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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 13, 2000
MCM CAPITAL GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-26489 48-1090909
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
500 N. FIRST, HUTCHINSON, KANSAS 67501
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (800) 759-0327
Not applicable.
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
Closing of Senior Note Financing
On January 13, 2000, MCM Capital Group, Inc. ("MCM") closed a financing
transaction in which MCM issued $10 million of its senior unsecured notes (the
"Debt") to a major financial institution (the "Investor"). The Debt includes the
following terms:
- Interest is payable semi-annually at the rate of 12% per
annum, in cash or, on any payment date on or prior to January
15, 2002, additional notes ("Interest Notes"), at MCM's
option.
- The Debt matures on January 15, 2007. Interest Notes mature on
July 1, 2005.
- The Debt may be redeemed without premium or penalty at any
time. If there is a change in control (as defined) of MCM, MCM
must offer to repurchase the Debt without premium or penalty.
- The Debt is an unsecured obligation of the Company and is
guaranteed by Midland Credit Management, Inc. ("Midland
Credit"), a wholly-owned subsidiary of MCM. Any other material
subsidiary of MCM, other than its securitization subsidiaries,
must also guarantee the Debt.
- In connection with issuance of the Debt, the Company issued a
warrant to the Investor to acquire up to 428,571 shares of the
Company's common stock (subject to adjustment) at a price of
$0.01 per share. This warrant is not exercisable until April
12, 2000. From April 12, 2000 to October 9, 2000, the Investor
can exercise the warrant for up to 50% of the common stock
covered by the warrant. Beginning on October 10, 2000 through
January 12, 2005, the Investor can exercise the warrant for
100% of the covered common stock. The holder was also granted
certain registration rights in connection with the common
stock issuable upon exercise of the warrant.
- Up to $10 million principal amount of the Debt is
guaranteed by Triarc Companies, Inc. ("Triarc"), subject to
reduction under certain circumstances. However, no demand or
claim may be made on the guarantee prior to July 12, 2001.
Triarc indirectly owns approximately 8.4% of the outstanding
common stock of MCM. In addition, Nelson Peltz, Peter W. May
and Eric D. Kogan, each of whom are directors of MCM and are
officers and/or directors of Triarc, directly or indirectly
own approximately 13.5% of the outstanding common stock of
MCM. In consideration for the Guaranty, MCM paid Triarc a fee
of $200,000 and issued a warrant to Triarc for the purchase of
up to 100,000 shares of common stock of MCM (subject to
adjustment) at $0.01 per share at any time on or before
January 12, 2005. Triarc has the right to purchase the Debt
from the Investor under certain circumstances. If Triarc (or
any third party designated by Triarc) purchases the Debt on or
prior to April 11, 2000, Triarc (or the designated third
party) will receive 100% of the warrants issued to the
Investor, and if Triarc (or the designated third party)
purchases the Debt on or after April 12, 2000 but prior to
October 9, 2000, Triarc (or the designated third party) will
receive 50% of the warrants issued to the Investor.
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The board of directors of MCM approved the issuances of the Debt and
related transactions, and the disinterested members of the board of directors of
MCM approved the payment of the fee and the issuance of the warrants to Triarc.
Under the terms of the Debt, MCM can issue up to an additional $40
million principal amount of notes ("Additional Notes") on substantially similar
terms as the Debt. MCM must use the proceeds from any Additional Notes issued in
excess of $25.0 million to permanently reduce certain existing indebtedness of
Midland Credit. MCM is in discussions with various parties regarding the
purchase of Additional Notes. However, MCM does not currently have commitments
for any Additional Notes, and there can be no assurance that MCM will be able to
sell any of the Additional Notes. The note purchase agreement under which the
Debt was issued (the "Note Purchase Agreement") supersedes the indication of
interest previously given by the Investor, which was referenced in MCM's Report
on Form 10-Q for the quarter ended September 30, 1999 (the "Third Quarter
10-Q").
For further information regarding the transaction, see the documents
filed as exhibits in Item 7 hereof.
Closing of Securitization Transaction
On January 18, 2000, MCM closed a securitization transaction (the
"Securitization Transaction"). Midland Receivables 99-1 Corporation, a
bankruptcy remote special purpose entity formed by Midland Credit, issued
nonrecourse notes in the amount of $28.9 million, bearing interest at 9.63% per
annum. The notes are collateralized by the securitized charged-off receivables
and an initial cash reserve account of approximately $1.5 million and are
insured through a financial guarantee insurance policy. The securitized
receivables had an original aggregate charged-off balance of approximately
$658.9 million without giving effect to recoveries or settled balances and an
aggregate adjusted original cost of approximately $39.5 million. The
securitization will be accounted for as a financing transaction. MCM will
recognize income over the estimated life of the receivables securitized and the
receivables and corresponding debt will remain on MCM's balance sheet.
Liquidity and Capital Resources
In 1999, Midland Credit was a party to three separate forward flow
agreements under which it purchased substantially all of its receivables. One of
these agreements terminated in November of 1999, and one terminated on December
31, 1999. Neither of these forward flow agreements was renewed. The remaining
forward flow agreement terminates by its terms in February 2001. Midland Credit
recently obtained an amendment to this agreement that permits termination by
either party on 30 days notice, although Midland Credit agreed to pay for
its January and February 2000 purchases under the agreement in advance. If
Midland Credit terminates this agreement, the seller will be released from its
obligation to repurchase or replace previously acquired receivables that
violated certain representations and warranties contained in the forward flow
agreement. If any of the receivables also breach representations in Midland
Credit's securitization transactions and Midland Credit has to repurchase those
receivables, it could not seek compensation or substitution from the seller and
Midland Credit would ultimately be liable for any repurchase or substitution
obligation under the securitization transactions. Midland Credit obtains
substantially all receivables that it currently purchases and services under
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this forward flow agreement. In addition, the forward flow agreement is subject
to early termination by Midland Credit and the seller upon the occurrence of
specific events, so there can be no assurance that the forward flow contract
will remain in effect until its scheduled termination date. There can be no
assurance that Midland Credit will be able to obtain a sufficient number of
receivables to maintain a profitable level of collections, retain qualified
personnel or sustain its current growth.
Under the Securitization Transaction, Midland Credit is prohibited from
purchasing more than $3 million in the aggregate of receivables until it has
obtained $10 million in additional financing. Thereafter, during any period in
which Midland Credit has less than $10 million of committed and fully available
financing, it may only purchase an additional $3 million in receivables. Midland
Credit believes that if it obtains approximately $10 million in additional
financing prior to March 15, 2000 and thereafter maintains $10 million in
committed and fully available financing, it will have sufficient liquidity to
continue to purchase receivables pursuant to its forward flow agreement and fund
its operations and working capital needs for at least the next twelve months.
There can be no assurance however that Midland Credit will be able to obtain and
maintain such financing. If Midland Credit does not obtain such additional
financing, it would cease making purchases of receivables under and, if
necessary, terminate its forward flow agreement.
Under the Securitization Transaction, if Midland Credit does not
maintain certain specified amounts of unrestricted cash and/or availability
under committed working capital facilities (varying over the period to February
28, 2001 from a low of $1 million to a high of $5 million and thereafter $5
million), an event of default will occur. If an event of default occurs, Midland
Credit may be removed as servicer and the receivables in the Securitization
Transaction can be liquidated to pay off the related notes issued in the
securitization. The note insurer for the securitization (or noteholders under
certain circumstances) can waive the event of default or elect not to remove
Midland Credit as the servicer or to liquidate the receivables. In addition,
under the Securitization Transaction, the note insurer or other controlling
party must reappoint Midland Credit as the servicer prior to the end of each
quarter. Should such an event of default occur, Midland Credit believes that it
would have sufficient liquidity to fund its operations and working capital needs
through at least December 2000, provided (i) the event of default is waived or
the election is made not to remove Midland Credit as the servicer or liquidate
the receivables, (ii) the controlling party continues to reappoint Midland
Credit as the servicer on a quarterly basis, and (iii) Midland Credit ceases
making purchases of receivables. If, however, the controlling party does not
reappoint Midland Credit as servicer or an event of default occurs, including
Midland Credit's inability to maintain the required liquidity or any event of
default under any securitization transaction insured by the note insurer, and
the controlling party removes Midland Credit as servicer or liquidates the
receivables, MCM or Midland Credit may be required to, among other things, (i)
cease making purchase of receivables and, if necessary, terminate its forward
flow agreement, (ii) reduce future capital expenditures scheduled for computer,
telephone and system upgrades, (iii) sell certain of its receivables portfolios
for cash, (iv) reduce the number of employees and overall scope of operations,
(v) pursue strategic alternatives such as a sale, merger or recapitalization of
MCM or Midland Credit, or (vi) seek protection under reorganization, insolvency
or similar laws. In addition, if an event of default under the Securitization
Transaction occurs and is continuing, and the controlling party removes Midland
Credit as servicer, that would also cause an event of default under the Debt.
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Reference is made to the Third Quarter 10-Q for additional information
about MCM's commitments and contingencies.
Legal Proceedings
As disclosed in the Third Quarter 10-Q, Varmint Investments Group, LLC
and Panagora Partners, LLC filed suit against Midland Credit on July 22, 1998 in
the United States District Court for the Southern District of Texas, Houston
Division. The plaintiffs allege securities fraud, common law fraud, and
fraudulent inducement based upon the sale of receivables by Midland Credit to
the plaintiffs in 1997. The plaintiffs seek recovery of the purchase prices for
the receivables, or approximately $1.3 million and, in addition, other damages,
including exemplary or punitive damages, attorneys' fees, expenses, and court
costs. Midland Credit has denied the allegations and is vigorously defending
this suit. On November 8, 1999 the court issued orders denying Midland Credit's
motion for summary judgment and a motion by Midland Credit to assert certain
counterclaims. The trial, originally scheduled for January 10, 2000, has been
rescheduled for April 3, 2000. Although any litigation is inherently uncertain,
Midland Credit believes it has certain contractual defenses to the asserted
claims. Notwithstanding the foregoing, a judgment adverse to Midland Credit
involving this litigation could have a material adverse impact on MCM's business
and its financial condition.
Forward Looking Statement Disclaimer
The statements in this report that are not historical facts, including
most importantly, those statements preceded by, or that include the words "may,"
"believes," "expects," "anticipates," or the negation thereof, or similar
expressions, constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve risks, uncertainties and other facts which may cause the
actual results, performance or achievements of MCM and its subsidiaries to be
materially different from any future results, performance or achievements
express or implied by such forward-looking statements. Such factors include, but
are not limited to, the following: MCM's ability to obtain sufficient quantities
of receivables at favorable prices and to recover sufficient amounts on
receivables to fund operations; MCM's ability to hire and retain qualified
personnel to recover its receivables efficiently; the availability of financing;
MCM's ability to maintain sufficient liquidity to operate its business; MCM's
continued servicing of the receivables in its securitization transactions;
unexpected costs associated with Year 2000 compliance or the business risk
associated with Year 2000 non-compliance by suppliers; changes in, or failure to
comply with, government regulations; the costs, uncertainties and other effects
of legal and administrative proceedings and other risks and uncertainties
detailed in MCM's Securities and Exchange Commission filings. MCM will not
undertake and specifically declines any obligation to publicly release the
result of any revisions to any forward-looking statements to reflect events or
circumstances after the date of such statements or unanticipated events. In
addition, it is MCM's policy generally not to make any specific projections as
to future earnings, and MCM does not endorse any projections regarding future
performance that may be made by third parties.
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ITEM 7. EXHIBITS
10.1 Note Purchase Agreement dated as of January 12, 2000 between MCM and
ING (U.S.) Capital LLC ("ING")
10.2 Warrant Agreement dated as of January 12, 2000 between MCM and ING
10.3 Warrant Agreement dated as of January 12, 2000 between MCM and Triarc
Companies, Inc. ("Triarc").
10.4 Registration Rights Agreement dated as of January 12, 2000 between MCM
and ING
10.5 Registration Rights Agreement dated as of June 30, 1999 among MCM, C.P.
International Investments Limited, MCM Holding Company, LLC, and other
persons
10.6 Subsidiary Guaranty dated as of January 12, 2000
10.7 Guaranty and Option Agreement dated as of January 12, 2000 between
Triarc and ING
10.8 First Amendment to Loan Sale Agreement between Midland Credit
Management, Inc. and MBNA America Bank N.A., dated as of
January 13, 2000
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MCM CAPITAL GROUP, INC.
Date: January 20, 2000 By: /s/ R. Brooks Sherman, Jr.
---------------------------------------------
R. Brooks Sherman, Jr.
Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
10.1 Note Purchase Agreement dated as of January 12, 2000 between MCM and
ING (U.S.) Capital LLC ("ING")
10.2 Warrant Agreement dated as of January 12, 2000 between MCM and ING
10.3 Warrant Agreement dated as of January 12, 2000 between MCM and Triarc.
10.4 Registration Rights Agreement dated as of January 12, 2000 between MCM
and ING
10.5 Registration Rights Agreement dated as of June 30, 1999 among MCM, C.P.
International Investments Limited, MCM Holding Company, LLC, and other
persons
10.6 Subsidiary Guaranty dated as of January 12, 2000
10.7 Guaranty and Option Agreement dated as of January 12, 2000 between
Triarc Companies, Inc. ("Triarc") and ING
10.8 First Amendment to Loan Sale Agreement between Midland Credit
Management, Inc. and MBNA America Bank N.A., dated January 13, 2000
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EXHIBIT 10.1
[EXECUTION COPY]
NOTE PURCHASE AGREEMENT,
dated as of January 12, 2000,
between
MCM CAPITAL GROUP, INC.
as the Issuer,
and
ING (U.S.) CAPITAL LLC,
as the Purchaser,
for
$10,000,000 Principal Amount of
12.0% Series No. 1 Senior Notes due January 15, 2007
and
Warrants to Purchase 428,571 Common Shares.
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
SECTION 1.1 Defined Terms 1
SECTION 1.2 Use of Defined Terms 13
SECTION 1.3 Cross References 13
SECTION 1.4 Accounting and Financial Determinations 13
ARTICLE II PURCHASE AND SALE OF SECURITIES
SECTION 2.1 Purchase Commitment 14
SECTION 2.2 Issue Price 14
SECTION 2.3 Closing 14
ARTICLE III CONDITIONS TO CLOSING
SECTION 3.1 Certificate of Incorporation 15
SECTION 3.2 Resolutions, etc. 15
SECTION 3.3 Series No. 1 Note 15
SECTION 3.4 Warrants 15
SECTION 3.5 Guaranties. 15
SECTION 3.6 Material Contracts 16
SECTION 3.7 Performance; No Default 16
SECTION 3.8 Absence of Litigation, etc. 16
SECTION 3.9 Certificate as to Compliance, etc. 16
SECTION 3.10 Certificate as to Solvency, etc. 16
SECTION 3.11 Opinion of Counsel 16
SECTION 3.12 Fees 17
SECTION 3.13 Wire Instructions 17
SECTION 3.15 Legal Investment 17
SECTION 3.16 Satisfactory Legal Form 17
SECTION 3.17 Approvals, etc. 17
ARTICLE IV PAYMENTS, REGISTRATION, ETC.
SECTION 4.1 Place of Payment 17
SECTION 4.2 Home Office Payment 17
SECTION 4.3 Optional Payments 18
SECTION 4.4 Payment of Principal and Interest 18
SECTION 4.5 Allocation 19
SECTION 4.6 Mandatory Offer of Redemption of Series No. 1 Notes 19
SECTION 4.7 Assignments by Noteholders 20
SECTION 4.7.1 Consent to Certain Assignments 20
SECTION 4.7.2 Procedures 20
SECTION 4.7.3 Terms and Conditions 20
SECTION 4.7.4 Registration, Transfer, etc. 21
SECTION 4.8 Transfer and Exchange 21
SECTION 4.9 Replacement 21
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SECTION 4.10 Taxes 22
ARTICLE V WARRANTIES, ETC.
SECTION 5.1 Organization, Power, Authority, etc. 23
SECTION 5.2 Due Authorization 24
SECTION 5.3 Validity, etc. 24
SECTION 5.4 Financial Information 24
SECTION 5.5 Absence of Material Adverse Change 25
SECTION 5.6 Continuing Indebtedness 25
SECTION 5.7 Contingencies 25
SECTION 5.8 Litigation, etc. 25
SECTION 5.9 Capitalization 25
SECTION 5.10 Margin Regulations 26
SECTION 5.11 Government Regulation 26
SECTION 5.12 Title to and Condition of Properties; Material Contracts 26
SECTION 5.13 Patents, Trademarks, etc. 27
SECTION 5.14 Taxes 27
SECTION 5.15 Pension and Welfare Plans 27
SECTION 5.16 Environmental Matters 27
SECTION 5.17 Year 2000 Problem 28
SECTION 5.18 Solvency 28
SECTION 5.19 Subsidiaries, etc. 28
SECTION 5.20 Accuracy of Information 29
SECTION 5.21 Offering of Subject Securities 29
ARTICLE VI COVENANTS
SECTION 6.1 Certain Affirmative Covenants 29
SECTION 6.1.1 Financial Information, etc. 30
SECTION 6.1.2 Notice of Default, etc. 31
SECTION 6.1.3 Maintenance of Corporate Existence, etc. 32
SECTION 6.1.4 Performance of Purchase Documents 32
SECTION 6.1.5 Books and Records 32
SECTION 6.1.6 Subsidiary Guarantors 32
SECTION 6.1.7 Payment of Taxes, etc. 32
SECTION 6.1.8 Environmental Conduct 32
SECTION 6.1.9 Use of Proceeds 33
SECTION 6.1.10 Insurance 33
SECTION 6.1.11 Subsequent Note Issuance 33
SECTION 6.2 Certain Negative Covenants 33
SECTION 6.2.1 Business Activities 33
SECTION 6.2.2 Indebtedness 33
SECTION 6.2.3 Liens 35
SECTION 6.2.4 Bank of America Credit Agreement. 35
SECTION 6.2.5 Restricted Payments, etc. 35
SECTION 6.2.6 Investments 36
SECTION 6.2.7 Consolidation, Merger, etc. 36
SECTION 6.2.8 Rental Obligations 37
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SECTION 6.2.9 Take or Pay Contracts 37
SECTION 6.2.10 Negative Pledges, Upstream Restrictions, etc. 37
SECTION 6.2.11 Transactions with Affiliates 37
SECTION 6.2.12 Asset Dispositions, etc. 38
ARTICLE VII EVENTS OF DEFAULT
SECTION 7.1 Events of Default 38
SECTION 7.1.1 Non-Payment of Obligations 38
SECTION 7.1.2 Default on Other Indebtedness 38
SECTION 7.1.3 Bankruptcy, Insolvency, etc. 39
SECTION 7.1.4 Breach of Warranty 39
SECTION 7.1.5 Non-Performance of Certain Undertakings 39
SECTION 7.1.6 Non-Performance of Other Undertakings 39
SECTION 7.1.7 Judgments 39
SECTION 7.1.8 Pension Plans 40
SECTION 7.1.9 Clean Audit 40
SECTION 7.2 Action if Bankruptcy 40
SECTION 7.3 Action if Other Event of Default 40
SECTION 7.4 Suits for Enforcement 40
SECTION 7.5 Remedies Cumulative 40
ARTICLE VIII MISCELLANEOUS
SECTION 8.1 Waivers, Amendments, etc. 41
SECTION 8.2 Notices 41
SECTION 8.3 Costs and Expenses 41
SECTION 8.4 Indemnification 42
SECTION 8.5 Survival 42
SECTION 8.6 Severability 42
SECTION 8.7 Headings 43
SECTION 8.8 Counterparts 43
SECTION 8.9 Governing Law 43
SECTION 8.10 Jurisdiction 43
SECTION 8.11 Successors and Assigns 43
SECTION 8.12 Waiver of Jury Trial. 43
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SCHEDULE I - Disclosure Schedule
Item 3.4 - Capital Stock
Item 5.6 - Ongoing Indebtedness
Item 5.8 - Litigation
Item 5.9 - Repurchase, etc. Agreements
Item 5.12 - Defaults
Item 5.13 - Patents, Trademarks
Item 5.15 - Employee Benefit Plans
Item 5.16 - Environmental Matters
Item 5.19 - Subsidiaries
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EXHIBIT A - Form of Series No. 1 Note
EXHIBIT B - Certificate as to Certificate of Incorporation
EXHIBIT C - Certificate as to Authorizing Resolutions, etc.
EXHIBIT D - Form of Subsidiary Guaranty
EXHIBIT E - Form of Warrant Agreement
EXHIBIT F - Form of Assignment and Acceptance
EXHIBIT G - Certificate as to Compliance
EXHIBIT H - Certificate as to Solvency
EXHIBIT I - Form of Opinion of Counsel
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NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT, dated as of January 12, 2000, between MCM
CAPITAL GROUP, INC., a Delaware corporation (the "Company") and ING (U.S.)
CAPITAL LLC, a Delaware limited liability company (alternatively, "ING" or the
"Purchaser"),
W I T N E S S E T H:
WHEREAS, the Company desires to obtain financing for the purchase of
charged-off accounts, the making of acquisitions in the Company's existing lines
of business and lines of business reasonably related thereto, and working
capital and general corporate purposes; and
WHEREAS, the Company has authorized the sale to the Purchaser, and the
Purchaser is willing on the terms and conditions hereinafter set forth
(including Article III) to purchase, directly or through nominees, on the
Closing Date:
(a) $10,000,000 principal amount of 12.0% senior promissory
notes in the form of Exhibit A hereto due January 15, 2007; and
(b) Warrants to purchase 428,571 of the Common Shares of the
Company at an exercise price of $0.01 per share;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. The following terms (whether or not
italicized) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"1998 Audited Financial Statements" is defined in clause (a) of Section
5.4.
"1999 Interim Financial Statements" is defined in clause (c) of Section
5.4.
"Affiliate" means, relative to any Person, any other Person which,
directly or indirectly, controls or is controlled by or under common control
with such Person (excluding, however, any trustee under, or any committee with
responsibility for administering, any Plan). For the purposes of this
definition, "control" (including the correlative terms "controlling",
"controlled by" and "under common control with") means, relative to any Person,
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 Stock, by agreement or otherwise; provided, however, that
(x) beneficial ownership of 15% or more of the
1
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Voting Stock of a Person shall be deemed to be control and (y) any of the
foregoing to the contrary notwithstanding, the term "Affiliate," relative to the
Company and Subsidiaries, shall not include ING.
"this Agreement" means, on any date, this Purchase Agreement as
originally in effect and as thereafter from time to time amended, supplemented
or otherwise modified in accordance with the terms hereof and in effect on such
date.
"Applicable Law" means, relative to any Person, (x) all provisions of
laws, statutes, ordinances, rules, regulations, requirements, restrictions,
permits, certificates or orders of any Governmental Authority applicable to such
Person or any of its assets or property and (y) all judgments, injunctions,
orders and decrees of all courts in proceedings or actions in which such Person
is a party or by which any of its assets or properties are bound.
"Approval" means, relative to any Person, each approval, license,
permit, consent, exemption, filing or registration by or with any Governmental
Authority (x) necessary to authorize or permit the execution, delivery or
performance of, or for the validity or enforceability of, any Transaction
Document or (y) that the failure to have or obtain would have a Materially
Adverse Effect on its conduct of its business.
"Assignment and Acceptance" is defined in Section 4.7.
"Authorized Officer" means, relative to any Obligor, those of its
officers whose signatures and incumbency shall have been certified to the
Purchaser pursuant to clause (a)(ii) of Section 3.2. or Section 3.5.
"Bank of America Credit Agreement" means the credit agreement dated as
of July 15, 1999, between Bank of America, N.A. and Midland, as in effect on the
Closing Date or as amended thereafter in accordance with Section 6.2.4.
"Bank of America Indebtedness" means all Indebtedness of the Company or
Midland under the Bank of America Credit Agreement, or any refinancing or
replacement thereof effected in accordance with Section 6.2.4.
"Business Day" means any day, excluding, however, a Saturday, Sunday
and each legal holiday on which banks are authorized or required to close in New
York, New York or the State of Kansas.
"Capitalized Lease Liability" means, relative to any Person, any
monetary obligation under any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capitalized lease, and, for purposes of
this Agreement and each other Purchase Document, the amount of any such
obligation shall be the capitalized amount thereof determined in accordance with
GAAP, and the stated maturity thereof shall be determined in accordance with
GAAP.
"Capital Stock" means, relative to any Person, any and all shares,
partnership or membership interests, participations, rights or other equivalents
(however designated) of corporate stock, including (w) capital shares of such
Person (whether voting or non-voting), (x) if such Person is a partnership,
capital partnership interests (whether general or limited), (y) any other
indicia of ownership of such Person (z) and all warrants, options, purchase
rights, conversion or exchange rights, voting rights, calls or any claims of any
character with respect thereto.
2
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"Cash Equivalent Investment" means any investment of the following
nature:
(a) obligations issued or guaranteed by the United States
of America;
(b) certificates of deposit, overnight time deposits,
bankers acceptances and other "money market instruments" issued by any
bank or trust company organized under the laws of the United States of
America or any State thereof and (x) whose deposits are insured by the
Federal Deposit Insurance Corporation or (y) having capital and surplus
in an aggregate amount of not less than $100,000,000;
(c) open market commercial paper bearing the highest credit
rating for such obligations issued by S&P or Moody's or by another
nationally recognized credit rating firm;
(d) repurchase agreements entered into with any bank or
trust company organized under the laws of the United States of America
or any State thereof and having capital and surplus in an aggregate
amount of not less than $100,000,000 relating to United States of
America government obligations;
(e) shares of "money market funds", each having net assets
of not less than $100,000,000; and
(f) other short-term investments calculated in accordance
with GAAP;
in each (other than clause (f) above) case maturing or being due or payable in
full not more than 180 days after the Company's acquisition thereof.
"Certificate of Incorporation" means the certificate of incorporation
of the Company in the form furnished to the Purchaser prior to the execution and
delivery of this Agreement, together with all amendments thereto as of the
Closing Date.
"Change of Control" means:
(a) the sale, lease or transfer of all or substantially all
the assets of the Company to any Person or group (as such term is
defined in Section 13(d)(3) of the Exchange Act) other than any of the
Significant Stockholders;
(b) the liquidation or dissolution of (or the adoption of a
plan of liquidation by) the Company; or
(c) the acquisition by any Person or affiliated group (other
than any of the Significant Stockholders) of a direct or indirect
majority in interest (more than 50%) of the issued and outstanding
Voting Stock of the Company by way of merger or consolidation or
otherwise.
"Closing" is defined in Section 2.3.
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"Closing Date" is defined in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Common Share" means a share of common stock, $0.01 par value per
share, of the Company as authorized by the Certificate of Incorporation.
"Company" is defined in the preamble.
"Company's Knowledge" means, at any time and relative to any matter,
knowledge which any Authorized Officer of the Company would have after
reasonable inquiry, under the circumstances, of the current employees of the
Company or any Subsidiary who would reasonably be expected to have knowledge
regarding such matter, whether or not such Authorized Officer actually made
inquiry of such employees.
"Contingent Liability" means, relative to any Person, any agreement,
undertaking or arrangement by which such Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor
against loss) the Indebtedness, obligation or any other liability of any other
Person (other than by endorsements of instruments in the course of collection),
or guarantees the payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's Contingent Liability shall
(subject, however, to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum principal amount, if larger) of the
Indebtedness, obligation or other liability guaranteed thereby.
"Contractual Undertaking" means, relative to any Person, any provision
of any debt or equity security issued by it or of any Instrument or undertaking
to which it is a party or by which it or any of its property is bound or
subject.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414(b) or 414(c) of the
Code or section 4001(b)(1) of ERISA.
"Default" means any Event of Default or any act, condition or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disclosure Schedule" means Schedule I hereto.
"Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is covered by ERISA and (x) which is currently
maintained or contributed to by the Company, (y) which was at any time during
the last six years maintained, contributed to or terminated by the Company or
(z) with respect to which there is any potential or outstanding liability of the
Company.
"Environmental Claim" is defined in clause (b) of Section 5.16.
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<PAGE> 10
"Environmental Law" means all present and future Applicable Laws
imposing liability or standards of conduct relating to the environment,
industrial hygiene, land use or the protection of human health and safety,
natural resources, pollution (including Hazardous Materials) or waste
management.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Registration Agreement" means that certain registration rights
agreement, dated June 30, 1999, among the Company, and the other parties that
are a party thereto.
"Fiscal Quarter" or "FQ" means any period of three consecutive calendar
months comprising a quarter of a Fiscal Year; references to a Fiscal Quarter
with numbers corresponding to a calendar year and a number corresponding to a
Fiscal Quarter (e.g., "1999 FQ 1") refer to such Fiscal Quarter (i.e., the
first) of such Fiscal Year.
"Fiscal Year" or "FY" means a period of 12 consecutive calendar months
ending on each December 31st; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., "the 1999 Fiscal Year" or "1999 FY")
refer to the Fiscal Year ending on December 31st of such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"Governmental Authority" means any international, national, federal,
state, provincial, local, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, or any court, in each case
whether of the United States or foreign.
"Hazardous Material" means:
(a) any substances that are defined or listed in, or
otherwise classified pursuant to, any applicable Environmental Laws as
"hazardous substances", "hazardous materials", "hazardous wastes",
"toxic substances", "contaminants", "pollutants" or any other
formulation intended to define, list or classify substances by reason
of adverse effects on the environment or deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity or "TLCP" toxicity or "EP" toxicity;
(b) any oil, petroleum or petroleum derived substances,
natural gas, natural gas liquids or synthetic gas and drilling fluids,
produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal
resources;
(c) any flammable substances or explosives or any
radioactive materials; or
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<PAGE> 11
(d) any asbestos in any form or electrical equipment which
contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per million.
"Hedging Liability" means, relative to any Person, all liabilities of
such Person under interest rate and currency swap, cap and collar agreements and
all other Instruments designed to protect such Person against fluctuations in
interest or currency exchange rates.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Purchase Document refer to this Agreement or such
other Purchase Document, as the case may be, as a whole and not to any
particular Article, Section, paragraph or provision of this Agreement or such
other Purchase Document.
"holder" is defined, relative to a Series No. 1 Note, in Section 4.7.4.
"including" means including without limiting the generality of any
description preceding such term.
"Indebtedness" means, relative to any Person, without duplication:
(a) all obligations of such Person for borrowed money
(including all notes payable and drafts accepted representing
extensions of credit) and all obligations evidenced by bonds,
debentures, notes or other similar instruments on which interest
charges are customarily paid;
(b) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit, whether or not drawn, and
bankers' acceptances issued for the account of such Person;
(c) all Capitalized Lease Liabilities of such Person;
(d) net monetary liabilities of such Person under all
Hedging Liabilities (calculated, at any time, as the aggregate amount
(giving effect to any netting agreements) that such Person would be
required to pay if the agreements giving rise to such Hedging
Liabilities were terminated at such time);
(e) all obligations of such Person to pay the deferred
purchase price of property or services that, in accordance with GAAP,
would be included on the liability side of the balance sheet of such
Person as of the date at which Indebtedness is to be determined;
(f) all indebtedness referred to in clause (a), (b), (c),
(d) or (e) secured by a Lien on property owned or being purchased by
such Person (including indebtedness arising under conditional sales or
other title retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse;
provided, however, that in the case of any such Indebtedness which is
by its terms non-recourse to such Person, the amount of such
Indebtedness shall, for the purpose of this clause, be deemed to be the
lesser of (x) the aggregate unpaid principal amount of such
Indebtedness and (y) the fair market value of the property subject to
such Lien, as determined by such Person in good faith; and
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<PAGE> 12
(g) all Contingent Liabilities of such Person in respect of
any Indebtedness of any other Person.
"Indemnified Liabilities" is defined in Section 8.4.
"Indemnified Party" is defined in Section 8.4.
"ING" is defined in the preamble.
"Institutional Holder" means the Purchaser (so long as it or its
nominee shall hold a Series No. 1 Note or other Subject Security) and each other
financial institution which shall hold a Series No. 1 Note or other Subject
Security (excluding, however, any financial institution which is not a
Noteholder and acquired the other Subject Securities held by it in a
distribution to the public or a sale pursuant to Rule 144A under the Securities
Act or as the direct or indirect transferee of other Subject Securities acquired
in such a distribution or sale).
"Instrument" means any contract, agreement, indenture, mortgage,
document or other writing (whether by formal agreement, letter or otherwise)
under which any obligation is evidenced, assumed or undertaken or any Lien (or
right or interest therein) is granted or perfected.
"Intellectual Property" is defined in Section 5.13.
"Investment" means, relative to any Person, all investments by such
Person in any other Person (including Affiliates) in the forms of (v) loans,
advances (excluding, however, commission, travel, indemnity and similar advances
to officers, directors and employees of such Person made in the ordinary course
of business), (w) Contingent Liabilities of such Person incurred with respect to
Indebtedness of any other Person, (x) capital contributions, purchases or other
acquisitions for consideration of Indebtedness, equity interests or other
securities, (y) payments in respect of tax savings or liabilities made by such
Person to or for the benefit of any other Person with whom such Person files a
consolidated tax return which are not reimbursed by such other Person and (z)
any other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP. The amount of any Investment shall be
the original principal or capital amount thereof less all returns of principal
or equity, or distributions or dividends paid, thereon and shall, if made by the
transfer or exchange of property other than cash, be deemed to have been made in
an original principal or capital amount equal to the fair value of such property
at the time of such Investment.
"Lien" means (x) any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) or preference,
priority or other security agreement, whether or not filed, recorded or
otherwise perfected under Applicable Law to secure any Indebtedness, (y) any
financing statement filed under the Uniform Commercial Code (or comparable law
of any jurisdiction), other than to perfect the sale or purchase of accounts,
and (z) any option or other agreement to sell or to provide any Instrument or
financing statement of the nature referred to in item (x) or (y).
"Material Contracts" means the agreements and contracts that are
required to be filed by the Company pursuant to Item 601 of Regulation S-K as an
exhibit to any report, registration statement or other filing under the
Securities Act or the Exchange Act.
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"Material Subsidiary" means any Subsidiary of the Company that owns or
otherwise holds tangible assets of $10,000 or more.
"Materially Adverse Effect" means (x) a material adverse effect on the
financial condition, business, assets, operations or properties of the Company
and Subsidiaries, taken as a whole, (y) a material impairment of the ability of
any Obligor to perform its respective payment obligations under the Purchase
Documents to which it is or will be a party or (z) an impairment of the validity
or enforceability of, or a material impairment of the rights, remedies or
benefits available to the Noteholders under, this Agreement or any other
Purchase Document.
"Midland" means Midland Credit Management, Inc.
"Non-U.S. Noteholder" is defined in Section 4.10.
"Noteholder" means at any time each Person (including the Purchaser)
then registered in accordance with Section 2.3, 4.8 or 4.9 as the owner or
holder of a Series No. 1 Note; provided, however, that no Person which is an
Affiliate of the Company (other than Triarc Companies, Inc. or its designee,
excluding the Company and its Subsidiaries) shall be deemed to be a Noteholder
for purposes of Section 8.1 or any other action requiring the consent,
concurrence or other action of each Noteholder.
"Notice of Redemption" is defined in Section 4.7.
"Obligation" means all obligations of the Company with respect to the
repayment or performance of all obligations (monetary or otherwise) of the
Company arising under or in connection with the Series No. 1 Notes or under this
Agreement or any other Purchase Document in respect of the Series No. 1 Notes,
the Indebtedness evidenced thereby or to any Person as the holder of a Series
No. 1 Note.
"Obligor" means the Company or any Subsidiary Guarantor.
"Operating Lease" is defined in Section 6.2.8.
"Optional Redemption Price" means, for any portion of the outstanding
principal amount of any Series No. 1 Note, the outstanding principal amount of
such portion of the Series No. 1 Note.
"or" is not exclusive.
"Organizational Document" means, relative to any Person, each
instrument that (x) defines its corporate existence, including its articles or
certificate of incorporation, as filed or recorded with an applicable
Governmental Authority or (y) governs its internal affairs, including its
by-laws and all shareholder agreements, voting trusts and similar arrangements
to which it is a party applicable to any of its authorized shares of Capital
Stock, in each case as amended, supplemented or restated.
"outstanding" means, at any time relative to the Series No. 1 Notes,
any Series No. 1 Notes theretofore issued pursuant to Section 2.3, 4.8 or 4.9
and not surrendered pursuant to Section 4.8 or 4.9 but excluding, however, all
Series No. 1 Notes which are deemed pursuant to Section 4.9 to be not
outstanding.
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<PAGE> 14
"Payment Date" means the 15th day of each January and July, commencing
July 15, 2000 or, if any such day is not a Business Day, the next succeeding
Business Day.
"Payment or Insolvency Default" means a Default pursuant to Section
7.1.1 or 7.1.3.
"Permitted Lien" means the following types of Liens (other than any
such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA):
(a) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by Section
6.1.7;
(b) statutory Liens of landlords, Liens of carriers,
warehousemen, mechanics, suppliers, materialmen and repairmen and other
like Liens arising in the ordinary course of business for sums not yet
more than 10 days delinquent or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor;
(c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (excluding,
however, obligations for the payment of borrowed money);
(d) leases or subleases granted to others not interfering in
any material respect with the ordinary conduct of the business of the
Company or any Subsidiary;
(e) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects, encroachments or irregularities in title
and other similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business of the
Company or any Subsidiary;
(f) any (w) interest or title of a lessor or sublessor under
any lease, (x) restriction or encumbrance that the interest or title of
such lessor or sublessor may be subject to, (y) subordination of the
interest of the lessee or sublessee under such lease to any restriction
or encumbrance referred to in item (x) or (z) Liens arising from filing
Uniform Commercial Code financing statements regarding leases;
(g) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(h) Liens (including extensions, renewals and replacements
thereof) upon property acquired (the "acquired property") by the
Company or any Subsidiary after the Closing Date; provided, however,
that (w) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund,
the cost (including the cost of construction) of the acquired property,
(x) the principal amount of the Indebtedness secured by such Lien does
not exceed 100% of the cost of the acquired property, (y) such Lien
does not extend to or cover any property other than the acquired
property and any improvements on such
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<PAGE> 15
acquired property and (z) the incurrence of the Indebtedness to
purchase the acquired property is permitted by Section 6.2.2;
(i) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty
requirements;
(j) Liens arising out of consignment or similar arrangements
for the sale of goods entered into by the Company or any Subsidiary in
the ordinary course of business;
(k) judgment and attachment Liens not giving rise to an Event
of Default; and
(l) additional Liens granted by the Company or any Subsidiary
at any one time outstanding in respect of properties or assets having,
on the date such Lien is granted, an aggregate fair market value not to
exceed $100,000.
"Person" means any natural person, corporation, firm, association,
partnership, limited liability partnership, limited liability company,
government, trust, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"PIK Notes" is defined in clause (b) of Section 4.4.
"Plan" means (x) a "pension plan," as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Company or any
corporation, trade or business that is, along with the Company, a member of a
Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA or (y) a "welfare plan," as
such term is defined in section 3(1) of ERISA.
"Purchase Document" means this Agreement, the Series No. 1 Notes, the
Warrant Agreement, the Subsidiary Guaranty and each other Instrument executed
and delivered from time to time by the Company or any Subsidiary to the
Purchaser or any other Noteholder pursuant hereto, whether or not mentioned
herein.
"Purchaser" is defined in the preamble.
"Ratably" means, relative to the Noteholders, ratably according to the
aggregate outstanding principal amount of all Series No. 1 Notes held by each
Noteholder.
"Registration Agreement" means that certain Registration Rights
Agreement, dated as of January 12, 2000, by and between the Company and the
Purchaser.
"Reimbursement Agreement" means the reimbursement agreement, dated as
of January 12, 2000, between the Company and Midland.
"Required Noteholders" means, at any time, Noteholders owning more than
50% of the then outstanding principal amount of the Series No. 1 Notes;
provided, however, that any Series No. 1 Note
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which from time to time is held by any Affiliate of the Company (other than
Triarc Companies, Inc. or any of its designees, excluding the Company and its
Subsidiaries) shall be deemed to be not outstanding for all purposes of (x)
Sections 7.3 and 8.1 and (y) any other determination to be made by, or action to
be taken by or at the direction of, the Required Noteholders.
