binding on or enforceable against any of the Loan Parties intended
to be a party to it, or any such Loan Party shall so state in writing;
or
(j) any Collateral Document after delivery thereof pursuant to
Section 3.01, 5.01(k) or 5.02(k) shall for any reason (other than
pursuant to the terms thereof) cease to create a valid and perfected
first priority (subject to the liens and security interests expressly
permitted under Section 5.02(a)) lien on and security interest in the
Collateral purported to be covered thereby; or
(k) any of the following events or conditions shall have
occurred and such event or condition, when aggregated with any and all
other such events or conditions set forth in this Section 6.01(k), has
resulted, or, with respect to clause (i) of this Section 6.01(k), could
reasonably be
<PAGE>
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expected to result, in liabilities of one or more of the Loan Parties
and/or the ERISA Affiliates in an aggregate amount exceeding $5,000,000
at any time:
(i) any ERISA Event shall have occurred with respect
to a Plan; or
(ii) any of the Loan Parties or any of the ERISA
Affiliates shall have incurred Withdrawal Liability to a
Multiemployer Plan or liability in connection with the
reorganization, insolvency or termination of a Multiemployer
Plan; or
(iii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the
Internal Revenue Code), whether or not waived, shall exist
with respect to one or more of the Plans, or any Lien shall
exist on the property and assets of any of the Loan Parties or
any of the ERISA Affiliates in favor of the PBGC or any Plan;
or
(l) an "Event of Default" (as defined in the applicable Senior
Subordinated Notes Documents) shall have occurred and be continuing
under the Senior Subordinated Notes Documents; or
(m) a Change of Control shall occur;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each of the Lender Parties and the obligation of each
of the Lender Parties to make Advances (other than Swing Line Advances by any of
the Revolving Credit Lenders pursuant to Section 2.02(b)(ii) and Letter of
Credit Advances by the Issuing Bank or any of the Revolving Credit Lenders
pursuant to Section 2.03(c)(i)) and of the Issuing Bank to issue Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and (ii)
shall at the request, or may with the consent, of the Required Lenders, by
notice to the Borrower, declare the Notes, all interest thereon and all other
amounts payable under or in respect of this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such
interest and all such other amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower; provided, however, that in
the event of an actual or deemed entry of an order for relief with respect to
the Borrower under the United States Federal Bankruptcy Code or a similar order
or action under any other Requirements of Law covering the protection of
creditors' rights or the relief of debtors applicable to the Borrower, (1) the
Commitments of each of the Lender Parties and the obligation of each of the
Lender Parties to make Advances (other than Swing Line Advances by any of the
Revolving Credit Lenders pursuant to Section 2.02(b)(ii) and Letter of Credit
Advances by the Issuing Bank or any of the Revolving Credit Lenders pursuant to
Section 2.03(c)(i)) and of the Issuing Bank to issue Letters of Credit shall
automatically be terminated and (2) the Notes, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Required Lenders,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Administrative Agent, on behalf of the
Lender Parties, in same day funds at the Administrative Agent's office
designated in such demand, for deposit in the L/C Cash Collateral Account, an
amount equal to the aggregate Available Amount of all Letters of Credit then
outstanding. If at any time the Administrative
<PAGE>
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Agent determines that any funds held in the L/C Cash Collateral Account are
subject to any right or claim of any Person other than the Agents and the other
Secured Parties or that the total amount of such funds is less than the
aggregate Available Amount of all Letters of Credit, the Borrower will,
forthwith upon demand by the Administrative Agent, pay to the Administrative
Agent, as additional funds to be deposited and held in the L/C Cash Collateral
Account, an amount equal to the excess of (a) such aggregate Available Amount
over (b) the total amount of funds, if any, then held in the L/C Cash Collateral
Account that the Administrative Agent determines to be free and clear of any
such right and claim. Upon the drawing of any Letter of Credit for which funds
are on deposit in the L/C Cash Collateral Account, such funds shall be applied
to reimburse the Issuing Bank or the Revolving Credit Lenders, as applicable, to
the extent permitted under applicable law.
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. (a) Each of the Lender
Parties (in its respective capacities as a Lender, the Swing Line Bank, the
Issuing Bank and a Hedge Bank, in each case if applicable) hereby appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement and the other
Loan Documents as are delegated to the Administrative Agent by the terms hereof
and thereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for under the Loan
Documents (including, without limitation, enforcement or collection of the
Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all of the Lender Parties and all holders of Notes; provided,
however, that the Administrative Agent shall not be required to take any action
(i) that exposes the Administrative Agent to personal liability or that is
contrary to this Agreement or to applicable Requirements of Law or (ii) as to
which the Administrative Agent has not received adequate security or indemnity
(whether pursuant to Section 7.05 or otherwise). If the security or indemnity
furnished to the Administrative Agent for any purpose under or in respect of the
Loan Documents shall, in the good faith opinion of the Administrative Agent, be
insufficient or become impaired, then the Administrative Agent may require
additional security or indemnity and cease, or not commence, to follow the
directions or take the actions indemnified against until such additional
security or indemnity is furnished. The Administrative Agent agrees to give to
each of the Lender Parties prompt notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement.
(b) The Administrative Agent shall also act as the "collateral
agent" under the Loan Documents, and each of the Lender Parties (in its capacity
as a Lender, the Swing Line Bank, the Issuing Bank and a Hedge Bank, in each
case if applicable, and as a Secured Party) hereby appoints and authorizes the
Administrative Agent to act as the agent of such Lender for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any
of the Loan Parties to secure any of the Secured Obligations, together with such
powers and discretion as are reasonably incidental thereto. The Administrative
Agent may from time to time in its discretion appoint any of the Lender Parties
or any of the affiliates of a Lender Party to act as its co-agent or sub-agent
for purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents or of exercising any rights or
remedies thereunder at the direction of the Administrative Agent. In such
capacity, such co-agents and sub-agents shall be entitled to the benefits of all
provisions of this Article VII (including, without limitation,
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Section 7.05, as though such co-agents or sub-agents were the "Administrative
Agent" under the Loan Documents) as if set forth in full herein with respect
thereto. The Administrative Agent shall not be responsible for any gross
negligence or willful misconduct of any of the co-agents or sub-agents selected
by it with reasonable care.
(c) None of the Lead Arranger and Book Manager, the
Syndication Agent, the Documentation Agent or either Co-Arranger shall have any
powers or discretion under this Agreement or any of the other Loan Documents
other than those bestowed upon it as a co-agent or sub-agent from time to time
by the Administrative Agent pursuant to subsection (b) of this Section 7.01, and
each of the Lender Parties hereby acknowledges that none of the Lead Arranger
and Book Manager, the Syndication Agent, the Documentation Agent or either
Co-Arranger shall have any liability under this Agreement or under any of the
other Loan Documents.
SECTION 7.02. Administrative Agent's Reliance, Etc. Neither
the Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their own gross
negligence or willful misconduct as determined in a final, nonappealable
judgment by a court of competent jurisdiction. Without limiting the generality
of the immediately preceding sentence, the Administrative Agent:
(a) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives and accepts an Assignment and
Acceptance entered into by the Lender that is the payee of such Note,
as assignor, and an Eligible Assignee, as assignee, as provided in
Section 8.07;
(b) may consult with legal counsel (including counsel for any
of the Loan Parties), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts;
(c) makes no representation or warranty to any of the Secured
Parties and shall not be responsible to any of the Secured Parties for
any statements, representations or warranties (whether written or oral)
made in or in connection with the Loan Documents;
(d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or
conditions of any of the Loan Documents on the part of any of the Loan
Parties or to inspect the property and assets (including the books and
records) of any of the Loan Parties;
(e) shall not be responsible to any of the Secured Parties for
the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the protection or priority of any lien or
security interest created or purported to be created under or in
connection with, any of the Loan Documents or any other instrument or
document furnished pursuant thereto; and
(f) shall incur no liability under or in respect of any of the
Loan Documents by acting upon any notice, consent, order, certificate
or other instrument or writing (which may be by telegram, telecopy or
telex) believed by it to be genuine and signed or sent by the proper
party or parties.
<PAGE>
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SECTION 7.03. NationsBank, NMS, MSSF, CIBC and Affiliates.
With respect to its Commitment or Commitments, the Advances made by it and the
Note or Notes issued to it, each of NationsBank, MSSF and CIBC shall have the
same rights and powers under the Loan Documents as any of the other Lender
Parties and may exercise the same as though it were not an Agent hereunder; and
the term "Lender", "Lenders", "Lender Party", "Lender Parties", "Secured Party"
or "Secured Parties" shall, unless otherwise expressly indicated, include
NationsBank, NMS, MSSF, CIBC and their respective affiliates parties hereto in
their respective individual capacities. NationsBank, NMS, MSSF, CIBC and their
respective affiliates (whether or not parties hereto) may accept deposits from,
lend money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any of the
Loan Parties, any of their respective Subsidiaries and any Person who may do
business with or own securities of any such Loan Party or any such Subsidiary,
all as if NationsBank, NMS, MSSF and CIBC were not Agents hereunder and without
any duty to account therefor to the other Lender Parties.
SECTION 7.04. Lender Credit Decision. Each of the Lender
Parties hereby acknowledges that it has, independently and without reliance upon
any of the Agents or any of the other Lender Parties and based on the financial
statements referred to in Section 4.01 and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each of the Lender Parties also hereby acknowledges that it
will, independently and without reliance upon any of the Agents or any of the
other Lender Parties and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.
SECTION 7.05. Indemnification. (a) Each of the Lenders hereby
severally agrees to indemnify the Administrative Agent (to the extent not
promptly reimbursed by the Borrower) from and against such Lender's ratable
share (determined as provided below in this Section 7.05(a)) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by the Administrative Agent under the Loan Documents; provided, however, that
none of the Lenders shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct as determined in a final, nonappealable
judgment by a court of competent jurisdiction. In the case of any claim,
investigation, litigation or proceeding to which the indemnity in this Section
7.05(a) applies, such indemnity shall be effective whether or not such claim,
investigation, litigation or proceeding is brought by the Administrative Agent,
any of the Lender Parties or a third party. Without limiting any of the
provisions of the immediately preceding sentence, each of the Lenders hereby
agrees to reimburse the Administrative Agent promptly upon demand for its
ratable share of any costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any of the other Loan Documents, to
the extent that the Administrative Agent is not promptly reimbursed for such
costs and expenses by the Borrower. For purposes of this Section 7.05(a), the
Lenders' respective ratable shares of any amount shall be determined, at any
time, according to the sum of (i) the aggregate principal amount of all Advances
owing to the respective Lenders and outstanding at such time, (ii) in the case
of each of the Revolving Credit Lenders, such respective Revolving Credit
Lender's Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time and (iii) the aggregate Unused Revolving Credit
Commitments of the respective Revolving Credit Lenders at such time; provided
that the aggregate principal amount of all Swing Line Advances owing to the
Swing Line Bank and
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all Letter of Credit Advances owing to the Issuing Bank and outstanding at such
time shall be considered to be owed to the Revolving Credit Lenders ratably in
accordance with their respective Revolving Credit Commitments. The failure of
any of the Lenders to reimburse the Administrative Agent promptly upon demand
for its ratable share of any amount required to be paid by the Lenders to the
Administrative Agent as provided in this Section 7.05(a) shall not relieve any
of the other Lenders of its obligation hereunder to reimburse the Administrative
Agent for its ratable share of such amount, but none of the Lenders shall be
responsible for the failure of any of the other Lenders to reimburse the
Administrative Agent for such other Lender's ratable share of such amount.
(b) Each of the Revolving Credit Lenders hereby severally
agrees to indemnify the Issuing Bank (to the extent not promptly reimbursed by
the Borrower) from and against such Revolving Credit Lender's ratable share
(based upon its Revolving Credit Commitment) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against the Issuing Bank in any way relating to or
arising out of the Loan Documents or any action taken or omitted by the Issuing
Bank under the Loan Documents; provided, however, that none of the Revolving
Credit Lenders shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Issuing Bank's gross negligence or willful
misconduct as determined in a final, nonappealable judgment by a court of
competent jurisdiction. In the case of any claim, investigation, litigation or
proceeding to which the indemnity in this Section 7.05(b) applies, such
indemnity shall be effective whether or not such claim, investigation,
litigation or proceeding is brought by the Issuing Bank, any of the Lender
Parties or a third party. Without limiting any of the provisions of the
immediately preceding sentence, each of the Revolving Credit Lenders hereby
agrees to reimburse the Issuing Bank promptly upon demand for its ratable share
(based upon Revolving Credit Commitment) of any costs and expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by the
Issuing Bank in connection with the administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of its rights or responsibilities under, this
Agreement or any of the other Loan Documents, to the extent that the Issuing
Bank is not promptly reimbursed for such costs and expenses by the Borrower. The
failure of any of the Revolving Credit Lenders to reimburse the Issuing Bank
promptly upon demand for its ratable share of any amount required to be paid by
the Revolving Credit Lenders to the Issuing Bank as provided in this Section
7.05(b) shall not relieve any of the other Revolving Credit Lenders of its
obligation hereunder to reimburse the Issuing Bank for its ratable share of such
amount, but none of the Revolving Credit Lenders shall be responsible for the
failure of any of the other Revolving Credit Lenders to reimburse the Issuing
Bank for such other Revolving Credit Lender's ratable share of such amount.
(c) Without prejudice to the survival of any other agreement
of any of the Lender Parties hereunder, the agreement and obligations of each of
the Lenders contained in this Section 7.05 shall survive the payment in full of
all principal, interest and other amounts payable under or in respect of this
Agreement or any of the other Loan Documents.
SECTION 7.06. Successor Administrative Agent. The
Administrative Agent may resign as to any or all of the Facilities at any time
by giving written notice thereof to the Lender Parties and the Borrower and may
be removed as to all of the Facilities at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Administrative Agent as to such of
the Facilities as to which the Administrative Agent has resigned or been
removed; provided that, so long as no Default shall have occurred and be
continuing, the Borrower shall have the right to consent to any such successor
Administrative Agent, such consent not to be
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unreasonably withheld and to be deemed to have been given if the Borrower does
not object to the proposed successor Administrative Agent within five Business
Days of notice thereof. If no successor Administrative Agent shall have been so
appointed by the Required Lenders (and, if applicable, consented to by the
Borrower), and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lender Parties and the other Secured
Parties, appoint a successor Administrative Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any state
thereof and having a combined capital and surplus of at least $250,000,000. If
within 45 days after written notice is given of the retiring Administrative
Agent's resignation or removal as to any or all of the Facilities under this
Section 7.06 no successor Administrative Agent shall have been appointed and
shall have accepted such appointment, then on such 45th day (a) the retiring
Administrative Agent's resignation or removal shall become effective as to such
of the Facilities as to which the Administrative Agent has resigned or been
removed, (b) the retiring Administrative Agent shall thereupon be discharged
from its duties and obligations as to such Facilities under the Loan Documents
and (c) the Required Lenders shall thereafter perform all duties and obligations
of the retiring Administrative Agent as to such Facilities under the Loan
Documents until such time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided above in this Section 7.06. Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor
Administrative Agent as to all of the Facilities and upon the execution and
filing of such financing statements, or amendments thereto, and such other
instruments and notices, as may be necessary or desirable or as the Required
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted under the Collateral Documents, such successor
Administrative Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged from its duties and
obligations under the Loan Documents. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent as to less
than all of the Facilities and upon the execution and filing or recording of
such financing statements, amendments thereto, and such other instruments or
notices, as may be necessary or desirable, as the Required Lenders may request,
in order to continue the perfection of the Liens granted or purported to be
granted by the Collateral Documents, such successor Administrative Agent shall
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Administrative Agent as to such Facilities, other
than with respect to funds transfers and other similar aspects of the
administration of Borrowings under such Facilities, issuances of Letters of
Credit (notwithstanding any resignation as Administrative Agent with respect to
the Letter of Credit Facility) and payments by the Borrower in respect of such
Facilities, and the retiring Administrative Agent shall be discharged from its
duties and obligations under the Loan Documents as to such Facilities, other
than as aforesaid. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent as to any of the Facilities shall have
become effective, the provisions of this Article VII shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent as to such Facilities under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, the Notes or any of the other Loan Documents, nor
consent to any departure by any of the Loan Parties therefrom, shall in any
event be effective unless the same shall be in writing and signed by each of the
Loan Parties party to such Loan Document and directly affected by such
amendment, waiver or consent
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and signed (or in the case of the Collateral Documents, consented to) by the
Required Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that:
(a) no amendment, waiver or consent shall, unless in writing
and signed by the Borrower and all of the Lenders (other than any of
the Lenders that is, at such time, a Defaulting Lender), do any of the
following at any time:
(i) waive any of the conditions specified in Section
3.01 or 3.02 or, in the case of the Initial Extension of
Credit, Section 3.03;
(ii) change the number of Lenders or the percentage
of the Commitments or the aggregate outstanding principal
amount of Advances or the aggregate Available Amount of
outstanding Letters of Credit that, in each case, shall be
required for the Lender Parties or any of them to take any
action hereunder;
(iii) release all or substantially all of the value
of the guarantees of the Restricted Subsidiaries under the
Subsidiaries Guarantee;
(iv) release all or substantially all of the
Collateral in any transaction or series of related
transactions; or
(v) amend this Section 8.01;
(b) no amendment, waiver or consent shall, unless in writing
and signed by the Borrower and the Required Lenders and each of the
Lenders (other than any of the Lenders that is, at such time, a
Defaulting Lender) that has a Commitment under the Term A Facility, the
Term B Facility or the Revolving Credit Facility if such Lender is
directly affected by such amendment, waiver or consent:
(i) increase the Commitments of such Lender;
(ii) reduce the principal of, or stated rate of
interest on, the Notes held by such Lender or any fees or
other amounts payable hereunder to such Lender; or
(iii) postpone any date scheduled for any payment of
principal of, or interest on, the Notes held by such Lender
pursuant to Section 2.04 or 2.07 or any date fixed for any
payment of fees or the Guaranteed Obligations payable
hereunder or thereunder to such Lender; and
(c) no amendment, waiver or consent shall, unless in writing
and signed by the Borrower and the Required Lenders and, if the Lenders
under any such Facility are directly affected by such amendment, waiver
or consent, Lenders holding more than 50% of the aggregate Commitments
under the Term A Facility, the Term B Facility or the Revolving Credit
Facility, change the order of application of any reduction in the
Commitments or any prepayment of Advances between the Term A Facility
and the Term B Facility from the application thereof set forth in the
applicable provisions of Section 2.05(b) or 2.06(b), respectively, in
any manner that materially
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affects the Lenders under such Facility or permanently reduce the
Revolving Credit Facility at any time when all or a portion of the Term
Facilities remain in effect;
and provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Swing Line Bank or the Issuing Bank, as the case may
be, in addition to the Lenders required above to take such action, affect the
rights or duties of the Swing Line Bank or the Issuing Bank under this Agreement
or any of the other Loan Documents; and provided further that no amendment,
waiver or consent shall, unless in writing and signed by the Administrative
Agent in addition to the Lender Parties required above to take such action,
affect the rights or duties of the Administrative Agent under this Agreement or
any of the other Loan Documents. Notwithstanding any of the foregoing provisions
of this Section 8.01, none of the defined terms set forth in Section 1.01 shall
be amended, supplemented or otherwise modified hereafter in any manner that
would change the meaning, purpose or effect of this Section 8.01 or any section
referred to herein unless such amendment, supplement or modification is agreed
to in writing by the number and percentage of Lenders (and the Swing Line Bank,
the Issuing Bank and Administrative Agent, in each case, if applicable)
otherwise required to amend such section under the terms of this Section 8.01.