"Residual Transaction" is defined in clause (e) of Section 6.2.2.
"Restricted Payment" means
(a) relative to any Capital Stock of the Company,
(i) any dividend or other distribution (in cash,
property or obligations), direct or indirect, by the Company
on account of (x) any shares of any class of such Capital
Stock (now or hereafter outstanding) or (y) any warrants,
options or other rights with respect to any shares of any
class of such Capital Stock (now or hereafter outstanding),
excluding, however, in each case, dividends or distributions
payable in such Capital Stock, or warrants to purchase such
Capital Stock, or split-ups or reclassifications of such
Capital Stock into additional or other shares of its Capital
Stock,
(ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value,
direct or indirect, by the Company or any Subsidiary of any
shares of any class of such Capital Stock (now or hereafter
outstanding), and
(iii) any payment by the Company or any Subsidiary
made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any
class of such Capital Stock now or hereafter outstanding;
(b) any payment or prepayment by the Company or any Subsidiary
of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any
Indebtedness subordinated in right of payment to the Obligations; and
(c) any deposit to fund any of the foregoing.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization Subsidiary" means any of Midland Receivables 98-1
Corporation, Midland Receivables 99-1 Corporation or Midland Funding 98-A
Corporation or any other bankruptcy-remote Subsidiary created or acquired by the
Company or any Subsidiary for the purpose of securitizing or otherwise selling,
pledging or borrowing against charged-off accounts in the ordinary course of
business.
"Securitization Transaction" means any transaction or series of
transactions by or through a Securitization Subsidiary for the purpose of
securitizing or otherwise selling, pledging or borrowing against charged-off
accounts in the ordinary course of business.
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"Series No. 1 Note" means each 12.0% senior promissory note of the
Company issued on the Closing Date in accordance with Section 2.3, and any PIK
Notes issued pursuant to Section 4.4, in each case substantially in the form of
Exhibit A hereto (as such note may be amended, endorsed or otherwise modified
from time to time) and all other notes accepted from time to time in
substitution, replacement or renewal therefor, including pursuant to Section 4.8
or 4.9.
"Significant Stockholders" means, collectively, Nelson Peltz, Peter W.
May, Triarc Companies, Inc., C.P. International Investments Limited, Peter N.S.
Frazer and Frank Chandler, or any of their Affiliates.
"Subject Security" means all Series No. 1 Notes and other securities
purchased on the Closing Date pursuant to Section 2.3, together with all other
securities issued in replacement or exchange therefor or as a distribution
thereon.
"Subsidiary" means, relative to any Person, (x) any corporation,
association or other business entity more than 50.0% of the outstanding shares
of Voting Stock of which is owned directly or indirectly by such Person and (y)
any partnership in which such Person is a general partner (but not including any
trust unless the applicable Person owns more than 50% beneficial interest
therein as evidenced by issued certificates). Except as otherwise indicated
herein, references to Subsidiaries refer to Subsidiaries of the Company.
"Subsidiary Guaranty" is defined in Section 6.1.6.
"Subsidiary Guarantor" means each Subsidiary that shall from time to
time after the Closing Date become a party to the Subsidiary Guaranty in
accordance with Section 6.1.6.
"Tax" is defined in Section 4.10.
"Transaction" means collectively:
(a) the issuance by the Company of the Subject Securities in
accordance with this Agreement; and
(b) all of the other transactions contemplated by the parties
hereto (including in accordance with Article III) to occur on the
Closing Date, including the payment of Transaction Costs.
"Transaction Cost" means any reasonably incurred fee, cost or expense
payable by the Company or any Subsidiary in connection with the Transaction.
"Transaction Documents" means the Purchase Documents, the Registration
Agreement and all documents, certificates and Instruments delivered in
connection with any thereof.
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"Voting Stock" means, relative to any Person, Capital Stock of any
class or kind, including any Capital Stock of such Person of any other class or
kind which is then convertible into Capital Stock of such class or kind,
ordinarily having the power to vote (and irrespective of whether at the time
Capital Stock of such Person of any other class or kind shall or might upon the
occurrence of a contingency have voting power) for the election of directors,
managers or other voting members of the governing body of such Person.
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"Warrant" means a warrant issued by the Company substantially in the
form of Attachment 1 to the Warrant Agreement (as such warrant may be amended,
endorsed or otherwise modified from time to time) and all other warrants
accepted from time to time in substitution, replacement or renewal therefor,
including pursuant to Section 2.2 or 2.3 thereof.
"Warrant Agreement" means an agreement between the Company and the
Purchaser substantially in the form of Exhibit E hereto as such agreement may be
amended, waived or otherwise modified from time to time in accordance with its
terms.
"wholly-owned Subsidiary" means, relative to any Person, any Subsidiary
of such Person all of the Capital Stock (and all rights and options to purchase
such Capital Stock) of which, other than directors' qualifying shares, are
owned, beneficially and of record, by such Person or its wholly-owned
Subsidiaries.
"Year 2000 Problem" means, relative to any Person, any significant risk
that computer hardware, software or equipment containing embedded microchips
used in its businesses or operations will not, in the case of dates of time
periods occurring after December 31, 1999, function at least as effectively as
in the case of dates or time periods occurring prior to January 1, 2000.
SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule, each
Series No. 1 Note and any other Purchase Document or any notice or other
communication delivered from time to time in connection with any Purchase
Document.
SECTION 1.3 Cross References. Unless otherwise specified, references
in this Agreement and in each other Purchase Document to any Article or Section
are references to such Article or Section of this Agreement or such other
Purchase Document, as the case may be, and unless otherwise specified,
references in any Article, Section or definition to any item or clause are
references to such item or clause of such Article, Section or definition.
SECTION 1.4 Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Purchase Document
shall be interpreted, all accounting determinations and computations hereunder
or thereunder for periods after the Closing Date shall be made and all financial
statements required to be delivered hereunder or thereunder shall be prepared,
in accordance with generally accepted accounting principles ("GAAP") (subject,
however, in the case of financial information as at the close of any period
other than a Fiscal Year, to the absence of footnotes and year-end adjustments)
as in effect at such time and applied consistently with the 1998 Audited
Financial Statements (except as disclosed therein).
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ARTICLE II
PURCHASE AND SALE OF SECURITIES
SECTION 2.1 Purchase Commitment. The Purchaser hereby agrees,
subject, however, to the terms and conditions of this Agreement (including
Article III), to purchase from the Company, and the Company hereby agrees to
sell to the Purchaser, at the Closing the following securities:
(a) $10,000,000 principal amount of Series No. 1 Notes, at
par; and
(b) for consideration of $10.00, a Warrant to purchase 428,571
of the Company's Common Shares, exercisable for a period of five years
at an exercise price of $0.01 per share.
SECTION 2.2 Issue Price. The Company and the Purchaser agree that,
for purposes of section 1271 et seq. of the Code, the issue price of each Series
No. 1 Note and the issue price of the Warrant shall be determined by the Company
in good faith and shall be provided to the Purchaser promptly thereafter but in
no event more than 45 days after the Closing Date.
SECTION 2.3 Closing. The purchase of the Series No. 1 Notes and the
other Subject Securities shall take place at a closing (the "Closing") at the
offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York, at 10:00
a.m., local time, on January 12, 2000 or such other Business Day as may be
agreed upon by the Company and the Purchaser (the "Closing Date"). At the
Closing, the Company will deliver to the Purchaser:
(a) a single Series No. 1 Note (or such greater number of
Series No. 1 Notes as the Purchaser may request) in the aggregate
principal amount set forth in clause (a) of Section 2.1, dated the
Closing Date, and registered in the Purchaser's name (or in the name of
one or more nominees of the Purchaser), and
(b) a Warrant (or such greater number of Warrants as the
Purchaser may request) representing in the aggregate the right to
purchase the number of Common Shares set forth in clause (b) of Section
2.1, dated the Closing Date, and registered in the Purchaser's name (or
in the name of one or more nominees of the Purchaser),
each against delivery by the Purchaser to the Company of immediately available
funds in the amount of the purchase price therefor. If, at the Closing, the
Company shall fail to tender to the Purchaser the Subject Securities as provided
in this Section or any of the conditions specified in Article III shall not have
been fulfilled to the Purchaser's reasonable satisfaction, the Purchaser shall,
at its election, be relieved of all further obligations under this Agreement,
without thereby waiving any other rights the Purchaser may have by reason of
such failure or such nonfulfillment.
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ARTICLE III
CONDITIONS TO CLOSING
The Purchaser's obligation to purchase and pay for the Subject
Securities is subject, however, to the fulfillment, to the Purchaser's
satisfaction, prior to, at or concurrently with the Closing, of all of the
following conditions:
SECTION 3.1 Certificate of Incorporation. Each of the following shall
have occurred (and the Purchaser shall have received from the Company a
certificate, dated the Closing Date, of its Secretary or Assistant Secretary
substantially in the form of Exhibit B hereto confirming inter alia that):
(a) the Company shall have adopted and duly filed with the
Secretary of State of Delaware the Certificate of Incorporation; and
(b) no further amendments or modifications thereto shall have
been adopted or filed.
SECTION 3.2 Resolutions, etc. The Purchaser shall have received:
(a) from the Company, a certificate, dated the Closing Date,
in the form of Exhibit C hereto as to:
(i) resolutions of its Board of Directors then in
full force and effect authorizing in the case of the Company,
the issuance of the Subject Securities and the execution,
delivery and performance of this Agreement and each other
Purchase Document to be executed by it, and
(ii) 3.2.0.1.2. the incumbency and signatures of
those of its officers authorized to act with respect to this
Agreement and each other Purchase Document executed by it;
(b) duly executed and delivered counterparts of the
Registration Agreement; and
(c) the balance sheets and financial statements identified in
clauses (a) through (d) of Section 5.4 together with all other
financial information reasonably requested by the Purchaser, who shall
be satisfied with the same in its sole discretion.
SECTION 3.3 Series No. 1 Note. The Company shall have executed and
delivered to the Purchaser a Series No. 1 Note, dated the Closing Date, in the
original principal amount provided in clause (a) of Section 2.1 with interest
payable thereon at the rates determined in accordance with Section 4.4.
SECTION 3.4 Warrants. The Company shall have exchanged duly executed
counterparts of the Warrant Agreement with the Purchaser and shall have issued
pursuant thereto to the Purchaser, a Warrant, dated the Closing Date, for the
number of Common Shares provided in clause (b) of Section 2.1.
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SECTION 3.5 Guaranties. The Purchaser shall have received from each
Subsidiary Guarantor, a duly authorized and executed Subsidiary Guaranty,
together with appropriately completed certificates similar in form and substance
to Exhibits B and C hereto.
SECTION 3.6 Material Contracts. The Purchaser shall have received from
the Company true, correct and completed copies of all Material Contracts
(including but not limited to the Reimbursement Agreement, the First
Registration Agreement, the indenture and servicing agreements for all
Securitization Transactions as of the Closing Date, and the Bank of America
Credit Agreement) as executed by the parties thereto, including all schedules
thereto appropriately completed. The Material Contracts, including the schedules
thereto, shall be in form and substance reasonably acceptable to the Purchaser.
SECTION 3.7 Performance; No Default. At the time of the Closing (and
after giving effect to the Transaction),
(a) the representations and warranties of the Company
contained in this Agreement and those made in writing by or on behalf
of the Company in connection with any other Purchase Document delivered
on the Closing Date shall be true and correct;
(b) the Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be
performed or complied with by it prior to or at the Closing; and
(c) no Default shall have occurred and be continuing.
SECTION 3.8 Absence of Litigation, etc. Except as disclosed by the
Company pursuant to Section 5.8,
(a) no litigation, arbitration or governmental investigation
or proceeding shall be pending or, to the Company's Knowledge,
threatened against the Company or any Subsidiary which (x) affects any
of their respective financial condition, business, assets, operations
or properties and which would, in the opinion of the Purchaser,
reasonably be expected to have a Materially Adverse Effect or (y)
relates to the Transaction; and
(b) no development shall have occurred in any such litigation,
arbitration or governmental investigation or proceeding so disclosed,
which would, in the opinion of the Purchaser, reasonably be expected to
have a Materially Adverse Effect.
SECTION 3.9 Certificate as to Compliance, etc. The Purchaser shall
have received from the Company a certificate, dated the Closing Date, of its
chief executive or financial Authorized Officer as to satisfaction of the
conditions set forth in Sections 3.7 and 3.8 in the form of Exhibit G hereto.
SECTION 3.10 Certificate as to Solvency, etc. The Purchaser shall have
received a certificate, dated the Closing Date, of the chief financial
Authorized Officer of the Company, in the form of Exhibit H hereto.
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SECTION 3.11 Opinion of Counsel. The Purchaser shall have received
opinions, dated the Closing Date, from Squire, Sanders & Dempsey L.L.P., counsel
to the Company and the Subsidiary Guarantors, substantially in the form of
Exhibit I hereto.
SECTION 3.12 Fees. The Company shall have made payment in full of:
(a) all fees and other amounts due on the Closing Date to the
Purchaser by the Company in connection with the Transaction; and
(b) all fees and expenses of Mayer, Brown & Platt which shall
have been invoiced (including reasonable amounts invoiced on account)
to the Company pursuant to Section 8.3.
SECTION 3.13 Wire Instructions. The Purchaser shall have received,
not less than two Business Days prior to the Closing Date, wire instructions
prepared by the Company as to all wire transfers or other payments to be
effected on the Closing Date in connection with the Transactions to be
consummated on the Closing Date pursuant to this Agreement or the other
Transaction Documents, which wire instructions shall identify the payor and
payee of each such wire transfer or payment, shall describe the manner of
transfer or payment and shall otherwise be satisfactory in form and substance to
the Purchasers.
SECTION 3.14 Due Diligence. The Purchaser shall have completed, to its
reasonable satisfaction, an investigation and analysis of the legal affairs and
Contractual Undertakings of the Company and its Subsidiaries.
SECTION 3.15 Legal Investment. On the Closing Date, the Purchaser's
purchase of the Subject Securities shall not be prohibited by any Applicable Law
and shall not subject it to any penalty or, in the Purchaser's reasonable
judgment, other onerous condition under or pursuant to any Applicable Law.
SECTION 3.16 Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Company shall be satisfactory
in form and substance to the Purchaser and its counsel; the Purchaser and its
counsel shall have received all information, and such counterpart originals or
such certified or other copies of all Instruments, as the Purchaser or its
counsel may reasonably request; and all legal matters incident to the
transactions contemplated by this Agreement shall be satisfactory to counsel to
the Purchaser.
SECTION 3.17 Approvals, etc. The Company shall have received (i) all
Approvals, and (ii) any consent of third-parties required under any Contractual
Undertaking of the Company or any Subsidiary have been obtained or given, in
each case in connection with the Transaction.
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ARTICLE IV
PAYMENTS, REGISTRATION, ETC.
SECTION 4.1 Place of Payment. Payments of principal and interest
becoming due and payable on the Series No. 1 Notes and any dividends or other
payments on or in respect of any other Subject Securities shall be made to the
Purchaser's account identified on the signature page hereto at the office of The
Chase Manhattan Bank, 5 Metrotech Center, Brooklyn, New York.
SECTION 4.2 Home Office Payment. So long as the Purchaser or its
nominee shall be the holder of any Subject Security, and notwithstanding
anything contained in Section 4.1 or in any Subject Security to the contrary,
the Company will pay all sums becoming due for principal of and interest on such
Series No. 1 Note so held and all dividends or other payments on or in respect
of any other Subject Security so held, not later than 12:00 o'clock noon, New
York City time, on the date such payment is due, in immediately available funds,
(a) in accordance with the payment instructions set forth
below the Purchaser's signature hereto with instructions to the payee
identified in such instructions to telephone advice of credit in
accordance with such instructions, or
(b) by such other method or at such other address or bank
account as the Purchaser may designate in writing,
without the presentation or surrender of such Subject Security or the making of
any notation thereon, except that any Series No. 1 Note paid or prepaid (or any
other Subject Security redeemed) in full shall be surrendered to the Company at
its principal office for cancellation. Prior to any sale or other disposition of
any Series No. 1 Note held by the Purchaser, the Purchaser will, at its
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Series No. 1
Note to the Company in exchange for a new Series No. 1 Note or Series No. 1
Notes, as the case may be, pursuant to Section 4.8. The Company will afford the
benefits of this Section to any Institutional Holder which is the direct or
indirect transferee of any Subject Security purchased by the Purchaser under
this Agreement and which has made the same agreement relating to such Subject
Security as the Purchaser has made in this Section.
SECTION 4.3 Optional Payments. The Company may, at its option, prepay
at any time all or any part (in a minimum amount of $100,000 and integral
multiples of $1,000 thereafter) of the outstanding principal amount of, or of
interest due or to become due on the next Payment Date under, the Series No. 1
Notes. Prepayments of principal shall be in the amount of the applicable
Optional Redemption Price and shall be accompanied by payment in full of all
interest accrued on such principal amount and not yet paid. Each prepayment
shall be subject, however, to the Company having given each Noteholder written
notice of such prepayment not more than 30 days and not less than five days
prior to the date fixed for such prepayment, in each case specifying (w) such
date, (x) the aggregate principal amount, if any, of (and the amount of unpaid
interest accrued on such principal amount), or the amount of unpaid interest
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on, the Series No. 1 Notes to be prepaid on such date, (y) the principal amount,
if any, of (and the amount of unpaid interest accrued on such principal amount),
or the amount of unpaid interest on, each Series No. 1 Note held by such
Noteholder to be prepaid on such date and (z) the Optional Redemption Price
applicable to such prepayment.
SECTION 4.4 Payment of Principal and Interest.
(a) Payment of Maturity. The Company will duly and punctually
pay the principal of and interest on the Series No. 1 Notes, and will
timely pay and perform all of its other Obligations, in accordance with
the terms of such Series No. 1 Notes, this Agreement and the other
Purchase Documents, and, without limitation of the foregoing, the
Company will, on the maturity of all Series No. 1 Notes (whether on
January 15, 2007 or by declaration (pursuant to Section 7.3) or
otherwise), make payment in full to the holders of the Series No. 1
Notes of the unpaid principal balance thereof, to the extent not sooner
paid or prepaid hereunder, together with all unpaid interest and fees
accrued thereon and all expenses, indemnities and other amounts then
due and payable under the terms of the Series No. 1 Notes, this
Agreement or the other Purchase Documents.
(b) Interest. The Series No. 1 Notes will bear interest, prior
to the occurrence of any Default pursuant to Section 7.1.1 relating to
the non-payment of principal of or interest on the Series No. 1 Notes,
at a rate of 12.0% per annum. Interest so accrued will be payable in
arrears on each Payment Date, commencing with July 15, 2000 and at
maturity; provided, that on any Payment Date on or prior to January 15,
2002, the Company may (in lieu of making any required cash payment of
interest on any outstanding Series No. 1 Notes) issue on such date, and
each Person then entitled to payment of interest shall accept, a Series
No. 1 Note (a "PIK Note") in a principal amount equal to the interest
owed to such Person on such Payment Date. All PIK Notes shall have a
maturity date of July 1, 2005. At any time when the Company shall have
defaulted in the payment when due (whether at maturity, or at a date
fixed for payment or prepayment or by declaration or otherwise) of
principal of or interest on the Series No. 1 Notes (and for so long as
such default shall continue), the Series No. 1 Notes will bear
interest, payable semi-annually as aforesaid or at the option of a
Noteholder on demand, at a rate equal to the sum of the foregoing rate
plus an additional 2% per annum on the entire unpaid balance of such
principal amount, on overdue premium, if any, and (to the extent
permitted by applicable law) on overdue interest.
SECTION 4.5 Allocation. Each partial prepayment paid or to be prepaid
of principal of the Series No. 1 Notes and each prepayment of interest paid or
to be prepaid shall be allocated (in integral multiples of $1,000) among all of
the Series No. 1 Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof. In the case of
each voluntary prepayment of principal of or interest on the Series No. 1 Notes,
the principal amount to be prepaid, if any, (together with interest on such
principal amount accrued to such date), or the amount of interest to be prepaid,
as the case may be, shall mature and become due and payable on the date fixed
for such prepayment. From and after the date of any such prepayment of
principal, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest, as aforesaid, interest on such
principal amount shall cease to accrue. Any Series No. 1 Note paid or prepaid in
full shall be surrendered to the Company and cancelled and shall not be
reissued, and no Series No. 1 Note shall be issued in lieu of any prepaid
principal amount of any Series No. 1 Note.
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SECTION 4.6 Mandatory Offer of Redemption of Series No. 1 Notes. Upon
the earliest to occur of:
(a) any Change of Control,
(b) the Company entering into any written or other arrangement
which will give rise to a Change of Control, or
(c) the Company having notice that any other Person has
entered into a written or other arrangement which will give rise to a
Change of Control,
the Company will promptly give written notice of such transaction or event to
each Noteholder, which notice shall describe such transaction or event in
reasonable detail. Within five (5) Business Days following the occurrence of any
Change of Control, the Company will offer to purchase from each Noteholder all
of the outstanding Series No. 1 Notes held by it at a purchase price, payable in
immediately available funds, equal to the Optional Redemption Price of the
unpaid principal amount thereof together with all unpaid interest accrued
thereon to the date of such purchase.
SECTION 4.7 Assignments by Noteholders. Each Noteholder may assign to
one or more financial institutions that are accredited investors all or a
portion of its rights and obligations under Series No. 1 Notes, this Agreement
and all other agreements executed in connection therewith (pursuant to the terms
and conditions of such agreements); provided, however, that in the case of each
such assignment of a Series No. 1 Note, the principal amount assigned shall be
equal to or greater than $1,000,000 or, if less, such Noteholder's entire amount
of its Series No. 1 Note(s); provided further, however, that such Noteholder
shall give the Company no less than five Business Days written notice of such
prospective assignment, upon the receipt of which the Company shall have three
Business Days to give such Noteholder written notice (the "Notice of
Redemption") stating that the Company shall redeem or prepay the portion of such
Series No. 1 Note(s) or portion to be assigned in accordance with Section 4.3
within ten Business Days after such Noteholder's receipt of the Notice of
Redemption. The parties to each such assignment shall execute and deliver to the
Company, for its recording in the register kept by it pursuant to Section 4.7.4,
an assignment and acceptance agreement (the "Assignment and Acceptance")
substantially in the form of Exhibit F hereto, together with any Series No. 1
Note or Series No. 1 Notes subject to such assignment.
SECTION 4.7.1 Consent to Certain Assignments. The consent of the
Company is not required for a Noteholder to assign all or a portion of the
rights and obligations under this Agreement, provided that (i) all conditions
set forth in Section 4.7 have been satisfied, and (ii) only Noteholders and
Institutional Holders may have any rights under this Agreement.
SECTION 4.7.2 Procedures. Upon any assignment of Series No. 1 Notes,
and the execution and delivery by any Noteholder of an Assignment and Acceptance
to the Company,
(a) the assignee thereunder shall, automatically and without
further action, become a party hereto and, to the extent that rights
and obligations hereunder or under any other Purchase Document have
been assigned to it pursuant to such Assignment and Acceptance, shall
have all rights, obligations and benefits of a Noteholder; and
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(b) the 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 and be released (other
than the final paragraph of Section 6.1.1 which assignor shall continue
to be bound thereto) from its obligations under this Agreement and
under each other Purchase Document (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of an assigning
Noteholder's rights and obligations under this Agreement, such
assigning Noteholder shall cease to be a party hereto; provided that
the obligations of the Company to such assigning Noteholder under
Sections 4.10, 8.3 and 8.4 with respect to events occurring or
obligations arising before such assignment shall survive such
assignment).
SECTION 4.7.3 Terms and Conditions. By executing and delivering an
Assignment and Acceptance, each of the assignor and assignee thereunder confirm
to and agree with each other and the other parties hereto as follows:
(a) other than as provided in such Assignment and Acceptance,
such assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any
other Purchase Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement,
the assigned Series No. 1 Note, any Purchase Document or any other
Instrument furnished pursuant hereto;
(b) such assigning Purchaser makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Company or any Subsidiary or the performance or
observance by any party hereto or thereto of any of its obligations
under this Agreement or any other Purchase Document or any other
Instrument furnished pursuant hereto;
(c) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to
in Sections 5.4 and 6.1.1 (to the extent theretofore delivered) 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; and
(d) such assignee will, independently and without reliance
upon any Person 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 4.7.4 Registration, Transfer, etc. The Company will keep at
its principal office a register in which the Company will provide for the
registration of the Series No. 1 Notes and their transfer. The Company may treat
the Person in whose name any Series No. 1 Note is registered on such register as
the owner thereof for the purpose of receiving payment of the principal of and
interest on such Series No. 1 Note and for all other purposes, whether or not
such Series No. 1 Note shall be overdue, and the Company shall not be affected
by any notice to the contrary from any Person other than the applicable
Noteholder. All references in this Agreement to a "holder" of any Series No. 1
Note shall mean the Person in whose name such Series No. 1 Note is at the time
registered on such register.
SECTION 4.8 Transfer and Exchange. Upon surrender of any Series No. 1
Note for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will execute and deliver in
exchange therefor a new Series No. 1 Note or Series No. 1 Notes, as the case
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may be, of the same class in denominations of at least $100,000 (except a Series
No. 1 Note may be issued in a lesser principal amount if the unpaid principal
amount of the surrendered Series No. 1 Note is not evenly divisible by, or is
less than, $100,000), as requested by the holder or transferee, which aggregate
the unpaid principal amount of such Series No. 1 Note, registered as such holder
or transferee may request, dated so that there will be no loss of interest on
such surrendered Series No. 1 Note and otherwise of like tenor.
SECTION 4.9 Replacement. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Series No. 1 Note and, in the case of any such loss, theft or destruction of any
Series No. 1 Note, upon delivery of an indemnity bond in such reasonable amount
as the Company may determine (or, in the case of any Series No. 1 Note or Series
No. 1 Notes held by the Purchaser or another Institutional Holder or the
Purchaser's nominee, of an unsecured indemnity agreement from the Purchaser or
such other holder reasonably satisfactory to the Company), or, in the case of
any such mutilation, upon the surrender of such Series No. 1 Note for
cancellation to the Company at its principal office, the Company at its expense
will execute and deliver, in lieu thereof, a new Series No. 1 Note of the same
class and of like tenor, dated so that there will be no loss of interest on (and
registered in the name of the holder of) such lost, stolen, destroyed or
mutilated Series No. 1 Note. Any Series No. 1 Note in lieu of which any such new
Series No. 1 Note has been so executed and delivered by the Company shall be
deemed to be not outstanding for any purpose of this Agreement.
SECTION 4.10 Taxes. Except as otherwise provided in this Section, all
payments by the Company of principal of, and interest on, the Series No. 1
Notes, and all other amounts payable hereunder shall be made free and clear of
and without deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, excluding, however,
franchise taxes and taxes imposed on or measured by the Purchaser's or any other
Noteholder's net income or receipts (such non-excluded items being called
"Taxes"). In the event that any withholding or deduction from any payment to be
made by the Company hereunder is required in respect of any Taxes pursuant to
any Applicable Law, then, the Company will:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Purchaser and each other
Noteholder an official receipt or other documentation satisfactory to
the Purchaser and each other Noteholder evidencing such payment to such
authority; and
(c) except as otherwise provided in this Section, pay to the
Purchaser and each other Noteholder such additional amount or amounts
as is necessary to ensure that the net amount actually received by each
Noteholder will equal the full amount such Noteholder would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Purchaser or any
Noteholder with respect to any payment received by the Purchaser or such
Noteholder hereunder, the Purchaser or such Noteholder may pay such Taxes, and,
except as otherwise provided in this Section, upon receipt of written evidence
of such payment, the Company will promptly pay such additional amount (including
any penalties, interest or expenses) as is necessary in order that the net
amount received by the Purchaser or such Noteholder
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after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount the Purchaser or such Noteholder would have received had
no such Taxes been asserted.
If the Company fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Purchaser and the other Noteholders
the required receipts or other required documentary evidence, the Company shall
indemnify the Purchaser and the other Noteholders for any incremental Taxes,
interest or penalties that may become payable by the Purchaser or any other
Noteholder as a result of any such failure. For purposes of this Section, a
distribution hereunder by the Purchaser or any other Noteholder to or for the
account of any Noteholder shall be deemed a payment by the Company.
The Purchaser shall provide to the Company on or prior to the due date
of the first payment under the Series No. 1 Notes, two original signed copies of
Internal Revenue Service Form 4224 or Form 1001 or any successor form certifying
to the Purchaser's entitlement to a complete exemption from United States
withholding tax with respect to payments of interest to be made under this
Agreement and under any Series No. 1 Note. Any Noteholder which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes (a "Non-U.S. Noteholder") that becomes a
Noteholder under this Agreement after the Closing shall, upon the date of such
Noteholder becoming a Noteholder hereunder, provide to the Company two original
signed copies of Internal Revenue Service Form 4224 or Form 1001 or any
successor form certifying as to such Noteholder's entitlement to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement and under any Series No. 1 Note;
provided, however, that if such Non-U.S. Noteholder is an Affiliate of the
Purchaser and is organized under the laws of the same jurisdiction as the
Purchaser, such Noteholder will only be required to deliver such forms
certifying as to such Noteholder's entitlement to the same exemption from such
withholding tax to which the Purchaser would be entitled with respect to such
payments as of such date. To the extent legally entitled to do so, on or before
the date any such form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent form previously delivered by it
to the Company, and otherwise from time to time upon the reasonable written
request of the Company after the Closing, each Noteholder (including the
Purchaser) that is a Non-U.S. Noteholder will provide to the Company two
original signed copies of Internal Revenue Service Form 4224 or Form 1001 (or
any successor forms) certifying to such Noteholder's entitlement to an exemption
from United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Series No. 1 Note.
Notwithstanding anything to the contrary contained in this Section, the
Company shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder for the account of any Noteholder that
is a Non-U.S. Noteholder and that has not provided to the Company the forms
required to be provided to the Company pursuant to the preceding paragraph, and
the Company shall have no obligation to pay any additional amount to a Non-U.S.
Noteholder with respect to such withheld amounts or with respect to Taxes
incurred by such Non-U.S. Noteholder to the extent such withholding would not
have been required or such Taxes would not have been incurred if such Non-U.S.
Noteholder would have provided such forms to the Company in the manner required
by the preceding paragraph.
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ARTICLE V
WARRANTIES, ETC.
To induce the Purchaser to enter into this Agreement and to purchase
the Subject Securities hereunder, the Company represents and warrants unto the
Purchaser as follows (and, for all purposes of this Agreement, all of such
representations and warranties shall be understood to be made by the Company on
(and only on) the date of execution and delivery of this Agreement by the
Company and the Closing Date (except to the extent specifically made as of
another date); provided, however, that (x) the representations in Sections 5.4
and 5.20 relative to any financial, other information or projections delivered
from time to time pursuant to this Agreement or any other Purchase Document
shall also be understood to be made with respect thereto on the date of delivery
thereof and (y) the representations in Sections 5.1, 5.2 and 5.3 relative to
each Subsidiary Guarantor shall also be understood to be made on the date when
such Subsidiary Guarantor executes and delivers a Subsidiary Guaranty pursuant
to clause (a) of Section 6.1.6.):
SECTION 5.1 Organization, Power, Authority, etc. Each Obligor is a
corporation duly incorporated and in good standing under the laws of the
jurisdiction of its incorporation and has full power and authority and holds all
requisite Approvals to own and hold its property and to conduct its business
substantially as currently conducted by it. The Company has full power and
authority to enter into and perform its obligations under this Agreement, the
Series No. 1 Notes, the other Subject Securities and each other Purchase
Document to which it is a party and to issue the Subject Securities (and any
Common Shares issuable upon exercise of any thereof), and each Subsidiary
Guarantor has full power and authority to enter into and perform its obligations
under the Subsidiary Guaranty and each other Purchase Document to which it is a
party.
SECTION 5.2 Due Authorization. The execution and delivery by the
Company of this Agreement, the Series No. 1 Notes and other Subject Securities
and each other Purchase Document to which it is a party, the performance by the
Company of its obligations hereunder and thereunder, and the issuance of the
Subject Securities (and the issuance of Common Shares issuable upon exercise of
any thereof) by the Company, and the execution and delivery by each Subsidiary
Guarantor of the Subsidiary Guaranty and each other Purchase Document to which
it is a party and the performance by each Subsidiary Guarantor of its
obligations thereunder, have been duly authorized by all necessary corporate
action, do not require any Approval, do not and will not conflict with, result
in any violation of, or constitute any default under, any provision of any
Organizational Document, any Applicable Law or Material Contract and will not
result in or require the creation or imposition of any Lien on any of its
properties pursuant to the provisions of any Material Contract (excluding,
however, pursuant to any Purchase Document).
SECTION 5.3 Validity, etc. This Agreement constitutes, and the Series
No. 1 Notes and other Subject Securities and each other Purchase Document to
which the Company is a party will on the due execution and delivery thereof
constitute, the legal, valid and binding obligations of the Company enforceable
in accordance with their respective terms, subject, however, as to enforcement
only, to bankruptcy, insolvency, reorganization, moratorium or similar laws at
the time in effect affecting the enforceability of the rights of creditors
generally and general equity principles (regardless of whether enforcement is
sought in a proceeding at law or in equity). The Subsidiary Guaranty and each
other Purchase Document to which each Subsidiary Guarantor is a party will on
the due execution and delivery
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thereof constitute the legal, valid and binding obligation of such Subsidiary
Guarantor enforceable in accordance with their respective terms, subject,
however, as to enforcement only, as aforesaid.
SECTION 5.4 Financial Information. All balance sheets, financial
statements and all other financial information which have been furnished by or
on behalf of the Company to the Purchaser for the purposes of or in connection
with this Agreement or any transaction contemplated hereby, including
(a) the audited consolidated balance sheet at December
31, 1998, and the related consolidated statement of operations, of
shareholders' equity and of cash flow for the fiscal year then ended,
of the Company and its Subsidiaries (the "1998 Audited Financial
Statements"), and
(b) the consolidated balance sheet at September 30, 1999,
and the related consolidated statements of operations, of shareholders'
equity and of cash flow for the three fiscal quarters then ended, of
the Company and its Subsidiaries (the "1999 Interim Financial
Statements"),
have been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as disclosed therein) and present fairly the
consolidated financial condition of the corporations covered thereby as at the
dates thereof and the results of their operations for the periods then ended.
All financial information as to the Company and Subsidiaries which shall
hereafter from time to time be furnished by or on behalf of the Company to the
Purchaser and other Noteholders for the purposes of or in connection with this
Agreement or any transaction contemplated hereby will be prepared in accordance
with GAAP consistently applied throughout the periods involved (except as
disclosed therein) and will present fairly the consolidated financial condition
of the corporations covered thereby as at the dates thereof and the results of
their operations for the periods then ended except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
summary statements or may be condensed (subject, however, in the case of
unaudited interim statements, to normal year-end audit adjustments).
SECTION 5.5 Absence of Material Adverse Change. There have been
no occurrences, events or changed circumstances since December 31, 1998, other
than as disclosed in the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999 (excluding, however, the Transaction) which,
individually, as part of a series or in the aggregate, have had a Materially
Adverse Effect.
SECTION 5.6 Continuing Indebtedness. There is no long-term
Indebtedness of the Company and Subsidiaries on a consolidated basis expected to
be outstanding immediately after giving effect to the Transaction, except as
disclosed in Item 5.6 ("Ongoing Indebtedness") of the Disclosure Schedule.
SECTION 5.7 Contingencies. Neither the Company nor any Subsidiary has
any contingent liability for taxes, long-term leases or unusual forward or
long-term commitments or material unrealized or unanticipated losses from
unfavorable commitments which could reasonably be expected, individually or in
the aggregate, to have a Materially Adverse Effect and which are not reflected
in the financial statements described in clause (a) or (b) of Section 5.4 or in
the notes thereto.
SECTION 5.8 Litigation, etc. There is no pending or, to the Company's
Knowledge, threatened litigation, arbitration or governmental investigation or
proceeding against, or labor controversy affecting
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the Company or any Subsidiary or to which any of the properties, assets or
revenues of any thereof is subject (x) which could reasonably be expected,
individually or in the aggregate, to have a Materially Adverse Effect, except as
disclosed in Item 5.8 ("Litigation, etc.") of the Disclosure Schedule or (y)
which relates to the Transaction.
SECTION 5.9 Capitalization.
(a) On the Closing Date, the authorized Capital Stock of
the Company will be as set forth in Item 3.4 ("Capital Stock") of the
Disclosure Schedule and the number of Common Shares reserved for
issuance upon the exercise of
(i) any and all stock option plans or employee
ownership plans in respect of the Capital Stock of the Company
in existence on the Closing Date,
(ii) any warrants, other than the warrants issued in
connection with this Transaction; and
(iii) the conversion or exchange of all securities
convertible into or exchangeable for Common Shares,
respectively, is as set forth therein.
(b) The Common Shares to be issued to the Purchaser
pursuant to the Warrant will have been duly authorized for issuance
and, when sold and delivered against payment therefor as provided
herein and in the Warrant Agreement, will be validly issued, fully paid
and non-assessable and will be free and clear of all preemptive rights
and Liens except as otherwise provided herein and will be entitled to
the respective voting powers, designations, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof as are set forth with respect
thereto in the Certificate of Incorporation.
(c) The Company does not have outstanding any Capital Stock or
securities convertible into or exchangeable for any shares of its
Capital Stock, nor does it have outstanding any rights or options to
subscribe for or to purchase any Capital Stock or securities
convertible into or exchangeable for any of its shares of Capital
Stock, except as described in this Section. Except as disclosed in Item
5.9 ("Repurchase, etc. Agreements") of the Disclosure Schedule, the
Company is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its Capital
Stock.
(d) The aggregate amount of Common Shares issuable
pursuant to any warrants, options and other rights held by any
management employee of the Company or any Affiliate thereof for which
the exercise price thereof is equal to or greater than the market price
of such Common Shares on the Closing Date does not exceed 5% of the
aggregate outstanding Common Shares of the Company at the time of
calculation.
(e) Except for the Registration Agreement, the Warrant
Agreement, and the First Registration Agreement, and the registration
of existing stock options and stock options granted
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under the 1999 Stock Option Plan, none of the Company or any Subsidiary
has entered into an agreement to register any of its securities under
the Securities Act.
SECTION 5.10 Margin Regulations. The Company is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock, and less than 25%
of the assets of the Company, individually and on a consolidated basis with all
Subsidiaries, consists of margin stock. Terms for which meanings are provided in
F.R.S. Board Regulation U or any regulations substituted therefor, as from time
to time in effect, are used in this Section with such meanings.
SECTION 5.11 Government Regulation. Neither the Company nor any
Subsidiary is (or shall upon the consummation of the Transaction become) (x) an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (y) subject to regulation under the Federal Power
Act, the Interstate Commerce Act, the Commodity Exchange Act or any Applicable
Law limiting its ability to incur or assume Indebtedness for borrowed money.
SECTION 5.12 Title to and Condition of Properties; Material Contracts.
Each of the Company and each Subsidiary (x) has good and marketable title to all
of the real property, and valid title to all of the personal properties and
other assets (tangible, intangible or mixed), which it purports to own (except
where failure would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect), free and clear of all Liens
(excluding, however, Liens permitted by Section 6.2.3) and (y) enjoys peaceful
and undisturbed possession under all leases to which it is a party as lessee
(excluding, however, leases the absence of which would not reasonably be
expected, individually or in the aggregate, to have a Materially Adverse
Effect). All Material Contracts to which the Company is a party are valid and
binding and in full force and effect, and no default has occurred or is
continuing thereunder except as disclosed on Item 5.12 ("Defaults") of the
Disclosure Schedule. No consent need be obtained from any Person (which is not
required by Article III to be obtained on or prior to the Closing Date) in
respect of any such Material Contract in connection with the Transaction which,
if not obtained, would reasonably be expected, individually or in the aggregate,
to have a Materially Adverse Effect.
SECTION 5.13 Patents, Trademarks, etc. The Company and Subsidiaries
own, or are licensed under, and have the rights to use, all material patents,
trademarks, trade names, copyrights, technology, recipes, know-how and processes
(collectively, "Intellectual Property") necessary for the conduct of their
businesses as currently conducted, and the consummation of the Transaction does
not alter or impair any such rights. Except as disclosed in Item 5.13 ("Patents,
Trademarks, etc.") of the Disclosure Schedule, there is no (x) claim which has
been asserted by any Person to the use of any Intellectual Property or
challenging or questioning the validity or effectiveness of any license or
agreement related thereto or (y) to the Company's Knowledge, valid basis for any
such claim or any claim that the use of such Intellectual Property by the
Company and Subsidiaries infringes or will infringe on the rights of any Person.
SECTION 5.14 Taxes. The Company and each of its Subsidiaries has
filed all material tax returns and reports required by Applicable Law to have
been filed by it and has paid all taxes and governmental charges thereby shown
to be owing, excluding, however, any such taxes or charges which
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are being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 5.15 Pension and Welfare Plans. During the 12
consecutive-month period prior to the Closing Date, no steps have been taken to
terminate any Plan, and no contribution failure has occurred with respect to any
Plan sufficient to give rise to a Lien under section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any Plan
which might result in the incurrence by the Company or any member of the
Controlled Group of any material liability, fine or penalty. Except as disclosed
in Item 5.15 ("Employee Benefit Plans") of the Disclosure Schedule, neither the
Company nor any of its Subsidiaries nor any member of the Controlled Group has
any contingent liability with respect to any post-retirement benefit under a
Plan, other than liability for continuation coverage described in Part 6 of
Title I of ERISA.
SECTION 5.16 Environmental Matters. Except as disclosed in Item 5.16
("Environmental Matters") of the Disclosure Schedule,
(a) to the Company's Knowledge all facilities and
property (including underlying groundwater) owned or leased by the
Company or any of its Subsidiaries are owned or leased by it in
material compliance with all Environmental Laws,
(b) there have been no unresolved past, and there are no
pending or, to the Company's Knowledge, threatened claims, complaints,
notices or requests for information received by the Company or any of
its Subsidiaries with respect to any alleged violation of any
Environmental Law, or complaints, notices or inquiries to the Company
or any of its Subsidiaries regarding potential liability under any
Environmental Law (collectively, "Environmental Claims"),
(c) to the Company's Knowledge there have been no
releases of Hazardous Materials at, on or under any property now or
previously owned or leased by the Company or any of its Subsidiaries,
(d) to the Company's Knowledge no property now or
previously owned or leased by the Company or any of its Subsidiaries is
listed or proposed for listing (with respect to owned property only) on
the National Priorities List pursuant to CERCLA, on the CERCLIS or on
any similar state list of sites requiring investigation or clean-up,
(e) none of the Company or any of its Subsidiaries has
received notice that the Company or any of its Subsidiaries is
potentially responsible for clean-up or other corrective action under
any Environmental Law,
(f) to the Company's Knowledge there are no underground
storage tanks, active or abandoned, including petroleum storage tanks,
on or under any property now or previously owned or leased by the
Company or any of its Subsidiaries,
(g) neither the Company nor any of its Subsidiaries has
directly transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or, to the Company's
Knowledge, proposed for listing on the National Priorities List
pursuant to
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CERCLA, on the CERCLIS or on any similar federal, state or provincial
list or which is the subject of federal, state, provincial or local
enforcement actions or other investigations which may lead to material
claims against the Company or any Subsidiary for any remedial work,
damage to natural resources or personal injury, including claims under
CERCLA,
(h) to the Company's Knowledge, there are no polychlorinated
biphenyls or friable asbestos present at any property now or previously
owned or leased by the Company or any of its Subsidiaries, and
(i) to the Company's Knowledge, no conditions exist at, on or
under any property now or previously owned or leased by the Company or
any of its Subsidiaries which, with the passage of time, or the giving
of notice or both, would give rise to liability under any Environmental
Law,
except, in any and all such cases, as would not reasonably be expected,
individually or in the aggregate, to have a Materially Adverse Effect.
SECTION 5.17 Year 2000 Problem. The Company has reviewed its
operations and those of its Subsidiaries with a view to assessing whether it or
its Subsidiaries' respective businesses will, in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission or other
utilization of data, be vulnerable to a Year 2000 Problem. Based on such review,
the Company has no reason to believe that a Materially Adverse Effect will
result from a Year 2000 Problem.
SECTION 5.18 Solvency. The Transaction (including the issuance and
sale of the Series No. 1 Notes hereunder, the incurrence by the Company of the
Indebtedness represented by the Series No. 1 Notes and the application of the
proceeds of the issuance and sale of the Series No. 1 Notes), will not involve
or result in any fraudulent transfer or fraudulent conveyance under the
provisions of any applicable federal or state law respecting fraudulent
transfers or fraudulent conveyances. After giving effect to the Transaction, the
Company and each Subsidiary will be solvent.
SECTION 5.19 Subsidiaries, etc. As of the Closing Date,
(a) the Company will have no Subsidiaries and no other
Investments in any joint venture, partnership or other Person, except
as disclosed in Item 5.19 ("Subsidiaries, etc.") of the Disclosure
Schedule; and
(b) the Company will be the record and beneficial owner, free
of Liens, of 100% of the issued and outstanding Capital Stock of each
Subsidiary.
SECTION 5.20 Accuracy of Information. All factual information (and, for
the sake of clarity, not including any projections) heretofore or
contemporaneously furnished by or on behalf of the Company in writing to the
Purchaser for purposes of or in connection with the Transaction, including true
and complete copies thereof furnished to the Purchaser prior to the execution
and delivery of this Agreement, is collectively, and all other such factual
written information hereafter furnished by or on behalf of the Company to the
Purchaser or any Noteholder will be, in light of the circumstances under which
it was made, individually, true and accurate in every material respect taken as
a whole on the date as of which such written information is dated or certified,
and such information is not, or shall not be, as the case may be,
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incomplete on the date as of such information is dated or certified by omitting
to state any material fact necessary to make such information, in light of the
circumstances under which it was made, not misleading. There is, to the
Company's Knowledge, no fact that the Company has not disclosed to the Purchaser
in writing that would, individually or in the aggregate, reasonably be expected
to have a Materially Adverse Effect. All projections heretofore,
contemporaneously and hereafter furnished by or on behalf of the Company in
writing to the Purchaser for purposes of this Agreement or any transaction
contemplated hereby are and will be based on good faith estimates and
assumptions which the Company believes are fair and reasonable in light of the
historical financial performance of the Company and current and reasonably
foreseeable business conditions, and, to the Company's Knowledge, there are or
will be no facts or circumstances existing at the time such projections are
furnished which would, individually or in the aggregate, reasonably be expected
to cause a material change in such projections, it being recognized, however, by
the Purchaser that projections as to future events are not to be viewed as fact
and that actual results during the period or periods covered by any such
projections may differ from the projected results and that the differences may
be material.
SECTION 5.21 Offering of Subject Securities. Neither the Company, any
Subsidiary nor any Person employed to act on behalf of any thereof in connection
with the offer and sale of the Subject Securities has directly or indirectly
offered the Series No. 1 Notes, the Common Shares or any part thereof or any
similar securities for sale to, or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in respect thereof with, anyone
other than the Persons identified in Item 3.4 ("Capital Stock") of the
Disclosure Schedule. Neither the Company, nor anyone acting on behalf of it has
taken or will take any action which would subject the issuance or sale of the
Series No. 1 Notes or Common Shares to the provisions of Section 5 of the
Securities Act or to the registration or qualification requirements of any
securities or blue sky law of any applicable jurisdiction.
ARTICLE VI
COVENANTS
SECTION 6.1 Certain Affirmative Covenants. The Company agrees with:
(a) the Purchaser and each other Noteholder that, until all
Obligations have been paid and performed in full, the Company will
perform all of the covenants contained in Section 6.1;
(b) the Purchaser and each other Institutional Holder that,
for so long as either shall hold any Subject Security (other than a
Series No. 1 Note), the Company will perform the covenants contained in
clause (b) of Section 6.1.1 for the benefit of the Purchaser or such
Institutional Holder as if it were a Noteholder; and
(c) the Purchaser that, if at any time and for so long as (i)
the Purchaser shall hold any Subject Security (other than a Series No.
1 Note) and (ii) the Company is not subject to the reporting
requirements of Section 13 (d) or (g) of the Exchange Act, the Company
will perform the covenants contained in clauses (a) and (b) of Section
6.1.1 for the benefit of the Purchaser as if it were a Noteholder.
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SECTION 6.1.1 Financial Information, etc. The Company will furnish, or
will cause to be furnished, to the Purchaser and each other Noteholder copies of
the following financial statements, reports and information:
(a) promptly when available and in any event within 120 days
after the close of each Fiscal Year, (i) a consolidated balance sheet
as of the end of such Fiscal Year, and consolidated statements of
operations, of shareholders' equity and of cash flow for such Fiscal
Year, of the Company and Subsidiaries, prepared on a comparative basis
with the preceding Fiscal Year and audited by Ernst & Young, L.L.P. (or
other independent public accountants of recognized national standing
selected by the Company) and (ii) credit collection analyses on a
"static pool" basis together with all servicer reports for the last
Fiscal Quarter of such Fiscal Year prepared in connection with any
Securitization Transaction or warehouse financing;
(b) promptly when available and in any event within 60 days
after the close of each of the first three Fiscal Quarters of each
Fiscal Year, and certified by the chief accounting, executive or
financial officer of the Company, (i) consolidated balance sheets at
the close of such Fiscal Quarter, and the related consolidated
statements of operations, of shareholders' equity and of cash flow for
such Fiscal Quarter and for the period commencing at the close of the
previous Fiscal Year and ending with the close of such Fiscal Quarter,
of the Company and Subsidiaries (with comparative information at the
close of and for the corresponding Fiscal Quarter of the prior Fiscal
Year and for the corresponding portion of such prior Fiscal Year), (ii)
management discussion and analysis of such balance sheets and financial
statements and (iii) credit collection analyses on a "static pool"
basis together with all servicer reports for such Fiscal Quarter
prepared in connection with any Securitization Transaction or warehouse
financing;
(c) promptly when available and in any event within 30 days
after the close of each calendar month, and certified by the chief
accounting, executive or financial officer of the Company, (i)
consolidated balance sheets at the close of such calendar month, and
the related consolidated statements of operations, of shareholders'
equity and of cash flow for such calendar month and for the period
commencing at the close of the previous Fiscal Year and ending with the
close of such calendar month, of the Company and Subsidiaries (with
comparative information at the close of and for the corresponding
calendar month of the prior Fiscal Year and for the corresponding
portion of such prior Fiscal Year) and (ii) a copy of all Form 8-Ks
filed by the Company during such month, provided, that if at any time
and for so long as the Company is not subject to the reporting
requirements of Section 13 (d) or (g) of the Exchange Act, then the
Company, in lieu of furnishing such Form 8-Ks, will furnish such
information that would otherwise be required to be reported in such
Form 8-Ks;
(d) together with each set of financial statements delivered
from time to time as at the close of any Fiscal Year or Fiscal Quarter,
a certificate of the chief accounting, executive or financial officer
of the Company stating that to the best of such Officer's Knowledge no
Default had occurred or was continuing at the close of such Fiscal Year
or Fiscal Quarter, as the case may be, or, if a Default had occurred
and was continuing, a description thereof and a statement as to whether
it is continuing and as to what actions are being taken to cure it;
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(e) with ten (10) Business Days after approval thereof by the
Company's Board of Directors, the Company's budget as in effect for
such Fiscal Year substantially in the form approved by the Company's
Board of Directors;
(f) promptly after being made generally available to the
public by the Company, all press releases and statements delivered to
its shareholders concerning developments that are material; and
(g) such other information with respect to the financial
condition, business, property, assets, revenues and operations of the
Company or any Subsidiary as the Purchaser or the Required Noteholders
may from time to time reasonably request (including as to potentially
material environmental conditions to monitor compliance with Section
6.1.8).
For purposes of any financial statements delivered pursuant to clauses (a) and
(b), all Subsidiaries which are either direct Subsidiaries or Subsidiaries of
the same Subsidiary and which are not Subsidiary Guarantors may be treated
collectively on a consolidated basis.
The Purchaser and each other Noteholder and Institutional Holder
acknowledge that certain information provided to such parties pursuant to this
Agreement may consist of material nonpublic information regarding the Company,
and each such party acknowledges and agrees that it is aware (and that any
Person to whom any such information may be disclosed as permitted by this
Agreement has been, or upon receiving such information will be, advised) of the
restrictions imposed by federal and state securities laws on a Person possessing
material nonpublic information regarding an issuer of securities.
Notwithstanding any other provision in this Agreement, this paragraph shall
survive and continue to be binding against Purchaser, each other Noteholder and
Institutional Holder after any sale, conveyance, assignment or transfer by any
such Person of any Subject Security or the Warrants.
SECTION 6.1.2 Notice of Default, etc. The Company will furnish, or
will cause to be furnished, to the Purchaser and each other Noteholder prompt
notice (with a description in reasonable detail) of:
(a) the occurrence, to the Company's Knowledge, of any
Default;
(b) any steps by the Company or any other Person to terminate
any Plan, or the failure to make a required contribution to any Plan if
such failure is sufficient to give rise to a Lien under section 302(f)
of ERISA, or of any action with respect to a Plan which could result in
the requirement that the Company or any Subsidiary furnish a bond or
other security with the PBGC or such Plan, or any event with respect to
any Plan which could result in the incurrence by the Company or any
Subsidiary of any material liability, fine or penalty, or any material
increase in the Contingent Liability of the Company or any Subsidiary
with respect to any post-retirement Plan benefit, notice thereof and
copies of all documentation relating thereto; and
(c) material written claims, complaints, notices or inquiries
relating to compliance with Environmental Laws with respect to the
condition of any facilities and properties of the Company or any
Subsidiary.
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SECTION 6.1.3 Maintenance of Corporate Existence, etc. Except as
allowed under Section 6.2.7, the Company will cause to be done at all times all
things necessary to maintain and preserve the corporate existence of the Company
and each Material Subsidiary.
SECTION 6.1.4 Performance of Purchase Documents. The Company will, and
will cause each Subsidiary to, perform promptly and faithfully all of its
obligations under each Purchase Document.
SECTION 6.1.5 Books and Records. The Company will, and will cause each
Subsidiary to, keep books and records reflecting all of its business affairs and
transactions in accordance with GAAP and permit the Noteholders as a single
group or any representatives of all Noteholders (as appointed by the Required
Noteholders), at reasonable times and intervals and on reasonable prior notice,
to visit all of its offices, to discuss its financial matters with its officers
and independent public accountant (and hereby authorizes such independent public
accountant to discuss its financial matters with the Noteholders as a single
group or their aforementioned representatives whether or not any representative
of the Company is present) and to examine (and, at the reasonable expense of the
Company, photocopy extracts (such extracts to be identified by the Required
Noteholders or their authorized representatives with reasonable particularity)
from) any of its books or other corporate records. For so long as an Event of
Default exists and is continuing, the Company agrees to pay any reasonable fees
and out-of-pocket expenses of a single independent public accounting firm
representing all Noteholders (as appointed by the Required Noteholders)
reasonably incurred in connection with the Noteholders' exercise of their rights
pursuant to this Section.
SECTION 6.1.6 Subsidiary Guarantors. The Company will:
(a) concurrently with any Person (other than any
Securitization Subsidiary) becoming a Material Subsidiary, cause such
Material Subsidiary (x) to execute and deliver to the Purchaser a
guaranty agreement (as amended, supplemented and otherwise modified
from time to time, the "Subsidiary Guaranty") in substantially the form
of Exhibit D hereto and (y) to deliver to the Purchaser appropriately
completed certificates substantially in the form of Exhibits B and C
hereto; and
(b) except as allowed under Section 6.2.7, continue to own and
hold, free of Liens (other than Liens created by the Purchase
Documents), all of the outstanding shares of Capital Stock of each
Subsidiary.
SECTION 6.1.7 Payment of Taxes, etc. The Company will, and will cause
each Subsidiary to, pay and discharge, as the same may become due and payable,
all federal, state and local taxes, assessments, fees and other governmental
charges or levies against it or on any of its property, as well as claims of any
kind which, if unpaid, might become a material Lien upon any of its properties;
provided, however, that the foregoing shall not require the Company or any
Subsidiary to pay or discharge any such tax, assessment, fee, charge, levy or
Lien so long as it shall be diligently and promptly contesting the validity
thereof in good faith by appropriate proceedings and shall have set aside on its
books adequate reserves in accordance with GAAP with respect thereto.
SECTION 6.1.8 Environmental Conduct. The Company will, and will cause
each Subsidiary to, (x) use and operate all of its facilities and properties in
compliance with all Environmental Laws, (y) keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
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environmental matters in effect and remain in compliance therewith and (z)
handle all Hazardous Substances in compliance with all applicable Environmental
Laws; except, in each case, where the failure to comply with the terms of this
Section 6.1.8 could not reasonably be expected, individually or in the
aggregate, to have a Materially Adverse Effect.
SECTION 6.1.9 Use of Proceeds. The Company will lend the proceeds of
the Series No. 1 Notes to Midland. Midland will use such proceeds (a) to
purchase charged-off accounts and (b) for working capital and general corporate
purposes.
SECTION 6.1.10 Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business against such
casualties and contingencies and of such types and in such amounts as is
reasonable and customary in the case of similar businesses.
SECTION 6.1.11 Subsequent Note Issuance. The Company will, promptly
upon the issuance of any Indebtedness allowed under Section 6.2.2(b), amend this
Agreement (and each other Purchase Document to the extent required) to the
extent necessary to ensure that no holder of any such Indebtedness enjoys any
other terms and conditions in the aggregate that are more favorable than those
of any Noteholder hereunder (including interest rates and covenants).
SECTION 6.2 Certain Negative Covenants. The Company agrees with
(a) the Purchaser and each other Noteholder that, until all
Obligations have been paid and performed in full, the Company will
perform all of the covenants contained in this Section 6.2; and
(b) the Purchaser and each other Institutional Holder that,
for so long as either shall hold any Subject Security (other than a
Series No. 1 Note), the Company will perform the covenants contained in
Section 6.2.1, 6.2.7, and 6.2.11 for their benefit as if they were
Noteholders.
SECTION 6.2.1 Business Activities. The Company will not, and will not
permit any Subsidiary to, engage in any business activity, excluding, however,
its consummation of the Transaction, its performance from time to time of its
obligations under the Transaction Documents and its engaging in activities in
which the Company or its Subsidiaries are engaged on the Closing Date (which the
Purchaser acknowledges is the purchase, sale and servicing of charged-off
accounts, including, without limitation, Securitization Transactions and
Residual Transactions in connection therewith), and, in each case, activities or
lines of business incidental and related thereto and (ii) Investments permitted
pursuant to clause (f) of Section 6.2.6.
SECTION 6.2.2 Indebtedness. The Company will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist or otherwise become
or be liable in respect of any Indebtedness other than:
(a) Indebtedness in respect of the Series No. 1 Notes and
other Obligations;
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(b) future Indebtedness of the Company in an aggregate
principal amount not to exceed $40,000,000 which Indebtedness is
incurred on terms and conditions substantially similar to those of this
Agreement; provided, that all proceeds of any such Indebtedness in
excess of $25,000,000 shall be used to permanently reduce the Bank of
America Indebtedness to the extent outstanding and, to the extent not
outstanding, to permanently reduce the availability of borrowings under
the Bank of America Credit Agreement;
(c) the Bank of America Indebtedness;
(d) other future non-recourse Indebtedness of the Company
or any Securitization Subsidiary, the proceeds of which are used for
the purpose of acquiring, financing or refinancing charged-off
accounts, and that is incurred by the Company or such Securitization
Subsidiary on terms and conditions customary to such Securitization
Transactions; provided, however, that the aggregate original principal
amount of such Indebtedness shall not, when incurred, exceed (i) in the
case of charged-off accounts that have not been subject to a prior
Securitization Transaction, 100% of the acquisition cost of the
accounts being financed or sold in connection with such Indebtedness
less 50% of the actual collections against such accounts, and (ii) in
the case of charged-off accounts that have been subject to a prior
Securitization Transaction, the aggregate outstanding principal balance
of the Indebtedness in such Securitization Transaction at the time such
charged-off accounts are released therefrom;
(e) other future Indebtedness of the Company or any Subsidiary
that is incurred by the Company or such Subsidiary (i) by releveraging
charged-off accounts owned by any Securitization Subsidiary or (ii) on
the basis of the Company's or such Subsidiary's equity interest in any
Securitization Subsidiary or residual or subordinate interest in any
Securitization Transaction (each a "Residual Transaction"); provided,
however, that no such Indebtedness shall be incurred unless the net
cash proceeds (taking into account payment of applicable Taxes) of such
Indebtedness are applied in accordance with Section 4.3;
(f) other future Indebtedness of the Company or any Subsidiary
that consists of warehouse financing of charged-off accounts; provided,
however, that the aggregate original principal amount of such
Indebtedness shall not, when incurred, exceed 100% of the acquisition
cost of the accounts being financed in connection with such
Indebtedness;
(g) Capitalized Lease Liabilities (i) incurred to finance the
acquisition of new assets, not to exceed $6,000,000 at any one time,
and (ii) incurred for any other purpose, not to exceed $300,000 at any
one time; and
(h) without duplication, Indebtedness disclosed on Item 5.6
("Ongoing Indebtedness") of the Disclosure Schedule;
provided, however, that, no Indebtedness otherwise permitted pursuant to any of
the foregoing clauses (excluding, however, clauses (a) and (b)) shall be
permitted if such Indebtedness is owing by the Company to a Subsidiary unless
such Indebtedness is expressly subordinated to the prior payment in full in cash
of all Obligations and is incurred on such terms and conditions consented to by
the Required Noteholders in their discretion.
36
<PAGE> 42
SECTION 6.2.3 Liens. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its
property, revenues or assets, whether now owned or hereafter acquired, except:
(a) Liens securing the Obligations;
(b) Liens granted by the Company prior to the Closing Date to
secure the Bank of America Indebtedness as in effect on the Closing
Date;
(c) Liens granted by the Company to secure its obligations
under the Reimbursement Agreement;
(d) Liens granted by a Securitization Subsidiary to secure
Indebtedness allowed under clause (d) of Section 6.2.2; provided,
however, that no such Lien shall be granted except to create a security
interest in the specific charged-off accounts financed or purchased by
the beneficiary of such Lien;
(e) Liens granted by the Company or a Subsidiary to secure
Indebtedness allowed under clause (e) of Section 6.2.2; provided,
however, that no such Lien shall be granted except to create a security
interest in the equity interest in any Securitization Subsidiary or
residual interest in any Securitization Transaction;
(f) Liens granted by the Company or a Subsidiary to secure
Indebtedness allowed under clause (f) of Section 6.2.2; provided,
however, that no such Lien shall be granted except to create a security
interest in the specific charged-off accounts financed, refinanced or
purchased in connection with such warehouse financing; and
(g) Permitted Liens.
SECTION 6.2.4 Bank of America Credit Agreement. The Company will not,
and will not permit any Subsidiary to, materially amend, modify or consent to
any such material amendment or modification of, the Bank of America Credit
Agreement, without the prior written consent of the Required Noteholders which
shall not be unreasonably withheld, it being understood and agreed that, without
the consent of the Required Noteholders, the Bank of America Credit Agreement
may be extended or amended and restated without material departure from the
terms and conditions contained therein as of the Closing Date other than market
related changes in the interest rate.
SECTION 6.2.5 Restricted Payments, etc. On or after the Closing Date,
the Company will not, and will not permit any Subsidiary to, declare, pay, make,
apply any of its funds, property or assets to making or making any deposit to
fund any Restricted Payment.
37
<PAGE> 43
SECTION 6.2.6 Investments. The Company will not, and will not permit
any Subsidiary, other than a Securitization Subsidiary in a Securitization
Transaction, to, make any Investments, except:
(a) Investments of the Company in any Subsidiary Guarantor
that is a wholly-owned Subsidiary;
(b) Cash Equivalent Investments, excluding, however,
Investments described in clause (f) of the definition of Cash
Equivalent Investments.
(c) Investments made by way of the Company or any
wholly-owned Subsidiary of the Company acquiring not less than 51% of
the outstanding Capital Stock of any Person, if after giving effect
thereto, (x) no Default has occurred and is continuing and (y) such
Person becomes a Subsidiary Guarantor in accordance with Section 6.1.6;
(d) capital contributions to a Securitization Subsidiary
in connection with (i) the initial closing of any Securitization
Transaction, or (ii) any equity or reserve account funding required in
connection with the purchase of new charged-off accounts under any
warehouse financing;
(e) Investments made in connection with any Securitization
Transaction in an amount not greater than 15% of the original principal
balance of the Indebtedness incurred under such Securitization
Transaction; and
(f) additional Investments not to exceed an amount equal to
the product of (x) $500,000 multiplied by (y) a fraction, the numerator
of which equals $10,000,000 plus any Indebtedness incurred pursuant to
clause (b) of Section 6.2.2, and the denominator of which equals
$10,000,000.
SECTION 6.2.7 Consolidation, Merger, etc. The Company will
not, and will not permit any Subsidiary to,
(a) liquidate or dissolve, consolidate with, or merge into or
with, any other corporation or purchase or otherwise acquire all or
substantially all of the assets of any Person (or of any division
thereof); or
(b) sell, transfer, convey or otherwise dispose of all or any
substantial part of its assets, other than the sale of charged-off
accounts sold or otherwise disposed of by a Securitization Subsidiary
in connection with a Securitization Transaction;
provided, however, that
(c) any Subsidiary may liquidate or dissolve voluntarily into,
and may merge with and into, the Company or any other Subsidiary;
(d) so long as no Payment or Insolvency Default or Event of
Default has occurred and is continuing or would occur after giving
effect thereto, the Company or any Subsidiary may
38
<PAGE> 44
purchase or acquire all of the outstanding shares of Capital Stock of,
or substantially all of the assets of, any Person (or any division
thereof) and such purchase or acquisition complies with clause (c) of
Section 6.2.6; and
(e) any Subsidiary may merge with any other corporation permitted to be
acquired pursuant to clause (d) and may be created and capitalized for
such purposes.
SECTION 6.2.8 Rental Obligations. The Company will not, and will not
permit any Subsidiary to, enter into at any time after the Closing Date any
lease, except any lease (an "Operating Lease") which is not treated as a capital
lease in accordance with GAAP which, together with all other Operating Leases
then in effect, will not require the payment of an aggregate amount of rentals
by the Company and Subsidiaries in excess of $3,000,000 for any Fiscal Year.
SECTION 6.2.9 Take or Pay Contracts. Except in the ordinary course of
business and consistent with past practices, the Company will not, and will not
permit any Subsidiary to, enter into or be a party to any arrangement for the
purchase of materials, supplies, other property or services if such arrangement
by its express terms requires that payment be made by the Company or such
Subsidiary regardless of whether such materials, supplies, other property or
services are delivered or furnished to it.
SECTION 6.2.10 Negative Pledges, Upstream Restrictions, etc. The
Company will not, and will not permit any Subsidiary to, enter into any
agreement (excluding, however, this Agreement, the other Purchase Documents and
any agreement under which Indebtedness allowed under clause (b) of Section 6.2.2
is incurred) which expressly prohibits or restricts
(a) the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter acquired
(excluding, however, (w) any agreement governing any Indebtedness
permitted by clauses (d), (e) or (f) of Section 6.2.2 as to the assets
financed with the proceeds of such Indebtedness, (x) customary
non-assignment provisions in operating leases entered into in the
ordinary course as to the leasehold interest created thereby, (y)
customary non-assignment provisions in contracts, to the extent such
provisions prohibit Liens on the rights under such contracts and (z)
Liens granted by Securitization Subsidiaries in connection with a
Securitization Transaction);
(b) the ability of the Company or any Subsidiary to amend or
otherwise modify, or to perform obligations under, this Agreement or
any other Purchase Document; or
(c) except as a part of a Residual Transaction, the ability of
any Subsidiary to make any payments, directly or indirectly, to the
Company by way of dividends, advances, repayments of loans or advances,
reimbursements of management and other intercompany charges, expenses
and accruals or other returns on Investments, or any other agreement or
arrangement which restricts the ability of any such Subsidiary to make
any payment, directly or indirectly, to the Company.
SECTION 6.2.11 Transactions with Affiliates. The Company will not, and
will not permit any Subsidiary to, enter into, or cause, suffer or permit to
exist:
(a) any arrangement or contract with any of its other
Affiliates of a nature customarily entered into by Persons which are
Affiliates of each other (including management or
<PAGE> 45
similar contracts or arrangements relating to the allocation of
revenues, taxes and expenses or otherwise) requiring any payments to be
made by the Company or any Subsidiary to any Affiliate unless such
arrangement is fair and equitable to the Company or such Subsidiary; or
(b) any other transaction, arrangement or contract with any of
its other Affiliates which would not be entered into by a prudent
Person in the position of the Company or such Subsidiary with, or which
is on terms which are less favorable than are obtainable from, any
Person which is not one of its Affiliates;
provided, however, that this Section shall not be construed to restrict or
prohibit (i) execution and delivery of the Registration Agreement (ii) customary
provisions in Securitization Transactions and Residual Transactions (iii)
extensions, refinancings or renewals of the Bank of America Indebtedness, and
(iv) the purchase of any interest in the Series No. 1 Notes by any Affiliate of
the Company.
SECTION 6.2.12 Asset Dispositions, etc. The Company will not, and will
not permit any Subsidiary to, sell (including as part of a sale-leaseback
transaction), transfer, lease, contribute or otherwise convey, or grant options,
warrants or other rights with respect to, all or any substantial part of its
assets (including accounts receivable and capital stock of Subsidiaries) to any
Person, unless:
(a) such sale, transfer, lease, contribution or conveyance is
in the ordinary course of its business (including the disposition of
obsolete equipment and the sale of receivables); or
(b) the net book value of all assets sold, transferred,
leased, contributed or conveyed other than in the ordinary course of
business by the Company and the Subsidiaries during the same Fiscal
Year either (i) does not exceed $500,000 or (ii) the net proceeds above
such amount from such sale, transfer, lease, contribution or conveyance
are applied in accordance with Section 4.3; or
(c) such sale, transfer, lease, contribution or conveyance
consists of a sale or transfer of charged-off accounts by any
Subsidiary as in connection with any Securitization Transaction or the
incurrence of Indebtedness allowed under clause (d) of Section 6.2.2.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 Events of Default. The term "Event of Default" means any
of the following events:
SECTION 7.1.1 Non-Payment of Obligations. The Company shall default in
the payment or prepayment when due of any principal of any Series No. 1 Note,
or, within three (3) Business Days of the due date thereof, the Company shall
default in the payment of interest on any Series No. 1 Note or any other
Obligation.
SECTION 7.1.2 Default on Other Indebtedness. Any default shall occur
under the terms applicable to any recourse Indebtedness (excluding, however, any
Obligation) outstanding in a principal amount exceeding $500,000 of the Company
or any Subsidiary, in each case representing any borrowing
<PAGE> 46
or financing or arising under any other Material Contract, and such default (x)
shall consist of the failure to make any payment of principal or interest on, or
any redemption (or to make any required offer to redeem) of, such Indebtedness
when due (subject, however, to any applicable notice or grace period or if no
notice or grace period is provided, then the continuance of such failure for
five (5) Business Days after written notice of such failure is given by the
holder of such Indebtedness) in accordance with the terms thereof, or (y) shall
allow some or all of the holders of such Indebtedness to cause any or all of
such Indebtedness to become, or shall have resulted in any or all of such
Indebtedness having become, due and payable in accordance with its terms prior
to its stated maturity, whether by declaration or otherwise.
SECTION 7.1.3 Bankruptcy, Insolvency, etc. The Company or any
Subsidiary shall:
(a) become insolvent or generally fail to pay, or admit in
writing its inability to pay, debts as they become due;
(b) apply for, consent to or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for the Company or
any Subsidiary or any property of any thereof or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Company or any
Subsidiary or for a substantial part of the property of any thereof,
and such trustee, receiver, sequestrator or other custodian shall not
be discharged within 60 days;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of the Company or any
Subsidiary, and, if such case or proceeding is not commenced by the
Company or such Subsidiary, such case or proceeding shall be consented
to or acquiesced in by the Company or such Subsidiary or shall result
in the entry of an order for relief or shall remain for 60 days
undismissed; or
(e) take any corporate action authorizing, or in furtherance
of, any of the foregoing.
SECTION 7.1.4 Breach of Warranty. Any warranty of the Company
hereunder or in any other Purchase Document or any other writing furnished by or
on behalf of the Company to the Purchaser or any other Noteholder for the
purposes of or in connection with this Agreement or any such Purchase Document
is or shall be incorrect when made in any material respect.
SECTION 7.1.5 Non-Performance of Certain Undertakings. The Company
shall default in the due performance and observation of any agreement contained
in Section 6.2.4, 6.2.5, 6.2.7, 6.2.9, 6.2.10, 6.2.11 or 6.2.12.
SECTION 7.1.6 Non-Performance of Other Undertakings.
(a) Any Obligor shall default in the due performance and
observance of any other agreement contained herein or in any other
Purchase Document, and such default shall continue unremedied for a
period of 30 days after notice thereof shall have been given to the
Company by the Purchaser or the Required Noteholders.
<PAGE> 47
(b) The Company shall be removed as servicer in connection
with any securitization financing during the continuance of any event
of default thereunder.
SECTION 7.1.7 Judgments. A final judgment, to the extent not fully
covered by insurance, shall be rendered against the Company or any Subsidiary
and such judgment shall remain in force, undischarged, unsatisfied and unstayed
for more than 60 days, whether or not consecutive, and such judgment, together
with all other such outstanding final judgments against the Company and
Subsidiaries, exceeds (to the extent of all such uninsured portions) an
aggregate of $500,000.
SECTION 7.1.8 Pension Plans. Any of the following events shall occur
with respect to any Plan:
(a) the institution of any steps by the Company, any member of
its Controlled Group or any other Person to terminate a Plan if, as a
result of such termination, the Company or any such member could be
required to make a contribution to such Plan, or could reasonably
expect to incur a liability or obligation to such Plan, in excess of
$500,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 7.1.9 Clean Audit. The auditor's report that accompanies the
audited financial statements provided pursuant to clause (a) of Section 6.1.1
for any Fiscal Year other than Fiscal Year 2005 contains a "going concern"
qualification, unless such qualification is caused solely by reason of the
maturity of the Bank of America Indebtedness or the maturity of the Series No. 1
Notes, or (ii) reports an inability to opine on such financial statements.
SECTION 7.2 Action if Bankruptcy. If any Event of Default described
in clauses (a) through (d) of Section 7.1.3 shall occur, the outstanding
principal amount of all outstanding Series No. 1 Notes and all other Obligations
shall automatically be and become immediately due and payable, without notice or
demand.
SECTION 7.3 Action if Other Event of Default. If any Event of Default
(excluding, however, any Event of Default described in clauses (a) through (d)
of Section 7.1.3) shall occur for any reason, whether voluntary or involuntary,
and be continuing, the Required Noteholders may, upon notice or demand, declare
all or any portion of the outstanding principal amount of the Series No. 1 Notes
to be due and payable and any or all other Obligations to be due and payable,
whereupon the full unpaid amount of such Series No. 1 Notes and any and all
other Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment.
SECTION 7.4 Suits for Enforcement. If any Event of Default shall have
occurred and be continuing, the Required Noteholders may proceed to protect and
enforce the rights of the holders of such Series No. 1 Notes, either by suit in
equity or by action at law, or both, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the exercise of
any power granted in this Agreement, and may proceed to enforce the payment of
all sums due upon such Series No. 1 Notes, and such further amounts as shall be
sufficient to cover the costs and expenses of
<PAGE> 48
collection (including reasonable counsel fees and disbursements), or to enforce
any other legal or equitable right of the holder of such Series No. 1 Notes.
SECTION 7.5 Remedies Cumulative. No remedy conferred in this Agreement
or in the other Purchase Documents upon the Noteholders is intended to be
exclusive of any other remedy and each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or otherwise.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Waivers, Amendments, etc. The provisions of this Agreement
and of each Purchase Document may from time to time be amended, waived or
otherwise modified, if such amendment, waiver or modification is in writing and
consented to by the Company and the Required Noteholders; provided, however,
that no such amendment, waiver or modification:
(a) which would modify any requirement hereunder that any
particular action be taken by each Noteholder or by the Required
Noteholders shall be effective unless consented to by each Noteholder
or the Required Noteholders, as the case may be; or
(b) which would modify this Section or change the definition
of "Required Noteholders" or which would extend the due date for, or
reduce the amount of, any payment or prepayment of principal of or
interest on any Series No. 1 Note (or reduce the rate of interest on
any Series No. 1 Note) shall be made without the consent of each
Noteholder.
No failure or delay on the part of the Purchaser or any other Noteholder in
exercising any power or right under this Agreement or any other Purchase
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Company in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Purchaser or any other
Noteholder under this Agreement or any other Purchase Document shall, except as
may be otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 8.2 Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Purchase Document shall be in
writing and addressed or delivered to it at its address set forth below its
signature hereto or at such other address as may be designated by such party in
a notice to the other parties. Any notice, if sent by mail or courier and
properly addressed and prepaid, shall be deemed given when received; any notice,
if transmitted by facsimile, shall be deemed given when transmitted and
electronically confirmed.
SECTION 8.3 Costs and Expenses. The Company agrees to pay all
reasonable out-of-pocket expenses of the Purchaser for the negotiation,
preparation, execution and delivery of this Agreement and each other Purchase
Document, including Schedules and Exhibits, and any amendments, waivers,
<PAGE> 49
consents, supplements or other modifications to this Agreement, any other
Purchase Document, any Subject Security or the Registration Agreement as may
from time to time hereafter be required (including the reasonable fees and
expenses of counsel for the Purchaser from time to time incurred in connection
therewith), whether or not the Transaction is consummated, and to pay all
reasonable out-of-pocket expenses of the Purchaser (including reasonable fees
and expenses of counsel to the Purchaser) incurred in connection with the
preparation and review of the form of any Instrument relevant to this Agreement,
any other Purchase Document, any Subject Security or the Registration Agreement
and the consideration of legal questions relevant hereto and thereto or to any
enforcement or preservation of rights as to, or restructuring or "work-out" of,
any Obligations or the rights and preferences of any Subject Security. The
Company also agrees to reimburse the Noteholders upon demand for all reasonable
out-of-pocket expenses (including reasonable attorneys' fees and legal expenses
of a single law firm representing all Noteholders) incurred by the Noteholders
to enforce or to preserve rights as to, or to restructure or "work out", any
Obligations.
SECTION 8.4 Indemnification. In consideration of the execution and
delivery of this Agreement by the Purchaser, the Company hereby indemnifies,
exonerates and holds the Purchaser and each other Noteholder and each of their
respective officers, directors, employees, trustees and agents (the "Indemnified
Parties") free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages and expenses actually
incurred in connection therewith (irrespective of whether such Indemnified Party
is a party to the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements (the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to:
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Series No. 1
Note,
(b) the entering into and performance of this Agreement and
any other Purchase Document by any of the Indemnified Parties
(including any action brought by or on behalf of the Company as the
result of any determination by the Purchaser pursuant to Article III to
not purchase the Subject Securities), or
(c) any investigation, litigation or proceeding related to the
Transaction,
excluding, however, any such Indemnified Liabilities arising for the account of
a particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct. If, and to the extent that, the foregoing
undertaking may be unenforceable for any reason, the Company hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under Applicable Law.