SECTION 8.02. Notices, Etc. (a) All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed, telegraphed,
telecopied, telexed or delivered:
(i) if to the Borrower, at its address at 8825 Page
Boulevard, St. Louis, Missouri 63114, Telecopier No.: (314) 253-5941,
Attention: President;
(ii) if to any of the Initial Lenders, the Swing Line Bank or
the Issuing Bank, at its Base Rate Lending Office specified opposite
its name on Part B of Schedule I hereto;
(iii) if to any of the other Lender Parties, at its Base Rate
Lending Office specified on Schedule I to the Assignment and Acceptance
pursuant to which it became a Lender Party;
(iv) if to the Administrative Agent, at its address at
Independence Center, 101 North Tryon Street, 15th Floor, NC1-001-15-04,
Charlotte, North Carolina 28255 (Telecopier No. (704) 388-9436),
Attention: Corporate Credit Services; or
(v) as to the Borrower or the Administrative Agent, at such
other address as shall be designated by such party in a written notice
to each of the other parties and, as to each other party, at such other
address as shall be designated by such party in a written notice to
both the Borrower and the Administrative Agent.
All such notices and communications shall, when mailed, telegraphed, telecopied
or telexed, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier or confirmed by telex answerback,
respectively, addressed as aforesaid, except that notices and communications to
the Administrative Agent pursuant to Article II, III or VII shall not be
effective until received by the Administrative Agent. Delivery by telecopier of
an executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of an originally executed counterpart
thereof.
(b) If any notice required under this Agreement is permitted
to be made, and is made, by telephone, actions taken or omitted to be taken in
reliance thereon by the Administrative Agent or any of
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the Lender Parties shall be binding upon the Borrower and the other Loan Parties
notwithstanding any inconsistency between the notice provided by telephone and
any subsequent writing in confirmation thereof provided to the Administrative
Agent or such Lender Party; provided that any such action taken or omitted to be
taken by the Administrative Agent or any such Lender Party shall have been in
good faith and in accordance with the terms of this Agreement.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any of the Lender Parties or the Administrative Agent to exercise, and no delay
in exercising, any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof or consent thereto; nor shall any single or partial
exercise of any such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by applicable law.
SECTION 8.04. Costs and Expenses; Indemnification. (a) The
Borrower hereby agrees to pay on demand (i) all reasonable costs and expenses of
each of the Agents in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents (including,
without limitation, (A) all due diligence, collateral review, syndication,
transportation, computer, duplication, audit, insurance, consultant and search
fees and expenses and (B) the reasonable fees and expenses of one principal
counsel for the Agents and other special and local counsel for the Agents and
the Lender Parties with respect thereto, with respect to advising each such
Agent as to its rights and responsibilities, or the protection or preservation
of rights or interests, under the Loan Documents, with respect to negotiations
with any of the Loan Parties or with other creditors of any of the Loan Parties
or any of their Subsidiaries arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all costs and expenses of each of the
Agents and the Lender Parties in connection with the enforcement of the Loan
Documents, whether in any action, suit or litigation, or in any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally
(including, without limitation, the reasonable fees and expenses of counsel for
each of the Agents and each of the Lender Parties with respect thereto).
(b) The Borrower hereby agrees to indemnify and hold harmless
each of the Agents, each of the Lender Parties and each of their respective
affiliates and their respective officers, directors, employees, agents,
representatives and advisors (each an "Indemnified Party") from, and hold each
of them harmless against, any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of
(including, without limitation, in connection with any investigation, litigation
or proceeding or preparation of a defense in connection therewith) (i) any
aspect of the Transaction, the Facilities, the actual or proposed use of the
proceeds of the Advances or the Letters of Credit, the Loan Documents, the
Related Documents or any of the transactions contemplated thereby, (ii) any
acquisition or proposed acquisition by any of the Equity Investors, any of their
respective Affiliates or any other Person of all or any portion of the Equity
Interests in or debt securities of, or all or substantially all the property and
assets of, the Borrower or any of its Subsidiaries or other Affiliates or (iii)
the actual or alleged presence of Hazardous Materials on any property of any of
the Loan Parties or any of their Subsidiaries or any Environmental Action
relating in any way to any of the Loan Parties or any of their Subsidiaries,
except to the extent such claim, damage, loss, liability or expense is
determined to have resulted from (A) such Indemnified Party's or any Related
Indemnified Party's gross negligence or willful misconduct, (B) claims of any of
the Lender Parties solely against one or more other Lender Parties (and not by
one or more Lender Parties against the Administrative Agent or one
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or more of the other Agents) that have not resulted from the action, inaction,
participation or contribution of the Borrower or its Subsidiaries or other
Affiliates or any of their respective officers, directors, stockholders,
partners, members, employees, agents, representative or advisors or (C) any
action brought by the Borrower or any of its Subsidiaries against one or more
Indemnified Parties in which the Borrower or its applicable Subsidiary, as the
case may be, prevails in a final, nonappealable judgment by a court of competent
jurisdiction. In the case of any claim, investigation, litigation or other
proceeding to which the indemnity in this Section 8.04(b) applies, such
indemnity shall be effective whether or not such claim, investigation,
litigation or proceeding is brought by any of the Loan Parties, its directors,
stockholders or creditors or an Indemnified Party or any Indemnified Party is
otherwise a party thereto and whether or not the Transaction (or any aspect
thereof) or any of the other transactions contemplated hereby are consummated.
The Borrower also hereby agrees that none of the Indemnified Parties shall have
any liability (whether direct or indirect, in contract, tort or otherwise) to
the Borrower, any of the other Loan Parties or any of its or their respective
Affiliates or its or their respective officers, directors, stockholders,
partners, members, employees, agents, representatives or advisors, and the
Borrower hereby further agrees not to assert any claim against any of the
Indemnified Parties on any theory of liability, for special, indirect,
consequential or punitive damages, arising out of or otherwise relating to any
aspect of the Transaction, the Facilities, the actual or proposed use of the
proceeds of any Advances or any Letters of Credit, the Loan Documents, the
Related Documents or any of the other transactions contemplated thereby, except,
in the case of any such Indemnified Party, for direct, as opposed to
consequential, damages that are determined to have resulted from such
Indemnified Party's or any Related Indemnified Party's gross negligence or
willful misconduct.
(c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of any of
the Lender Parties other than on the last day of the Interest Period for such
Advance, as a result of a payment or Conversion pursuant to Section 2.06 or
2.10(d), acceleration of the maturity of the Notes pursuant to Section 6.01 or
for any other reason, or by an Eligible Assignee to any of the Lender Parties
other than on the last day of the Interest Period for such Advance upon an
assignment of rights and obligations under this Agreement pursuant to Section
8.07 as a result of a demand by the Borrower pursuant to Section 8.07(a), or if
the Borrower fails to make any payment or prepayment of an Advance for which a
notice of prepayment has been given or that is otherwise required to be made,
whether pursuant to Section 2.04, 2.06 or 6.01 or otherwise, the Borrower shall,
upon demand by such Lender Party, pay to the Administrative Agent for the
account of such Lender Party any amounts required to compensate such Lender
Party for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment, including, without limitation, any loss (excluding
any loss of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any Lender
Party to fund or maintain such Advance. A certificate of the Lender Party
requesting compensation pursuant to this Section 8.04(c), submitted to the
Borrower by such Lender Party (with a copy to the Administrative Agent) and
specifying therein the amount of such additional compensation (including the
basis of calculation thereof), shall be conclusive and binding for all purposes,
absent manifest error.
(d) If any of the Loan Parties fails to pay when due any
costs, expenses or other amounts payable by it under or in respect of any of the
Loan Documents (including, without limitation, fees and expenses of counsel and
indemnification payments), such amount may be paid on behalf of such Loan Party
by the Administrative Agent or any of the Lender Parties, in its sole
discretion.
(e) Without prejudice to the survival of any other agreement
of any of the Loan Parties under or in respect of this Agreement or any of the
other Loan Documents, the agreements and obligations of the Borrower contained
in Sections 2.10 and 2.12 and in this Section 8.04 shall survive the payment in
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full of principal, interest and all other amounts payable under or in respect of
this Agreement or any of the other Loan Documents.
SECTION 8.05. Right of Setoff. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each of the Agents and the Lender Parties and each
of their respective affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by applicable law, to set off and
otherwise apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Agent, such Lender Party or such affiliate to or for the credit or the
account of the Borrower against any and all of the Obligations of the Borrower
now or hereafter existing under and in respect of this Agreement and the other
Loan Documents, irrespective of whether such Agent or such Lender Party shall
have made any demand under this Agreement or any such other Loan Document and
although such Obligations may be unmatured. Each of the Agents and the Lender
Parties hereby agrees promptly to notify the Borrower after any such setoff and
application is made by such Agent or such Lender Party, as the case may be, or
any of its affiliates; provided, however, that the failure to give such notice
shall not affect the validity of such setoff and application. The rights of each
of the Agents and each of the Lender Parties and their respective affiliates
under this Section 8.05 are in addition to any other rights and remedies
(including, without limitation, other rights of setoff) that such Agent, such
Lender Party and their respective affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the
Administrative Agent and when the Administrative Agent shall have been notified
by each of the Initial Lenders, the Swing Line Bank and the Initial Issuing Bank
that such Initial Lender, the Swing Line Bank and the Initial Issuing Bank has
executed it and, thereafter, shall be binding upon and inure to the benefit of,
and be enforceable by, the Borrower, each of the Agents and each of the Lender
Parties and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of all of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each of the
Lenders may, and so long as no Default has occurred and is continuing, if
demanded by the Borrower (following (i) a demand by such Lender for the payment
of additional compensation pursuant to Section 2.10(a), 2.10(b) or 2.12, (ii) an
assertion by such Lender pursuant to Section 2.10(c) or 2.10(d) that it is
impractical or unlawful for such Lender to make Eurodollar Rate Advances or
(iii) a refusal by such Lender to approve any amendment or waiver of, or consent
to departure from, any of the terms or conditions of this Agreement or any of
the other Loan Documents; provided that the Borrower may not demand the
replacement of one or more Lenders pursuant to this clause (iii) holding, in the
aggregate, more than 10% of the aggregate Commitments under all of the
Facilities as of the date of any such proposed demand or the date of any such
proposed amendment, waiver or consent), upon at least five Business Days' notice
to such Lender and the Administrative Agent, each of such Lenders will, assign
to one or more Persons all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment or
Commitments, the Advances owing to it and the Note or Notes held by it);
provided, however, that:
(A) each such assignment with respect to any of the Facilities
shall be of a uniform, and not a varying, percentage of all rights and
obligations under and in respect of such Facility;
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(B) except in the case of an assignment to a Person that
immediately prior to such assignment was a Lender or an affiliate or an
Approved Fund of a Lender or an assignment of all of a Lender's rights
and obligations under one or more of the Facilities, the aggregate
amount of the Commitments of the assigning Lender under all of the
Facilities being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $1,000,000 or such other
amount as the Administrative Agent and the assigning Lender and, so
long as no Default has occurred and is continuing, the Borrower shall
agree;
(C) each such assignment shall be to an Eligible Assignee;
(D) each such assignment made as a result of a demand by the
Borrower pursuant to this Section 8.07(a) shall be arranged by the
Borrower with the approval of the Administrative Agent, which approval
shall not be unreasonably withheld or delayed, and either shall be an
assignment of all of the rights and obligations of the assigning Lender
under this Agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other
such assignments that, in the aggregate, cover all of the rights and
obligations of the assigning Lender under this Agreement;
(E) no Lender shall be obligated to make any such assignment
as a result of a demand by the Borrower pursuant to this Section
8.07(a) unless and until such Lender shall have received one or more
payments from one or more Eligible Assignees in an aggregate amount at
least equal to the aggregate outstanding principal amount of all
Advances owing to such Lender, together with accrued interest thereon
to the date of payment of such principal amount, and from the Borrower
and/or one or more Eligible Assignees in an aggregate amount equal to
all other amounts payable to such Lender under this Agreement and the
Notes (including, without limitation, any amounts owing under Sections
2.10, 2.12 and 8.04);
(F) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment; and
(G) the Lender assignor (or, if such assignment is being made
pursuant to a demand by the Borrower therefor under this Section
8.07(a), the Borrower or the Lender assignee) shall pay to the
Administrative Agent a processing and recordation fee of $3,500.
(b) The Issuing Bank may assign to any other Person all, but
not a portion of, its rights and obligations under the undrawn portion of its
Letter of Credit Commitment at any time; provided, however, that:
(i) each such assignment shall be to an Eligible Assignee;
and
(ii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $3,500.
(c) The Swing Line Bank may not assign its rights and
obligations hereunder, but may terminate all such rights and obligations if, at
any time, the Swing Line Bank ceases to have a Revolving
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Credit Commitment in an amount at least equal to the amount of the Swing Line
Facility on the date of this Agreement.
(d) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in such Assignment and Acceptance,
(i) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or the
Issuing Bank hereunder and (ii) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (other than
its rights under Sections 2.10, 2.12 and 8.04 (and other similar provisions of
the other Loan Documents that are specified under the terms of such other Loan
Documents to survive the payment in full of the Obligations of the Loan Parties
under and in respect of the Loan Documents) to the extent any claim thereunder
relates to an event arising prior to such assignment) and be released from its
obligations (other than its obligations under Section 7.05 to the extent any
claim thereunder relates to an event arising prior to such assignment) under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(e) By executing and delivering an Assignment and Acceptance,
the Lender or the Issuing Bank assignor thereunder and the assignee thereunder
(or, solely with respect to the assignments and assumptions of the Existing
Advances being made on the Effective Date pursuant to Section 2.01(a), 2.01(b)
or 2.01(c), by executing and delivering this Agreement, the Existing Lenders and
the other Initial Lenders) confirm to and agree with each other and the other
parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance
(or, in the case of the Existing Lenders, this Agreement), such
assigning Lender or Issuing Bank makes no representation or warranty
and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents, or the execution,
legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, this
Agreement or any of the other Loan Documents, or any other instrument
or document furnished pursuant hereto or thereto;
(ii) such assigning Lender or Issuing Bank makes no
representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any of the other Loan
Parties or the performance or observance by the Borrower or any of the
other Loan Parties of any of its Obligations under or in respect of any
of the Loan Documents, or any other instrument or document furnished
pursuant thereto;
(iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance
upon any of the Agents, such assigning Lender or any of the other
Lender Parties and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement;
<PAGE>
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(v) such assignee confirms that it is an Eligible Assignee;
(vi) such assignee appoints and authorizes each of the Agents
to take such action as an agent on its behalf and to exercise such
powers and discretion under the Loan Documents as are delegated to such
Agent by the terms hereof, together with such powers and discretion as
are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender Party.
With respect to the assignments and assumptions of the Existing Advances being
made on the Effective Date pursuant to Section 2.01(a), 2.01(b) or 2.01(c), by
executing and delivering this Agreement, each of the Existing Lenders and each
of the other Initial Lenders hereby represents and warrants that its name set
forth on Schedule I hereto is its legal name, that it is the legal and
beneficial owner of the interest or interests being assigned by it hereunder and
that such interest or interests are free and clear of any adverse claim.