SECTION 8.5 Survival. The obligations of the Company under clauses (b)
and (c) of Section 6.1 and clause (b) of Section 6.2 shall survive the payment
in full of all Obligations and the termination of any other provisions of this
Agreement or any other Purchase Document and shall continue for the benefit of
the Purchaser for so long as it shall hold any Subject Securities. The
obligations of the Company under Section 8.4 shall remain in full force and
effect, regardless of any investigation made by or on behalf of any Indemnified
Party, and the obligations of the Company under Sections 8.3 and 8.4 shall
survive the payment or prepayment of the Subject Securities, at maturity, upon
redemption or otherwise, any transfer of the Subject Securities by the
Purchaser, and any termination of this Agreement and the other Purchase
<PAGE> 50
Documents. The representations and warranties made by the Company in this
Agreement and in each other Purchase Document shall survive the execution and
delivery of this Agreement and each such other Purchase Document.
SECTION 8.6 Severability. Any provision of this Agreement or any other
Purchase Document 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 of this
Agreement or such Purchase Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 8.7 Headings. The various headings of this Agreement and of
each other Purchase Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such Purchase Document
or any provisions hereof or thereof.
SECTION 8.8 Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be executed by the
Company and the Purchaser and be deemed to be an original and all of which shall
constitute together but one and the same agreement.
SECTION 8.9 Governing Law. This Agreement, the Series No. 1 Notes, the
Subsidiary Guaranty and each other Purchase Document shall each be deemed to be
a contract made under and governed by the internal laws of the State of New
York.
SECTION 8.10 JURISDICTION. FOR PURPOSE OF ANY ACTION OR PROCEEDING
INVOLVING THIS AGREEMENT OR ANY OTHER PURCHASE DOCUMENT, THE COMPANY HEREBY
EXPRESSLY SUBMITS TO THE JURISDICTION OF ALL FEDERAL AND STATE COURTS LOCATED IN
THE CITY OF NEW YORK, STATE OF NEW YORK AND CONSENTS THAT IT MAY BE SERVED WITH
ANY PROCESS OR PAPER BY REGISTERED MAIL OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK, PROVIDED A REASONABLE TIME FOR APPEARANCE IS ALLOWED.
SECTION 8.11 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Company may not assign or transfer its rights or
obligations hereunder without the prior written consent of all
Noteholders; and
(b) the rights of sale, assignment, and transfer of the Series
No. 1 Notes are subject to Section 4.7.
SECTION 8.12 WAIVER OF JURY TRIAL. THE PURCHASER AND THE COMPANY
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER PURCHASE DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF THE PURCHASER OR THE COMPANY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PURCHASER ENTERING INTO THIS AGREEMENT.
[signature pages follow]
<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
MCM CAPITAL GROUP, INC.
By: /s/ Robert E. Koe
---------------------------------
Name: Robert E. Koe
Title: President
Address: 4302 East Broadway
Phoenix, Arizona 85040
Telephone: (602) 707-0211
Facsimile: (602) 707-5509
Attention: President
Copy to: Timothy W. Moser, Esq.
Squire, Sanders & Dempsey LLP
40 North Central Avenue, Suite 2700
Phoenix, AZ 85004
ING (U.S.) CAPITAL LLC
By: /s/ David Balestrery
----------------------------------
Name: David Balestrery
Title: Vice President
Address: 55 East 52nd Street
New York, New York 10015
Telephone: (212) 409-1955
Facsimile: (212) 593-3360
Attention: David A. Balestrery
Ira Braunstein
Copy to: David K. Duffee, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
Payments to: The Chase Manhattan Bank
(ABA No. 021000021)
Account No. 930 103 5763
S-1
<PAGE> 52
Confirmation to: David A. Balestrery/Ira Braunstein
2
<PAGE> 1
EXHIBIT 10.2
WARRANT AGREEMENT
dated as of January 12, 2000
between
MCM CAPITAL GROUP, INC.
and
ING (U.S.) CAPITAL LLC
for
Warrants to Purchase
428,571 shares of Common Stock
<PAGE> 2
WARRANT AGREEMENT
This WARRANT AGREEMENT, dated as of January 12, 2000 (this "Agreement") is
entered into by and between MCM Capital Group, Inc., a Delaware corporation (the
"Company"), and ING (U.S.) Capital LLC, a Delaware limited liability company
(the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company is a party with the Purchaser to a note purchase
agreement, dated as of January 12, 2000 (the "Note Purchase Agreement"),
pursuant to which the Company has agreed, on and subject to the occurrence of
the Closing Date under the Note Purchase Agreement, to issue and sell to the
Purchaser the Warrants which, subject to the adjustments provided herein,
entitle the Purchaser to purchase 428,571 shares of common stock, $.01 par value
per share, of the Company (the "Common Stock").
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements and covenants hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. Unless the context otherwise
requires, the following terms, when used in this Agreement, shall have the
respective meanings specified below :
"Additional Notes" shall mean up to $40,000,000 in aggregate principal
amount of notes issued by the Company subsequent to the Closing Date pursuant to
Section 6.2.2(b) of the Note Purchase Agreement.
"Additional Warrants" shall mean warrants, options or similar rights to
purchase Common Stock on terms and conditions, and in a form, substantially
similar to the Warrants, which are issued to the purchasers of Additional Notes
in connection with the sale of such Additional Notes by the Company and the
purchase thereof by such purchaser.
"Affiliate" shall have the meaning specified in the Note Purchase
Agreement.
"Agreement" or "this Agreement" shall have the meaning specified in the
preamble to this Agreement.
"Board" shall mean the board of directors of the Company.
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"Closing Date" shall have the meaning specified in the Note Purchase
Agreement.
"Common Stock" shall have the meaning specified in the recitals to this
Agreement.
"Company" shall have the meaning specified in the preamble to this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exercise Price" shall have the meaning specified in Section 3.01.
"Expiration Date" shall be January 12, 2005.
"Fair Market Value" shall mean, with respect to any shares of Common Stock
as of any date of determination, (i) if such shares of Common Stock are not
Publicly Traded, the fair value of such shares of Common Stock (A) as determined
reasonably and in good faith in the most recently completed arm's-length
transaction between the Company and an unaffiliated third party in which such
determination is necessary and the closing of which shall have occurred within
the six months preceding such date of determination, or (B) if no such
transaction shall have occurred within such six-month period, as determined in
accordance with the Valuation Criteria reasonably and in good faith by an
Independent Financial Expert appointed by the Board and consented to by the
Purchaser (such consent not to be unreasonably withheld); or (ii) if such shares
of Common Stock are Publicly Traded, the Market Price of such shares of Common
Stock on the trading day immediately preceding such date of determination;
provided, however, that with respect to shares of Common Stock issuable upon the
exercise of options under a stock option plan or the issuance of shares of
Common Stock under an employee stock incentive plan, the Fair Market Value of
such shares shall be determined in accordance with the applicable provisions of
such plan (if any).
"Holders" shall mean the registered holders from time to time of the
Warrants and, unless otherwise provided or indicated herein, the registered
holders from time to time of the Underlying Common Stock.
"Incremental Note Principal" shall mean, with respect to any issuance of
Additional Notes, the sum of aggregate principal amount of such Additional
Notes, plus the aggregate principal amount of all Additional Notes issued prior
thereto.
"Incremental Warrant Shares" shall mean, with respect to any issuance of
Additional Warrants, the sum of the number of shares of Common Stock issuable
upon exercise of such Additional Warrants, plus the number of shares of Common
Stock issuable upon exercise of all Additional Warrants issued prior thereto.
"Independent Financial Expert" shall mean a nationally recognized
investment banking firm (i) that does not (and whose directors, officers,
employees and affiliates do not) have a direct or indirect financial interest in
the Company or any of its Affiliates, and (ii) that is not, and none of whose
directors, officer, employees or Affiliates are, at the time it is called upon
to
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render independent financial advice to the Company, a promoter, director or
officer of the Company or any of its Affiliates or an underwriter or placement
agent with respect to any of the securities of the Company or any of its
Affiliates, nor have the Company or any such directors, officers, employees or
Affiliates acted in such capacity during the three year period prior thereto.
"Market Price" shall mean, with respect to any shares of Common Stock
that are Publicly Traded, for any specified trading day, (i) in the case of
shares of Common Stock listed or admitted to trading on any securities exchange
or on the Nasdaq National Market or the Nasdaq SmallCap Market, the average
closing price, or if no sale takes place on a particular day, the average of the
closing bid and asked prices on such day, for the ten (10) trading days prior to
the date in question, (ii) in the case of shares of Common Stock not then listed
or admitted to trading on any securities exchange or on the Nasdaq National
Market or the Nasdaq SmallCap Market, the average last reported sale price, or
if no sale takes place on a particular day, the average of the closing bid and
asked prices on such day, for the ten (10) trading days prior to the date in
question, as reported by a reputable quotation source designated by the Company,
and (iii) if there are no bid and asked prices reported during the ten (10)
trading days prior to the specified date, the Fair Market Value of such shares
of Common Stock as determined as if such shares of Common Stock were not
Publicly Traded.
"Note Purchase Agreement" shall have the meaning specified in the recitals
to this Agreement.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization or other entity or any
government or political subdivision, agency or instrumentality thereof, as well
as any syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Exchange Act.
"Publicly Traded" shall mean, relative to any security, that such security
is (i) listed on a domestic securities exchange, (ii) quoted on the Nasdaq
National Market or the Nasdaq SmallCap Market, or (iii) traded in the domestic
over-the-counter market, which trades are reported on the OTC Electronic
Bulletin Board or reported by the National Quotation Bureau, Incorporated.
"Purchaser" shall have the meaning specified in the preamble to this
Agreement.
"Rights" shall mean any "poison pill" or similar shareholder rights issued
pursuant to a "poison pill" shareholder rights plan or similar plan.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Series No. 1 Note" shall have the meaning specified in the Note
Purchase Agreement.
"Series No. 1 Note Ratio" shall mean a fraction, the numerator of which
is the aggregate original principal amount of the Series No. 1 Notes and the
denominator of which is the Incremental Note Principal.
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"Taxes" shall mean all transfer, stamp, documentary and other similar
taxes, assessments or charges levied by any governmental or revenue authority in
respect hereof in respect of any Warrant or any Warrant Certificate, excluding,
however, franchise taxes and taxes, assessments or charges levied or imposed on
or measured by the net income or receipts of any Person.
"Underlying Common Stock" shall mean the shares of Common Stock issuable
or issued upon the exercise of the Warrants.
"Valuation Criteria" shall mean one or more valuation methods that the
Independent Financial Expert or the Board, as the case may be, in its
professional or reasonable business judgment, as the case may be, determines to
be most appropriate for use in determining the Fair Market Value of any
securities for which such determination is required pursuant to this Agreement.
"Warrant Certificates" shall have the meaning specified in Section 2.01 of
this Agreement.
"Warrants" shall mean the warrants issued to the Purchaser on the Closing
Date as contemplated by this Agreement and the Note Purchase Agreement, which
warrants initially entitle the Purchaser to purchase 428,571 shares of Common
Stock.
ARTICLE II
ORIGINAL ISSUE OF WARRANTS; TRANSFER
Section 2.01. FORM OF WARRANT CERTIFICATES. The Warrants shall be
evidenced by certificates in registered form only and substantially in the form
attached hereto as Exhibit A (the "Warrant Certificates"), shall be dated the
date on which signed by the Company and may have such legends and endorsements
typed, stamped, printed, lithographed or engraved thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation applicable thereto, with any rule or regulation of any securities
exchange or association on which the Warrants may be listed, or to conform to
customary usage.
Section 2.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. Warrant
Certificates evidencing the Warrants shall be executed by the Company and
delivered on the Closing Date to the Purchaser. The Warrant Certificates shall
be executed on behalf of the Company by one or more duly authorized officers of
the Company.
Section 2.03. TRANSFER OF WARRANTS.
(a) Subject to clause (b) of this Section 2.03 and provided that all
conditions to transfer set forth in this Agreement and in the Note Purchase
Agreement have been satisfied, each Warrant and the rights thereunder may be
transferred by the Holder thereof delivering to the Company the Warrant
Certificate evidencing such Warrant accompanied by a properly completed
assignment form (a form of which is attached to the form of Warrant Certificate
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attached as Exhibit A to this Agreement). Within ten (10) Business Days of
receipt of such assignment form, the Company shall issue and deliver to the
transferee, subject to clause (b) below, a Warrant Certificate of like kind and
tenor representing the transferred Warrants and to the transferor a Warrant
Certificate of like kind and tenor representing any Warrants evidenced by such
original certificate that are not being transferred. Each Warrant Certificate
issued pursuant to this Section 2.03 shall be substantially in the form of
Exhibit A to this Agreement and shall bear the restrictive legends set forth
thereon (unless, with respect to the legend regarding transfer under applicable
securities laws, the Holder or transferee thereof supplies to the Company an
opinion of counsel, reasonably satisfactory to the Company, that the
restrictions described in such legend are no longer applicable to such
Warrants).
(b) The transfer of Warrants shall be permitted only pursuant to a
transaction that complies with, or is exempt from, the provisions of the
Securities Act and any applicable provisions of state securities laws, and the
Company may require an opinion of counsel, reasonably satisfactory to the
Company, to such effect prior to the transfer of any Warrant.
ARTICLE III
EXERCISE PRICE; EXERCISE OF WARRANTS GENERALLY
Section 3.01. EXERCISE PRICE. Each Warrant Certificate shall entitle the
Holder thereof, subject to the provisions of the Agreement, to purchase one
share of Common Stock for each Warrant represented thereby at an exercise price
(the "Exercise Price") of $0.01 per share.
Section 3.02. EXERCISE OF WARRANTS. Subject to the terms and conditions
set forth herein, the Warrants shall be exercisable beginning on the 91st day
after the Closing Date through the Expiration Date, as follows: (i) for the
period beginning on the 91st day after the Closing Date and ending on the 270th
day after the Closing Date, for not more than 50% of the aggregate number of
shares of Common Stock issuable upon exercise of the Warrants from time to time
(giving effect to the adjustments contemplated by Section 4.01 of this
Agreement); and (ii) beginning on the 271st day after the Closing Date and
ending on the Expiration Date, for up to 100% of the aggregate number of shares
of Common Stock issuable upon exercise of the Warrants from time to time.
Section 3.03. EXPIRATION OF WARRANTS. The Warrants shall terminate and
become void as of the close of business on the Expiration Date.
Section 3.04. METHOD OF EXERCISE.
(a) In order to exercise a Warrant, the Holder thereof must
surrender the Warrant Certificate evidencing such Warrant to the Company, with
one of the forms on the reverse of or attached to the Warrant Certificate duly
executed, and by paying in full to the Company (i) by wire transfer of
immediately available funds, or (ii) by certified or official bank check, or
(iii) by any combination of the foregoing, the Exercise Price for each share of
Underlying Common Stock as to which Warrants are then being exercised. A Holder
may exercise such Holder's Warrant for the full number of shares of Underlying
Common Stock
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issuable upon exercise thereof (subject to the limitations set forth in Section
3.02) or any lesser number of whole shares of Underlying Common Stock.
(b) Not later than the fifth Business Day following the later of (i)
surrender of a Warrant Certificate in conformity with the foregoing provisions
or (ii) payment by the Holder of the full Exercise Price for the shares of
Underlying Common Stock as to which such Warrants are then being exercised, the
Company shall transfer to the Holder of such Warrant Certificate appropriate
evidence of ownership of any shares of Underlying Common Stock or other
securities or property (including any money) to which the Holder is entitled,
registered or otherwise placed in, or payable to the order of, such name or
names as may be directed in writing by the Holder, and shall deliver such
evidence of ownership and any other securities or property (including any money)
to the person or persons entitled to receive the same, together with an amount
in cash in lieu of any fraction of a share as provided in Section 4.04. If such
Warrant Certificate shall not have been exercised in full, the Company will
issue to such Holder a new Warrant Certificate exercisable for the number of
shares of Underlying Common Stock as to which such Warrant shall not have been
exercised. Any registration of Underlying Common Stock issued upon exercise of a
Warrant in the name of any person other than the registered holder of the
Warrant shall be subject to Sections 5.03 and 5.04 of this Agreement.
(c) Each person in whose name any certificate representing shares of
Underlying Common Stock is issued shall for all purposes be deemed to have
become the holder of record of such shares of Underlying Common Stock on the
date on which the Warrant Certificate was surrendered to the Company and payment
of the Exercise Price therefor, irrespective of the date of delivery of such
certificate representing shares of Underlying Common Stock.
Section 3.05. CANCELLATION OF WARRANTS. The Company shall cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, exchange or substitution, and no Warrant
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall destroy canceled
Warrant Certificates. If the Company shall acquire any of the Warrants, such
acquisition shall not operate as a redemption or termination of the right
represented by such Warrants unless and until the Warrant Certificates
evidencing such Warrants are surrendered to the Company for cancellation.
ARTICLE IV
ADJUSTMENTS
Section 4.01. ADJUSTMENTS. The number of shares of Common Stock
issuable upon exercise of each Warrant shall be subject to adjustment from
time to time as follows:
(a) Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications. In the event that the Company shall (i) pay a dividend or
make any other distribution with respect to its Common Stock in shares of its
capital stock, (ii) subdivide its outstanding Common Stock, (iii) combine its
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such
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reclassification in connection with a merger, consolidation or other business
combination in which the Company is the continuing corporation), the number of
shares of Common Stock issuable upon exercise of each Warrant immediately prior
to the record date for such dividend or distribution, or the effective date of
such subdivision or combination, shall be adjusted so that the Holder of each
Warrant shall thereafter be entitled to receive the kind and number of shares of
Common Stock or other securities of the Company that such Holder would have
owned or have been entitled to receive after the happening of any of the events
described above, had such Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An adjustment
made pursuant to this Section 4.01(a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event.
(b) Issuance of Common Stock, Rights, Options or Warrants at
Lower Values.
(i) In the event that the Company shall issue or sell shares
of Common Stock, or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock, at a price per share of Common Stock (determined in the case of such
rights, options, warrants or convertible or exchangeable securities, by dividing
(x) the total amount of Consideration receivable by the Company in respect of
the issuance and sale of such rights, options, warrants or convertible or
exchangeable securities, plus the total Consideration, if any, payable to the
Company upon exercise, conversion or exchange thereof, by (y) the total number
of shares of Common Stock covered by such rights, options, warrants or
convertible or exchangeable securities) that is lower than the then Fair Market
Value per share of the Common Stock immediately prior to such sale or issuance,
then the number of shares of Common Stock thereafter issuable upon the exercise
of each Warrant then outstanding shall equal the Pre-Issuance Value per Warrant
divided by the Unadjusted Post-Issuance Value per Warrant. Such adjustment shall
be made successively whenever any such sale or issuance is made.
(ii) For purposes of this Section 4.01(b), (A) "Pre-Issuance
Value per Warrant" shall mean (1) the total number of shares of Common Stock
then issuable upon exercise of each Warrant, multiplied by (2) the Fair Market
Value per share of Common Stock immediately prior to any issuance or sale
described in Section 4.01(b)(i); and (B) "Unadjusted Post-Issuance Value per
Warrant" shall mean (1) the sum of (x) the total number of shares of Common
Stock (including shares of Common Stock issuable upon exercise of outstanding
Warrants and Additional Warrants) outstanding immediately prior to any issuance
or sale described in Section 4.01(b)(i), multiplied by the Fair Market Value per
share of Common Stock immediately prior to such issuance or sale, plus (y) the
total number of additional shares of Common Stock issued or sold by the Company
(including, in the case of rights, options, warrants or convertible or
exchangeable securities, the total number of shares of Common Stock covered by
such rights, options, warrants or convertible or exchangeable securities),
multiplied by the price per share of Common Stock for which such additional
shares of Common Stock were issued or sold (including, in the case of rights,
options, warrants or convertible or exchangeable securities, the total amount of
Consideration per share receivable by the Company in respect of the issuance and
sale of such rights, options, warrants or convertible or exchangeable
securities, plus the total Consideration per share, if any, payable to the
Company upon exercise, conversion
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or exchange thereof), divided by (2) the total number of shares of Common Stock
outstanding immediately after such issuance or sale (including, in the case of
rights, options, warrants or convertible or exchangeable securities, the total
number of shares of Common Stock covered by such rights, options, warrants or
convertible or exchangeable securities and including shares of Common Stock
issuable upon exercise of outstanding Warrants and Additional Warrants).
(iii) In the event that the Company shall issue and sell
shares of Common Stock or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock for consideration consisting, in whole or in part, of property
other than cash or its equivalent, then in determining the "price per share of
Common Stock" and the "Consideration" receivable by or payable to the Company
for purposes of this Section 4.01, the Board shall determine, in good faith, the
fair value of such property. In the event that the Company shall issue and sell
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock, together with one
or more other securities as part of a unit at a price per unit, then in
determining the "price per share of Common Stock" and the "Consideration"
receivable by or payable to the Company for purposes of this Section 4.01, the
Board shall determine, in good faith, the fair value of the rights, options,
warrants or convertible or exchangeable securities then being sold as part of
such unit.
(iv) Any adjustment to the number of shares of Common Stock
issuable upon exercise of all Warrants then outstanding made pursuant to this
Section 4.01(b) shall be allocated among each Warrant then outstanding on a pro
rata basis.
(v) Notwithstanding anything herein to the contrary, the
provisions of this Section 4.01(b) shall not apply to any of the following:
(A) the grant or issuance of restricted stock,
options or other similar rights issued pursuant to employee stock option plans,
directors stock option plans or similar plans providing for options or other
similar rights to purchase Common Stock covering in the aggregate not in excess
of 20% of the fully-diluted shares of Common Stock issued and outstanding from
time to time, or the issuance of shares upon exercise of any such options or
other similar rights,
(B) the issuance of shares upon the exercise of options,
warrants, convertible or exchangeable securities, or similar securities that are
convertible into Common Stock in accordance with their terms, that are issued
and outstanding as of the date of this Agreement (giving effect to the
transactions relating to the issuance of the Series No. 1 Notes, including
without limitation the issuance of the Warrants),
(C) the issuance of any Additional Warrants,
(D) the issuance of any Rights,
(E) the issuance of shares of capital stock
pursuant to any stock dividend, stock split or other distribution in respect
of outstanding shares, and
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(F) the issuance of Common Stock or securities
convertible into Common Stock pursuant to an underwritten offering (including,
without limitation, any such securities issued pursuant to the underwriters'
overallotment option).
(c) Sale of Additional Notes. In the event that the Company shall
issue or sell any Additional Notes and, in connection therewith, shall issue any
Additional Warrants, the aggregate number of shares of Common Stock thereafter
issuable upon the exercise of the Warrants then outstanding shall equal (i) the
product obtained by multiplying the Series No. 1 Note Ratio by the Incremental
Warrant Shares, minus (ii) the number of shares of Underlying Common Stock, if
any, that have theretofore been issued upon exercise of Warrants; provided,
however, that no adjustment pursuant to this subsection (c) shall reduce the
number of shares issuable upon exercise of a Warrant.
(d) Issuance of Rights. In the event that the Company shall
distribute any Rights prior to the exercise or expiration of the Warrants, the
Company shall make proper provision so that each Holder who exercises a Warrant
after the record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such exercise, in
addition to the shares of Common Stock issuable upon such exercise, a number of
Rights determined as follows: (A) if such exercise occurs on or prior to the
date fixed for the distribution to the holders of Rights of separate securities
evidencing such Rights, the same number of Rights to which a holder of a number
of shares of Common Stock equal to the number of shares of Underlying Common
Stock issuable upon such exercise would have been entitled at the time of such
exercise in accordance with the terms and provisions applicable to the Rights,
and (B) if such exercise occurs after such distribution date, the same number of
Rights to which a holder of the number of shares of Underlying Common Stock into
which the Warrant so exercised was exercisable immediately prior to such
distribution date would have been entitled on the distribution date in
accordance with the terms and provisions applicable to the Rights.
(e) Expiration Of Rights, Options and Conversion Privileges. Upon
the expiration of any rights, options, warrants or conversion or exchange
privileges that have previously resulted in an adjustment pursuant to Section
4.01(b) or Section 4.01(c), if any thereof shall not have been exercised, the
number of shares of Common Stock issuable upon the exercise of each Warrant
shall, upon such expiration, be readjusted and shall thereafter, upon any future
exercise, be such as they would have been had they been originally adjusted (or
had the original adjustment not been required, as the case may be) as if (i) the
only shares of Common Stock so issued were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such rights, options, warrants or
conversion or exchange rights and (ii) such shares of Common Stock, if any, were
issued or sold for the Consideration actually received by the Company upon such
exercise plus the Consideration, if any, actually received by the Company for
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange rights whether or not exercised.
(f) De Minimis Adjustments. No adjustment in the number of shares of
Common Stock issuable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent in the number of share
of Common Stock purchasable upon an
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exercise of each Warrant; provided, however, that any adjustments which by
reason of this Section 4.01(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
shall be made to the nearest one-tenth of a share.
Section 4.02. DETERMINATION OF ADJUSTMENT. Whenever the number of shares
of Common Stock issuable upon the exercise of each Warrant is adjusted as herein
provided, a certificate of an officer of the Company setting forth the number of
shares of Common Stock issuable upon the exercise of each Warrant after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made
(in reasonable detail), shall, absent demonstrable error, be conclusive evidence
of such adjustment. The Company shall be entitled to rely on such certificate
and shall exhibit the same from time to time to any Holder desiring an
inspection thereof during normal business hours.
Section 4.03. STATEMENT ON WARRANTS. Irrespective of any adjustment in the
number or kind of shares issuable upon the exercise of the Warrants,
certificates evidencing Warrants theretofore or thereafter issued may continue
to express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
Section 4.04. FRACTIONAL INTEREST. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full shares of Common Stock which shall be issuable
upon such exercise thereof shall be computed on the basis of the aggregate
number of shares of Common Stock acquirable on exercise of the Warrants so
presented. If any fraction of a share of Common Stock would, except for the
provisions of this Section 4.04, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall pay an amount in cash calculated
by it to be equal to the then Fair Market Value per share of Common Stock
multiplied by such fraction computed to the nearest whole cent.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01. WARRANT TRANSFER BOOKS.
(a) The Warrant Certificates shall be issued in registered form
only. The Company shall keep at its executive office a register in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Warrant Certificates and of transfers or
exchanges of Warrant Certificates as herein provided.
(b) Every Warrant Certificate surrendered for registration of
transfer or exchange shall (if so required by the Company) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder thereof or his attorney duly authorized in
writing.
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Section 5.02. NO STOCK RIGHTS. Prior to the exercise of the Warrants, no
holder of a Warrant Certificate, as such, shall be entitled to vote or be deemed
the holder of Common Stock or any other securities of the Company which may at
any time be issuable on the exercise hereof, nor shall anything contained herein
be construed to confer upon any holder of a Warrant Certificate, as such, the
rights of a stockholder of the Company or the right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, to exercise any
preemptive right, to receive notice of meetings or other actions affecting
stockholders (except as specifically provided herein), or to receive dividends
or subscription rights or otherwise.
Section 5.03. RESTRICTIONS ON TRANSFER. The Holder of any Warrant
Certificate, by acceptance thereof, acknowledges and agrees that the Warrants
and the Underlying Common Stock issuable upon exercise of such Warrants shall be
subject to the terms and conditions of the Note Purchase Agreement, as such
document may be in effect from time to time, including, without limitation, the
provisions therein relating to restrictions on transfer. Without limitation of
the obligations set forth in Section 5.07, it shall be a condition precedent to
any transfer of the Warrant that each proposed transferee execute and deliver to
the Company the documentation required by such Section 5.07.
Section 5.04. NO REGISTRATION OF WARRANTS OR UNDERLYING COMMON STOCK UNDER
SECURITIES LAWS; OTHER REGULATORY FILINGS.
(a) Neither the Warrants nor the Underlying Common Stock have been
registered under the Securities Act or any state securities laws.
(b) The Holder of any Warrant Certificate, by acceptance thereof,
represents that it is acquiring the Warrants to be issued to it for its own
account and not with a view to the distribution thereof, and agrees not to sell,
transfer, pledge or hypothecate any Warrants or any Underlying Common Stock
unless (i) (A) such transfer is made in connection with an effective
registration statement under the Securities Act and any applicable state
securities laws or (B) the Holder thereof has furnished the Company a
satisfactory opinion of counsel for such Holder to the effect that such
transaction is exempt from the registration requirements of the Securities Act,
the rules and regulations in effect thereunder and any applicable state
securities laws, and (ii) such transfer is made in accordance with terms and
conditions set forth in the Note Purchase Agreement relating to restrictions on
transfer to the extent the Warrants or Underlying Common Stock are subject
thereto.
(c) Each Holder of Warrants also hereby acknowledges that any
exercise of the Warrants may be subject to the filing requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and agrees to
make any such required filings prior to any such exercise.
Section 5.05. RESERVATION OF COMMON STOCK FOR ISSUANCE ON EXERCISE OF
WARRANTS. The Company shall at all times reserve and keep available, out of its
authorized but unissued Common Stock, solely for the purpose of issue upon
exercise of Warrants as herein provided, such number of shares of Common Stock
as shall then be issuable
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upon the exercise of all outstanding Warrants. All shares of Common Stock which
shall be so issuable shall, upon such issue and upon payment of the exercise
price therefor as provided herein and in the applicable Warrant Certificate, be
duly and validly issued and fully paid and non-assessable.
Section 5.06. PAYMENT OF TAXES. The Company shall pay all Taxes that may
be imposed on the Company or on the Warrants or on any securities deliverable
upon exercise of Warrants with respect thereto. The Company shall not be
required, however, to pay any Taxes or other charges imposed in connection with
any transfer involved in the issue of any certificate for shares of Common Stock
or other securities underlying the Warrants or payment of cash to any person
other than the Holder of a Warrant Certificate surrendered upon the exercise or
purchase of a Warrant.
Section 5.07. CERTAIN PERSONS TO EXECUTE AGREEMENT. Without in any way
limiting any transfer restrictions contained elsewhere herein or in the Note
Purchase Agreement, no Holder shall sell or otherwise transfer any Warrants held
by such Holder, unless, prior to the consummation of any such sale or other
disposition, the person to whom such sale or other disposition is proposed to be
made executes and delivers to the Company an agreement, in form and substance
satisfactory to the Company, whereby such prospective transferee confirms that,
with respect to the Warrants that are the subject of such sale or other
disposition, it shall be deemed to be a "Holder" for the purposes of this
Agreement and agrees to be bound by all the terms of this Agreement and all
applicable terms of the Note Purchase Agreement. Upon the execution and delivery
by such prospective transferee of the agreement referred to in the next
preceding sentence, and subject to all applicable transfer restrictions, such
prospective transferee shall be deemed a "Holder" for the purposes of this
Agreement, and shall have the rights and be subject to the obligations of a
Holder hereunder with respect to the Warrants held by such prospective
transferee.
ARTICLE VI
MISCELLANEOUS
Section 6.01. EXPENSES. Except as otherwise specified in this Agreement or
in the Note Purchase Agreement, all costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
Section 6.02. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, or by courier service, cable, telecopy, telegram, or registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties hereto at their addresses set forth on the signature pages to this
Agreement (or at such other address for a party hereto as shall be specified in
a notice given in accordance with this Section 6.02).
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<PAGE> 14
Section 6.03. HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning, construction or interpretation of this Agreement.
Section 6.04. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
Section 6.05. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant
Certificate is lost, stolen, mutilated or destroyed, the Company in its
discretion may issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, and upon receipt of a proper
affidavit or other evidence satisfactory to the Company (and surrender of any
mutilated Warrant Certificate) and bond of indemnity in form and amount and with
corporate surety satisfactory to the Company in each instance protecting the
Company, a new Warrant Certificate of like tenor and exercisable for an
equivalent number of shares of Common Stock as the Warrant Certificate so lost,
stolen, mutilated or destroyed. Any such new Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate at any time
shall be enforceable by anyone. An applicant for such a substitute Warrant
Certificate also shall comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe. All Warrant
Certificates shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement of lost,
stolen, mutilated or destroyed Warrant Certificates, and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without their surrender.
Section 6.06. ENTIRE AGREEMENT. This Agreement and the documents referred
to herein constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and supersede all prior agreements and undertakings,
both written and oral, between or among the parties with respect to the subject
matter hereof.
Section 6.07. NO THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement, whether
express or implied, is intended to or shall confer upon any person other than
the parties hereto and their respective successors and permitted assigns, any
legal or equitable right, benefit or remedy of any nature whatsoever, under or
by reason of this Agreement.
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<PAGE> 15
Section 6.08. AMENDMENT; WAIVER. This Agreement may not be amended,
modified, supplemented or waived except by an instrument in writing signed by,
or on behalf of, the Company and holders of more than 50% of the outstanding
Warrants or, in the case of a waiver, the party to be bound thereby (which, in
the case of the Holders of the Warrants, shall require Holders of more than 50%
of the outstanding Warrants).
Section 6.09. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS OF
EACH PARTY ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO
THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS.
Section 6.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 6.11. PURCHASE DOCUMENT. This Agreement is a Purchase Document for
purposes of the Note Purchase Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
Section 6.12. SPECIFIC PERFORMANCE. Each Holder shall have the right to
specific performance by the Company of the provisions of this Agreement, in
addition to any other remedies that it may have at law or in equity. The Company
hereby irrevocably waives, to the extent that it may do so under applicable law,
any defense based on the adequacy of a remedy at law which may be asserted as a
bar to the remedy of specific performance in any action brought against the
Company for specific performance of this Agreement by the Holders of the
Warrants or the Underlying Common Stock.
Section 6.13. FILINGS. The Company shall, at its own expense and to the
extent it is reasonably able to do so, promptly execute and deliver, or cause to
be executed and delivered, to any Holder of Warrants all applications,
certificates, instruments and other documents that such Holder may reasonably
request in connection with the obtaining of any consent, approval, qualification
or authorization of any Federal, state or local government (or any agency or
commission thereof) necessary or appropriate in connection with, or for the
effective exercise of, any Warrants then held by such Holder, in each case
subject to such confidentiality obligations as the Company may reasonably impose
on such Holder; provided, however, that the Company shall not be required to
qualify to do business in, or provide a general consent to service of process
in, any jurisdiction in which it is not already qualified to do business and
shall not be required to register the Warrants or the Underlying Common Stock
under any federal or state securities laws except as otherwise required under
any registration rights agreement (or similar agreement) to which the Company
may be a party from time to time.
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<PAGE> 16
Section 6.14. OTHER TRANSACTIONS. Nothing contained herein shall preclude
the Holder from engaging in any transaction, in addition to those contemplated
by this Agreement, with the Company or any of its Affiliates in which the
Company or such Affiliate is not restricted hereby from engaging with any other
Person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date fast above written.
MCM CAPITAL GROUP, INC.
By: /s/ Gregory G. Meredith
------------------------------------
Name: Gregory G. Meredith
Title: Secretary
ING (U.S.) CAPITAL LLC
By: /s/ David Balestrery
------------------------------------
Name: David Balestrery
Title: Vice President
16
<PAGE> 18
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, AND
NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE
ISSUER, UNLESS (i) SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR (ii) THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL
FOR THE HOLDER HEREOF THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT, THE RULES AND REGISTRATIONS IN EFFECT THEREUNDER AND
ANY APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
THE EXERCISE OF THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
AND OTHER PROVISIONS SET FORTH IN A WARRANT AGREEMENT AND A NOTE PURCHASE
AGREEMENT, EACH DATED AS OF JANUARY 12, 2000, AS THEREAFTER AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, COPIES OF WHICH ARE ON
FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO REGISTRATION OF
TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS AND
UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH.
MCM CAPITAL GROUP, INC.
WARRANT CERTIFICATE
Dated as of _________, _____
WARRANTS TO PURCHASE ____ SHARES OF COMMON STOCK
Certificate No. ___
Number of Warrants: __________
MCM CAPITAL GROUP, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Company"), hereby certifies that, for value
received, ING (U.S.) CAPITAL, LLC, or its registered assigns, is the registered
holder of the number of Warrants set forth above (the "Warrants"). Each Warrant
shall entitle the registered holder thereof (the "Holder"), during the time
periods specified below and subject to the provisions contained herein and in
the Warrant Agreement (as defined below), to receive from the Company one share
of Common Stock, par value $0.01 per share, of the Company ("Common Stock"),
subject to adjustment upon the occurrence of certain events as more fully
described in the Warrant
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<PAGE> 19
Agreement, at an exercise price of $0.01 per share. The Warrants shall be
exercisable beginning on April 12, 2000 through January 12, 2005 (the
"Expiration Date"), as follows: (i) for the period beginning on April 12, 2000
and ending on the October 9, 2000, for not more than 50% of the aggregate number
of shares of Common Stock issuable upon exercise of the Warrants from time to
time (giving effect to the adjustments contemplated by Section 4.01 of the
Warrant Agreement referred to below); and (ii) beginning on October 10, 2000 and
ending on the Expiration Date, for up to 100% of the aggregate number of shares
of Common Stock issuable upon exercise of the Warrants from time to time. This
Warrant Certificate shall terminate and become void as of the close of business
on the Expiration Date.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of January 12, 2000 (as thereafter amended, modified
or supplemented, the "Warrant Agreement"), among the Company and ING (U.S.)
Capital, LLC, and is subject to the terms and provisions contained in the
Warrant Agreement and in the Note Purchase Agreement (each such term is defined
in the Warrant Agreement), to all of which terms and provisions the Holder of
this Warrant Certificate consents by acceptance hereof, which applicable terms
and provisions are hereby incorporated herein by reference and made a part
hereof. Reference is hereby made to the Warrant Agreement and the Note Purchase
Agreement for a full statement of the respective rights, limitations of rights,
duties and obligations thereunder of the Company and the Holders of the
Warrants.
The number of shares of Common Stock issuable upon the exercise of each
Warrant is subject to adjustment as provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of
Warrants shall, upon such issue and upon payment of the Exercise Price in
accordance with the terms set forth in the Warrant Agreement, be duly and
validly issued and fully paid and non-assessable.
In order to exercise a Warrant, the Holder hereof must surrender this
Warrant Certificate at the office of the Company, with the Form of Election to
Purchase attached hereto appropriately completed and duly executed by the Holder
hereof, all subject to the terms and conditions hereof and of the Warrant
Agreement.
All terms used in this Warrant Certificate that are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
Copies of the Warrant Agreement are on file at the office of the Company
and may be obtained by writing to the Company at MCM Capital Group, Inc., 4302
East Broadway, Phoenix, Arizona 85042, Attention: Secretary.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 20
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
executed by its officers thereunto duly authorized as of the date first written
above.
MCM CAPITAL GROUP, INC.
By:
------------------------------------
Name:
Title:
3
<PAGE> 21
FORM OF ELECTION TO PURCHASE
(To Be Executed by the Holder to Exercise Warrants Evidenced by the Foregoing
Warrant Certificate)
To: MCM Capital Group, Inc.
The undersigned hereby irrevocably elects to exercise the Warrants evidenced by
the foregoing Warrant Certificate for, and to acquire thereunder, one full share
(subject to adjustment) of Common Stock issuable upon exercise of each such
Warrant, all on the terms and conditions specified in the within Warrant
Certificate and the Warrant Agreement therein referred to. The undersigned
hereby surrenders this Warrant Certificate and all right, title and interest
therein to the Company and directs that the shares of Common Stock deliverable
upon the exercise of such Warrants be registered or placed in the name of the
undersigned at the address specified below and delivered thereto.
Address: _________________________________________________
_________________________________________________
_________________________________________________
(Include Zip Code)
Name of Holder: _________________________________________________
(Please Print)
By: _________________________________________________
(Signature)*
(Name:)___________________________________________
(Title:)____________________________________________
Dated: ___________________
1
<PAGE> 22
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned Holder of the foregoing Warrant
Certificate hereby sells, assigns and transfers(1) unto each assignee set forth
below (including the undersigned with respect to any Warrants constituting a
part of the Warrants evidenced by the foregoing Warrant Certificate not being
assigned hereby) all of the rights of the undersigned in and to the number of
Warrants (as defined in and evidenced by the foregoing Warrant Certificate) set
forth opposite the name of such assignee below and in and to the foregoing
Warrant Certificate with respect to said Warrants and the shares of Common Stock
issuable upon exercise of said Warrants:
Name of Assignee: ____________________________________________
(Please Print)
Address: _____________________________________________
_____________________________________________
_____________________________________________
(Include Zip Code)
Number of Warrants: ___________________
and does hereby irrevocably constitute and appoint the Company the undersigned's
attorney-in-fact to make such transfer on the books of the Company maintained
for that purpose, with full power of substitution in the premises.
_______________________
(1) THE SECURITIES EVIDENCED BY THE FOREGOING WARRANT CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS SET FORTH IN THE WARRANT
AGREEMENT AND THE NOTE PURCHASE AGREEMENT, COPIES OF WHICH ARE ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO REGISTRATION OF TRANSFER OF SUCH
SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH
RESTRICTIONS SHALL HAVE BEEN COMPILED WITH.
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<PAGE> 23
If the total number of Warrants transferred shall not be all the Warrants
evidenced by the foregoing Warrant Certificate, the undersigned requests that a
new Warrant Certificate evidencing the Warrants not so assigned be issued in the
name of and delivered to the undersigned.
Dated: _______________
Name of Holder: _________________________________________________
(Please Print)
_________________________________________________
(Signature)*
(Name:) __________________________________________
(Title:) __________________________________________
2
<PAGE> 1
EXHIBIT 10.3
WARRANT AGREEMENT
dated as of January 12, 2000
between
MCM CAPITAL GROUP, INC.
and
TRIARC COMPANIES, INC.
for
Warrants to Purchase
100,000 shares of Common Stock
<PAGE> 2
WARRANT AGREEMENT
This WARRANT AGREEMENT, dated as of January 12, 2000 (this "Agreement") is
entered into by and between MCM Capital Group, Inc., a Delaware corporation (the
"Company"), and Triarc Companies, Inc., a Delaware corporation ("Triarc").
W I T N E S S E T H:
WHEREAS, the Company is a party with ING (U.S.) Capital LLC (the
"Purchaser") to that certain Note Purchase Agreement, dated as of January 12,
2000 (the "Note Purchase Agreement"), pursuant to which the Company has agreed
to issue and sell to the Purchaser, and the Purchaser has agreed to purchase,
certain securities of the Company;
WHEREAS, Triarc and the Purchaser have entered into that certain Guaranty
and Option Agreement, dated as of January 12, 2000 (the "Guaranty"), pursuant to
which Triarc has agreed, on the terms and subject to the limitations set forth
therein, to guarantee certain obligations of the Company under the Series No. 1
Notes (as defined herein); and
WHEREAS, in order to induce Triarc to enter into the Guaranty, and as
partial consideration therefor, the Company has agreed to issue to Triarc
warrants which, subject to the adjustments provided herein, entitle Triarc to
purchase 100,000 shares of common stock, $0.01 par value per share, of the
Company (the "Common Stock").
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements and covenants hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. Unless the context otherwise
requires, the following terms, when used in this Agreement, shall have the
respective meanings specified below :
"Additional Notes" shall mean up to $40,000,000 in aggregate principal
amount of notes issued by the Company subsequent to the Closing Date pursuant to
Section 6.2.2(b) of the Note Purchase Agreement.
"Additional Warrants" shall mean warrants, options or similar rights to
purchase Common Stock on terms and conditions, and in a form, substantially
similar to the Purchaser Warrants, which are issued to the purchasers of
Additional Notes in connection with the sale of such Additional Notes by the
Company and the purchase thereof by such purchaser.
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<PAGE> 3
"Affiliate" shall have the meaning specified in the Note Purchase
Agreement.
"Agreement" or "this Agreement" shall have the meaning specified in the
preamble to this Agreement.
"Board" shall mean the board of directors of the Company.
"Closing Date" shall have the meaning specified in the Note Purchase
Agreement.
"Common Stock" shall have the meaning specified in the recitals to this
Agreement.
"Company" shall have the meaning specified in the preamble to this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exercise Price" shall have the meaning specified in Section 3.01.
"Expiration Date" shall be January 12, 2005.
"Fair Market Value" shall mean, with respect to any shares of Common Stock
as of any date of determination, (i) if such shares of Common Stock are not
Publicly Traded, the fair value of such shares of Common Stock (A) as determined
reasonably and in good faith in the most recently completed arm's-length
transaction between the Company and an unaffiliated third party in which such
determination is necessary and the closing of which shall have occurred within
the six months preceding such date of determination, or (B) if no such
transaction shall have occurred within such six-month period, as determined in
accordance with the Valuation Criteria reasonably and in good faith by an
Independent Financial Expert appointed by the Board and consented to by Triarc
(such consent not to be unreasonably withheld); or (ii) if such shares of Common
Stock are Publicly Traded, the Market Price of such shares of Common Stock on
the trading day immediately preceding such date of determination; provided,
however, that with respect to shares of Common Stock issuable upon the exercise
of options under a stock option plan or the issuance of shares of Common Stock
under an employee stock incentive plan, the Fair Market Value of such shares
shall be determined in accordance with the applicable provisions of such plan
(if any).
"Holders" shall mean the registered holders from time to time of the
Warrants and, unless otherwise provided or indicated herein, the registered
holders from time to time of the Underlying Common Stock.
"Independent Financial Expert" shall mean a nationally recognized
investment banking firm (i) that does not (and whose directors, officers,
employees and affiliates do not) have a direct or indirect financial interest in
the Company or any of its Affiliates, and (ii) that is not, and none of whose
directors, officer, employees or Affiliates are, at the time it is called upon
to render independent financial advice to the Company, a promoter, director or
officer of the Company or any of its Affiliates or an underwriter or placement
agent with respect to any of the
2
<PAGE> 4
securities of the Company or any of its Affiliates, nor have the Company or any
such directors, officers, employees or Affiliates acted in such capacity during
the three year period prior thereto.
"Market Price" shall mean, with respect to any shares of Common Stock
that are Publicly Traded, for any specified trading day, (i) in the case of
shares of Common Stock listed or admitted to trading on any securities exchange
or on the Nasdaq National Market or the Nasdaq SmallCap Market, the average
closing price, or if no sale takes place on a particular day, the average of the
closing bid and asked prices on such day, for the ten (10) trading days prior to
the date in question, (ii) in the case of shares of Common Stock not then listed
or admitted to trading on any securities exchange or on the Nasdaq National
Market or the Nasdaq SmallCap Market, the average last reported sale price, or
if no sale takes place on a particular day, the average of the closing bid and
asked prices on such day, for the ten (10) trading days prior to the date in
question, as reported by a reputable quotation source designated by the Company,
and (iii) if there are no bid and asked prices reported during the ten (10)
trading days prior to the specified date, the Fair Market Value of such shares
of Common Stock as determined as if such shares of Common Stock were not
Publicly Traded.
"Note Purchase Agreement" shall have the meaning specified in the recitals
to this Agreement.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization or other entity or any
government or political subdivision, agency or instrumentality thereof, as well
as any syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Exchange Act.
"Publicly Traded" shall mean, relative to any security, that such security
is (i) listed on a domestic securities exchange, (ii) quoted on the Nasdaq
National Market or the Nasdaq SmallCap Market, or (iii) traded in the domestic
over-the-counter market, which trades are reported on the OTC Electronic
Bulletin Board or reported by the National Quotation Bureau, Incorporated.
"Purchaser" shall have the meaning specified in the recitals to this
Agreement.
"Purchaser Warrants" shall mean the warrants issued to the Purchaser on
the Closing Date as contemplated by the Note Purchase Agreement and that certain
Warrant Agreement, dated as of January 12, 2000, by and between the Company and
the Purchaser, which warrants initially entitle the Purchaser to purchase
428,571 shares of Common Stock.
"Rights" shall mean any "poison pill" or similar shareholder rights issued
pursuant to a "poison pill" shareholder rights plan or similar plan.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Series No. 1 Note" shall have the meaning specified in the Note
Purchase Agreement.
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<PAGE> 5
"Taxes" shall mean all transfer, stamp, documentary and other similar
taxes, assessments or charges levied by any governmental or revenue authority in
respect hereof in respect of any Warrant or any Warrant Certificate, excluding,
however, franchise taxes and taxes, assessments or charges levied or imposed on
or measured by the net income or receipts of any Person.
"Triarc" shall have the meaning specified in the preamble to this
Agreement.
"Underlying Common Stock" shall mean the shares of Common Stock issuable
or issued upon the exercise of the Warrants.
"Valuation Criteria" shall mean one or more valuation methods that the
Independent Financial Expert or the Board, as the case may be, in its
professional or reasonable business judgment, as the case may be, determines to
be most appropriate for use in determining the Fair Market Value of any
securities for which such determination is required pursuant to this Agreement.
"Warrant Certificates" shall have the meaning specified in Section 2.01 of
this Agreement.
"Warrants" shall mean the warrants issued to Triarc on the Closing Date as
contemplated by this Agreement and the Note Purchase Agreement, which warrants
initially entitle Triarc to purchase 100,000 shares of Common Stock.
ARTICLE II
ORIGINAL ISSUE OF WARRANTS; TRANSFER
Section 2.01. FORM OF WARRANT CERTIFICATES. The Warrants shall be
evidenced by certificates in registered form only and substantially in the form
attached hereto as Exhibit A (the "Warrant Certificates"), shall be dated the
date on which signed by the Company and may have such legends and endorsements
typed, stamped, printed, lithographed or engraved thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation applicable thereto, with any rule or regulation of any securities
exchange or association on which the Warrants may be listed, or to conform to
customary usage.
Section 2.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. Warrant
Certificates evidencing the Warrants shall be executed by the Company and
delivered on the Closing Date to Triarc. The Warrant Certificates shall be
executed on behalf of the Company by one or more duly authorized officers of the
Company.
Section 2.03. TRANSFER OF WARRANTS.
(a) Subject to clause (b) of this Section 2.03 and provided that all
conditions to transfer set forth in this Agreement have been satisfied, each
Warrant and the rights thereunder may be transferred by the Holder thereof
delivering to the Company the Warrant Certificate evidencing such Warrant
accompanied by a properly completed assignment form (a form of
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<PAGE> 6
which is attached to the form of Warrant Certificate attached as Exhibit A to
this Agreement). Within ten (10) Business Days of receipt of such assignment
form, the Company shall issue and deliver to the transferee, subject to clause
(b) below, a Warrant Certificate of like kind and tenor representing the
transferred Warrants and to the transferor a Warrant Certificate of like kind
and tenor representing any Warrants evidenced by such original certificate that
are not being transferred. Each Warrant Certificate issued pursuant to this
Section 2.03 shall be substantially in the form of Exhibit A to this Agreement
and shall bear the restrictive legends set forth thereon (unless, with respect
to the legend regarding transfer under applicable securities laws, the Holder or
transferee thereof supplies to the Company an opinion of counsel, reasonably
satisfactory to the Company, that the restrictions described in such legend are
no longer applicable to such Warrants).
(b) The transfer of Warrants shall be permitted only pursuant to a
transaction that complies with, or is exempt from, the provisions of the
Securities Act and any applicable provisions of state securities laws, and the
Company may require an opinion of counsel, reasonably satisfactory to the
Company, to such effect prior to the transfer of any Warrant.
ARTICLE III
EXERCISE PRICE; EXERCISE OF WARRANTS GENERALLY
Section 3.01. EXERCISE PRICE. Each Warrant Certificate shall entitle the
Holder thereof, subject to the provisions of the Agreement, to purchase one
share of Common Stock for each Warrant represented thereby at an exercise price
(the "Exercise Price") of $0.01 per share.
Section 3.02. EXERCISE OF WARRANTS. Subject to the terms and conditions
set forth herein, the Warrants shall be exercisable at any time from the date of
issuance through the Expiration Date.
Section 3.03. EXPIRATION OF WARRANTS. The Warrants shall terminate and
become void as of the close of business on the Expiration Date.
Section 3.04. METHOD OF EXERCISE.
(a) In order to exercise a Warrant, the Holder thereof must
surrender the Warrant Certificate evidencing such Warrant to the Company, with
one of the forms on the reverse of or attached to the Warrant Certificate duly
executed, and by paying in full to the Company (i) by wire transfer of
immediately available funds, or (ii) by certified or official bank check, or
(iii) by any combination of the foregoing, the Exercise Price for each share of
Underlying Common Stock as to which Warrants are then being exercised. A Holder
may exercise such Holder's Warrant for the full number of shares of Underlying
Common Stock issuable upon exercise thereof (subject to the limitations set
forth in Section 3.02) or any lesser number of whole shares of Underlying Common
Stock.
(b) Not later than the fifth Business Day following the later of (i)
surrender of a Warrant Certificate in conformity with the foregoing provisions
or (ii) payment by the Holder of the full Exercise Price for the shares of
Underlying Common Stock as to which such Warrants
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are then being exercised, the Company shall transfer to the Holder of such
Warrant Certificate appropriate evidence of ownership of any shares of
Underlying Common Stock or other securities or property (including any money) to
which the Holder is entitled, registered or otherwise placed in, or payable to
the order of, such name or names as may be directed in writing by the Holder,
and shall deliver such evidence of ownership and any other securities or
property (including any money) to the person or persons entitled to receive the
same, together with an amount in cash in lieu of any fraction of a share as
provided in Section 4.04. If such Warrant Certificate shall not have been
exercised in full, the Company will issue to such Holder a new Warrant
Certificate exercisable for the number of shares of Underlying Common Stock as
to which such Warrant shall not have been exercised. Any registration of
Underlying Common Stock issued upon exercise of a Warrant in the name of any
person other than the registered holder of the Warrant shall be subject to
Sections 5.03 and 5.04 of this Agreement.
(c) Each person in whose name any certificate representing shares of
Underlying Common Stock is issued shall for all purposes be deemed to have
become the holder of record of such shares of Underlying Common Stock on the
date on which the Warrant Certificate was surrendered to the Company and payment
of the Exercise Price therefor, irrespective of the date of delivery of such
certificate representing shares of Underlying Common Stock.
Section 3.05. CANCELLATION OF WARRANTS. The Company shall cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, exchange or substitution, and no Warrant
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall destroy canceled
Warrant Certificates. If the Company shall acquire any of the Warrants, such
acquisition shall not operate as a redemption or termination of the right
represented by such Warrants unless and until the Warrant Certificates
evidencing such Warrants are surrendered to the Company for cancellation.
ARTICLE IV
ADJUSTMENTS
Section 4.01. ADJUSTMENTS. The number of shares of Common Stock issuable
upon exercise of each Warrant shall be subject to adjustment from time to time
as follows:
(a) Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications. In the event that the Company shall (i) pay a dividend or
make any other distribution with respect to its Common Stock in shares of its
capital stock, (ii) subdivide its outstanding Common Stock, (iii) combine its
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a merger, consolidation or other
business combination in which the Company is the continuing corporation), the
number of shares of Common Stock issuable upon exercise of each Warrant
immediately prior to the record date for such dividend or distribution, or the
effective date of such subdivision or combination, shall be adjusted so that the
Holder of each Warrant shall thereafter be entitled to receive the kind and
number of shares of Common Stock or other securities of the Company that such
Holder would have owned or have
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been entitled to receive after the happening of any of the events described
above, had such Warrant been exercised immediately prior to the happening of
such event or any record date with respect thereto. An adjustment made pursuant
to this Section 4.01(a) shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such event.
(b) Issuance of Common Stock, Rights, Options or Warrants at
Lower Values.
(i) In the event that the Company shall issue or sell shares
of Common Stock, or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock, at a price per share of Common Stock (determined in the case of such
rights, options, warrants or convertible or exchangeable securities, by dividing
(x) the total amount of Consideration receivable by the Company in respect of
the issuance and sale of such rights, options, warrants or convertible or
exchangeable securities, plus the total Consideration, if any, payable to the
Company upon exercise, conversion or exchange thereof, by (y) the total number
of shares of Common Stock covered by such rights, options, warrants or
convertible or exchangeable securities) that is lower than the then Fair Market
Value per share of the Common Stock immediately prior to such sale or issuance,
then the number of shares of Common Stock thereafter issuable upon the exercise
of each Warrant then outstanding shall equal the Pre-Issuance Value per Warrant
divided by the Unadjusted Post-Issuance Value per Warrant. Such adjustment shall
be made successively whenever any such sale or issuance is made.
(ii) For purposes of this Section 4.01(b), (A) "Pre-Issuance
Value per Warrant" shall mean (1) the total number of shares of Common Stock
then issuable upon exercise of each Warrant, multiplied by (2) the Fair Market
Value per share of Common Stock immediately prior to any issuance or sale
described in Section 4.01(b)(i); and (B) "Unadjusted Post-Issuance Value per
Warrant" shall mean (1) the sum of (x) the total number of shares of Common
Stock (including shares of Common Stock issuable upon exercise of outstanding
Warrants and Additional Warrants) outstanding immediately prior to any issuance
or sale described in Section 4.01(b)(i), multiplied by the Fair Market Value per
share of Common Stock immediately prior to such issuance or sale, plus (y) the
total number of additional shares of Common Stock issued or sold by the Company
(including, in the case of rights, options, warrants or convertible or
exchangeable securities, the total number of shares of Common Stock covered by
such rights, options, warrants or convertible or exchangeable securities),
multiplied by the price per share of Common Stock for which such additional
shares of Common Stock were issued or sold (including, in the case of rights,
options, warrants or convertible or exchangeable securities, the total amount of
Consideration per share receivable by the Company in respect of the issuance and
sale of such rights, options, warrants or convertible or exchangeable
securities, plus the total Consideration per share, if any, payable to the
Company upon exercise, conversion or exchange thereof), divided by (2) the total
number of shares of Common Stock outstanding immediately after such issuance or
sale (including, in the case of rights, options, warrants or convertible or
exchangeable securities, the total number of shares of Common Stock covered by
such rights, options, warrants or convertible or exchangeable securities and
including shares of Common Stock issuable upon exercise of outstanding Warrants
and Additional Warrants).
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(iii) In the event that the Company shall issue and sell
shares of Common Stock or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock for consideration consisting, in whole or in part, of property
other than cash or its equivalent, then in determining the "price per share of
Common Stock" and the "Consideration" receivable by or payable to the Company
for purposes of this Section 4.01, the Board shall determine, in good faith, the
fair value of such property. In the event that the Company shall issue and sell
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock, together with one
or more other securities as part of a unit at a price per unit, then in
determining the "price per share of Common Stock" and the "Consideration"
receivable by or payable to the Company for purposes of this Section 4.01, the
Board shall determine, in good faith, the fair value of the rights, options,
warrants or convertible or exchangeable securities then being sold as part of
such unit.
(iv) Any adjustment to the number of shares of Common Stock
issuable upon exercise of all Warrants then outstanding made pursuant to this
Section 4.01(b) shall be allocated among each Warrant then outstanding on a pro
rata basis.
(v) Notwithstanding anything herein to the contrary, the
provisions of this Section 4.01(b) shall not apply to any of the following:
(A) the grant or issuance of restricted stock, options
or other similar rights issued pursuant to employee stock option plans,
directors stock option plans or similar plans providing for options or other
similar rights to purchase Common Stock covering in the aggregate not in excess
of 20% of the fully-diluted shares of Common Stock issued and outstanding from
time to time, or the issuance of shares upon exercise of any such options or
other similar rights,
(B) the issuance of shares upon the exercise of options,
warrants, convertible or exchangeable securities, or similar securities that are
convertible into Common Stock in accordance with their terms, that are issued
and outstanding as of the date of this Agreement (giving effect to the
transactions relating to the issuance of the Series No. 1 Notes, including
without limitation the issuance of the Warrants and the Purchaser Warrants),
(C) the issuance of any Additional Warrants,
(D) the issuance of any Rights,
(E) the issuance of shares of capital stock pursuant to
any stock dividend, stock split or other distribution in respect of outstanding
shares, and
(F) the issuance of Common Stock or securities
convertible into Common Stock pursuant to an underwritten offering (including,
without limitation, any such securities issued pursuant to the underwriters'
overallotment option).
(c) [Reserved].
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(d) Issuance of Rights. In the event that the Company shall
distribute any Rights prior to the exercise or expiration of the Warrants, the
Company shall make proper provision so that each Holder who exercises a Warrant
after the record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such exercise, in
addition to the shares of Common Stock issuable upon such exercise, a number of
Rights determined as follows: (A) if such exercise occurs on or prior to the
date fixed for the distribution to the holders of Rights of separate securities
evidencing such Rights, the same number of Rights to which a holder of a number
of shares of Common Stock equal to the number of shares of Underlying Common
Stock issuable upon such exercise would have been entitled at the time of such
exercise in accordance with the terms and provisions applicable to the Rights,
and (B) if such exercise occurs after such distribution date, the same number of
Rights to which a holder of the number of shares of Underlying Common Stock into
which the Warrant so exercised was exercisable immediately prior to such
distribution date would have been entitled on the distribution date in
accordance with the terms and provisions applicable to the Rights.
(e) Expiration Of Rights, Options and Conversion Privileges. Upon
the expiration of any rights, options, warrants or conversion or exchange
privileges that have previously resulted in an adjustment pursuant to Section
4.01(b), if any thereof shall not have been exercised, the number of shares of
Common Stock issuable upon the exercise of each Warrant shall, upon such
expiration, be readjusted and shall thereafter, upon any future exercise, be
such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the only
shares of Common Stock so issued were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such rights, options, warrants or
conversion or exchange rights and (ii) such shares of Common Stock, if any, were
issued or sold for the Consideration actually received by the Company upon such
exercise plus the Consideration, if any, actually received by the Company for
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange rights whether or not exercised.
(f) De Minimis Adjustments. No adjustment in the number of shares of
Common Stock issuable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent in the number of share
of Common Stock purchasable upon an exercise of each Warrant; provided, however,
that any adjustments which by reason of this Section 4.01(f) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-tenth of a share.
Section 4.02. DETERMINATION OF ADJUSTMENT. Whenever the number of shares
of Common Stock issuable upon the exercise of each Warrant is adjusted as herein
provided, a certificate of an officer of the Company setting forth the number of
shares of Common Stock issuable upon the exercise of each Warrant after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made
(in reasonable detail), shall, absent demonstrable error, be conclusive evidence
of such adjustment. The Company shall be entitled to rely on such certificate
and shall exhibit the same from time to time to any Holder desiring an
inspection thereof during normal business hours.
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Section 4.03. STATEMENT ON WARRANTS. Irrespective of any adjustment in the
number or kind of shares issuable upon the exercise of the Warrants,
certificates evidencing Warrants theretofore or thereafter issued may continue
to express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
Section 4.04. FRACTIONAL INTEREST. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full shares of Common Stock which shall be issuable
upon such exercise thereof shall be computed on the basis of the aggregate
number of shares of Common Stock acquirable on exercise of the Warrants so
presented. If any fraction of a share of Common Stock would, except for the
provisions of this Section 4.04, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall pay an amount in cash calculated
by it to be equal to the then Fair Market Value per share of Common Stock
multiplied by such fraction computed to the nearest whole cent.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01. WARRANT TRANSFER BOOKS.
(a) The Warrant Certificates shall be issued in registered form
only. The Company shall keep at its executive office a register in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Warrant Certificates and of transfers or
exchanges of Warrant Certificates as herein provided.
(b) Every Warrant Certificate surrendered for registration of
transfer or exchange shall (if so required by the Company) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder thereof or his attorney duly authorized in
writing.
Section 5.02. NO STOCK RIGHTS. Prior to the exercise of the Warrants, no
holder of a Warrant Certificate, as such, shall be entitled to vote or be deemed
the holder of Common Stock or any other securities of the Company which may at
any time be issuable on the exercise hereof, nor shall anything contained herein
be construed to confer upon any holder of a Warrant Certificate, as such, the
rights of a stockholder of the Company or the right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, to exercise any
preemptive right, to receive notice of meetings or other actions affecting
stockholders (except as specifically provided herein), or to receive dividends
or subscription rights or otherwise.
Section 5.03. RESTRICTIONS ON TRANSFER. The Holder of any Warrant
Certificate, by acceptance thereof, acknowledges and agrees that without
limitation of the obligations set forth in Section 5.07, it shall be a condition
precedent to any transfer of the
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Warrant that each proposed transferee execute and deliver to the Company the
documentation required by such Section 5.07.
Section 5.04. NO REGISTRATION OF WARRANTS OR UNDERLYING COMMON
STOCK UNDER SECURITIES LAWS; OTHER REGULATORY FILINGS.
(a) Neither the Warrants nor the Underlying Common Stock have been
registered under the Securities Act or any state securities laws.
(b) The Holder of any Warrant Certificate, by acceptance thereof,
represents that it is acquiring the Warrants to be issued to it for its own
account and not with a view to the distribution thereof, and agrees not to sell,
transfer, pledge or hypothecate any Warrants or any Underlying Common Stock
unless (i) such transfer is made in connection with an effective registration
statement under the Securities Act and any applicable state securities laws or
(ii) the Holder thereof has furnished the Company a satisfactory opinion of
counsel for such Holder to the effect that such transaction is exempt from the
registration requirements of the Securities Act, the rules and regulations in
effect thereunder and any applicable state securities laws.
(c) Each Holder of Warrants also hereby acknowledges that any
exercise of the Warrants may be subject to the filing requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and agrees to
make any such required filings prior to any such exercise.
Section 5.05. RESERVATION OF COMMON STOCK FOR ISSUANCE ON EXERCISE OF
WARRANTS. The Company shall at all times reserve and keep available, out of its
authorized but unissued Common Stock, solely for the purpose of issue upon
exercise of Warrants as herein provided, such number of shares of Common Stock
as shall then be issuable upon the exercise of all outstanding Warrants. All
shares of Common Stock which shall be so issuable shall, upon such issue and
upon payment of the exercise price therefor as provided herein and in the
applicable Warrant Certificate, be duly and validly issued and fully paid and
non-assessable.
Section 5.06. PAYMENT OF TAXES. The Company shall pay all Taxes that may
be imposed on the Company or on the Warrants or on any securities deliverable
upon exercise of Warrants with respect thereto. The Company shall not be
required, however, to pay any Taxes or other charges imposed in connection with
any transfer involved in the issue of any certificate for shares of Common Stock
or other securities underlying the Warrants or payment of cash to any person
other than the Holder of a Warrant Certificate surrendered upon the exercise or
purchase of a Warrant.
Section 5.07. CERTAIN PERSONS TO EXECUTE AGREEMENT. Without in any way
limiting any transfer restrictions contained elsewhere herein, no Holder shall
sell or otherwise transfer any Warrants held by such Holder, unless, prior to
the consummation of any such sale or other disposition, the person to whom such
sale or other disposition is proposed to be made executes and delivers to the
Company an agreement, in form and substance satisfactory to the Company, whereby
such prospective transferee confirms that, with respect to the Warrants
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that are the subject of such sale or other disposition, it shall be deemed to be
a "Holder" for the purposes of this Agreement and agrees to be bound by all the
terms of this Agreement. Upon the execution and delivery by such prospective
transferee of the agreement referred to in the next preceding sentence, and
subject to all applicable transfer restrictions, such prospective transferee
shall be deemed a "Holder" for the purposes of this Agreement, and shall have
the rights and be subject to the obligations of a Holder hereunder with respect
to the Warrants held by such prospective transferee.
ARTICLE VI
MISCELLANEOUS
Section 6.01. EXPENSES. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
Section 6.02. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, or by courier service, cable, telecopy, telegram, or registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties hereto at their addresses set forth on the signature pages to this
Agreement (or at such other address for a party hereto as shall be specified in
a notice given in accordance with this Section 6.02).
Section 6.03. HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning, construction or interpretation of this Agreement.
Section 6.04. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
Section 6.05. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant
Certificate is lost, stolen, mutilated or destroyed, the Company in its
discretion may issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, and upon receipt of a proper
affidavit or other evidence satisfactory to the Company (and surrender of any
mutilated Warrant Certificate) and bond of indemnity in form and amount and with
corporate surety satisfactory to the Company in each instance protecting the
Company, a new Warrant Certificate of like tenor and exercisable for an
equivalent number of shares of Common
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Stock as the Warrant Certificate so lost, stolen, mutilated or destroyed. Any
such new Warrant Certificate shall constitute an original contractual obligation
of the Company, whether or not the allegedly lost, stolen, mutilated or
destroyed Warrant Certificate at any time shall be enforceable by anyone. An
applicant for such a substitute Warrant Certificate also shall comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe. All Warrant Certificates shall be held and owned upon the
express condition that the foregoing provisions are exclusive with respect to
the replacement of lost, stolen, mutilated or destroyed Warrant Certificates,
and shall preclude any and all other rights or remedies notwithstanding any law
or statute existing or hereafter enacted to the contrary with respect to the
replacement of negotiable instruments or other securities without their
surrender.
Section 6.06. ENTIRE AGREEMENT. This Agreement and the documents
referred to herein constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, between or among the parties with respect
to the subject matter hereof.
Section 6.07. NO THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement, whether
express or implied, is intended to or shall confer upon any person other than
the parties hereto and their respective successors and permitted assigns, any
legal or equitable right, benefit or remedy of any nature whatsoever, under or
by reason of this Agreement.
Section 6.08. AMENDMENT; WAIVER. This Agreement may not be amended,
modified, supplemented or waived except by an instrument in writing signed by,
or on behalf of, the Company and holders of more than 50% of the outstanding
Warrants or, in the case of a waiver, the party to be bound thereby (which, in
the case of the Holders of the Warrants, shall require Holders of more than 50%
of the outstanding Warrants).
Section 6.09. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS OF
EACH PARTY ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO
THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS.
Section 6.10. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 6.11. [Reserved]
Section 6.12. SPECIFIC PERFORMANCE. Each Holder shall have the right to
specific performance by the Company of the provisions of this Agreement, in
addition to any other
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remedies that it may have at law or in equity. The Company hereby irrevocably
waives, to the extent that it may do so under applicable law, any defense based
on the adequacy of a remedy at law which may be asserted as a bar to the remedy
of specific performance in any action brought against the Company for specific
performance of this Agreement by the Holders of the Warrants or the Underlying
Common Stock.
Section 6.13. FILINGS. The Company shall, at its own expense and to the
extent it is reasonably able to do so, promptly execute and deliver, or cause to
be executed and delivered, to any Holder of Warrants all applications,
certificates, instruments and other documents that such Holder may reasonably
request in connection with the obtaining of any consent, approval, qualification
or authorization of any Federal, state or local government (or any agency or
commission thereof) necessary or appropriate in connection with, or for the
effective exercise of, any Warrants then held by such Holder, in each case
subject to such confidentiality obligations as the Company may reasonably impose
on such Holder; provided, however, that the Company shall not be required to
qualify to do business in, or provide a general consent to service of process
in, any jurisdiction in which it is not already qualified to do business and
shall not be required to register the Warrants or the Underlying Common Stock
under any federal or state securities laws except as otherwise required under
any registration rights agreement (or similar agreement) to which the Company
may be a party from time to time.
Section 6.14. OTHER TRANSACTIONS. Nothing contained herein shall
preclude the Holder from engaging in any transaction, in addition to those
contemplated by this Agreement, with the Company or any of its Affiliates in
which the Company or such Affiliate is not restricted hereby from engaging with
any other Person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date fast above written.
MCM CAPITAL GROUP, INC.
By: /S/ Gregory G. Meredith
------------------------------
Name: Gregory G. Meredith
Title: Secretary
TRIARC COMPANIES, INC.
By: /s/ John L. Barnes, Jr.
------------------------------
Name: John L. Barnes, Jr.
Title: Executive Vice President
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, AND
NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE
ISSUER, UNLESS (i) SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR (ii) THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL
FOR THE HOLDER HEREOF THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT, THE RULES AND REGISTRATIONS IN EFFECT THEREUNDER AND
ANY APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
THE EXERCISE OF THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
AND OTHER PROVISIONS SET FORTH IN A WARRANT AGREEMENT, DATED AS OF JANUARY 12,
2000, AS THEREAFTER AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS
OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH.
MCM CAPITAL GROUP, INC.
WARRANT CERTIFICATE
Dated as of ---------,-------
WARRANTS TO PURCHASE -------SHARES OF COMMON STOCK
Certificate No.----
Number of Warrants:----------
MCM CAPITAL GROUP, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Company"), hereby certifies that, for value
received, TRIARC COMPANIES, INC., or its registered assigns, is the registered
holder of the number of Warrants set forth above (the "Warrants"). Each Warrant
shall entitle the registered holder thereof (the "Holder"), during the time
periods specified below and subject to the provisions contained herein and in
the Warrant
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Agreement (as defined below), to receive from the Company one share
of Common Stock, par value $0.01 per share, of the Company ("Common Stock"),
subject to adjustment upon the occurrence of certain events as more fully
described in the Warrant Agreement, at an exercise price of $0.01 per share. The
Warrants shall be exercisable beginning on the date of issuance through January
12, 2005 (the "Expiration Date"). This Warrant Certificate shall terminate and
become void as of the close of business on the Expiration Date.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of January 12, 2000 (as thereafter amended, modified
or supplemented, the "Warrant Agreement"), among the Company and Triarc
Companies, Inc., and is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the Holder of this
Warrant Certificate consents by acceptance hereof, which applicable terms and
provisions are hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Company and the Holders of the Warrants.
The number of shares of Common Stock issuable upon the exercise of each
Warrant is subject to adjustment as provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of
Warrants shall, upon such issue and upon payment of the Exercise Price in
accordance with the terms set forth in the Warrant Agreement, be duly and
validly issued and fully paid and non-assessable.
In order to exercise a Warrant, the Holder hereof must surrender this
Warrant Certificate at the office of the Company, with the Form of Election to
Purchase attached hereto appropriately completed and duly executed by the Holder
hereof, all subject to the terms and conditions hereof and of the Warrant
Agreement.
All terms used in this Warrant Certificate that are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
Copies of the Warrant Agreement are on file at the office of the
Company and may be obtained by writing to the Company at MCM Capital Group,
Inc., 4302 East Broadway, Phoenix, Arizona 85042, Attention: Secretary.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
2
<PAGE> 19
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed by its officers thereunto duly authorized as of the date first
written above.
MCM CAPITAL GROUP, INC.
By:
------------------------------
Name:
Title:
3
<PAGE> 20
FORM OF ELECTION TO PURCHASE
(To Be Executed by the Holder to Exercise Warrants Evidenced by the Foregoing
Warrant Certificate)
To: MCM Capital Group, Inc.
The undersigned hereby irrevocably elects to exercise the Warrants evidenced by
the foregoing Warrant Certificate for, and to acquire thereunder, one full share
(subject to adjustment) of Common Stock issuable upon exercise of each such
Warrant, all on the terms and conditions specified in the within Warrant
Certificate and the Warrant Agreement therein referred to. The undersigned
hereby surrenders this Warrant Certificate and all right, title and interest
therein to the Company and directs that the shares of Common Stock deliverable
upon the exercise of such Warrants be registered or placed in the name of the
undersigned at the address specified below and delivered thereto.
Address: ----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
(Include Zip Code)
Name of Holder:----------------------------------------------------------
(Please Print)
By: ----------------------------------------------------------
(Signature)*
(Name:)-------------------------------------------------------
(Title:)-------------------------------------------------------
Dated:----------------------
1
<PAGE> 21
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned Holder of the foregoing Warrant
Certificate hereby sells, assigns and transfers(1) unto each assignee set forth
below (including the undersigned with respect to any Warrants constituting a
part of the Warrants evidenced by the foregoing Warrant Certificate not being
assigned hereby) all of the rights of the undersigned in and to the number of
Warrants (as defined in and evidenced by the foregoing Warrant Certificate) set
forth opposite the name of such assignee below and in and to the foregoing
Warrant Certificate with respect to said Warrants and the shares of Common Stock
issuable upon exercise of said Warrants:
Name of Assignee: -------------------------------------------------------
(Please Print)
Address: -------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
(Include Zip Code)
Number of Warrants: -------------------------
and does hereby irrevocably constitute and appoint the Company the undersigned's
attorney-in-fact to make such transfer on the books of the Company maintained
for that purpose, with full power of substitution in the premises.
- -----------------------
(1) THE SECURITIES EVIDENCED BY THE FOREGOING WARRANT CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS SET FORTH IN THE WARRANT
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS
OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPILED WITH.
<PAGE> 22
If the total number of Warrants transferred shall not be all the Warrants
evidenced by the foregoing Warrant Certificate, the undersigned requests that a
new Warrant Certificate evidencing the Warrants not so assigned be issued in the
name of and delivered to the undersigned.
Dated: -------------------------
Name of Holder: -------------------------------------------------------
(Please Print)
-------------------------------------------------------
(Signature)*
(Name:)-------------------------------
(Title:)-------------------------------
2
<PAGE> 1
EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
MCM CAPITAL GROUP, INC.
Dated as of January 12, 2000
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
----
1. REGISTRATIONS UPON REQUEST...........................................1
1.1. Requests by Stockholders.....................................1
1.2. Registration Statement Form..................................2
1.3. Expenses.....................................................2
1.4. Priority in Demand Registrations.............................2
1.5. No Company or Other Stockholder Initiated Registration;
Deferral of Registration.....................................3
2. INCIDENTAL REGISTRATIONS.............................................3
3. REGISTRATION PROCEDURES..............................................5
4. UNDERWRITTEN OFFERINGS...............................................9
4.1. Underwriting Agreement.......................................9
4.2. Selection of Underwriters....................................9
5. HOLDBACK AGREEMENTS.................................................10
6. PREPARATION; REASONABLE INVESTIGATION...............................10
7. OTHER REGISTRATION RIGHTS...........................................11
8. [RESERVED]..........................................................11
9. INDEMNIFICATION.....................................................11
9.1. Indemnification by the Company..............................11
9.2. Indemnification by the Sellers..............................12
9.3. Notices of Claims, etc......................................13
9.4. Other Indemnification.......................................13
9.5. Indemnification Payments....................................13
9.6. Other Remedies..............................................14
10. REPRESENTATIONS AND WARRANTIES......................................14
11. DEFINITIONS.........................................................15
12. MISCELLANEOUS.......................................................16
12.1. Rule 144, etc.................................................16
12.2. Successors, Assigns and Transferees...........................17
12.3. Amendment and Modification....................................17
12.4. Governing Law.................................................17
12.5. Invalidity of Provision.......................................17
12.6. Notices.......................................................17
12.7. Headings; Execution in Counterparts...........................19
i
<PAGE> 3
12.8. Injunctive Relief..............................................19
12.9. Term...........................................................19
12.10.Further Assurances.............................................19
12.11.Entire Agreement...............................................19
ii
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is dated as of
the 12th day of January, 2000 by and among MCM Capital Group, Inc., a Delaware
corporation (the "COMPANY"), and ING (U.S.) Capital LLC (together with its
Affiliated Stockholders (as herein defined), if any, "ING"). Capitalized terms
used but not otherwise defined herein have their respective meanings set forth
in Section 11.
WHEREAS, ING has entered into a Note Purchase Agreement, dated as of
January 12, 2000 (the "NOTE PURCHASE AGREEMENT"), with the Company pursuant to
which ING agreed to purchase from Company certain securities, on the terms and
subject to the conditions therein set forth;
WHEREAS, it is a condition of the consummation of the transactions
contemplated by the Note Purchase Agreement that the Company and ING enter into
this Agreement for the purpose of providing for certain registration rights for
the benefit of holders of Registrable Securities (as hereinafter defined);
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to and
on the terms and conditions herein set forth, the parties hereto agree as
follows:
1. Registrations Upon Request.
1.1. Requests by Stockholders. At any time during which the Company is
qualified at all relevant times to use Form S-3 (or any other comparable form
hereinafter adopted) for the registration under the Securities Act of the
Registrable Securities, ING shall have the right to make requests that the
Company effect up to two separate registrations under the Securities Act of all
or part of the Registrable Securities owned by it; provided that at any time
when ING owns fewer Registrable Securities than its Permitted Transferees, such
right of ING to request up to two registrations will be exercisable by those
entities owning individually or in the aggregate in excess of 50% of the
outstanding Registrable Securities then owned by ING and its Permitted
Transferees. A request made by ING and/or its Permitted Transferees pursuant to
the immediately preceding sentence (in either case, the "REQUESTING PARTY")
shall not be counted for purposes of the request limitations set forth above if
(a) the Requesting Party determines in its good faith judgment to withdraw the
proposed registration of any Registrable Securities requested to be registered
pursuant to this Section 1.1 due to marketing or regulatory reasons, (b) the
registration statement relating to any such request is not declared effective
within 90 days of the date such registration statement is first filed with the
Commission and the Requesting Party determines to withdraw the proposed
registration, (c) within 180 days after the registration relating to any such
request has become effective, such registration is interfered with by any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason and the Company fails to have such
stop order, injunction or other order or requirement removed, withdrawn or
resolved to the Requesting Party's reasonable satisfaction within 30 days, (d)
more than 50% of the Registrable Securities requested by the Requesting Party to
be included in the registration are not so included pursuant to Section 1.4, (e)
the
<PAGE> 5
conditions to closing specified in the underwriting agreement or purchase
agreement entered into in connection with the registration relating to any such
request are not satisfied (other than as a result of a default or breach
thereunder by the Requesting Party), or (f) the registration relating to such
request is preempted by a proposed Company registration, notice of which is
given by the Company to the Requesting Party pursuant to Section 1.5(b)(iii) and
the Requesting Party provides the Company written notice of the withdrawal of
its registration request prior to a registration statement relating thereto
becoming effective.