(f) The Administrative Agent, acting for this purpose (but
only for this purpose) as the agent of the Borrower, shall maintain at its
address set forth in Section 8.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lender Parties and the Commitment under each of the
Facilities of, and principal amount of the Advances owing under each of the
Facilities to, each of the Lender Parties from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Administrative Agent and the Lender
Parties shall treat each Person whose name is recorded in the Register as a
Lender Party hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower, any of the Agents or any of the Lender
Parties at any reasonable time and from time to time during normal business
hours and upon reasonable prior notice.
(g) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender or Issuing Bank and an assignee, together with any Note
or Notes subject to such assignment, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower. In the case of any assignment by a Lender, within ten
Business Days after its receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Administrative Agent in exchange for
the surrendered Note or Notes a new Note or Notes from the Borrower payable to
or to the order of such Eligible Assignee in an amount equal to the Commitment
assumed by it under each of the Facilities pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment under one or
more of the Facilities, a new Note or Notes from the Borrower payable to or to
the order of the assigning Lender in an amount equal to the Commitment retained
by it under each such Facility. Each of the new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of Exhibit A-1,
A-2 or A-3 hereto, as appropriate.
(h) Each of the Lender Parties may sell participations to one
or more Persons (other than any of the Loan Parties or any of their respective
Affiliates) in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment or
Commitments, the Advances owing to it and the Note or Notes, if any, held by
it); provided, however, that:
<PAGE>
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(i) such Lender Party's obligations under this Agreement
(including, without limitation, its Commitments) shall remain
unchanged;
(ii) such Lender Party shall remain solely responsible to the
other parties hereto for the performance of such obligations;
(iii) such Lender Party shall remain the holder of any such
Note for all purposes of this Agreement;
(iv) the Borrower, the Administrative Agent and the other
Lender Parties shall continue to deal solely and directly with such
Lender Party in connection with such Lender Party's rights and
obligations under and in respect of this Agreement and the other Loan
Documents; and
(v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of any of the
Loan Documents, or any consent to any departure by any of the Loan
Parties therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or stated rate of interest on,
the Notes or any fees or other amounts payable hereunder, in each case
to the extent subject to such participation, or postpone any date
scheduled for any payment of principal of, or interest on, the Notes
pursuant to Section 2.04 or 2.07 or any date fixed for the payment of
any fees or the Guaranteed Obligations payable hereunder or thereunder,
in each case to the extent subject to such participation, or release
all or substantially all of the Collateral in any transaction or series
of related transactions.
(i) Any of the Lender Parties may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 8.07, disclose to the assignee or participant or proposed assignee
or participant, as the case may be, any information relating to the Borrower or
any of its Subsidiaries or to any aspect of the Transaction that has been
furnished to such Lender Party by or on behalf of the Borrower or any of its
Subsidiaries; provided, however, that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any Confidential Information received by it from
such Lender Party on substantially the same terms as those set forth in Section
8.09.
(j) Any of the Lender Parties may at any time create a
security interest in all or any portion of its rights under this Agreement
(including, without limitation, the Advances owing to it and the Note or Notes
held by it) in favor of any Federal Reserve Bank in accordance with Regulation A
of the Board of Governors of the Federal Reserve System.
SECTION 8.08. No Liability of the Issuing Bank. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
the Issuing Bank nor any of its officers or directors shall be liable or
responsible for:
(a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection
therewith;
(b) the validity, sufficiency or genuineness of any documents,
or of any endorsement thereon, even if such documents should prove to
be in any or all respects invalid, insufficient, fraudulent or forged;
<PAGE>
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(c) payment by the Issuing Bank against presentation of any
documents that do not comply with the terms of a Letter of Credit,
including the failure of any documents to bear any reference or
adequate reference to the Letter of Credit, unless such documents are
substantially different from the applicable form specified in such
Letter of Credit; or
(d) any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit;
except that the Borrower shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Borrower, to the extent of any direct, but
not consequential, damages suffered by the Borrower that the Borrower proves
were caused by (i) the Issuing Bank's willful misconduct or gross negligence as
determined in a final, nonappealable judgment by a court of competent
jurisdiction in determining whether documents presented under any Letter of
Credit comply with the terms of the Letter of Credit or (ii) the Issuing Bank's
failure to make lawful payment under a Letter of Credit after the presentation
to it of a draft and certificates strictly complying with the terms and
conditions of the Letter of Credit. In furtherance and not in limitation of the
foregoing, the Issuing Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
SECTION 8.09. Confidentiality. Neither any of the Agents nor
any of the Lender Parties shall disclose any Confidential Information to any
Person without the consent of the Borrower, other than (a) to such Agent's or
such Lender Party's respective affiliates and their respective officers,
directors, employees, agents, representatives, attorneys, auditors and other
advisors on a confidential basis, (b) to one or more of the other Agents or
other Secured Parties, (c) to actual or prospective Eligible Assignees and
participants, in each case on a confidential basis and otherwise in accordance
with Section 8.07(i), (d) as required by any applicable Requirements of Law or
by subpoena or any other judicial or other legal process, (e) to any rating
agency when required by it; provided that, prior to any such disclosure, such
rating agency shall undertake to preserve the confidentiality of any
Confidential Information received by it from such Lender Party, (f) as requested
or required by any Governmental Authority or any state, federal or foreign
authority or examiner regulating banks or banking, (g) to any other Person to
which such disclosure may be necessary in connection with any claim, suit,
litigation or proceeding to which such Agent or such Lender Party is a party and
(h) if an Event of Default shall have occurred and be continuing, to the extent
such Agent or such Lender Party reasonably determines that such disclosure is
necessary in the enforcement of or for the protection of the rights and remedies
afforded to it under this Agreement or any of the other Loan Documents.
SECTION 8.10. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different 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. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an originally executed
counterpart of this Agreement.
SECTION 8.11. Governing Law; Jurisdiction, Etc. (a) This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property and assets, to the
nonexclusive jurisdiction of any New York state court or any federal court of
the United States of America sitting in New York City, New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any of the other Loan
<PAGE>
-148-
Documents to which it is a party, or for recognition or enforcement of any
judgment in respect thereof, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York state court or, to
the fullest extent permitted by applicable law, in any such federal court. Each
of the parties hereto hereby irrevocably consents to the service of copies of
any summons and complaint and any other process which may be served in any such
action or proceeding by certified mail, return receipt requested, or by
delivering a copy of such process to such party, at its address specified in
Section 8.02, or by any other method permitted by applicable law. Each of the
parties hereto hereby agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by applicable law. Nothing
in this Agreement shall affect any right that any of the parties hereto may
otherwise have to bring any action or proceeding relating to this Agreement or
any of the other Loan Documents in the courts of any jurisdiction.
(c) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any action
or proceeding arising out of or relating to this Agreement or any of the other
Loan Documents to which it is a party in any New York state court or federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 8.12. Waiver of Jury Trial. Each of the Borrower, the
Agents and the Lender Parties hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to this Agreement, any of the other
Loan Documents, any documents delivered pursuant to the Loan Documents, the
Advances, the Letters of Credit, any aspect of the Transaction or any of the
other transactions contemplated hereby or thereby or the actions of any of the
Agents or any of the Lender Parties in the negotiation, administration,
performance or enforcement thereof.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
THE BORROWER
UNITED INDUSTRIES CORPORATION
By ________________________________________
Name:
Title:
THE AGENTS
NATIONSBANK, N.A., as Administrative Agent
By ________________________________________
Name:
Title:
NATIONSBANC MONTGOMERY SECURITIES
LLC, as Lead Arranger and Book Manager
and a Co-Arranger
By ________________________________________
Name:
Title:
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agent and a Co-Arranger
By ________________________________________
Name:
Title:
<PAGE>
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CANADIAN IMPERIAL BANK OF
COMMERCE, as Documentation Agent
By ________________________________________
Name:
Title:
THE EXISTING LENDERS AND
THE INITIAL LENDER PARTIES
NATIONSBANK, N.A., as an Existing Lender,
an Initial Lender and the Initial Issuing Bank
By ________________________________________
Name:
Title:
MORGAN STANLEY SENIOR FUNDING, INC.
as an Existing Lender and an Initial Lender
By ________________________________________
Name:
Title:
CIBC INC., as an Existing Lender and an Initial
Lender
By ________________________________________
Name:
Title:
Exhibit 10.16
-------------
LEASE
By and between
REX REALTY CO., Lessor
and
UNITED INDUSTRIES CORPORATION, Lessee
Effective Date of Lease: December 1, 1995
"Plant II" at 8458-8464 Industrial Drive
Vinita Park, St. Louis County, Missouri
(Consisting of Chemsico Division Offices and Manufacturing, facilities)
<PAGE>
LEASE INDEX
8458-8464 Chapin Industrial Drive
Vinita Park, St. Louis County, Missouri
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
1. Parties 1
2. Premises 1
3. Term 1
4. Rent 1
4.1 When and Where Payable 1
4.2 Amount of Rent 1
4.3 Rental for Renewal Terms 1
5. Use 2
5.1 Use 2
5.2 Compliance with Law at Date of Lease 2
5.3 Condition of Premises at Date of Lease 2
6. Maintenance, Repairs and Modifications 2
6.1 Lessee's Obligations 2
6.2 Condition on Termination 3
6.3 Lessor's Rights 3
6.4 Lessor's Obligations 3
6.5 Modifications of Premises by Lessee 3
6.6 Lessee's Trade Fixtures 4
7. Insurance and Indemnification 4
7.1 Insuring Party; Lessee's Obligation for Cost of All Insurance 4
7.2 Liability Insurance 5
7.3 Property Insurance 5
7.4 Insurance Policies 6
7.5 Waiver of Subrogation 6
7.6 Indemnity 6
7.7 Exemption of Lessor from Liability 7
8. Damage or Destruction 7
8.1 Partial Damage - Insured 7
8.2 Partial Damage - Uninsured 8
8.3 Total Destruction 8
8.4 Damage Near End of Term 8
8.5 Abatement of Rent; Lessee's Remedies 8
8.6 Termination - Advance Payments 9
8.7 Waiver 9
9. Property Taxes 9
9.1 Real Property Taxes 9
9.2 Definition of "Real Property Taxes" 9
9.3 Joint Assessment 10
i
<PAGE>
<CAPTION>
LEASE INDEX
8458-8464 Chapin Industrial Drive
Vinita Park, St. Louis County, Missouri
<S> <C> <C>
9.4 Personal Property Taxes 10
10. Utilities 10
11. Assignment and Subletting 10
11.1 Lessor's Consent Required 10
11.2 Named Lessee Affiliate 10
11.3 No Release of Named Lessee 11
11.4 Attorneys' Fees 11
12. Defaults; Remedies 11
12.1 Default by Lessee 11
12.2 Remedies 12
12.3 Default by Lessor 13
12.4 Late Charges 13
13. Condemnation 13
14. Interest 14
15. General Provisions 14
15.1 Estoppel Certificate; Lessee's Financials 14
15.2 Definition of Lessor 15
15.3 Definition of Lessee 15
15.4 Severability 16
15.5 Time is of the Essence 16
15.6 Captions 16
15.7 Incorporation of Prior Agreements; Amendments 16
15.8 Notices 16
15.9 Waivers 16
15.10 Recording 17
15.11 Holding Over 17
15.12 Cumulative Remedies 17
15.13 Covenants and Conditions 17
15.14 Binding Effect; Choice of Law 17
15.15 Subordination 17
15.16 Attorneys' Fees 18
15.17 Lessor's Access 18
15.18 Signs and Auctions 18
15.19 Merger 18
15.20 Corporate Authority 18
15.21 Approvals and Consents 18
15.22 Quiet Possession 19
15.23 Options 19
ii
<PAGE>
<CAPTION>
LEASE INDEX
8458-8464 Chapin Industrial Drive
Vinita Park, St. Louis County, Missouri
<S> <C> <C>
15.24 Multiple Tenant Property Rules and Regulations 19
15.25 Insuring Party 19
15.26 When Lessor is Obligated 19
15.27 Effect of Lease on Existing Tenancies 19
</TABLE>
iii
<PAGE>
LEASE
-----
1. Parties. This Lease, dated effective as of December 1, 1995, is made by and
between Rex Realty Co., a Delaware corporation ("Lessor") and United
Industries Corporation, a Delaware corporation ("Lessee").
2. Premises. Lessor leases to Lessee and Lessee leases from Lessor for the
Term, at the rent, and subject to all of the provisions of this Lease, that
certain real property, together with all improvements thereon, if any,
situated in the County of St. Louis, State of Missouri, known and numbered
as 8458-8464 Chapin Industrial Drive, consisting of an office and
manufacturing plant, of approximately 85,500 square feet, situated on
approximately 3.3 acres of land (the "Premises"). A legal description of the
land is described on Exhibit A attached hereto and incorporated herein by
this reference.
3. Term. The "Terrn" of this Lease shall commence on December 1, 1995,
("Commencement Date") and continue through December 31, 1999. Thereafter the
Term shall automatically be extended on a year-to-year basis from January 1
through December 31 of each year through and until December 31, 2010, unless
either party elects to terminate such year-to-year extension by giving
Termination Notice in which case the Term shall terminate at the end of the
year following the year during which such Termination Notice is given.
4. Rent.
4.1 When and Where Payable. Lessee shall pay rent to Lessor for the
Premises, without offset or demand, in advance, on the first day of
each month of the Term. Rent for any period during the Term which is
for less than one month shall be a pro rata portion of the monthly rent
based on a month of thirty (30) days. Rent shall be payable in lawful
money of the United States to Lessor at Lessor's address stated herein
or to such other persons or at such other places as Lessor may
designate by Notice to Lessee.
4.2 Amount of Rent Rent for the period from the Commencement Date to
December 31, 1999, shall be at the monthly rate of Thirty Thousand Five
Hundred Sixty-Six and 25/100 Dollars ($30,566.25) (bemig an annualized
amount of $366,795.00) ($4.29/sq. ft.).
4.3 Rental for Renewal Terms. The parties shall no later than ninety (90)
days prior to expiration of the then current Term or Renewal Term agree
upon Rent for the next Renewal Term.
1
<PAGE>
5. Use.
5.1 Use. The Premises shall be used and occupied for any lawful purpose.
Lessee shall comply at all times with all federal, state and local
ordinances and regulations that apply to the Premises or Lessee's
business. Lessee covenants that it will commit no nuisance or waste on
the Premises. 5.2 Compliance with Law at Date of Lease.
5.2 Compliance with Law at Date of Lease.
(a) Lessor represents to Lessee that, to the best of Lessor's
knowledge, as of the date of this Lease, the Premises do not violate
any existing applicable building code regulation. If it be determined
that a violation exists at the date hereof, then it shall be the
obligation of Lessor, after Notice from Lessee, at Lessor's sole cost
and expense, to promptly rectify any such violation. If Lessee does not
give Notice of any such violation to Lessor within one (1) year after
the Comrnencement Date, it shall be conclusively deemed that such
violation did not exist at the date hereof and the correction of any
violation shall be the obligation of the Lessee.
(b) Except as otherwise provided in ss.5.2(a), Lessee shall, at
Lessee's expense, comply promptly with all applicable laws and
regulations in effect during any part of the Term in respect of the
Premises. Lessee shall not use nor permit the use of the Prermises in
any manner that will tend to create waste, or constitute nuisance, or
disturb Lessor or other tenants of Lessor, if any.
5.3 Condition of Premises at Date of Lease. Except as provided in
ss.5.2(a), Lessee hereby accepts the Premises in the condition existing
as of the date hereof, subject to all applicable laws and regulations
in respect of the Premises.
6. Maintenance, Repairs and Modifications.
6.1 Lessee's Obligations. Lessee shall keep the Premises and every part
thereof in good order, condition and repair, structural and
nonstructural (whether or not the part of the Premises requiring
repair, or the means of repairing the same are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs
occurs as a result of Lessee's use, any prior use, the elements or the
age of the Premises) including, without limiting the generality of the
foregoing, all plumbing, heating, air conditioning, ventilating,
electrical and lighting facilities and equipment, fixtures, walls
(interior and exterior), foundations, ceilings, roofs (interior and
exterior), floors, windows, doors; plate glass and skylights, and all
landscaping, driveways, walkways, parking lots, fences and signs
located on and adjacent to the Premises.
6.2 Condition On Termination. On the last day of the Term, Lessee shall
surrender the Premises to Lessor in the same condition as at the
Comniencement Date except for reasonable wear and tear and for
Modifications made in accordance with ss.6.5 (which
2
<PAGE>
Lessor does not require Lessee to remove). Lessee shall repair any
damage to the Premises occasioned by the removal of Lessee's trade
fixtures, furnishings and equipment which repair shall include, but is
not limited to patching and filling of holes and repair of structural
damage, if any.
6.3 Lessor's Rights. If Lessee fails to perform Lessee's obligations under
this ss.6, Lessor may (but shall not be required to) enter the
Premises, after ten (10) days' prior Notice to Lessee (except that no
prior Notice shall be required if Lessor believes prompt action is
required), and put the same in good order, condition and repair, and
the cost thereof together with interest thereon at the rate per annum
stated in ss.14 shall become due and payable as additional rent to
Lessor together with Lessee' next rent installment.