Upon any such registration request, the Company will promptly, but in
any event within 10 days, give written notice of such request to all holders of
Registrable Securities and thereupon the Company will, subject to Sections 1.4
and 1.5, use its best efforts to effect the prompt registration under the
Securities Act of:
(i) the Registrable Securities which the Company has been so requested
to register by the Requesting Party, and
(ii) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given to
the Company by such holders within 10 days after the giving of such written
notice by the Company to such holders,
all to the extent required to permit the disposition of the Registrable
Securities so to be registered in accordance with the intended method or methods
of disposition of each seller of such Registrable Securities.
1.2. Registration Statement Form. A registration requested pursuant to
Section 1.1 shall be effected by the filing of a registration statement on
a form reasonably acceptable to the Requesting Party, it being understood
and agreed that the Company shall only be required to effect any such
registration if it is, at all relevant times, qualified for registration on
Form S-3 (or any other comparable form hereinafter adopted).
1.3. Expenses. The Company will pay all Registration Expenses in
connection with any registration requested and effectuated under Section
1.1; provided that (a) each seller of Registrable Securities shall pay all
Registration Expenses to the extent required to be paid by such seller
under applicable law and all underwriting discounts and commissions and
transfer taxes, if any, and (b) if, pursuant to clause (a) of Section 1.1,
a Requesting Party determines in its good faith judgment to withdraw the
proposed registration of any Registrable Securities requested to be
registered pursuant to Section 1.1 due to marketing reasons after the
filing of a registration statement with respect to such Registrable
Securities, the Requesting Party shall reimburse the Company for its
reasonable out-of-pocket expenses (including, without limitation, all
reasonable legal and accounting fees and disbursements and printing costs)
incurred in connection with the preparation and filing of such registration
statement unless the Requesting Party agrees in writing to have the
withdrawn registration treated as one of its two registration requests
permitted pursuant to Section 1.1.
1.4. Priority in Demand Registrations. If a registration pursuant to
Section 1.1 involves an underwritten offering, and the managing underwriter
(or, in the case of an offering which is not underwritten, a nationally
recognized investment banking firm) shall advise the
2
<PAGE> 6
Company in writing (with a copy to each Person requesting registration of
Registrable Securities) that, in its opinion, the number of securities
requested and otherwise proposed to be included in such registration by all
parties exceeds the number which can be sold in such offering without
materially and adversely affecting the offering price or the market price
of the Common Stock or would otherwise jeopardize the offering, the Company
will include in such registration to the extent of the number which the
Company is so advised can be sold in such offering without such material
adverse effect, first, the Registrable Securities of all Stockholders
(including the Requesting Party) and the securities of any other securities
holder of the Company entitled to incidental registration rights with
respect thereto, on a pro rata basis (based on the number of shares
proposed to be registered by each such holder), and second the securities,
if any, being sold by the Company, subject to the limitations of Section 7.
1.5. No Company or Other Stockholder Initiated Registration; Deferral
of Registration. (a) After receipt of notice of a requested registration
pursuant to Section 1.1, neither the Company nor any other Stockholder
shall initiate, without the consent of the Requesting Party, a registration
of any Company securities for its own account until at least 90 days after
such registration has been effected or such registration has been
terminated.
(b) Notwithstanding the foregoing, the Company shall have the
right to delay the filing or effectiveness, but not the preparation, of a
registration statement for any requested registration pursuant to Section
1.1 during one or more periods aggregating not more than 120 days in any
12-month period during the term of this Agreement in the event that (i) the
Company would, in accordance with the written advice of its counsel, be
required to disclose in the prospectus contained in such registration
statement information not otherwise required by law to be publicly
disclosed, (ii) the Company has pending or in process a material
transaction, the disclosure of which would, in the good faith judgment of
the Board, materially and adversely affect the Company or the transaction,
or (iii) at the time of receipt of notice of a requested registration
pursuant to Section 1.1 the Company was in the process of contemplating a
registration of equity securities for its own account and (A) the Company
gives written notice thereof to the Requesting Party within 10 days after
receipt of such registration request and (B) a registration statement with
respect to such Company initiated offering is filed within 90 days of
receipt of such notice from the Requesting Party.
2. Incidental Registrations. If the Company at any time proposes to
register any of its equity securities under the Securities Act for its own
account (other than pursuant to a registration on Form S-4 or S-8 or any
successor form) it shall give written notice thereof to each Stockholder.
If within 10 days after the receipt of any such notice, any Stockholder
requests that the Company include all or any portion of the Registrable
Securities owned by such Stockholder in such registration, then, subject to
subsection (a) below, the Company will give prompt written notice to all
holders of Registrable Securities regarding such proposed registration.
Upon the written request of any such holder made within 10 days after the
receipt of any such notice (which request shall specify the number of
Registrable Securities intended to be disposed of by such holder and the
intended method or methods of disposition thereof), the Company will use
its best efforts to effect the registration under the Securities Act of
such Registrable Securities, together with any other securities proposed to
be registered by other holders of the Company's securities exercising
incidental registration rights with respect thereto, on a pro rata basis
(based
3
<PAGE> 7
on the number of Registrable Securities proposed to be registered by each such
requesting holder and the number of other registrable securities proposed to be
registered by each such other holder) in accordance with such intended method or
methods of disposition, provided that:
(a) the Company shall not include any Registrable Securities of
holders of Registrable Securities in such proposed registration if it
believes in good faith that inclusion of such securities would not be in
the best interests of the Company, provided that the Company will include
in such registration that number of Registrable Securities of the holders
of Registrable Securities that such managing underwriter and the Company
determine would not be adverse to the best interests of the Company and
provided further that the Company shall give the holders of Registrable
Securities prompt notice after any such determination has been made (in
lieu of the notice otherwise required under the second sentence of this
Section 2);
(b) if, at any time after giving written notice pursuant to this
Section 2 of its intention to register equity securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register
such equity securities, the Company may, at its election, give written
notice of such determination to each holder of Registrable Securities and,
thereupon, shall not be obligated to register any Registrable Securities in
connection with such registration (but shall nevertheless pay the
Registration Expenses in connection therewith), without prejudice, however,
to the rights of ING and/or its Permitted Transferees to request that a
registration be effected under Section 1.1; and
(c) if, in connection with a registration pursuant to this Section 2,
the managing underwriter of such registration (or, in the case of an
offering that is not underwritten, a nationally recognized investment
banking firm) shall advise the Company in writing (with a copy to each
holder of Registrable Securities requesting registration thereof) that, in
its opinion, the number of securities requested and otherwise proposed to
be included in such registration exceeds the number which can be sold in
such offering without materially and adversely affecting the offering price
or the market price of the Common Stock or would otherwise jeopardize the
offering, then in the case of any registration pursuant to this Section 2,
the Company will include in such registration to the extent of the number
which the Company is so advised can be sold in such offering without such
material adverse effect, first if such registration is initiated by the
Company pursuant to Section 1.1 of the Prior Registration Rights Agreement,
the "Registrable Securities of all Stockholders (including the Requesting
Party)" (with the preceding phrase having the same meaning as used in
Section 1.4 of the Prior Registration Rights Agreement) together with the
Registrable Securities of the Stockholders, if any, exercising incidental
registration rights with respect thereto, on a pro rata basis (based on the
number of shares of "Registrable Securities" owned by each such
"Stockholder", as such terms are defined herein or in the Prior
Registration Rights Agreement, as applicable), second, the securities (if
any) being sold by the Company, and third, the securities, if any, of any
other holder of securities of the Company exercising incidental
registration rights with respect thereto, on a pro rata basis (based on the
number of shares of registrable securities owned by each such holder),
subject to the limitations of Section 7.
4
<PAGE> 8
Notwithstanding the foregoing, the holders of Registrable
Securities will not be entitled to participate in any registration pursuant to
this Section 2 to the extent that the managing underwriter (or, in the case of
an offering that is not underwritten, a nationally recognized investment banker)
shall determine in good faith and in writing (with a copy to each affected
Person requesting registration of Registrable Securities) that the participation
of any such holder would adversely affect the marketability or offering price of
the securities being sold by the Company or any Stockholder in such
registration.
The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 2, provided that each seller of Registrable Securities shall pay all
Registration Expenses to the extent required to be paid by such seller under
applicable law and all underwriting discounts and commissions and transfer
taxes, if any. No registration effected under this Section 2 shall relieve the
Company from its obligation to effect registrations under Sections 1.1.
3. Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 1.1 and 2, the
Company will promptly:
(a) prepare, and as soon as practicable, but in any event within
60 days thereafter, file with the Commission, a registration statement with
respect to such Registrable Securities, make all required filings with the NASD
and use its reasonable best efforts to cause such registration statement to
become effective as soon as practicable;
(b) prepare and promptly file with the Commission such amendments
and post-effective 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 so long as is required to comply with the
provisions of the Securities Act and to complete the disposition of all
securities covered by such registration statement in accordance with the
intended method or methods of disposition thereof, but in no event for a period
of more than six months after such registration statement becomes effective;
(c) furnish copies of all documents proposed to be filed with the
Commission in connection with such registration to counsel selected by the
holders of at least 51% of the Registrable Securities proposed to be sold in
connection with such registration (such holders, the "MAJORITY HOLDERS"), and
such documents shall be subject to the review of such counsel and the Majority
Holders, and the Company shall not file any registration statement or amendment
or post-effective amendment or supplement to such registration statement or the
prospectus used in connection therewith to which either such counsel or the
Majority Holders, as the case may be, shall have reasonably objected in writing
on the grounds that such amendment or supplement does not comply (explaining
why) in all material respects with the requirements of the Securities Act or of
the rules or regulations thereunder;
5
<PAGE> 9
(d) furnish to each seller of Registrable Securities, without
charge, such number of conformed copies of such registration statement and
of each such amendment and supplement thereto (in each case including all
exhibits and documents filed therewith) and such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller in accordance with the intended
method or methods of disposition thereof;
(e) use its reasonable best efforts to register or qualify such
Registrable Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable such seller to consummate the disposition
of such Registrable Securities in such jurisdictions in accordance with the
intended method or methods of disposition thereof, provided that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it is not
so qualified, subject itself to taxation in any jurisdiction wherein it is
not so subject, or take any action which would subject it to general
service of process in any jurisdiction wherein it is not so subject;
(f) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies, authorities or
self-regulatory bodies as may be necessary by virtue of the business and
operations of the Company to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities in accordance
with the intended method or methods of disposition thereof;
(g) furnish to each seller of Registrable Securities a signed
counterpart, addressed to the sellers, of
(i) an opinion of outside counsel for the Company experienced
in securities law matters, dated the effective date of the
registration statement (or, if such registration includes an
underwritten public offering, the date of the closing under the
underwriting agreement), and
(ii) a "comfort" letter (unless the registration is pursuant
to Section 2 and such a letter is not otherwise being furnished to the
Company), dated the effective date of such registration statement (and
if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement), signed by
the independent public accountants who have issued an audit report on
the Company's financial statements included in the registration
statement,
covering such matters as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten public
offerings of
6
<PAGE> 10
securities, subject to such qualifications as are customary in opinions and
accountants' letters delivered in such circumstances;
(h) notify each seller of any Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
or existence of any fact as a result of which the prospectus included in such
registration statement as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, and, as promptly as is practicable, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing;
(i) otherwise comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement of the Company (in form complying with the
provisions of Rule 158 under the Securities Act) covering the period of at least
12 months, but not more than 18 months, beginning with the first month after the
effective date of such registration statement;
(j) notify each seller of any Registrable Securities covered by such
registration statement (i) when the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to such registration
statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission for amendments or supplements to such
registration statement or to amend or to supplement such prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of such registration statement or the
initiation of any proceedings for that purpose and (iv) of the suspension of the
qualification of such securities for offering or sale in any jurisdiction, or of
the institution of any proceedings for any of such purposes;
(k) use its reasonable best efforts to obtain the lifting of any stop
order that might be issued suspending the effectiveness of such registration
statement as soon as practicable;
(l) use its reasonable best efforts (i) (A) to list such Registrable
Securities on any securities exchange on which the equity securities of the
Company are then listed or, if no such equity securities are then listed, on an
exchange selected by the Company, if such listing is then permitted under the
rules of such exchange, or (a) if such listing is not practicable, to secure
designation of such securities as a NASDAQ "national market system security"
within the meaning of Rule 11Aa2-1 under the Exchange Act or, failing that, to
secure NASDAQ authorization for such Registrable Securities, and, without
limiting the foregoing, to arrange for at least two market makers to register as
such with respect to such Registrable Securities with the NASD, and (ii) to
provide a
7
<PAGE> 11
transfer agent and registrar for such Registrable Securities not later
than the effective date of such registration statement and to instruct such
transfer agent upon sale of the Registrable Securities pursuant to such
registration (A) to release any stop transfer order with respect to the
certificates with respect to the Registrable Securities being sold and (B) to
furnish certificates without restrictive legends representing ownership of the
shares being sold, in such denominations requested by the sellers of the
Registrable Securities or the lead underwriter;
(m) enter into such agreements and take such other actions as
the sellers of Registrable Securities or the underwriters reasonably
request in order to expedite or facilitate the disposition of such
Registrable Securities, including, without limitation, preparing for,
and participating in, such number of "road shows" and all such other
customary selling efforts as the underwriters reasonably request in
order to expedite or facilitate such disposition;
(n) furnish to any holder of such Registrable Securities such
information and assistance as such holder may reasonably request in
connection with any "due diligence" effort which such seller reasonably
deems appropriate; and
(o) use its reasonable best efforts to take all other steps
necessary to effect the registration of such Registrable Securities
contemplated hereby.
As a condition to its registration of Registrable Securities of any
prospective seller, the Company may require such seller of any Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding such seller, its ownership of Registrable
Securities and the disposition of such Registrable Securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith, together with such certificates, if any, as may be
required to permit the delivery of the opinions and comfort letters contemplated
by Section 3(g) and the execution of the underwriting agreement and the delivery
of the documents required to be delivered thereunder. Each such holder agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such holder
not materially misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any Registrable Securities covered thereby by name, or
otherwise identifies such seller as the holder of any Registrable Securities,
without the consent of such seller, such consent not to be unreasonably withheld
or delayed, unless such disclosure is required by law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(h), such holder will promptly discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(h). If so directed
by the Company, each holder of
8
<PAGE> 12
Registrable Securities will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, in such holder's possession of the
prospectus covering such Registrable Securities at the time of receipt of such
notice. In the event that the Company shall give any such notice, the period
mentioned in Section 3(b) shall be extended by the number of days during the
period from and including the date of the giving of such notice to and including
the date when each seller of any Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by Section 3(h).
4. Underwritten Offerings.
4.1. Underwriting Agreement. If requested by the underwriters for any
underwritten offering pursuant to a registration requested under Section 1.1 or
2, the Company shall enter into an underwriting agreement with the underwriters
for such offering, such agreement to be reasonably satisfactory in substance and
form to the underwriters and the Majority Holders. Any such underwriting
agreement shall contain such representations and warranties by the Company and
such other terms and provisions as are customarily contained in agreements of
this type, including, without limitation and unless waived by the Majority
Holders, indemnities to the effect and to the extent provided in Section 9. The
holders of Registrable Securities to be distributed by such underwriter shall be
parties to such underwriting agreement. No underwriting agreement (or other
agreement in connection with such offering) shall require any Stockholder, in
its capacity as stockholder and/or controlling Person, to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, the ownership of such holder's Registrable Securities and such holder's
intended method or methods of disposition and any other representation
customarily furnished by selling stockholders in similar transactions or
required by law.
4.2. Selection of Underwriters. If the Company at any time proposes to
register any of its securities under the Securities Act for sale for its own
account pursuant to an underwritten offering in which holders of Registrable
Securities are participants, or in the case of any registration requested
pursuant to Section 1.1 that is for an underwritten offering, the Company will
have the right to select the managing underwriter (which shall be of nationally
recognized standing) to administer the offering.
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<PAGE> 13
5. Holdback Agreements. (a) If and whenever the Company proposes to
register any of its equity securities under the Securities Act for its own
account (other than on Form S-4 or S-8 or any successor form) or is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 1.1 or 2, each holder of
Registrable Securities agrees by acquisition of such Registrable Securities not
to request registration under Section 1.1 of any Registrable Securities and, if
it is then an officer, director or the beneficial owner (determined in
accordance with Rule 13d-3 under the Exchange Act) of more than 5% of any class
of the Company's equity securities (or any securities convertible into or
exchangeable or exercisable for any of such securities), not to effect any
public sale or distribution of the Company's equity securities (other than
pursuant to such registration), within seven days prior to and 90 days (unless
advised in writing by the managing underwriter that a longer period, not to
exceed 180 days, is required, or such shorter period as the managing underwriter
for any underwritten offering may agree) after the effective date of the
registration statement relating to such registration, except its part of such
registration.
(b) The Company agrees not to effect any public sale or distribution
of its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities within seven days prior to and 90 days
(unless advised in writing by the managing underwriter that a longer period, not
to exceed 180 days, is required, or such shorter period as the managing
underwriter for any underwritten offering may agree) after the effective date of
any registration statement filed pursuant to Section 1.1 (except as part of such
registration or pursuant to a registration on Form S-4 or S-8 or any successor
form). In addition, upon the request of the managing underwriter, the Company
shall use its reasonable efforts to cause each officer, director or beneficial
owner (determined in accordance with Rule 13d-3 under the Exchange Act) of more
than 5% of any class of the Company's equity securities (or any securities
convertible into or exchangeable or exercisable for any of such securities),
other than any such securities acquired in a public offering, to agree not to
effect any such public sale or distribution of such securities during such
period, except as part of any such registration if permitted, and to cause each
such officer, director and beneficial holder to enter into a similar agreement
to such effect with the Company.
6. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of such
Registrable Securities so to be registered and their underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to the financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have issued audit reports on its financial
statements as shall be reasonably requested by such holders in connection with
such registration statement.
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<PAGE> 14
7. Other Registration Rights. ING acknowledges that the Company is a
party to that certain Registration Rights Agreement dated as of June 30, 1999 by
and among the Company, C.P. International Investments Limited, MCM Holding
Company LLC and certain other parties named therein (the "PRIOR REGISTRATION
RIGHTS AGREEMENT") and consents to all terms and provisions of the Prior
Registration Rights Agreement. To the extent that the Prior Registration Rights
Agreement provides demand or incidental registration rights that are of a higher
priority to the rights granted to holders of Registrable Securities hereunder,
or to the extent there is any conflict between any term or provision of the
Prior Registration Rights Agreement and any term or provision set forth herein,
the parties acknowledge and agree that the terms and provisions of the Prior
Registration Rights Agreement shall take priority over the terms and provisions
of this Agreement. The Company shall not grant to any Person any other
incidental registration rights from and after the date hereof that are of the
same or higher priority to the rights granted to the holders of Registrable
Securities under Section 2 hereof during the term of this Agreement; provided,
however, that the Company may grant registration rights equal in priority to the
registration rights granted hereunder in connection with any issuance of
indebtedness under Section 6.2.2(b) of the Note Purchase Agreement.
8. [Reserved]
9. Indemnification.
9.1. Indemnification by the Company. In the event of any registration
of any Registrable Securities pursuant to this Agreement, the Company agrees to
indemnify, defend and hold harmless (a) each seller of such Registrable
Securities, (b) the directors, members, stockholders, officers, partners,
employees, agents and Affiliates of such seller, (c) each Person who
participates as an underwriter in the offering or sale of such securities and
(d) each person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) any of the foregoing against
any and all losses, claims, damages, expenses or other liabilities (or actions
or proceedings in respect thereof), jointly or severally, directly or
indirectly, based upon or arising out of (i) any untrue statement or alleged
untrue statement of a fact contained in any registration statement under which
such Registrable Securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained therein
or used in connection with the offering of securities covered thereby, or any
amendment or supplement thereto, or (ii) any omission or alleged omission to
state a fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse each such indemnified
party for any legal or any other expenses reasonably incurred by them in
connection with enforcing its rights hereunder or under the underwriting
agreement entered into in connection with such offering or investigating,
preparing, pursuing or defending any such loss, claim, damage, liability, action
or proceeding, except insofar as any such loss, claim, damage, liability,
action, proceeding or expense arises out of or is based upon (A) an untrue
statement or omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such seller expressly for use in the preparation thereof, (B) the
gross negligence, willful misconduct or fraud of such seller, or (C) any
preliminary prospectus to the extent that any such loss claim, damage,
liability, action or proceeding results solely from the fact that the seller
sold Registrable Securities to a person as to whom the Company shall establish
that there was not sent by
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<PAGE> 15
commercially reasonable means, at or prior to the written confirmation of such
sale, a copy of the final prospectus in any case where such delivery is required
by the Securities Act, if the Company has previously furnished copies thereof in
sufficient quantity to the seller or the underwriters for such offering and the
loss, claim, damage, liability, action or proceeding results from an untrue
statement or omission of a material fact contained in the preliminary prospectus
that was corrected in the final prospectus. Such indemnity shall remain in full
force and effect regardless of any investigation made by such indemnified party
and shall survive the transfer of such Registrable Securities by such seller. If
the Company is entitled to, and does, assume the defense of the related action
or proceedings provided herein, then the indemnity agreement contained in this
Section 9.1 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, action or proceeding if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld or delayed). The Company shall also indemnify any underwriters of the
Registrable Securities, their officers, directors and employees, and each person
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) to the same extent as provided above with respect to
indemnification of the seller of Registrable Securities.
9.2. Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 1.1 or 2 that the Company shall have received an
undertaking reasonably satisfactory to it from each of the prospective sellers
of such Registrable Securities to indemnify and hold harmless, severally, not
jointly, in the same manner and to the same extent as set forth in Section 9.1,
the Company, its directors, officers, employees, agents and each person, if any,
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) the Company, but only with respect to (i) any written
information furnished to the Company by such seller expressly for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement, or (ii) the gross
negligence, willful misconduct or fraud of such seller. The Company and the
holders of the Registrable Securities hereby acknowledge and agree that, unless
otherwise expressly agreed to in writing by such holders, the only information
furnished to or to be furnished to the Company for use in any registration
statement or prospectus relating to the Registrable Securities or in any
amendment, supplement or preliminary materials associated therewith are
statements specifically relating to (a) transactions between such holder and its
Affiliates, on the one hand, and the Company, on the other hand, (b) the
beneficial ownership of shares of Common Stock by such holder and its Affiliates
and (c) the name and address of such holder. If any additional information about
such holder or the plan of distribution (other than for an underwritten
offering) is required by law to be disclosed in any such document, then such
holder shall not unreasonably withhold its agreement referred to in the
immediately preceding sentence of this Section 9.2. Such indemnity shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Company or any such director, officer or controlling Person and shall
survive the transfer of such Registrable Securities by such seller. The
indemnity agreement contained in this Section 9.2 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, action or
proceeding if such settlement is effected without the consent of such seller
(which consent shall not be unreasonably withheld or delayed). The indemnity
provided by each seller of Registrable Securities under this Section 9.2 shall
be limited in amount to the net amount of proceeds
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<PAGE> 16
actually received by such seller from the sale of Registrable Securities
pursuant to such registration statement giving rise to such liability.
9.3. Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 9, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the indemnifying party of the
commencement of such action or proceeding, provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 9, except to the extent that the indemnifying party is materially
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate therein and to assume the defense thereof jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof except for the reasonable fees and
expenses of any counsel retained by such indemnified party to monitor such
action or proceeding. Notwithstanding the foregoing, if such indemnified party
reasonably determines, based upon advice of independent counsel, that a conflict
of interest exists between the indemnified party and the indemnifying party with
respect to such action and that it is advisable for such indemnified party to be
represented by separate counsel or that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party, such indemnified party may retain other counsel, reasonably
satisfactory to the indemnifying party, to represent such indemnified party, and
the indemnifying party shall pay all reasonable fees and expenses of such
counsel. No indemnifying party, in the defense of any such claim or litigation,
shall, except with the consent of such indemnified party, which consent shall
not be unreasonably withheld, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. The rights accorded to any
indemnified party hereunder shall be in addition to any rights that such
indemnified party may have at common law, by separate agreement or otherwise.
9.4. Other Indemnification. Indemnification similar to that specified
in the preceding paragraphs of this Section 9 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration (other than under the Securities Act) or
other qualification of such Registrable Securities under any federal or state
law or regulation of any governmental authority.
9.5. Indemnification Payments. Any indemnification required to be made
by an indemnifying party pursuant to this Section 9 shall be made by periodic
payments to the indemnified party during the course of the action or proceeding,
as and when bills are received by such indemnifying party, with respect to an
indemnifiable loss, claim, damage, liability or expense incurred by such
indemnified party.
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<PAGE> 17
9.6. Other Remedies. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities, actions, proceedings or
expenses in such proportion as is appropriate to reflect the relative benefits
to and faults of the indemnifying party on the one hand and the indemnified
party on the other in connection with the offering of Registrable Securities and
the statements or omissions or alleged statements or omissions which resulted in
such loss, claim, damage, liability, action, proceeding or expense, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statements or omissions. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. No party shall be liable for contribution under this Section
9.6 except to the extent as such party would have been liable to indemnify under
this Section 9 if such indemnification were enforceable under applicable law.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.6 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
10. Representations and Warranties. Each Stockholder, severally and not
jointly, represents and warrants to the Company and each other Stockholder that:
(i) such Stockholder has the power, authority and capacity (or, in
the case of any Stockholder that is a corporation or limited partnership, all
corporate or limited partnership power and authority, as the case may be) to
execute, deliver and perform this Agreement;
(ii) in the case of a Stockholder that is a corporation or limited
partnership, the execution, delivery and performance of this Agreement by such
Stockholder has been duly and validly authorized and approved by all necessary
corporate or limited partnership action, as the case may be;
(iii) this Agreement has been duly and validly executed and
delivered by such Stockholder and constitutes a valid and legally binding
obligation of such Stockholder, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to creditors' rights generally and general principles
of equity; and
(iv) the execution, delivery and performance of this Agreement by
such Stockholder does not and will not violate the terms of or result in the
acceleration of any obligation under (A) any material contract, commitment or
other material instrument to which such Stockholder is a party or by which such
Stockholder is bound, (B) in the case of a Stockholder that is a corporation or
limited partnership, the certificate of incorporation,
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<PAGE> 18
certificate of limited partnership, by-laws or limited partnership agreement, as
the case may be, or (C) any law, statute, regulation, order or decree applicable
to such Stockholder.
11. Definitions. For purposes of this Agreement, the following terms
shall have the following respective meanings:
Affiliate: (i) with respect to any Person, a Person that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and (ii) with respect to any
natural Person, (A) the spouse, parents and direct descendants of such Person,
(B) the estate, testamentary trust, trustees, executors, administrators,
legatees or testamentary beneficiaries of such Person, and (C) any trust
established by such Person for the exclusive benefit of any of the foregoing
Persons.
Affiliated Stockholder: with respect to ING, each of its
Affiliates if and so long as it owns any Registrable Securities and has agreed
in writing to be bound by the terms and conditions of this Agreement, a copy of
which agreement shall have been delivered to the Company.
Board: the board of directors of the Company.
Commission: the Securities and Exchange Commission.
Common Stock: the Common Stock of the Company, par value $.01 per
share, and any securities into which such Common Stock shall have been changed
or any securities resulting from any reclassification of such Common Stock.
Exchange Act: the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time.
Majority Holders: as defined in Section 3(c).
NASD: National Association of Securities Dealers, Inc.
NASDAQ: the Nasdaq National Market.
Note Purchase Agreement: as defined in the first recital of this
Agreement.
Permitted Transferee: as defined in Section 12.2.
Person: an individual, corporation, partnership, limited liability
company, joint venture, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality,
thereof.
Prior Registration Rights Agreement: as defined in Section 7.
Registrable Securities: the shares of Common Stock issued or
issuable upon exercise of warrants issued pursuant to that certain Warrant
Agreement dated as of January 12,
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<PAGE> 19
2000 by and between the Company and ING (the "Warrants") and any other shares of
Common Stock issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
shares of Common Stock issued or issuable upon exercise of the Warrants. As to
any particular shares of Common Stock, such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (ii) such securities shall have been sold to the public pursuant to
Rule 144 under the Securities Act or are eligible for resale by the holder
thereof without regard to volume limitation pursuant to paragraph (k) of Rule
144 under the Securities Act, (iii) such securities shall have been otherwise
transferred other than to a Permitted Transferee and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act or any similar state law then in force or (iv) such securities
shall have ceased to be outstanding.
Registration Expenses: all expenses incident to the Company's
performance of or compliance with any registration pursuant to this Agreement,
including, without limitation, (i) registration, filing and NASD fees, (ii) fees
and expenses of complying with securities or blue sky laws, (iii) fees and
expenses associated with listing securities on an exchange or NASDAQ, (iv) word
processing, duplicating and printing expenses, (v) messenger and delivery
expenses, (vi) transfer agents', trustees', depositories', registrars' and
fiscal agents fees, (vii) reasonable fees and disbursements of counsel for the
Company and of its independent public accountants, including the expenses of any
special audits or "cold comfort" letters, (viii) reasonable fees and
disbursements of any one counsel retained by the sellers of Registrable
Securities, which counsel shall be designated in the manner specified in Section
3 and (ix) any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any.
Securities Act: the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time.
Stockholders: (i) ING, if and so long as it owns any Registrable
Securities, and (ii) each Affiliated Stockholder.
12. Miscellaneous.
12.1. Rule 144, etc. If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act relating to any class of securities, the Company will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Commission thereunder, and will
take such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (A) Rule 144 under the Securities
Act, as such rule may be amended from time to time or (b) any successor rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the
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<PAGE> 20
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
12.2. Successors, Assigns and Transferees. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
predecessors and permitted assigns under this Section 12.2. Provided that an
express assignment shall have been made, a copy of which shall have been
delivered to the Company, the provisions of this Agreement which are for the
benefit of a holder of Registrable Securities shall be for the benefit of and
enforceable by any subsequent holder of any Registrable Securities to which such
Registrable Securities are transferred in compliance with the provisions of such
Registrable Securities and the applicable provisions of the Note Purchase
Agreement ("PERMITTED TRANSFEREES"), subject to the provisions respecting the
minimum numbers or percentages of shares of Registrable Securities required in
order to be entitled to certain rights, or to take certain actions, contained
herein.
12.3. Amendment and Modification. This Agreement may be amended,
modified or supplemented by the Company with the written consent of a majority
(by number of shares) of the holders of Registrable Securities, provided that
all Stockholders shall be notified of such amendment, modification or
supplement.
12.4. Governing Law. This Agreement and the rights and obligations
of the parties hereunder and the persons subject hereto shall be governed by,
and construed and interpreted in accordance with, the law of the State of New
York, without giving effect to the choice of law principles thereof.
12.5. Invalidity of Provision. The invalidity or unenforceability
of any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
12.6. Notices. All notices, requests, demands, letters, waivers
and other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
sent by next-day or overnight mail or delivery or (d) sent by fax, as follows:
(i) If to the Company, to it at:
MCM Capital Group, Inc.
4302 East Broadway
Phoenix, Arizona 85040
Attention: Chief Executive Officer
Telecopier No.: (602) 707-5509
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<PAGE> 21
with a copy to:
MCM Capital Group, Inc.
4302 East Broadway
Phoenix, Arizona 85040
Attention: General Counsel
Telecopier No.: (602) 707-5509
and copies to:
Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attention: Timothy W. Moser, Esq.
Telecopier No.: (602) 253-8129
and
Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004
Attention: Steven D. Pidgeon
Telecopier No.: (602) 382-6070
(ii) If to ING, to it at:
ING (U.S.) Capital, LLC
55 East 52nd Street
New York, New York 10015
Attention: David Balestrery
Ira Braunstein
Telecopier No.: (212) 593-3360
with a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: David K. Duffee, Esq.
Telecopier No.: (212) 262-1910
or to such other person or address as any party shall specify by notice in
writing to the Company. All such notices, requests, demands, letters, waivers
and other communications shall be deemed to have been received (w) if by
personal delivery on the day after such delivery, (x) if by certified or
registered mail, on the eighth business day after the mailing thereof, (y) if by
next-day or overnight mail or delivery, on the day delivered or (z) if by fax,
on the next day
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<PAGE> 22
following the day on which such fax was sent, provided that a copy is also sent
by certified or registered mail.
12.7. Headings; Execution in Counterparts. The headings and
captions contained herein are for convenience and shall not control or affect
the meaning or construction of any provision hereof. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and which together shall constitute one and the same instrument.
12.8. Injunctive Relief. Each of the parties recognizes and agrees
that money damages may be insufficient and, therefore, in the event of a breach
of any provision of this Agreement the aggrieved party may elect to institute
and prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach of this Agreement. Such
remedies shall, however, be cumulative and not exclusive, and shall be in
addition to any other remedy which such party may have.
12.9. Term. This Agreement shall be, effective as of the date
hereof and shall continue in effect thereafter until the earlier of (a) its
termination by the consent of the parties hereto or their respective successors
in interest, (b) the date on which no Registrable Securities remain outstanding,
and (c) the date on which all remaining Registrable Securities are subject to
immediate resale by the holder thereof without regard to volume limitation
pursuant to paragraph (k) of Rule 144 under the Securities Act.
12.10. Further Assurances. Subject to the specific terms of this
Agreement, each of the Company and the Stockholders shall make, execute,
acknowledge and deliver such other instruments and documents, and take all such
other actions, as may be reasonably required in order to effectuate the purposes
of this Agreement and to consummate the transactions contemplated hereby.
12.11. Entire Agreement. This Agreement is intended by the parties
hereto as a final expression of their agreement and intended to be a complete
and exclusive statement of their agreement and understanding in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 23
IN WITNESS WHEREOF this Agreement has been signed by each of the
parties hereto, and shall be effective as of the date first above written.
MCM CAPITAL GROUP, INC.
By: /s/ Robert E. Koe
---------------------------
Name: Robert E. Koe
Title: President
ING (U.S.) CAPITAL LLC
By: /s/ David Balestrery
-------------------------------
Name: David Balestrery
Title: Vice President
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<PAGE> 24
[FORM OF LETTER AGREEMENT]
January 12, 2000
MCM Capital Group, Inc.
4302 East Broadway
Phoenix, Arizona 85040
Attn: Chief Executive Officer
Re: Registration Rights Agreement (the "First Registration Rights
Agreement") dated as of June 30, 1999 by and among MCM Capital
Group, Inc. (the "Company"), C.P. International Investments
Limited and its Affiliated Stockholders, MCM Holding Company
LLC and its Affiliated Stockholders, and certain other persons
and their Affiliated Stockholders referred to therein as the
MCM Holding Distributees
Ladies and Gentlemen:
Each of the undersigned is a party (or a successor in interest to a
party) to the First Registration Rights Agreement referred to above and, for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby consents and agrees (i) to the execution and delivery by
the Company of that certain Registration Rights Agreement dated as of the date
hereof (the "Second Registration Rights Agreement") by and between the Company
and ING (U.S.) Capital LLC, and (ii) to the agreement by the Company to all
terms and provisions of the Second Registration Rights Agreement, including
without limitation the granting of demand and incidental rights thereunder on
the terms and conditions set forth therein.
The Company and each of the undersigned hereby further agrees that all
shares of common stock, $.01 par value per share, of the Company ("Common
Stock") issued or issuable upon exercise of warrants issued pursuant to that
certain Warrant Agreement dated as of January 12, 2000 by and between the
Company and Triarc Companies, Inc. shall, to the extent beneficially owned
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) by
CPII, the MCM Distributees or their Permitted Transferees (as such terms are
defined in the First Registration Rights Agreement), constitute "Registrable
Securities" for all purposes of the First Registration Rights Agreement.
This instrument is intended to, and shall, constitute a written consent
to the Second Registration Rights Agreement for purposes of Section 7 of the
First Registration Rights Agreement. Notwithstanding the preceding paragraph,
this consent shall be applicable only to the Second Registration Rights
Agreement in the form originally executed and shall not be applicable to any
amendment, restatement or other modification thereof.
The parties acknowledge that Nelson Peltz, Peter W. May and Triarc
Companies, Inc. are the direct or indirect beneficial owners of shares of Common
Stock and constitute the "MCM Holding Distributee Majority" as such term is used
in Section 7 of the First Registration Rights Agreement and are executing this
letter agreement in such capacity, regardless of the form of legal ownership
pursuant to which such shares are beneficially owned.
<PAGE> 25
C.P. International Investments Limited
By:
-------------------------------
Name:
Title:
Triarc Companies, Inc.
By:
-------------------------------
Name:
Title:
-------------------------------
Nelson Peltz
-------------------------------
Peter W. May
MCM Capital Group, Inc.
By:
-------------------------------
Name:
Title:
<PAGE> 1
Exhibit 10.5
REGISTRATION RIGHTS AGREEMENT
MCM CAPITAL GROUP, INC.
Dated as of June 30, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Registrations Upon Request.......................................................................... 2
1.1. Requests by Stockholders................................................................. 2
1.2. Registration Statement Form.............................................................. 3
1.3. Expenses................................................................................. 3
1.4. Priority in Demand Registrations......................................................... 4
1.5. No Company or Other Stockholder Initiated Registration; Deferral of
Registration.......................................................................... 4
2. Incidental Registrations............................................................................ 5
3. Registration Procedures............................................................................. 7
4. Underwritten Offerings.............................................................................. 11
4.1. Underwriting Agreement................................................................... 11
4.2. Selection of Underwriters................................................................ 12
5. Holdback Agreements................................................................................. 12
6. Preparation; Reasonable Investigation............................................................... 13
7. No Grant of Future Registration Rights.............................................................. 13
8. [Reserved]
.............................................................................................. 14
9. Indemnification..................................................................................... 14
9.1. Indemnification by the Company........................................................... 14
9.2. Indemnification by the Sellers........................................................... 15
9.3. Notices of Claims, etc................................................................... 16
9.4. Other Indemnification.................................................................... 16
9.5. Indemnification Payments................................................................. 17
9.6. Other Remedies........................................................................... 17
10. Representations and Warranties..................................................................... 17
11. Definitions........................................................................................ 18
12. Miscellaneous...................................................................................... 20
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
12.1. Rule 144, etc........................................................................... 20
12.2. Successors, Assigns and Transferees..................................................... 20
12.3. Amendment and Modification.............................................................. 21
12.4. Governing Law........................................................................... 21
12.5. Invalidity of Provision................................................................. 21
12.6. Notices................................................................................. 21
12.7. Headings; Execution in Counterparts..................................................... 23
12.8. Injunctive Relief....................................................................... 23
12.9. Term.................................................................................... 23
12.10. Further Assurances..................................................................... 24
12.11. Entire Agreement....................................................................... 24
</TABLE>
ii
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is dated as of the 30th day of June,
1999 among MCM Capital Group, Inc., a Delaware corporation (the "COMPANY"), C.P.
International Investments Limited, a Bahamian company (together with its
Affiliated Stockholders (as herein defined), if any, "CPII"), MCM Holding
Company LLC, a New York limited liability company (together with its Affiliated
Stockholders, if any, "MCM HOLDING"), and each of the persons whose names are
listed on Schedule A hereto (together with their respective Affiliated
Stockholders, if any, the "MCM HOLDING DISTRIBUTEES"). Capitalized terms used
but not otherwise defined herein have their respective meanings set forth in
Section 11.
WHEREAS, CPII and MCM Holding have entered into a Stock Purchase
Agreement, dated February 13, 1998 (the "STOCK PURCHASE AGREEMENT"), with the
Company and the then stockholders of the Company (the "INITIAL STOCKHOLDERS"),
pursuant to which CPII and MCM Holding agreed to purchase from the Initial
Stockholders certain shares of common stock of Midland Corporation of Kansas,
the corporate predecessor to the Company ("MIDLAND KANSAS"), on the terms and
subject to the conditions therein set forth;
WHEREAS, as a condition to execution and delivery by CPII and MCM
Holding of the Stock Purchase Agreement, Midland Kansas, the Initial
Stockholders, CPII and MCM Holding entered into a Stockholders' Agreement, dated
as of February 13, 1998 (the "STOCKHOLDERS' AGREEMENT"), providing for certain
rights and obligations of the parties thereto;
WHEREAS, pursuant to separate Certificates of Merger, filed with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Kansas, respectively, effective prior to the date hereof, Midland
Kansas merged with and into the Company with the Company as the surviving
corporation, whereupon the Company succeeded to the rights and obligations of
Midland Kansas and CPII and MCM Holding became stockholders of the Company;
WHEREAS, the Company desires to consummate an IPO and, in connection
therewith, to eliminate certain rights held by CPII and MCM Holding pursuant to
the Stockholders' Agreement pursuant to an amendment to the Stockholders'
Agreement, dated as of June 21, 1999 (the "STOCKHOLDERS' AGREEMENT AMENDMENT");
<PAGE> 5
WHEREAS, immediately following the consummation of the IPO, MCM Holding
expects to distribute shares of Common Stock held by MCM Holding to the MCM
Holding Distributees, who represent all of the members of MCM Holding; and
WHEREAS, it is a condition of the execution and delivery by CPII and
MCM Holding of the Stockholders' Agreement Amendment, that the Company enter
into this Agreement for the purpose of providing for certain registration rights
for the benefit of holders of Registrable Securities;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to and
on the terms and conditions herein set forth, the parties hereto agree as
follows:
1. Registrations Upon Request.
1.1. Requests by Stockholders. At any time, the MCM Holding
Distributees (as a group) and CPII shall each have the right to make requests
that the Company effect up to two separate registrations under the Securities
Act of all or part of the Registrable Securities owned by them, respectively;
provided that (i) in the case of the MCM Holding Distributees, such right to
request up to two registrations will be exercisable by any MCM Holding
Distributees owning singly or in the aggregate at least 25% of the then
outstanding Registrable Securities then owned by all MCM Holding Distributees
(the "QUALIFIED MCM STOCKHOLDERS") and (ii) at any time when CPII owns fewer
Registrable Securities than its Permitted Transferees, such right of CPII to
request up to two registrations will be exercisable by those entities owning in
excess of 50% of the outstanding Registrable Securities then owned by CPII and
its Permitted Transferees. A request made either by the Qualified MCM
Stockholders or by CPII and/or its Permitted Transferees pursuant to the
immediately preceding sentence (in either case, the "REQUESTING PARTY") shall
not be counted for purposes of the request limitations set forth above if (a)
the Requesting Party determines in its good faith judgment to withdraw the
proposed registration of any Registrable Securities requested to be registered
pursuant to this Section 1.1 due to marketing or regulatory reasons, (b) the
registration statement relating to any such request is not declared effective
within 90 days of the date such registration statement is first filed with the
Commission and the Requesting Party determines to withdraw the proposed
registration, (c) within 180 days after the registration relating to any such
request has become effective, such registration is interfered with by any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason and the Company fails to have such
stop order, injunction or other order or requirement removed, withdrawn or
2
<PAGE> 6
resolved to the Requesting Party's reasonable satisfaction within 30 days, (d)
more than 10% of the Registrable Securities requested by the Requesting Party to
be included in the registration are not so included pursuant to Section 1.4, (e)
the conditions to closing specified in the underwriting agreement or purchase
agreement entered into in connection with the registration relating to any such
request are not satisfied (other than as a result of a default or breach
thereunder by the Requesting Party), (f) the registration relating to such
request is an IPO in which the Company elects to sell shares of Common Stock, or
(g) the registration relating to such request is preempted by a proposed Company
registration, notice of which is given by the Company to the Requesting Party
pursuant to Section 1.5(b)(iii), and the Requesting Party determines to withdraw
its registration request prior to a registration statement relating thereto
becoming effective.
Upon any such registration request, the Company will promptly, but in
any event within 10 days, give written notice of such request to all holders of
Registrable Securities and thereupon the Company will, subject to Sections 1.4
and 1.5, use its best efforts to effect the prompt registration under the
Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by the Requesting Party, and
(ii) all other Registrable Securities which the Company has
been requested to register by the holders thereof by written request
given to the Company by such holders within 10 days after the giving of
such written notice by the Company to such holders,
all to the extent required to permit the disposition of the Registrable
Securities so to be registered in accordance with the intended method or methods
of disposition of each seller of such Registrable Securities.
1.2. Registration Statement Form. A registration requested pursuant to
Section 1.1 shall be effected by the filing of a registration statement on a
form reasonably acceptable to the Requesting Party, it being understood that the
Company shall, where permitted under the Securities Act, seek to qualify for
registration on Form S-3 (or any other comparable form hereinafter adopted).
1.3. Expenses. The Company will pay all Registration Expenses in
connection with any registration requested under Section 1.1; provided that (a)
each seller of Registrable Securities shall pay all Registration Expenses to the
extent required to be paid by such seller under applicable law and all
underwriting discounts and commissions and transfer taxes, if any, and (b) if,
pursuant to clause (a) of Section 1.1, a Requesting Party determines in its good
faith judgment to withdraw the proposed registration of any
3
<PAGE> 7
Registrable Securities requested to be registered pursuant to Section 1.1 due to
marketing reasons after the filing of a registration statement with respect to
such Registrable Securities, the Requesting Party shall reimburse the Company
for its reasonable out-of-pocket expenses incurred in connection with the
preparation and filing of such registration statement unless the Requesting
Party agrees in writing to have the withdrawn registration treated as one of its
two registration requests permitted pursuant to Section 1.1.
1.4. Priority in Demand Registrations. If a registration pursuant to
Section 1.1 involves an underwritten offering, and the managing underwriter (or,
in the case of an offering which is not underwritten, a nationally recognized
investment banking firm) shall advise the Company in writing (with a copy to
each Person requesting registration of Registrable Securities) that, in its
opinion, the number of securities requested and other wise proposed to be
included in such registration exceeds the number which can be sold in such
offering without materially and adversely affecting the offering price or the
market price of the Common Stock or would otherwise jeopardize the offering, the
Company will include in such registration to the extent of the number which the
Company is so advised can be sold in such offering without such material adverse
effect, first, the Registrable Securities of all Stockholders (including the
Requesting Party), on a pro rata basis (based on the number of shares of
Registrable Securities owned by each such Stockholder), second, the securities,
if any, being sold by the Company, and third, the securities, if any, of any
other securitiesholder of the Company entitled to incidental registration rights
with respect thereto, subject to the limitations of Section 7.
1.5. No Company or Other Stockholder Initiated Registration; Deferral
of Registration. (a) After receipt of notice of a requested registration
pursuant to Section 1.1, neither the Company nor any other Stockholder shall
initiate, without the consent of the Requesting Party, a registration of any
Company securities for its own account until 90 days after such registration has
been effected or such registration has been terminated.
(b) Notwithstanding the foregoing, the Company shall have the right to
delay the filing or effectiveness, but not the preparation, of a registration
statement for any requested registration pursuant to Section 1.1 during one or
more periods aggregating not more than 90 days in any 12-month period during the
term of this Agreement in the event that (i) the Company would, in accordance
with the written advice of its counsel, be required to disclose in the
prospectus contained in such registration statement information not otherwise
required by law to be publicly disclosed and (ii) the Company has pending or in
process a material transaction, the disclosure of which would, in the good faith
judgment of the Company's Board of Directors, materially and adversely affect
the Company or the transaction, or (iii) at the time of receipt of notice of a
requested registration pursuant to Section 1.1 the Company was in the process of
contemplating a
4
<PAGE> 8
registration of equity securities for its own account and (A) the Company gives
written notice thereof to the Requesting Party within 10 days after receipt of
such registration request and (B) a registration statement with respect to such
Company initiated offering is filed within 60 days of receipt of such notice
from the Requesting Party.
2. Incidental Registrations. If the Company at any time proposes to
register any of its equity securities under the Securities Act for its own
account (other than pursuant to a registration on Form S-4 or S-8 or any
successor form) it shall give written notice thereof to each Stockholder. If,
within 10 days after the receipt of any such notice, any Stockholder requests
that the Company include all or any portion of the Registrable Securities owned
by such Stockholder in such registration, then, subject to subsection (a) below,
the Company will give prompt written notice to all holders of Registrable
Securities regarding such proposed registration. Upon the written request of any
such holder made within 10 days after the receipt of any such notice (which
request shall specify the number of Registrable Securities intended to be
disposed of by such holder and the intended method or methods of disposition
thereof), the Company will use its best efforts to effect the registration under
the Securities Act of such Registrable Securities on a pro rata basis (based on
the number of shares of Registrable Securities owned by each such requesting
holder) in accordance with such intended method or methods of disposition,
provided that:
(a) without the prior written consent of the Stockholders, the
Company shall not include any Registrable Securities of holders of
Registrable Securities other than the Stockholders in such proposed
registration if it believes in good faith that inclusion of such
securities would not be in the best interests of the Company, provided
that the Company will include in such registration that number of
Registrable Securities of the holders of Registrable Securities that
such managing underwriter and the Company determine would not be
adverse to the best interests of the Company and provided, further,
that the Company shall give the holders of Registrable Securities
prompt notice after any such determination has been made (in lieu of
the notice otherwise required under the second sentence of this Section
2);
(b) if, at any time after giving written notice (pursuant to
this Section 2) of its intention to register equity securities and
prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any
reason not to register such equity securities, the Company may, at its
election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, shall not be obligated to
register any Registrable Securities in connection with such
registration (but shall nevertheless pay the Registration Expenses in
connection therewith), without prejudice,
5
<PAGE> 9
however, to the rights of the Qualified MCM Stockholders and CPII,
respectively, to request that a registration be effected under Section
1.1; and
(c) if in connection with a registration pursuant to this
Section 2, the managing underwriter of such registration (or, in the
case of an offering that is not underwritten, a nationally recognized
investment banking firm) shall advise the Company in writing (with a
copy to each holder of Registrable Securities requesting registration
thereof) that, in its opinion, the number of securities requested and
otherwise proposed to be included in such registration exceeds the
number which can be sold in such offering without materially and
adversely affecting the offering price or the market price of the
Common Stock or would otherwise jeopardize the offering, then in the
case of any registration pursuant to this Section 2, the Company will
include in such registration to the extent of the number which the
Company is so advised can be sold in such offering without such
material adverse effect, first, the securities, if any, being sold by
the Company, second, the Registerable Securities of the Stockholders,
on a pro rata basis (based on the number of shares of Registrable
Securities owned by each such Stockholder), third, the Registrable
Securities of any other holder, on a pro rata basis (based on the
number of shares of Registrable Securities owned by each such holder),
and fourth, the securities, if any, of any other securitiesholder of
the Company entitled to incidental registration rights with respect
thereto, subject to the limitations of Section 7.
Notwithstanding the foregoing, the holders of Registrable Securities
other than the Stockholders will not be entitled to participate in any
registration pursuant to this Section 2 to the extent that the managing
underwriter (or, in the case of an offering that is not underwritten, a
nationally recognized investment banker) shall determine in good faith and in
writing (with a copy to each affected Person requesting registration of
Registrable Securities) that the participation of any such holder would
adversely affect the marketability or offering price of the securities being
sold by the Company or any Stockholder in such registration.
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 2,
provided that each seller of Registrable Securities shall pay all Registration
Expenses to the extent required to be paid by such seller under applicable law
and all underwriting discounts and commissions and transfer taxes, if any. No
registration effected under this Section 2 shall relieve the Company from its
obligation to effect registrations under Sections 1.1.
6
<PAGE> 10
3. Registration Procedures. If and whenever the Company is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 1.1 and 2, the Company will
promptly:
(a) prepare, and as soon as practicable, but in any event
within 60 days thereafter, file with the Commission, a registration
statement with respect to such Registrable Securities, make all
required filings with the NASD and use its reasonable best efforts to
cause such registration statement to become effective as soon as
practicable;
(b) prepare and promptly file with the Commission such
amendments and post-effective 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
so long as is required to comply with the provisions of the Securities
Act and to complete the disposition of all securities covered by such
registration statement in accordance with the intended method or
methods of disposition thereof, but in no event for a period of more
than six months after such registration statement becomes effective;
(c) furnish copies of all documents proposed to be filed with
the Commission in connection with such registration to (i) in the case
of a registration pursuant to Section 1.1 or 2 in which CPII is
participating, counsel selected by CPII, and (ii) in the case of a
registration pursuant to Section 1.1 or 2 in which MCM Holding
Distributees are participating, counsel selected by the holders of at
least 51% of the Registrable Securities proposed to be sold by such MCM
Holding Distributees in connection with such registration (such
holders, the "MAJORITY HOLDERS"), and such documents shall be subject
to the review of such counsel and CPII and/or the Majority Holders, as
the case may be, and the Company shall not file any registration
statement or amendment or post-effective amendment or supplement to
such registration statement or the prospectus used in connection
therewith to which either such counsel or CPII or the Majority Holders,
as the case may be, shall have reasonably objected in writing on the
grounds that such amendment or supplement does not comply (explaining
why) in all material respects with the requirements of the Securities
Act or of the rules or regulations thereunder;
(d) furnish to each seller of Registrable Securities, without
charge, such number of conformed copies of such registration statement
and of each such amendment and supplement thereto (in each case
including all exhibits and documents filed therewith) and such number
of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any
7
<PAGE> 11
summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as such seller may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by such seller in accordance with the intended method
or methods of disposition thereof;
(e) use its reasonable best efforts to register or qualify
such Registrable Securities covered by such registration statement
under the securities or blue sky laws of such jurisdictions as each
seller shall reasonably request, and do any and all other acts and
things which may be necessary or advisable to enable such seller to
consummate the disposition of such Registrable Securities in such
jurisdictions in accordance with the intended method or methods of
disposition thereof, provided that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, subject
itself to taxation in any jurisdiction wherein it is not so subject, or
take any action which would subject it to general service of process in
any jurisdiction wherein it is not so subject;
(f) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be registered with
or approved by such other governmental agencies, authorities or
self-regulatory bodies as may be necessary by virtue of the business
and operations of the Company to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition thereof;
(g) furnish to each seller of Registrable Securities a signed
counterpart, addressed to the sellers, of
(i) an opinion of outside counsel for the Company
experienced in securities law matters, dated the effective
date of the registration statement (or, if such registration
includes an underwritten public offering, the date of the
closing under the underwriting agreement), and
(ii) a "comfort" letter (unless the registration is
pursuant to Section 2 and such a letter is not otherwise being
furnished to the Company), dated the effective date of such
registration statement (and if such registration includes an
underwritten public offering, dated the date of the closing
under the underwriting agreement), signed by the independent
public accountants who have issued an audit report on the
Company's financial statements included in the registration
statement,
8
<PAGE> 12
covering such matters as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities, subject to
such qualifications as are customary in opinions and accountants'
letters delivered in such circumstances;
(h) notify each seller of any Registrable Securities covered
by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the
happening of any event or existence of any fact as a result of which
the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing, and, as promptly as is practicable,
prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(i) otherwise comply with all applicable rules and regulations
of the Commission, and make available to its security holders, as soon
as reasonably practicable, an earnings statement of the Company (in
form complying with the provisions of Rule 158 under the Securities
Act) covering the period of at least 12 months, but not more than 18
months, beginning with the first month after the effective date of such
registration statement;
(j) notify each seller of any Registrable Securities covered
by such registration statement (i) when the prospectus or any
prospectus supplement or post-effective amendment has been filed, and,
with respect to such registration statement or any post-effective
amendment, when the same has become effective, (ii) of any request by
the Commission for amendments or supplements to such registration
statement or to amend or to supplement such prospectus or for
additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of such registration statement
or the initiation of any proceedings for that purpose and (iv) of the
suspension of the qualification of such securities for offering or sale
in any jurisdiction, or of the institution of any proceedings for any
of such purposes;
(k) use every reasonable effort to obtain the lifting of any
stop order that might be issued suspending the effectiveness of such
registration statement as soon as practicable;
9
<PAGE> 13
(l) use its reasonable best efforts (i) (A) to list such
Registrable Securities on any securities exchange on which the equity
securities of the Company are then listed or, if no such equity
securities are then listed, on an exchange selected by the Company, if
such listing is then permitted under the rules of such exchange, or (B)
if such listing is not practicable, to secure designation of such
securities as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 under the Exchange Act or, failing that, to
secure NASDAQ authorization for such Registrable Securities, and,
without limiting the foregoing, to arrange for at least two market
makers to register as such with respect to such Registrable Securities
with the NASD, and (ii) to provide a transfer agent and registrar for
such Registrable Securities not later than the effective date of such
registration statement and to instruct such transfer agent (A) to
release any stop transfer order with respect to the certificates with
respect to the Registrable Securities being sold and (B) to furnish
certificates without restrictive legends representing ownership of the
shares being sold, in such denominations requested by the sellers of
the Registrable Securities or the lead underwriter;
(m) enter into such agreements and take such other actions as
the sellers of Registrable Securities or the underwriters reasonably
request in order to expedite or facilitate the disposition of such
Registrable Securities, including, without limitation, preparing for,
and participating in, such number of "road shows" and all such other
customary selling efforts as the underwriters reasonably request in
order to expedite or facilitate such disposition;
(n) furnish to any holder of such Registrable Securities such
information and assistance as such holder may reasonably request in
connection with any "due diligence" effort which such seller deems
appropriate; and
(o) use its best efforts to take all other steps necessary to
effect the registration of such Registrable Securities contemplated
hereby.
As a condition to its registration of Registrable Securities of any
prospective seller, the Company may require such seller of any Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding such seller, its ownership of Registrable
Securities and the disposition of such Registrable Securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith, together with such certificates, if any, as may be
required to permit the delivery of the opinions and comfort letters contemplated
by Section 3(g) and the execution of the underwriting agreement and the delivery
of the documents required to be delivered thereunder. Each such holder agrees to
furnish promptly to the Company all information required to be disclosed in
10
<PAGE> 14
order to make the information previously furnished to the Company by such holder
not materially misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any Registrable Securities covered thereby by name, or
otherwise identifies such seller as the holder of any Registrable Securities,
without the consent of such seller, such consent not to be unreasonably withheld
or delayed, unless such disclosure is required by law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(h), such holder will promptly discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(h). If so directed
by the Company, each holder of Registrable Securities will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
in such holder's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event that the Company
shall give any such notice, the period mentioned in Section 3(b) shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 3(h).
4. Underwritten Offerings.
4.1. Underwriting Agreement. If requested by the underwriters for any
underwritten offering pursuant to a registration requested under Section 1.1 or
2, the Company shall enter into an underwriting agreement with the underwriters
for such offering, such agreement to be reasonably satisfactory in substance and
form to the underwriters and to CPII (if CPII is participating in such
registration) and to the Majority Holders (if the MCM Holding Distributees are
participating in such registration). Any such underwriting agreement shall
contain such representations and warranties by the Company and such other terms
and provisions as are customarily contained in agreements of this type,
including, without limitation and unless waived by CPII (if CPII is
participating in such registration) and the Majority Holders (if the MCM Holding
Distibutees are participating in such registration), indemnities to the effect
and to the extent provided in Section 9. The holders of Registrable Securities
to be distributed by such underwriter shall be parties to such underwriting
agreement and may, at their option,
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<PAGE> 15
require that any or all of the representations and warranties by, and the
agreements on the part of, the Company to and for the benefit of such
underwriters be made to and for the benefit of such holders of Registrable
Securities and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement shall also be conditions
precedent to the obligations of such holders of Registrable Securities. No
underwriting agreement (or other agreement in connection with such offering)
shall require any Stockholder, in its capacity as stockholder and/or controlling
Person, to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, the ownership of such holder's Registrable Securities and
such holder's intended method or methods of disposition and any other
representation required by law or to furnish any indemnity to any Person which
is broader than the indemnity furnished by such holder pursuant to Section 9.2.
4.2. Selection of Underwriters. If the Company at any time proposes to
register any of its securities under the Securities Act for sale for its own
account pursuant to an underwritten offering in which holders of Registrable
Securities are participants, the Company will have the right to select the
managing underwriter (which shall be of nation ally recognized standing) to
administer the offering, but if CPII or the MCM Holding Distributees at such
time own at least 20% of the number of shares of Common Stock they own on the
date hereof, only with the approval thereof, such approval not to be
unreasonably withheld. Notwithstanding the foregoing sentence, whenever a
registration requested pursuant to Section 1.1 is for an underwritten offering,
the Requesting Party will have the right to select the managing underwriter
(which shall be of nationally recognized standing) to administer the offering,
but only with the approval of the Company, such approval not to be unreasonably
withheld.
5. Holdback Agreements. (a) If and whenever the Company proposes to
register any of its equity securities under the Securities Act for its own
account (other than on Form S-4 or S-8 or any successor form) or is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 1.1 or 2, each holder of
Registrable Securities agrees by acquisition of such Registrable Securities not
to request registration under Section 1.1 of any Registrable Securities and, if
it is then an officer, director or the beneficial owner (determined in
accordance with Rule 13d-3 under the Exchange Act) of more than 5% of any class
of the Company's equity securities (or any securities convertible into or
exchangeable or exercisable for any of such securities), not to effect any
public sale or distribution of the Company's equity securities (other than
pursuant to such registration), within seven days prior to and 90 days (unless
advised in writing by the managing underwriter that a longer period, not to
exceed 180 days, is required, or such shorter period as the managing
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<PAGE> 16
underwriter for any underwritten offering may agree) after the effective date of
the registration statement relating to such registration, except as part of
such registration.
(b) The Company agrees not to effect any public sale or distribution of
its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities within seven days prior to and 90 days
(unless advised in writing by the managing underwriter that a longer period, not
to exceed 180 days, is required, or such shorter period as the managing
underwriter for any underwritten offering may agree) after the effective date of
any registration statement filed pursuant to Section 1.1 (except as part of such
registration or pursuant to a registration on Form S-4 or S-8 or any successor
form). In addition, upon the request of the managing underwriter, the Company
shall use its reasonable best efforts to cause each officer, director or
beneficial owner (determined in accordance with Rule 13d-3 under the Exchange
Act) of more than 5% of any class of the Company's equity securities (or any
securities convertible into or exchangeable or exercisable for any of such
securities), other than any such securities acquired in a public offering, to
agree not to effect any such public sale or distribution of such securities
during such period, except as part of any such registration if permitted, and to
cause each such officer, director and beneficial holder to enter into a similar
agreement to such effect with the Company.
6. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of such
Registrable Securities so to be registered and their underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to the financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have issued audit reports on its financial
statements as shall be reasonably requested by such holders in connection with
such registration statement.
7. No Grant of Future Registration Rights. The Company shall not grant
to any Person (a) any other demand or incidental registration rights to without
the prior written consent of the MCM Holding Distributees Majority and CPII, so
long as the MCM Holding Distributees (as a group) and CPII, respectively,
continue to own at least 10% of the number of shares of Common Stock owned
thereby (or, in the case of the MCM Holding Distributees, owned by MCM Holding),
respectively, on the date hereof and (b) any incidental registration rights that
are of a higher priority to the rights granted
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<PAGE> 17
to the holders of Registrable Securities under Section 2 hereof during the term
of this Agreement.
8. [Reserved]
9. Indemnification.
9.1. Indemnification by the Company. In the event of any registration
of any Registrable Securities pursuant to this Agreement (including, without
limitation, any registration of Registrable Securities as part of any IPO by the
Company closing on or after the date of this Agreement), the Company agrees to
indemnify, defend and hold harmless (a) each seller of such Registrable
Securities, (b) the directors, members, stockholders, officers, partners,
employees, agents and Affiliates of such seller, (c) each Person who
participates as an underwriter in the offering or sale of such securities and
(d) each person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) any of the foregoing against
any and all losses, claims, damages, expenses or other liabilities (or actions
or proceedings in respect thereof), jointly or severally, directly or
indirectly, based upon or arising out of (i) any untrue statement or alleged
untrue statement of a fact contained in any registration statement under which
such Registrable Securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained therein
or used in connection with the offering of securities covered thereby, or any
amendment or supple ment thereto, or (ii) any omission or alleged omission to
state a fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse each such indemnified
party for any legal or any other expenses reasonably incurred by them in
connection with enforcing its rights hereunder or under the underwriting
agreement entered into in connection with such offering or investigating,
preparing, pursuing or defending any such loss, claim, damage, liability, action
or proceeding, except insofar as any such loss, claim, damage, liability,
action, proceeding or expense arises out of or is based upon (A) an untrue
statement or omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such seller expressly for use in the preparation thereof, or (B) any
preliminary prospectus to the extent that any such loss, claim, damage,
liability, action or proceeding results solely from the fact that the seller
sold Registrable Securities to a person as to whom the Company shall establish
that there was not sent by commercially reasonable means, at or prior to the
written confirmation of such sale, a copy of the final prospectus in any case
where such delivery is required by the Securities Act, if the Company has
previously furnished copies thereof in sufficient quantity to the seller or the
underwriters for such offering and the loss, claim, damage, liability, action or
proceeding results from an untrue statement or omission of a material
14
<PAGE> 18
fact contained in the preliminary prospectus that was corrected in the final
prospectus. Such indemnity shall remain in full force and effect, regardless of
any investigation made by such indemnified party and shall survive the transfer
of such Registrable Securities by such seller. If the Company is entitled to,
and does, assume the defense of the related action or proceedings provided
herein, then the indemnity agreement contained in this Section 9.1 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
action or proceeding if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld or delayed). The
Company shall also indemnify any underwriters of the Registrable Securities,
their officers, directors and employees, and each person who controls (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as provided above with respect to indemnification of the
seller of Registrable Securities.
9.2. Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 1.1 or 2 that the Company shall have received an
undertaking reasonably satisfactory to it from each of the prospective sellers
of such Registrable Securities to indemnify and hold harmless, severally, not
jointly, in the same manner and to the same extent as set forth in Section 9.1,
the Company, its directors, officers, employees, agents and each person, if any,
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) the Company, but only with respect to any written
information furnished to the Company by such seller expressly for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. (The Company and the
holders of the Registrable Securities hereby acknowledge and agree that, unless
otherwise expressly agreed to in writing by such holders, the only information
furnished or to be furnished to the Company for use in any registration
statement or prospectus relating to the Registrable Securities or in any
amendment, supplement or preliminary materials associated therewith are
statements specifically relating to (a) transactions between such holder and its
Affiliates, on the one hand, and the Company, on the other hand, (b) the
beneficial ownership of shares of Common Stock by such holder and its Affiliates
and (c) the name and address of such holder. If any additional information about
such holder or the plan of distribution (other than for an underwritten
offering) is required by law to be disclosed in any such document, then such
holder shall not unreasonably withhold its agreement referred to in the
immediately preceding sentence of this Section 9.2.) Such indemnity shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Company or any such director, officer or controlling Person and shall
survive the transfer of such Registrable Securities by such seller. The
indemnity agreement contained in this Section 9.2 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, action or
proceeding if such settlement is effected without the consent of such seller
(which consent shall not be unreasonably withheld or
15
<PAGE> 19
delayed). The indemnity provided by each seller of Registrable Securities under
this Section 9.2 shall be limited in amount to the net amount of proceeds
actually received by such seller from the sale of Registrable Securities
pursuant to such registration statement giving rise to such liability.
9.3. Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 9, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the indemnifying party of the
commencement of such action or proceeding, provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 9, except to the extent that the indemnifying party is materially
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate therein and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof except for the reasonable fees and
expenses of any counsel retained by such indemnified party to monitor such
action or proceeding. Notwithstanding the foregoing, if such indemnified party
reasonably determines, based upon advice of independent counsel, that either a
conflict of interest may exist between the indemnified party and the
indemnifying party with respect to such action and that it is advisable for such
indemnified party to be represented by separate counsel or that there may be one
or more legal defenses available to it which are different from or additional to
those available to the indemnifying party, such indemnified party may retain
other counsel, reasonably satisfactory to the indemnifying party, to represent
such indemnified party, and the indemnifying party shall pay all reasonable fees
and expenses of such counsel. No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of such indemnified party,
which consent shall not be unreasonably withheld, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation. The
rights accorded to any indemnified party hereunder shall be in addition to any
rights that such indemnified party may have at common law, by separate agreement
or otherwise.
9.4. Other Indemnification. Indemnification similar to that specified
in the preceding paragraphs of this Section 9 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required
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<PAGE> 20
registration (other than under the Securities Act) or other qualification of
such Registrable Securities under any federal or state law or regulation of any
governmental authority.
9.5. Indemnification Payments. Any indemnification required to be made
by an indemnifying party pursuant to this Section 9 shall be made by periodic
payments to the indemnified party during the course of the action or proceeding,
as and when bills are received by such indemnifying party with respect to an
indemnifiable loss, claim, damage, liability or expense incurred by such
indemnified party.
9.6. Other Remedies. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities, actions, proceedings or
expenses in such proportion as is appropriate to reflect the relative benefits
to and faults of the indemnifying party on the one hand and the indemnified
party on the other in connection with the offering of Registrable Securities and
the statements or omissions or alleged statements or omissions which resulted in
such loss, claim, damage, liability, action, proceeding or expense, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statements or omissions. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. No party shall be liable for contribution under this Section
9.6 except to the extent as such party would have been liable to indemnify under
this Section 9 if such indemnification were enforceable under applicable law.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.6 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
10. Representations and Warranties. Each Stockholder, severally and not
jointly, represents and warrants to the Company and each other Stockholder that:
(i) such Stockholder has the power, authority and capacity (or, in the
case of any Stockholder that is a corporation or limited partnership, all
corporate or limited
17
<PAGE> 21
partnership power and authority, as the case may be) to execute, deliver and
perform this Agreement;
(ii) in the case of a Stockholder that is a corporation or limited
partnership, the execution, delivery and performance of this Agreement by such
Stockholder has been duly and validly authorized and approved by all necessary
corporate or limited partnership action, as the case may be;
(iii) this Agreement has been duly and validly executed and delivered
by such Stockholder and constitutes a valid and legally binding obligation of
such Stock holder, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors' rights generally and general principles of
equity; and
(iv) the execution, delivery and performance of this Agreement by such
Stockholder does not and will not violate the terms of or result in the
acceleration of any obligation under (A) any material contract, commitment or
other material instrument to which such Stockholder is a party or by which such
Stockholder is bound, (B) in the case of a Stockholder that is a corporation or
limited partnership, the certificate of incorporation, certificate of limited
partnership, by-laws or limited partnership agreement, as the case may be, or
(C) any law, statute, regulation, order or decree applicable to such
Stockholder.
11. Definitions. For purposes of this Agreement, the following terms
shall have the following respective meanings:
Affiliate: (i) with respect to any Person, a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person, and (ii) with respect to any natural
Person, (A) the spouse, parents and direct descendants of such Person, (B) the
estate, testamentary trust, trustees, executors, administrators, legatees or
testamentary beneficiaries of such Person, and (C) any trust established by such
Person for the exclusive benefit of any of the foregoing Persons.
Affiliated Stockholder: with respect to CPII, MCM Holding, and the MCM
Holding Distributees, each of their respective Affiliates, in each case, if and
so long as it owns any Registrable Securities and has agreed in writing to be
bound by the terms and conditions of this Agreement, a copy of which agreement
shall have been delivered to the Company.
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<PAGE> 22
Board: the board of directors of the Company.
Commission: the Securities and Exchange Commission.
Common Stock: the Common Stock of the Company, par value $.01 per
share, and any securities into which such Common Stock shall have been changed
or any securities resulting from any reclassification of such Common Stock.
Exchange Act: the Securities Exchange Act of 1934, as amended, or any
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time.
IPO: the initial public offering of Common Stock.
Majority Holders: as defined in Section 3(c).
MCM Holding Distributees Majority: at any time, the owners of at least
51% of the Registrable Securities then owned by the MCM Holding Distributees.
NASD: National Association of Securities Dealers, Inc.
NASDAQ: the Nasdaq National Market.
Permitted Transferee: as defined in Section 12.2.
Person: an individual, corporation, partnership, limited liability
company, joint venture, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
Registrable Securities: the shares of Common Stock beneficially owned
(within the meaning of Rule 13d-3 of the Exchange Act) by CPII, MCM Holding, the
MCM Holding Distributees or the Permitted Transferees. As to any particular
shares of Common Stock, such securities shall cease to be Registrable Securities
when (i) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (ii) they
shall have been sold to the public pursuant to Rule 144 under the Securities
Act, (iii) they shall have been otherwise transferred other than to a Permitted
Transferee and subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any similar state law then in
force or (iv) they shall have ceased to be outstanding.
19
<PAGE> 23
Registration Expenses: all expenses incident to the Company's
performance of or compliance with any registration pursuant to this Agreement,
including, without limitation, (i) registration, filing and NASD fees, (ii) fees
and expenses of complying with securities or blue sky laws, (iii) fees and
expenses associated with listing securities on an exchange or NASDAQ, (iv) word
processing, duplicating and printing expenses, (v) messenger and delivery
expenses, (vi) transfer agents', trustees', depositories', registrars' and
fiscal agents' fees, (vii) fees and disbursements of counsel for the Company and
of its independent public accountants, including the expenses of any special
audits or "cold comfort" letters, (viii) reasonable fees and disbursements of
any one counsel retained by the sellers of Registrable Securities, which counsel
shall be designated in the manner specified in Section 3 and (ix) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions and transfer
taxes, if any.
Securities Act: the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time.
Stockholders: (i) CPII, MCM Holding and each MCM Holding Distributee,
in each case, if and so long as it owns any Registrable Securities and (ii) each
Affiliated Stockholder.
12. Miscellaneous.
12.1. Rule 144, etc. If the Company shall have filed a registration
state ment pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act
relating to any class of securities, the Company will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Commission there under, and will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such rule may be amended from time to time or (b) any successor rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
12.2. Successors, Assigns and Transferees. This Agreement shall be
binding upon and insure to the benefit of the parties hereto and their
respective successors and permitted assigns under this Section 12.2. Provided
that an express assignment shall
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<PAGE> 24
have been made, a copy of which shall have been delivered to the Company, the
provisions of this Agreement which are for the benefit of a holder of
Registrable Securities shall be for the benefit of and enforceable by any
subsequent holder of any Registrable Securities ("PERMITTED TRANSFEREES"),
subject to the provisions respecting the minimum numbers or percentages of
shares of Registrable Securities required in order to be entitled to certain
rights, or to take certain actions, contained herein.
12.3. Amendment and Modification. This Agreement may be amended,
modified or supplemented by the Company with the written consent of CPII, the
MCM Holding Distributees Majority and a majority (by number of shares) of any
other holder of Registrable Securities whose interests would be adversely
affected by such amendment in a manner different from the effect thereof on
other Registered Securities, provided that all Stockholders shall be notified of
such amendment, modification or supplement.
12.4. Governing Law. This Agreement and the rights and obligations of
the parties hereunder and the persons subject hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York,
without giving effect to the choice of law principles thereof.
12.5. Invalidity of Provision. The invalidity or unenforceability of
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
12.6. Notices. All notices, requests, demands, letters, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
sent by next-day or overnight mail or delivery or (d) sent by fax, as follows:
(i) If to the Company, to it at:
MCM Capital Group, Inc.
500 West First Street
Hutchinson, Kansas 67501-5222
Attention: Chief Executive Officer
Telecopier No.: (316) 665-0140
with a copy to:
MCM Capital Group, Inc.
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<PAGE> 25
500 West First Street
Hutchinson, Kansas 67501-5222
Attention: General Counsel
Telecopier No.: (316) 665-0140
and a copy to:
Snell & Wilmer
One Arizona Center
Phoenix, Arizona 85004-0001
Attention: Steven D. Pidgeon
Telecopier No.: (602) 382-6070
(ii) If to CPII, to it at:
C.P. International Investments Limited
2nd Floor, Block A, Russell Court
St. Stephen's Green
Dublin 2, Ireland
Attention: Managing Director
Telecopier No.: (011) (353) 475-6605
with a copy to:
Consolidated Press Holdings Limited
54-58 Park Street
Sydney, NSW 2000
Australia
Attention: Corporate Secretary
Telecopier No.: (011) (61) (2) 9267-2150
and a copy to
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: John M. Allen, Jr.
Telecopier No.: (212) 909-6836
(iii) If to MCM Holding or any MCM Holding Distributee, to it at:
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<PAGE> 26
c/o Triarc Companies, Inc.
280 Park Avenue
New York, NY 10017
Attention: General Counsel
Telecopier No.: (212) 451-3216
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Attention: Neale Albert, Esq. And Paul Ginsberg, Esq.
Telecopier No.: (212) 757-3990
or to such other person or address as any party shall specify by notice in
writing to the Company. All such notices, requests, demands, letters, waivers
and other communications shall be deemed to have been received (w) if by
personal delivery on the day after such delivery, (x) if by certified or
registered mail, on the eighth business day after the mailing thereof, (y) if by
next-day or overnight mail or delivery, on the day delivered or (z) if by fax,
on the next day following the day on which such fax was sent, provided that a
copy is also sent by certified or registered mail.
12.7. Headings; Execution in Counterparts. The headings and captions
contained herein are for convenience and shall not control or affect the meaning
or construction of any provision hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same instrument.
12.8. Injunctive Relief. Each of the parties recognizes and agrees that
money damages may be insufficient and, therefore, in the event of a breach of
any provision of this Agreement the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of this Agreement. Such remedies
shall, however, be cumulative and not exclusive, and shall be in addition to any
other remedy which such party may have.
12.9. Term. This Agreement shall be effective as of the date hereof and
shall continue in effect thereafter until the earlier of (a) its termination by
the consent of the parties hereto or their respective successors in interest,
(b) the date on which no Registrable Securities remain outstanding, and (c) the
date on which the Requesting Parties have collectively exhausted their
respective rights to request registrations under Section 1.1 and all remaining
Registrable Securities are subject to immediate resale by
23
<PAGE> 27
the holder thereof without regard to volume limitation pursuant to paragraph (k)
of Rule 144 under the Securities Act; provided, that after the date on which the
Requesting Parties have collectively exhausted their respective rights to
request registrations under Section 1.1, the rights and obligations under this
Agreement of any individual holder of Registrable Securities shall terminate if
and when all of such holder's Registrable Securities are subject to immediate
resale without regard to volume limitation pursuant to paragraph (k) of Rule 144
under the Securities Act.
12.10. Further Assurances. Subject to the specific terms of this
Agreement, each of the Company and the Stockholders shall make, execute,
acknowledge and deliver such other instruments and documents, and take all such
other actions, as may be reasonably required in order to effectuate the purposes
of this Agreement and to consummate the transactions contemplated hereby.
12.11. Entire Agreement. This Agreement is intended by the parties
hereto as a final expression of their agreement and intended to be a complete
and exclusive statement of their agreement and understanding in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
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<PAGE> 28
IN WITNESS WHEREOF this Agreement has been signed by each of
the parties hereto, and shall be effective as of the date first above written.
MCM CAPITAL GROUP, INC.