6.4 Lessor's Obligations. Except for the obligations of Lessor under
ss.5.2(a) (relating to Lessor's representation), ss.8 (relating to
destruction of the Premises) and ss.13 (relating to condemnation of the
Premises), it is intended by the parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair or maintain the
Premises, whether structural or nonstructural, all of which obligations
are intended to be obligations of Lessee. Lessee expressly waives the
benefit of any law or Judicial decision now or hereafter in effect
which would require Lessor to repair or maintain the Premises or which
would afford Lessee the right to (i) make repairs at Lessor's expense,
or (ii) terminate this Lease because of Lessor's failure to keep the
Premises in good order, condition and repair.
6.5 Modifications of Premises by Lessee.
(a) Lessee shall not, without Lessor's prior written approval, make any
Modifications in, or about the Premises, except for nonstructural items
not exceeding $5,000 in cost. "Modifications" include but is not
limited to structural and nonstructural alterations, additions and
improvements such as but not limited to partitions, electrical,
plumbing, heating, ventilating and air cooling equipment and work.
Lessor may require that Lessee remove any or all Modifications at the
expiration of the Term, and restore the Premises to the same condition
as at the Commencement Date. Lessor may require Lessee to provide to
Lessor, at Lessee's sole cost and expense, a payment and performance
bond in an amount equal to one and one-half times the estimated cost of
any Modifications which Lessor may approve. Should Lessee make any
Modifications without the prior written approval of Lessor, Lessor may
require that Lessee remove any or all of the same at any time.
(b) Detailed plans and drawings of any proposed Modifications in or
about the Premises that Lessee shall desire to make shall be presented
to Lessor. If Lessor approves, such approval shall be deemed
conditioned on Lessee acquiring all pen-nits from appropriate
governmental agencies, the furnishing of a copy thereof to Lessor prior
to the comrnencement of the work, and the compliance by Lessee with all
conditions of said permits in a prompt and expeditious manner. At
Lessor's request,
3
<PAGE>
Lessee shall furnish to Lessor three (3) full sets of as-built plans
detailing such Modifications.
(c) Lessee shall pay, when due, all claims for labor and materials
furnished or alleged to have been furnished to or for use 'in, on or
about the Premises, which claims are or may be secured by any mechanics
or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' Notice prior to
the commencement of any Modifications work, and Lessor shall have the
right to post statements of non-responsibility in or on the Premises.
If Lessee desires to contest the validity of any lien, claim or demand,
then Lessee shall, at its sole expense, defend and indemnify Lessor
against the same and shall pay and satisfy any adverse judgment that
may be rendered thereon before the enforcement thereof against Lessor
or the Premises. If Lessor shall require, Lessee shall furnish to
Lessor a surety bond satisfactory to Lessor indemnifying Lessor against
liability for, and holding the Premises free from the effect of, any
judgment, lien or claim.
(d) Unless Lessor requires their removal, as provided in ss.6.5(a), all
Modifications, which may be made in, on or about the Premises, shall
become the property of Lessor and remain on and be surrendered with the
Premises at the end of the Term.
6.6 Lessee's Trade Fixtures. Lessee's trade fixtures, furnishings and
equipment, other than items affixed to the Premises so that they cannot
be removed without material damage to the Premises, shall remain the
property of Lessee and may be removed by Lessee, subject to the
provisions of ss.6.2. Any of Lessee's trade fixtures, furnishings or
equipment which remain at the Premises after the end of the Term may be
removed and disposed of by Lessor (at Lessee's cost and expense)
without liability or Notice to Lessee.
7. Insurance and Indemnification.
7.1 Insuring Party; Lessee's Obligation for Cost of All Insurance.
(a) "Insuring Party" means the party who has the obligation to obtain
and keep in force insurance required by this Lease. The Insuring Party
is designated in ss. 15-25 hereof. Whether the Insuring Party is the
Lessor or the Lessee, the Lessee shall, as additional rent for the
Premises, pay the cost of all insurance. If Lessor is the Insuring
Party, then Lessee shall reimburse Lessor for the cost of all insurance
within ten (10) days following Lessor's Notice thereof If the Insuring
Party shall fail to obtain and keep in force any insurance required by
this Lease, the other party may, but shall not be required to obtain
such insurance and keep the same in force, at the cost and expense of
Lessee. If any such insurance has a deductible or co-payment provision,
Lessee shall be liable for the deductible or co-payment amount.
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(b) If the Premises constitute a part of a larger property, then Lessee
shall pay for any increase in the cost of insurance applicable to such
larger property if said increase is attributable to Lessee's acts,
omissions, use or occupancy of the Premises.
7.2 Liability Insurance.
(a) During the Term, the Insuring Party -shall obtain and keep in force
a policy or policies of Combined Single Limit, Bodily Injury and
Property Damage Insurance insuring Lessor and Lessee against liability
arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Subject to ss.7.2(b), such
insurance shall be a combined single limit policy 'in an amount not
less than $1,000,000.00. The policy shall contain cross liability
endorsements and shall insure performance by Lessee of the provisions
of ss.ss.7.6 and 7.7. The limits of said insurance shall not, however,
limit the liability of Lessee. If the Premises constitute a part of a
larger property said insurance shall 'include a Lessor's Protective
Liability endorsement.
(b) In the reasonable opinion of Lessor, if the minimum amount of
liability insurance stated in ss.7.2(a) is not adequate, the amount of
insurance coverage shall be increased as requested by Lessor, provided,
however that in no event shall the amount of the liability insurance
increase be more than fifty percent (50%) greater than the amount
thereof during the preceding year. Failure of Lessor to require
additional insurance coverage shall not be deemed to relieve Lessee
from any of its obligations and shall not limit Lessee's liability
under any provision of this Lease.
7.3 Property Insurance.
(a) During the Term, the Insuring Party shall obtain and keep in force
a policy or policies of insurance covering loss or damage to the
Premises, in the amount of the full replacement value thereof, as the
same may exist from time to time, but in no event less than the total
amount of promissory notes secured by liens on the Premises, against
all perils included within the classification of fire, extended
coverage, vandalism, earthquake, malicious mischief, boiler, special
extended perils (all risk) and sprinkler leakage. Said insurance shall
provide for payment of loss thereunder to Lessor or to the holders of
mortgages or deeds of trust on the Premises, as Lessor may from time to
time direct by Notice to Lessee. The Insuring Party shall, in addition,
obtain and keep in force during g the Term a policy of rental income
insurance covering a period of six (6) months, with loss payable to
Lessor, which insurance shall also cover all real estate taxes and
insurance costs for said period.
(b) If Lessor is the Insuring Party, Lessor will not insure Lessee's
trade fixtures, furnishings or equipment. If Lessee is the Insuring
Party, Lessee shall *insure its trade fixtures, furnishings and
equipment.
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7.4 Insurance Policies. Insurance required by this Lease shall be provided
by carriers reasonably satisfactory to Lessor. The Insuring Party shall
deliver to the other party copies of policies of such insurance or
certificates evidencing the existence and amounts of such insurance
with loss payable clauses satisfactory to Lessor or Lessor's mortgagee,
if so required. No such policy shall be cancelable or subject to
reduction of coverage or other modification except after twenty (20)
days' prior written Notice to Lessor. All insurance policies shall name
both Lessor and Lessee, and Lessor's mortgagee if so required, as named
additional insureds. The Insuring Party shall, within twenty (20) days
prior to the expiration of such policies, furnish the other party with
renewals or "binders" thereof The InsUn g Party shall not do or omit
doing anything which shall 'invalidate the 'insurance. Lessee shall pay
any additional insurance costs attributable to Lessee's acts,
omissions, use or occupancy of the Premises. If Lessor is the Insuring
Party, and if the insurance policies maintained hereunder cover other
properties 'in addition to the Premises, Lessor shall deliver to Lessee
a written statement showinc, in reasonable detail the manner in which
the cost of insurance payable by Lessee has been calculated.
7.5 Waiver of Subrogation. Lessee and Lessor each hereby waive any and all
rights of recovery against the other, or against the officers,
employees, agents and representatives of the other, for loss of or dama
e to such waiving party or its property or the property of others under
its control to the extent that such loss or damage is insured against
under any insurance policy in force at the time of such loss or damage.
The Insuring Party shall notify the insurance carrier or carriers of
the existence of this mutual waiver of subrogation.
7.6 Indemnity. Lessee shall defend, protect, release and indemnify Lessor
and hold Lessor harmless from and against any and all claims arising
(directly or indirectly) from Lessee's acts, omissions, use or
occupancy of the Premises and from the conduct of Lessee's business,
and from any act, omission, work or thing done, permitted or suffered
by Lessee in or about the Premises or elsewhere, and shall further
defend, protect, release, indemnify and hold harmless Lessor from and
against any and all claims arising from any default in the performance
of any obligation on Lessee's part to be performed, or arising from any
negligence of Lessee, or any of Lessee' agents, contractors, or
employees, and from and against all costs, attorneys' fees, expenses
and liabilities incurred in the defense of any such claim or any action
or proceeding brought thereon; and in case any action or proceeding be
brought against Lessor by reason of any such claim, Lessee (on Notice
from Lessor) shall defend the same at Lessee's expense by counsel
satisfactory to Lessor. Lessee shall pay Lessors attorneys' fees and
costs in participating in any action in respect of which Lessee is
required to defend or indemnify Lessor if Lessor shall decide it is to
its best interest to so participate.
7.7 Exemption of Lessor from Liability. Lessor shall not be liable for
injury to the person, or for any direct, indirect or consequential
damage or loss to the property or business or Lessee, Lessee's
employees, agents, contractors, invitees, customers, or
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other persons in, on or about the Premises, howsoever caused including,
but not limited to damage or injury caused by or resulting from fire,
steam, electricity, gas, hazardous or toxic substances, water or rain,
or from breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether resulting from conditions
arising on the Premises or on other portions of any larger property of
which the Prernises are a part, or from other sources or places, and
regardless of whether the cause of such injury or damage or the means
of repairing the same is inaccessible to Lessee. Lessor shall not be
liable for any act or omission of any other occupant, if any, of the
property of which the Premises are a part, if so.
Lessee hereby assunies all risk of and responsibility for loss and
damage to property of Lessee and others or injury or death to persons
in, on or about the Premises from any cause, and Lessee hereby waives
all claims in respect thereof against Lessor. The exemption of Lessor
from liability, and the assumptions and waivers, all as set forth in
this ss.7.7, are for the benefit of Lessor and Lessee only, shall at no
time inure to the benefit of third parties, and shall not in any way
affect or hinder any rights or claims that either Lessor or Lessee may
have against any third parties.
8. Damage or Destruction.
8.1 Partial Damage - Insured. Subject to the provisions of ss.ss.8.2, 8.3)
and 8.4, if the Premises are damacred by a casualty covered by
insurance, subject to the rights of any mortgagee of Lessor in and to
such insurance proceeds, to the extent of insurance proceeds received
by Lessor, the Lessor shall repair such damage (but not Lessee's
modifications, trade fixtures, furnishings or equipment) as soon as
reasonably possible, and the Term of this Lease shall continue in full
force and effect. If the insurance proceeds received by Lessor are not
sufficient to effect such repair, Lessor shall give Notice to Lessee of
the amount required in addition to the insurance proceeds to effect
such repair. Lessee shall contribute the required amount to Lessor
within ten (10) days after Notice from Lessor of the shortage in the
insurance. When Lessee shall contribute such amount to Lessor, Lessor
shall make such repairs as soon as reasonably possible and the Term of
this Lease shall continue in full force and effect. Lessee shall in no
event have any right to reimbursement for any such amount so
contributed.
8.2 Partial Damage - Uninsured: Insured with Proceeds Retained by
Mortgagee. Subject to the provisions of ss.ss.8.3 and 8.4, if the
Premises are damaged (except by an act or omission of Lessee in which
event Lessee shall make the repairs, at its expense) by a casualty not
covered under an insurance policy required to be maintained pursuant to
this Lease, or if such casualty is insured against under an insurance
policy but the proceeds of the insurance are retained by a mortgagee of
Lessor, Lessor may, at Lessor's option, either (i) repair such damage
as soon as reasonably possible at Lessor's expense, in which event the
Term of this Lease shall continue in full force and effect, or (ii)
give Notice to Lessee within thirty (30) days
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after the date of the occurrence of such damage of Lessor's intention
to terminate the Term of this Lease, which termination Notice shall
state the intended date of termination which shall be not less than
fifteen (15) days and not more than thirty (30) days after the date of
such Notice. If Lessor gives such termination Notice, Lessee shall have
the right within ten (10) days after the date of such termination
Notice to give its repair Notice to Lessor or Lessee's intention to
repair such damage at Lessee's expense, without reimbursement from
Lessor, in which event the Term of this Lease shall continue in full
force and effect, and Lessee shall proceed to make such repairs as soon
as reasonably possible. If Lessee does not give its repair Notice
within such ten (10) days period, the Term of this Lease shall
terminate as of the date of termination stated in Lessor's termination
Notice.
8.3 Total Destruction. If, in the reasonable opinion of Lessor, there is
total destruction of the Premises from any cause, whether or not
covered by 'insurance, (Including any total destruction required by any
public authority), then at the election of Lessor and on Notice to
Lessee the Term of this Lease shall terminate as of the date of such
total destruction which shall be the date of termination. For purposes
of this Lease, "total destruction" includes but is not limited to
damage or injury so extensive either (i) that the estimated cost of
repair and replacement exceeds 60% of the full replacement value of the
improvements constituting part of the Premises, or (ii) that the
estimated time to effect repair and replacement exceeds six (6) months.
8.4 Damage Near End of Term. If the Premises are damaged during the last
six (6) months of the then current Term of this Lease, Lessor may, at
Lessor's option, terminate the Tenn of this Lease by giving termination
Notice to Lessee within thirty (30) days after the date of occurrence
of such damage. In such case, the date of termination shall be stated
in Lessor's termination Notice and such date of termination shall not
be less than fifteen (15) days and not more than thirty (3 ) 0) days
after the date of such Notice.
8.5 Abatement of Rent; Lessee's Remedies.
(a) If the Premises are damaged, and Lessor or Lessee repairs the
Premises pursuant to the provisions of this Lease, rent for the period
in excess of six (6) months during which such damage or repair
continues shall be abated in proportion to the degree to which Lessee's
use of the Premises is impaired; provided, however, that the aggregate
amount of abatement hereunder shall not exceed the total rent payable
for a period of four (4) months. Except for abatement of rent, if any,
Lessee shall have no claim against Lessor for any loss which Lessee may
suffer by reason of any such damage or repair. There shall be no
abatement of rent for the initial six (6) months period of such damage
or repair which is covered by the rental insurance provided for in
ss.7-31(a) of this Lease.
(b) If Lessor shall be obligated to repair the Premises under the
provisions of this Lease and shall not commence such repair within
ninety (90) days after such obligation shall accrue, Lessee may, at
Lessee's option, terminate the Term of this
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Lease by giving Lessor Notice of Lessee's election to do so at any time
prior to the commencement of such repair. In such event, the Term of
this Lease shall terminate as of the date of such Notice.
8.6 Termination - Advance Payments. On termination of the Term of this
Lease pursuant to this ss.8, an equitable adjustment shall be made
concerning advance rent payments, if any, made by Lessee to Lessor.
8.7 Waiver. Lessee waives the provisions of all applicable laws and
judicial decisions which relate to termination of leases when the
property leased is damaged or destroyed, and agrees that such event
shall be governed by the provisions of this Lease.
9. Property Taxes.
9.1 Real Property Taxes. Lessee shall pay all Real Property Taxes (as
hereinafter defined) applicable to the Premises during the Terms of
this Lease. All such payments shall be made at least ten (10) days
prior to the applicable delinquency date. Lessee shall promptly furnish
Lessor with satisfactory evidence that such taxes have been paid. If
any such taxes paid by Lessee cover any period of time prior to or
after expiration of the Term, Lessee's share of such taxes shall be
equitably prorated to cover only the period of time within the tax
fiscal year during the Term. of this Lease, and Lessor shall reimburse
Lessee to the extent required. If Lessee shall fail to pay any such
taxes, Lessor shall have the right to pay the same, in which case
Lessee shall repay such amount ('including any late or delinquency
charges) to Lessor with Lessee's next rent installment together with
interest at the rate stated in ss. 14.
9.2 Definition of "Real Property Taxes". As used in this Lease, "Real
Property Taxes" shall include any form of assessment, license fee,
commercial rental tax, ad valorem tax, gross receipts, tax, levy,
penalty, or tax (other than net income, inheritance or estate taxes),
imposed by any public or private authority against any legal or
equitable interest of Lessor in the Premises or in the larger property
of which the Premises are a part, if so, or against Lessor's right to
rent or other income therefrom, or against Lessor's business of leasing
the Premises, or any tax or assessment imposed in substitution,
partially or totally, of any tax or assessment previously included
within the definition of Real Property Taxes, or any additional tax or
assessment the nature of which was previously included within the
definition of Real Property Taxes.
9.3 Joint Assessment. If the Premises are not separately assessed, Lessee's
liability shall be an equitable portion of the Real Property Taxes for
all of the property included within the tax parcel assessed, such
portion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may
be reasonably available. Lessor's reasonable determination thereof, in
good faith, shall be conclusive.
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9.4 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed against
and levied on trade fixtures, furnishings, equipment and all other
personal property of Lessee in, on or about the Premises. When
possible, Lessee shall cause said trade fixtures, furnishings,
equipment and all other personal property to be assessed and billed
separately from the property of Lessor.
(b) If any of Lessee's personal property shall be assessed with
Lessor's real property, Lessee shall pay to Lessor or to the taxing
authority the taxes attributable to Lessee within ten (10) days after
receipt of a written statement setting forth the taxes applicable to
Lessee's personal property.
10. Utilities.
Lessee shall pay for all water, gas, heat, light, power, telephone and other
utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered to Lessee, Lessee
shall pay a reasonable portion to be deterrIn ed by Lessor of all jointly
metered charges.
11. Assignment and Subletting.
11.1 Lessor's Consent Required. Subject to the provisions of ss. 11.2 ,
Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage, sublet, or encumber all or any part of Lessee's interest in
this Lease or in the Premises, without Lessor's prior written consent.
11.2 Named Lessee Affiliate. Notwithstanding the provisions of ss. 11.1
hereof, the Named Lessee may assign or sublet the Premises, or any
portion thereof, without Lessor's consent, to any entity which
controls, is controlled by or is under common control with the Named
Lessee, or to any entity resulting from merger or consolidation with
the Named Lessee or to any entity which acquires all the assets, as a
going concern, of the business of the Named Lessee that is being
conducted on the Premises, provided that said assignee or sublessee
assumes, in full, the obligations of Lessee under this Lease.
11.3 No Release of Named Lessee. Any subletting or assignment with Lessor's
consent pursuant to ss. 11.1 or without Lessor's consent pursuant to
ss. 11.2 shall not release the Named Lessee of its obligations or alter
the primary liability of the Named Lessee to pay the rent and to
perform all other obligations to be performed by Lessee hereunder. The
acceptance of rent by Lessor from any person other than the Named
Lessee shall not be deemed to be a waiver by Lessor of any provision
hereof. Consent to one assignment or subletting shall not be deemed
consent to any subsequent assignment or subletting. In the event of
default by any assignee, sublessee, or successor of the Named Lessee,
in the performance of any of the provisions hereof,
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Lessor may proceed directly against the Named Lessee without the
necessity of exhausting remedies against any assignee, sublessee or
successor or, at Lessor's option, may proceed jointly or severally
against the Named Lessee and any one or more assignees, sublessee or
successors. Lessor may consent to subsequent assignments or sublettings
or amendments to this Lease with direct or remote assignees, sublessee
or successors of the Named Lessee, without notifying the Named Lessee,
or any direct or remote assignee, sublessee or successor of the Named
Lessee, and without obtaining its or their consent thereto, and such
action shall not release the Named Lessee of liability under this
Lease.
11.4 Attorneys' Fees. In the event Lessee shall request the consent of
Lessor to any assignment or subletting, or if Lessee shall request the
approval or consent of Lessor for any act that Lessee proposes to do,
then Lessee shall pay Lessor's reasonable attorneys' fees incurred in
connection with Lessor's decision relative to granting or refusing
approval or consent.
12. Defaults; Remedies.
12.1 Default by Lessee. The occurrence of any one or more of the following
events shall constitute a default of this Lease by Lessee:
(a) Vacating the Premises or ceasing to actively conduct business at
the Premises for more than thirty (30) days, except for reasonable
periods on account of repair or reconstruction of the Premises.
(b) Failure to make any payment of rent or any other payment required
to be made by Lessee hereunder, as and when due, where such failure
shall continue for a period of five (5) days after notice thereof from
Lessor to Lessee.
(c) Failure by Lessee to observe or perform any of the provisions of
this Lease to be observed or performed by Lessee, other than described
in ss. 12. 1 (b), where such failure shall continue for a period of
thirty (30) days after Notice thereof from Lessor to Lessee; provided,
however, that if the nature of Lessee's default is such that more than
thirty (30) days are reasonably required for its cure, then Lessee
shall not be deemed to be in default if Lessee commences such cure
within ten (10) days after such Notice and thereafter diligently
pursues such cure to completion.
(d) (i) the making by Lessee of any general assignment, or general
arrangement for the benefit of creditors; (ii) filing by or against
Lessee of either a petition to have Lessee adjudicated a bankrupt or a
petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or
(iv) the attachment, execution or other judicial
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seizure of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, or by any guarantor of Lessee's obligations
hereunder, was materially inaccurate, whether intentionally so or not.
(f) The failure of Lessee to deliver an Estoppel Certificate pursuant
to ss. 15.1 of this Lease.
12.2 Remedies. In the event of any default by Lessee, the Lessor may, at any
time thereafter, with or without Notice or demand and without limiting
Lessor in the exercise of any other right or remedy, in law of equity,
which Lessor may have by reason of such default:
(a) Terminate Lessee's night to possession of the Premises in which
event Lessee shall immediately surrender possession of the Premises to
Lessor. In such event, Lessor shall be entitled to recover from Lessee
all damages incurred by Lessor by reason of such default including, but
not limited to: the cost of recovering possession of the Premises;
expenses of reletting, including renovation and alteration of the
Premises; reasonable attorneys' fees; any real estate commission paid
or payable with respect to reletting; the worth at the time of award by
the court having jurisdiction thereof of the amount by which the unpaid
rent for the balance of the Term after the time of such award exceeds
the amount of rental loss for the same period that Lessee proves could
be reasonably avoided; and that portion of any leasing commission paid
by Lessor (if so) allocable to the unexpired Term of this Lease.
(b) Maintain Lessee's right to possession of the Premises, in which
case the Term of this Lease shall continue in effect whether or not
Lessee shall have vacated the Premises. In such event, Lessor shall be
entitled to enforce all of Lessor's rights and remedies under this
Lease, including the right to recover the rent as it becomes due
hereunder, without any obligation or duty on the party of Lessor to
mitigate damage or loss. If Lessor elects the remedy provided for in
this ss. 12.2(b), then at any time thereafter, and without Notice to
Lessee, the Lessor may elect to terminate Lessee's possession of the
Premises pursuant to ss. 12.2(a) of this Lease.
(c) Pursue any other remedy now or hereafter available to Lessor under
the law of the State in which the Premises are located.
12.3 Default by Lessor. Lessor shall not be in default unless Lessor fails
to perform obligations required of Lessor within a reasonable time, but
in no event later than thirty (30) days after Notice by Lessee to
Lessor (and to the holder of any mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished
to Lessee by Notice) specifying the default complained of, provided,
however, that if the nature of Lessor's default is such that more than
thirty (30) days
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are reasonably required for its cure, then Lessor shall not be deemed
to be in default if Lessor commences such cure within said thirty (30)
days period and thereafter diligently pursues such cure to completion.
12.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee to
Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which
may be imposed on Lessor. Accordingly, if any installment of rent or
any other sum due from Lessee shall not be paid by Lessee when due,
Lessee shall pay to Lessor a late charge equal to six percent (6%) of
such overdue amount. Such late charge represents a fair and reasonable
estimate of the costs Lessor may incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's default with respect to such overdue
amount, nor prevent Lessor from exercising any other right or remedy.
Any late charge is in addition to and not in lieu of interest on the
amount due at the rate per annum stated in ss.14.
13. Condemnation. If the Premises or any portion thereof be taken under the
power of eminent domain, or be sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), the Term of this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes possession. If more than 10% of the floor area of the
improvements constituting part of the Premises, or more than 25% of the land
area constituting part of the Premises which is not occupied by any
improvements, is taken by condemnation, Lessee may, at Lessee's option, to
be exercised by Notice within ten (10) days after Lessor shall have given
Notice to Lessee of such taking (or in the absence of such Notice, within
ten (10) days after the condemning authority shall have taken possession)
terminate the Term of this Lease as of the date the condemning authority
takes possession. If Lessee does not so terminate the Term of this Lease,
the Term shall continue in full force and effect as to the portion of the
Premises remaining, except that the rent shall be equitably reduced
consistent with the degree to which Lessee's use of the Premises is reduced
by reason of the condemnation. Any award for the condemnation of all of any
part of the Premises shall be the property of Lessor, whether such award
shall be made as compensation for diminution in value of the leasehold or
for the taking of the fee, or as severance damages; provided, however, that
Lessee shall be entitled to any separate award by the condemning authority
for loss of or damage to Lessee's trade fixtures, furnishings, and removable
personal property, or for moving expenses of Lessee.
In the event that the Term of this Lease is not terminated by reason of such
condemnation, Lessor shall, to the extent of severance damages received by
Lessor in connection with such condemnation, repair any damage to the
Premises caused by such condemnation except to the extent that Lessee has
been reimbursed therefor by the condemning authority. Lessee shall pay any
amount in excess of such severance damages required to complete such repair.
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14. Interest. In addition to and not in lieu of all amounts payable by Lessee
pursuant to the provisions of this Lease, the Lessee shall pay simple
interest on the amount of every delinquent payment at a floating or
adjusting rate per annum. equal to one hundred fifty percent (150%) of the
per annum rate published or declared as "base" or "prime" by the Bank which
is in effect on the first day of the month during which the delinquency
first occurs and on the first day of each succeeding month thereafter until
the delinquency, together with interest thereon, be paid; provided, however,
that if such amount exceeds the highest amount allowed by law, then the
interest rate shall be the highest amount allowed by law. The Bank is such
financial institution doing business in the State in which the Premises are
situate as Lessor may designate from time to time by Notice to Lessee. The
accrual or payment of interest shall not excuse or cure any default by
Lessee.
15. General Provisions.
15.1 Estoppel Certificate; Lessee's Financials
(a) Within ten (10) days after Notice from Lessor, the Lessee shall
execute, acknowledge and deliver to Lessor, or to such other person as
Lessor may designate, a written statement ("Estoppel Certificate") in
form satisfactory to Lessor (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the
nature of such modification and certifying that this Lease, as so
modified, is in full force and effect), (ii) the date to which the rent
and other charges are paid in advance, if any, (iii) acknowledging that
there are not, to Lessee's knowledge, any uncured defaults on the part
of Lessor hereunder, or specifying such defaults if any are claimed and
(iv) providing such other information as Lessor may reasonably request.
Any such statement may be conclusively relied upon by Lessor and by any
prospective purchaser or encumbrances of the Premises.
(b) Lessee's failure to deliver such Estoppel Certificate within ten
(10) days after Notice from Lessor, shall be conclusive on Lessee (i)
that this Lease is in full force and effect, without modification
except as may be represented by Lessor, (ii) that there are no uncured
defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance, and shall make, constitute and
irrevocably appoint Lessor as Lessee's attorney-in-fact and in-Lessee's
name, place and stead to execute such Estoppel Certificate. Such
failure may also be considered by Lessor as a default by Lessee under
this Lease.
(c) If Lessor desires to utilize the Premises or the obligations of
Lessee under this Lease as security for any borrowing, credit or
financing desired by Lessor, then within ten (10) days after notice
from Lessor, the Lessee shall deliver to any financier designated by
Lessor such financial statements of Lessee as may be reasonably
required by such financier. All such financial statements shall be
received in confidence and shall be used only for the purposes herein
set forth.
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15.2 Definition of Lessor. "Lessor" means only the owner or owners at the
time in question of the fee title and in the event of any transfer of
such title or interest, the Lessor herein named (and in case of any
subsequent transfers the then grantor) shall be released, from and
after the date of such transfer, of all liability as respects Lessor's
obligations thereafter to be performed. Any funds in the hands of
Lessor (or the then grantor) at the time of such transfer in which
Lessee has an interest, shall be delivered to the transferee. The
obligations contained in this Lease to be performed by Lessor shall be
binding on Lessor's successors and assigns, only during their
respective periods of ownership.
15.3 Definition of Lessee. "Lessee" means (i) the party signing this Lease
as Lessee ("Named Lessee") whether the Premises are at any time
occupied by or 'in the possession of the Named Lessee or any direct or
remote assignee, sublessee or successor of the Named Lessee or any
other person claiming any rights by, through or under the Named Lessee;
and (ii) every direct and remote assignee, sublessee and successor of
the Named Lessee during whatever period such assignee, sublessee or
successor occupies or is in possession of the Premises or asserts or
has any claim or right to occupy or be in possession of the Premises;
and (iii) every other person claiming by, through or under the Named
Lessee any right to occupy or be possession of the Premises during
whatever period such person occupies or is in possession of the
Premises or asserts or has any claim or right to occupy or be in
possession of the Premises.
15.4 Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect
the validity of any other provision hereof.
15.5 Time is of the Essence. Time is of the essence.
15.6 Captions. Captions are for convenience only and are not a part of this
Lease.
15.7 Incorporation of Prior Agreements; Amendments. This Lease contains all
agreements of the parties with respect to the subject matter hereof. No
representation, declaration, promise, warranty, agreement or
understanding which is not expressed in this document, or in any
amendment of this document, shall be effective. This Lease may be
amended only in a document signed by the parties.
15.8 Notices. Any Notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified
mail, return receipt requested, addressed to Lessee or to Lessor at the
address noted below the signature of the respective parties, as the
case may be. Either party may by Notice to the other specify a
different address for Notice purposes except that on Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's
address for Notice purposes. A copy of all Notices required or
permitted to be given to Lessor hereunder shall be concurrently
transmitted to such party or parties at such addresses as Lessor may
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<PAGE>
from time to time hereafter designate by Notice to Lessee. Notices
given by personal delivery shall be deemed given on the date of
delivery, and Notices given by certified mail shall be deemed given on
the second regular business day after the date of mailing.
15.9 Waivers. No waiver by Lessor of any provision of this Lease shall be
deemed a waiver of any other provision of this Lease or of any
subsequent default by Lessee of the same or any other provision.
Lessor's consent to or approval of any act shall not be deemed to
render unnecessary the obtaining of Lessor's consent to or approval of
any subsequent act by Lessee. The acceptance of rent by Lessor shall
not be a waiver of any preceding default by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so
accepted, regardless of Lessor's knowledge of such preceding default
at the time of acceptance of such rent.
15.10 Recording. Lessee shall not record this Lease without Lessor's prior
written consent, and such recordation shall, at the option of Lessor,
constitute a non-curable default of Lessee. Each party shall, on
request of the other, execute, acknowledge and deliver to the other a
"short form" memorandum of this Lease for recording purposes.
15.11 Holding Over. If Lessee remains in possession of the Premises or any
part thereof after expiration of the Term without the express written
consent of Lessor, such occupancy shall be a tenancy from
month-to-month at a monthly rental in the amount of double the last
monthly rental during the Term, plus all other charges payable
hereunder, and subject to all provisions of this Lease which may be
applicable to a month-to-month tenancy.
15.12 Cumulative Remedies. No remedy or election available to Lessor shall
be deemed exclusive but shall be cumulative with all other remedies at
law and 'in equity available to Lessor.
15.13 Covenants and Conditions. Each provision of this Lease shall be deemed
both a covenant and a condition.
15.14 Binding Effect, Choice of Law. Subject to the provisions of ss.ss.
15.2 and 15.3 ), this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed
by the laws of the State in which the Premises are situate.
15.15 Subordination.
(a) At Lessor's option, this Lease, and the leasehold interests and
rights of Lessee, shall be subordinate to any ground lease, master or
superior lease, mortgage, deed of trust, hypothecation, or security
'interest now or hereafter affecting the Premises or any part of the
Premises, and to any and all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding such
subordination, Lessee's right to quiet possession of the Premises
during the Term shall not be disturbed so
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long as Lessee shall observe and perform all of the provisions of this
Lease to be observed and performed by Lessee. If any mortgagee,
trustee, lessor or security interest holder shall elect to have this
Lease regarded as being prior and superior to its mortgage, deed of
trust, lease or security interest, and shall give Notice thereof to
Lessee, this Lease shall be deemed prior and superior to such
mortgage, deed of trust, lease or security interest, whether this
Lease is dated before or after the date of said mortgage, deed of
trust, lease or security interest, or the date or recording thereof.
(b) Lessee agrees to execute any documents required to effectuate such
subordination or to make this Lease prior and superior to any
mortgage, deed of trust, lease or security interest, as the case may
be, and failing to do so within ten (10) days after Notice from Lessor
shall make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute any
such document.
15.16 Attorney's Fees. If either party brings an action to enforce the
provisions hereof or declare rights hereunder or recover for any loss
or damage on account of the default of the other party, the prevailing
party in any such action shall be entitled to reasonable attorneys'
fees, costs of litigation and court costs to be paid by the losing
party as fixed by the court.
15.17 Lessor's Access. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting
the same, showing the same to prospective purchasers, lenders, or
tenants, and making such alterations, repairs improvements or
additions to the Premises, or to the larger property of which they are
a part, if so, as Lessor may deem necessary or desirable. Lessor may
at any time place on or about the Premises any ordinary "For Sale"
signs, and Lessor may at any time during the last 120 days of the Term
place on or about the Premises any ordinary "For Lease" signs, all
without rebate of rent or liability to Lessee.
15.18 Signs and Auctions. Lessee shall not place any sign on or visible from
the exterior of the Premises, or conduct any auction in, on or about
the Premises without Lessor's prior written consent.
15.19 Merger. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination of the Term by Lessor,
shall not work a merger, and shall, at the option of Lessor, terminate
all or any existing subtenancies or may, at the option of Lessor,
operate as an assignment to Lessor of any or all of such subtenancies.
15.20 Corporate Authority. If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and
warrants that he is duly authorized to execute and deliver this Lease
on behalf of said corporation, in accordance with a duly adopted
resolution of the Board of Directors of said corporation or in
accordance with the Bylaws of said corporation, and that this Lease is
binding on said
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corporation. If Lessee is a corporation, Lessee shall, within thirty
(30) days after execution of this Lease, deliver to Lessor a certified
copy of a resolution of the Board of Directors of Lessee authorizing
or ratifying the execution of this Lease.
15.21 Approvals and Consents. If approval or consent of one party is
required to an act of the other party, such approval or consent shall
not be unreasonably withheld.
15.22 Quiet Possession. By observing and performing all of the provisions on
Lessee's part to be observed and performed hereunder, Lessee shall
have quiet possession of the Premises for the entire Term, subject to
all of the provisions of this Lease.
15.23 Options. In the event that Lessee has any option to extend the Term,
or any option to purchase the Premises or any right of first refusal
to purchase the Premises or other property of Lessor, then each of
such options and rights are personal to the Named Lessee and may not
be exercised by any one other than (i) theNamed Lessee or (ii) an
assignee or subtenant described in ss. 11.2 of this Lease. If there
are multiple options to extend the Term of this Lease, a later option
to extend cannot be exercised urdess every prior option has been duly
exercised. Any option night referenced 'in this ss. 15.231 may be
exercised only if Lessee is not in default.
15.24 Multiple Tenant Property Rules and Regulations. In the event that the
Premises are part of a larger property, then Lessee agrees that it
will abide by, keep and observe all reasonable rules and regulations
which Lessor may make from time to time for the management, safety,
care and cleanliness of such larger property, the parking of vehicles
and the preservation of good order therein as well as for the
convenience of other occupants. Lessee will promptly pay its pro rata
share, as reasonably determined by Lessor, of any maintenance or
repair or such portion of the Premises or such portion of the larger
property of which the Premises are a part, which are common areas or
used by Lessee and others. The violation of any such rules and
regulations, or the failure to pay such pro rata share of costs, shall
be deemed a default of this Lease by Lessee.
15.25 Insuring Party. The Insuring Party under this Lease shall be the
Lessee.
15.26 When Lessor is Obligated. The submission of this document by Lessor to
Lessee does not constitute an offer or option of any kind capable of
being accepted by Lessee: Lessor will be obligated if, and only if
Lessor duly executes this document by affixing its signature hereto,
and delivers a signed copy hereof to Lessee.
15.27 Effect of Lease on Existing Tenancies. In the event any existing
leases or tenancies are in effect with respect to the Premises as of
the effective date hereof, Named Lessee nonetheless shall be directly
liable to Lessor pursuant to all terms and provisions of this Lease,
and such lease or tenancy shall effectively be deemed a sublease
between Named Lessee and such lessee or tenant, pursuant to such lease
or tenancy. Named Lessee further agrees to indemnify, defend, release
and hold
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harmless Lessor from any and all claims of such lessee or tenant,
unless due to a default by Lessor under this Lease.
19
LEASE INDEX
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LESSOR: Rex Realty Co.
LESSEE: United Industries Corporation
EFFECTIVE DATE OF LEASE: November 27, 1989
ADDRESS OR LOCATION OF PREMISES: 8453-8489 Chapin Industrial
Drive, Vinita Park, St. Louis
County, Missouri (Office/
Warehouse Building)
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
1. Parties 1
2. Premises 1
3. Term 1
4. Rent 1
4.1 When and Where Payable 1
4.2 Amount of Rent 1
5. Use 2
5.1 Use 2
5.2 Compliance with Law at Date of Lease 2
5.3 Condition of Premises at Date of Lease 3
6. Maintenance, Repairs and Modifications 3
6.1 Lessee's Obligation 3
6.2 Condition on Termination 3
6.3 Lessor's Rights 3
6.4 Lessor's Obligation 3
6.5 Modifications of Premises by Lessee 4
6.6 Modifications of Premises by Lessor 5
6.7 Lessee's Trade Fixtures 5
7. Insurance and Indemnification 6
7.1 Insuring Party; Lessee's Obligation
for Cost of All Insurance 6
7.2 Liability Insurance 6
7.3 Property Insurance 7
7.4 Insurance Policies 7
7.5 Waiver of Subrogation 7
7.6 Indemnity 8
7.7 Exemption of Lessor8from Liability 8
8. Damage or Destruction 9
8.1 Partial Damage--Insured 9
8.2 Partial Damage--Uninsured 9
8.3 Total Destruction 10
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<S> <C> <C>
8.4 Damage Near End of Term 10
8.5 Abatement of Rent; Lessee's Remedies 10
8.6 Termination--Advance Payments 10
8.7 Waiver 11
9. Property Taxes 11
9.1 Real Property Taxes 11
9.2 Definition of "Real Property Taxes" 11
10. Utilities 12
11. Assignment and Subletting 12
11.2 Lessor's Consent Required 12
11.3 Named Lessee Affiliate 12
11.4 Attorneys' Fees 13
12. Defaults; Remedies 13
12.1 Default by Lessee 13
12.2 Remedies 14
12.3 Default by Lessor 14
12.4 Late Charges 15
13. Condemnation 15
14. Interest 15
15 General Provisions 16
15.1 Estoppel Certificate; Lessee's Financials 16
15.2 Definition of Lessor 17
15.3 Definition of Lessee 17
15.4 Severability 17
15.5 Time is of the Essence 18
15.6 Captions 18
15.7 Incorporation of Prior Agreements; Amendments 18
15.8 Notices 18
15.9 Waivers 18
15.10 Recording 18
15.11 Holding Over 18
15.12 Cumulative Remedies 19
15.13 Covenants and Conditions 19
15.14 Binding Effect; Choice of Law 19
15.15 Subordination 19
15.16 Attorneys' Fees 19
15.17 lessor's Access 20
15.18 Signs and Auctions 20
15.19 Merger 20
15.20 Corporate Authority 20
15.21 Approvals and Consents 20
15.22 Quiet Possession 20
15.23 Options 20
15.24 Multiple Tenant Property Rules and Regulations 21
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<PAGE>
<S> <C> <C>
15.25 Insuring Party 21
15.26 When Lessor is Obligated 21
15.27 Effect of Lease on Existing Tenancies 21
</TABLE>
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LEASE
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1. Parties. This Lease, dated effective as of November 27, 1989, is made by
and between Rex Realty Co., a Delaware corporation ("Lessor") and United
Industries Corporation, a Delaware corporation ("Lessee").
2. Premises. Lessor leases to Lessee and Lessee leases from Lessor for the
Term at the rent, and subject to all of the provisions of this Lease, that
certain real property, together with all improvements thereon, if any, situated
in the County of St. Louis, State of Missouri, known and numbered as 8453-8489
Chapin Industrial Drive, consisting of an office and warehouse building of
approximately 87,500 square feet situated on approximately 3.6 acres of land
(the "Premises"). A legal description of the land is described on Exhibit A
attached hereto and incorporated herein by this reference.
3. Term. The "Term" of this Lease shall commence on November 27, 1989
("Commencement Date") and continue through December 31, 1999. Thereafter the
Term shall automatically be extended on a year-to-year basis from January 1
through December 31 of each year through and until December 31, 2010, unless
either party elects to terminate such year-to-year extension by giving
Termination Notice in which case, the Term shall terminate at the end of the
year following the year during which such Termination Notice is given.
4. Rent.
4.1 When and Where Payable. Lessee shall pay rent to Lessor for the
Premises, without offset or demand, in advance, on the first day of each month
of the Term. Rent for any period during the Term which is for less than one
month shall be a pro rata portion of the monthly rent based on a month of thirty
(30) days. Rent shall be payable in lawful money of the United States to Lessor
at Lessor's address stated herein or to such other persons or at such other
places as Lessor may designate by Notice to Lessee.
4.2 Amount of Rent. Rent for the period from the Commencement Date to
December 31, 1990 shall be at the monthly rate equal to the sum of (i) Twenty-
Three Thousand Five Hundred Dollars ($23,500) (being an annualized amount of
$282,000), plus (ii) an amount determined by multiplying the annual rate of
thirteen percent (13%) by the aggregate expenditures made by Lessor pursuant to
Section 6.6 of this Lease and dividing such product by twelve (12). Such
aggregate expenditures shall be determined as of the first day of the month
preceding the month for which Rent is being calculated. For each calendar year
of
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the term of this Lease following 1990 (each such year being hereafter called
"Period"), Rent for each such Period shall be at a monthly rate equal to the sum
of (a) the total amount of all rent payable for the month immediately preceding
the beginning of such Period, plus (b) one-half (1/2) of the product resulting
from multiplying that amount as described in subpart (a) hereinabove by the
percentage change in the "CPI" from the "Initial Date" to the "Measuring Date"
plus (c) an amount as determined pursuant to subpart (ii) hereinabove with
respect to any such expenditure made throughout said Period. For the Period
commencing January 1, 1991, the "Initial Date" is the "CPI" publication date
most proximately preceding the date of this Lease, and the "Measuring Date" is
the "CPI" publication date most proximately preceding December 31, 1990. For
each other Period, the Initial Date is the CPI publication date most proximately
preceding the first day of the preceding Period, and the Measuring Date is the
CPI publication date most proximately preceding the last day of the preceding
Period. "CPI" shall mean the United States Consumer Price Index for all urban
consumers published by the Bureau of Labor Statistics of the Department of
Labor, All Items Index, U.S. City Average, 1982-84 = 100. In the event that the
CPI shall be converted to a different standard reference base or otherwise
revised, the determination of rent adjustment shall be made with the use of such
conversion factor, formula or table converting the CPI as may be published by
the Bureau of Labor Statistics or if not published by the Bureau of Labor
Statistics, then as reasonably determined by Lessor. if the CPI ceases to be
published or if no conversion factor, formula or table is reasonably available,
then there shall be substituted such other index as Lessor shall reasonably
determine.
S. Use.
5.1 Use. The Premises shall be used and occupied for any lawful purpose.
Lessee shall comply at all times with all federal, state and local ordinances
and regulations that apply to the Premises or Lessee's business. Lessee
covenants that it will commit no nuisance or waste on the Premises.
5.2 Compliance with Law at Date of Lease.
(a) knowledge, as of the date of this Lease, the Premises do not
violate any existing applicable building code regulation. If it be determined
that a violation exists at the date hereof, then it shall be the obligation of
Lessor, after Notice from Lessee, at Lessor's sole cost and expense, to promptly
rectify any such violation. If Lessee does not give Notice of any such violation
to Lessor within one (1) year after the Commencement Date, it shall be
conclusively deemed that such violation did not exist at the date hereof and the
correction of any violation shall be the obligation of the Lessee.
(b) Except as otherwise provided in ss.5.2(a), Lessee shall, at
Lessee's expense, comply promptly with all applicable laws and regulations in
effect during any part of the Term in respect of the Premises. Lessee shall not
use nor permit the use of the Premises in any manner that will tend to create
waste, or constitute
5.3 Condition of Premises at Date of Lease. Except as provided in
ss.5.2(a), Lessee hereby accepts the Premises in the condition existing as of
the date hereof, subject to all applicable laws and regulations in respect of
the Premises.
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6. Maintenance, Repairs and Modifications.
6.1 Lessee's Obligations. Lessee shall keep the Premises and every part
thereof in good order, condition and repair, structural and nonstructural
(whether or not the part of the Premises requiring repair, or the means of
repairing the same are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of the Premises) including, without limiting the
generality of the foregoing, all plumbing, heating, air conditioning,
ventilating, electrical and lighting facilities and equipment, fixtures, walls
(interior and exterior), foundations, ceilings, roofs (interior and exterior),
floors, windows, doors, plate glass and skylights, and all landscaping,
driveways, walkways, parking lots, fences and signs located on and adjacent to
the Premises.
6.2 Condition on Termination. On the last day of the Term, Lessee shall
surrender the Premises to Lessor in the same condition as at the Commencement
Date except for reasonable wear and tear and for Modifications made in
accordance with 56.5 (which Lessor does not require Lessee to remove) and/or
ss.6.6. Lessee shall repair any damage to the Premises occasioned by the removal
of Lessee's trade fixtures, furnishings and equipment which repair shall
include, but is not limited to patching and filling of holes and repair of
structural damage, if any.
6.3 Lessor's Rights. If Lessee fails to perform Lessee's obligations under
this ss.6, Lessor may (but shall not be required to) enter the Premises, after
ten (10) days' prior Notice to Lessee (except that no prior Notice shall be
required if Lessor believes prompt action is required), and put the same in good
order, condition and repair, and the cost thereof together with interest thereon
at the rate per annum stated in ss.14 shall become due and payable as additional
rent to Lessor together with Lessee's next rent installment.
6.4 Lessor's Obligations. Except for the obligations of Lessor under
55.2(a) (relating to Lessor's representation), ss.6.6 (relating to Modifications
by Lessor), ss.8 (relating to destruction of the Premises) and ss.13 (relating
to condemnation of the Premises), it is intended by the parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair or maintain the
Premises, whether structural or nonstructural, all of which obligations are
intended to be obligations of Lessee. Lessee expressly waives the benefit of any
law or judicial decision now or hereafter in effect which would require Lessor
to repair or maintain the Premises or which would afford Lessee the right to (i)
make repairs at Lessor's expense or (ii) terminate this Lease because of
Lessor's failure to keep the Premises in good order, condition and repair.
6.5 Modifications of Premises by Lessee.
(a) Lessee shall not, without Lessor's prior written approval, make any
Modifications in, on or about the Premises, except for nonstructural items not
exceeding $1,000 in cost. "Modifications" include but is not limited to
structural and nonstructural alterations, additions and improvements such as but
not limited to partitioning, electrical, plumbing, heating, ventilating and air
cooling equipment and work. Lessor may require that Lessee remove any or all
Modifications at the expiration of the Term, and restore the Premises to the
same condition as at the Commencement Date. Lessor may require Lessee to provide
to
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<PAGE>
Lessor, at Lessee's sole cost and expense, a payment and performance bond in an
amount equal to one and one-half times the estimated cost of any Modifications
which Lessor may approve. Should Lessee make any Modifications without the prior
written approval of Lessor, Lessor may require that Lessee remove any or all of
the same at any time.
(b) Detailed plans and drawings of any proposed Modifications in or
about the Premises that Lessee shall desire to make shall be presented to
Lessor. If Lessor approves, such approval shall be deemed conditioned on Lessee
acquiring all permits from appropriate governmental agencies, the furnishing of
a copy thereof to Lessor prior to the commencement of the work, and the
compliance by Lessee with all conditions of said permits in a prompt and
expeditious manner. At Lessor's request, Lessee shall furnish to Lessor three
(3) full sets of as-built plans detailing such Modifications.
(c) Lessee shall pay, when due, all claims for labor and materials
furnished or alleged to have been furnished to or
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<PAGE>
for use in, on or about the Premises, which claims are or may be secured by any
mechanics or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' Notice prior to the
commencement of any Modifications work, and Lessor shall have the right to post
statements of non-responsibility in or on the Premises. if Lessee desires to
contest the validity of any lien, claim or demand, then Lessee shall, at its
sole expense, defend and indemnify Lessor against the same and shall pay and
satisfy any adverse judgment that may be rendered thereon before the enforcement
thereof against Lessor or the Premises. If Lessor shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor indemnifying Lessor
against liability for, and holding the Premises free from the effect of, any
judgment, lien or claim.
(d) Unless Lessor requires their removal, as provided in ss.6.5(a), all
Modifications, which may be made in, on or about the Premises, shall become the
property of Lessor and remain on and be surrendered with the Premises at the end
of the Term.
6.6 Modifications of Premises by Lessor.
(a) At any time and from time to time during the period commencing with
the Commencement Date hereof and ending December 31, 1991, Lessor shall at
Lessor's sole cost and expense make such Modifications to the Premises and/or
install therein for Lessee's use and enjoyment such production equipment as
identified and requested in writing by Lessee. Provided, that, Lessor shall not
be obligated to expend in the aggregate greater than One Million Dollars
($1,000,000) for any Modifications and/or production equipment requested
hereunder by Lessee; and further provided that all Modifications made to the
Premises by Lessor shall be in the nature of capital improvements or
installation of equipment and not in the nature of repair or maintenance. Any
production equipment installed by Lessor shall be maintained by Lessee at
Lessee's cost and expense during the term hereof in good operating order and
condition, except for reasonable wear and tear and destruction by casualty which
is fully insured. All Modifications and production equipment made or installed
by Lessor shall be and remain the property of Lessor. Lessor shall keep accurate
records of its expenditures made pursuant to this Section and shall provide
copies thereof to Lessee from time to time as Lessee may reasonably require.
(b) All work done by Lessor pursuant to this Section 6.6 shall be done
in a good and workmanlike manner in compliance with all applicable building,
zoning and/or other laws, ordinances, governmental regulations or requirements
and in
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accordance with the requirements of all insurors under the policies of insurance
required by the provisions of this Lease.
(c) Lessor shall, at its own cost and expense, make any repairs,
improvements, alterations, or additions to the Premises required by any
governmental authority ("Required Work") as a result of work undertaken by
Lessor pursuant to subparagraph (a)hereof, provided that Lessor shall not be
obligated to undertake any Required Work the cost of which, when added to the
cost of Lessor's performance under subparagraph (a)hereof, exceeds the
aforementioned $1,000,000 limit, in which event Lessee shall undertake such
Required Work at its sole cost and expense.
6.7 Lessee's Trade Fixtures. Lessee's trade fixtures, furnishings and
equipment, other than items affixed to the Premises so that they cannot be
removed without material damage to the Premises, shall remain the property of
Lessee and may be removed by Lessee, subject to the provisions of 56.2. Any of
Lessee's trade fixtures, furnishings or equipment which remain at the Premises
after the end of the Term may be removed and disposed of by Lessor (at Lessee's
cost and expense) without liability or Notice to Lessee.
7. Insurance and Indemnification.
7.1 Insuring Party; Lessee's Obligation for Cost of All Insurance.
(a) "Insuring Party" means the party who has the obligation to obtain
and keep in force insurance required by this Lease. The Insuring Party is
designated in ss.15.25 hereof. Whether the Insuring Party is the Lessor or the
Lessee, the Lessee shall, as additional rent for the Premises, pay the cost of
all insurance. If Lessor is the Insuring Party, then Lessee shall reimburse
Lessor for the cost of all insurance within ten (10) days following Lessor's
Notice therefor. If the Insuring Party shall fail to obtain and keep in force
any insurance required by this Lease, the other party may, but shall not be
required to obtain such insurance and keep the same in force, at the cost and
expense of Lessee. If any such insurance has a deductible or co-payment
provision, Lessee shall be liable for the deductible or co-payment amount.
(b) If the Premises constitute a part of a larger property, then Lessee
shall pay for any increase in the cost of insurance applicable to such larger
property if said increase is attributable to Lessee's acts, omissions, use or
occupancy of the Premises.
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7.2 Liability Insurance.
(a) During the Term, the Insuring Party shall obtain and keep in force
a policy or policies of Combined Single Limit, Bodily Injury and Property Damage
Insurance insuring Lessor and Lessee against liability arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Subject to ss.7.2(b), such insurance shall be a combined
single limit policy in an amount not less than $1,000,000.00. The policy shall
contain cross liability endorsements and shall insure performance by Lessee of
the provisions of ss.ss.7.6 and 7.7. The limits of said insurance shall not,
however, limit the liability of Lessee. if the Premises constitute a part of a
larger property, said insurance shall include a Lessor's Protective Liability
endorsement.
(b) In the reasonable opinion of Lessor, if the minimum amount of
liability insurance stated in ss.7.2(a) is not adequate, the amount of insurance
coverage shall be increased as requested by Lessor, provided, however that in no
event shall the amount of the liability insurance increase be more than fifty
percent (50%) greater than the amount thereof during the preceding year. Failure
of Lessor to require additional insurance coverage shall not be deemed to
relieve Lessee from any of its obligations and shall not limit Lessee's
liability under any provision of this Lease.
7.3 Property Insurance.
(a) During the Term, the Insuring Party shall obtain and keep in force
a policy or policies of insurance covering loss or damage to the Premises, in
the amount of the full replacement value thereof, as the same may exist from
time to time, but in no event less than the total amount of promissory notes
secured by liens on the Premises, against all perils included within the
classification of fire, extended coverage, vandalism, earthquake, malicious
mischief, boiler, special extended perils (all risk) and sprinkler leakage. Said
insurance shall provide for payment of loss thereunder to Lessor or to the
holders of mortgages or deeds of trust on the Premises, as Lessor may from time
to time direct by Notice to Lessee. The Insuring Party shall, in addition,
obtain and keep in force during the Term a policy of rental income insurance
covering a period of six (6) months, with loss payable to Lessor, which
insurance shall also cover all real estate taxes and insurance costs for said
period.
(b) If Lessor is the Insuring Party, Lessor will not insure Lessee's
trade fixtures, furnishings or equipment. if Lessee is the Insuring Party,
Lessee shall insure its trade fixtures, furnishings and equipment.
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7.4 Insurance Policies. Insurance required by this Lease shall be provided
by carriers reasonably satisfactory to Lessor. The Insuring Party shall deliver
to the other party copies of policies of such insurance or certificates
evidencing the existence and amounts of such insurance with loss payable clauses
satisfactory to Lessor or Lessor's mortgagee, if so required. No such policy
shall be cancelable or subject to reduction of coverage or other modification
except after twenty (20) days' prior written Notice to Lessor. All insurance
policies shall name both Lessor and Lessee, and Lessor's mortgagee if so
required, as named additional insureds. The Insuring Party shall, within twenty
(20) days prior to the expiration of such policies, furnish the other party with
renewals or "binders" thereof. The Insuring Party shall not do or omit doing
anything which shall invalidate the insurance. Lessee shall pay any additional
insurance costs attributabe to Lessee's acts, omissions, use or occupancy of the
Premises. If Lessor is the Insuring Party, and if the insurance policies
maintained hereunder cover other properties in addition to the Premises, Lessor
shall deliver to Lessee a written statement showing in reasonable detail the
manner in which the cost of insurance payable by Lessee has been calculated.
7.5 Waiver of Subrogation. Lessee and Lessor each hereby waive any and all
rights of recovery against the other, or against the officers, employees, agents
and representatives of the other, for loss of or damage to such waiving party or
its property or the property of others under its control to the extent that such
loss or damage is insured against under any insurance policy in force at the
time of such loss or damage. The Insuring Party shall notify the insurance
carrier or carriers of the existence of this mutual waiver of subrogation.
7.6 Indemnity. Lessee shall defend, protect, release and indemnify Lessor
and hold Lessor harmless from and against any and all claims arising (directly
or indirectly) from Lessee's acts, omissions, use or occupancy of the Premises
and from the conduct of Lessee's business, and from any act, omission, work or
thing done, permitted or suffered by Lessee in or about the Premises or
elsewhere, and shall further defend, protect, release, indemnify and hold
harmless Lessor from and against any and all claims arising from any default in
the performance of any obligation on Lessee's part to be performed, or arising
from any negligence of Lessee, or any of Lessee's agents, contractors, or
employees, and from and against all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon; and in case any action or*proceeding be brought
against Lessor by reason of any such claim, Lessee (on Notice from Lessor) shall
defend the
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same at Lessee's expense by counsel satisfactory to Lessor. Lessee shall pay
Lessor's attorneys' fees and costs in participating in any action in respect of
which Lessee is required to defend or indemnify Lessor if Lessor shall decide it
is to its best interest to so participate.
7.7 Exemption of Lessor from Liability. Lessor shall not be liable for
injury to the person, or for any direct, indirect or consequential damage or
loss to the property or business of Lessee, Lessee's employees, agents,
contractors, invitees, customers, or other persons in, on or about the Premises,
howsoever caused including, but not limited to damage or injury caused by or
resulting from fire, steam, electricity, gas, hazardous or toxic substances,
water or rain, or from breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause, whether resulting from conditions arising on the
Premises or on other portions of any larger property of which the Premises are a
part, or from other sources or places, and regardless of whether the cause of
such injury or damage or the means of repairing the same is inaccessible to
Lessee. Lessor shall not be liable for any act or omission of any other
occupant, if any, of the property of which the Premises are a part, if so.
Lessee hereby assumes all risk of and responsibility for loss and damage to
property of Lessee and others or injury or death to persons in, on or about the
Premises from any cause, and Lessee hereby waives all claims in respect thereof
against Lessor. The exemption of Lessor from liability, and the assumptions and
waivers, all as set forth in this Section 7.7, are for the benefit of Lessor and
Lessee only, shall at no time inure to the benefit of third parties, and shall
not in any way affect or hinder any rights or claims that either Lessor or
Lessee may have against any third parties.
8. Damage or Destruction.
8.1 Partial Damage - Insured. Subject to the provisions of ss.ss.8.2, 8.3
and 8.4, if the Premises are damaged by a casualty covered by insurance, subject
to the rights of any mortgagee of Lessor in and to such insurance proceeds, to
the extent of insurance proceeds received by Lessor, the Lessor shall repair
such damage (but not Lessee's modifications, trade fixtures, furnishings or
equipment) as soon as reasonably possible, and the Term of this Lease shall
continue in full force and effect. if the insurance proceeds received by Lessor
are not sufficient to effect such repair, Lessor shall give Notice to Lessee of
the amount required in addition to the insurance proceeds to effect such repair.
Lessee shall contribute the required amount to
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Lessor within ten (10) days after Notice from Lessor of the shortage in the
insurance. When Lessee shall contribute such amount to Lessor, Lessor shall make
such repairs as soon as reasonably possible and the Term of this Lease shall
continue in full force and effect. Lessee shall in no event have any right to
reimbursement for any such amount so contributed.
8.2 Partial Damage - Uninsured; Insured with Proceeds Retained by
Mortgagee. Subject to the provisions of ss.ss.8.3 and 8.4, if the Premises are
damaged (except by an act or omission of Lessee in which event Lessee shall make
the repairs, at its expense) by a casualty not covered under an insurance policy
required to be maintained pursuant to this Lease, or if such casualty is insured
against under an insurance policy but the proceeds of the insurance are retained
by a mortgagee of Lessor, Lessor may, at Lessor's option, either (i) repair such
damage as soon as reasonably possible at Lessor's expense, in which event the
Term of this Lease shall continue in full force and effect, or (ii) give Notice
to Lessee within thirty (30) days after the date of the occurrence of such
damage of Lessor's intention to terminate the Term of this Lease, which
termination Notice shall state the intended date of termination which shall be
not less than fifteen (15) days and not more than thirty (30) days after the
date of such Notice. If Lessor gives such termination Notice, Lessee shall have
the right within ten (10) days after the date of such termination Notice to give
its repair Notice to Lessor of Lessee's intention to repair such damage at
Lessee's expense, without reimbursement from Lessor, in which event the Term of
this Lease shall continue in full force and effect, and Lessee shall proceed to
make such repairs as soon as reasonably possible. If Lessee does not give its
repair Notice within such ten (10) days period, the Term of this Lease shall
terminate as of the date of termination stated in Lessor's termination Notice.
8.3 Total Destruction. If, in the reasonable opinion of Lessor, there is
total destruction of the Premises from any cause, whether or not covered by
insurance, (including any total destruction required by any public authority),
then at the election of Lessor and on Notice to Lessee the Term of this Lease
shall terminate as of the date of such total destruction which shall be the date
of termination. For purposes of this Lease, "total destruction" includes but is
not limited to damage or injury so extensive either (i) that the estimated cost
of repair and replacement exceeds 60% of the full replacement value of the
improvements constituting part of the Premises, or (ii) that the estimated time
to effect repair and replacement exceeds six (6) months.
8.4 Damage Near End of Term. If the Premises are damaged during the last
six (6) months of the then current Term of this
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Lease, Lessor may, at Lessor's option, terminate the Term of this Lease by
giving termination Notice to Lessee within thirty (30) days after the date of
occurrence of such damage . In such case, the date of termination shall be
stated in Lessor's termination Notice and such date of termination shall not be
less than fifteen (15) days and not more than thirty (30) days after the date of
such Notice.
8.5 Abatement of Rent; Lessee's Remedies.
(a) If the Premises are damaged, and Lessor or Lessee repairs the
Premises pursuant to the provisions of this Lease, rent for the period in excess
of six (6) months during which such damage or repair continues shall be abated
in proportion to the degree to which Lessee's use of the Premises is impaired;
provided, however, that the aggregate amount of abatement hereunder shall not
exceed the total rent payable for a period of four (4) months. Except for
abatement of rent, if any, Lessee shall have no claim against Lessor for any
loss which Lessee may suffer by reason of any such damage or repair. There shall
be no abatement of rent for the initial six (6) months period of such damage or
repair which is covered by the rental insurance provided for in ss.7.3(a) of
this Lease.
(b) If Lessor shall be obligated to repair the Premises under the
provisions of this Lease and shall not commence such repair within ninety (90)
days after such obligation shall accrue, Lessee may, at Lessee's option,
terminate the Term of this Lease by giving Lessor Notice of Lessee's election to
do so at any time prior to the commencement of such repair. In such event, the
Term of this Lease shall terminate as of the date of such Notice.
8.6 Termination - Advance Payments. On termination of the Term of this
Lease pursuant to this ss.8, an equitable adjustment shall be made concerning
advance rent payments, if any, made by Lessee to Lessor.
8.7 Waiver. Lessee waives the provisions of all applicable laws and
judicial decisions which relate to termination of leases when the property
leased is damaged or destroyed, and agrees that such event shall be governed by
the provisions of this Lease.
9. Property Taxes.
9.1 Real Property Taxes. Lessee shall pay all Real Property Taxes (as
hereinafter defined) applicable to the Premises during the Term of this Lease.
All such payments shall be made at least ten (10) days prior to the applicable
delinquency date. Lessee shall promptly furnish Lessor with
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satisfactory evidence that such taxes have been paid. If any such taxes paid by
Lessee cover any period of time prior to or after expiration of the Term,
Lessee's share of such taxes shall be equitably prorated to cover only the
period of ..time within the tax fiscal year during the Term of this Lease, and
Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to
pay any such taxes, Lessor shall have the right to pay the same, in which case
Lessee shall repay such amount (including any late or delinquency charges) to
Lessor with Lessee's next rent installment together with interest at the rate
stated in 514.
9.2 Definition of "Real Property Taxes". As used in this Lease, "Real
Property Taxes" shall include any form of assessment, license fee, commercial
rental tax, ad valorem tax, gross receipts tax, levy, penalty, or tax (other
than net income, inheritance or estate taxes), imposed by any public or private
authority against any legal or equitable interest of Lessor in the Premises or
in the larger property of which the Premises are a part, if so, or against
Lessor's right to rent or other income therefrom, or against Lessor's business
of leasing the Premises, or any tax or assessment imposed in substitution,
partially or totally, of any tax or assessment previously included within the
definition of Real Property Taxes, or any additional tax or assessment the
nature of which was previously included within the definition of Real Property
Taxes.
9.3 Joint Assessment. If the Premises are not separately assessed, Lessee's
liability shall be an equitable portion of the Real Property Taxes for all of
the property included within the tax parcel assessed, such portion to be
determined by Lessor from the respective valuations assigned in the assessor's
work sheets or such other information as may be reasonably available. Lessor's
reasonable determination thereof, in good faith, shall be conclusive.
9.4 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed against
and levied on trade fixtures, furnishings, equipment and all other personal
property of Lessee in, on or about the Premises. When possible, Lessee shall
cause said trade fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the property of Lessor.
(b) If any of Lessee's personal property shall be assessed with
Lessor's real property, Lessee shall pay to Lessor or to the taxing authority
the taxes attributable to Lessee within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's personal property.
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10. Utilities.
Lessee shall pay for all water, gas, heat, light, power, telephone and
other utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered to Lessee, Lessee shall
pay a reasonable portion to be determined by Lessor of all jointly metered
charges.
11. Assignment and Subletting.
11.1 Lessor's Consent Required. Subject to the provisions of 511.2, Lessee
shall not voluntarily or by operation of law assign, transfer, mortgage, sublet,
or encumber all or any part of Lessee I s interest in this Lease or in the
Premises, without Lessor's prior written consent.
11.2 Named Lessee Affiliate. Notwithstanding the provisions of ss.11.1
hereof, the Named Lessee may assign or sublet the Premises, or any portion
thereof, without Lessor's consent, to any entity which controls, is controlled
by or is under common control with the Named Lessee, or to any entity resulting
from merger or consolidation with the Named Lessee, or to any entity which
acquires all the assets, as a going concern, of the business of the Named Lessee
that is being conducted on the Premises, provided that said assignee or
sublessee assumes, in full, the obligations of Lessee under this Lease.
11.3 No Release of Named Lessee. Any subletting or assignment with Lessor's
consent pursuant to ss.11.1 or without Lessor's consent pursuant to ss.11.2
shall not release the Named Lessee of its obligations or alter the primary
liability of the Named Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder. The acceptance of rent by
Lessor from any person other than the Named Lessee shall not be deemed to be a
waiver by Lessor of any provision hereof. Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or
subletting. In the event of default by any assignee, sublessee or successor of
the Named Lessee, in the performance of any of the provisions hereof, Lessor may
proceed directly against the Named Lessee without the necessity of exhausting
remedies against any assignee, sublessee or successor or, at Lessor's option,
may proceed jointly or severally against the Named Lessee and any one or more
assignees, sublessees or successors. Lessor may consent to subsequent
assignments or sublettings or amendments to this Lease with direct or remote
assignees, sublessees or successors of the Named Lessee, without notifying the
Named Lessee, or any direct or remote assignee, sublessee or successor of the
Named Lessee, and
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without obtaining its or their consent thereto, and such action shall not
release the Named Lessee of liability under this Lease.
11.4 Attorneys' Fees. In the event Lessee shall request the consent of
Lessor to any assignment or subletting, or if Lessee shall request the approval
or consent of Lessor for any act that Lessee proposes to do, then Lessee shall
pay Lessor's reasonable attorneys' fees incurred in connection with Lessor's
decision relative to granting or refusing approval or consent.
12. Defaults; Remedies.
12.1 Default by Lessee. The occurrence of any one or more of the following
events shall constitute a default of this Lease by Lessee:
(a) Vacating the Premises or ceasing to actively conduct business at
the Premises for more than thirty (30) days, except for reasonable periods on
account of repair or reconstruction of the Premises.
(b) Failure to make any payment of rent or any other payment required
to be made by Lessee hereunder, as and when due, where such failure shall
continue for a period of five (5) days after Notice thereof from Lessor to
Lessee.
(c) Failure by Lessee to observe or perform any of the provisions of
this Lease to be observed or performed by Lessee, other than described in
ss.12.1(b), where such failure shall continue for a period of thirty (30) days
after Notice thereof from Lessor to Lessee; provided, however, that if the
nature of Lessee's default is such that more than thirty (30) days are
reasonably required for its cure, then Lessee shall not be deemed to be in
default if Lessee commences such cure within ten (10) days after such Notice and
thereafter diligently pursues such cure to completion.
(d) (i) The making by Lessee of any general assignment, or general
arrangement for the benefit of creditors; (ii) filing by or against Lessee of
either a petition to have Lessee adjudicated a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Lessee, the same is dismissed within sixty
(60) days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the
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Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, or by any guarantor of Lessee's obligations hereunder, was
materially inaccurate, whether intentionally so or not.
(f) The failure of Lessee to deliver an Estoppel Certificate pursuant
to ss.15.1 of this Lease.
12.2 Remedies. In the event of any default by Lessee, the Lessor may, at
any time thereafter, with or without Notice or demand and without limiting
Lessor in the exercise of any other right or remedy, in law or equity, which
Lessor may have by reason of such default:
(a) Terminate Lessee's right to possession of the Premises in which
event Lessee shall immediately surrender possession of the Premises to Lessor.
In such event, Lessor shall be entitled to recover from Lessee all damages
incurred by Lessor by reason of such default including, but not limited to: the
cost of recovering possession of the Premises; expenses of reletting, including
renovation and alteration of the Premises; reasonable attorneys' fees; any real
estate commission paid or payable with respect to reletting; the worth at the
time of award by the court having jurisdiction thereof of the amount by which
the unpaid rent for the balance of the Term after the time of such award exceeds
the amount of rental loss for the same period that Lessee proves could be
reasonably avoided; and that portion of any leasing commission paid by Lessor
(if so) allocable to the unexpired Term of this Lease.
(b) Maintain Lessee's right to possession of the Premises in which case
the Term of this Lease shall continue in effect whether or not Lessee shall have
vacated the Premises. In such event, Lessor shall be entitled to enforce all of
Lessor's rights and remedies under this Lease, including the right to recover
the rent as it becomes due hereunder, without any obligation or duty on the part
of Lessor to mitigate damage or loss. If Lessor elects the remedy provided for
in this ss.12.2(b), then at any time thereafter, and without Notice to Lessee,
the Lessor may elect to terminate Lessee's possession of the Premises pursuant
to ss.12.2(a) of this Lease.
(c) Pursue any other remedy now or hereafter available to Lessor under
the law of the State in which the Premises are located
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12.3 Default by Lessor. Lessor shall not be in default unless Lessor fails
to perform obligations required of Lessor within a reasonable time, but in no
event later than thirty (30) days after Notice by Lessee to Lessor (and to the
holder of any mortgage or deed of trust covering the Premises whose name and
address shall have theretofore been furnished to Lessee by Notice) specifying
the default complained of; provided, however, that if the nature of Lessor's
default is such that more than thirty (30) days are reasonably required for its
cure, then Lessor shall not be deemed to be in default if Lessor commences such
cure within said thirty (30) days period and thereafter diligently pursues such
cure to completion.
12.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Lessor.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be paid by Lessee when due, Lessee shall pay to Lessor a late charge equal
to six percent (6%) of such overdue amount. Such late charge represents a fair
and reasonable estimate of the costs Lessor may incur by reason of late payment
by Lessee. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessee's default with respect to such overdue amount, nor prevent
Lessor from exercising any other right or remedy. Any late charge is in addition
to and not in lieu of interest on the amount due at the rate per annum stated in
ss.14.
13. Condemnation. If the Premises or any portion thereof be taken under the
power of eminent domain, or be sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), the Term of this Lease
shall terminate as to the part so taken as of the date the condemning authority
takes possession. If more than 10% of the floor area of the improvements
constituting part of the Premises, or more than 25% of the land area
constituting part of the Premises which is not occupied by any improvements, is
taken by condemnation, Lessee may, at Lessee's option, to be exercised by Notice
within ten (10) days after Lessor shall have given Notice to Lessee of such
taking (or in the absence of such Notice, within ten (10) days after the
condemning authority shall have taken possession) terminate the Term of this
Lease as of the date the condemning authority takes possession. If Lessee does
not so terminate the Term of this Lease, the Term shall continue in full force
and effect as to the portion of the Premises remaining, except that the rent
shall be equitably reduced consistent with the degree to
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which Lessee's use of the Premises is reduced by reason of the condemnation.
Any award for the condemnation of all or any part of the Premises shall be
the property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
separate award by the condemning authority for loss of or damage to Lessee's
trade fixtures, furnishings, and removable personal property, or for moving
expenses of Lessee.
In the event that the Term of this Lease is not terminated by reason of
such condemnation, Lessor shall, to the extent of severance damages received by
Lessor in connection with such condemnation, repair any damage to the Premises
caused by such condemnation except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall pay any amount in excess of
such severance damages required to complete such repair
14. Interest. In addition to and not in lieu of all amounts payable by Lessee
pursuant to the provisions of this Lease, the Lessee shall pay simple interest
on the amount of every delinquent payment at a floating or adjusting rate per
annum equal to one hundred fifty percent (150%) of the per annum rate published
or declared as "base" or "prime" by the Bank which is in effect on the first day
of the month during which the delinquency first occurs and on the first day of
each succeeding month thereafter until the delinquency, together with interest
thereon, be paid; provided, however, that if such amount exceeds the highest
amount allowed by law, then the interest rate shall be the highest amount
allowed by law. The Bank is Boatmen's National Bank of St. Louis, or such other
comparable financial institution doing business in the State in which the
Premises are situate as Lessor may designate from time to time by Notice to
Lessee. The accrual or payment of interest shall not excuse or cure any default
by Lessee.
15. General Provisions.
15.1 Estoppel Certificate; Lessee's Financials.
(a) Within ten (10) days after Notice from Lessor, the Lessee shall
execute, acknowledge and deliver to Lessor, or to such other person as Lessor
may designate, a written statement ("Estoppel Certificate") in form satisfactory
to Lessor M certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force
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and effect), (ii) the date to which the rent and other charges are paid in
advance, if any, (iii) acknowledging that there are not, to Lessee's knowledge,
any uncured defaults on the part of Lessor hereunder, or specifying such
defaults if any are claimed and (iv) providing such other information as Lessor
may reasonably request. Any such statement may be conclusively relied upon by
Lessor and by any prospective purchaser or encumbrancer of the Premises.
(b) Lessee's failure to deliver such Estoppel Certificate within ten
(10) days after Notice from Lessor, shall be conclusive on Lessee M that this
Lease is in full force and effect, without modification except as may be
represented by Lessor, (ii) that there are no uncured defaults in Lessor's
performance, and (iii) that not more than one month's rent has been paid in
advance, and shall make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead to execute such Estoppel
Certificate. Such failure may also be considered by Lessor as a default by
Lessee under this Lease.
(c) If Lessor desires to utilize the Premises or the obligations of
Lessee under this Lease as security for any borrowing, credit or financing
desired by Lessor, then within ten (10) days after Notice from Lessor, the
Lessee shall deliver to any financier designated by Lessor such financial
statements of Lessee as may be reasonably required by such financier. All such
financial statements shall be received in confidence and shall be used only for
the purposes herein set forth.
15.2 Definition of Lessor. "Lessor" means only the owner or owners at the
time in question of the fee title and in the event of any transfer of such title
or interest, the Lessor herein named (and in case of any subsequent transfers
the then grantor) shall be released, from and after the date of such transfer,
of all liability as respects Lessor's obligations thereafter to be performed.
Any funds in the hands of Lessor (or the then grantor) at the time of such
transfer in which Lessee has an interest, shall be delivered to the transferee.
The obligations contained in this Lease to be performed by Lessor shall be
binding on Lessor's successors and assigns, only during their respective periods
of ownership.
15.3 Definition of Lessee. "Lessee" means (i) the party signing this Lease
as Lessee ("Named Lessee") whether the Premises are at any time occupied by or
in the possession of the Named Lessee or any direct or remote assignee,
sublessee or successor of the Named Lessee or any other person claiming any
rights by, through or under the Named Lessee; and (ii) every direct and remote
assignee, sublessee and successor of the Named Lessee during whatever period
such assignee, sublessee or successor occupies or is in possession of the
Premises or asserts or has claim or right to occupy or be in possession of the
Premises; and (iii) every other person claiming by, through or under the Named
Lessee any right to occupy or be in possession of the Premises during whatever
period such person occupies or is in possession of the Premises or asserts or
has any claim or right to occupy or be in possession of the Premises.
15.4 Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
15.5 Time is of the Essence. Time is of the essence.
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15.6 Captions. Captions are for convenience only and are not part of this
Lease.
15.7 Incorporation of Prior Agreements; Amendments. This Lease contains all
agreements of the parties with respect to the subject matter hereof. No
representation, declaration, promise, warranty, agreement or understanding which
is not expressed in this document, or in any amendment of this document, shall
be effective. This Lease may be amended only in a document signed by the
parties.
15.8 Notices. Any Notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail, return
receipt requested, addressed to Lessee or to Lessor at the address noted below
the signature of the respective parties, as the case may be. Either party may by
Notice to the other specify a different address for Notice purposes except that
on Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for Notice purposes. A copy of all Notices required or
permitted to be given to Lessor hereunder shall be concurrently transmitted to
such party or parties at such addresses as Lessor may from time to time
hereafter designate by Notice to Lessee. Notices given by personal delivery
shall be deemed given on the date of delivery, and Notices given by certified
mail shall be deemed given on the second regular business day after the date of
mailing.
15.9 Waivers. No waiver by Lessor of any provision of this Lease shall be
deemed a waiver of any other provision of this Lease or of any subsequent
default by Lessee of the same or any other provision. Lessor's consent to or
approval of any act shall not be deemed to render unnecessary the obtaining of
Lessor's consent to o approval of any subsequent act by Lessee. The acceptance
of rent b Lessor shall not be a waiver of any
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preceding default by Lessee of any provision hereof, other than the failure of
Lessee to pay the particular rent so accepted, regardless of Lessor's knowledge
of such preceding default at the time of acceptance of such rent.
15.10 Recording. Lessee shall not record this Lease without Lessor's prior
written consent, and such recordation shall, at the option of Lessor, constitute
a non-curable default of Lessee. Each party shall, on request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
15.11 Holding Over. If Lessee remains in possession of the Premises or any
part thereof after expiration of the Term without the express written consent of
Lessor, such occupancy shall be a tenancy from month-to-month at a monthly
rental in the amount of double the last monthly rental during the Term, plus all
other charges payable hereunder, and subject to all provisions of this Lease
which may be applicable to a month-to-month tenancy.
15.12 Cumulative Remedies. No remedy or election available to Lessor shall
be deemed exclusive but shall be cumulative with all other remedies at law and
in equity available to Lessor.
15.13 Covenants and Conditions. Each provision of this Lease shall be
deemed both a covenant and a condition.
15.14 Binding Effect; Choice of Law. Subject to the provisions of Sss.15.2
and 15.3, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State in
which the Premises are situate.
15.14 Subordination.
(a) At Lessor's option, this Lease, and the leasehold interests and
rights of Lessee, shall be subordinate to any ground lease, master or superior
lease, mortgage, deed of trust, hypothecation, or security interest now or
hereafter affecting the Premises or any part of the Premises, and to any and all
renewals, modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises during the Term shall not be disturbed so long as Lessee shall observe
and perform all of the provisions of this Lease to be observed and performed by
Lessee. If any mortgagee, trustee, lessor or security interest holder shall
elect to have this Lease regarded as being prior and superior to its mortgage,
deed of trust, lease or security
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<PAGE>
interest, and shall give Notice thereof to Lessee, this Lease shall be deemed
prior and superior to such mortgage, deed of trust, lease or security interest,
whether this Lease is dated before or after the date of said mortgage, deed of
trust, lease or security interest, or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate such
subordination or to make this Lease prior and superior to any mortgage, deed of
trust, lease or security interest, as the case may be, and failing to do so
within ten (10) days after Notice from Lessor shall make, constitute and
irrevocably appoint Lessor as Lessee's attorney-in-fact and in Lessee's name,
place and stead, to execute any such document.
15.16 Attorneys' Fees. If either party brings an action to enforce the
provisions hereof or declare rights hereunder or recover for any loss or damage
on account of the default of the other party, the prevailing party in any such
action shall be entitled to reasonable attorneys' fees, costs of litigation and
court costs to be paid by the losing party as fixed by the court.
15.17 Lessor's Access. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the same,
showing the same to prospective purchasers, lenders, or tenants, and making such
alterations, repairs, improvements or additions to the Premises, or to the
larger property of which they are a part, if so, as Lessor may deem necessary or
desirable. Lessor may at any time place on or about the Premises any ordinary
"For Sale" signs, and Lessor may at any time during the last 120 days of the
Term place on or about the Premises any ordinary "For Lease" signs, all without
rebate of rent or liability to Lessee.
15.18 Signs and Auctions. Lessee shall not place any sign on or visible
from the exterior of the Premises, or conduct any auction in, on or about the
Premises without Lessor's prior written consent.
15.19 Merger. The voluntary or other surrender of this Lease by Lessee, or
a mutual cancellation thereof, or a termination of the Term by Lessor, shall not
work a merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
15.20 Corporate Authority. If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
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Directors of said corporation or in accordance with the Bylaws of said
corporation, and that this Lease is binding on said corporation. If Lessee is a
corporation, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor a certified copy of a resolution of the Board of
Directors of Lessee authorizing or ratifying the execution of this Lease.
15.21 Approvals and Consents. If approval or consent of one party is
required to an act of the other party, such approval or consent shall not be
unreasonably withheld.
15.22 Quiet Possession. By observing and performing all of the provisions
on Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire Term, subject to all of the provisions
of this Lease.
15.23 Options. In the event that Lessee has any option to extend the Term,
or any option to purchase the Premises or any right of first refusal to purchase
the Premises or other property of Lessor, then each of such options and rights
are personal to the Named Lessee and may not be exercised by any one other than
(i) the Named Lessee or (ii) an assignee or subtenant described in ss.11.2 of
this Lease. If there are multiple options to extend the Term of this Lease, a
later option to extend cannot be exercised unless every prior option has been
duly exercised. Any option right referenced in this ss.15.23 may be exercised
only if Lessee is not in default.
15.24 Multiple Tenant Property Rules and Regulations. In the event that the
Premises are part of a larger property, then Lessee agrees that it will abide
by, keep and observe all reasonable rules and regulations which Lessor may make
from time to time for the management, safety, care and cleanliness of such
larger property, the parking of vehicles and the preservation of good order
therein as well as for the convenience of other occupants. Lessee will promptly
pay its pro rata share, as reasonably determined by Lessor, of any maintenance
or repair of such portion of the Premises or such portion of the larger property
of which the Premises are a part, which are common areas or used by Lessee and
others. The violation of any such rules and regulations, or the failure to pay
such pro rata share of costs, shall be deemed a default of this Lease by Lessee.
15.25 Insuring Party. The Insuring Party under this Lease shall be the
Lessee.
15.26 When Lessor is Obligated. The submission of this document by Lessor
to Lessee does not constitute an offer or option of any kind capable of being
accepted by Lessee: Lessor will be obligated if, and only if Lessor duly
executes this
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document by affixing its signature hereto, and delivers a signed copy hereof to
Lessee.
15.27 Effect of Lease on Existing Tenancies. In the event any existing
leases or tenancies are in effect with respect to the Premises as of the
effective date hereof, Named Lessee nonetheless shall be directly liable to
Lessor pursuant to all terms and provisions of this Lease, and such lease or
tenancy shall effectively be deemed a sublease between Named Lessee and such
lessee or tenant, with Named Lessee having all responsibilities and obligations
of Lessor and being subject to all rights and occupancy of such lessee or
tenant, pursuant to such lease or tenancy. Named Lessee further agrees to
indemnify, defend, release and hold harmless Lessor from any and all claims of
such lessee or tenant, unless due to a default by Lessor under this Lease.
The parties hereto execute this Lease at the place and on the dates
specified immediately adjacent to their respective signatures
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<TABLE>
<S> <C> <C>
Executed at St. Louis, Missouri LESSOR:
on ____________________________
Address: c/o Mark R. Gale REX REALTY CO.
10 S. Broadway
Suite 1800 By: ________________________
St. Louis, Missouri
63102 Its: _______________________
(Corporate Seal)
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Executed at St. Louis, Missouri LESSEE;
on ____________________________
Address:_______________________ UNITED INDUSTRIES CORPORATION
-----------------------
_______________________ By: ________________________
Its: _______________________
(Corporate Seal)
</TABLE>
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CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of United Industries Corporation of our
report dated February 24, 1999 relating to the financial statements of United
Industries Corporation, which appear in such Prospectus.
/s/ PRICEWATERHOUSECOOPERS LLP
St. Louis, Missouri
April 5, 1999
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Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of United Industries Corporation of our
report dated February 25, 1999 relating to the financial statements of United
Industries Corporation, which appear in such Prospectus.
/s/ Rubin, Brown, Gornstein & Co., LLP.
St. Louis, Missouri
April 5, 1999
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