By: /s/ Frank Chandler
------------------------------------------
Name: Frank Chandler
Title: President
MCM HOLDING COMPANY LLC
By: /s/ Eric D. Kogan
------------------------------------------
Name: Eric D. Kogan
Title: Manager
C.P. INTERNATIONAL INVESTMENTS LIMITED
By: /s/ John Willinge
------------------------------------------
Name: John Willinge
Title: Executive Director and
Attorney-in-Fact
<PAGE> 29
SCHEDULE A
MCM HOLDING DISTRIBUTEES
See Attached List For Names
<PAGE> 30
MCM CAPITAL GROUP, INC.
OWNERSHIP SCHEDULE
Madison West Associates Corp.
Nelson Peltz Children's Trust
Jonathan P. May 1998 Trust
Leslie A. May 1998 Trust
Eric D. Kogan
Edward Garden
John L. Barnes, Jr.
JPAH Holdings, LLC
Brian L. Schorr
Stuart I. Rosen
James A. Knight
Alex Lemond
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EXHIBIT 10.6
SUBSIDIARY GUARANTY
THIS GUARANTY AGREEMENT, dated as of January 12, 2000 (this
"Guaranty"), by and among Midland Credit Management, Inc., a Kansas corporation
(the "Initial Subsidiary Guarantor"), and each other Subsidiary (such and all
other capitalized terms being used herein with the meaning set forth in Article
I) of MCM CAPITAL GROUP, INC., a Delaware corporation (the "Company"), which
from time to time in accordance with Section 6.1.6 of the Note Purchase
Agreement becomes a signatory hereto (each, an "Additional Subsidiary Guarantor"
and, collectively with the Initial Subsidiary Guarantor, a "Subsidiary
Guarantor") and ING (U.S.) Capital LLC (the "Purchaser"), for the benefit of
itself and its nominees.
W I T N E S S E T H:
WHEREAS, pursuant to a note purchase agreement, dated as of January 12,
2000 (together with all amendments and other modifications, if any, from time to
time thereafter made thereto, the "Note Purchase Agreement"), between the
Company and the Purchaser, the Company obtained $10,000,000 in cash representing
the proceeds from the sale by the Company to the Purchaser of the Series No. 1
Notes for a purchase price of $10,000,000 and Warrants for the purchase of
Common Shares for consideration of $10.00; and
WHEREAS, each Subsidiary Guarantor has, in consideration of, among
other things, receiving such capital contribution and the benefits of such
economies, synergies and financing, duly authorized the execution, delivery and
performance of this Guaranty;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, each Subsidiary Guarantor hereby agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. Except as otherwise provided herein or as
the context otherwise requires, the following terms (whether or not italicized)
when used in this Guaranty shall have the following meanings (such definitions
to be equally applicable to the singular and plural forms thereof):
"Additional Subsidiary Guarantor" is defined in the preamble.
"Company" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Initial Subsidiary Guarantor" is defined in the preamble.
"Series No. 1 Note" means each Series No. 1 Note executed and delivered
pursuant to the Note Purchase Agreement all amendments, endorsements and other
modifications made from time to time to
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such notes and each other promissory notes accepted from time to time in
substitution, replacement or renewal of such notes.
"Note Purchase Agreement" is defined in the second recital.
"Purchaser" is defined in the preamble.
"Subsidiary Guarantor" is defined in the preamble.
SECTION 1.2. Note Purchase Agreement Terms. Except as otherwise
provided herein or as the context otherwise requires, terms for which meanings
are provided in the Note Purchase Agreement shall have the same meanings when
used in this Guaranty.
ARTICLE II
GUARANTY
SECTION 2.1. Guaranty of Payment. Each Subsidiary Guarantor hereby
absolutely, unconditionally and irrevocably guarantees the full and prompt
payment and performance on demand and all times thereafter of all Obligations.
SECTION 2.2. Indemnification. Each Subsidiary Guarantor also agrees to
reimburse the Purchaser and the Noteholders, promptly after receipt of written
notice by the Purchaser or any Noteholder demanding such payment, for all
out-of-pocket costs and expenses, including reasonable attorneys' fees and
disbursements, which the Purchaser expends or incurs in collecting, compromising
or enforcing this Guaranty, whether or not suit is filed, expressly including
all out-of-pocket costs, expenses, reasonable attorneys' fees and other charges
incurred in connection with any insolvency, bankruptcy, reorganization,
liquidation, dissolution, arrangement or other similar proceedings involving any
Subsidiary Guarantor which in any way affect the exercise of rights, powers,
remedies and privileges with respect to this Guaranty or the interest accrued
and unpaid on the outstanding principal amount of the Series No. 1 Notes.
SECTION 2.3. Obligations Absolute, Unconditional, etc. Each Subsidiary
Guarantor agrees that its obligations hereunder shall be absolute, unconditional
and irrevocable, irrespective of the genuineness, validity, legality or
enforceability of the Obligations, the Series No. 1 Notes, the Note Purchase
Agreement or any other Purchase Document, or any other Instrument or collateral
relating to or securing the payment, performance or observance thereof or any
other circumstance which could otherwise constitute a legal or equitable
discharge of a surety or guarantor, and the Purchaser may, in its discretion or
at the direction of the Required Noteholders, proceed to enforce this Guaranty
in respect of any Obligations as and to the extent provided in Section 2.1 and
Section 2.2. Neither the Purchaser nor any other Noteholder shall have any
obligation to protect, secure, perfect or insure any collateral security
document or property subject thereto at any time held as security for the
Obligations or this Guaranty. Except as herein otherwise expressly provided,
each Subsidiary Guarantor hereby absolutely, unconditionally and irrevocably
waives, to the fullest extent permitted by applicable law, and agrees not to
assert or take advantage of:
(a) any right to require the Purchaser or any other Noteholder to
proceed against the Company or any other Person, or to proceed against or
exhaust any other security or collateral for
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the payment, performance or observance of the Obligations, or to pursue
any other remedy whatsoever before proceeding against any Subsidiary
Guarantor hereunder;
(b) any defense that may arise by reason of the incapacity,
lack of authority, death or disability of any Person, or the failure of
the Purchaser or any other Noteholder to file or enforce a claim
against any estate (in administration, bankruptcy or any other
proceedings) of any Person;
(c) any defense based upon an election of remedies by the
Purchaser or any other Noteholder, including an election to proceed by
non-judicial rather than judicial foreclosure, which destroys or
impairs any right of subrogation of any Subsidiary Guarantor or the
right of any Subsidiary Guarantor to proceed against the Company or any
other Person for reimbursement or both;
(d) any other defense of the Company, or the cessation of
the liability of the Company for any cause whatsoever, with respect to
any Obligations;
(e) any other defense of any kind, whether now existing or
arising hereafter, of any Subsidiary Guarantor to any action, suit or
judicial or legal proceeding that may be instituted with respect to
this Guaranty;
(f) presentment, demand, protest and notice of any kind,
including notice of the creation or non-payment or non-performance of
all or any Obligations, notice of dishonor or protest, notice of
acceptance by the Purchaser, its nominees or any other Noteholder of
this Guaranty, notice of the existence, creation or incurrence of any
new or additional indebtedness, obligation or other liability, and
notice of action or non-action on the part of the Purchaser or any
other Noteholder, the Company or any Subsidiary Guarantor or any other
Person in connection with the Obligations or otherwise; and
(g) any duty on the part of the Purchaser or any other
Noteholder or other Person to disclose to the Subsidiary Guarantors any
facts or information any such Person may now or hereafter know or
possess regarding the Company, the Obligations or any other matter
whatsoever, regardless of whether such Person has reason to believe
that such facts or other information may materially increase the risk
which any Subsidiary Guarantor intends to assume or has reason to
believe that such facts or other information are unknown to the
Subsidiary Guarantors or has a reasonable opportunity to communicate
such facts or other information, it being understood and agreed that
each Subsidiary Guarantor is fully and solely responsible for being and
keeping informed of the financial condition of the Company and of all
other circumstances bearing on the risk of non-payment of any
Obligations.
This Guaranty shall in all respects be a continuing, absolute, unconditional and
irrevocable Guaranty of payment, and shall remain in full force and effect until
all Obligations have been fully paid, and may not be amended, modified or
supplemented except in accordance with Section 8.1 of the Note Purchase
Agreement. This Guaranty shall continue to be effective, or to be reinstated, as
the case may be, if at any time any payment, in whole or in part, of any
Obligations is rescinded or must otherwise be restored or returned by the
Purchaser, its nominees or any other Noteholder upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of any Subsidiary Guarantor or the
Company, or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to any Subsidiary
Guarantor or the Company or any part of either of its property, or otherwise,
all as though such payments had never been made.
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SECTION 2.4. Waiver of All Defenses. Except as otherwise specified
herein, the Purchaser or any or each Noteholder may, from time to time, in its
sole discretion and without notice to the Subsidiary Guarantors, take any or all
of the following actions, all without in any way diminishing, impairing,
releasing or affecting the liability or obligations of the Subsidiary Guarantor
under or with respect to this Guaranty, and each Subsidiary Guarantor hereby
irrevocably consents to any or all of the following actions by the Purchaser and
each other Noteholder:
(a) retain or obtain a Lien in any property to secure any
Obligation or any obligation hereunder;
(b) retain or obtain the primary or secondary obligations
with respect to any Obligation;
(c) extend or renew for one or more periods (whether or not
longer than the original period), or alter or exchange, any Obligation,
or release or compromise any obligation of any Subsidiary Guarantor
hereunder or any obligation of any nature of any other Person with
respect to any Obligation or amend or modify in any respect the Note
Purchase Agreement or any Purchase Document;
(d) waive, modify, subordinate, compromise or release its
Lien in, or surrender, release or permit any substitution or exchange
for, all or any part of any property securing any Obligation or any
obligation hereunder, or extend or renew for one or more periods
(whether or not longer than the original period) or waive, release,
subordinate, compromise, modify, alter or exchange any guaranty or
other obligations of any nature of any obligor with respect to any such
property; and
(e) resort to any Subsidiary Guarantor for payment of any
Obligation, whether or not the Purchaser or any other Noteholder shall
have resorted to or exhausted any other remedy or any other security or
collateral for any obligation hereunder or shall have proceeded against
the Company or any other Person primarily or secondarily obligated with
respect to any Obligation.
Each Subsidiary Guarantor absolutely, unconditionally and irrevocably agrees
that, as long as any Obligation has not been paid in full, no Subsidiary
Guarantor shall have or enforce any right of subrogation, and each Subsidiary
Guarantor waives any right to enforce any remedy which the Purchaser or any
other Noteholder now has or may hereafter have against the Company or any other
Person hereunder or pursuant hereto or under or pursuant to the Note Purchase
Agreement, the Series No. 1 Notes or any other Purchase Document, and any
benefit of, and any right to participate in, any security for any Obligation now
or hereafter held by the Purchaser or any other Noteholder, as the case may be.
Each Subsidiary Guarantor absolutely, unconditionally and irrevocably
agrees that the liability of each Subsidiary Guarantor hereunder, and the
remedies for the enforcement of such liability, shall in no way be diminished or
affected by:
(a) the release or discharge of the Company or any other
Person responsible for the payment, performance or observance of any
Obligation in any creditors', receivership, bankruptcy, reorganization,
insolvency or other proceeding;
(b) the rejection or disaffirmance in any such proceeding of
any Instrument evidencing, securing, or executed in connection with,
any Obligation; or
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(c) the impairment, limitation or modification of any
Obligation resulting from the operation of any present or future
provision of the federal bankruptcy code or any other Applicable Law.
Each Subsidiary Guarantor absolutely, unconditionally and irrevocably
further agrees that the creation from time to time of any Obligation and the
application or allocation of amounts received by the Purchaser or any Noteholder
or any other Person to the payment of such Obligation, and the creation,
existence or enforcement from time to time of any security for the Obligation,
and the application and allocation of the proceeds of such security, shall in no
way affect or impair the rights, remedies, powers and privileges of the
Purchaser or any other Noteholder or the holder of any Series No. 1 Note or the
obligation of any Subsidiary Guarantor under this Guaranty.
Each Subsidiary Guarantor hereby expressly waives notice of the
creation of all Obligations and all diligence in collection or protection of or
realization upon the Obligations or any thereof, any obligation hereunder, or
any security for or guaranty of any of the foregoing.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Purchase Document. This Guaranty is a Purchase Document
for purposes of the Note Purchase Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof, including Article VIII thereof.
SECTION 3.2. Successors and Assigns; Assignment. This Guaranty shall be
binding upon each Subsidiary Guarantor and its successors and assigns and shall
inure to the benefit of the Purchaser and each other Noteholder and their
respective successors and assigns, including any assignee of any Series No. 1
Note and be enforceable by the Purchaser at the direction of the Required
Noteholders; provided, however, that no Subsidiary Guarantor may assign any of
its obligations hereunder without the prior written consent of all Noteholders.
Each Noteholder may, subject, however, to the provisions of Section 4.7 of the
Note Purchase Agreement, from time to time, without notice to the Subsidiary
Guarantors assign or transfer any Series No. 1 Note or any interest therein,
and, notwithstanding any such transfer or assignment or any subsequent transfer
or assignment thereof, such Series No. 1 Note shall be and remain a Series No. 1
Note for purposes of this Guaranty, and each and every immediate and successive
transferee or assignee of any Series No. 1 Note or any interest therein shall,
to the extent of the interest of such transferee or assignee in the Series No. 1
Note, be entitled to the benefits of this Guaranty.
IN WITNESS WHEREOF, the Initial Subsidiary Guarantor has caused this
Guaranty to be executed and delivered by its Authorized Officer as of the date
first above written.
MIDLAND CREDIT MANAGEMENT, INC.
By: /s/ R. Brooks Sherman
Name: R. Brooks Sherman
Title: Executive Vice President
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EXHIBIT 10.7
[EXECUTION COPY]
GUARANTY AND OPTION AGREEMENT
THIS GUARANTY AND OPTION AGREEMENT (as amended, supplemented, amended
and restated or otherwise modified from time to time, this "Guaranty"), dated as
of January 12, 2000, is made by TRIARC COMPANIES, INC., a Delaware corporation
(the "Guarantor"), in favor of ING (U.S.) CAPITAL LLC (together with its
successors and assigns, "ING").
W I T N E S S E T H:
WHEREAS, pursuant to a Note Purchase Agreement, dated as of January 12,
2000 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Note Purchase Agreement"), between MCM Capital Group, Inc., a
Delaware corporation (the "Company") and ING, ING has purchased the Series No. 1
Notes from the Company;
WHEREAS, the Guarantor owns an equity interest in the Company;
WHEREAS, as a condition precedent to the purchase of the Series No. 1
Notes under the Note Purchase Agreement, the Guarantor is required to execute
and deliver this Guaranty;
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the purchase of the Series No. 1 Notes from the Company by ING
pursuant to the Note Purchase Agreement and the execution and delivery of the
Warrant Agreement between the Company and ING;
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce ING to purchase the Series No. 1
Notes from the Company, and to induce ING to enter into the Note Purchase
Agreement and the Warrant Agreement, the Guarantor agrees, for the benefit of
ING, as follows.
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
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"Applicable Fees" means, with respect to any Eligible Transaction, the
aggregate amount of compensation (net of syndication fees, underwriting
commissions or similar fees) actually paid by a Triarc Party to the Lead Banker
in such Eligible Transaction.
"Company" is defined in the first recital.
"CPH Party" means Consolidated Press Holdings Ltd. or any of its
Affiliates.
"Eligible Transaction" means a single transaction to which a Triarc
Party is a party:
(a) in any line of business in which ING is then active;
(b) in which ING was offered, but declined, the right (i) to
be the Lead Banker and (ii) to receive at least 40% of any Applicable
Fees paid to such Lead Banker;
(c) in which a nationally recognized investment banking firm
other than ING was engaged to be the Lead Banker;
(d) in which the terms on which the Lead Banker is engaged are
substantially the same as those offered to ING; and
(e) in which the aggregate amount of Applicable Fees is
greater than $1,000,000.
"Guaranteed Obligations" is defined in Section 2.1(a).
"Guarantor" is defined in the preamble.
"Guaranty" is defined in the preamble.
"ING" is defined in the preamble.
"Lead Banker" means, with respect to any Eligible Transaction, the lead
or co-lead investment banking firm or firms involved in arranging, underwriting
or providing investment banking or financial advisory services in connection
with such Eligible Transaction.
"Material Role" means, with respect to any transaction (including but
not limited to any Eligible Transaction), that in connection with such
transaction, ING (a) acts as the lead underwriter, arranger or similar position,
(b) acts as the co-lead underwriter, arranger or similar position, or (c)
receives 20% or more of the aggregate compensation paid by Triarc Parties and
all CPH Parties in connection with the underwriting or arranging of such
transaction.
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"Note Purchase Agreement" is defined in the first recital.
"Stockholders Agreement" means that certain Stockholders Agreement,
dated as of January 12, 2000, by and among the Company, ING, and the other
parties identified on the signature pages thereto.
"Triarc Change of Control" means the acquisition by any Person or group
(other than either of Nelson Peltz or Peter W. May or any of their respective
Affiliates (including members of their immediate families) or any trusts or
estates of which either is a primary beneficiary or any entity of which either
of them hold a majority of the Voting Stock, or any combination of the
foregoing) of a direct or indirect majority in interest (more than 50%) of the
issued and outstanding Voting Stock of the Guarantor by merger or consolidation
or otherwise.
"Triarc Party" means the Guarantor, the Company or any of
their respective Affiliates.
SECTION 1.2. Note Purchase Agreement Definitions. Unless otherwise
defined herein or the context otherwise requires, terms used in this Guaranty,
including its preamble and recitals, have the meanings provided in the Note
Purchase Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. Subject to Section 2.9, the Guarantor hereby
absolutely, unconditionally and irrevocably
(a) guarantees the full and punctual payment when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of $10,000,000 of the principal amount of the
Series No. 1 Notes (excluding any PIK Notes but including all such
principal amounts which would become due but for the operation of the
automatic stay under Section 362(a) of the United States Bankruptcy
Code, 11 U.S.C. Section 362(a), and the operation of Sections 502(b)
and 506(b) of the United States Bankruptcy Code, 11 U.S.C. Section
502(b) and Section 506(b)) (the "Guaranteed Obligations"); and
(b) indemnifies and holds harmless ING for any and all
reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees and expenses) incurred by ING in enforcing any rights
under this Guaranty;
provided, however, that the Guarantor shall only be liable under this Guaranty
for the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount. This Guaranty
constitutes a guaranty of payment when due and not of collection, and the
Guarantor specifically agrees that it
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shall not be necessary or required that ING exercise any right, assert any claim
or demand or enforce any remedy whatsoever against the Company, any other
Obligor or any other Person before or as a condition to the obligations of the
Guarantor hereunder.
SECTION 2.2. Reinstatement, etc. The Guarantor hereby agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Guaranteed
Obligations is invalidated, declared to be fraudulent or preferential, set
aside, rescinded or must otherwise be restored by any Noteholder, upon the
insolvency, bankruptcy, reorganization (or similar event) of the Company, any
other Obligor or otherwise, all as though such payment had not been made.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until the payment in full of
the Guaranteed Obligations (subject, however, to Section 8.5 of the Note
Purchase Agreement). The Guarantor guarantees that the Guaranteed Obligations of
the Company and each other Obligor will be paid strictly in accordance with the
terms of the Note Purchase Agreement and each other Purchase Document under
which they arise, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Noteholder with respect thereto. The liability of the Guarantor under this
Guaranty shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
Note Purchase Agreement or any other Purchase Document;
(b) the failure of any Noteholder to assert any claim or
demand or to enforce any right or remedy against the Company, any other
Obligor or any other Person (including any other guarantor) under the
provisions of the Note Purchase Agreement, any other Purchase Document
or otherwise, or to exercise any right or remedy against any other
guarantor (including the Guarantor) of, or collateral securing, any
Guaranteed Obligations;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any part of the Guaranteed Obligations, or
any other extension, compromise or renewal of any Guaranteed
Obligation;
(d) any reduction, limitation, impairment or termination of
any Guaranteed Obligations for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be
subject to (and the Guarantor hereby waives any right to or claim of)
any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, irregularity,
compromise or unenforceability of, or any other event or occurrence
affecting, any Guaranteed Obligations or otherwise;
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(e) any amendment to, rescission, waiver or other modification
of, or any consent to or departure from, any of the terms of the Note
Purchase Agreement or any other Purchase Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to or departure from, any other
guaranty held by any Noteholder securing any of the Guaranteed
Obligations; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Company, any other Obligor, any surety or any guarantor.
SECTION 2.4. No Demand. Notwithstanding any provision in this Guaranty
to the contrary, no claim or demand shall be made under this Guaranty prior to
July 12, 2001, and the Guarantor shall have no obligation to make any payment
under this Guaranty, and shall suffer no liability for any Guaranteed
Obligation, prior to any such claim or demand.
SECTION 2.5. Waiver, etc. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that any Noteholder
protect, secure, perfect or insure any Lien (or any property subject thereto) in
favor of ING or any other Noteholder, or exhaust any right or take any action
against the Company, any other Obligor or any other Person (including any other
guarantor) or any collateral securing the Guaranteed Obligations.
SECTION 2.6. Postponement of Subrogation, etc. The Guarantor agrees
that it will not exercise any rights which it may acquire by way of rights of
subrogation under this Guaranty or any other Purchase Document to which it is a
party, nor shall the Guarantor seek or be entitled to seek any contribution or
reimbursement from the Company or any other Obligor, in respect of any payment
made hereunder, under any other Purchase Document or otherwise, until following
the payment in full of the Guaranteed Obligations. Any amount paid to the
Guarantor on account of any such subrogation rights prior to the payment in full
of the Guaranteed Obligations shall be held in trust for the benefit of ING and
shall immediately be paid and turned over to ING in the exact form received by
the Guarantor (duly endorsed in favor of ING, if required), to be credited and
applied against the Guaranteed Obligations, whether matured or unmatured, in
accordance with Section 4.5 of the Note Purchase Agreement; provided, however,
that if
(a) the Guarantor has made payment to ING of all or any part
of the Guaranteed Obligations; and
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(b) the payment in full of the Guaranteed Obligations has
occurred;
then at the Guarantor's request ING will, at the expense of the Guarantor,
execute and deliver to the Guarantor appropriate documents (without recourse and
without representation or warranty) necessary to evidence the transfer by
subrogation to the Guarantor of an interest in the Guaranteed Obligations
resulting from such payment; provided, that the failure to receive such
assignment shall not limit the Guarantor's right of subrogation. In furtherance
of the foregoing, at all times prior to the payment in full of the Guaranteed
Obligations the Guarantor shall refrain from taking any action or commencing any
proceeding against the Company or any other Obligor (or its successors or
assigns, whether in connection with a bankruptcy proceeding or otherwise) to
recover any amounts in the respect of payments made under this Guaranty to ING.
SECTION 2.7. Successors, Transferees and Assigns, etc. This Guaranty
shall:
(a) be binding upon the Guarantor and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by ING.
Without limiting the generality of clause (b), ING may assign or otherwise
transfer (in whole or in part) any Series No. 1 Note held by it to any other
Person and such other Person shall thereupon become vested with all rights and
benefits in respect thereof granted to ING under this Guaranty or otherwise,
subject, however, to any contrary provisions in such assignment or transfer and
to the provisions of the Note Purchase Agreement.
SECTION 2.8. Payments. The Guarantor agrees that all payments made by
the Guarantor hereunder will be made in United States dollars to ING without
set-off, counterclaim or other defense and in accordance with Sections 4.1 and
4.2 and 4.10 of the Note Purchase Agreement, free and clear of and without
deduction for any Taxes, the Guarantor hereby agreeing to comply with and be
bound by the provisions of Sections 4.1 and 4.2 and 4.10 of the Note Purchase
Agreement in respect of all payments made by it hereunder and the provisions of
which Sections are hereby incorporated into and made a part of this Guaranty by
this reference as if set forth herein; provided, that references to the
"Company" in such Sections shall be deemed to be references to the Guarantor,
and references to "this Agreement" shall be deemed to be references to this
Guaranty.
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SECTION 2.9. Adjustment to Guaranteed Obligations. Notwithstanding
anything else to the contrary contained herein, to the extent the Guaranteed
Obligations guaranteed hereunder include any outstanding principal amount of the
Series No. 1 Notes, such outstanding principal amount shall be reduced (for
purposes of this Guaranty only) and the Guarantor shall not be liable to ING for
the following amounts:
(a) the amount of any fees paid to ING or any Affiliate (net
of syndication fees, underwriting commissions or similar fees) by any
Triarc Party or any CPH Party in connection with any transaction
occurring after the Closing Date for which ING or any Affiliate has a
Material Role; and
(b) for each Eligible Transaction for which ING or any
Affiliate does not have a Material Role, the greater of (i) an amount
equal to 25% of the Applicable Fees in such Eligible Transaction, or
(ii) the amount of any fees paid to ING (net of syndication fees,
underwriting commissions or similar fees) by any Triarc Party or any
CPH Party in connection with such Eligible Transaction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations. In order to induce ING to enter into the
Note Purchase Agreement, and to induce ING to enter into the Warrant Agreement,
the Guarantor represents and warrants to ING
(a) Organization, Power, Authority, etc. The Guarantor is a
corporation duly incorporated and in good standing under the laws of
the jurisdiction of its incorporation and has full power and authority
to enter into and perform its obligations under this Guaranty.
(b) Due Authorization. The execution and delivery by the
Guarantor of this Guaranty and the performance by the Guarantor of its
obligations hereunder have been duly authorized by all necessary
corporate action, do not require any Approval, do not and will not
conflict with, result in any violation of, or constitute any default
under, any provision of any Organizational Document.
(c) Validity, etc. This Guaranty constitutes the legal, valid
and binding obligation of the Guarantor enforceable in accordance with
its terms, subject, however, as to enforcement only, to bankruptcy,
insolvency, reorganization, moratorium or similar laws at the time in
effect affecting the enforceability of the rights of creditors
generally and general equity principles (regardless of whether
enforcement is sought in a proceeding at law or in equity).
7
<PAGE> 8
SECTION 3.2. Guarantor Compensation and Consent. The Guarantor
represents and warrants, and ING acknowledges and agrees, that the
Guarantor has received no direct economic consideration for entering
into this Guaranty other than (a) a cash fee equal to $200,000 and (b)
warrants for purchase of up to 100,000 Common Shares of the Company. By
execution and delivery of this Guaranty and notwithstanding any
provision in the Note Purchase Agreement to the contrary, ING as the
Purchaser consents to such compensation and such compensation is not a
violation of Sections 6.2.5 or 6.2.11 of the Note Purchase Agreement.
ARTICLE IV
AGREEMENTS AS TO SERIES NO. 1 NOTES
AND WARRANT
SECTION 4.1. Series No. 1 Notes.
(a) If at any time a Triarc Change in Control occurs, the
Guarantor shall either (i) offer to purchase, and if such offer is
accepted shall purchase, from the Noteholders, within 30 days of the
date of such occurrence, all outstanding Series No. 1 Notes for a
purchase price, payable in immediately available funds, equal to the
Optional Redemption Price of such Series No. 1 Notes together with all
unpaid interest accrued thereon to the date of such purchase; or (ii)
to secure payment pursuant to this Guaranty, deposit into a collateral
escrow account reasonably acceptable to the Guarantor and the Required
Noteholders cash or Cash Equivalent Investments equal to the Guaranteed
Obligations, as adjusted from time to time pursuant to Section 2.9.
Upon payment of a principal amount of the Series No. 1 Notes (other
than the PIK Notes) after the date of establishment of such escrow
account equal to the Guaranteed Obligations, as adjusted from time to
time pursuant to Section 2.9, all remaining amounts on deposit in the
escrow account shall be returned to the Guarantor. Upon the
consummation of any purchase pursuant to this Section 4.1(a), ING and
such other Noteholder shall comply with Section 4.2 below.
(b) The Guarantor (or any third party designated by the
Guarantor) shall have the right, upon 15 Business Days' prior written
notice to ING and any other Noteholder, to purchase all (but not less
than all) outstanding Series No. 1 Notes, for a purchase price, payable
in immediately available funds, equal to the Optional Redemption Price
of such Series No. 1 Notes together with all unpaid interest accrued
thereon to the date of such purchase. Upon the consummation of any
purchase pursuant to this Section 4.1(b), ING and such other Noteholder
shall comply with Section 4.2 below.
(c) The Guarantor (or any third party designated by the
Guarantor) shall have the right, at any time during which the Company
may redeem Series No. 1 Notes pursuant to Section 4.7 of the Note
Purchase Agreement, to purchase the Series No. 1 Notes identified in
the written notice of such prospective assignment delivered to the
Company in accordance with Section 4.7 of the Note Purchase Agreement,
on the same terms and conditions as such prospective assignment.
8
<PAGE> 9
SECTION 4.2. Warrants. Upon the consummation of any purchase of Series
No. 1 Notes pursuant to Section 4.1(a) or (b) above during any time period
identified below, ING or any other holder of the Warrants promptly shall deliver
to the Guarantor (or to such third-party purchaser previously identified by the
Guarantor) the following respective percentages of Warrants then owned by ING or
any other holder of the Warrants:
<TABLE>
<CAPTION>
Period: Percentage of Warrants Returned:
- ------- --------------------------------
<S> <C>
From the Closing Date
through 90 days thereafter 100%
From the 91st day after the
Closing Date through the
270th day after the Closing Date 50%
Any time after the 270th day
after the Closing Date 0%
</TABLE>
SECTION 4.3. Maintenance of Cash Reserves. The Guarantor shall maintain
in its accounts Cash Equivalent Investments, free of any and all Liens, in an
aggregate amount no less than $10,000,000 (subject, however, to reduction by an
amount equal to any reduction of Guaranteed Obligations pursuant to Section
2.9).
SECTION 4.4. Assignments. ING shall not assign any portion of its Notes
or Warrants without (i) delivery of this Guaranty and the Stockholders Agreement
to the assignee; and (ii) delivery by such assignee to Triarc of an
acknowledgment of, and an agreement by the assignee, in a form reasonably
acceptable to Triarc, to be bound by the terms and conditions of this Guaranty
and the Stockholders Agreement, including, without limitation, the obligation to
surrender all or part of the Warrants without additional consideration upon
certain events pursuant to this Guaranty.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Binding on Successors, Transferees and Assigns;
Assignment. In addition to, and not in limitation of, Section 3.7, this Guaranty
shall be binding upon the Guarantor and its successors, transferees and assigns
and shall inure to the benefit of and be enforceable by and against ING and its
successors, transferees and assigns (to the full extent provided pursuant to
Section 2.7); provided, however, that the Guarantor may not assign any of its
obligations hereunder without the prior written consent of ING.
9
<PAGE> 10
SECTION 5.2. Amendments, etc. No amendment to or waiver of any
provision of this Guaranty, nor consent to any departure by the Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by ING or successors and assigns and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 5.3. Notices. All notices and other communications provided for
hereunder shall be in writing (including facsimile communication) and mailed or
telecopied or delivered (i) in the case of the Guarantor, to the Guarantor in
care of the Company at the address or facsimile number of the Company specified
in the Note Purchase Agreement and (ii) in the case of ING, to ING at the
address or facsimile number of ING specified in the Note Purchase Agreement. All
such notices and other communications, when mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any such notice or communication, if
transmitted by facsimile, shall be deemed given when the confirmation of
transmission thereof is received by the transmitter.
SECTION 5.4. No Waiver; Remedies. In addition to, and not in limitation
of, Section 2.3 and Section 2.5, no failure on the part of any Noteholder to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 5.5. Captions. Section captions used in this Guaranty are for
convenience of reference only, and shall not affect the construction of this
Guaranty.
SECTION 5.6. Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 5.7. Governing Law, Entire Agreement, etc. THIS GUARANTY SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). THIS GUARANTY CONSTITUTES THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
10
<PAGE> 11
SECTION 5.8. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE NOTEHOLDERS OR THE GUARANTOR SHALL BE BROUGHT AND
MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE BROUGHT,
AT ING'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH PROPERTY MAY BE
FOUND. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE GUARANTOR
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR OUTSIDE OF THE STATE OF NEW YORK. THE
GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY.
SECTION 5.9. Waiver of Jury Trial. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS GUARANTY OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE NOTEHOLDERS OR THE
GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR ING ENTERING INTO THE NOTE PURCHASE AGREEMENT.
11
<PAGE> 12
SECTION 5.10. Counterparts. This Guaranty may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
TRIARC COMPANIES, INC.
By: /s/ John L. Barnes, Jr.
_______________________________
Name: John L. Barnes, Jr.
Title: Executive Vice President
ACCEPTED AND AGREED:
ING (U.S.) CAPITAL, LLC,
By: /s/ David Balestrery
_________________________________
Name: David Balestrery
Title: Vice President
S-1
<PAGE> 1
EXHIBIT 10.8
FIRST AMENDMENT TO LOAN SALE AGREEMENT
This FIRST AMENDMENT TO LOAN SALE AGREEMENT (this "Amendment") is made
and entered into as of the 13th day of January, 2000 by and among MBNA AMERICA
BANK, N.A., as seller (the "Seller") and MIDLAND CREDIT MANAGEMENT, INC., as
buyer (the "Buyer").
WITNESSETH:
WHEREAS, Seller and Buyer are parties to the Loan Sale Agreement, dated
as of September 1, 1999 (the "Loan Sale Agreement");
WHEREAS, Seller and Buyer wish to amend the Loan Sale Agreement
effective as of the Amendment Effective Date (as defined in Section 5) to
provide for suspension or the termination of Buyer's obligations to purchase
Additional Loans in certain circumstances and certain other amendments;
NOW, THEREFORE, in order to reflect the mutual understanding of the
parties hereto, the undersigned hereby agree and acknowledge that:
Section 1. Certain Defined Terms.
Capitalized terms which are used and not otherwise defined in this
Amendment shall have the respective meanings ascribed thereto in the Loan Sale
Agreement.
Section 2. Amendment of Loan Sale Agreement.
A. From and after the Amendment Effective Date, the Loan Sale
Agreement shall be modified by deleting Section 19.1 and Section 19.3 of the
Loan Sale Agreement in their entirety and replacing them with the following
provision:
Section 19.1 Term of Agreement. (a) Notwithstanding that this
Agreement may be terminated at any time in accordance with the
provisions of Article 12 hereof, the initial term of this Agreement
shall commence on the first Transfer Date and shall end on February 20,
2001; provided, however, that Buyer or Seller may cancel its obligation
to purchase or sell, as the case may be, Additional Loans hereunder by
delivering written notice of the same to the other party not later than
the 15th day of the month prior to the month in which termination is to
occur. After delivery of such notice, except for the impending sale
which is to occur in the month the notice is delivered, the obligation
of Buyer to purchase Additional Loans hereunder and the obligation of
Seller to sell Additional Loans hereunder shall terminate. In the event
that Buyer elects to terminate the Agreement pursuant to this Section
19(a), any and all of Seller's obligations, duties or responsibilities
relating to: (i) adjustments to purchase price or repurchases of
previously sold loans under Sections 8.1 and 8.2 of the Agreement shall
terminate upon Seller's receipt of notice; and (ii) to provide
documentation pursuant to Section 3.2 and Exhibit E of the Agreement
shall terminate upon Seller's receipt of notice.
<PAGE> 2
(b) The Buyer may elect not to purchase Additional Loans during March
2000 by giving Seller written notice of such election not later than
February 29, 2000. In the event that Buyer elects not to purchase
Additional Loans pursuant to this Section 19(b), any and all of
Seller's obligations, duties or responsibilities relating to: (i)
adjustments to purchase price or repurchases of previously sold loans
under Sections 8.1 and 8.2 of the Agreement shall terminate upon
Seller's receipt of notice; and (ii) to provide documentation pursuant
to Section 3.2 and Exhibit E of the Agreement shall terminate upon
Seller's receipt of notice. Seller's obligations, duties or
responsibilities under Sections 3.2, 8.1 and 8.2 of the Agreement and
Exhibit E shall be reinstated upon Buyer's next purchase of Additional
Loans pursuant to the terms and provisions of the Agreement.
(c) The parties expressly agree that the provisions of Articles 5, 10,
11, 14, 15, 16 and 21 shall survive any termination of the Agreement.
Seller agrees to provide to Buyer, upon Buyer's written request, copies
of credit applications and statements for any of the Loans sold to
Buyer, to the extent such documents are in Seller's possession, upon
Seller's receipt of payment of $10.00 per application or statement.
B. From and after the Amendment Effective Date, the Loan Sale Agreement
shall be modified by adding the following sentence to the end of the first
paragraph of Section 8.2:
Buyer may not submit any notification for repurchase of any Loan prior
to the 175th day following the Transfer Date of such Loan.
Section 3. Effect of Amendment.
Upon effectiveness of this Amendment, the Loan Sale Agreement shall be,
and be deemed to be, modified and amended in accordance herewith and the
respective rights, limitations, obligations, duties, liabilities and immunities
of the parties to the Loan Sale Agreement shall hereafter be determined,
exercised and enforced subject in all respects to such modifications and
amendments, and deemed to be part of the terms and conditions of the Loan Sale
Agreement for any and all purposes.
Section 4. Representations and Warranties of Buyer and Seller
Each of Buyer and Seller hereby represents and warrants as to itself
that this Amendment, and any other agreements or instruments executed or to be
executed by it as contemplated hereby, have been duly authorized, executed and
delivered by such party, and each of its obligations hereunder constitutes a
legal, valid and binding obligation of such party, enforceable against such
party in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or law).
Section 5. Conditions Precedent.
This Amendment shall be effective (the "Amendment Effective Date") upon
execution by both parties and Seller's receipt of $7,555,301.98 in
immediately available funds which will be wire transferred to Seller's
account representing payment in full for the Additional
<PAGE> 3
Loans which were required to be purchased by Buyer pursuant to the
terms of the Agreement on November 10, 1999, December 10, 1999,
December 17, 1999, and January 15, 2000 and which will be required to
be purchased on February 15, 2000. On the Amendment Effective Date, the
Seller shall execute and deliver to Buyer a Receipt and Acknowledgement
of Amendment Effective Date in the form attached hereto as Exhibit A.
Buyer's obligation under the Agreement to purchase Additional Loans in
February 2000 shall be deemed by the parties to be fulfilled upon
Seller's delivery of a Receipt and Acknowledgement of Amendment
Effective Date after Buyer makes the advance payments for such
Additional Loans as is required for this Amendment to be effective
pursuant to the terms and conditions of this Section 5. Seller shall
deliver immediately thereafter accounts having a total face value of
$14,002,896.54 (representing the January purchase obligation) and the
Seller, on or before February 15, 2000, shall deliver the remaining
accounts (representing the February purchase obligation having an
approximate face value of approximately $14,000,000.00).
Section 6. Binding Effect. This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their heirs, personal
representatives, successors and assigns.
Section 7. Governing Law. This Amendment shall be construed, and the
rights and obligations of Seller and Buyer hereunder determined, in accordance
with the laws of the State of Delaware.
Section 8. Section Headings. The section headings herein are for
convenience of reference only, and shall not limit or otherwise affect the
meaning hereof.
Section 9. Counterparts. This Amendment may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, but all of which together shall constitute but one and the same
instrument.
<PAGE> 4
IN WITNESS WHEREOF, Buyer and Seller have caused this Amendment to the
Loan Sale Agreement to be duly executed by their respective officers as of the
day and year first above written.
MBNA AMERICA BANK, N.A.
By: /s/ Robert V. Ciarrocki
_____________________________
Name: Robert V. Ciarrocki
Title: SEVP
MIDLAND CREDIT MANAGEMENT, INC.
By: /s/ R. Brooks Sherman
_____________________________
Name: R. Brooks Sherman
Title: Executive Vice President
<PAGE> 5
EXHIBIT A
RECEIPT AND ACKNOWLEDGMENT
MBNA AMERICA BANK, N.A. hereby acknowledges receipt of wire transfer(s)
of federal funds in the aggregate amount of $ $7,555,301.98 from MIDLAND CREDIT
MANAGEMENT, INC. and further acknowledges that the condition precedent set forth
in Section 5 of the First Amendment to the Loan Sale Agreement (the "Amendment")
has been satisfied and that the Amendment is in full force and effect.
MBNA AMERICA BANK, N.A.
By:_____________________________
Name:
Title:
