<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
LLS CORP.
(Exact name of Registrant as specified in its charter)
---------------------
<TABLE>
<S> <C> <C>
ILLINOIS 3089 36-2741439
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
---------------------
DAVID M. SINDELAR
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
LLS CORP.
101 SOUTH HANLEY ROAD, SUITE 400
ST. LOUIS, MISSOURI 63105
(314) 727-1701
(Name, Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices and agent for
service of process)
---------------------
Copies To:
R. SCOTT COHEN, ESQ.
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201
(214) 746-7700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ______________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______________
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM OFFERING MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE PRICE PER AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED NOTE OFFERING PRICE(1) FEE(2)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
11 5/8 Senior Subordinated Notes due 2009..... $100,000,000 100% $100,000,000 $29,500.00
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated in accordance with Rule 457(f) under the Securities Act of 1933,
as amended.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
THIS PROSPECTUS, DATED SEPTEMBER 29, 1999, IS SUBJECT TO COMPLETION AND
AMENDMENT.
PROSPECTUS
OFFER TO EXCHANGE ALL OUTSTANDING
11 5/8% SENIOR SUBORDINATED NOTES DUE 2009
FOR
11 5/8% SENIOR SUBORDINATED NOTES DUE 2009
OF
LLS CORP.
- - The exchange offer will expire at 5:00 p.m., New York City time on
, 1999, unless we extend this date.
- - If you decide to participate in this exchange offer, the new notes you receive
will be the same as your outstanding notes, except that, unlike your
outstanding notes, you will be able to offer and sell the new notes freely to
any potential buyer in the United States.
- - We will not receive any proceeds from the exchange offer.
- - You will not owe additional federal income taxes if you exchange your
outstanding notes for new notes.
--------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
WE URGE YOU TO READ THE "RISK FACTORS" SECTION OF THIS PROSPECTUS BEGINNING ON
PAGE 9, WHICH DESCRIBES INFORMATION YOU SHOULD CONSIDER BEFORE PARTICIPATING
IN THE EXCHANGE OFFER.
--------------------------------
THE DATE OF THIS PROSPECTUS IS , 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 3
PROSPECTUS SUMMARY
This brief summary highlights selected information from the prospectus. It
does not contain all of the information that is important to you. We urge you to
carefully read and review the entire prospectus and the other documents to which
it refers to fully understand the terms of the notes. In this prospectus, unless
otherwise noted, the words "we," "our," "ours," "us" and "the Company" refer to
LLS Corp. and all of its subsidiaries.
THE COMPANY
We are a leading, fully-integrated custom designer, manufacturer and
marketer of precision injection molded plastic components, closures and
dispensing systems used in (1) medical devices and pharmaceutical products, (2)
consumer products and (3) food and beverage products.
Our principal executive offices are located at 101 South Hanley Road, Suite
400, St. Louis, Missouri 63105, and our telephone number is (314)727-1701.
THE TRANSACTIONS
On July 30, 1999, Hicks, Muse, Tate & Furst, Incorporated, a Dallas-based
private investment firm, and Mills & Partners, Inc., a St. Louis-based
investment and management services firm, together with our pre-Transaction
shareholders, completed the following transactions (collectively, the
"Transactions"), which resulted in the recapitalization of our company:
- we borrowed an aggregate of $150 million under our new $200 million
senior credit facility;
- we sold $100 million of senior subordinated notes due 2009, the same
notes we are now offering to exchange;
- Hicks Muse and its affiliates, including Mills & Partners, paid
approximately $78.1 million for 78 million shares of our series A
convertible preferred stock and approximately 13.3 million shares of our
class A common stock, which together represents 68.5% of our outstanding
capital stock; and
- our pre-Transaction shareholders retained 42 million shares of our common
stock, which represents 31.5% of our outstanding capital stock.
We used the proceeds from our senior credit facility, the notes offering and
equity investment by Hicks Muse and Mills & Partners to purchase shares of our
common stock from our pre-Transaction shareholders, repay indebtedness
outstanding at the time of the Transactions and pay related fees and expenses of
the Transactions.
1
<PAGE> 4
THE EXCHANGE OFFER
SECURITIES TO BE
EXCHANGED................ On July 30, 1999, we issued $100.0 million
aggregate principal amount of outstanding 11 5/8%
Senior Subordinated Notes due 2009, referred to
herein as old notes, to the initial purchaser,
referred to herein as the original offering, in a
transaction exempt from the registration
requirements of the Securities Act of 1933. The
terms of the registered 11 5/8% Senior Subordinated
Notes due 2009 offered hereby, referred to herein
as new notes, and the terms of the old notes are
substantially identical in all material respects,
except that the new notes will be freely
transferable by you except as otherwise provided
herein. The old notes and new notes are sometimes
collectively referred to as the "notes." See the
section entitled "Description of the New Notes" for
a description of the terms of the notes.
THE EXCHANGE OFFER......... $1,000 principal amount of new notes in exchange
for each $1,000 principal amount of old notes. As
of the date of this prospectus, old notes
representing $100.0 million aggregate principal
amount are outstanding.
Based on interpretations by the staff of the
Securities and Exchange Commission, as set forth in
no-action letters issued to third parties unrelated
to us, we believe that the new notes issued in
connection with the exchange offer in exchange for
old notes may be offered for resale, resold or
otherwise transferred by you, without compliance
with the registration and prospectus delivery
requirements of the Securities Act, provided that
your new notes are acquired in the ordinary course
of your business and you have no arrangement with
any person to engage in a distribution of new
notes. The foregoing does not apply to you if you
are (1) an "affiliate" of ours within the meaning
of Rule 405 under the Securities Act, or (2) a
broker-dealer who purchased old notes directly from
us to resell under Rule 144A or any other available
exemption under the Securities Act.
However, the SEC has not considered this exchange
offer in the context of a no-action letter and we
cannot be sure that the staff of the SEC would make
a similar determination with respect to this
exchange offer as in other circumstances.
Furthermore, you must, unless you are a
broker-dealer, acknowledge that you are not engaged
in, and do not intend to engage in, a distribution
of your new notes and have no arrangement or
understanding to participate in a distribution of
new notes. If you are a broker-dealer that receives
new notes for your own account pursuant to the
exchange offer you must acknowledge that you will
comply with the prospectus delivery requirements of
the Securities Act in connection with any resale of
your new notes. If you are a broker-dealer who
acquired old notes directly from us and not as a
result of market-making activities or other trading
activities, you may not rely on the staff's
interpretations discussed above or participate in
the exchange offer and must comply with the
prospectus delivery requirements of the Securities
Act in order to resell the new notes.
REGISTRATION RIGHTS
AGREEMENT................ We sold the old notes on July 30, 1999, in a
private placement in reliance on Section 4(2) of
the Securities Act. The old notes were
2
<PAGE> 5
immediately resold by the initial purchaser in
reliance on Rule 144A under the Securities Act. In
connection with the sale, we entered into a
registration rights agreement with the initial
purchaser requiring us to make the exchange offer.
The registration rights agreement further provides
that we must use our best efforts to:
- cause the registration statement with respect to
the exchange offer to be declared effective on or
before December 27, 1999; and
- consummate the exchange offer on or before
February 14, 2000.
See the section entitled "The Exchange
Offer -- Purpose and Effect."
EXPIRATION DATE............ The exchange offer will expire at 5:00 p.m., New
York City time, , 1999 or such later date
and time to which it is extended.
WITHDRAWAL................. You may withdraw your old notes tendered in
connection with the exchange offer at any time
prior to 5:00 p.m., New York City time, on ,
1999, or any later date and time to which we extend
the offer. If we do not accept your old notes
tendered for exchange for any reason, your old
notes will be returned to you without expense as
soon as possible after the expiration or
termination of the exchange offer.
INTEREST ON THE NEW NOTES
AND THE OLD NOTES........ Interest on your new notes will accrue from the
original issue date of your old notes or from the
date of the last periodic payment of interest on
your old notes, whichever date is later. No
additional interest will be paid on your old notes
tendered and accepted for exchange.
CONDITIONS TO THE EXCHANGE
OFFER.................... The exchange offer is subject to customary
conditions, some of which may be waived by us. See
the section entitled "The Exchange Offer -- Certain
Conditions to Exchange Offer."
PROCEDURES FOR TENDERING
OLD NOTES................ If you want to accept the exchange offer you must
complete, sign and date the letter of transmittal,
or a copy thereof, in accordance with the
instructions contained in this prospectus and the
letter of transmittal, and mail or otherwise
deliver the letter of transmittal, or the copy,
together with your old notes and any other required
documentation, to the exchange agent at the address
set forth in this prospectus. If you hold your old
notes through the Depository Trust Company and want
to accept the exchange offer, you must do so under
the DTC's Automated Tender Offer Program, by which
you will agree to be bound by the letter of
transmittal. By executing or agreeing to be bound
by the letter of transmittal, you will represent to
us that, among other things:
- your new notes acquired in connection with the
exchange offer are being obtained in the ordinary
course of your business, whether or not you are
the registered holder of the old notes;
- you are not engaging in and do not intend to
engage in a distribution of your new notes;
- you do not have an arrangement or understanding
with any person to participate in the
distribution of your new notes; and
- you are not our "affiliate," as defined under
Rule 405 under the Securities Act.
3
<PAGE> 6
Under the registration rights agreement, if:
- prior to the consummation of the exchange offer,
we, or the holders of a majority of the aggregate
principal amount of the notes, determine that the
new notes would not be freely tradable without
restriction under the Securities Act and the
Exchange Act and without material restrictions
under applicable blue sky or state securities
laws;
- applicable interpretations of the SEC would not
permit the consummation of the exchange offer;
- the exchange offer is not consummated within 180
days of the original offering for any reason; or
- in the case of a holder not permitted to
participate in the exchange offer or any holder
participating in the exchange offer that receives
new notes that may not be sold without
restriction under state and federal securities
laws, the holder notifies us within 120 days of
consummation of the exchange offer,
we will be required to file a "shelf" registration
statement for a continuous offering under Rule 415
of the Securities Act in respect of the old notes.
We will accept for exchange any and all of your old
notes which you properly tender, and do not
withdraw, in the exchange offer prior to 5:00 p.m.,
New York City time, on , 1999. The new
notes issued in connection with the exchange offer
will be delivered promptly to you following the
expiration date. See the section entitled "The
Exchange Offer -- Terms of the Exchange Offer."
EXCHANGE AGENT............. The Bank of New York is serving as exchange agent
in connection with the exchange offer.
MATERIAL FEDERAL INCOME TAX
CONSIDERATIONS........... The exchange of your old notes for new notes in
connection with the exchange offer should not
constitute a sale or an exchange for federal income
tax purposes. See the section entitled "United
States Federal Income Tax Considerations."
EFFECT OF NOT TENDERING.... If you fail to tender your old notes or if you
tender your old notes and we do not accept them,
your old notes will, following completion of the
exchange offer, continue to be subject to the
existing transfer restrictions. Under these
circumstances, we will have no further obligation
to provide for the registration of your old notes
under the Securities Act.
4
<PAGE> 7
THE NEW NOTES
The summary below describes the principal terms of the new notes. Some of
the terms and conditions described below are subject to important limitations
and exceptions. The section entitled "Description of the New Notes" of this
prospectus beginning on page 48 contains a more detailed description of the
terms and conditions of the new notes.
Issuer..................... LLS Corp., an Illinois corporation.
Securities Offered......... $100.0 million principal amount of 11 5/8% Senior
Subordinated Notes due 2009.
Maturity Date.............. August 1, 2009.
Interest Rate.............. We will pay interest at an annual rate equal to
11 5/8%.
Interest Payment Dates..... We will make interest payments twice a year,
beginning on February 1, 2000.
Ranking.................... The notes will be unsecured and will be
subordinated in right of payment to all of our
existing and future senior debt. The notes will
rank equal in right of payment with any of our
future senior subordinated debt and will rank
senior to all of our subordinated debt. As of June
30, 1999, after giving pro forma effect to the
consummation of the Transactions, the aggregate
principal amount of our outstanding senior debt
would have been approximately $150.0 million, and
we would have had no senior subordinated debt
outstanding, other than the notes.
Optional Redemption........ After August 1, 2004, we may, at our option, redeem
all or some of the notes at the following premiums,
plus interest:
<TABLE>
<CAPTION>
FOR THE PERIOD BELOW PERCENTAGE
-------------------- ----------
<S> <C>
On or after August 1, 2004........................ 105.813%
On or after August 1, 2005........................ 103.875%
On or after August 1, 2006........................ 101.938%
August 1, 2007 and thereafter..................... 100.000%
</TABLE>
Prior to August 1, 2002, we may, at our option,
redeem up to $35.0 million of the principal amount
of the notes with the net proceeds of particular
public equity offerings at 111.625% of the face
amount, plus interest.
Change of Control Offer.... If we experience a change of control prior to
August 1, 2004, we may, at our option, redeem all
of the notes at 100% of their face amount, plus
interest and a premium. If we elect not to redeem
the notes, or if the change of control occurs after
August 1, 2004, we must give you, as holders of the
notes, the opportunity to sell us your notes at
101% of their face amount, plus interest.
Asset Sale Proceeds........ If we do not reinvest cash proceeds from the sale
of assets in our business, we may have to use such
proceeds to offer to buy back some of the notes at
their face amount, plus interest.
Certain Indenture
Provisions................. The indenture governing the notes limits our
ability and the ability of our restricted
subsidiaries to, among other things:
- incur additional indebtedness;
- pay dividends on, redeem or repurchase our
capital stock;
5
<PAGE> 8
- issue or sell capital stock of our restricted
subsidiaries;
- make particular types of investments;
- engage in transactions with our affiliates;
- sell assets; and
- consolidate, merge or transfer all or
substantially all of our assets and the assets of
our subsidiaries.
These covenants are subject to a number of
important exceptions.
Use of Proceeds............ We will not receive any cash proceeds from the
issuance of the new notes in connection with the
exchange offer.
For more complete information about the notes, see the section entitled the
"Description of the New Notes" of this prospectus.
RISK FACTORS
Before exchanging your old notes for new notes, you should consider
carefully the information included in the section entitled "Risk Factors," as
well as all other information set forth in this prospectus.
6
<PAGE> 9
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following table presents summary historical combined financial data of
Courtesy Corporation and its affiliates for the periods indicated. The
historical combined financial data for the fiscal years ended September 30,
1996, 1997 and 1998 have been derived from, and should be read in conjunction
with, the audited combined financial statements of Courtesy Corporation and its
affiliates, that are included elsewhere in this prospectus. The historical
combined financial data for the nine months ended June 30, 1998 and 1999 have
been derived from, and should be read in conjunction with, the unaudited
combined financial statements of Courtesy Corporation and its affiliates and
include, in the opinion of management, all adjustments necessary to present
fairly the data for such periods. The unaudited pro forma combined financial
data of Courtesy Corporation and its affiliates for the fiscal year ended
September 30, 1998 and the nine months ended June 30, 1999 shown below gives
effect to the Transactions as if they had occurred on October 1, 1997. The
unaudited pro forma balance sheet data at June 30, 1999 gives effect to the
Transactions as if they had occurred on that date.
Neither the summary historical combined financial data nor the unaudited
pro forma combined financial data are necessarily indicative of either the
future results of operations or the results of operations that would have
occurred if the Transactions had been consummated on the indicated dates. The
following information should be read in conjunction with the audited and
unaudited financial statements of Courtesy Corporation and its affiliates and
the notes thereto, "Unaudited Pro Forma Combined Financial Data" and the notes
thereto, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," all included elsewhere herein.
<TABLE>
<CAPTION>
PRO FORMA
---------------------------
NINE MONTHS ENDED FISCAL YEAR NINE MONTHS
FISCAL YEARS ENDED SEPTEMBER 30, JUNE 30, ENDED ENDED
--------------------------------- ------------------- SEPTEMBER 30 JUNE 30
1996 1997 1998 1998 1999 1998 1999
--------- --------- --------- -------- -------- ------------- -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................ $101,366 $129,485 $172,608 $116,408 $125,634 $172,608 $125,634
Cost of sales........................ 67,248 88,153 120,986 81,665 88,483 120,986 88,483
-------- -------- -------- -------- -------- -------- --------
Gross profit......................... 34,118 41,332 51,622 34,743 37,151 51,622 37,151
Operating expenses................... 9,507 11,974 15,064 11,760 13,084 13,484 13,084
-------- -------- -------- -------- -------- -------- --------
Income from operations............... 24,611 29,358 36,558 22,983 24,067 38,138 24,067
Interest expense, net................ 1,389 1,535 1,315 832 1,814 24,325 17,569
Amortization of deferred financing
fees............................... -- -- -- -- -- 2,569 1,927
-------- -------- -------- -------- -------- -------- --------
Income before income taxes........... 23,222 27,823 35,243 22,151 22,253 11,244 4,571
Income tax provision................. 84 277 188 135 180 4,497 1,829
-------- -------- -------- -------- -------- -------- --------
Net income before minority
interest........................... 23,138 27,546 35,055 22,016 22,073 6,747 2,742
Minority interest.................... 718 1,060 1,225 947 171 1,225 171
-------- -------- -------- -------- -------- -------- --------
Net income........................... $ 22,420 $ 26,486 $ 33,830 $ 21,069 $ 21,902 $ 5,522 $ 2,571
======== ======== ======== ======== ======== ======== ========
OTHER FINANCIAL DATA:
Depreciation and amortization(1)..... $ 5,795 $ 8,224 $ 9,896 $ 6,645 $ 9,353 $ 9,896 $ 9,353
EBITDA(2)............................ 30,406 37,582 46,454 29,628 33,420 48,034 33,420
Adjusted EBITDA(3)................... 31,023 39,038 49,977 31,431 34,429 49,977 34,429
Capital expenditures................. 21,107 13,937 31,330 13,912 15,199 31,330 15,199
Total assets......................... 87,866 105,343 129,826 125,202 149,222
Long-term obligations (including
current portion)................... 20,452 19,188 29,925 29,647 47,858
Ratio of earnings to fixed
charges(4)......................... 14.0x 14.5x 19.1x 17.8x 10.3x 1.4x 1.2x
</TABLE>
- ---------------
(1) Excludes amortization of deferred financing fees.
(2) Earnings before interest, taxes, depreciation, amortization and minority
interest ("EBITDA") is a key financial measure but should not be construed
as an alternative to operating income or cash flows from operating
activities, as determined in accordance with generally accepted accounting
principles. EBITDA is also one of the financial measures by which our
covenants are calculated under our debt instruments.
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<PAGE> 10
(3) Adjusted EBITDA reflects EBITDA, as defined in note (2), adjusted for the
following:
<TABLE>
<CAPTION>
PRO FORMA
NINE MONTHS ---------------------------
FISCAL YEARS ENDED ENDED FISCAL YEAR NINE MONTHS
SEPTEMBER 30, JUNE 30, ENDED ENDED
---------------------- --------------- SEPTEMBER 30 JUNE 30
1996 1997 1998 1998 1999 1998 1999
---- ------ ------ ------ ------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Compensation adjustment(a)...................... $617 $1,097 $1,580 $1,185 $ -- $ -- $ --
Preoperating costs.............................. -- 359(b) 1,943(b) 618(b) 1,009(c) 1,943(b) 1,009(c)
---- ------ ------ ------ ------ ------ ------
$617 $1,456 $3,523 $1,803 $1,009 $1,943 $1,009
==== ====== ====== ====== ====== ====== ======
</TABLE>
(a) Represents a reduction in officers' compensation under the employment
agreements entered into by particular officers in connection with the
consummation of the Transactions, as if the reductions had taken place
at the beginning of the periods presented on a summary historical basis.
The compensation adjustment for the pro forma fiscal year ended
September 30, 1998 has been reflected in the statement of operations
data -- operating expenses, presented above.
(b) Represents certain preoperating costs associated with the newly
constructed facility at 600 Buffalo Grove, Illinois. These preoperating
costs represent the costs incurred during the period prior to which the
facility began generating revenues.
(c) Represents certain preoperating costs associated with newly purchased
facilities in Anderson, South Carolina and Lake Geneva, Wisconsin. These
preoperating costs represent the costs incurred during the period prior
to which the facilities began generating revenues.
(4) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent earnings before income taxes plus fixed charges. "Fixed
charges" consist of interest on all indebtedness, amortization of deferred
financing fees and the portion, approximately 1/3, of rental expense that
management believes is representative of the interest component of rent
expense.
8
<PAGE> 11
RISK FACTORS
In addition to the other information set forth in this prospectus you
should carefully consider the following information about our business before
exchanging your old notes for new notes.
LEVERAGE -- WE HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS WHICH COULD ADVERSELY
AFFECT OUR FINANCIAL POSITION AND RESULTS OF OPERATIONS AND PREVENT US FROM
FULFILLING OUR OBLIGATIONS UNDER THE NOTES.
We have significant indebtedness and debt service obligations. As of June
30, 1999, after giving pro forma effect to the consummation of the Transactions,
we would have had outstanding long-term indebtedness of $250.0 million,
excluding unused commitments, and total shareholders' deficit of approximately
$124.2 million. See the sections entitled "Capitalization" and "Description of
Senior Credit Facility." In addition, subject to the terms of our indebtedness,
we are able to incur additional indebtedness in the future.
The degree to which we are leveraged could have important consequences to
you, including the following:
- our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other purposes may be
impaired;
- a large portion of our cash flow from operations must be dedicated to the
payment of principal and interest on our indebtedness;
- we may be more vulnerable to economic downturns, more limited in our
ability to withstand competitive pressures and have less flexibility in
responding to changing business and economic conditions; and
- fluctuations in market interest rates will affect the cost of our
borrowings to the extent not covered by interest rate hedge agreements
because interest under the senior credit facility is payable at variable
rates. See the sections entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Description of Senior Credit Facility."
ABILITY TO SERVICE DEBT -- TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL.
Our high level of indebtedness poses a substantial risk to holders of the
notes, including the risk that we might not be able to generate sufficient cash
flow to satisfy our debt obligations or to meet capital needs. A large portion
of our cash flow from operations is dedicated to the payment of principal and
interest on our indebtedness. Our ability to service our indebtedness depends on
our future performance, which will be affected by general economic conditions
and financial, business and other factors, many of which are beyond our control.
If we were otherwise unable to service our indebtedness, we might pursue one or
more alternative strategies such as:
- selling assets;
- restructuring or refinancing our indebtedness;
- seeking additional debt or equity financing; or
- reducing or delaying planned capital expenditures.
We cannot guarantee that any of these strategies could be effected on
satisfactory terms, if at all, or that restructuring or refinancing would be
permitted under the indenture governing the notes or the senior credit facility.
See the sections entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Description of Senior Credit Facility."
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<PAGE> 12
SUBORDINATION -- YOUR RIGHT TO RECEIVE PAYMENTS ON THESE NOTES IS JUNIOR TO OUR
EXISTING AND FUTURE SENIOR INDEBTEDNESS.
The notes are our general unsecured obligations and are subordinated in
right of payment to all of our existing and future senior indebtedness. Senior
indebtedness includes the indebtedness incurred under the senior credit
facility. In the event of our dissolution or liquidation, or in the case of
certain events of default with respect to the notes or our senior indebtedness,
holders of our senior indebtedness will be entitled to be paid in full before
any payment is made to you, as holders of the notes. Accordingly, there may be
insufficient assets remaining to pay you after payment of prior claims. After
giving pro forma effect to the consummation of the Transactions as if they had
occurred on June 30, 1999, we would have had approximately $150.0 million of
senior indebtedness outstanding on that date, all of which represents
indebtedness under the senior credit facility secured by substantially all of
our assets and those of our subsidiaries. In addition, there would have been
approximately $50.0 million available to be drawn by us as secured senior
indebtedness under our senior credit facility. See the section entitled
"Unaudited Pro Forma Combined Financial Data." The indenture governing the notes
will not prohibit or limit the designation of indebtedness otherwise permitted
to be incurred as senior indebtedness. See the section entitled "Description of
the New Notes -- Subordination."
RESTRICTIVE COVENANTS -- WE ARE REQUIRED TO COMPLY WITH NUMEROUS COVENANTS WHICH
RESTRICT THE MANNER IN WHICH WE CONDUCT OUR BUSINESS.
The indenture governing the notes and the senior credit facility contain
numerous restrictive covenants that limit the discretion of management with
respect to various business matters. These covenants place significant
restrictions on, among other things, our ability, and the ability of our
restricted subsidiaries, to:
- incur additional indebtedness;
- pay dividends on, redeem or repurchase our capital stock;
- issue or sell capital stock of our restricted subsidiaries;
- make particular types of investments;
- engage in transactions with our affiliates;
- sell assets; and
- consolidate, merge or transfer all or substantially all of our assets and
the assets of our subsidiaries.
The indenture and the senior credit facility also contain a number of
financial covenants that require us to meet certain financial ratios and tests.
Our failure to comply with the obligations in the indenture and the senior
credit facility could result in an event of default under the indenture or the
senior credit facility, which, if not cured or waived, could permit acceleration
of the indebtedness thereunder and acceleration of indebtedness under other
instruments that may contain cross-acceleration or cross-default provisions, any
of which could have a material adverse effect on our financial condition,
results of operations, and our ability to satisfy our obligations under the
notes. The senior credit facility restricts the prepayment, purchase,
redemption, defeasance or other payment of any of the principal of the notes so
long as any loans remain outstanding under the senior credit facility. See the
sections entitled "Description of Senior Credit Facility" and "Description of
the New Notes -- Certain Covenants."
HOLDING COMPANY STRUCTURE -- WE DEPEND ON THE BUSINESSES OF OUR SUBSIDIARIES TO
SATISFY OUR OBLIGATIONS UNDER THE NOTES.
As a result of our holding company structure, our operating cash flow and
ability to service our indebtedness, including the notes, is dependent upon the
operating cash flow of our subsidiaries and the payment of funds by our
subsidiaries in the form of loans, dividends or otherwise. As of June 30, 1999,
after giving pro forma effect to the consummation of the Transactions, our
subsidiaries would have had aggregate liabilities of $188.5 million, including
guarantees of borrowings under the senior credit facility.
10
<PAGE> 13
Our subsidiaries are separate legal entities that have no obligation to pay any
amounts due under the notes or to make any funds available for that purpose.
In addition, the notes are effectively subordinated to the obligations of
our subsidiaries, including the guarantee by our subsidiaries of our obligations
under the senior credit facility. In the event of an insolvency, liquidation or
other reorganization of any of these subsidiaries, our creditors, including you
as holders of the notes, as well as our shareholders, will have no right to
proceed against the assets of these subsidiaries or to cause the liquidation or
bankruptcy of the subsidiaries under applicable bankruptcy laws. Creditors of
these subsidiaries, including the lenders under the senior credit facility,
would be entitled to payment in full from the assets of these subsidiaries
before we, as a shareholder, would be entitled to receive any distribution from
these subsidiaries. Except to the extent that we may be a creditor with
recognized claims against the subsidiaries, claims of creditors of the
subsidiaries will have priority with respect to the assets and earnings of the
subsidiaries over the claims of our creditors, including your claims under the
notes.
SIGNIFICANT CUSTOMERS -- THE LOSS OF ONE OR MORE OF OUR SIGNIFICANT CUSTOMERS
COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS.
Two of our customers represented approximately 38% of net sales in fiscal
year 1997 and 40% of net sales in fiscal year 1998. Our sales to certain of
these and other customers consist of only one or two products. The loss of any
of our significant customers or one of their products could have a material
adverse impact on our financial condition, results of operations and our ability
to satisfy our obligations under the notes. In addition, we generally do not
have long-term contracts with our customers. Accordingly, a customer could
transfer, reduce the volume of, or cancel a purchase order at any time, which
could adversely impact our business.
CONTROLLING SHAREHOLDERS -- HICKS MUSE IS OUR LARGEST SHAREHOLDER AND EXERCISES
CONTROL OVER US.
Hicks Muse and its affiliates own 68.5% of our outstanding capital stock.
As a result, Hicks Muse and its affiliates are, subject to the terms of the
Shareholders Agreement (as defined) entered into by and among each of our
shareholders, able to elect a majority of the members of the Board of Directors
and thereby control our management and policies. See the section entitled
"Certain Relationships and Related Transactions -- The Shareholders Agreement."
In addition, as owners of more than a majority of our outstanding capital stock,
Hicks Muse and its affiliates are able to approve any action requiring the
approval of our shareholders, including the adoption of amendments to our
Articles of Incorporation and the approval of mergers or sales of all or
substantially all of our assets.
RAW MATERIALS -- FLUCTUATIONS IN THE PRICE AND AVAILABILITY OF RESIN COULD
ADVERSELY AFFECT US.
Our results of operations may be adversely affected by the pricing and
availability of the raw materials we use in the manufacture of our products.
Sudden increases in demand or decreases in supply can greatly increase the cost
of raw materials. Plastic resin, particularly polyethylene and polypropylene, is
our principal raw material. Approximately 67% of the cost of all raw materials
procured by us in 1998 was attributable to purchases of plastic resin. The cost
of plastic resin fluctuates, based on supply and demand, and rose significantly
from 1994 to mid-1996. In the second half of 1996, market prices for resin
decreased as new manufacturing capacity became available and the prices have
continued to decline since that time. While we have historically been able to
pass substantially all resin price increases on to our customers on a timely
basis, resin price increases would affect our working capital needs. We cannot
guarantee that plastic resin prices will not rise significantly in the future or
that the supply will remain stable. In the event of an adverse change in the
plastic resin market, we cannot guarantee that we will be able to obtain
sufficient quantities of plastic resin for production or find alternative
sources of supply.
11
<PAGE> 14
COMPETITION -- THE COMPETITIVE NATURE OF THE PLASTIC INJECTION MOLDING INDUSTRY
MAY THREATEN OUR POSITION.
We face direct competition in each of our product lines from a number of
companies, many of which have financial and other resources that are
substantially greater than ours. As we broaden our product offerings, we expect
to meet increased competition from additional competitors with entrenched
positions in those product lines. We also face competition from bottling
companies, other food and beverage providers and medical and pharmaceutical
companies that elect to produce their own closures, dispensing systems and
devices rather than purchase them from outside sources. In addition, the
packaging industry has numerous well-capitalized competitors, and there is a
risk that these companies will expand their product offerings, either through
internal product development or acquisitions of any of our direct competitors,
to compete in the niche markets that we currently serve. These competitors, as
well as existing competitors, could introduce products or establish prices for
their products in a manner that could adversely affect our ability to compete.
Because of our product concentration, an increase in competition or any
technological innovations with respect to our specific product applications,
such as the introduction of lower-priced competitive products or products
containing technological improvement over our products, could have a material
adverse effect on our financial condition, results of operations and our ability
to satisfy our obligations under the notes.
INTELLECTUAL PROPERTY -- THE PROTECTION GIVEN TO OUR TECHNOLOGY MAY BE LIMITED.
We hold more than 40 patents covering various aspects of the design and
construction of our products. However, from time to time, litigation may be
necessary to protect our technology, to determine the validity and scope of the
proprietary rights of others or to defend claims of patent infringement. We
cannot be sure that we will be successful in protecting our proprietary
technology from third party infringement or that our products will not be found
to infringe upon the proprietary technology of others. Furthermore, patents do
not ensure that our competitors will not develop competing products in the
future. We also rely on trade secrets and know-how to maintain our competitive
position in the industry. While we enter into confidentiality agreements with
employees and consultants who have access to our proprietary information, we
cannot guarantee that these measures will prevent the unauthorized disclosure or
use of this information. The loss of our patents or the disclosure of any
material proprietary information could have a material adverse effect on our
financial condition, results of operations and our ability to satisfy our
obligations under the notes.
ENVIRONMENTAL RISKS -- WE COULD HAVE LIABILITY FOR ENVIRONMENTAL CONTAMINATION
AT OUR PROPERTIES.
Our operations are subject to various federal, state and local laws
relating to pollution or the protection of the environment. For example,
stringent environmental laws govern the handling and disposal of chemicals and
substances used in our manufacturing operation. In addition, we, as an owner and
operator of real estate, may be liable under some environmental laws for cleanup
and other costs and damages resulting from past or present spills or other
releases of hazardous or toxic substances on or from our properties. Liability
under these laws may be imposed without regard to whether we knew of, or were
responsible for, the presence of such substances on our property, and, in some
cases, may not be limited to the value of the property. The presence of
contamination, or the failure to properly clean it up, also may adversely affect
our ability to sell, lease or operate our property or to borrow using our
property as collateral. Failure to comply with applicable environmental laws or
the incurrence of clean-up or other environmental costs in the future could have
a material adverse effect on our financial condition, results of operations and
our ability to satisfy our obligations under the notes. See the section entitled
"Business -- Environmental."
12
<PAGE> 15
INTEGRATING ACQUISITIONS -- WE CANNOT BE SURE THAT WE WILL BE ABLE TO
SUCCESSFULLY INTEGRATE ANY BUSINESSES WE MAY ACQUIRE IN THE FUTURE.
In order to grow our business and enhance our competitive position, we may
acquire other businesses in the future. We cannot predict whether or when any
acquisitions will occur. Acquisitions commonly involve various risks, including:
- the difficulty of integrating the acquired business and its employees;
- the potential disruption of our business and diversion of our resources
and management's time;
- the difficulty of maintaining uniform standards, controls, procedures and
policies;
- our possible lack of experience in a particular market;
- possible strains in our relationships with employees or customers as a
result of changes in management or policies; and
- incurring more debt as a means of financing the acquisition and
increasing our payment obligations.
We cannot be sure that we will make any acquisitions or that any acquired
business will be successfully integrated into our operations or will ultimately
perform as expected. Also, the availability of additional financing cannot be
assured and, depending on the terms of the potential acquisition, may be
restricted by the terms of our senior credit facility and the indenture
governing the notes. We cannot be sure that any future acquisitions will not
have a material adverse effect on our financial condition, results of operations
and our ability to satisfy our obligations under the notes. We currently do not
have any plans regarding potential acquisitions.
CHANGE OF CONTROL -- WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO
FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE GOVERNING THE
NOTES.
Upon the occurrence of particular change of control events, we may need to
refinance large amounts of our indebtedness, including the indebtedness under
the notes and under the senior credit facility. If a change of control occurs
after August 1, 2004, we must offer to buy back the notes for a price equal to
101% of the principal amount, plus any interest which has accrued and remains
unpaid as of the date purchased. We would fund any repurchase obligation with
our available cash and cash generated from other sources such as borrowings or
sales of equity. However, we cannot guarantee that there will be sufficient
funds available for any required repurchases of the notes when a change of
control occurs. In addition, the senior credit facility will prohibit us from
repurchasing the notes after a change of control until we first repay our
indebtedness under the senior credit facility in full. If we fail to repurchase
the notes in that circumstance, we will go into default under both the indenture
governing the notes and the senior credit facility. Any future indebtedness
which we incur may also contain restrictions on repayment which will come into
effect upon a change of control. If a change of control occurs, we cannot assure
you that we will have sufficient funds to satisfy all of our debt obligations.
See the sections entitled "Description of Senior Credit Facility" and
"Description of the New Notes -- Change of Control."
FRAUDULENT CONVEYANCE -- FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC
CIRCUMSTANCES, TO VOID DEBT OBLIGATIONS AND REQUIRE NOTEHOLDERS TO RETURN
PAYMENTS RECEIVED.
Various laws enacted for the protection of creditors may apply to the
incurrence of indebtedness and other obligations in connection with the
Transactions and to the transfer of a portion of the proceeds of our
indebtedness to our shareholders. If a court were to find in a lawsuit by an
unpaid creditor or representatives of creditors that we did not receive fair
consideration or reasonably equivalent value for incurring the indebtedness or
obligations in connection with the Transactions and, at the time of incurring
the indebtedness, we:
- were insolvent;
- became insolvent by reason of the Transactions;
13
<PAGE> 16
- were engaged in a business or transaction for which our remaining assets
constituted unreasonably small capital; or
- intended to incur or believed we would incur obligations beyond our
ability to pay such obligations as they mature,
such court, subject to applicable statutes of limitations, could void our
obligations under the notes, subordinate the notes to other indebtedness, or
take other action detrimental to you, as holders of notes. Some courts have held
that an obligor's purchase of its own capital stock does not constitute
reasonably equivalent value or fair consideration for indebtedness incurred to
finance that purchase.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction which is being applied. Generally, however, a
company would be considered insolvent at a particular time if the sum of its
debts was then greater than all of its property at a fair valuation or if the
present fair saleable value of its assets was then less than the amount that
would be required to pay its probable liabilities on its existing debts as they
become absolute and matured. On the basis of our historical financial
information, our recent operating history as discussed in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other factors, we believe that, after giving effect to the
Transactions, we will not be rendered insolvent, we will have sufficient capital
for the business in which we are engaged and we will be able to pay our debts as
they mature. We cannot guarantee, however, what standard a court would apply to
evaluate the parties' intent or to determine whether we were insolvent at the
time of, or rendered insolvent upon completion of, the Transactions or that,
regardless of the standard, a court would not determine that we were insolvent
at the time of, or rendered insolvent upon completion of, the Transactions.
YEAR 2000 ISSUES -- WE COULD BE ADVERSELY AFFECTED IF YEAR 2000 PROBLEMS ARE
SIGNIFICANT.
As the end of the century nears, there is a widespread concern that many
existing information systems, primarily computer software programs, will not be
able to properly recognize or process date-sensitive information when the year
changes to 2000. If not corrected, many information systems could fail, create
erroneous results, cause unanticipated systems failures or otherwise disrupt our
operations. Our failure, or the failure of one or more of our key suppliers,
customers or distributors to address successfully year 2000 issues, could have a
material adverse effect on our financial condition, results of operations and
our ability to satisfy our obligations under the notes. See the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000."
ABSENCE OF PUBLIC MARKET -- THE NEW NOTES DO NOT HAVE AN ESTABLISHED TRADING
MARKET.
Since the original offering, there has been no public market for the notes.
We do not plan on listing the new notes on any securities exchange. The initial
purchaser has told us that it plans on making a market in the notes, but it is
not obligated to do so, and may discontinue its activities at any time.
Accordingly, we cannot determine:
- the likelihood that an active market for the notes will develop;
- the liquidity of any such market;
- your ability to sell your notes; or
- the prices that you may obtain for your notes if sold.
Future trading prices for your notes will depend upon many factors,
including, among others, our operating results, the market for similar
securities and changing interest rates.
FORWARD-LOOKING INFORMATION -- YOU SHOULD NOT PLACE UNDUE RELIANCE ON
FORWARD-LOOKING INFORMATION.
Throughout this prospectus we make "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Forward-looking statements include
14
<PAGE> 17
the words "may," "will," "estimate," "intend," "continue," "believe," "pro
forma," "expect" or "anticipate" and other similar words. The forward-looking
statements contained in this prospectus are generally located in the sections
entitled "Prospectus Summary," "Risk Factors," "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
"Business," but may be found in other locations as well. These forward-looking
statements generally relate to our plans and objectives for future operations
and are based upon management's reasonable estimates of future results or
trends. Although we believe that our plans and objectives reflected in or
suggested by such forward-looking statements are reasonable, we may not achieve
such plans or objectives. Actual results may differ from projected results due,
but not limited, to unforeseen developments, including those discussed above.
You should read this prospectus completely and with the understanding that
actual future results may be materially different from what we expect. We will
not update forward-looking statements even though our situation may change in
the future.
15
<PAGE> 18
THE TRANSACTIONS
On July 30, 1999, Hicks Muse and Mills & Partners, together with our
pre-Transaction shareholders, completed the following Transactions, which
resulted in the recapitalization of our company:
- we borrowed an aggregate of $150 million under our new $200 million
senior credit facility;
- we sold $100 million of senior subordinated notes due 2009, the same
notes we are now offering to exchange;
- Hicks Muse and its affiliates, including Mills & Partners, paid
approximately $78.1 million for 78 million shares of our series A
convertible preferred stock and approximately 13.3 million shares of our
class A common stock, which together represents 68.5% of our outstanding
capital stock; and
- our pre-Transaction shareholders retained 42 million shares of our common
stock, which represents 31.5% of our outstanding capital stock.
We used the proceeds from our senior credit facility, the notes offering and the
equity investment by Hicks Muse and Mills & Partners to purchase shares of our
common stock from our pre-Transaction shareholders, repay indebtedness and
accrued interest outstanding at the time of the Transactions and pay related
fees and expenses.
16
<PAGE> 19
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes in
exchange for old notes. In consideration for issuing the new notes as
contemplated by this prospectus, we will receive in exchange old notes in like
principal amount, which will be cancelled and as such will not result in an
increase in our indebtedness.
We used the proceeds from the original offering to partially finance the
Transactions. The following table sets forth the sources and uses of funds in
connection with the Transactions.
<TABLE>
<CAPTION>
SOURCES OF FUNDS USES OF FUNDS
---------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Senior Credit Facility............. $150,000 Transactions Consideration(2)...... $311,133
Senior Subordinated Notes due
2009............................. 100,000 Fees and Expenses.................. 17,000
Equity Investment(1)............... 78,133
-------- --------
Total Sources............ $328,133 Total Uses................ $328,133
======== ========
</TABLE>
- ---------------
(1) Reflects the acquisition by Hicks Muse and its affiliates, including Mills &
Partners, of 78 million shares of series A convertible preferred stock and
approximately 13.3 million shares of our class A common stock, but does not
include the retention of 42 million shares of common stock by our pre-
Transactions shareholders.
(2) Reflects payments to our pre-Transaction shareholders and includes the
repayment of then existing indebtedness and accrued interest of $45,496, and
the retention of $133 for operating purposes.
17
<PAGE> 20
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 1999 on an
actual and a pro forma basis after giving effect to the consummation of the
Transactions as if they had occurred on June 30, 1999. The information set forth
below should be read in conjunction with our audited combined financial
statements and unaudited pro forma combined financial data, together with the
related notes thereto, included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
----------------------
ACTUAL PRO FORMA
--------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt (including current maturities):
Existing indebtedness..................................... $ 47,858 $ --
Senior credit facility.................................... -- 150,000
Senior subordinated notes due 2009........................ -- 100,000
-------- ---------
Total long-term debt.............................. 47,858 250,000
Shareholders' equity (deficit).............................. 69,372 (124,181)(1)
-------- ---------
Total capitalization.............................. $117,230 $ 125,819
======== =========
</TABLE>
- ---------------
(1) The pro forma shareholders' deficit as of June 30, 1999 gives effect to the
consummation of the Transactions, including a $78.1 million equity
investment by Hicks Muse and its affiliates, including Mills & Partners, and
the retention of 42 million shares of our common stock by our
pre-Transactions shareholders. As a result of the pro forma adjustments,
retained earnings were reduced by $271.3 million.
18
<PAGE> 21
SELECTED FINANCIAL DATA
The historical financial data for the fiscal years ended September 30,
1996, 1997 and 1998 have been derived from, and should be read in conjunction
with, the audited combined financial statements of Courtesy Corporation and its
affiliates included elsewhere in this prospectus. The historical financial data
for the fiscal years ended September 30, 1994 and 1995 have been derived from
the audited combined financial statements of Courtesy Corporation and its
affiliates not included in this prospectus. The historical financial data for
the nine months ended June 30, 1998 and 1999 have been derived from the
unaudited combined financial statements of Courtesy Corporation and its
affiliates and include, in the opinion of management, all adjustments necessary
to present fairly the data for such periods. The results of operations for the
nine months ended June 30, 1999 are not necessarily indicative of the results
that may be expected for the full year. The following information should be read
in conjunction with the audited combined financial statements of Courtesy
Corporation and its affiliates and the notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS ENDED SEPTEMBER 30, JUNE 30,
-------------------------------------------------- -------------------
1994 1995 1996 1997 1998 1998 1999
------- ------- -------- -------- -------- -------- --------
(UNAUDITED)
STATEMENT OF OPERATIONS DATA: (IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales.......................................... $61,683 $76,379 $101,366 $129,485 $172,608 $116,408 $125,634
Cost of sales...................................... 42,028 48,936 67,248 88,153 120,986 81,665 88,483
------- ------- -------- -------- -------- -------- --------
Gross profit....................................... 19,655 27,443 34,118 41,332 51,622 34,743 37,151
Operating expenses................................. 8,746 8,626 9,507 11,974 15,064 11,760 13,084
------- ------- -------- -------- -------- -------- --------
Income from operations............................. 10,909 18,817 24,611 29,358 36,558 22,983 24,067
Interest expense, net.............................. 1,318 1,241 1,389 1,535 1,315 832 1,814
------- ------- -------- -------- -------- -------- --------
Income before income taxes......................... 9,591 17,576 23,222 27,823 35,243 22,151 22,253
Income tax provision............................... 23 151 84 277 188 135 180
------- ------- -------- -------- -------- -------- --------
Net income before minority interest................ 9,568 17,425 23,138 27,546 35,055 22,016 22,073
Minority interest.................................. 327 591 718 1,060 1,225 947 171
------- ------- -------- -------- -------- -------- --------
Net income......................................... $ 9,241 $16,834 $ 22,420 $ 26,486 $ 33,830 $ 21,069 $ 21,902
======= ======= ======== ======== ======== ======== ========
OTHER FINANCIAL DATA:
Depreciation and amortization...................... $ 3,623 $ 4,275 $ 5,795 $ 8,224 $ 9,896 $ 6,645 $ 9,353
EBITDA(1).......................................... 14,532 23,092 30,406 37,582 46,454 29,628 33,420
Adjusted EBITDA(2)................................. 16,687 23,381 31,023 39,038 49,977 31,431 34,429
Capital expenditures............................... 4,067 14,265 21,107 13,937 31,330 13,912 15,199
Total assets....................................... 45,386 61,910 87,866 105,343 129,826 125,202 149,222
Long-term obligations (including current
portion)......................................... 14,766 16,586 20,452 19,188 29,925 29,647 47,858
Ratio of earnings to fixed charges(3).............. 6.5x 11.7x 14.0x 14.5x 19.1x 17.8x 10.3x
</TABLE>
- ---------------
(1) Earnings before interest, taxes, depreciation, amortization and minority
interest ("EBITDA") is a key financial measure but should not be construed
as an alternative to operating income or cash flows from operating
activities, as determined in accordance with generally accepted accounting
principles. EBITDA is also one of the financial measures by which our
covenants are calculated under our debt instruments.
(2) Adjusted EBITDA reflects EBITDA, as defined in note (1), adjusted for the
following:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
FISCAL YEARS ENDED SEPTEMBER 30, JUNE 30,
---------------------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
------ ---- ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Compensation adjustment(a)......................... $2,155 $289 $617 $1,097 $1,580 $1,185 $ --
Preoperating costs................................. -- -- -- 359(b) 1,943(b) 618(b) 1,009(c)
------ ---- ---- ------ ------ ------ ------
$2,155 $289 $617 $1,456 $3,523 $1,803 $1,009
====== ==== ==== ====== ====== ====== ======
</TABLE>
(a) Represents a reduction in officers' compensation under the employment
agreements entered into by particular officers in connection with the
consummation of the Transactions, as if the reductions had taken place at
the beginning of the periods presented.
(b) Represents certain preoperating costs associated with the newly
constructed facility at 600 Buffalo Grove, Illinois. These preoperating
costs represent the costs incurred during the period prior to which the
facility began generating revenues.
(c) Represents certain preoperating costs associated with newly purchased
facilities in Anderson, South Carolina and Lake Geneva, Wisconsin. These
preoperating costs represent the costs incurred during the period prior to
which the facilities began generating revenues.
(3) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent earnings before income taxes plus fixed charges. "Fixed
charges" consist of interest on all indebtedness, amortization of deferred
financing fees and the portion, (approximately 1/3), of rental expense that
management believes is representative of the interest component of rent
expense.
19
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table is derived from our combined financial statements
included elsewhere in this prospectus and sets forth certain items for the
periods indicated.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SEPTEMBER 30, NINE MONTHS ENDED JUNE 30,
------------------------------------------------------ -----------------------------------
1996 1997 1998 1998 1999
---------------- ---------------- ---------------- ---------------- ----------------
(UNAUDITED)
(IN THOUSANDS EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................ $101,366 100.0% $129,485 100.0% $172,608 100.0% $116,408 100.0% $125,634 100.0%
Cost of sales............ 62,082 61.2% 81,209 62.7% 112,608 65.2% 76,161 65.4% 80,988 64.5%
Operating expenses....... 8,878 8.8% 10,694 8.3% 13,546 7.9% 10,619 9.1% 11,226 8.9%
Depreciation and
amortization(1)........ 5,795 5.7% 8,224 6.3% 9,896 5.7% 6,645 5.7% 9,353 7.4%
-------- -------- -------- -------- --------
Operating income......... 24,611 24.3% 29,358 22.7% 36,558 21.2% 22,983 19.8% 24,067 19.2%
======== ======== ======== ======== ========
EBITDA(2)................ $ 30,406 30.0% $ 37,582 29.0% $ 46,454 26.9% $ 29,628 25.5% $ 33,420 26.6%
Adjusted EBITDA(3)....... 31,023 30.6% 39,038 30.1% 49,977 29.0% 31,431 27.0% 34,429 27.4%
</TABLE>
- ---------------
(1) Depreciation and amortization has been excluded from cost of sales and
operating expenses, and reflected as a separate component of operating
income for all of the periods presented. Had depreciation and amortization
been classified as a component of cost of sales and operating expenses, the
cost of sales, and cost of sales as a percentage of net sales, would be
$67,248, or 66.3%, $88,153, or 68.1%, $120,986, or 70.1%, $81,665, or 70.2%
and $88,483, or 70.4%, for the fiscal years ended September 30, 1996, 1997
and 1998 and for the nine months ended June 30, 1998 and 1999, respectively,
with no effect on the operating income presented.
(2) Earnings before interest, taxes, depreciation, amortization and minority
interest ("EBITDA") is a key financial measure but should not be construed
as an alternative to operating income or cash flows from operating
activities, as determined in accordance with generally accepted accounting
principles. EBITDA is also one of the financial measures by which our
covenants are calculated under our debt instruments.
(3) Adjusted EBITDA reflects EBITDA, as defined in note (2), adjusted for the
following:
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEARS ENDED ENDED
SEPTEMBER 30, JUNE 30,
------------------------ -----------------
1996 1997 1998 1998 1999
---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Compensation adjustment(a)............................... $617 $1,097 $1,580 $1,185 $ --
Preoperating costs....................................... -- 359(b) 1,943(b) 618(b) 1,009(c)
---- ------ ------ ------ ------
$617 $1,456 $3,523 $1,803 $1,009
==== ====== ====== ====== ======
</TABLE>
- ---------------
(a) Represents a reduction in officers' compensation under the employment
agreements entered into by particular officers in connection with the
consummation of the Transactions, as if the reductions had taken place at
the beginning of the periods presented.
(b) Represents certain preoperating costs associated with the newly
constructed facility at 600 Buffalo Grove, Illinois. These preoperating
costs represent the costs incurred during the period prior to which the
facility began generating revenues.
(c) Represents certain preoperating costs associated with newly purchased
facilities in Anderson, South Carolina and Lake Geneva, Wisconsin. These
preoperating costs represent the costs incurred during the period prior to
which the facilities began generating revenues.
Nine Months Ended June 30, 1999 Compared to Nine Months Ended June 30, 1998
Net sales -- Net sales of $125.6 million for the nine months ended June 30,
1999 reflected an increase of $9.2 million, or 7.9%, compared to sales for the
nine months ended June 30, 1998. This overall increase was primarily due to
growth in new customer accounts and the introduction and sale of new products.
Cost of sales -- Cost of sales increased $4.8 million, or 6.3%, to $81.0
million for the nine months ended June 30, 1999 compared to the cost of sales
for the comparable period in 1998. This increase was primarily due to higher
sales levels achieved during the period. Cost of sales expressed as a percentage
of net sales decreased to 64.5% for the nine months ended June 30, 1999 from
65.4% for the comparable period in 1998. This decrease reflected improvements in
manufacturing efficiencies offset by higher labor and facility costs incurred
during the first nine months of 1999. The higher labor and facility costs in
1999
20
<PAGE> 23
represented the setup and startup of new manufacturing facilities in Anderson,
South Carolina and Lake Geneva, Wisconsin.
Operating expenses -- Operating expenses increased $0.6 million, or 5.7%,
to $11.2 million for the nine months ended June 30, 1999 compared to operating
expenses for the comparable period of 1998. This increase was primarily
attributable to higher variable costs which resulted from increases in sales and
additional fixed costs resulting from the addition of two manufacturing
facilities. Operating expenses expressed as a percentage of net sales decreased
to 8.9% from 9.1% for the comparable periods.
Depreciation and amortization -- Depreciation and amortization increased
$2.7 million to $9.4 million for the nine months ended June 30, 1999. This
primarily reflects net increases in depreciable assets resulting from new
equipment purchases and the addition of two manufacturing facilities.
Fiscal Year Ended September 30, 1998 Compared to Fiscal Year Ended September
30, 1997
Net sales -- Net sales of $172.6 million in 1998 reflected an increase of
$43.1 million, or 33.3%, compared to net sales in 1997. This increase was
primarily due to sales growth to existing customers and, to a lesser extent,
sales to new customers. Growth in existing accounts represented increasing
demand for existing products as well as the introduction and sale of new
products.
Cost of sales -- Cost of sales increased $31.4 million, or 38.7%, to $112.6
million in 1998. This increase was primarily due to higher sales levels achieved
during the year. Cost of sales expressed as a percentage of net sales increased
to 65.2% in 1998 from 62.7% in 1997. Contributing to this increase was higher
labor and facility costs incurred in 1998 that represented the setup and startup
of a new manufacturing facility in Buffalo Grove, Illinois. The majority of
these costs were incurred during the second half of the year. It is expected
that the addition of this manufacturing facility will lead to an increase in our
manufacturing capacity. In addition, the increase in cost of sales as a
percentage of net sales reflected a shift in product mix during 1998 to products
that have a lower average gross margin than our overall average gross margin in
1997.
Operating expenses -- Operating expenses increased $2.9 million, or 26.7%,
to $13.5 million in 1998. This increase was primarily attributable to higher
variable costs which resulted from increases in sales and the addition of a new
manufacturing facility. Operating expenses expressed as a percentage of net
sales decreased to 7.9% in 1998 from 8.3% in 1997.
Depreciation and amortization -- Depreciation and amortization increased
$1.7 million to $9.9 million in 1998. This reflects net increases in depreciable
assets resulting from new equipment purchases and the addition of a new
manufacturing facility.
Fiscal Year Ended September 30, 1997 Compared to Fiscal Year Ended September
30, 1996
Net sales -- Net sales of $129.5 million in 1997 reflected an increase of
$28.1 million, or 27.7%, compared to net sales in 1996. This increase was
primarily due to sales growth to existing customers and, to a lesser extent,
sales to new customers. Growth in existing accounts represented increasing
demand for existing products as well as the introduction and sale of new
products.
Cost of sales -- Cost of sales increased $19.1 million, or 30.8%, to $81.2
million in 1997. This increase was primarily due to higher sales levels achieved
during the year. Cost of sales expressed as a percentage of net sales increased
to 62.7% in 1997 from 61.2% in 1996. This increase was primarily attributable to
a shift in product mix during 1997 to products that have a lower average gross
margin than our average gross margin in 1996.
Operating expenses -- Operating expenses increased $1.8 million, or 20.5%,
to $10.7 million in 1997. This increase was primarily attributable to higher
variable costs which resulted from increases in sales. Operating expenses
expressed as a percentage of net sales decreased to 8.3% in 1997 from 8.8% in
1996.
Depreciation and amortization -- Depreciation and amortization increased
$2.4 million to $8.2 million in 1997. This primarily reflects net increases in
depreciable assets resulting from new equipment purchases.
21
<PAGE> 24
SEASONALITY
Historically, a slightly higher portion of our sales and net income has
been realized during the third and fourth fiscal quarters. In addition to our
peak season fluctuations, quarterly results of operations may fluctuate
depending on the timing and amount of sales from the introduction of new
products.
LIQUIDITY AND CAPITAL RESOURCES
We have satisfied our historical requirements for capital through cash flow
from operations. For the two fiscal years ended 1997 and 1998, and the nine
months ended June 30, 1999, our capital expenditures were $13.9 million, $31.3
million and $15.2 million, respectively, and our net cash provided by operating
activities was $29.7 million, $37.2 million and $30.6 million, respectively. We
estimate that our 1999 capital expenditures will be approximately $17.0 million,
principally for the expansion of our manufacturing capacity. We expect that $5.0
million of these capital expenditures will be maintenance capital expenditures.
Payments on the notes and the senior credit facility represent significant
cash requirements for us. The notes require semi-annual interest payments
beginning in February 2000 and will mature in 2009. Borrowings under the senior
credit facility require quarterly interest payments beginning in September,
1999. In addition, the senior credit facility provides $55.0 million of
revolving loans available to us. The terms of the notes and the senior credit
facility include significant operating and financial restrictions, particularly
limits on our ability to incur indebtedness, create liens, sell assets, engage
in mergers or consolidations, make investments and pay dividends. The tranche A
loan under the senior credit facility amortizes quarterly over six years as
follows:
- $3.0 million in year two;
- $12.0 million in year three;
- $15.0 million in year four;
- $17.0 million in year five; and
- $18.0 million in year six.
The tranche B loan under the senior credit facility amortizes quarterly
over seven years as follows:
- $0.2 million in year two;
- $0.8 million in each of years three through six; and
- $76.6 million in year seven.
The revolving loans terminate, and all outstanding amounts thereunder
mature, on June 30, 2005. See the sections entitled "Description of Senior
Credit Facility," "Description of the New Notes" and "Unaudited Pro Forma
Combined Financial Data."
We believe that the net cash provided by operating and financing activities
will be sufficient to fund our future cash requirements, which consist primarily
of repayment of indebtedness, working capital requirements and capital
expenditures. Our future operating performance and ability to service or
refinance our current indebtedness is subject to future economic conditions and
financial, business and other factors, many of which are beyond our control. See
the section entitled "Risk Factors -- Leverage."
YEAR 2000
We use software and related technologies throughout our business that could
be adversely impacted by the year 2000 issue. The year 2000 issue, which is
common to most businesses, concerns the inability of information systems,
primarily computer software programs, to properly recognize or process
date-sensitive information when the year changes to 2000. We have conducted a
comprehensive review of our computer systems to identify the systems that could
be affected by the year 2000 issue and have developed an
22
<PAGE> 25
implementation plan. Our review and plan includes assessing both business
applications and manufacturing applications. Our business applications include
all purchased software systems and all hardware required for information
processing, financial reporting systems, customer billing systems, customer
service systems and telecommunication transmission and reception systems.
Manufacturing systems include all purchased software systems and all hardware
required to support certain machinery and equipment that is integral to our
operations. We have received year 2000 compliance certificates from the vendors
providing our software programs. Based on our review of our systems and
consultation with our software vendors, we believe that our software will
function properly beyond 1999. However, we cannot guarantee that our systems
will be year 2000 compliant.
The total cost associated with the hardware and software modifications
required by the year 2000 issue has not been and is not expected to be material
to our financial position.
In addition, the inability of third parties with whom we transact business
to adequately address their year 2000 issues is outside of our control.
Nevertheless, we are surveying our critical third party suppliers and service
providers to assess their year 2000 compliance and we will continue to monitor
their progress. However, we cannot guarantee that the third parties with whom we
transact business will be year 2000 compliant. Our failure or the failure of
third parties to adequately address the year 2000 issue could have a material
adverse effect on our business, financial condition and results of operations
and our ability to satisfy our obligations under the notes.
MARKET RISK
In the ordinary course of business we are exposed to market risks. Our main
exposure relates to changes in interest rates on outstanding debt. Our senior
credit facility allows us to enter into interest rate swap agreements to limit
our exposure on a portion of our long-term debt. We do not expect to hold or
issue financial instruments for trading purposes.
INTEREST RATE AND DEBT SENSITIVITY ANALYSIS
For our fixed-rate debt, interest rate changes affect the fair market value
but do not impact our earnings or cash flows. However, for the variable-rate
debt included in our senior credit facility, interest rate changes generally do
not affect the fair market value but do impact future earnings and cash flows,
assuming other factors are constant. A hypothetical 10% change in our weighted
average borrowing rate would cause a change in earnings of approximately $1.2
million.
23
<PAGE> 26
BUSINESS
GENERAL
We are a leading, fully-integrated custom designer, manufacturer and
marketer of precision injection molded plastic components, closures and
dispensing systems used in (1) medical devices and pharmaceutical products, (2)
consumer products and (3) food and beverage products.
PRODUCTS AND SERVICES
Our offering of products and services includes the following:
Mold Design and Development. We design and manufacture custom-made molds
for our customers and for our own proprietary use. The molds we develop for our
customers are used in all of the markets we serve, and the molds we develop for
our own proprietary use are used primarily to produce plastic closures for
applications in bottled water, food products and personal care products. The
typical product cycle of a custom-made mold includes product concept
development, design and precision mold tool construction. This product cycle
typically takes 12 to 26 weeks for completion; however, in some instances it may
take up to five years.
Injection Molded Products. We manufacture precision injection molded
plastic components, closures and dispensing systems used in all of the markets
we serve. Our injection molded components are used in a variety of medical
devices which include insulin pens, inhalers, diagnostic test kits and vials.
Our closure and dispensing systems are used to cap or dispense products which
include (1) pull/push closures used to cap plastic bottles, (2) hinged and twist
top closures for food products and (3) tilt top closures for food and personal
care products.
Value-Added Assembly Services. Our assembly activities consist of
continuous motion, multi-component, pick-and-place assembly of plastic
components. We work closely with our customers, to develop equipment, process
controls and assembly techniques to facilitate the delivery of high quality,
fully assembled products. We are able to provide our value-added assembly in a
"clean room" environment, a necessity for the medical and pharmaceutical
industries.
Supplier-Managed Inventory Programs. As an additional value-added service,
we offer supplier-managed inventory programs to some of our largest customers.
In such programs, we manufacture and ship consignment inventory on an as-needed
basis to customer-owned warehouses. Participating customers manage their
inventory positions through the use of electronic data interface systems shared
with us.
RAW MATERIALS AND PRODUCTION
The principal raw materials for our plastic products are polypropylene and
polyethylene resins, which account for approximately 67% of the cost of all raw
materials purchased for our products. We purchased approximately 46.0 million
and 69.0 million pounds of plastic resins during fiscal 1997 and fiscal 1998,
respectively, and 57.0 million pounds during the nine months ended June 30,
1999. We believe that due to our volume purchases we are able to negotiate
attractive pricing with resin suppliers. We have not experienced any significant
difficulties over the past ten years in obtaining sufficient quantities of
resins, although prices for resins can fluctuate over relatively short periods
of time. Historically, we have been able to pass substantially all resin price
increases on to our customers on a timely basis.
In order to produce our products, the resin, which is delivered as small
pebble-size pellets to large storage silos, is conveyed through a pipeline
system to an injection molding machine, where it is melted into a thick liquid
state. Coloring agents are added as appropriate and the mixture is injected at
high pressure into a specially designed, multi-cavity mold. The principal
equipment in our plants includes injection molding machines (we operate
approximately 180 molding machines ranging in size from 55 to 715 tons clamping
pressure), finishing lines, high speed, multi-component, pick and place assembly
machines, and automated systems for handling and processing raw materials and
finished goods.
24
<PAGE> 27
We design and manufacture substantially all of our own molds. We believe
our mold expertise has led to reduced costs due to shorter molding cycle times
and enhanced reliability and longevity of our tooling.
PROPERTIES
We own or lease six modern production facilities, which operate five to
seven days a week, 24 hours a day, and one warehouse facility. The production
facilities are highly efficient due to automation and frequently scheduled
maintenance in the plants. We believe that these facilities are well-maintained
and in good operating condition and anticipate that the facilities themselves
will be sufficient to meet our needs for the next several years. We cannot
guarantee, however, that unanticipated developments will not occur that would
require us to add production facilities sooner than expected. The following
table indicates the locations, functions, square footage and nature of ownership
of our facilities:
<TABLE>
<CAPTION>
APPROXIMATE
FACILITY SQUARE FOOTAGE OWNED/LEASED PRINCIPAL USE
-------- -------------- ------------ -------------
<S> <C> <C> <C>
800 Corporate Grove Dr. 265,000 Land & building owned Headquarters and manufacturing
Buffalo Grove, Illinois(1)
700 Corporate Grove Dr. 342,000 Land & building owned Headquarters and manufacturing
Buffalo Grove, Illinois(1)
600 Deerfield Parkway 311,000 Land leased/building Manufacturing
Buffalo Grove, Illinois owned
1019-1021 Noel Avenue 66,000 Leased Manufacturing
Wheeling, Illinois(1)
200 Masters Boulevard 169,000 Land & building Manufacturing
Anderson, South Carolina leased
2491 Vista Drive 11,000 Owned Manufacturing
Lake Geneva, Wisconsin
913 Commerce 98,000 Leased Warehouse
Buffalo Grove, Illinois
</TABLE>
- ---------------
(1) Each of these facilities is certified under ISO 9002, an internationally
recognized manufacturers' quality standard. We expect to have our new
facilities in Buffalo Grove, Illinois and Anderson, South Carolina certified
by the end of 1999.
SALES, MARKETING AND CUSTOMER SERVICE
We market our products primarily through our internal sales department. We
also utilize independent sales representatives to market our products. Calls on
customers by these salespersons and representatives, along with participation at
trade shows, are the primary means of customer contact. A number of our
customers are large corporate clients with numerous production facilities, many
of which may make their own separate purchase decisions. Our two largest
customers each accounted for more than 10% of our sales during such period. Many
of our customers have been doing business with us for more than ten years.
Attention to customer service is a critical component of our marketing
effort. Our customers operate high-speed, high-volume production lines.
Customers rely on our ability to provide reliable, on-time delivery of our
products and to maintain the uniform quality of those products.
INTERNATIONAL SALES
Although our sales are primarily domestic, we expect significant growth in
international sales, particularly in the market for water bottle closures. The
U.S. bottled water industry, in general, uses more sophisticated packaging
materials and processes than bottled water companies use in the rest of the
world. We believe that bottled water companies and other non-carbonated beverage
companies in Europe, the Far
25
<PAGE> 28
East, Latin America and elsewhere are beginning to adopt more advanced packaging
materials and techniques, and that, as they do, they will become potential
customers for our plastic closure products.
COMPETITION
We believe that the most important factors in marketing our products are
price, product design, product quality and reliability and customer service.
Among the attributes that distinguish us from other sellers of such products and
provide a competitive advantage include our:
- ability to provide our customers with innovative, low-cost products;
- reputation for quality, reliability and service; and
- highly automated production facilities and in-house tool manufacturing
capability.
We face direct competition in each of our product lines from a number of
companies, many of which have financial and other resources that are
substantially greater than ours. As we broaden our product offerings, we expect
to meet increased competition from additional competitors with entrenched
positions in those product lines. We also face competition from bottling
companies, other food and beverage providers and medical and pharmaceutical
companies that elect to produce their own closures, dispensing systems and
devices rather than purchase them from outside sources. In addition, the
packaging industry has numerous well-capitalized competitors, and there is a
risk that these companies will expand their product offerings, either through
internal product development or acquisitions of any of our direct competitors,
to compete in the niche markets that we currently serve. These competitors, as
well as existing competitors, could introduce products or establish prices for
their products in a manner that could adversely affect our ability to compete.
Because of our product concentration, an increase in competition or any
technological innovations with respect to our specific product applications,
such as the introduction of lower-priced competitive products or products
containing technological improvement over our products, could have a significant
adverse effect on our financial condition and results of operations.
INTELLECTUAL PROPERTY
We hold more than 40 patents covering various aspects of the design and
construction of our products. We maintain a strong commitment to research and
development, focusing our efforts on enhancing existing products as well as
developing new products based on our existing technologies and production
capabilities. Our research and development staff of over 30 design engineers
works together with our customers to identify specific needs and develop
innovative, high performance solutions which satisfy those needs. This method of
product development allows the customer to become a member of the development
team, develops close ongoing working relationships between us and our customers
and, in many instances, allows us to gain an in-depth understanding of our
customers' businesses, thereby enabling us to better anticipate and serve their
needs.
LEGAL PROCEEDINGS
We have from time to time been involved in various claims and litigation.
The nature of our business is such that it is anticipated that we will be
involved in claims and litigation considered to be in the ordinary course of
business. Based on our experience with similar claims and litigation, we do not
anticipate that these matters will have a material adverse effect on us.
ENVIRONMENTAL
Certain of our operations are subject to federal, state and local
environmental laws and regulations that govern, among other things, the
discharge of pollutants into the air and water, as well as the handling and
disposal of solid and hazardous wastes. We believe that we are in material
compliance with applicable environmental laws and that the costs of compliance
with such current or proposed environmental laws and regulations will not have a
material adverse effect on us. Further, we are not a party to any claim or
26
<PAGE> 29
proceeding and are not aware of any threatened claim or proceeding under
environmental laws that could, if adversely decided, reasonably be expected to
have a material adverse effect on our financial condition or results of
operations. See the section entitled "Risk Factors -- Environmental."
EMPLOYEES
As of June 30, 1999, we had approximately 1,600 employees, including
approximately 180 mold-makers. None of our employees are party to any collective
bargaining agreements. We have not experienced any labor problems resulting in a
work stoppage, and believe we have good relations with our employees.
27
<PAGE> 30
MANAGEMENT
Set forth below is information with respect to those individuals who are
currently serve as members of our Board of Directors or as our executive
officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James N. Mills............................. 62 Chairman of the Board and Chief Executive
Officer
Thomas O. Hicks............................ 53 Director
Jack D. Furst.............................. 40 Director
David M. Sindelar.......................... 42 Director, Senior Vice President and Chief
Financial Officer
Walter J. Kreiseder........................ 57 Director
Gerald J. Sommers.......................... 57 Director
Wesley D. DeHaven.......................... 35 Vice President-Finance
</TABLE>
Set forth below is a description of the backgrounds of those persons who
serve as our directors and executive officers. There is no family relationship
between any of our directors or executive officers. Officers are elected by the
Board of Directors and hold office until their respective successors are duly
elected and qualified.
James N. Mills
James N. Mills has served as our Chairman of the Board and Chief Executive
Officer since July 1999. Mr. Mills is the Chairman of the Board and Chief
Executive Officer of Mills & Partners. Mr. Mills is also Chairman of the Board
and Chief Executive Officer of International Wire Holding Company and Viasystems
Group, Inc. Mr. Mills was Chairman of the Board and Chief Executive Officer of
Berg Electronics Corp. from November 1992 through October 1998, of Crain
Holdings Corp. from August 1995 through December 1997, of Jackson Holding
Company from February 1993 through August 1995, of Thermadyne Holdings
Corporation from February 1989 through February 1995 and of Thermadyne
Industries, Inc. from 1987 to 1995. Prior to that time, Mr. Mills served as
Executive Vice President of McGraw-Edison Company, a company engaged in the
electronic, industrial, commercial and automotive industries, from 1978 to 1985,
and served as Industrial Group President and President of the Bussman Division
of the McGraw-Edison Company from 1980 to 1984.
Thomas O. Hicks
Thomas O. Hicks has served as a director since July 1999. Mr. Hicks has
been Chairman and Chief Executive Officer of Hicks Muse since co-founding Hicks
Muse in 1989 and has over 29 years of experience in leveraged acquisitions and
private investments. From 1984 to May 1989, Mr. Hicks was Co-Chairman of the
Board and Co-Chief Executive Officer of Hicks & Haas, a Dallas-based private
investment firm. Mr. Hicks serves on the Boards of Directors of AMFM, Inc.,
International Home Foods, Inc., Sybron International Corporation, Inc.,
Cooperative Computing, Inc., Home Interiors & Gifts, Inc., LIN Holdings Corp.,
LIN Television Corporation, Regal Cinemas, Inc. and Viasystems Group, Inc.
Jack D. Furst
Jack D. Furst has served as a director since July 1999. Mr. Furst has
served as a Partner and Principal of Hicks Muse since 1989, the year in which it
was formed. Mr. Furst has approximately 20 years of experience in leveraged
acquisitions and private investments. Mr. Furst is involved in all aspects of
Hicks Muse's business and has been actively involved in originating, structuring
and monitoring its investments. Prior to joining Hicks Muse, Mr. Furst served as
a Vice President and subsequently a Partner of Hicks & Haas from 1987 to 1989.
From 1984 to 1986, Mr. Furst was a Merger and Acquisitions/Corporate Finance
Specialist for The First Boston Corporation in New York. Before joining First
Boston, Mr. Furst was a Financial Consultant at PricewaterhouseCoopers. Mr.
Furst serves on the
28
<PAGE> 31
Boards of Directors of American Tower Corporation, Triton Energy Limited, Home
Interiors & Gifts, Inc., Hedstrom Holdings, Inc., International Wire Holding
Company, Cooperative Computing, Inc. and Viasystems Group, Inc.
David M. Sindelar
David M. Sindelar has served as our Senior Vice President and Chief
Financial Officer and as a director since July 1999. Mr. Sindelar serves as
President of Mills & Partners, Inc., and is a Senior Vice President and Chief
Financial Officer of International Wire Holding Company and Viasystems Group,
Inc. Mr. Sindelar served as Senior Vice President and Chief Financial Officer of
Berg Electronics Corp. from November 1992 through October 1998, of Crain
Holdings Corp. from August 1995 through December 1997 and of Jackson Holding
Company from February 1993 through August 1995. From 1987 to February 1995, Mr.
Sindelar held various positions at Thermadyne Holdings Corporation including
Senior Vice President, Chief Financial Officer and Vice President -- Corporate
Controller and Controller.
Walter J. Kreiseder
Walter J. Kreiseder continues to serve as a director, and serves as Chief
Executive Officer of our operating subsidiary and each of its subsidiaries. Mr.
Kreiseder served as our Chief Executive Officer and as a director from our
inception in 1972 through July 1999. Mr. Kreiseder is directly involved in all
aspects of the business and has over 37 years of experience in the injection
molding industry. Mr. Kreiseder is affiliated with several industry associations
including the Tooling and Manufacturing Association and the Society of Plastic
Engineers.
Gerald J. Sommers
Gerald J. Sommers continues to serve as a director, and serves as President
and Chief Operating Officer of our operating subsidiary and each of its
subsidiaries. Mr. Sommers served as our President and Chief Operating Officer
and as a director from our inception in 1972 through July 1999. Mr. Sommers is
directly involved in all aspects of the business and has over 37 years of
experience in the injection molding industry. Mr. Sommers is affiliated with
several industry associations including the Tooling and Manufacturing
Association and the Society of Plastic Engineers.
Wesley D. DeHaven
Wesley D. DeHaven has served as our Vice President -- Finance since July
1999. Mr. DeHaven serves as a Vice President of Mills & Partners. Mr. DeHaven
served as Vice President of Viasystems Group, Inc. from March 1998 through
November 1998, Vice President -- Finance of Crain Industries, Inc. from December
1996 through February 1998, Corporate Controller of International Wire Group,
Inc. from April 1994 through November 1996, and Controller for the cutting and
welding segment of Thermadyne Industries, Inc. from June 1993 through March
1994. Prior to that time, Mr. DeHaven was employed by the international
accounting firm of Arthur Andersen & Co.
29
<PAGE> 32
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid during the fiscal year
ended September 30, 1998 to the Chief Executive Officer and the three other most
highly compensated executive officers who were serving as executive officers at
September 30, 1998. Information with respect to fiscal years prior to September
30, 1998 is not required as we were not a reporting company pursuant to Section
13(a) or 15(d) of the Exchange Act of any time during those years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)
--------------------------- ---- ---------- ----------
<S> <C> <C> <C>
Walter J. Kreiseder, Chief Executive Officer................ 1998 1,302,600 205,577
Gerald J. Sommers, Chief Operating Officer.................. 1998 1,302,600 205,577
James Beck, Vice President.................................. 1998 147,600 1,000
Dennis Greenberg, Vice President............................ 1998 121,110 28,500
</TABLE>
COMPENSATION OF DIRECTORS
Directors who are officers, employees or otherwise an affiliate of ours do
not receive compensation for their services as directors. Directors are entitled
to reimbursement of their reasonable out-of-pocket expenses in connection with
their travel to and attendance at meetings of the Board of Directors or
committees thereof.
EXECUTIVE EMPLOYMENT AGREEMENTS
James N. Mills Employment Agreement
Mr. James N. Mills entered into an executive employment agreement with us
upon consummation of the Transactions. Under his employment agreement, Mr. Mills
will serve as our Chairman of the Board and Chief Executive Officer through July
30, 2004. Mr. Mills is required to devote his business time and attention to the
transaction of our business as is reasonably necessary to discharge his duties
under the employment agreement. Subject to the above limitation on his
activities, Mr. Mills is free to participate in other business endeavors.
Mr. Mills' compensation under his employment agreement includes an annual
base salary of not less than $350,000, subject to adjustment at the sole
discretion of our Board of Directors, and benefits as will be customarily
accorded our executives for as long as our employment agreement is in effect. In
addition, Mr. Mills is entitled to an annual bonus in an amount to be determined
at the sole discretion of our Board of Directors.
Mr. Mills' employment agreement also provides that if Mr. Mills' employment
is terminated for a reason other than death, disability or cause, Mr. Mills will
continue to receive his then current salary through July 30, 2004 or for one
year, whichever is longer, and any other benefits to which he would otherwise be
entitled under the employment agreement. In addition, Mr. Mills' employment
agreement provides that if Mr. Mills is terminated due to death or disability,
Mr. Mills or his estate, heirs or beneficiaries, as applicable, will receive, in
addition to any other benefits provided under any benefit plan, his then current
salary for a period of 24 months from the date of termination.
David M. Sindelar Employment Agreement
Mr. David M. Sindelar entered into an executive employment agreement with
us upon consummation of the Transactions. Under his employment agreement, Mr.
Sindelar will serve as our Senior Vice President and Chief Financial Officer
through July 30, 2004. Mr. Sindelar is required to devote his business time and
attention to the transaction of our business as is reasonably necessary to
discharge his duties under the employment agreement. Subject to the above
limitation on his activities, Mr. Sindelar is free to participate in other
business endeavors.
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<PAGE> 33
Mr. Sindelar's compensation under his employment agreement includes an
annual base salary of not less than $150,000, subject to adjustment at the sole
discretion of the Chairman of the Board, and benefits as will be customarily
accorded our executives for as long as the employment agreement is in effect. In
addition, Mr. Sindelar is entitled to an annual bonus in an amount to be
determined at the sole discretion of the Chairman of the Board.
Mr. Sindelar's employment agreement also provides that if Mr. Sindelar's
employment is terminated for a reason other than death, disability or cause, Mr.
Sindelar will continue to receive his then current salary through July 30, 2004
or for one year, whichever is longer, and any other benefits to which he would
otherwise be entitled under the employment agreement. In addition, Mr.
Sindelar's employment agreement provides that if Mr. Sindelar is terminated due
to death or disability, Mr. Sindelar or his estate, heirs or beneficiaries, as
applicable, will receive, in addition to any other benefits provided under any
benefit plan, his then current salary for a period of 24 months from the date of
termination.
Walter J. Kreiseder Employment Agreement
Mr. Walter J. Kreiseder entered into an executive employment agreement with
our operating subsidiary providing for an employment term of five years upon
consummation of the Transactions. From July 30, 1999 through the second
anniversary of the employment agreement, Mr. Kreiseder will serve as the Chief
Executive Officer of our operating subsidiary and each of its subsidiaries and
is required to devote his best efforts and full business time, attention,
knowledge and skill to the operation of the business and affairs of our
operating subsidiary and its subsidiaries. Subject to the above limitation on
his activities, Mr. Kreiseder is able to participate in other activities. Prior
to the second anniversary of the effective date of the employment agreement, and
each subsequent anniversary thereof during the term of the employment agreement,
Mr. Kreiseder and our operating subsidiary will negotiate in good faith to
establish reduced time commitments and levels of responsibility applicable to
Mr. Kreiseder's employment with our operating subsidiary for such year and, in
addition, an appropriate reduction in Mr. Kreiseder's annual base salary
commensurate with such reduced time commitments and levels of responsibility.
Mr. Kreiseder has also agreed in connection with his employment agreement not to
compete with us or any of our subsidiaries during his employment and for a
period of two years after the termination of his employment for any reason.
Mr. Kreiseder's compensation under his employment agreement includes an
annual base salary of $500,000, subject to adjustment as described above, and
benefits as will be customarily accorded the executives of our operating
subsidiary for as long as the employment agreement is in effect.
Mr. Kreiseder's employment agreement also provides that if Mr. Kreiseder's
employment is terminated by him for "good reason," or by our operating
subsidiary for any reason other than "cause" or Mr. Kreiseder's death, permanent
disability or retirement:
- on or prior to the second anniversary of the effective date of the
employment agreement, Mr. Kreiseder will continue to receive his then
current base salary for the greater of (1) 12 months from the date of
termination of his employment and (2) the remainder of the period on or
prior to the second anniversary of the effective date of the employment
agreement; or
- after the second anniversary of the effective date of the employment
agreement, Mr. Kreiseder will continue to receive his then current base
salary for 12 months from the date of termination of his employment.
In either case, Mr. Kreiseder will also continue to be covered by the same
or equivalent medical, dental and life insurance coverage as in effect
immediately prior to the termination of his employment until the earlier of the
expiration of the period for which he receives severance pay or the date on
which he commences new employment.
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<PAGE> 34
Gerald J. Sommers Employment Agreement
Mr. Gerald J. Sommers entered into an executive employment agreement with
our operating subsidiary providing for an employment term of five years upon
consummation of the Transactions. From July 30, 1999 through the second
anniversary of the employment agreement, Mr. Sommers will serve as President and
Chief Operating Officer of our operating subsidiary and each of its subsidiaries
and is required to devote his best efforts and full business time, attention,
knowledge and skill to the operation of the business and affairs of our
operating subsidiary and its subsidiaries. Subject to the above limitation on
his activities, Mr. Sommers is able to participate in other activities. Prior to
the second anniversary of the effective date of the employment agreement and
each subsequent anniversary thereof during the term of the employment agreement,
Mr. Sommers and our operating subsidiary will negotiate in good faith to
establish reduced time commitments and levels of responsibility applicable to
Mr. Sommers' employment with our operating subsidiary and, in addition, an
appropriate reduction in Mr. Sommers' annual base salary commensurate with such
reduced time commitments and levels of responsibility. Mr. Sommers has also
agreed pursuant to his employment agreement not to compete with us or any of our
subsidiaries during his employment and for a period of two years after the
termination of his employment for any reason.
Mr. Sommers' compensation under his employment agreement includes an annual
base salary of $500,000, subject to adjustment as described above, and such
benefits as will be customarily accorded the executives of our operating
subsidiary for as long as the employment agreement is in effect.
Mr. Sommers' employment agreement also provides that if Mr. Sommers'
employment is terminated by him for "good reason," or by our operating
subsidiary for any reason other than "cause" or Mr. Sommers' death, permanent
disability or retirement:
- on or prior to the second anniversary of the effective date of the
employment agreement, Mr. Sommers will continue to receive his then
current base salary for the greater of (1) 12 months from the date of
termination of his employment and (2) the remainder of the period on or
prior to the second anniversary of the effective date of the employment
agreement; or
- after the second anniversary of the effective date of the employment
agreement, Mr. Sommers will continue to receive his then current base
salary for 12 months from the date of termination of his employment.
In either case, Mr. Sommers will also continue to be covered by the same or
equivalent medical, dental and life insurance coverage as in effect immediately
prior to the termination of his employment until the earlier of the expiration
of the period for which he receives severance pay or the date on which he
commences new employment.
LLS CORP. 1999 STOCK OPTION PLAN
We recently adopted the LLS Corp. 1999 Stock Option Plan (the "Stock Option
Plan") under which incentive and non-qualified stock options, stock appreciation
rights, stock awards, performance awards and stock units will be issued to our
employees and the employees of any of our subsidiaries as designated by our
Board of Directors. A total of 7,017,543 shares of our common stock are reserved
for issuance under the Stock Option Plan. The Stock Option Plan will terminate
on the tenth anniversary of its effectiveness, unless sooner terminated by the
Committee.
The Stock Option Plan provides that it is to be administered by a committee
of our Board of Directors or a subcommittee of such a committee. The committee
has the authority to grant to any participant one or more awards and to
establish the terms and conditions of such awards, subject to certain
limitations specified in the Stock Option Plan. For example, in the case of
stock options, the per-share exercise price of each option must not be less than
100% of the fair market value of our common stock on the date such option is
granted, and no option may be exercisable later than ten years after the date of
grant. In the event of a change in control, as defined in the Stock Option Plan,
the committee, in its
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<PAGE> 35
discretion, may take such actions as it deems appropriate with respect to
outstanding awards, including, without limitation, accelerating the
exercisability or vesting of such awards.
PERFORMANCE OPTIONS
We have granted 2,000,749 and 1,600,000 performance options to purchase
shares of our common stock to James N. Mills and David M. Sindelar,
respectively. A total of 4,340,749 shares of our common stock are reserved for
issuance in connection with the exercise of performance options. The performance
options will be exercisable only in the event that HMTF/CC Investments, LLC has
realized an overall rate of return of at least 35% per year, compounded
annually, on all equity funds invested by it in us. Subject to the foregoing,
the performance options will be exercisable (1) immediately prior to a Liquidity
Event (as defined), (2) concurrently with the consummation of a Qualified IPO
(as defined), or (3) on the tenth anniversary of the date of grant. A "Liquidity
Event" generally means (1) one or more sales or other dispositions of our common
stock if, thereafter, the amount of our common stock owned by HMTF/CC
Investments, LLC is reduced by 50%, (2) any merger, consolidation or other
business combination involving us in which any person or group acquires a
majority of the common stock of the resulting entity, or (3) any sale of all or
substantially all of our assets. A "Qualified IPO" means a firm commitment
underwritten public offering of our common stock for gross proceeds of at least
$50.0 million.
The exercise price for the performance options will initially be equal to
$1.00 per share and, effective each anniversary of the grant, the per share
exercise price for the performance options will be equal to the per share
exercise price for the prior year multiplied by 1.08. The exercise price for the
performance options and the number of shares of our common stock for which the
performance options will be exercisable is subject to adjustment in the event of
certain fundamental changes in our capital structure. The performance options
will terminate on the tenth anniversary of the date of grant.
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<PAGE> 36
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our capital stock by (1) each person who owns beneficially more
than five percent of our capital stock, (2) each of our directors and executive
officers and (3) all directors and executive officers as a group. Our series A
convertible preferred stock and class A common stock vote together with our
common stock as a single class. Our series A convertible preferred stock is
entitled to the number of votes equal to the whole number of shares of common
stock into which it is then convertible, which will initially be one per share,
and our class A common stock is entitled to one vote for each share. Unless
otherwise indicated, each person has sole voting power and investment power with
respect to the shares attributed to him/her.
<TABLE>
<CAPTION>
SERIES A
CONVERTIBLE COMMON CLASS A
PREFERRED STOCK(1) STOCK COMMON STOCK(2)
----------------------- ----------------------- -----------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENT
NUMBER OF OF NUMBER OF OF NUMBER OF OF OF
SHARES CLASS SHARES CLASS SHARES CLASS TOTAL
---------- ---------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
5% SHAREHOLDERS
HMTF/CC Investments, LLC(3)...... 78,000,000 100.0% -- -- -- -- 58.5%
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
James N. Mills(4)................ -- -- -- -- 13,333,333 100.0% 10.0%
100 South Hanley, Suite 400
St. Louis, Missouri 63105
Walter J. Kreiseder(5)........... -- -- 21,000,000 50.0% -- -- 15.8%
800 Corporate Grove Drive
Buffalo Grove, Illinois
60089-4552
Gerald J. Sommers(6)............. -- -- 21,000,000 50.0% -- -- 15.8%
800 Corporate Grove Drive
Buffalo Grove, Illinois
60089-4552
DIRECTORS AND EXECUTIVE OFFICERS
James N. Mills(4)................ -- -- -- -- 13,333,333 100.0% 10.0%
Walter J. Kreiseder(5)........... -- -- 21,000,000 50.0% -- -- 15.8%
Gerald J. Sommers(6)............. -- -- 21,000,000 50.0% -- -- 15.8%
Thomas O. Hicks(3)............... 78,000,000 100.0% -- -- -- -- 58.5%
Jack D. Furst(7)................. 78,000,000 100.0% -- -- -- -- 58.5%
David M. Sindelar(8)............. -- -- -- -- 4,000,000 30.0% 3.0%
Wesley D. DeHaven................ -- -- -- -- -- -- --
All directors/executive officers
as a group(7 persons).......... 78,000,000 100.0% 42,000,000 100.0% 13,333,333 100.0% 100.0%
</TABLE>
- ---------------
(1) Our series A convertible preferred stock is convertible into our common
stock (a) at the option of any holder of series A convertible preferred
stock at any time and (b) automatically upon the closing of the sale of
shares of our common stock in a registered public offering resulting in at
least $50.0 million in gross proceeds to us. Each share of series A
convertible preferred stock is convertible into a whole number of shares of
our common stock as is determined by dividing $1.00 by the series A
conversion price, which will initially be $1.00.
(2) Our class A common stock is convertible into our common stock (a) at the
option of any holder of class A common stock at any time, (b) at our option
upon the occurrence of a Triggering Event (as defined), and (c)
automatically on July 31, 2009. A "Triggering Event" means any merger,
consolidation or other business combination or any sale of all or
substantially all of our assets in which Hicks Muse and its affiliates cease
to beneficially own at least 50% of the resulting entity. Each share of
class A common stock is convertible into a fraction of a share of common
stock equal to the quotient of (a) the fair market value of a share of
common stock at the time of conversion less the sum of $0.99 plus imputed
interest thereon at a rate of 8% per annum, compounded annually, at the
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<PAGE> 37
time of conversion, divided by (b) the fair market value of a share of
common stock at the time of conversion. Because the fraction of a share of
common stock into which class A common stock is convertible is determinable
only at the time of a conversion, shares of common stock that may be
issuable upon conversion of class A common stock are not included in the
shares of common stock beneficially owned in the foregoing table.
(3) Consists solely of shares of our series A convertible preferred stock owned
of record by HMTF/CC Investments, LLC, a limited liability company whose
managing member is HMTF/Courtesy GP, LLC. Mr. Hicks is the sole member and
manager of HMTF/Courtesy GP, LLC and, accordingly, may be deemed to be the
beneficial owner of our series A convertible preferred stock held directly
or indirectly by HMTF/CC Investments, LLC. In addition, Mr. Hicks holds a
minority limited liability company interest in HMTF/CC Investments, LLC. Mr.
Hicks disclaims beneficial ownership of shares of our series A convertible
preferred stock owned by HMTF/CC Investments, LLC.
(4) Includes 4,600,000 shares of class A common stock owned of record by Mr.
Mills and shares of class A common stock owned of record by certain persons
subject to an irrevocable proxy in favor of Mr. Mills. Mr. Mills disclaims
beneficial ownership of shares of our class A common stock not owned by him.
See "Certain Relationships and Related Transactions -- The Shareholders
Agreement."
(5) Includes 10,500,000 shares of common stock owned of record by a personal
trust for which Mr. Kreiseder serves as trustee and 10,500,000 shares of
common stock owned of record by four children's trusts. Mr. Kreiseder
disclaims beneficial ownership of shares of our common stock owned by the
children's trusts.
(6) Includes 8,400,000 shares of common stock owned of record by a personal
trust for which Mr. Sommers serves as trustee and 12,600,000 shares of
common stock owned of record by four children's trusts. Mr. Sommers
disclaims beneficial ownership of shares of our common stock owned by the
children's trusts.
(7) Mr. Furst holds a minority limited liability company interest in HMTF/CC
Investments, LLC. Mr. Furst disclaims beneficial ownership of shares of our
series A convertible preferred stock owned by HMTF/CC Investments, LLC.
(8) Includes 3,600,000 shares of class A common stock owned of record by Mr.
Sindelar and 400,000 shares of class A common stock owned of record by two
children's trusts of which Mr. Sindelar serves as trustee. Mr. Sindelar
disclaims beneficial ownership of shares of our class A common stock owned
by the children's trusts.
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<PAGE> 38
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Set forth below is a description of certain transactions entered into
between us and certain of our shareholders or affiliates during the last three
years. Some of these relationships continue to be in effect and may result in
conflicts of interest between us and those shareholders or affiliates.
THE SHAREHOLDERS AGREEMENT
Each holder of common stock, series A convertible preferred stock and class
A common stock entered into a shareholders agreement with us (the "Shareholders
Agreement") upon consummation of the Transactions. In accordance with the terms
of the Shareholders Agreement, our Board of Directors consists of six directors,
made up of two Hicks Muse designees, two Mills & Partners designees and Walter
J. Kreiseder and Gerald J. Sommers. Also, the number of members of the Board of
Directors may be expanded by the mutual agreement of Hicks Muse and Mills &
Partners to include independent directors who are reasonably acceptable to Mr.
Kreiseder and Mr. Sommers. Each party to the Shareholders Agreement agreed to
vote his or its shares of common stock, series A convertible preferred stock and
class A common stock and take all other actions necessary to give effect to the
agreements contained therein, including without limitation the election of the
Hicks Muse designees, the Mills & Partners designees and Mr. Kreiseder and Mr.
Sommers to the Board of Directors.
In addition, the Shareholders Agreement contains an irrevocable proxy in
connection with which the initial holders of class A common stock and their
transferees granted to James N. Mills, or to Hicks Muse if Mr. Mills is no
longer an officer or director, the power to vote all shares of capital stock
held by such parties on all matters concerning the election of directors as
provided in the Shareholders Agreement.
The Shareholders Agreement, among other things, grants preemptive rights
and certain registration rights to the parties thereto and contains provisions
requiring the parties to the Shareholders Agreement to sell their shares of
common stock in connection with certain sales of common stock by HMTF/CC
Investments, LLC and its affiliates ("drag-along rights") and granting the
parties to the Shareholders Agreement the right to include a portion of their
shares of common stock in certain sales in which HMTF/CC Investments, LLC and
its affiliates do not exercise their drag-along rights ("tag-along rights"). The
Shareholders Agreement will terminate on its tenth anniversary date, although
the preemptive rights, drag-along rights and tag-along rights contained in the
Shareholders Agreement will terminate earlier upon the consummation of a firm
commitment underwritten public offering of our common stock.
MONITORING AND OVERSIGHT AND FINANCIAL ADVISORY AGREEMENTS
Following consummation of the Transactions, we entered into an agreement
(the "Monitoring and Oversight Agreement") with an affiliate of Hicks Muse
("Hicks Muse Partners"), under which we will pay Hicks Muse Partners an annual
fee, payable quarterly, in an initial amount equal to $500,000 for monitoring
and oversight services to be provided to us. In addition, we will reimburse
Hicks Muse Partners for its expenses incurred in connection with services
rendered. The initial fee will be adjusted, but not below the amount of the
initial fee, on January 1 of each calendar year to an amount equal to 0.2% of
our budgeted consolidated annual net sales for our then-current fiscal year.
Upon the acquisition by us or any of our subsidiaries of another entity or
business, the fee will be adjusted prospectively in the same manner using the
pro forma combined budgeted consolidated annual net sales.
We also entered into an agreement (the "Financial Advisory Agreement") with
Hicks Muse Partners under which Hicks Muse Partners received a financial
advisory fee in an amount equal to $5.3 million for its services as financial
advisor to us in connection with the Transactions. We also reimbursed Hicks Muse
Partners for its expenses incurred in connection with the Transactions. In
addition, Hicks Muse Partners will be entitled to receive a fee equal to 1.5% of
the "transaction value" (as defined) for each "subsequent transaction" (as
defined) in which we or any of our subsidiaries are involved. The term
"transaction value" means the total value of the subsequent transaction,
including without limitation, the aggregate amount of the funds required to
complete the subsequent transaction, excluding any fees payable pursuant to the
Financial Advisory Agreement, including the amount of any indebtedness,
preferred stock or similar items
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<PAGE> 39
assumed, or remaining outstanding. The term "subsequent transaction" means any
future proposal for a tender offer, acquisition, sale, merger, exchange offer,
recapitalization, restructuring or other similar transaction directly or
indirectly involving us or any of our subsidiaries or any of their respective
subsidiaries and any other person or entity.
Each of the Monitoring and Oversight Agreement and the Financial Advisory
Agreement will terminate upon the earlier to occur of:
- the tenth anniversary of its execution; or
- the date on which Hicks Muse or its successors and their respective
affiliates, including, without limitation, any equity fund sponsored by
Hicks Muse or its successors, shall cease to own beneficially, any of our
securities or the securities of any of our successors.
Messrs. Hicks and Furst, who serve as two of our directors, are each
principals of Hicks Muse Partners. In addition, we agreed to indemnify Hicks
Muse Partners, its affiliates, and their respective directors, officers,
controlling persons, if any, agents and employees from and against any and all
claims, liabilities, losses, damages, expenses and fees and disbursements
related to or arising out of or in connection with the services rendered by
Hicks Muse Partners in connection with each of the Monitoring and Oversight
Agreement and the Financial Advisory Agreement and not resulting from the bad
faith, gross negligence or willful misconduct of Hicks Muse Partners. Hicks Muse
Partners is also entitled to reimbursement for any expenses incurred by it in
connection with rendering services allocable to us under the Monitoring and
Oversight Agreement and the Financial Advisory Agreement.
The Monitoring and Oversight Agreement and the Financial Advisory Agreement
each make available the resources of Hicks Muse Partners concerning a variety of
financial and operational matters. We do not believe that the services to be
provided by Hicks Muse Partners could otherwise be obtained by us without the
addition of personnel or the engagement of outside professional advisors. In our
opinion, the fees to be provided for under these agreements reasonably reflect
the benefits to be received by us.
REAL PROPERTY LEASES
We lease two of our properties from entities in which two of our directors,
Walter J. Kreiseder and Gerald J. Sommers, hold beneficial interests. The lessor
of our facility in Wheeling, Illinois is KS/Wheeling L.L.C., a limited liability
company of which Messrs. Kreiseder and Sommers are the only members. We have
leased this property since September 1986, and the term of the lease expires in
August 2007. We paid a total of $360,000 in rent in 1998. We lease the land on
which one of our Buffalo Grove, Illinois facilities is located from Cole Taylor
Bank, trustee of a trust for the benefit of Messrs. Kreiseder and Sommers. We
have leased this property since August 1996, and the term of the lease expires
in August 2011. We paid a total of $334,691 in rent in 1998.
NOTES PURCHASE COMMITMENT
In connection with the consummation of the Transactions, TCW/Crescent
Mezzanine, L.L.C. and its affiliates (collectively, "TCW"), made a stand-by
commitment to purchase the entire $100 million aggregate principal amount of the
notes we originally offered. In consideration for this commitment, TCW received
cash fees and warrants to purchase shares of our common stock. In addition, TCW
invested $10.0 million in HMTF/CC Investments, LLC. TCW/Crescent Mezzanine,
L.L.C. is an affiliate of Hicks Muse.
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<PAGE> 40
DESCRIPTION OF SENIOR CREDIT FACILITY
In connection with the consummation of the Transactions, we entered into
the senior credit facility. The following is a summary description of the
principal terms of the senior credit facility and is subject to and qualified in
its entirety by reference to the senior credit facility. Capitalized terms used
in this section and not otherwise defined in this Prospectus shall have the
meanings given to them in the senior credit facility.
General. The senior credit facility is provided by a syndicate of banks and
other financial institutions (the "Lenders") for which Bank of America, National
Association ("Bank of America") acts as administrative agent (the
"Administrative Agent"), Credit Suisse First Boston acts as the syndication
agent (the "Syndication Agent"), Bankers Trust Company acts as documentation
agent, and Banc of America Securities LLC acts as lead arranger and book
manager. The senior credit facility provides for borrowing of up to $55.0
million under a revolving credit facility (the "Revolving Facility") and for
borrowings of up to an aggregate of $145.0 million under two term loan
facilities (the "Term Facilities"). The proceeds of the Loans (as defined) were
used to:
- refinance the outstanding principal amount of our indebtedness
outstanding at the time of the Transactions;
- consummate the Transactions;
- pay fees and expenses incurred in connection with the Transactions; and
- provide for working capital and other general corporate purposes,
including acquisitions.
The senior credit facility may be amended at any time, including to increase the
amount thereof, in accordance with the terms of the senior credit facility.
Revolving Facility. The Revolving Facility provides for borrowings of up to
$55.0 million (the "Revolving Loans"), which may include up to $10.0 million of
Letters of Credit and $5.0 million of Swing Line Loans. The Revolving Facility
is available on a revolving basis ending on the sixth anniversary of the closing
date of the Transactions.
Term Facilities. Under the senior credit facility, there are two term loan
facilities as follows:
- a six year term loan facility (the "Term A Facility"); and
- a seven year term loan facility (the "Term B Facility").
The Term A Facility was made available to us in a single borrowing on the
closing date of the Transactions pursuant to which term loans ("Term A Loans")
were made. The maximum amount available under the Term A Facility is $65.0
million. Once repaid, the Term A Loans may not be reborrowed. Term A Loans will
amortize in quarterly installments as set forth below. The final maturity for
all Term A Loans is the sixth anniversary of the closing date of the
Transactions.
The Term B Facility was made available to us in a single borrowing on the
closing date of the Transactions pursuant to which term loans ("Term B Loans")
were made. The maximum amount available under the Term B Facility is $80.0
million. Once repaid, the Term B Loans may not be reborrowed. Term B Loans will
amortize in quarterly installments as set forth below. The final maturity for
all Term B Loans is the seventh anniversary of the closing date of the
Transactions (the Term A Loans, the Term B Loans and the Revolving Loans are
collectively referred herein as, the "Loans").
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<PAGE> 41
The annual amortization of the Term A Loans and Term B Loans is as follows,
payable in equal quarterly installments in each loan year other than loan year 2
(which is payable at the end of loan year 2):
<TABLE>
<CAPTION>
TERM A FACILITY TERM B FACILITY
--------------- ---------------
<S> <C> <C>
Loan Year 1............................................. $ 0 $ 0
Loan Year 2............................................. $ 3,000,000 $ 200,000
Loan Year 3............................................. $12,000,000 $ 800,000
Loan Year 4............................................. $15,000,000 $ 800,000
Loan Year 5............................................. $17,000,000 $ 800,000
Loan Year 6............................................. $18,000,000(1) $ 800,000
Loan Year 7............................................. $ 0 $76,600,000(1)
</TABLE>
- ---------------
(1) Or such other amounts then outstanding.
Interest. The Loans bear interest at:
- the reserve adjusted LIBOR rate plus the applicable margins set forth
below (the "LIBOR Applicable Margin"); or
- the Administrative Agent's alternate base rate plus the applicable
margins set forth below (the "Base Rate Applicable Margin"); in each case
determined in accordance with our Leverage Ratio.
<TABLE>
<CAPTION>
LIBOR APPLICABLE MARGIN BASE RATE APPLICABLE MARGIN
------------------------------- -------------------------------
REVOLVING LOANS REVOLVING LOANS
LEVERAGE RATIO AND TERM A LOANS TERM B LOANS AND TERM A LOANS TERM B LOANS
- -------------- ---------------- ------------ ---------------- ------------
<S> <C> <C> <C> <C>
> 4.50:1................... 2.50% 3.00% 1.25% 1.75%
> 4.00:1 < 4.50:1.......... 2.25 2.75 1.00 1.50
> 3.50:1 < 4.00:1.......... 2.00 2.50 0.75 1.25
<3.50:1.................... 1.75 2.50 0.50 1.25
</TABLE>
Interest periods for LIBOR rate loans shall be, at our option, one, two, three
or six months or, if available to all Lenders, nine or twelve months, and shall
be payable on the last business day of the applicable interest period therefor
or, if earlier, on the end of each third-month date following the commencement
of such interest period.
Optional and Mandatory Prepayments. Outstanding Loans may be voluntarily
prepaid without penalty; provided that, we shall pay LIBOR rate breakage costs,
if any, for any prepayment other than at the end of a LIBOR interest period.
Mandatory prepayments will be required:
- upon the receipt of the net cash proceeds from the sale of assets other
than in the ordinary course of business or from settlements of casualty
claims and condemnation proceedings, subject to particular exceptions, to
the extent such proceeds are not reinvested in our business and the
business of our subsidiaries within 12 months after receipt of an amount
equal to the lesser of 100% of such net cash proceeds and an amount, if
any, that would result in the Leverage Ratio being less than 3.50 to
1.00;
- beginning on April 2001, an amount equal to the lesser of 70% of excess
cash flow pursuant to an annual sweep arrangement and an amount, if any,
that would result in the Leverage Ratio being less than 3.50 to 1.00; and
- from 100% of the net cash proceeds from the issuance of future debt by us
or any of our subsidiaries, subject to particular exceptions.
Mandatory prepayments shall be applied pro rata to reduce the outstanding
principal amount of Term A Loans and the Term B Loans and applied first to the
next two installments of Term A Loans and Term B
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<PAGE> 42
Loans as we elect, and second to the remaining installments of Term A Loans and
Term B Loans pro rata based on the number of then remaining installments.
Fees. Commencing on the closing date of the Transactions, a non-refundable
fee (the "Commitment Fee") began to accrue on the daily average unused portion
of the commitment amount of the Revolving Facility, whether or not then
available, payable quarterly in arrears and on the final maturity date of the
Revolving Facility, whether by stated maturity or otherwise. The Commitment Fee
is initially 0.50% per annum, and will decrease to 0.375% per annum based on
improvements to our Leverage Ratio.
Security. The senior credit facility will be secured by:
- a first-priority perfected lien on substantially all of our domestic
property and assets, tangible and intangible, and the domestic property
and assets, tangible and intangible, of our subsidiaries;
- a first-priority pledge of the common stock of all of our existing and
future domestic subsidiaries; and
- a first-priority pledge of 65% of the common stock of all of our direct
material foreign subsidiaries, with various exceptions.
Guarantees. Our payment obligations under the senior credit facility are
guaranteed on a senior basis by all of our direct and indirect domestic
subsidiaries, with various exceptions.
Covenants. The senior credit facility contains financial covenants pursuant
to which we must maintain a minimum interest coverage ratio and a maximum
Leverage Ratio. In addition, the senior credit facility contains covenants
pertaining to our management and operations and the management and operations of
our subsidiaries. The senior credit facility also subjects us and our
subsidiaries to restrictions, subject in each case to various exceptions, on:
- the incurrence of additional debt and contingent obligations;
- the granting of liens on our assets;
- the making of dividends or similar distributions;
- the sale of assets or similar transfers other than in the ordinary course
of business;
- the making of selected acquisitions and investments;
- the consummation of mergers and consolidations; and
- entering into selected transactions with affiliates.
Events of Default. The senior credit facility contains customary events of
default, including:
- payment defaults;
- breach of representations and warranties;
- covenant defaults;
- cross-defaults to particular other indebtedness;
- selected events of bankruptcy and insolvency;
- ERISA events;
- judgment defaults;
- actual or asserted invalidity of any security interests; and
- change of control.
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<PAGE> 43
THE EXCHANGE OFFER
PURPOSE AND EFFECT
We sold the old notes on June 30, 1999. In connection with that placement,
we entered into the registration rights agreement, which requires us to file a
registration statement under the Securities Act with respect to the new notes.
Upon the effectiveness of the registration statement, we will offer you and the
other holders of the old notes the opportunity to exchange your old notes for
new notes of the same principal amount. The new notes will be issued without a
restrictive legend and generally may be reoffered and resold by you without
registration under the Securities Act. The registration rights agreement further
provides that we must use our reasonable best efforts to:
- cause the registration statement with respect to the exchange offer to be
declared effective on or before December 27, 1999; and
- consummate the exchange offer on or before February 14, 2000.
Except as provided below, upon the completion of the exchange offer, our
obligations with respect to the registration of the old notes and the new notes
will terminate. We filed a copy of the registration rights agreement as an
exhibit to the registration statement, of which this prospectus is a part. The
summary in this prospectus of the material provisions of the registration rights
agreement does not purport to be complete and is qualified in its entirety by
reference to the registration rights agreement. As a result of the timely filing
and the effectiveness of the registration statement, we will not owe certain
liquidated damages provided for in the registration rights agreement. Following
the completion of the exchange offer, except as set forth in the paragraph
immediately below, any old notes you do not tender will not have any further
registration rights and your old notes will continue to be subject to particular
restrictions on transfer. Accordingly, the liquidity of the market for the old
notes could be negatively affected upon completion of the exchange offer.
In order to participate in the exchange offer, you must represent to us
among other things, that:
- the new notes acquired in connection with the exchange offer are being
obtained in the ordinary course of your business;
- you are not engaging in and do not intend to engage in a distribution of
the new notes;
- you do not have an arrangement or understanding with any person to
participate in a distribution of the new notes; and
- you are not our "affiliate," as defined in Rule 405 under the Securities
Act.
Under the registration rights agreement, if:
- prior to the consummation of the exchange offer, we, or the holders of a
majority of the aggregate principal amount of the notes, determine that
the new notes would not be freely tradable without restriction under the
Securities Act and the Exchange Act and without material restrictions
under applicable blue sky or state securities laws;
- applicable interpretations of the SEC would not permit the consummation
of the exchange offer;
- the exchange offer is not consummated within 180 days of the original
offering for any reason; or
- in the case of a holder not permitted to participate in the exchange
offer or any holder participating in the exchange offer that receives new
notes that may not be sold without restriction under state and federal
securities laws, the holders notifies us within 120 days of consummation
of the exchange offer,
we will be required to file a "shelf" registration statement for a continuous
offering under Rule 415 under the Securities Act in respect of the old notes.
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<PAGE> 44
Other than set forth in this paragraph, you will not have the right to
participate in the "shelf" registration statement nor otherwise require that we
register your old notes under the Securities Act. See "-- Procedures for
Tendering."
Based on interpretations of the SEC's staff set forth in no-action letters
issued to third parties unrelated to us, we believe that, with the exceptions
set forth below, your new notes issued in connection with the exchange offer in
exchange for your old notes may be offered for resale, resold, and otherwise
transferred by you without compliance with the registration and prospectus
delivery requirements of the Securities Act if:
- the new notes acquired in connection with the exchange offer are being
obtained in the ordinary course of your business;
- you are not engaging in and do not intend to engage in a distribution of
the new notes;
- you do not have an arrangement or understanding with any person to
participate in a distribution of the new notes; and
- you are not our "affiliate," as defined in Rule 405 under the Securities
Act.
If you tender in the exchange offer for the purpose of participating in a
distribution of the new notes, you cannot rely on this interpretation by the
SEC's staff and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. If you are a broker-dealer that receives the new notes for your own
account in exchange for old notes, where such old notes were acquired by you as
a result of market making activities or other trading activities, you must
acknowledge that you will deliver a prospectus in connection with any resale of
your new notes. See the section entitled "Plan of Distribution." If you are a
broker-dealer who acquired old notes directly from us and not as a result of
market-making activities or other trading activities, you may not rely on the
SEC's interpretations discussed above or participate in the exchange offer and
must comply with the prospectus delivery requirements of the Securities Act in
order to sell your new notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the exchange offer, except as set forth in the
second paragraph under "-- Purpose and Effect" above, any old notes you do not
tender will not have any further registration rights and your old notes will
continue to be subject to particular restrictions on transfer. Accordingly, the
liquidity of the market for your old notes could be negatively affected upon
completion of the exchange offer if you do not participate in the exchange
offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all old notes that you
validly tender and do not withdraw prior to 5:00 p.m., New York City time, on
, 1999, or such date and time to which we extend the offer. We will issue
to you $1,000 principal amount of new notes in exchange for each $1,000
principal amount of outstanding of your old notes we accept in the exchange
offer. You may tender some or all of your old notes in connection with the
exchange offer. However, you may only tender your old notes in integral
multiples of $1,000 in principal amount.
The form and terms of the new notes are substantially the same as the form
and terms of the old notes except that the new notes have been registered under
the Securities Act and will not bear legends restricting their transfer. The new
notes will evidence the same debt as the old notes and will be issued in
connection with, and entitled to the benefits of, the indenture pursuant to
which your old notes were issued.
As of the date of this prospectus, old notes representing $100.0 million
aggregate principal amount were outstanding and there was one registered holder,
a nominee of the DTC. This prospectus, together with the letter of transmittal,
is being sent to DTC's nominee and to others believed to have beneficial
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<PAGE> 45
interests in the old notes. We intend to conduct the exchange offer in
accordance with the applicable requirements of the Securities Act and the rules
and regulations of the SEC under the Securities Act.
We shall be deemed to have accepted validly tendered old notes when, as,
and if we have given oral or written notice of our acceptance to the exchange
agent. The exchange agent will act as agent for you for the purpose receiving
your new notes from us. If your tendered old notes are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
in this prospectus or otherwise, certificates for any of your unaccepted old
notes will be returned, without expense, to you as promptly as practicable after
1999, unless we extend the exchange offer.
If you participate in the exchange offer, you will not be required to pay
brokerage commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes with respect to the exchange of your old notes in
connection with the exchange offer. We will pay all charges and expenses, other
than particular applicable taxes, in connection with the exchange offer. See
"-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date shall be 5:00 p.m., New York City time, on
, 1999, unless we, in our sole discretion, extend the exchange
offer, in which case the expiration date shall mean the latest date and time to
which the exchange offer is extended. In order to extend the exchange offer, we
will notify the exchange agent and each registered holder of any extension by
oral or written notice prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date. We reserve the
right, in our discretion, to:
- delay accepting any old notes, to extend the exchange offer or, if any of
the conditions set forth under "-- Conditions to Exchange Offer" shall
not have been satisfied, to terminate the exchange offer, by giving oral
or written notice of such delay, extension or termination to the exchange
agent; or
- amend the terms of the exchange offer in any manner.
In the event that we make a material or fundamental change to the terms of
the exchange offer, we will file a post-effective amendment to the registration
statement.
PROCEDURES FOR TENDERING
Except as set forth under "-- Book Entry Transfer," to tender in the
exchange offer you must complete, sign, and date the letter of transmittal, or a
copy of the letter of transmittal, have the signatures guaranteed if required by
the letter of transmittal, and mail or otherwise deliver the letter of
transmittal or copy to the exchange agent prior to the expiration date. In
addition:
- certificates for your old notes must be received by the exchange agent
along with the letter of transmittal prior to the expiration date;
- a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of your old notes, if that procedure is available, into
the exchange agent's account at DTC (the "Book-Entry Transfer Facility")
in accordance with to the procedure for book-entry transfer described
below, must be received by the exchange agent prior to the expiration
date; or
- you must comply with the guaranteed delivery procedures described below.
To be tendered effectively, the letter of transmittal and other required
documents must be received by the exchange agent at the address set forth under
"-- Exchange Agent" prior to the expiration date.
A tender of your old notes that is not withdrawn before the expiration date
will constitute your agreement with us to be bound by the terms and subject to
the conditions of this prospectus and the letter of transmittal.
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<PAGE> 46
THE METHOD OF DELIVERY OF YOUR OLD NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. DO NOT SEND THE
LETTER OF TRANSMITTAL OR YOUR OLD NOTES TO US. YOU MAY REQUEST THAT YOUR BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE EFFECT THESE TRANSACTIONS FOR
YOU.
If you want to tender and your old notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee, you should
contact the registered holder promptly and instruct the registered holder to
tender on your behalf. If you want to tender on your own behalf, you must, prior
to completing and executing the letter of transmittal and delivering your old
notes, either make appropriate arrangements to register ownership of the old
notes in the your name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable
time.
Unless you are a registered holder who requests that the new notes be
mailed to you and issued in your name or you are a member of or participant in
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program, the Stock Exchange Medallion Program, or an
"Eligible Guarantor Institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, each an "Eligible Institution," an
Eligible Institution must guarantee your signature on a letter of transmittal or
a notice of withdrawal.
If the letter of transmittal is signed by a person other than the
registered holder of your old notes listed in the letter of transmittal, your
old notes must be endorsed or accompanied by a properly completed bond power,
signed by the registered holder as that registered holder's name appears on the
old notes.
If a trustee, executor, administrator, guardian, attorney-in-fact, officer
of a corporation, or other person acting in a fiduciary or representative
capacity signs the letter of transmittal or any notes or bond powers on your
behalf, that person must indicate their capacity when signing, and submit
satisfactory evidence to us with the letter of transmittal demonstrating their
authority to act on your behalf.
We will decide all questions as to the validity, form, eligibility,
acceptance, and withdrawal of tendered old notes, and our determination will be
final and binding. We reserve the absolute right to reject any and all old notes
not properly tendered or the acceptance of which would be unlawful in the
opinion of our counsel. We also reserve the right to waive any defects,
irregularities, or conditions of tender particular to your old notes. Our
interpretation of the terms and conditions of the exchange offer, including the
instructions in a letter of transmittal, will be final and binding on all
parties. You must cure any defects or irregularities in connection with tenders
of old notes within such time as we shall determine. Although we intend to
notify you of defects or irregularities with respect to the tender of your old
notes, we, the exchange agent, or any other person shall not incur any liability
for failure to give such notification. Tender of your old notes will not be
deemed to have been made until such defects or irregularities have been cured or
waived. Any of your old notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the exchange agent to you, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
We reserve the right to purchase or make offers for any old notes that
remain outstanding after the expiration date or to terminate the exchange offer
and, to the extent permitted by law, purchase old notes in the open market, in
privately negotiated transactions or otherwise. The terms of any purchases or
offers could differ from the terms of the exchange offer.
By tendering, you will represent to us that, among other things:
- the new notes acquired in connection with the exchange offer are being
obtained in the ordinary course of your business, whether or not you are
the registered holder;
- you are not engaging in and do not intend to engage in a distribution of
the new notes;
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<PAGE> 47
- you do not have an arrangement or understanding with any person to
participate in the distribution of the new notes; and
- you are not our "affiliate," as defined under Rule 405 of the Securities
Act.
In all cases, issuance of new notes for your old notes we accept for
exchange in connection with the exchange offer will be made only after timely
receipt by the exchange agent of:
- certificates for your old notes or a timely Book-Entry Confirmation of
your old notes into the exchange agent's account at the Book-Entry
Transfer Facility;
- a properly completed and duly executed letter of transmittal or, with
respect to the DTC and its participants, electronic instructions in which
the tendering holder acknowledges its receipt of and agreement to be
bound by the letter of transmittal; and
- all other required documents.
If your tendered old notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if your old notes are submitted
for a greater principal amount than you desire to exchange, your unaccepted or
non-exchanged old notes will be returned without expense to you or, in the case
of old notes tendered by book-entry transfer into the exchange agent's account
at the Book-Entry Transfer Facility in accordance with the book-entry transfer
procedures described below, such nonexchanged old notes will be credited to an
account maintained with such Book-Entry Transfer Facility, as promptly as
practicable after the expiration or termination of the exchange offer.
If you are a broker-dealer that receives new notes for your own account in
exchange for your old notes, where you acquired your old notes as a result of
market-making activities or other trading activities, you must acknowledge that
you will deliver a prospectus in connection with any resale of your new notes.
See the section entitled "Plan of Distribution."
BOOK-ENTRY TRANSFER
The exchange agent will make requests to establish accounts at the
Book-Entry Transfer Facility for purposes of the exchange offer within two
business days after the date of this prospectus. If you are a financial
institution that is a participant in the Book-Entry Transfer Facility's systems,
you may make book-entry delivery of your old notes being tendered by causing the
Book-Entry Transfer Facility to transfer your old notes into the exchange
agent's account at the Book-Entry Transfer Facility in accordance with the
appropriate procedures for transfer. However, although you may deliver your old
notes through book-entry transfer at the Book-Entry Transfer Facility, a letter
of transmittal or copy of the letter of transmittal, with any required signature
guarantees and any other required documents, must, except as set forth in the
following paragraph, be transmitted to and received by the exchange agent on or
prior to the expiration date or the guaranteed delivery procedures set forth
below must be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the exchange offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system instead of sending a signed, hard copy letter of
transmittal. DTC is obligated to communicate those electronic instructions to
the exchange agent. To tender notes through ATOP, the electronic instructions
sent to DTC and transmitted by DTC to the exchange agent must contain the
participant's acknowledgment of its receipt of and agreement to be bound by the
letter of transmittal for the notes.
GUARANTEED DELIVERY PROCEDURES
If you are the registered holder of old notes and desire to tender your old
notes and your old notes are not immediately available, time will not permit
your old notes or other required documents to reach the exchange agent before
the expiration date or you cannot complete the procedure for book-entry transfer
on a timely basis, you may tender your old notes if:
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<PAGE> 48
- the tender is made through an Eligible Institution;
- prior to the expiration date, the exchange agent received from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery, in the form provided by us; and
- the letter of transmittal and certificates for all physically tendered
old notes, in proper form for transfer, or a Book-Entry Confirmation and
all other documents required by the applicable letter of transmittal are
received by the exchange agent within three New York Stock Exchange
("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery shall state your name and address and the
amount of old notes tendered, that the tender is being made thereby and
guaranteeing that within three NYSE trading days after the date of execution of
the Notice of Guaranteed Delivery, the letter of transmittal and certificates
for all physically tendered old notes, in proper form for transfer, or a
Book-Entry Confirmation and any other documents required by the applicable
letter of transmittal will be deposited by the Eligible Institution with the
exchange agent.
WITHDRAWAL RIGHTS
You may withdraw your tender of your old notes at any time prior to 5:00
p.m., New York City time, on the expiration date.
For your withdrawal to be effective, a written or, for a DTC participant,
electronic ATOP transmission notice of withdrawal must be received by the
exchange agent at its address set forth in this prospectus prior to 5:00 p.m.,
New York City time, on the expiration date.
Your notice of withdrawal must:
- specify your name;
- identify your old notes to be withdrawn, including the certificate number
or numbers and principal amount of your old notes;
- be signed by you in the same manner as the original signature on the
letter of transmittal by which your old notes were tendered or be
accompanied by documents of transfer sufficient to have the trustee of
your old notes register the transfer of your old notes into your name;
and
- specify the name in which any such old notes are to be registered, if you
do not want your old notes registered in your name.
We will determine all questions as to the validity, form, and eligibility
of your notice and our determination shall be final and binding on all you. Any
old notes you withdraw will not be considered to have been validly tendered. We
will return your old notes which have been tendered but not exchanged without
cost to the you as soon as practicable after withdrawal, rejection of tender, or
termination of the exchange offer. You may retender your properly withdrawn old
notes by following one of the above procedures before the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we shall not be
required to accept for exchange, or to issue new notes in exchange for, any of
your old notes and may terminate or amend the exchange offer if at any time
before the acceptance of your old notes for exchange or the exchange of the new
notes for such old notes, we determine that the exchange offer violates
applicable law, any applicable interpretation of the staff of the SEC or any
order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for our sole benefit and we may assert the
foregoing conditions regardless of the circumstances giving rise to the
conditions. We may waive in whole or in part at any time and from
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time to time these conditions in our sole discretion. Our failure at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, we will not accept for exchange any of your old notes
tendered, and no new notes will be issued in exchange for any your old notes, if
at such time any stop order shall be threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture Act of 1939, as
amended. In any such event we are required to use every reasonable effort to
obtain the withdrawal of any stop order at the earliest possible time.
EXCHANGE AGENT
All executed letters of transmittal should be directed to the exchange
agent. The Bank of New York has been appointed as exchange agent for the
exchange offer. Questions, requests for assistance and requests for additional
copies of this prospectus or of the letter of transmittal should be directed to
the exchange agent addressed as follows:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
Attention: New York, New York 10286
Attention:
</TABLE>
By Facsimile:
(Eligible Institutions Only)
(212) 815-6339
For Information or
Confirmation by Telephone:
(212) 815-3428
Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or by overnight delivery service.
FEES AND EXPENSES
We will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone by
our officers and employees.
We will pay estimated cash expenses in the aggregate of $ incurred in
connection with the exchange offer. These expenses include fees and expenses of
the exchange agent, accounting, legal, printing, and related fees and expenses.
TRANSFER TAXES
You will not be obligated to pay any transfer taxes in connection with the
exchange offer, unless you request that we register new notes in the name of, or
request that old notes not tendered or not accepted in the exchange offer be
returned to, a person other than the registered tendering holder, in which case
you will be responsible for the payment of any applicable transfer tax on the
notes.
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DESCRIPTION OF THE NEW NOTES
GENERAL
The new notes will be issued under an Indenture, dated as of July 30, 1999
(the "Indenture"), entered into between the Company and The Bank of New York, as
Trustee (the "Trustee"), a copy of which is available upon request to the
Company. The following summary of certain provisions of the Indenture and the
new notes does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Indenture (including the
definitions of certain terms therein and those terms made a part thereof by the
Trust Indenture Act of 1939, as amended) and the new notes.
Principal of, premium, if any, and interest on the new notes will be
payable, and the new notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York, which
initially shall be the corporate trust office of the Trustee in New York, New
York, except that, at the option of the Company, payment of interest may be made
by check mailed to the address of the holders as such address appears in the
Note Register.
The new notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge will be made for any registration of transfer or exchange of new
notes, but the Company may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith.
TERMS OF NOTES
The new notes will be unsecured, senior subordinated obligations of the
Company, limited to $100.0 million aggregate principal amount, and will mature
on August 1, 2009. Each new note will bear interest at the rate per annum shown
on the front cover of this prospectus from the date of issuance, or from the
most recent date to which interest has been paid or provided for, payable
semiannually on February 1 and August 1 of each year commencing on February 1,
2000 to holders of record at the close of business on the July 15 or January 15
immediately preceding the interest payment date.
OPTIONAL REDEMPTION
Except as set forth below, the notes will not be redeemable at the option
of the Company prior to August 1, 2004. On and after such date, the notes will
be redeemable, at the Company's option, in whole or in part, at any time upon
not less than 30 nor more than 60 days prior notice mailed by first-class mail
to each holder's registered address, at the following redemption prices,
expressed as percentages of principal amount, plus accrued and unpaid interest
to the redemption date, subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date:
If redeemed during the 12-month period commencing on August 1 of the years
set forth below:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ------ ----------------
<S> <C>
2004................................................ 105.813%
2005................................................ 103.875%
2006................................................ 101.938%
2007 and thereafter................................. 100.000%
</TABLE>
Notwithstanding the foregoing, at any time and from time to time prior to
August 1, 2002, the Company may redeem in the aggregate up to $35.0 million
principal amount of the notes with the net cash proceeds of one or more Equity
Offerings by the Company so long as there is a Public Market at the time of such
redemption, at a redemption price, expressed as a percentage of principal
amount, of 111.625%, plus accrued and unpaid interest, if any, to the redemption
date, subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date in
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<PAGE> 51
respect of then outstanding notes; provided, however, that at least $65.0
million of the notes must remain outstanding after each such redemption.
At any time on or prior to August 1, 2004, the notes may also be redeemed
as a whole, but not in part, at the option of the Company upon the occurrence of
a Change of Control, upon not less than 30 nor more than 60 days prior notice
(but in no event more than 90 days after the occurrence of such Change of
Control) mailed by first-class mail to each holder's registered address, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest, if any, to, the date
of redemption (the "Redemption Date") (subject to the right of holders of record
on the relevant record date to receive interest due on the relevant interest
payment date in respect of then outstanding notes).
"Applicable Premium" means, with respect to a note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such note
at August 1, 2004 (such redemption price being described under "-- Optional
Redemption") plus (2) all required interest payments due on such note through
August 1, 2004, computed using a discount rate equal to the Treasury Rate plus
100 basis points, over (B) the principal amount of such note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to August 1, 2004; provided, however, that if
the period from the Redemption Date to August 1, 2004 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to August 1, 2004 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
Selection. In the case of any partial redemption, selection of the notes
for redemption will be made by the Trustee on a pro rata basis, by lot or by
such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no note of $1,000 in original principal amount or less
will be redeemed in part. If any note is to be redeemed in part only, the notice
of redemption relating to such note shall state the portion of the principal
amount thereof to be redeemed. A new note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original note.
RANKING AND SUBORDINATION
The payment of the principal of, premium, if any, and interest on the notes
is subordinated in right of payment, as set forth in the Indenture, to the
payment when due of all Senior Indebtedness of the Company. However, payment
from the money or the proceeds of U.S. Government Obligations held in any
defeasance trust described under "Defeasance" below is not subordinate to any
Senior Indebtedness or subject to the restrictions described herein. As of March
31, 1999, on a pro forma basis after giving effect to the Reorganization and the
Transactions, there would have been approximately $150.0 million of Senior
Indebtedness outstanding. In addition, on the same pro forma basis, there would
have been approximately $50.0 million available under the Senior Credit Facility
as of March 31, 1999, for the general corporate purposes and working capital
needs of the Company, all of which would be Senior Indebtedness if borrowed.
Although the Indenture contains limitations on the amount of additional
Indebtedness that the Company may incur, under certain circumstances the amount
of such Indebtedness could be substantial and, in any case, such Indebtedness
may be Senior Indebtedness. See "Certain Covenants -- Limitation on
Indebtedness" below. All the operations of the Company are conducted through its
Subsidiaries. Each
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Subsidiary of the Company has guaranteed the Company's obligations under the
Senior Credit Facility. Although the Indenture limits the incurrence of
Indebtedness of the Company's Subsidiaries, such limitation is subject to a
number of significant qualifications; moreover, the Indenture does not impose
any limitation on the incurrence by such Subsidiaries of liabilities that are
not considered Indebtedness under the Indenture. See "-- Limitation on
Indebtedness."
"Senior Indebtedness" is defined as the Bank Indebtedness and all other
Indebtedness of the Company, including interest and fees thereon, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that the obligations in respect of such Indebtedness
are not superior in right of payment to the notes; provided, however, that
Senior Indebtedness will not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for Federal, state, foreign, local or other taxes
owed or owing by the Company, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), or (4) any Indebtedness,
Guarantee or obligation of the Company that is expressly subordinate or junior
in right of payment to any other Indebtedness, Guarantee or obligation of the
Company, including any Senior Subordinated Indebtedness and any Subordinated
Indebtedness.
The notes are effectively subordinated to the obligations of the Company's
Subsidiaries, including the guarantee by its Subsidiaries of obligations under
the Credit Agreement, because the Company is a holding company. In the event of
an insolvency, liquidation or other reorganization of any of the Subsidiaries of
the Company, the creditors of the Company (including the holders of the notes),
as well as shareholders of the Company, will have no right to proceed against
the assets of such Subsidiaries or to cause the liquidation or bankruptcy of
such Subsidiaries under applicable bankruptcy laws. Creditors of such
Subsidiaries, including lenders under the Senior Credit Facility, would be
entitled to payment in full from such assets before the Company, as a
shareholder, would be entitled to receive any distribution therefrom. Except to
the extent that the Company itself may be a creditor with recognized claims
against such Subsidiaries, claims of creditors of such Subsidiaries will have
priority with respect to the assets and earnings of such Subsidiaries over the
claims of creditors of the Company, including claims under the notes.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the notes in accordance with the provisions of the Indenture. The
Company has agreed in the Indenture that it will not incur, directly or
indirectly, any Indebtedness that is subordinate or junior in right of payment
to Senior Indebtedness unless such Indebtedness is Senior Subordinated
Indebtedness or is contractually subordinated in right of payment to Senior
Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be
subordinate or junior to Secured Indebtedness merely because it is unsecured nor
is any Indebtedness deemed to be subordinate or junior to other Indebtedness
merely because it matures after such other Indebtedness.
During the continuance of any default in the payment of the principal of,
premium, if any, interest or liquidated damages, if any, on Designated Senior
Indebtedness or any other default with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Company may not pay principal of, premium (if any), or interest on, the notes or
make any deposit pursuant to the provisions described under "Defeasance" below
and may not otherwise purchase, redeem or retire any notes (collectively, "pay
the notes") (except in (i) Capital Stock (other than Disqualified Stock) issued
by the Company to pay interest on the notes or issued in exchange for the notes,
(ii) in securities substantially identical to the notes issued by the Company in
payment of interest thereon or (iii) in securities issued by the Company which
are subordinated to Senior Indebtedness at least to the same extent as the notes
and having an Average Life at least equal to the remaining Average Life of the
notes) for a period (a "Payment Blockage Period") commencing upon the receipt by
the Trustee (with a copy to the Company) of written notice (a "Blockage Notice")
of such default from the Representative of the holders of such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter
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(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice is no
longer continuing or (iii) because such Designated Senior Indebtedness has been
repaid in full). Notwithstanding the provisions described in the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness or
the Representative of such holders have accelerated the maturity of such
Designated Senior Indebtedness, the Company may resume payments on the notes
after the end of such Payment Blockage Period. Not more than one Blockage Notice
may be given in any consecutive 360-day period, irrespective of the number of
defaults with respect to Designated Senior Indebtedness during such period.
Upon any payment or distribution of the assets of the Company to creditors
upon a total or partial liquidation or dissolution or reorganization or
bankruptcy of or similar proceeding relating to the Company or its property, the
holders of Senior Indebtedness will be entitled to receive payment in full of
the Senior Indebtedness before the holders of the notes are entitled to receive
any payment, and until the Senior Indebtedness is paid in full, any payment or
distribution to which holders of the notes would be entitled but for the
subordination provisions of the Indenture will be made to holders of the Senior
Indebtedness as their interests may appear.
If payment of the notes is accelerated because of an Event of Default, the
Company and the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
If any Designated Senior Indebtedness is outstanding, the Company may not pay
the notes until five Business Days after such holders or the Representative of
the Designated Senior Indebtedness receive notice of such acceleration and,
thereafter, may pay the notes only if the subordination provisions of the
Indenture otherwise permit payment at that time.
By reason of the subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each holder will have the right to require the Company to repurchase
all or any part of such holder's notes at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of purchase (subject to the right of holders of record on the relevant
record date to receive accrued and unpaid interest due on the relevant interest
payment date in respect of then outstanding notes):
(i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets
of the Company and its Subsidiaries to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act (a "Group")
(whether or not otherwise in compliance with the provisions of the
Indenture), other than to Hicks Muse, Mills & Partners, or any of their
Affiliates, officers or directors (the "Permitted Holders"); or
(ii) a majority of the Board of Directors of the Company shall consist
of Persons who are not Continuing Directors; or
(iii) the acquisition by any Person or Group (other than the Permitted
Holders or any direct or indirect Subsidiary of any Permitted Holder) of
the power, directly or indirectly, to vote or direct the voting of
securities having more than 50% of the ordinary voting power for the
election of directors of the Company.
Within 30 days following any Change of Control, unless the Company has
mailed a redemption notice with respect to all the outstanding notes in
connection with such Change of Control, the Company shall mail a notice to each
holder with a copy to the Trustee stating: (1) that a Change of Control has
occurred and that such holder has the right to require the Company to purchase
such holder's notes at a purchase
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price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
holders of record on a record date to receive accrued and unpaid interest on the
relevant interest payment date in respect of the then outstanding notes); (2)
the repurchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed); and (3) the procedures determined by
the Company, consistent with the Indenture, that a holder must follow in order
to have its notes purchased.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.
The definition of "Change of Control" includes, among other transactions, a
disposition of all or substantially all of the property and assets of the
Company and its Subsidiaries. With respect to the disposition of property or
assets, the phrase "all or substantially all" as used in the Indenture varies
according to the facts and circumstances of the subject transaction, has no
clearly established meaning under New York law (which is the choice of law under
the Indenture) and is subject to judicial interpretation. Accordingly, in
certain circumstances there may be a degree of uncertainty in ascertaining
whether a particular transaction would involve a disposition of "all or
substantially all" of the property or assets of a Person, and therefore it may
be unclear whether a Change of Control has occurred and whether the Company is
required to make an offer to repurchase the notes as described above.
The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the Credit Agreement. Future Senior
Indebtedness of the Company and future Indebtedness of the Company's
Subsidiaries may also contain prohibitions of certain events that would
constitute a Change of Control or require such Indebtedness to be repurchased
upon a Change of Control. Moreover, the exercise by the holders of their right
to require the Company to repurchase the notes could cause a default under
Senior Indebtedness of the Company, even if the Change of Control itself does
not. Finally, the Company's ability to pay cash to the holders upon a repurchase
may be limited by the Company's then existing financial resources. There can be
no assurance that sufficient funds will be available when necessary to make any
required repurchases. Even if sufficient funds were otherwise available, the
terms of the Bank Indebtedness will prohibit the Company's prepayment of notes
prior to their scheduled maturity. Consequently, if the Company is not able to
prepay the Bank Indebtedness and any other Senior Indebtedness containing
similar restrictions or obtain requisite consents, as described above, the
Company will be unable to fulfill its repurchase obligations if holders of notes
exercise their repurchase rights following a Change of Control, thereby
resulting in a default under the Indenture.
CERTAIN COVENANTS
The Indenture contains certain covenants including, among others, the
following:
Limitation on Indebtedness. (a) The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, Incur any Indebtedness; provided,
however, that the Company and any of its Restricted Subsidiaries may incur
Indebtedness if on the date thereof the Consolidated Coverage Ratio would be
greater than 2.00:1.00.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may incur the following Indebtedness: (i) Indebtedness
Incurred pursuant to (A) the Credit Agreement (including, without limitation,
any renewal, extension, refunding, restructuring, replacement or refinancing
thereof referred to in clause (ii) of the definition thereof) or (B) any other
agreements or indentures governing Senior Indebtedness; provided, however, that
the aggregate principal amount of all Indebtedness Incurred pursuant to this
clause (i) does not exceed $200.0 million at any time outstanding, less the
aggregate principal amount thereof repaid with the net proceeds of Asset
Dispositions (to the extent, in the case of a repayment of revolving credit
Indebtedness, the commitment to advance the loans repaid has
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been terminated); (ii) Indebtedness represented by Capitalized Lease
Obligations, mortgage financings or purchase money obligations, in each case
Incurred for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property used in a Related Business or
Incurred to Refinance any such purchase price or cost of construction or
improvement, in each case Incurred no later than 365 days after the date of such
acquisition or the date of completion of such construction or improvement;
provided, however, that the principal amount of any Indebtedness Incurred
pursuant to this clause (ii) shall not exceed $15.0 million at any time
outstanding; (iii) Permitted Indebtedness; and (iv) Indebtedness (other than
Indebtedness described in clauses (i)-(iii)) in a principal amount which, when
taken together with the principal amount of all other Indebtedness Incurred
pursuant to this clause (iv) and then outstanding, will not exceed $40.0 million
(it being understood that any Indebtedness Incurred under this clause (iv) shall
cease to be deemed Incurred or outstanding for purposes of this clause (iv) (but
shall be deemed to be Incurred for purposes of paragraph (a)) from and after the
first date on which the Company or its Restricted Subsidiaries could have
Incurred such Indebtedness under the foregoing paragraph (a) without reliance
upon this clause (iv)).
(c) In addition, the Company shall not Incur any Secured Indebtedness which
is not Senior Indebtedness unless contemporaneously therewith effective
provision is made to secure the notes equally and ratably with such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien.
(d) The Company will not permit any Unrestricted Subsidiary to Incur any
Indebtedness other than Non-Recourse Debt; provided, however, if any such
Indebtedness ceases to be Non-Recourse Debt, such event shall be deemed to
constitute an Incurrence of Indebtedness by the Company or a Restricted
Subsidiary.
(e) The Company will not Incur any Indebtedness if such Indebtedness is
subordinate or junior in right of payment to any Senior Indebtedness, unless
such Indebtedness is Senior Subordinated Indebtedness or is contractually
subordinated in right of payment to Senior Subordinated Indebtedness.
(f) For purposes of determining compliance with any U.S. dollar-denominated
restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in effect on the date
such Indebtedness was Incurred, in the case of term debt, or first committed, in
the case of revolving credit debt; provided that if such Indebtedness is
Incurred to refinance other indebtedness denominated in a foreign currency, and
such refinancing would cause the applicable U.S. dollar-denominated restriction
to be exceeded if calculated at the relevant currency exchange rate in effect on
the date of such refinancing, such U.S. dollar-denominated restriction shall be
deemed not to have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of such
Indebtedness being refinanced. The principal amount of any Indebtedness Incurred
to refinance other Indebtedness, if Incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the currency
exchange rate applicable to the currencies in which such respective Indebtedness
is denominated that is in effect on the date of such refinancing.
Limitation on Restricted Payments. (a) The Company shall not, and shall not
permit any of its Restricted Subsidiaries, directly or indirectly, to (i)
declare or pay any dividend or make any distribution on or in respect of its
Capital Stock (including any payment in connection with any merger or
consolidation involving the Company or any of its Restricted Subsidiaries)
except (A) dividends or distributions payable in its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to purchase such
Capital Stock (other than Disqualified Stock), and (B) dividends or
distributions payable to the Company or a Restricted Subsidiary of the Company
(and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its
other holders of Capital Stock on a pro rata basis), (ii) purchase, redeem,
retire or otherwise acquire for value any Capital Stock of the Company held by
Persons other than a Restricted Subsidiary of the Company or any Capital Stock
of a Restricted Subsidiary of the Company held by Persons other than the Company
or another Restricted Subsidiary of the Company (in either case, other than in
exchange for its Capital Stock (other than Disqualified Stock) or to the extent
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that after giving effect to such purchase, redemption, retirement or
acquisition, such Restricted Subsidiary would become a Wholly Owned Subsidiary),
(iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment, any Subordinated Indebtedness (other than the purchase, repurchase
or other acquisition of Subordinated Indebtedness purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of purchase, repurchase or
acquisition) or (iv) make any Investment (other than a Permitted Investment) in
any Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being herein referred to
in clauses (i) through (iv) as a "Restricted Payment"), if at the time the
Company or such Restricted Subsidiary makes such Restricted Payment: (1) a
Default shall have occurred and be continuing (or would result therefrom); or
(2) the Company is not able to incur an additional $1.00 of Indebtedness
pursuant to paragraph (a) under "Limitation on Indebtedness"; or (3) the
aggregate amount of such Restricted Payment and all other Restricted Payments
declared or made subsequent to the Issue Date would exceed the sum of: (A) 50%
of the Consolidated Net Income accrued during the period (treated as one
accounting period) from the Issue Date to the end of the most recent fiscal
quarter ending prior to the date of such Restricted Payment as to which
financial results are available (or, in case such Consolidated Net Income shall
be a deficit, minus 100% of such deficit); (B) the aggregate net proceeds
received by the Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) or other capital contributions subsequent to the Issue Date
(other than net proceeds received from an issuance or sale of such Capital Stock
to a Subsidiary of the Company or an employee stock ownership plan or similar
trust); provided, however, that the value of any non cash net proceeds (which in
each case shall be assets of the type used in a Related Business or Capital
Stock of a Person engaged in a Related Business) shall be as determined by the
Board of Directors in good faith, except that in the event the value of any non
cash net proceeds shall be $15.0 million or more, the value shall be as
determined in writing by an independent investment banking firm of nationally
recognized standing; (C) the aggregate Net Cash Proceeds received by the Company
from the issue or sale of its Capital Stock (other than Disqualified Stock) to
an employee stock ownership plan or similar trust subsequent to the Issue Date;
provided, however, that if such plan or trust Incurs any Indebtedness owed to or
Guaranteed by the Company or any of its Restricted Subsidiaries to finance the
acquisition of such Capital Stock, such aggregate amount shall be limited to
such Net Cash Proceeds less such Indebtedness Incurred to or Guaranteed by the
Company or any of its Restricted Subsidiaries and any increase in the
Consolidated Net Worth of the Company resulting from principal repayments made
by such plan or trust with respect to Indebtedness Incurred by it to finance the
purchase of such Capital Stock; (D) the amount by which Indebtedness of the
Company is reduced on the Company's balance sheet upon the conversion or
exchange (other than by a Restricted Subsidiary of the Company) subsequent to
the Issue Date of any Indebtedness of the Company for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash, or other
property, distributed by the Company upon such conversion or exchange); (E) the
amount equal to the net reduction in Investments since the Issue Date (other
than Permitted Investments) made by the Company or any of its Restricted
Subsidiaries in any Person resulting from (i) repurchases or redemptions of such
Investments by such Person, proceeds realized upon the sale of such Investment
to an unaffiliated purchaser, and repayments of loans or advances or other
transfers of assets by such Person to the Company or any Restricted Subsidiary
of the Company or (ii) the redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the definition of
"Investment") not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments; provided, however, that no
amount shall be included under this clause (E) to the extent it is already
included in Consolidated Net Income; (F) the aggregate Net Cash Proceeds
received by a Person in consideration for the issuance of such Person's Capital
Stock (other than Disqualified Stock) which are held by such Person at the time
such Person is merged with and into the Company in accordance with the "Merger
and Consolidation" covenant subsequent to the Issue Date; provided, however,
that concurrently with or immediately following such merger the Company uses an
amount equal to such Net Cash
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Proceeds to redeem or repurchase the Company's Capital Stock; and (G) $5.0
million since the Issue Date.
(b) The provisions of paragraph (a) shall not prohibit: (i) any purchase or
redemption of Capital Stock or Subordinated Indebtedness of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan
or similar trust); provided, however, that (A) such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments and (B) the
Net Cash Proceeds from such sale shall be excluded from clause (3)(B) of
paragraph (a); (ii) any purchase or redemption of Subordinated Indebtedness of
the Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Subordinated Indebtedness of the Company; provided, however,
that such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments; (iii) any purchase or redemption of Subordinated
Indebtedness from Net Available Cash to the extent permitted under "Limitation
on Sales of Assets and Subsidiary Stock" below; provided, however, that such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments; (iv) dividends paid within 60 days after the date of
declaration if at such date of declaration such dividend would have complied
with the requirements of paragraph (a) above; (v) payments of dividends on the
Company's common stock after an initial public offering of common stock of the
Company in an annual amount not to exceed 6% of the gross proceeds (before
deducting underwriting discounts and commissions and other fees and expenses of
the offering) received by the Company from shares of common stock sold for the
account of the Company (and not for the account of any stockholder) in such
initial public offering; (vi) payments by the Company to repurchase Capital
Stock or other securities of the Company from members of management of the
Company in an aggregate amount not to exceed $10.0 million since the Issue Date;
(vii) payments to enable the Company to redeem or repurchase stock purchase or
similar rights granted by the Company with respect to its Capital Stock in an
aggregate amount not to exceed $5.0 million since the Issue Date; (viii)
payments, not to exceed $200,000 in the aggregate since the Issue Date, to
enable the Company to make cash payments to holders of its Capital Stock in lieu
of the issuance of fractional shares of its Capital Stock; and (ix) payments
made pursuant to any merger, consolidation or sale of assets effected in
accordance with the "Merger and Consolidation" covenant; provided, however, that
no such payment may be made pursuant to this clause (ix) unless, after giving
effect to such transaction (and the incurrence of any Indebtedness in connection
therewith and the use of the proceeds thereof), the Company would be able to
Incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Indebtedness" covenant such that, after
Incurring that $1.00 of additional Indebtedness, the Consolidated Coverage Ratio
would be greater than 3.5:1.00; provided, however, that in the case of clauses
(v), (vi), (vii), (viii) and (ix) no Default or Event of Default shall have
occurred or be continuing at the time of such payment or as a result thereof;
provided further, however, that for purposes of determining the aggregate amount
expended for Restricted Payments in accordance with clause (3) of the
immediately preceding paragraph (a), only the amounts expended under clauses
(iv) through (ix) shall be included.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any such Restricted Subsidiary to
(i) pay dividends or make any other distributions on its Capital Stock or pay
any Indebtedness or other obligation owed to the Company, (ii) make any loans or
advances to the Company or (iii) transfer any of its property or assets to the
Company; except: (a) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including the Credit Agreement; (b)
any encumbrance or restriction with respect to such a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness or Preferred Stock issued
by such Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company and outstanding on such date (other than
Indebtedness or Preferred Stock issued as consideration in, or to provide all or
any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary of the Company or was acquired by the
Company); (c) any
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encumbrance or restriction with respect to such a Restricted Subsidiary pursuant
to an agreement evidencing Indebtedness Incurred without violation of the
Indenture or effecting a refinancing of Indebtedness issued pursuant to an
agreement referred to in clauses (a) or (b) or this clause (c) or contained in
any amendment to an agreement referred to in clauses (a) or (b) or this clause
(c); provided, however, that the encumbrances and restrictions with respect to
such Restricted Subsidiary contained in any of such agreement, refinancing
agreement or amendment, taken as a whole, are not materially less favorable to
the holders, as determined in good faith by the senior management of the Company
or Board of Directors of the Company, than encumbrances and restrictions with
respect to such Restricted Subsidiary contained in agreements in effect at, or
entered into on, the Issue Date; (d) in the case of clause (iii), any
encumbrance or restriction (A) that restricts in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) by virtue of
any transfer of, agreement to transfer, option or right with respect to, or Lien
on, any property or assets of the Company or any Restricted Subsidiary not
otherwise prohibited by the Indenture, (C) that is included in a licensing
agreement to the extent such restrictions limit the transfer of the property
subject to such licensing agreement or (D) arising or agreed to in the ordinary
course of business and that does not, individually or in the aggregate, detract
from the value of property or assets of the Company or any of its Subsidiaries
in any manner material to the Company or any such Restricted Subsidiary as
determined in good faith by senior management of the Company; (e) in the case of
clause (iii) above, restrictions contained in security agreements, mortgages or
similar documents securing Indebtedness of a Restricted Subsidiary to the extent
such restrictions restrict the transfer of the property subject to such security
agreements; (f) any restriction with respect to such a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition of all
or substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition; (g) encumbrances or
restrictions with respect to Indebtedness of Foreign Subsidiaries; provided that
(1) such encumbrances or restrictions do not limit in any manner the ability of
the Restricted Subsidiaries of the Company from performing any of the acts
referred to in clauses (i) through (iii) above and (2) the aggregate principal
amount of the Indebtedness of the Foreign Subsidiaries of the Company which
includes such an encumbrance or restriction does not exceed $25.0 million; and
(h) encumbrances or restrictions arising or existing by reason of applicable
law.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company shall
not, and shall not permit any of its Restricted Subsidiaries to, make any Asset
Disposition unless (i) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Company's senior management or
the Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset Disposition, (ii)
at least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents and (iii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (A)
first, to the extent the Company or any Restricted Subsidiary elects (or is
required by the terms of any Senior Indebtedness), to prepay, repay or purchase
(x) Senior Indebtedness or (y) Indebtedness (other than Preferred Stock) of a
Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the
Company) within 180 days from the later of the date of such Asset Disposition or
the receipt of such Net Available Cash; (B) second, within one year from the
receipt of such Net Available Cash, to the extent of the balance of such Net
Available Cash after application in accordance with clause (A), at the Company's
election either (x) to the investment in or acquisition of Additional Assets or
(y) to prepay, repay or purchase (1) Senior Indebtedness or (2) Indebtedness
(other than Preferred Stock) of a Wholly-Owned Subsidiary (in each case other
than Indebtedness owed to the Company); and (C) third, within 45 days after the
later of the application of Net Available Cash in accordance with clauses (A)
and (B) and the date that is one year from the receipt of such Net Available
Cash, to the extent of the balance of such Net Available Cash after application
in accordance with clauses (A) and (B), to make an offer to purchase Notes and
other Senior Subordinated Indebtedness, to the extent required pursuant to the
terms thereof, pro rata at 100% of the tendered principal amount thereof (or
100% of the accreted value of such other Senior Subordinated Indebtedness so
tendered, if such Senior
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Subordinated Indebtedness was issued at a discount), plus accrued and unpaid
interest, if any, thereon to the date of purchase. The balance of such Net
Available Cash after application in accordance with clauses (A), (B) and (C) may
be used by the Company in any manner not otherwise prohibited under the
Indenture. Notwithstanding anything herein to the contrary, in connection with
any prepayment, repayment or purchase of Indebtedness pursuant to clause (A),
(B) or (C) above, the Company or such Restricted Subsidiary shall retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased. Notwithstanding the foregoing provisions, the Company and
its Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance herewith except to the extent that the aggregate Net
Available Cash from all Asset Dispositions since the Issue Date which are not
applied in accordance with this covenant at any time exceed $5.0 million. The
Company shall not be required to make an offer for Notes pursuant to this
covenant if the Net Available Cash available therefor (after application of the
proceeds as provided in clauses (A) and (B)) is less than $10.0 million for any
particular Asset Disposition (which lesser amounts shall be carried forward for
purposes of determining whether an offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition).
For the purposes of this covenant, the following will be deemed to be cash:
(x) the assumption by the transferee of Senior Indebtedness of the Company or
Indebtedness of any Restricted Subsidiary of the Company and the release of the
Company or such Restricted Subsidiary from all liability on such Senior
Indebtedness or Indebtedness in connection with such Asset Disposition (in which
case the Company shall, without further action, be deemed to have applied such
assumed Indebtedness in accordance with clause (A) of the preceding paragraph)
and (y) securities received by the Company or any Restricted Subsidiary of the
Company from the transferee that are promptly converted by the Company or such
Restricted Subsidiary into cash.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries
will be permitted to consummate an Asset Swap if (i) immediately after giving
effect to such Asset Swap, no Default or Event of Default shall have occurred or
be continuing, (ii) in the event such Asset Swap involves an aggregate amount in
excess of $2.5 million, the terms of such Asset Swap have been approved by a
majority of the members of the Board of Directors of the Company, and (iii) in
the event such Asset Swap involves an aggregate amount in excess of $10.0
million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Asset Swap
is fair to the Company or such Restricted Subsidiary, as the case may be, from a
financial point of view.
(b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to clause (a)(iii)(C), the Company will be required to purchase
Notes tendered pursuant to an offer by the Company for the Notes at a purchase
price of 100% of their principal amount plus accrued and unpaid interest, if
any, to the purchase date in accordance with the procedures (including prorating
in the event of oversubscription as well as proration required as a result of
tenders of other Senior Subordinated Indebtedness) set forth in the Indenture.
If the aggregate purchase price of the Notes tendered pursuant to the offer is
less than the Net Available Cash allotted to the purchase of the Notes, the
Company may use the remaining Net Available Cash for any purpose not prohibited
by the Indenture. Upon the consummation of the purchase of Notes properly
tendered in response to such offer to purchase, the amount of Net Available Cash
subject to future offers to purchase shall be deemed to be reset to zero.
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to the
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Indenture by virtue thereof.
Limitation on Affiliate Transactions. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or conduct any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of the
Company other than a Wholly-Owned Subsidiary (an "Affiliate Transaction")
unless: (i) the terms of
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such Affiliate Transaction are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate; (ii) in the event such Affiliate Transaction involves an
aggregate amount in excess of $5.0 million, the terms of such transaction have
been approved by a majority of the members of the Board of Directors of the
Company and by a majority of the disinterested members of such Board, if any
(and such majority or majorities, as the case may be, determines that such
Affiliate Transaction satisfies the criteria in (i) above); and (iii) in the
event such Affiliate Transaction involves an aggregate amount in excess of $10.0
million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Affiliate
Transaction is fair to the Company or such Restricted Subsidiary, as the case
may be, from a financial point of view.
(b) The foregoing paragraph (a) shall not apply to (i) any Restricted
Payment permitted to be made pursuant to the covenant described under
"Limitation on Restricted Payments," (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors of the Company, (iii) loans or advances to
employees in the ordinary course of business of the Company or any of its
Restricted Subsidiaries, (iv) any transaction between Wholly-Owned Subsidiaries,
(v) indemnification agreements with, and the payment of fees and indemnities to,
directors, officers and employees of the Company and its Restricted
Subsidiaries, in each case in the ordinary course of business, (vi) transactions
pursuant to agreements as in existence on the Issue Date, (vii) any employment,
non-competition or confidentiality agreements entered into by the Company or any
of its Restricted Subsidiaries with its employees in the ordinary course of
business, (viii) the issuance of Capital Stock of the Company (other than
Disqualified Stock), (ix) any obligations of the Company pursuant to the
Monitoring and Oversight Agreement and the Financial Advisory Agreement, and (x)
transactions pursuant to supply or similar agreements entered into in the
ordinary course of business on customary terms that are not less favorable to
the Company than those that would have been obtained in a comparable transaction
with an unrelated Person, as determined in good faith by senior management of
the Company.
Limitation on Capital Stock of Restricted Subsidiaries. The Company will
not permit any of its Restricted Subsidiaries to issue any Capital Stock (other
than Preferred Stock) to any Person (other than to the Company or a Wholly-Owned
Subsidiary of the Company) or permit any Person (other than the Company or a
Wholly-Owned Subsidiary of the Company) to own any Capital Stock (other than
Preferred Stock) of a Restricted Subsidiary of the Company, if in either case as
a result thereof such Restricted Subsidiary would no longer be a Restricted
Subsidiary of the Company; provided, however, that this provision shall not
prohibit (x) the Company or any of its Restricted Subsidiaries from selling,
leasing or otherwise disposing of all of the Capital Stock of any Restricted
Subsidiary or (y) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary in compliance with the Indenture.
Rule 144A Information Requirement. The Company will furnish to the holders
of Notes, upon their request, and to prospective purchasers thereof designated
by such holders, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act for so long as is required for an offer or
sale of the Notes to qualify for an exemption under Rule 144A.
Reports. The Indenture will provide that so long as any of the Notes are
outstanding, the Company will provide to the holders of Notes and file with the
Commission, to the extent such submissions are accepted for filing by the
Commission, copies of the annual reports and of the information, documents and
other reports that the Company would have been required to file with the
Commission pursuant to Sections 13 or 15(d) of the Exchange Act regardless of
whether the Company is then obligated to file such reports.
Merger and Consolidation. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation, partnership, trust or limited
liability company organized and existing under the laws of the United States of
America, any State thereof or the
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District of Columbia and the Successor Company (if not the Company) shall
expressly assume, by supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the Company
under the Notes and the Indenture; (ii) immediately after giving effect to such
transaction (and treating any Indebtedness that becomes an obligation of the
Successor Company or any Subsidiary of the Successor Company as a result of such
transaction as having been incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default or Event of Default
shall have occurred and be continuing; (iii) immediately after giving effect to
such transaction, the Successor Company would be able to incur at least an
additional $1.00 of Indebtedness pursuant to paragraph (a) of "Limitation on
Indebtedness"; and (iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but, in the
case of a lease of all or substantially all its assets, the Company will not be
released from the obligation to pay the principal of and interest on the Notes.
Notwithstanding the foregoing clauses (ii) and (iii), (1) any Restricted
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company and (2) the Company may merge
with an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction to realize tax or other benefits, provided, that
the Trustee shall receive an Opinion of Counsel that, as a result of such
Affiliate merger, the holders of the Notes will not recognize income, gain or
loss for Federal income tax purposes as a result of such Affiliate merger and
will be subject to Federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such Affiliate merger had
not occurred.
EVENTS OF DEFAULT
Each of the following constitutes an Event of Default under the Indenture:
(i) a default in any payment of interest on any Note when due, continued for 30
days, whether or not such payment is prohibited by the provisions described
under "Ranking and Subordination" above, (ii) a default in the payment of
principal of any Note when due at its Stated Maturity, upon optional redemption,
upon required repurchase, upon declaration or otherwise, whether or not such
payment is prohibited by the provisions described under "Ranking and
Subordination" above, (iii) the failure by the Company to comply with its
obligations under the covenants described under "Certain Covenants -- Merger and
Consolidation" above, (iv) the failure by the Company to comply with its
obligations under the covenants described under "Certain Covenants -- Limitation
on Indebtedness," "-- Limitation on Restricted Payments," "-- Limitation on
Restrictions on Distributions from Restricted Subsidiaries," "-- Limitation on
Sales of Assets and Subsidiary Stock," or "Change of Control" above (in each
case, other than a failure to purchase Notes, which shall constitute an Event of
Default under clause (ii) above), (v) the failure by the Company to comply for
30 days after notice with its obligations under the covenants described under
"Certain Covenants" above, other than those referred to in clauses (iii) and
(iv) above, (vi) the failure by the Company to comply for 30 days after notice
with its other agreements contained in the Indenture, (vii) Indebtedness of the
Company or any Restricted Subsidiary is not paid within any applicable grace
period after final maturity or is accelerated by the holders thereof because of
a default and the total amount of such Indebtedness unpaid or accelerated
exceeds $15.0 million and such default shall not have been cured, including by
way of repayment, or such acceleration rescinded after a 10 day period (the
"cross acceleration provision"), (viii) certain events of bankruptcy, insolvency
or reorganization of the Company or a Significant Subsidiary (the "bankruptcy
provisions") or (ix) any judgment or decree for the payment of money in excess
of $15.0 million (to the extent not covered by insurance) is rendered against
the Company or a Significant Subsidiary and such judgment or decree shall remain
undischarged or unstayed for a period of 60 days after such judgment becomes
final and non-appealable (the "judgment default provision"). However, a default
under clause (v) or (vi) will not constitute an Event of Default until the
Trustee or the holders of 25% in principal amount of the outstanding Notes
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notify the Company of the Default and the Company does not cure such Default
within the time specified in clause (v) or (vi) hereof after receipt of such
notice.
If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Notes by notice to the
Company and the Trustee may declare the principal of and accrued and unpaid
interest, if any, on all the Notes to be due and payable. Upon such a
declaration, such principal and accrued and unpaid interest shall be immediately
due and payable. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and accrued and unpaid interest on all the Notes
will become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any holders. Under certain circumstances, the
holders of a majority in principal amount of the outstanding Notes may rescind
any such acceleration with respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such holders have offered the
Trustee reasonable security or indemnity against any loss, liability or expense,
(iv) the Trustee has not complied with such request within 30 days after the
receipt of the request and the offer of security or indemnity and (v) the
holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 30-day period. Subject to certain
restrictions, the holders of a majority in principal amount of the outstanding
Notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other holder or that would
involve the Trustee in personal liability.
The Indenture provides that if a Default or Event of Default occurs and is
continuing and is known to the Trustee, the Trustee must mail to each holder
notice of the Default or Event of Default within 90 days after it occurs.
However, except in the case of a Default or Event of Default in the payment of
principal of, premium (if any) or interest on any Note, the Trustee may withhold
notice if and so long as its board of directors, a committee of its board of
directors or a committee of its trust officers in good faith determines that
withholding notice is in the interests of the holders of the Notes. In addition,
the Company is required to deliver to the Trustee, within 120 days after the end
of each fiscal year, a certificate indicating whether the signers thereof know
of any Default or Event of Default that occurred during the previous year. The
Company also is required to deliver to the Trustee, within 30 days after the
occurrence thereof, written notice of any events which would constitute certain
Defaults.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
written consent of the holders of at least a majority in principal amount of the
Notes then outstanding and any past default or noncompliance with any provisions
may be waived with the written consent of the holders of at least a majority in
principal amount of the Notes then outstanding. However, without the consent of
each holder of an outstanding Note affected, no amendment may, among other
things, (i) reduce the amount of Notes whose holders must consent to an
amendment, (ii) reduce the stated rate of or extend the stated time for payment
of interest on any Note, (iii) reduce the principal of or extend the Stated
Maturity of any Note, (iv) reduce the premium payable upon the redemption or
repurchase of any Note or change the time at which any Note may be redeemed as
described under "Optional Redemption" above, (v) make any Note payable in money
other than that stated in the Note, (vi) impair the right of any holder to
receive
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payment of principal of and interest on such holder's Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment on or
with respect to such holder's Notes or (vii) make any change in the amendment
provisions which require each holder's consent or in the waiver provisions.
Without the consent of any holder, the Company and the Trustee may amend
the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation, partnership, trust or
limited liability company of the obligations of the Company under the Indenture,
to provide for uncertificated Notes in addition to or in place of certificated
Notes (provided that the uncertificated Notes are issued in registered form for
purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Notes are described in Section 163(f)(2)(B) of the Code), to make
any change in the subordination provisions in the Indenture that would limit or
terminate the benefits available to any holder of Senior Indebtedness
thereunder, to add any Guarantee with respect to the Notes, to secure the Notes,
to add to the covenants of the Company for the benefit of the holders or to
surrender any right or power conferred upon the Company, to provide for the
issuance of Exchange Notes, to make any other change that does not adversely
affect the rights of any holder or to comply with any requirement of the
Commission in connection with the qualification of the Indenture under the Trust
Indenture Act. However, no amendment may be made to the subordination provisions
of the Indenture that adversely affects the rights of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to the holders a notice briefly describing such amendment.
However, the failure to give such notice to all the holders, or any defect
therein, will not impair or affect the validity of the amendment.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under substantially
all its covenants in the Indenture including those covenants described under
"Certain Covenants" (other than "Merger and Consolidation"), the operation of
the cross acceleration provision, the bankruptcy provisions with respect to
Significant Subsidiaries and the judgment default provision described under
"Events of Default" above and the limitations contained in clauses (iii) and
(iv) under "Certain Covenants -- Merger and Consolidation" above ("covenant
defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (v), (vii), (viii) (with respect only
to Significant Subsidiaries) or (ix) under "Events of Default" above or because
of the failure of the Company to comply with clause (iii) or (iv) under "Certain
Covenants -- Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to maturity or any redemption date specified by the
Company, as the case may be, and must comply with certain other conditions,
including delivery to the Trustee of an Opinion of Counsel to the effect that
holders of the Notes will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit and defeasance and will be subject to
Federal income tax on the same amount and in the same manner and at the same
times as would have been the
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case if such deposit and defeasance had not occurred (and, in the case of legal
defeasance only, such Opinion of Counsel must be based on a ruling of the
Internal Revenue Service or other change in applicable Federal income tax law).
CONCERNING THE TRUSTEE
The Bank of New York is to be the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the Notes.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by the Company or a Restricted Subsidiary of the Company;
(iii) Capital Stock constituting a minority interest in any Person that at such
time is a Restricted Subsidiary of the Company; or (iv) Permitted Investments of
the type and in the amounts described in clause (viii) of the definition
thereof; provided, however, that, in the case of clauses (ii) and (iii), such
Restricted Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary, (ii) a
disposition of inventory in the ordinary course of business, (iii) a disposition
of obsolete or worn out equipment or equipment that is no longer useful in the
conduct of the business of the Company and its Restricted Subsidiaries and that
is disposed of in each case in the ordinary course of business, (iv)
dispositions of property for net proceeds which, when taken collectively with
the net proceeds of any other such dispositions under this clause (iv) that were
consummated since the beginning of the calendar year in which such disposition
is consummated, do not exceed 1.50% of the consolidated book value of the
Company's assets as of the most recent date prior to such disposition for which
a consolidated balance sheet of the Company has been regularly prepared, (v)
transactions permitted under "Certain Covenants -- Merger and Consolidation"
above, (vi) transactions permitted by the "Limitation on Restricted Payments"
covenant, and (vii) any transaction that constitutes a Change of Control.
"Asset Swap" means the execution of a definitive agreement, subject only to
customary closing conditions that the Company in good faith believes will be
satisfied, for a substantially concurrent purchase and sale, or exchange, of
Productive Assets between the Company or any of its Restricted Subsidiaries and
another Person or group of affiliated Persons; provided, however, that any
amendment to or waiver of any closing condition that individually or in the
aggregate is material to the Asset Swap shall be deemed to be a new Asset Swap.
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"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
indebtedness, the quotient obtained by dividing (i) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption
multiplied by the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter incurred, payable or guaranteed by the Company under or
in respect of the Credit Agreement or any Interest Rate Agreement or Currency
Agreement with a holder of Bank Indebtedness and any related notes, collateral
documents, letters of credit and guarantees, including principal, premium (if
any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Consolidated Cash Flow" for any period means the Consolidated Net Income
for such period, plus, without duplication, the following to the extent deducted
in calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, (v) exchange or translation losses on foreign currencies, and (vi) all
other non-cash items reducing Consolidated Net Income (excluding any non-cash
item to the extent it represents an accrual of or reserve for cash disbursements
for any subsequent period prior to the Stated Maturity of the Notes) and less,
to the extent added in calculating Consolidated Net Income, (x) exchange or
translation gains on foreign currencies and (y) non-cash items (excluding such
non-cash items to the extent they represent an accrual for cash receipts
reasonably expected to be received prior to the Stated Maturity of the Notes),
in each case for such period. Notwithstanding the foregoing, the income tax
expense, depreciation expense and amortization expense of a Subsidiary of the
Company shall be included in Consolidated Cash Flow only to the extent (and in
the same proportion) that the net income of such Subsidiary was included in
calculating Consolidated Net Income.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of
the most recent four consecutive fiscal quarters ending prior to the date of
such determination and as to which financial statements are available to (ii)
Consolidated Interest Expense for such four fiscal quarters; provided, however,
that (1) if the Company or any of its Restricted Subsidiaries has Incurred any
Indebtedness since the beginning of such period that remains outstanding or if
the transaction giving rise to the need to calculate Consolidated Coverage Ratio
is an incurrence of Indebtedness, or both, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to (A) such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period (provided that if such
Indebtedness is Incurred under a revolving credit facility (or similar
arrangement or under any predecessor revolving credit or similar arrangement)
only that portion of such Indebtedness that constitutes
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the one year projected minimum balance of such Indebtedness (as determined in
good faith by senior management of the Company and assuming a constant level of
sales) shall be deemed outstanding for purposes of this calculation) and (B) the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period any Indebtedness of the Company or any of its Restricted Subsidiaries has
been repaid, repurchased, defeased or otherwise discharged (other than
Indebtedness under a revolving credit or similar arrangement unless such
revolving credit Indebtedness has been permanently repaid and has not been
replaced), Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Indebtedness had been repaid,
repurchased, defeased or otherwise discharged on the first day of such period,
(3) if since the beginning of such period the Company or any of its Restricted
Subsidiaries shall have made any Asset Disposition or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an Asset
Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be (i) reduced by an amount equal to the Consolidated Interest
Expense attributable to any Indebtedness of the Company or any of its Restricted
Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect
to the Company and its continuing Restricted Subsidiaries in connection with
such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary of the Company is sold, the Consolidated Interest Expense
for such period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent the Company and its continuing Restricted Subsidiaries
are no longer liable for such Indebtedness after such sale) and (ii) increased
by interest income attributable to the assets which are the subject of such
Asset Disposition for such period, (4) if since the beginning of such period the
Company or any of its Restricted Subsidiaries (by merger or otherwise) shall
have made an Investment in any Restricted Subsidiary of the Company (or any
Person which becomes a Restricted Subsidiary of the Company) or an acquisition
of assets, including any Investment in a Restricted Subsidiary of the Company or
any acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, or if the transaction giving rise to such
calculation is a transaction subject to the "Mergers and Consolidations"
covenant, Consolidated Cash Flow and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness and the use of the proceeds therefrom) as if such
Investment or acquisition occurred on the first day of such period and (5) if
since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary of the Company or was merged with or into the Company or
any Restricted Subsidiary of the Company since the beginning of such period)
shall have made any Asset Disposition, Investment or acquisition of assets that
would have required an adjustment pursuant to clause (3) or (4) above if made by
the Company or a Restricted Subsidiary of the Company during such period,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Restricted Subsidiaries, plus, to the extent not
included in such interest expense, (i) interest expense attributable to capital
leases, (ii) amortization of debt discount, (iii) capitalized interest, (iv)
non-cash interest expense, (v) commissions, discounts and other fees and charges
owed with respect
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to letters of credit and bankers' acceptance financing, (vi) interest actually
paid by the Company or any such Restricted Subsidiary under any Guarantee of
Indebtedness or other obligation of any other Person, (vii) net payments
(whether positive or negative) pursuant to Interest Rate Agreements, (viii) the
cash contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than the Company) in connection with Indebtedness Incurred
by such plan or trust and (ix) cash and Disqualified Stock dividends in respect
of all Preferred Stock of Restricted Subsidiaries and Disqualified Stock of the
Company held by Persons other than the Company or a Wholly Owned Subsidiary and
less (a) to the extent included in such interest expense, the amortization of
capitalized debt issuance costs and debt discount solely to the extent relating
to the issuance and sale of Indebtedness together with any equity security as
part of an investment unit and (b) interest income. Notwithstanding the
foregoing, the Consolidated Interest Expense with respect to any Restricted
Subsidiary of the Company, that was not a Wholly-Owned Subsidiary, shall be
included only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its consolidated Restricted Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any person acquired by the Company or any of its Restricted
Subsidiaries in a pooling of interests transaction for any period prior to the
date of such acquisition, (ii) any net income of any Restricted Subsidiary of
the Company if such Restricted Subsidiary is subject to restrictions, directly
or indirectly, on the payment of dividends or the making of distributions by
such Restricted Subsidiary, directly or indirectly, to the Company (other than
restrictions in effect on the Issue Date with respect to a Restricted Subsidiary
of the Company and other than restrictions that are created or exist in
compliance with the "Limitation on Restrictions on Distributions from Restricted
Subsidiaries" covenant (excluding clause (g) thereof from the operation of this
parenthetical)), (iii) any gain or loss realized upon the sale or other
disposition of any assets of the Company or its consolidated Restricted
Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which are
not sold or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or other disposition of any Capital Stock of
any Person, (iv) any extraordinary gain or loss, (v) the cumulative effect of a
change in accounting principles, (vi) one-time transaction expenses incurred in
connection with the Transactions that are not capitalized or amortized pursuant
to GAAP, (vii) charges relating to the writeoff of acquired in-process research
and development expenses and other intangibles in connection with the
application of the purchase method of accounting to the net assets of a Person
acquired by the Company and its Restricted Subsidiaries and charges relating to
writeoff of intangible assets, (viii) charges relating to start-up or
organizational costs of any facilities purchased or otherwise opened by the
Company or any of its consolidated Restricted Subsidiaries, after the Issue
Date, including any operating inefficiencies associated therewith, not to exceed
$4.0 million in the aggregate per facility, (ix) the net income of any Person,
other than a Restricted Subsidiary, except to the extent of the lesser of (A)
dividends or distributions paid to the Company or any of its Restricted
Subsidiaries by such Person and (B) the net income of such Person (but in no
event less than zero), and the net loss of such Person (other than an
Unrestricted Subsidiary) shall be included only to the extent of the aggregate
Investment of the Company or any of its Restricted Subsidiaries in such Person
and (x) any non-cash expenses attributable to grants or exercises of employee
stock options. Notwithstanding the foregoing, for the purpose of the covenant
described under "Certain Covenants -- Limitation on Restricted Payments" only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to the Company or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments permitted
under such covenant pursuant to clause (a)(3)(E) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending prior to the taking of any
action for the purpose of which the determination is being made and for which
financial statements are available (but in no event ending more than 180 days
prior to the taking of such action), as (i) the
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par or stated value of all outstanding Capital Stock of the Company plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Stock.
"Continuing Director" means, as of the date of determination, any Person
who (i) was a member of the Board of Directors of the Company on the Issue Date,
(ii) was nominated for election or elected to the Board of Directors of the
Company with the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election, or (iii) is a representative of a Permitted Holder.
"Credit Agreement" means (i) the Credit Agreement, dated as of July 30,
1999, among the Company, Bank of America, National Association, as
Administrative Agent, Credit Suisse First Boston, as Syndication Agent, Bankers
Trust Company, as Documentation Agent, and the lenders from time to time parties
thereto, as the same may be amended, supplemented or otherwise modified from
time to time, including amendments, supplements or modifications relating to the
addition or elimination of Subsidiaries of the Company as borrowers or other
credit parties thereunder, and (ii) any renewal, extension, refunding,
restructuring, replacement or refinancing thereof (whether with the original
Administrative Agent and lenders or another administrative agent or agents or
one or more other lenders and whether provided under the original Credit
Agreement or one or more other credit or other agreements or indentures).
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $20.0
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures (other than as a result of a Change of Control) or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii)
is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding
capital stock which is convertible or exchangeable solely at the option of the
Company or a Restricted Subsidiary) or (iii) is redeemable at the option of the
holder thereof (other than as a result of a Change of Control), in whole or in
part, in each case on or prior to the Stated Maturity of the Notes, provided,
that only the portion of Capital Stock which so matures or is mandatorily
redeemable, is so convertible or exchangeable or is so redeemable at the option
of the holder thereof prior to such Stated Maturity shall be deemed to be
Disqualified Stock.
"Equity Offering" means an offering for cash by the Company of its common
stock, or options, warrants or rights with respect to its common stock.
"Financial Advisory Agreement" means the Financial Advisory Agreement
between Hicks Muse Partners and the Company as in effect on the Issue Date.
"Foreign Subsidiaries" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or the Commission or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All
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ratios and computations based on GAAP contained in the Indenture shall be
computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Restricted Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred
by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course of business), which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person, (vi) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person, (viii)
the amount of all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock or, with respect to any
Restricted Subsidiary of the Company, any Preferred Stock of such Restricted
Subsidiary to the extent such obligation arises on or before the Stated Maturity
of the Notes (but excluding, in each case, any accrued dividends) and (ix) to
the extent not otherwise included in this definition, obligations under Currency
Agreements and Interest Rate Agreements. The amount of Indebtedness of any
Person at any date shall be the outstanding principal amount of all
unconditional obligations as described above, as such amount would be reflected
on a balance sheet prepared in accordance with GAAP, and the maximum liability
of such Person, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations described above at such date.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to
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others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the "Limitation on
Restricted Payments" covenant, (i) "Investment" shall include the portion
(proportionate to the Company's equity interest in a Restricted Subsidiary to be
designated as an Unrestricted Subsidiary) of the fair market value of the net
assets of such Restricted Subsidiary of the Company at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Unrestricted Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is so re-designated a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors and
evidenced by a resolution of such Board of Directors certified in an Officers'
Certificate to the Trustee.
"Issue Date" means the date on which the Notes are originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Monitoring and Oversight and Agreement" means the Monitoring and Oversight
Agreement between Hicks Muse Partners and the Company as in effect on the Issue
Date.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets subject to such Asset Disposition) therefrom, in
each case net of (i) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state, foreign and local
taxes required to be paid or accrued as a liability under GAAP in connection
with such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (iii) all distributions
and other payments required to be made to any Person owning a beneficial
interest in assets subject to sale or minority interest holders in Subsidiaries
or joint ventures as a result of such Asset Disposition, (iv) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Restricted Subsidiary
of the Company after such Asset Disposition and (v) any portion of the purchase
price from an Asset Disposition placed in escrow (whether as a reserve for
adjustment of the purchase price, for satisfaction of indemnities in respect of
such Asset Disposition or otherwise in connection with such Asset Disposition);
provided, however, that upon the termination of such escrow, Net Available Cash
shall be increased by any portion of funds therein released to the Company or
any Restricted Subsidiary.
"Net Cash Proceeds" means, with respect to any issuance or sale of Capital
Stock, the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any Restricted Subsidiary (a) provides any guarantee or credit support of
any kind (including any undertaking, guarantee, indemnity, agreement or
instrument that would constitute Indebtedness) or (b) is directly or indirectly
liable (as a guarantor or otherwise) and (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of the Company or any
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Restricted Subsidiary to declare a default under such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity.
"Permitted Indebtedness" means (i) Indebtedness of the Company owing to and
held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary
owing to and held by the Company or any Wholly-Owned Subsidiary; provided,
however, that any subsequent issuance or transfer of any Capital Stock or any
other event which results in any such Wholly-Owned Subsidiary ceasing to be a
Wholly-Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Company or a Wholly-Owned Subsidiary) shall be deemed, in each
case, to constitute the Incurrence of such Indebtedness by the issuer thereof;
(ii) Indebtedness represented by (x) the Notes, (y) any Indebtedness (other than
the Indebtedness described in clauses (i), (ii) and (iv) of paragraph (b) of the
covenant described under "Limitation on Indebtedness" and other than
Indebtedness Incurred pursuant to clause (i) above or clauses (iv), (v), (vi) or
(vii) below) outstanding on the Issue Date and (z) any Refinancing Indebtedness
Incurred in respect of any Indebtedness described in this clause (ii) or
Incurred pursuant to paragraph (a) of the covenant described under "Limitation
on Indebtedness"; (iii) (A) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on the date on which such Restricted Subsidiary was acquired by the
Company or its Restricted Subsidiaries (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Subsidiary or
was otherwise acquired by the Company); provided, however, that at the time such
Restricted Subsidiary is acquired by the Company, the Company would have been
able to Incur $1.00 of additional Indebtedness pursuant to paragraph (a) of the
covenant described under "Limitation on Indebtedness" above after giving effect
to the Incurrence of such Indebtedness pursuant to this clause (iii) and (B)
Refinancing Indebtedness Incurred by the Company or a Restricted Subsidiary in
respect of Indebtedness Incurred by such Restricted Subsidiary pursuant to this
clause (iii); (iv) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Company or any of its
Restricted Subsidiaries to their customers in the ordinary course of their
business, (B) in respect of performance bonds or similar obligations of the
Company or any of its Restricted Subsidiaries for or in connection with pledges,
deposits or payments made or given in the ordinary course of business in
connection with or to secure statutory, regulatory or similar obligations,
including obligations under health, safety or environmental obligations, (C)
arising from Guarantees to suppliers, lessors, licensees, contractors,
franchisees or customers of obligations (other than Indebtedness) Incurred in
the ordinary course of business and (D) under Currency Agreements and Interest
Rate Agreements; provided, however, that in the case of Currency Agreements and
Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements
are entered into for bona fide hedging purposes of the Company or its Restricted
Subsidiaries (as determined in good faith by the Board of Directors or senior
management of the Company) and correspond in terms of notional amount, duration,
currencies and interest rates, as applicable, to Indebtedness of the Company or
its Restricted Subsidiaries Incurred without violation of the Indenture or to
business transactions of the Company or its Restricted Subsidiaries on customary
terms entered into in the ordinary course of business; (v) Indebtedness arising
from agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in each case Incurred in
connection with the disposition of any business, assets or Restricted Subsidiary
of the Company (other than Guarantees of Indebtedness or other obligations
Incurred by any Person acquiring all or any portion of such business assets or
Restricted Subsidiary of the Company for the purpose of financing such
acquisition) in a principal amount not to exceed the gross proceeds actually
received by the Company or any of its Restricted Subsidiaries in connection with
such disposition, provided, however, that the principal amount of any
Indebtedness Incurred pursuant to this clause (v), when taken together with all
Indebtedness Incurred pursuant to this clause (v) and then outstanding since the
Issue Date, shall not exceed $15.0 million; (vi) Indebtedness consisting of (A)
Guarantees by the Company or a Restricted Subsidiary of Indebtedness Incurred by
a Wholly-Owned Subsidiary without violation of the Indenture and (B) Guarantees
by a Restricted Subsidiary of Senior Indebtedness Incurred by the Company
without
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violation of the Indenture (so long as such Restricted Subsidiary could have
Incurred such Indebtedness directly without violation of the Indenture); (vii)
Indebtedness arising from agreements with governmental agencies of any foreign
country, or political subdivision or agency thereof, relating to the
construction of plants and the purchase and installation (including related
training costs) of equipment to be used in a Related Business; provided that
such Indebtedness (A) has a maturity in excess of ten years and 91 days and (B)
in the aggregate does not exceed $15.0 million since the Issue Date; (viii)
Indebtedness of all Foreign Subsidiaries for working capital purposes and
overdraft facilities in an aggregate amount not to exceed $15.0 million at any
one time outstanding; and (ix) Indebtedness arising from the honoring by a bank
or other financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business, provided that
such Indebtedness is extinguished promptly in accordance with customary
practices.
"Permitted Investment" means an Investment by the Company or any of its
Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of the Company;
provided, however, that the primary business of such Wholly-Owned Subsidiary is
a Related Business; (ii) another Person if as a result of such Investment such
other Person becomes a Wholly-Owned Subsidiary of the Company or is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets to, the Company or a Wholly-Owned Subsidiary of the Company; provided,
however, that in each case such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
of its Restricted Subsidiaries, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
(v) payroll, travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (vi) loans or
advances to employees for purposes of purchasing the Company's common stock in
an aggregate amount outstanding at any one time not to exceed $7.5 million since
the Issue Date and other loans and advances to employees made in the ordinary
course of business consistent with past practices of the Company or such
Restricted Subsidiary; (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any of its Restricted Subsidiaries or in satisfaction of judgments or
claims; (viii) a Person engaged in a Related Business or a loan or advance to
the Company the proceeds of which are used solely to make an investment in a
Person engaged in a Related Business or a Guarantee by the Company of
Indebtedness of any Person in which such Investment has been made; provided,
however, that no Permitted Investments may be made pursuant to this clause
(viii) to the extent the amount thereof would, when taken together with all
other Permitted Investments made pursuant to this clause (viii) since the Issue
Date, exceed $20.0 million in the aggregate (plus, to the extent not previously
reinvested, any return of capital realized since the Issue Date on Permitted
Investments made pursuant to this clause (viii), or any release or other
cancellation of any Guarantee constituting such Permitted Investment); (ix)
Persons to the extent such Investment is received by the Company or any
Restricted Subsidiary as consideration for Asset Dispositions effected in
compliance with the covenant described under "Limitations on Sales of Assets and
Subsidiary Stock"; (x) prepayments and other credits to suppliers made in the
ordinary course of business consistent with the past practices of the Company
and its Restricted Subsidiaries; and (xi) Investments in connection with
pledges, deposits, payments or performance bonds made or given in the ordinary
course of business in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or environmental
obligations.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock" means, as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
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"Productive Assets" means assets of a kind used or usable by the Company
and its Restricted Subsidiaries in the Company's business or any Related
Business.
A "Public Market" exists at any time with respect to the common stock of
the Company if (a) the common stock of the Company is then registered with the
Securities and Exchange Commission pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, and traded either on a national
securities exchange or in the National Association of Securities Dealers
Automated Quotation System and (b) at least 15% of the total issued and
outstanding common stock of the Company has been distributed prior to such time
by means of an effective registration statement under the Securities Act of
1933, as amended.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, "refinance") any Indebtedness existing on
the Issue Date or Incurred in compliance with the Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness, provided, however, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the earlier of (A) the
ninety-first day after the Stated Maturity of the Notes and (B) the Stated
Maturity of the Indebtedness being refinanced, (ii) the Refinancing Indebtedness
has an Average Life at the time such Refinancing Indebtedness is Incurred that
is equal to or greater than the lesser of (A) the Average Life of the Notes and
(B) the Average Life of the Indebtedness being refinanced, and (iii) such
Refinancing Indebtedness is Incurred in an aggregate principal amount (or if
issued with original issue discount, an aggregate issue price) that is equal to
(or 101% of, in the case of a refinancing of the Notes in connection with a
Change of Control) or less than the sum of the aggregate principal amount (or if
issued with original issue discount, the aggregate accredited value) then
outstanding of the Indebtedness being refinanced, plus applicable premium and
reasonable costs paid in connection with such refinancing.
"Related Business" means any business which is the same as or related,
ancillary or complementary to any of the businesses of the Company and its
Restricted Subsidiaries on the Issue Date, as reasonably determined by the
Company's Board of Directors.
"Representative" means any trustee, agent or representative (if any) of an
issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Notes in right of payment and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of the
Company which is not Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"Subordinated Indebtedness" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement.
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"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary shall
refer to a Subsidiary of the Company.
"Temporary Cash Investments" means any of the following: (i) any Investment
in direct obligations of the United States of America or any agency thereof or
obligations Guaranteed by the United States of America or any agency thereof,
(ii) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital, surplus and undivided profits
aggregating in excess of $250.0 million (or the foreign currency equivalent
thereof) and whose long-term debt, or whose parent holding company's long-term
debt, is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act), (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above, (iv) Investments in commercial paper, maturing not more than 180
days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group, (v) Investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc. and (vi) Investments in mutual funds whose investment
guidelines restrict substantially all of such funds' investments to those
satisfying the provisions of clauses (i) through (v) above.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any Restricted Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated; provided,
however, that either (A) the Subsidiary to be so designated has total
consolidated assets of $10,000 or less or (B) if such Subsidiary has
consolidated assets greater than $10,000, then such designation would be
permitted under "Limitation on Restricted Payments." The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) the
Company could Incur $1.00 of additional Indebtedness under clause (a) of
"Limitation on Indebtedness" and (y) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced to
the Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
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"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the Company, at
least 99% of the Capital Stock of which (other than directors' qualifying
shares) is owned by the Company or another Wholly-Owned Subsidiary.
BOOK-ENTRY, DELIVERY AND FORM
The Notes initially will be represented by one or more Notes in registered,
global form without interest coupons (collectively, the "Global Notes"). The
Global Notes will be deposited upon issuance with the Trustee as custodian for
The Depository Trust Company ("DTC"), in New York, New York, and registered in
the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant as described below.
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"-- Exchange of Book-Entry Notes for Certificated Notes."
The Notes (including beneficial interests in the Global Notes) will be
subject to certain restrictions on transfer and will bear a restrictive legend
as described under "Notice to Investors." In addition, transfer of beneficial
interests in the Global Notes will be subject to the applicable rules and
procedures of DTC and its direct or indirect participants, which may change from
time to time.
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar.
DEPOSITORY PROCEDURES
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and Indirect Participants.
DTC has also advised the Company that pursuant to procedures established by
it, (i) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchaser with portions of the principal
amount of Global Notes and (ii) ownership of such interests in the Global Notes
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC (with respect to Participants) or by
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Notes).
Investors in the Global Notes may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations that are Participants in such system. All interests in a Global
Note may be subject to the procedures and requirements of DTC.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interest in a Global Note to such persons may be limited to
that extent. Because DTC can act only on behalf of Participants, which in turn
act on behalf of Indirect Participants and certain banks, the ability of a
person having a beneficial interest in a Global Note to pledge such interest to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interest, may be affected by the lack of a physical
certificate evidencing such interest. For certain other restrictions on the
transferability of the Notes, see "-- Exchange of Book-Entry Notes for
Certificated Notes."
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EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal, premium, liquidated damages, if any,
and interest on a Global Note registered in the name of DTC or its nominee will
be payable by the Trustee to DTC or its nominee in its capacity as the
registered holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee will treat the persons in whose names the Notes,
including the Global Notes, are registered as the owners thereof for the purpose
of receiving such payments and for any and all other purposes whatsoever.
Consequently, neither the Company, the Trustee nor any agent of the Company or
the Trustee has or will have any responsibility or liability for (i) any aspect
of DTC's records or any Participant's or Indirect Participant's records relating
to or payments made on account of beneficial ownership interests in the Global
Notes, or for maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in the Global Notes or (ii) any other matter relating to the
actions and practices of DTC or any of its Participants or Indirect
Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security
such as the Global Notes as shown on the records of DTC. Payments by
Participants and the Indirect Participants to the beneficial owners of Notes
will be governed by standing instructions and customary practices and will not
be the responsibility of DTC, the Trustee or the Company. Neither the Company
nor the Trustee will be liable for any delay by DTC or its Participants in
identifying the beneficial owners of the Notes, and the Company and the Trustee
may conclusively rely on and will be protected in relying on instructions from
DTC or its nominee as the registered owner of the Notes for all purposes.
Interests in the Global Notes will trade in DTC's Same-day Funds Settlement
System and secondary market trading activity in such interests will, therefore,
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and its Participants. Transfers between Participants in DTC
will be effected in accordance with DTC's procedures, and will be settled in
same-day funds.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of the Notes as to which such
Participant or Participants has or have given direction. However, if there is an
Event of Default under the Notes, DTC reserves the right to exchange Global
Notes for legended Notes in certificated form, and to distribute such Notes to
its Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources believed to be reliable, but the Company takes no
responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Notes among Participants in DTC it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Initial Purchaser nor
the Trustee will have any responsibility for the performance by DTC or its
Participants or Indirect Participants of their respective obligations under the
rules and procedures governing their operations.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive Notes in registered
certificated form if (i) DTC (x) notifies the Company that it is unwilling or
unable to continue as depositary for the Global Note and the Company thereupon
fails to appoint a successor depositary or (y) has ceased to be a clearing
agency registered under the Exchange Act, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Notes in certificated form or (iii) there shall have occurred and be
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continuing to occur a Default or an Event of Default with respect to the Notes.
In addition, beneficial interests in a Global Note may be exchanged for
certificated Notes upon request but only upon instruction given to the Trustee
by or on behalf of DTC in accordance with customary procedures. In all cases,
certificated Notes delivered in exchange for any Global Note or beneficial
interest therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the depositary (in accordance with
its customary procedures) and will bear the restrictive legend referred to in
"Notice to Investors" unless the Company determines otherwise in compliance with
applicable law.
CERTIFICATED NOTES
Subject to certain conditions, any person having a beneficial interest in a
Global Note may, upon request to the Trustee, exchange such beneficial interest
for Notes in certificated form (a "Certificated Note"). Upon any such issuance,
the Trustee is required to register such Certificated Notes in the name of, and
cause the same to be delivered to, such person or persons (or the nominee of any
thereof). All such Certificated Notes would be subject to the legend
requirements described herein under "Notice to Investors." In addition, if (i)
the Company notifies the Trustee in writing that the DTC is no longer willing or
able to act as a depositary and the Company is unable to locate a qualified
successor within 90 days or (ii) the Company, at its option, notifies the
Trustee in writing that it elects to cause the issuance of Notes in the form of
Certificated Notes under the Indenture, then, upon surrender by the Global Note
Holder of its Global Note, Notes in such form will be issued to each person that
the Global Note Holder and the DTC identify as being the beneficial owner of the
related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the DTC in identifying the beneficial owners of Notes and
the Trustee may conclusively rely on, and will be protected in relying on,
instructions from the Global Note Holder or the DTC for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
The Indenture will require that payments in respect of the Notes
represented by a Global Note (including principal, premium, if any, interest and
liquidated damages, if any, thereon) be made by wire transfer of immediately
available next day funds to the accounts specified by the Global Note Holder.
With respect to Certificated Notes, the Company will make all payments of
principal, premium, if any, interest and liquidated damages, if any, thereon by
wire transfer of immediately available funds to the accounts specified by the
holders thereof or, if no such account is specified, by mailing a check to each
such holder's registered address. The Company expects that secondary trading in
the Certificated Notes will also be settled in immediately available funds.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the United States federal income tax
considerations relevant to the exchange of your old notes for new notes. The
discussion is based upon the Internal Revenue Code of 1986, Treasury
regulations, Internal Revenue Service rulings and pronouncements, and judicial
decisions now in effect, all of which are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect you. The description does
not consider the effect of any applicable foreign, state, local or other tax
laws or estate or gift tax considerations.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO YOU OF EXCHANGING YOUR OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The exchange of your old notes for new notes pursuant to the exchange offer
should not constitute a sale or an exchange for federal income tax purposes.
Consequently, you should have a basis for the new notes equal to the basis of
your old notes and your holding period for the new notes should include the
period during which your old notes were held. Accordingly, such exchange should
have no federal income tax consequences to you.
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PLAN OF DISTRIBUTION
If you are a broker-dealer that receives new notes for your own account in
exchange for your old notes pursuant to the exchange offer, where your old notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, you must acknowledge that you will deliver a
prospectus in connection with any resale of your new notes. This prospectus, as
it may be amended or supplemented from time to time, may be used by you in
connection with resales of new notes received in exchange for your old notes
where your old notes were acquired as a result of market-making activities or
other trading activities. We have agreed that, for a period of 180 days after
the consummation of the exchange offer, we will make this prospectus, as amended
or supplemented, available to you for use in connection with any such resale. In
addition, until , 1999, if you effect a transaction in the new notes
you may be required to deliver a prospectus.
We will not receive any proceeds from any sale of new notes by
broker-dealers. If you are a broker-dealer, new notes you receive for your own
account in connection with the exchange offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the new notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. You may
make resales directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such new notes. If you are a
broker-dealer that resells new notes that were received by you for your own
account pursuant to the exchange offer and you participate in a distribution of
your new notes, you may be deemed to be an "underwriter" within the meaning of
the Securities Act, and any profit on any resale of new notes and any
commissions or concessions received by you may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that you will deliver and by delivering a prospectus, you will not
be deemed to admit that you are an "underwriter" within the meaning of the
Securities Act.
For a period of days after the registration statement is declared
effective, we will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to you, if you are a broker-dealer
that requests these documents in the Letter of Transmittal or otherwise. We have
agreed to pay all expenses incident to the exchange offer (including the
expenses of one counsel for the holders of the notes) other than commissions or
concessions of any broker-dealers and will indemnify you (including any
broker-dealers) against certain liabilities, including certain liabilities under
the Securities Act.
LEGAL MATTERS
The validity of the notes will be passed upon for us by Weil, Gotshal &
Manges LLP, Dallas, Texas and New York, New York.
EXPERTS
The financial statements of Courtesy Corporation and Affiliates as of
September 30, 1997 and 1998 and for each of the three fiscal years in the period
ended September 30, 1998 included in this prospectus have been audited by
Altschuler, Melvoin and Glasser LLP, independent auditors, as stated in their
report appearing herein and have been so included in reliance on the report of
such firm, given on their authority as experts in accounting and auditing.
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AVAILABLE INFORMATION
We will be subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith will file reports
and other information with the SEC. These reports and other information may be
inspected and copied at the public reference facilities of the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60611, and 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained at prescribed rates by writing to the Public
Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
This prospectus does not contain all the information set forth in the
registration statement filed with the SEC on Form S-4 with respect to the new
notes and the exhibits and schedules thereto, particular portions of which have
been omitted pursuant to the rules and regulations of the SEC. Statements made
in this prospectus as to the contents of any contract, agreement or other
document set forth all material elements of such documents, but are not
necessarily complete. With respect to each such contact, agreement or other
document filed as an exhibit to the registration statement, reference is hereby
made to such exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such reference.
Copies of the registration statement and the exhibits thereto are on file with
the SEC and may be examined without charge at the public reference facilities of
the SEC described above. Copies of such materials can also be obtained at
prescribed rates by writing to the Public Reference Section of the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The reports,
proxy statements and other information may also be obtained from the web site
that the SEC maintains at http://www.sec.gov.
We are required by the indenture to furnish the holders of the notes with
copies of the annual reports and the information, documents and other reports
specified in Sections 13 and 15(d) of the Exchange Act, as long as any notes are
outstanding.
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UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following unaudited pro forma combined balance sheet at June 30, 1999
and the unaudited pro forma combined statements of operations for the nine
months ended June 30, 1999 and the fiscal year ended September 30, 1998 (the
"Pro Forma Financial Statements") give effect to the Transactions (as defined)
as if they had occurred on June 30, 1999 in the case of the balance sheet data
and as of October 1, 1997 in the case of the statements of operations data.
Hicks, Muse, Tate & Furst Incorporated, Mills & Partners, Courtesy
Corporation (the "Company") and the Company's existing shareholders completed
the following transactions (the "Transactions"):
- the Company borrowed an aggregate of $150 million under its new $200
million senior credit facility;
- the Company sold $100 million of senior subordinated notes due 2009;
- Hicks Muse and its affiliates, including Mills & Partners, paid
approximately $78.1 million for 78 million shares of the Company's series
A convertible preferred stock and approximately 13.3 million shares of
the Company's class A common stock, which collectively represents 68.5%
of the outstanding capital stock; and
- the Company's existing shareholders retained 42 million shares of common
stock, which represents 31.5% of the Company's outstanding capital stock.
The proceeds from the foregoing were used to purchase shares of the Company's
common stock from the Company's pre-Transaction shareholders, repay existing
indebtedness and accrued interest outstanding at the time of the Transactions
and pay fees and expenses.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable and are described in the
notes accompanying the Pro Forma Financial Statements. The Pro Forma Financial
Statements are provided for information purposes only and do not purport to
represent what our financial position or results of operations would actually
have been had the Reorganization and the Transactions occurred at such dates or
to project our financial position or results of operations at or for any future
date or period.
The Pro Forma Financial Statements and accompanying notes should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the audited combined financial statements of
Courtesy Corporation and its affiliates and the notes thereto contained
elsewhere in this prospectus. The Transactions have been treated as a
recapitalization for financial accounting purposes.
P-1
<PAGE> 82
LLS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS COURTESY CORPORATION AND AFFILIATES)
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AT JUNE 30, 1999
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
COMBINED TRANSACTIONS
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ---------
<S> <C> <C> <C>
Current assets:
Cash.................................................. $ 481 $ (348)(1) $ 133
Trade accounts receivable, net........................ 23,308 23,308
Inventories........................................... 27,404 27,404
Other current assets.................................. 177 177
-------- --------- ---------
Total current assets.......................... 51,370 (348) 51,022
Property, plant and equipment, net...................... 86,495 86,495
Other assets............................................ 11,357 15,443(2) 26,800
-------- --------- ---------
Total assets.................................. $149,222 $ 15,095 $ 164,317
======== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable...................................... $ 20,195 $ $ 20,195
Revolving credit borrowings........................... 16,000 (16,000)(3) --
Current portion of long-term debt..................... 2,620 (2,620)(3) --
Income taxes payable.................................. 136 136
Customers' deposits................................... 7,396 7,396
Due to employee benefit plans......................... 371 371
Accrued salaries and other expenses................... 2,885 265(4) 3,150
-------- --------- ---------
Total current liabilities..................... 49,603 (18,355) 31,248
Long-term debt.......................................... 29,238 220,762(3) 250,000
Long-term liabilities................................... -- 4,500(5) 4,500
Deferred income tax liability........................... -- 2,750(6) 2,750
Deferred compensation obligation........................ 1,009 (1,009)(7) --
-------- --------- ---------
Total liabilities............................. 79,850 208,648 288,498
Shareholders' equity (deficit):
Common stock.......................................... 20 533(8) 553
Preferred stock....................................... -- 780(8) 780
Additional paid-in-capital............................ 324 76,476(8) 76,800
Retained earnings (accumulated deficit)............... 69,028 (264,616)(8) (202,314)
(6,726)(9)
-------- --------- ---------
Total shareholders' equity (deficit).......... 69,372 (193,553) (124,181)
-------- --------- ---------
Total liabilities and shareholders' equity
(deficit)................................... $149,222 $ 15,095 $ 164,317
======== ========= =========
</TABLE>
See accompanying notes to the Unaudited Pro Forma Combined Balance Sheet
P-2
<PAGE> 83
LLS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS COURTESY CORPORATION AND AFFILIATES)
NOTES TO THE UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AT JUNE 30, 1999
(IN THOUSANDS)
(1) Represents cash distributed by the Company to certain pre-Transaction
shareholders, net of excess operating cash generated in connection with the
Transactions.
(2) Represents the following:
(a) Deferred financing costs incurred in connection with the Transactions
in the amount of $19,947.
(b) Distribution of the cash surrender value of life insurance by the
Company to certain pre-Transaction shareholders in the amount of
$1,881.
(c) Distribution of tax deposits by the Company to certain pre-Transaction
shareholders in the amount of $2,623.
(3) Represents the adjustments necessary to arrive at the pro forma consolidated
debt of the Company following the Transactions as follows:
<TABLE>
<S> <C>
Senior Credit Facility...................................... $150,000
Senior Subordinated Notes due 2009.......................... 100,000
--------
Total long term debt.............................. $250,000
========
</TABLE>
(4) Represents the following:
(a) Current accrued liabilities incurred in connection with the
Transactions in the amount of $500.
(b) Repayment of accrued interest by certain pre-Transaction shareholders
of the Company in the amount of $235.
(5) Represents long-term accrued liabilities incurred in connection with the
Transactions.
(6) Represents deferred tax liability as if the Company were a C corporation
rather than an S corporation. The deferred tax recognized on this change in
tax status will be charged to income from continuing operations as required
by Statement of Financial Accounting Standards No. 109.
(7) Represents the elimination of deferred compensation obligation by the
Company.
(8) Represents the redemption of Company common stock and the issuance of new
equity:
<TABLE>
<S> <C>
Effect of the redemption of Company common stock(a)......... $(262,907)
---------
Effect of the equity proceeds and related fees(b)........... 76,080
---------
Pro forma adjustment........................................ $(186,827)
=========
</TABLE>
(a) Reflects the redemption of Company common stock using (i) gross
proceeds from the Senior Subordinated Notes due 2009 of $100,000, (ii)
borrowings under the senior credit facility of $150,000 and (iii) the
equity investment by the shareholders of $78,133, after (i) repayment
of combined historical indebtedness of $48,093, which included accrued
interest, (ii) payments of fees and expenses of approximately $17,000
associated with the Transactions, and (iii) $133 used for operating
cash purposes.
(b) Reflects equity proceeds of $78,133 from the shareholders, net of
related Transaction fees and expenses of $2,053.
(9) Represents the effect on shareholders' equity (deficit) as a result of the
following pro forma adjustments:
<TABLE>
<S> <C>
Distribution of cash by the Company to certain
pre-Transaction shareholders (Note 1)..................... $ (481)
Distribution of the cash surrender value of life insurance
by the Company, to certain pre-Transaction shareholders
(Note 2).................................................. (1,881)
Distribution of tax deposits by the Company, to certain
pre-Transaction shareholders (Note 2)..................... (2,623)
Incurrence of deferred tax liability as a result of the
Company obtaining C corporation status (Note 6)........... (2,750)
Elimination of deferred compensation obligation by the
Company (Note 7).......................................... 1,009
-------
Total............................................. $(6,726)
=======
</TABLE>
P-3
<PAGE> 84
LLS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS COURTESY CORPORATION AND AFFILIATES)
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED TRANSACTIONS
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ---------
<S> <C> <C> <C>
Net sales................................................... $125,634 $ $125,634
Cost of sales............................................... 88,483 88,483
Operating expenses.......................................... 13,084 13,084
-------- -------- --------
Income from operations...................................... 24,067 24,067
Interest expense, net....................................... 1,814 15,755(1) 17,569
Amortization of deferred financing fees..................... -- 1,927(2) 1,927
-------- -------- --------
Income before income taxes.................................. 22,253 (17,682) 4,571
Income tax provision........................................ 180 1,649(3) 1,829
-------- -------- --------
Net income before minority interest......................... 22,073 (19,331) 2,742
Minority interest........................................... 171 171
-------- -------- --------
Net income.................................................. $ 21,902 $(19,331) $ 2,571
======== ======== ========
</TABLE>
<TABLE>
<S> <C>
Other Financial Data:
Depreciation and amortization(4).......................... $ 9,353
EBITDA(5)................................................. $33,420
Adjusted EBITDA(6)........................................ $34,429
Ratio of earnings to fixed charges(7)..................... $ 1.2x
</TABLE>
See accompanying notes to the Unaudited Pro Forma Combined Statement of
Operations
P-4
<PAGE> 85
LLS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS COURTESY CORPORATION AND AFFILIATES)
NOTES TO THE UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
1. Reflects the interest expense on borrowings under the Senior Credit Facility
and the issuance of the Senior Subordinated Notes due 2009 as if the
Transactions had been consummated as of the beginning of the period:
<TABLE>
<S> <C>
Senior Credit Facility(a)
Tranche A Loans at 7.6%(b)................................ $ 3,705
Tranche B Loans at 8.1%(c)................................ 4,860
Revolving Facility at 7.6%(b)............................. 285
Senior Subordinated Notes due 2009 at 11.625%............... 8,719
Elimination of historical interest.......................... (1,814)
-------
Net adjustment.................................... $15,755
=======
</TABLE>
- ---------------
(a)A one-half of one percent change in interest rates would impact interest
expense for borrowings under the Senior Credit Facility in the amount of
approximately $563.
(b)Borrowings under the Tranche A Loans and the Revolving Facility require
interest payments at the rate of 1.25% above the base rate or 2.50%
above LIBOR.
(c)Borrowings under the Tranche B Loans require interest payments at the
rate of 1.75% above the base rate or 3.00% above LIBOR.
2. Reflects the amortization of deferred financing fees associated with the
Transactions as if the Transactions had been consummated at the beginning of
the period. These fees are amortized over the term of the related debt using
the effective interest method and the straight-line method, which
approximates the effective interest method.
3. Reflects the income tax effect of the pro forma adjustments described above
and the status of the Company as a C corporation as if the Transactions had
been consummated as of the beginning of the period at an effective income tax
rate of 40.0%. The deferred tax recognized on this change in tax status,
estimated to be $2,750, will be charged to income from continuing operations
following the Transactions. This charge is not reflected in the pro forma
combined statements of operations because it is a non-recurring charge
directly attributable to the Transactions.
4. Excludes amortization of deferred financing fees.
5. Earnings before interest, taxes, depreciation, amortization and minority
interest ("EBITDA") is a key financial measure but should not be construed as
an alternative to operating income or cash flows from operating activities
(as determined in accordance with GAAP). EBITDA is also one of the financial
measures by which the Company's covenants are calculated under its debt
instruments.
6. Adjusted EBITDA reflects EBITDA, as defined in note (5), adjusted for certain
preoperating costs associated with newly purchased facilities in Anderson,
South Carolina and Lake Geneva, Wisconsin. These preoperating costs represent
the costs incurred during the period prior to the facility generating
revenues.
7. For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent earnings before income taxes plus fixed charges. "Fixed
charges" consist of interest on all indebtedness, amortization of deferred
financing fees and the portion (approximately 1/3) of rental expense that
management believes is representative of the interest component of rent
expense.
P-5
<PAGE> 86
LLS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS COURTESY CORPORATION AND AFFILIATES)
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<TABLE>
<CAPTION>
COMBINED TRANSACTIONS
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ---------
<S> <C> <C> <C>
Net sales................................................. $172,608 $ $172,608
Cost of sales............................................. 120,986 120,986
Operating expenses........................................ 15,064 (1,580)(1) 13,484
-------- -------- --------
Income from operations.................................... 36,558 1,580 38,138
Interest expense, net..................................... 1,315 23,010(2) 24,325
Amortization of deferred financing fees................... -- 2,569(3) 2,569
-------- -------- --------
Income before income taxes................................ 35,243 (23,999) 11,244
Income tax provision...................................... 188 4,309(4) 4,497
-------- -------- --------
Net income before minority interest....................... 35,055 (28,308) 6,747
Minority interest......................................... 1,225 1,225
-------- -------- --------
Net income................................................ $ 33,830 $(28,308) $ 5,522
======== ======== ========
Other Financial Data:
Depreciation and amortization(5)........................ $ 9,896
EBITDA(6)............................................... $ 48,034
Adjusted EBITDA(7)...................................... $ 49,977
Ratio of earnings to fixed charges(8)................... 1.4x
</TABLE>
See accompanying notes to the Unaudited Pro Forma Combined Statement of
Operations
P-6
<PAGE> 87
LLS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS COURTESY CORPORATION AND AFFILIATES)
NOTES TO THE UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
1. Reflects the net reduction in officers' compensation pursuant to the
employment agreements, executed concurrent with the Transactions.
2. Reflects the interest expense on borrowings under the Senior Credit Facility
and the issuance of the Notes as if the Transactions had been consummated as
of the beginning of the period:
<TABLE>
<S> <C>
Senior Credit Facility(a)
Tranche A Loans at 8.2%(b)................................ $ 5,330
Tranche B Loans at 8.7%(c)................................ 6,960
Revolving Facility at 8.2%(b)............................. 410
Senior Subordinated Notes due 2009 at 11.625%............... 11,625
Elimination of historical interest.......................... (1,315)
-------
Net adjustment.................................... $23,010
=======
</TABLE>
- ---------------
(a)A one-half of one percent change in interest rates would impact interest
expense for borrowings under the Senior Credit Facility in the amount of
approximately $750.
(b)Borrowings under the Tranche A Loans and the Revolving Facility require
interest payments at the rate of 1.25% above the base rate or 2.50%
above LIBOR.
(c)Borrowings under the Tranche B Loans require interest payments at the
rate of 1.75% above the base rate or 3.00% above LIBOR.
3. Reflects the amortization of deferred financing fees associated with the
Transactions as if the Transactions had been consummated at the beginning of
the fiscal year. These fees are amortized over the term of the related debt
using the effective interest method and the straight-line method, which
approximates the effective interest method.
4. Reflects the income tax effect of the pro forma adjustments described above
and the status of the Company as a C corporation as if the Transactions had
been consummated as of the beginning of the fiscal year at an effective
income tax rate of 40.0%. The deferred tax recognized on this change in tax
status, estimated to be $2,588, will be charged to income from continuing
operations following the Transactions. This charge is not reflected in the
pro forma combined statements of operations because it is a non-recurring
charge directly attributable to the Transactions.
5. Excludes amortization of deferred financing fees.
6. Earnings before interest, taxes, depreciation, amortization and minority
interest ("EBITDA") is a key financial measure but should not be construed as
an alternative to operating income or cash flows from operating activities
(as determined in accordance with GAAP). EBITDA is also one of the financial
measures by which the Company's covenants are calculated under its debt
instruments.
7. Adjusted EBITDA reflects EBITDA, as defined in note (6), adjusted for certain
preoperating costs associated with a newly constructed facility -- 600
Buffalo Grove. These preoperating costs represent the costs incurred during
the period prior to the facility generating revenues.
8. For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent earnings before income taxes plus fixed charges. "Fixed
charges" consist of interest on all indebtedness, amortization of deferred
financing fees and the portion (approximately 1/3) of rental expense that
management believes is representative of the interest component of rent
expense.
P-7
<PAGE> 88
COURTESY CORPORATION AND AFFILIATES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS:
Independent Auditors' Report.............................. F-2
Combined Balance Sheets, September 30, 1997 and 1998 and
June 30, 1999.......................................... F-3
Combined Statement of Income, Fiscal Years Ended September
30, 1996, 1997 and 1998 and the Nine Months Ended June
30, 1998 and 1999...................................... F-4
Combined Statement of Changes in Stockholders' Equity,
Fiscal Years Ended September 30, 1996, 1997 and 1998
and the Nine Months Ended June 30, 1999................ F-5
Combined Statement of Cash Flows, Fiscal Years Ended
September 30, 1996, 1997 and 1998 and the Nine Months
Ended June 30, 1998 and 1999........................... F-6
Notes to the Combined Financial Statements................ F-7
</TABLE>
F-1
<PAGE> 89
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Courtesy Corporation
We have audited the accompanying combined balance sheets of Courtesy
Corporation and Affiliates (Note 1) (the "Company") as of September 30, 1997 and
1998, and the related combined statements of income, changes in stockholders'
equity and cash flows for each of the fiscal years in the three-year period
ended September 30, 1998. Courtesy Corporation and Affiliates are under common
ownership and management. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Courtesy
Corporation and Affiliates as of September 30, 1997 and 1998, and the results of
their operations and their cash flows for each of the fiscal years in the three-
year period ended September 30, 1998, in conformity with generally accepted
accounting principles.
ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
December 11, 1998 (except for
Notes 1 and 5 as to which the date is
July 30, 1999)
F-2
<PAGE> 90
COURTESY CORPORATION AND AFFILIATES
COMBINED BALANCE SHEETS
ASSETS (pledged -- Note 5)
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------- JUNE 30,
1997 1998 1999
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Current Assets:
Cash............................................. $ 380,673 $ 1,177,288 $ 481,224
Trade accounts receivable (net of allowance for
doubtful accounts of $27,500 for all
periods)...................................... 13,305,062 19,683,672 23,307,623
Inventories (Notes 2 and 3)...................... 29,180,776 24,932,240 27,404,108
Other current assets and prepaid expenses........ 302,758 80,009 177,123
------------ ------------ ------------
43,169,269 45,873,209 51,370,078
------------ ------------ ------------
Property, Plant and Equipment (at cost, net of
accumulated depreciation and amortization --Notes
2 and 4)......................................... 57,272,559 78,706,708 86,495,066
------------ ------------ ------------
Other Assets:
Goodwill, net (Notes 1 and 2).................... 0 0 6,621,756
Other............................................ 4,901,174 5,245,972 4,735,464
------------ ------------ ------------
4,901,174 5,245,972 11,357,220
------------ ------------ ------------
$105,343,002 $129,825,889 $149,222,364
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................. $ 13,045,647 $ 13,161,690 $ 20,195,340
Revolving credit borrowings (Note 5)............. 1,500,000 1,000,000 16,000,000
Current portion of long-term debt (Note 5)....... 2,530,241 2,388,173 2,620,000
Income taxes payable (Note 2).................... 287,000 200,000 135,704
Customers' deposits.............................. 14,071,123 6,391,922 7,395,993
Due to employee benefit plans (Note 7)........... 378,457 550,147 370,955
Accrued salaries and other expenses.............. 3,726,210 5,979,088 2,884,816
------------ ------------ ------------
35,538,678 29,671,020 49,602,808
------------ ------------ ------------
Long-term Liabilities:
Long-term debt (Note 5).......................... 15,158,172 26,536,666 29,238,334
Deferred compensation obligation (Note 6)........ 1,209,078 968,472 1,008,472
------------ ------------ ------------
16,367,250 27,505,138 30,246,806
------------ ------------ ------------
Minority Interest.................................. 1,447,379 1,923,336 0
------------ ------------ ------------
Commitments and Contingencies (Note 9)
Stockholders' Equity (Note 8):
Common stock..................................... 20,000 20,000 20,000
Additional paid-in capital....................... 319,310 324,310 324,310
Retained earnings................................ 51,650,385 70,382,085 69,028,440
------------ ------------ ------------
51,989,695 70,726,395 69,372,750
------------ ------------ ------------
$105,343,002 $129,825,889 $149,222,364
============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
F-3
<PAGE> 91
COURTESY CORPORATION AND AFFILIATES
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS ENDED SEPTEMBER 30, JUNE 30,
------------------------------------------ ---------------------------
1996 1997 1998 1998 1999
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net Sales............... $101,365,575 $129,485,110 $172,607,862 $116,407,596 $125,634,246
Cost of Sales........... 67,248,229 88,153,076 120,985,809 81,664,719 88,483,172
------------ ------------ ------------ ------------ ------------
Gross Profit............ 34,117,346 41,332,034 51,622,053 34,742,877 37,151,074
Selling, General and
Administrative
Expenses.............. 9,506,788 11,973,898 15,063,672 11,760,168 13,083,934
------------ ------------ ------------ ------------ ------------
Income from
Operations............ 24,610,558 29,358,136 36,558,381 22,982,709 24,067,140
Interest Expense........ (1,584,954) (1,721,623) (1,719,078) (1,069,795) (2,094,576)
Interest Income......... 196,265 186,705 403,972 237,853 280,853
------------ ------------ ------------ ------------ ------------
Income before Income
Taxes................. 23,221,869 27,823,218 35,243,275 22,150,767 22,253,417
Income Tax Provision
(Note 2).............. 83,926 277,385 187,810 135,000 180,000
------------ ------------ ------------ ------------ ------------
Net Income before
Minority Interest..... 23,137,943 27,545,833 35,055,465 22,015,767 22,073,417
Minority Interest....... (717,674) (1,060,101) (1,224,984) (946,568) (170,862)
------------ ------------ ------------ ------------ ------------
Net Income.............. $ 22,420,269 $ 26,485,732 $ 33,830,481 $ 21,069,199 $ 21,902,555
============ ============ ============ ============ ============
Pro Forma Income:
Income before Income
Taxes (from
above)............. $ 35,243,275
Income Tax
Provision.......... 14,097,000
------------
Net Income before
Minority
Interest........... 21,146,275
Minority Interest..... (734,990)
------------
Net Income......... $ 20,411,285
============
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE> 92
COURTESY CORPORATION AND AFFILIATES
COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Balance, October 1, 1995.................... $20,000 $ 319,310 $ 29,712,925 $ 30,052,235
Distributions to stockholders............... (12,831,403) (12,831,403)
Net income.................................. 22,420,269 22,420,269
------- --------- ------------ ------------
Balance, September 30, 1996................. 20,000 319,310 39,301,791 39,641,101
Distributions to stockholders............... (14,137,138) (14,137,138)
Net income.................................. 26,485,732 26,485,732
------- --------- ------------ ------------
Balance, September 30, 1997................. 20,000 319,310 51,650,385 51,989,695
Issuance of common stock.................... 5,000 5,000
Distributions to stockholders............... (15,098,781) (15,098,781)
Net income.................................. 33,830,481 33,830,481
------- --------- ------------ ------------
Balance, September 30, 1998................. 20,000 324,310 70,382,085 70,726,395
Distribution to stockholders (unaudited).... (23,256,200) (23,256,200)
Net income (unaudited)...................... 21,902,555 21,902,555
------- --------- ------------ ------------
Balance, June 30, 1999 (unaudited).......... $20,000 $ 324,310 $ 69,028,440 $ 69,372,750
======= ========= ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
F-5
<PAGE> 93
COURTESY CORPORATION AND AFFILIATES
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS ENDED SEPTEMBER 30, JUNE 30,
------------------------------------------ ---------------------------
1996 1997 1998 1998 1999
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income for period............... $ 22,420,269 $ 26,485,732 $ 33,830,481 $ 21,069,199 $ 21,902,555
Adjustment to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization..... 5,795,280 8,224,055 9,895,858 6,644,733 9,353,262
Gain on sale of property and
equipment....................... (36,300) 0 (27,477) (750) (100)
Deferred compensation............. 225,098 193,958 159,394 120,000 40,000
Minority interest................. 717,674 1,060,101 1,224,984 946,568 170,862
Increase (Decrease) in cash from
changes in:
Trade accounts receivable....... (1,935,248) (3,312,824) (6,378,610) (6,644,351) (3,623,971)
Inventories..................... (8,240,438) (6,982,665) 4,248,536 (1,679,250) (2,471,868)
Other current assets and prepaid
expenses..................... 72,545 (69,729) 222,749 (111,888) (97,114)
Other assets.................... (1,216,646) (1,566,461) (344,798) (3,021,366) 660,508
Accounts payable................ 7,326,992 1,281,337 116,043 (4,549,451) 7,033,650
Income taxes payable............ (107,000) 192,000 (87,000) (12,840) (64,296)
Customers' deposits............. 2,796,789 5,752,051 (7,679,201) 3,478,534 1,004,071
Due to employee benefit plans... 91,807 33,349 171,690 (98,375) (179,192)
Accrued salaries and other
expenses..................... 2,327,922 (1,221,138) 2,252,878 1,354,834 (3,094,252)
Deferred compensation
obligation................... (400,000) (400,000) (400,000) (400,000) --
------------ ------------ ------------ ------------ ------------
Net cash provided by
operating activities....... 29,838,744 29,669,766 37,205,527 17,095,597 30,634,115
------------ ------------ ------------ ------------ ------------
Cash Flows from Investing Activities:
Capital expenditures................ (21,107,113) (13,937,312) (31,330,007) (13,912,467) (15,198,649)
Acquisition of mold operation....... 0 0 0 -- (1,951,170)
Proceeds from sale of property and
equipment......................... 36,300 0 27,477 750 --
------------ ------------ ------------ ------------ ------------
Net cash used in investing
activities................. (21,070,813) (13,937,312) (31,302,530) (13,911,717) (17,149,819)
------------ ------------ ------------ ------------ ------------
Cash Flows from Financing Activities:
Proceeds from notes payable......... 6,501,676 591,384 13,408,616 19,908,616 14,500,000
Principal payments of notes
payable........................... (2,365,833) (2,262,708) (1,586,666) (9,450,399) (4,066,505)
Proceeds (Repayments) of revolving
credit borrowings, net............ 500,000 1,000,000 (500,000) -- 7,500,000
Repayments of capital lease
obligation........................ (769,991) (592,298) (585,524)
Proceeds from issuance of common
stock............................. 0 0 5,000 5,000 --
Redemption of minority interest..... 0 0 0 -- (8,524,355)
Distributions to stockholders....... (13,309,412) (14,636,724) (15,847,808) (12,512,808) (23,589,500)
------------ ------------ ------------ ------------ ------------
Net cash used in financing
activities................. (9,443,560) (15,900,346) (5,106,382) (2,049,591) (14,180,360)
------------ ------------ ------------ ------------ ------------
Net Increase (Decrease) in Cash....... (675,629) (167,892) 796,615 1,134,289 (696,064)
Cash, Beginning of Period............. 1,224,194 548,565 380,673 380,673 1,177,288
------------ ------------ ------------ ------------ ------------
Cash, End of Period................... $ 548,565 $ 380,673 $ 1,177,288 $ 1,514,962 $ 481,224
============ ============ ============ ============ ============
Supplemental Disclosure of Cash Flow
Information:
Cash Paid During the Period for:
Interest........................ $ 1,424,922 $ 1,569,844 $ 1,646,324 $ 793,877 $ 1,763,326
============ ============ ============ ============ ============
Income taxes.................... $ 190,926 $ 85,385 $ 274,810 $ 147,840 $ 244,296
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
F-6
<PAGE> 94
COURTESY CORPORATION AND AFFILIATES
NOTES TO THE COMBINED FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1999 AND FOR THE NINE MONTHS
ENDED JUNE 30, 1998 AND 1999 IS UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION AND NATURE OF ACTIVITIES
The combined financial statements include the accounts and activities of
Courtesy Corporation ("Courtesy"), Creative Packaging Corporation ("Creative")
and Courtesy Sales Corporation ("CSC" -- formed during fiscal 1998)
(collectively, the "Company") which are affiliated by reason of common ownership
and management. Because the companies are under common ownership, excluding an
11.11% minority interest in Creative, and management, the financial statements
have been combined based on the historical costs of the underlying companies.
All significant intercompany accounts and transactions have been eliminated in
the combination.
The Company is engaged in the design, manufacture and distribution of
various types of injection molded plastic parts and custom molds used in plastic
injection molding. The Company operates in one industry segment, serving
customers located primarily in the United States.
On January 31, 1999, the 11.11% minority interest in Creative was redeemed
for $8,524,355 in cash. In its combined financial statements, the Company
recorded approximately $6,763,000 of goodwill in connection with the purchase of
this minority interest.
Prior to the Recapitalization discussed below, the Company completed a
Reorganization whereby (i) the shareholders of CSC exchanged their common stock
for common stock in Courtesy making CSC a wholly-owned subsidiary of Courtesy,
(ii) the shareholders of Creative exchanged their common stock for common stock
in Courtesy making Creative a wholly-owned subsidiary of Courtesy, (iii)
Courtesy amended its articles of incorporation to, among other things,
recapitalize its outstanding capital stock and change its name to LLS Corp.
("LLS") and (iv) LLS organized a new wholly-owned subsidiary and contributed all
of its assets and liabilities to this new subsidiary.
On July 30, 1999, the Company completed a recapitalization (the
"Recapitalization") through the following simultaneous transactions: (i) LLS
received $78,133,000 in exchange for the issuance of 78,000,000 shares of its
Series A Convertible Preferred Stock and 13,333,333 shares of Class A Common
Stock, (ii) LLS raised $150,000,000 from a senior credit facility (the "Senior
Credit Facility") and $100,000,000 from the issuance of senior subordinated
notes payable (the "Notes") and (iii) the proceeds from the issuance of equity,
the issuance of the Notes and borrowings under the Senior Credit Facility were
used to repay existing indebtedness and accrued interest for approximately
$45,496,000, redeem approximately 67.0% of the outstanding capital stock for
approximately $265,504,000, and pay fees and expenses of approximately
$17,000,000. In addition, approximately $133,000 was retained for operating
purposes.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies followed by the Company is as
follows:
Unaudited Interim Financial Information -- The unaudited balance sheet
as of June 30, 1999, and the unaudited statements of income and cash flows
for the nine months ended June 30, 1998 and 1999, and the unaudited
statement of changes in stockholders' equity for the nine months ended June
30, 1999 include, in the opinion of management, all adjustments (consisting
of normal recurring adjustments) necessary to present fairly the Company's
financial position, results of operations and cash flows. Operating results
for the nine months ended June 30, 1999 are not necessarily indicative of
the results that may be expected for the fiscal year ending September 30,
1999. The footnotes related to such periods are also unaudited.
F-7
<PAGE> 95
COURTESY CORPORATION AND AFFILIATES
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Revenue Recognition -- Sales are recognized as products are shipped or
upon passage of title to the customer.
Use of Estimates -- In preparing financial statements in conformity
with generally accepted accounting principles, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
Inventories -- Inventories are stated at the lower of cost, determined
under the first-in, first-out (FIFO) method, or market.
Depreciation and Amortization -- Provisions for depreciation and
amortization of plant and equipment are computed on both straight-line and
accelerated methods for financial reporting purposes, based on the
estimated useful lives of the assets. For income tax reporting purposes,
such provisions are computed principally under accelerated methods, as
permitted by the Internal Revenue Code.
Goodwill -- Goodwill is being amortized on a straight-line basis over
an estimated useful life of twenty years.
Impairment of Long-lived Assets -- In the event that facts and
circumstances indicate that the cost of any long-lived assets may be
impaired, an evaluation of recoverability would be performed. If an
evaluation is required, the estimated future undiscounted cash flows
associated with the asset would be compared to the asset's carrying amount
to determine if a write-down to market value or discounted cash flow value
is required.
Capital Leases -- Leases required to be capitalized under criteria of
Statement of Financial Accounting Standards No. 13 are recorded at the
present value of future rental payments (Note 5). Amortization of capital
leases is computed under the straight-line method over the estimated useful
life of the equipment for financial purposes and under accelerated methods
for tax reporting purposes.
Fair Value of Financial Instruments -- Management believes that the
book value of its current receivables, accounts payable and accrued
expenses approximates fair value due to their short-term nature and the
fair value of the revolving credit note is equal to its carrying value
because the interest rate adjusts with changes in the market rate of
interest. The fair value of the mortgage notes and capitalized lease
obligation are not materially different from its carrying value based upon
discounting cash flows using interest rates that management believes
approximate interest rates currently available for similar debt.
Income Taxes -- Courtesy, Creative and CSC have elected to be taxed as
S corporations, under the Internal Revenue Code, pursuant to which profits
are allocated and taxed to their stockholders by inclusion in their
respective individual income tax returns. Accordingly, no liability or
provision for federal income taxes is included in the accompanying
financial statements, and no deferred taxes are provided for temporary
differences between tax and financial reporting. However, the Company is
subject to state income taxes.
Significant Customers -- Sales to one significant customer during
fiscal 1996 approximated 18% of net sales and sales to two significant
customers during both fiscal 1997 and 1998 approximated 38% and 40% of net
sales, respectively. No other single customer accounted for more than 10%
of net sales. These customers' receivable balances represented 9%, 41% and
40% of trade accounts receivable as of September 30, 1996, 1997 and 1998,
respectively.
F-8
<PAGE> 96
COURTESY CORPORATION AND AFFILIATES
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Advertising and Promotion -- All costs associated with advertising and
promotion are charged to operations as incurred. Such expenses are included
in operating expenses in the combined statement of income and amounted to
$318,994, $294,801 and $307,447 for the fiscal years ended September 30,
1996, 1997 and 1998, respectively.
Pro Forma Income -- The pro forma income adjustment for the fiscal
year ended September 30, 1998 reflects a provision for federal and state
income taxes as if the Company were a "C" corporation rather than an "S"
corporation for such periods based upon the statutory rates.
Recent Accounting Pronouncements -- In June 1997, the Financial
Accounting Standards Board issued Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (FAS 130). FAS 130 establishes standards
for reporting and display of comprehensive income and its components in the
financial statements. FAS is effective for fiscal years beginning after
December 31, 1997. Reclassification of financial statements for earlier
periods provided for comparative purposes is required. The adoption of this
standard is expected to have no impact on the Company's results of
operations, financial position or cash flows.
In June 1997, the Financial Accounting Standards Board issued
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (FAS 131). FAS 131 establishes
standards for the way public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. FAS 131 is effective for financial statements for fiscal years
beginning after December 15, 1997. Financial statement disclosure for prior
periods are required to be restated. The adoption of this standard is
expected to have no impact on the disclosures included in the Company's
combined financial statements.
NOTE 3 -- INVENTORIES
Inventories at September 30, 1997 and 1998 consisted of the following:
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Raw materials.............................................. $ 4,829,209 $ 4,743,471
Work-in-process............................................ 17,091,597 10,933,375
Finished goods............................................. 7,259,970 9,255,394
----------- -----------
$29,180,776 $24,932,240
=========== ===========
</TABLE>
F-9
<PAGE> 97
COURTESY CORPORATION AND AFFILIATES
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at September 30, 1997 and 1998 consisted of
the following:
<TABLE>
<CAPTION>
ESTIMATED
1997 1998 LIFE
------------ ------------ ---------
<S> <C> <C> <C>
Land...................................... $ 3,636,139 $ 3,636,139
Buildings and improvements................ 24,491,561 39,106,862 15 to 39 years
Machinery and equipment................... 47,504,148 59,649,365 5 to 7 years
Machinery and equipment -- capitalized
lease obligations....................... 3,733,480 2,612,005 5 to 7 years
Molds and tools........................... 6,039,977 6,300,236 5 years
Automobiles and trucks.................... 138,776 179,753 3 years
Leasehold improvements.................... 1,596,394 1,596,394 10 to 15 years
------------ ------------
87,140,475 113,080,754
Less accumulated depreciation and
amortization (including capital lease
amortization of $2,596,334 and
$2,008,212, respectively)............ (32,649,224) (42,179,590)
------------ ------------
54,491,251 70,901,164
Construction in progress (see below)...... 2,781,308 7,805,544
------------ ------------
$ 57,272,559 $ 78,706,708
============ ============
</TABLE>
Provisions for depreciation and amortization of plant and equipment for the
fiscal years ended September 30, 1996, 1997 and 1998 amounted to $5,795,280,
$8,224,055 and $9,895,858, respectively.
During June 1998, the Company completed construction of a new manufacturing
and warehouse facility adjacent to the existing facilities on land which is
owned by an affiliate of the Company (Note 9). The total cost of the facility
amounted to $14,615,301.
Construction in progress at September 30, 1998 represents (a) $2,404,698
incurred in connection with the construction of proprietary molds and (b) costs
incurred in connection with a new manufacturing and warehouse facility located
in South Carolina. The total cost of such new facility (completed during October
1998) approximated $5,500,000.
NOTE 5 -- REVOLVING CREDIT BORROWINGS AND LONG-TERM DEBT
As of September 30, 1998, Courtesy was obligated to The Northern Trust
Company ("Northern") under various credit and security agreements, which provide
for maximum aggregate borrowings of $17,500,000 (exclusive of mortgage loans)
evidenced by revolving credit, term, call and construction loan facilities.
Borrowings are secured by all assets owned by Courtesy and are guaranteed by
Creative.
Revolving credit loan borrowings, due November 30, 1999, are limited to the
lesser of $12,500,000 or the sum of (i) 80% of eligible accounts receivable, and
(ii) 50% of eligible inventories. Such borrowings bear interest, at the
Company's option, at either (a) the LIBOR rate plus 1% or (b) the prime rate.
The weighted average interest rates on the revolving credit borrowings were
8.25%, 6.84% and 6.93% for the fiscal years ended September 30, 1996, 1997 and
1998, respectively.
F-10
<PAGE> 98
COURTESY CORPORATION AND AFFILIATES
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Long-term obligations at September 30, 1997 and 1998 consisted of the
following:
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Mortgage note payable to Northern (payable in quarterly
installments of $233,333 plus interest at 7.20%, with a
balloon payment of $4,666,680 due May 31, 2008).......... $ 0 $13,766,667
Mortgage notes payable to Northern (payable in quarterly
installments of $138,333 plus interest at 8.94% on 50% of
the principal balance and 7.88% on the remainder, with a
balloon payment of $4,426,676 due May 31, 2000).......... 5,810,000 5,256,666
Mortgage note payable to Northern (payable in quarterly
installments of $200,000 plus interest at 7.89%, with a
balloon payment of $4,000,000 due January 31, 2006)...... 10,600,000 9,800,000
Capitalized lease obligation (payable in monthly
installments of $51,185, inclusive of interest at 6.8%;
final payment November 15, 1998; secured by leased
equipment)............................................... 687,029 101,506
Call loans payable to Northern............................. 591,384 0
----------- -----------
Total...................................................... 17,688,413 28,924,839
Less portion due currently................................. 2,530,241 2,388,173
----------- -----------
Noncurrent portion......................................... $15,158,172 $26,536,666
=========== ===========
</TABLE>
The aggregate maturities of long-term liabilities as of September 30, 1998
are as follows:
<TABLE>
<CAPTION>
CAPITALIZED
FISCAL YEAR ENDED LEASE
SEPTEMBER 30, OBLIGATION OTHER
----------------- ----------- -----------
<S> <C> <C>
1999........................................................ $102,371 $ 2,286,667
2000........................................................ 0 6,436,667
2001........................................................ 0 1,733,333
2002........................................................ 0 1,733,333
2003........................................................ 0 1,733,333
Thereafter.................................................. 0 14,900,000
-------- -----------
102,371 28,823,333
Less imputed interest thereon............................... 865 0
-------- -----------
$101,506 $28,823,333
======== ===========
</TABLE>
The agreement pertaining to the Northern loans require the payment of
penalties upon the early retirement of outstanding loans and contain covenants
requiring the maintenance of certain ratios, limitations on the maximum amount
of capital expenditures and specified levels of net worth and pretax earnings.
At September 30, 1998, the Company was in compliance with all covenants.
On October 15, 1998, the Company borrowed $5,000,000 from Northern pursuant
to a note payable, payable in quarterly installments of $83,333, plus interest
at 7.16%, with final maturity on August 31, 2008. The proceeds were used to fund
the costs incurred in connection with a new manufacturing and warehouse facility
located in South Carolina (Note 4).
In connection with the Recapitalization (Note 1), effective July 30, 1999,
the Company executed a $200,000,000 Senior Credit Facility and issued
$100,000,000 of Notes, at which time the amounts outstanding under the
aforementioned revolving credit borrowings and long-term obligations were paid
in full.
F-11
<PAGE> 99
COURTESY CORPORATION AND AFFILIATES
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The Senior Credit Facility provides for (i) a $65,000,000 term loan (the
"Tranche A Loan") maturing July 31, 2005, (ii) an $80,000,000 term loan (the
"Tranche B Loan") maturing July 31, 2006 (together with the Tranche A Loan, the
"Term Loans") and (iii) a $55,000,000 revolving credit facility (the "Revolving
Loans"). The Company may use the Revolving Loans for letters of credit of up to
$10,000,000. The loans under the Senior Credit Facility bear interest, at the
Company's election, at either the LIBOR Rate plus an applicable margin or the
Base Rate plus an applicable margin. The applicable LIBOR Rate margin is 2.50%
for the Tranche A Loan and Revolving Loans and 3.00% for the Tranche B Loan. The
applicable Base Rate margin is 1.25% for the Tranche A Loan and Revolving Loans
and 1.75% for the Tranche B Loan. The applicable margin with respect to the
loans will be eligible for certain performance pricing step-downs. The Revolving
Loans are subject to a commitment fee based on the undrawn portion of the
Revolving Loans. The commitment fee is eligible for certain performance pricing
step downs and is initially .050% per annum.
The Company may, at its option, prepay the Term Loans without premium or
penalty. Additionally, the Company may reduce or eliminate the Revolving Loans
prior to maturity on July 31, 2005. The Senior Credit Facility is guaranteed
unconditionally on a senior basis by the Company's direct and indirect domestic
subsidiaries and is collateralized by a lien on substantially all assets of the
Company and its wholly-owned subsidiaries. The Senior Credit Facility contains
several financial covenants which, among other things, require the Company to
maintain certain financial ratios and restrict the Company's ability to incur
indebtedness, make capital expenditures and pay dividends
The Notes bear interest at 11 5/8% per year, payable semi-annually on
February 1, and August 1 of each year, commencing on February 1, 2000 and
maturing on August 1, 2009. Except as set forth below, the Notes will not be
redeemable at the option of the Company prior to August 1, 2004. On and after
such date, the Notes are subject to redemption by the Company, in whole or in
part, at specified redemption prices. In addition, prior to August 1, 2002, the
Company may, subject to certain requirements, redeem up to $35,000,000 of Notes
outstanding at a redemption price equal to 111.625% plus accrued and unpaid
interest. The Notes may be redeemed at any time on or after August 1, 2004, in
whole or in part by the Company.
The Notes restrict, among other things, the incurrence of additional
indebtedness by the Company, the payment of dividends and other distributions in
respect of the Company's capital stock, the payment of dividends and other
distributions by the Company's subsidiaries, the creation of liens on the
properties and the assets of the Company to secure certain subordinated debt and
certain mergers, sales of assets and transactions with affiliates.
The Company will file a registration statement on Form S-4 in connection
with a pending exchange offer in which the Company would exchange new Notes for
the Company's currently outstanding Notes due 2009. The terms of the new Notes
are the same as the terms of the currently outstanding Notes.
NOTE 6 -- DEFERRED COMPENSATION OBLIGATION
Courtesy maintains nonqualified deferred compensation agreements for the
benefit of certain key officers of the Company. The plan provides for $3,200,000
to be paid, in equal or unequal increments at such times and in such amounts as
may be determined by the Company, on or before December 31, 2002. During each of
the years ended September 30, 1996, 1997 and 1998, $400,000 was paid to the
officers. The initial cost of the benefits was charged to expense and accrued
using a present value method over the expected term of the agreements. Charges
to expense for the fiscal years ended September 30, 1996, 1997 and 1998 were
$225,098, $193,958 and $159,394, respectively.
F-12
<PAGE> 100
COURTESY CORPORATION AND AFFILIATES
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7 -- EMPLOYEE BENEFIT PLANS
The Company maintains for the benefit of its eligible employees, several
benefit plans, all of which conform to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA), as follows:
Employees' Profit-sharing Plan -- This plan is maintained for the
benefit of all eligible employees. The employer makes discretionary annual
contributions in such amounts as may be determined by its Board of
Directors, limited to amounts deductible for federal income tax purposes.
Benefits vest in participants over a period of years, and distributions are
made to participants (or to their beneficiaries) upon death, retirement or
severance of employment. The employer contribution for the fiscal years
ended September 30, 1996, 1997 and 1998 amounted to $350,000, $420,000 and
$735,000, respectively.
Employees' 401(k) Plan -- This plan is maintained for the benefit of
all eligible employees and was established under the provisions of Section
401(k) of the Internal Revenue Code. Under such plan, employer
contributions are discretionary. The employer contribution for the fiscal
years ended September 30, 1996, 1997 and 1998 amounted to $12,800, $15,005
and $20,469, respectively.
NOTE 8 -- STOCKHOLDERS' EQUITY
As of September 30, 1996, 1997 and 1998 (a) 5,000 shares of Courtesy's
Class A voting common (no par value, 10,000 shares authorized) were issued and
outstanding, (b) 15,000 shares of Courtesy's Class B nonvoting common (no par
value, 30,000 shares authorized) were issued and outstanding and (c) 1,000
shares of Creative's common stock (no par value) were authorized, issued and
outstanding. As of September 30, 1998, 100 shares of CSC's common stock (no par
value) were authorized, issued and outstanding.
F-13
<PAGE> 101
COURTESY CORPORATION AND AFFILIATES
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Stockholders' equity at September 30, 1996, 1997 and 1998 is comprised of
the following:
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
September 30, 1996
Courtesy............................. $20,000 $ 5,000 $32,605,460 $32,630,460
Creative............................. 0 353,594 7,628,988 7,982,582
CSC.................................. 0 0 0 0
------- -------- ----------- -----------
20,000 358,594 40,234,448 40,613,042
Eliminations......................... 0 (39,284) (932,657) (971,941)
------- -------- ----------- -----------
Total........................ $20,000 $319,310 $39,301,791 $39,641,101
======= ======== =========== ===========
September 30, 1997
Courtesy............................. $20,000 $ 5,000 $41,296,236 $41,321,236
Creative............................. 0 353,594 12,674,129 13,027,723
CSC.................................. 0 0 0 0
------- -------- ----------- -----------
20,000 358,594 53,970,365 54,348,959
Eliminations......................... 0 (39,284) (2,319,980) (2,359,264)
------- -------- ----------- -----------
Total........................ $20,000 $319,310 $51,650,385 $51,989,695
======= ======== =========== ===========
September 30, 1998
Courtesy............................. $20,000 $ 5,000 $56,565,329 $56,590,329
Creative............................. 0 353,594 16,958,167 17,311,761
CSC.................................. 0 5,000 26,310 31,310
------- -------- ----------- -----------
20,000 363,594 73,549,806 73,933,400
Eliminations......................... 0 (39,284) (3,167,721) (3,207,005)
------- -------- ----------- -----------
Total........................ $20,000 $324,310 $70,382,085 $70,726,395
======= ======== =========== ===========
</TABLE>
NOTE 9 -- COMMITMENTS AND CONTINGENCIES
Certain premises occupied by the Company are leased under various operating
leases, some of which are owned by a partnership whose partners are officers and
stockholders of the Company (see below). All leases provide for payment by the
lessee of costs applicable to operating the leased premises (inclusive of real
estate taxes), and expire at various dates through fiscal 2011.
Courtesy is subject to a ground lease agreement, which allows Courtesy to
utilize a vacant plot of land adjacent to the Company's corporate headquarters.
This plot of land is currently owned by an affiliate of the Company related by
common ownership and was used to build a manufacturing and warehouse facility
which was placed into service in June 1998 (Note 4). The ground lease agreement,
as amended, provides for a base rent of $334,691 per year through August 31,
2011, with an adjustment based on the Consumer Price Index every five years. The
agreement also provides for an option to renew for up to three consecutive
periods of five years and an option to purchase the land at fair market value.
Total rent expense, including real estate taxes, amounted to $1,221,711,
$1,595,594 and $1,924,991 ($351,436, $648,491 and $694,691 which was paid to
related parties) for the fiscal years ended September 30, 1996, 1997 and 1998,
respectively.
F-14
<PAGE> 102
COURTESY CORPORATION AND AFFILIATES
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Future minimum rental payments applicable to the aforementioned leases are
as follows:
<TABLE>
<CAPTION>
RELATED THIRD
FISCAL YEAR ENDED SEPTEMBER 30, PARTIES PARTIES TOTAL
- ------------------------------- ---------- -------- ----------
<S> <C> <C> <C>
1999.............................................. $ 695,000 $515,000 $1,210,000
2000.............................................. 695,000 388,000 1,083,000
2001.............................................. 695,000 8,000 703,000
2002.............................................. 695,000 0 695,000
2003.............................................. 695,000 0 695,000
Thereafter........................................ 4,060,000 0 4,060,000
---------- -------- ----------
$7,535,000 $911,000 $8,446,000
========== ======== ==========
</TABLE>
Pursuant to an agreement between Courtesy and its stockholders, Courtesy
shall purchase all shares of such stockholders upon that stockholder's death or
disability. The purchase price shall be equal to the Fair Market Value per
Share, as defined, determined as of the date of death or disability. Courtesy
maintains life insurance policies on the lives of its stockholders, in the
aggregate amount of $58,000,000, to provide funds for such possible purchases.
Any remaining unpaid balance shall be paid, in accordance with the terms of a
note to be established, in ten equal annual principal payments, with interest
rates adjusted at each anniversary date based upon Northern's prime rate. Such
agreement was terminated in connection with the Recapitalization (Note 1).
Pursuant to an agreement between Creative and its stockholders, Creative
shall purchase all shares of such stockholders upon that stockholder's death or
disability. The purchase price shall be equal to the Book Value per Share, as
defined, determined as of the date of death or disability. Creative maintains
life insurance policies on the lives of its majority stockholders, in the
aggregate amount of $20,000,000, to provide funds for such possible purchases.
Twenty-five percent of the stockholder's balance will be paid upon determination
of the Book Value per Share. The unpaid balance shall be paid, in accordance
with the terms of a note to be established, in sixteen equal quarterly principal
payments, with interest rates adjusted at each quarter based upon Northern's
prime rate. Such agreement was terminated in connection with the
Recapitalization (Note 1).
There are various lawsuits against Courtesy incident to the operation of
its business. The liability, if any, associated with these matters was not
determinable at September 30, 1998. While certain of these matters involve
substantial amounts, it is the opinion of management that their ultimate
resolution will not have a material adverse effect on the Company's financial
position or results of operations.
F-15
<PAGE> 103
------------------------------------------------------
------------------------------------------------------
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS ABOUT THE TRANSACTIONS WE DISCUSS IN THIS PROSPECTUS OTHER THAN
THOSE CONTAINED HEREIN. IF YOU ARE GIVEN ANY INFORMATION OR REPRESENTATIONS
ABOUT THESE MATTERS THAT IS NOT DISCUSSED IN THIS PROSPECTUS, YOU MUST NOT RELY
ON THAT INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SECURITIES ANYWHERE OR TO ANYONE WHERE OR TO WHOM WE ARE NOT
PERMITTED TO OFFER OR SELL SECURITIES UNDER APPLICABLE LAW. THE DELIVERY OF THIS
PROSPECTUS OFFERED HEREBY DOES NOT, UNDER ANY CIRCUMSTANCES, MEAN THAT THERE HAS
NOT BEEN A CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS PROSPECTUS. IT ALSO DOES
NOT MEAN THAT THE INFORMATION IN THIS PROSPECTUS IS CORRECT AFTER THIS DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 1
Risk Factors......................... 9
The Transactions..................... 16
Use of Proceeds...................... 17
Capitalization....................... 18
Selected Financial Data.............. 19
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 20
Business............................. 24
Management........................... 28
Securities Ownership of Certain
Beneficial Owners and Management... 34
Certain Relationships and Related
Transactions....................... 36
Description of Senior Credit
Facility........................... 38
The Exchange Offer................... 41
Description of the New Notes......... 48
United States Federal Income Tax
Considerations..................... 76
Plan of Distribution................. 77
Legal Matters........................ 77
Experts.............................. 77
Available Information................ 78
Unaudited Pro Forma Combined
Financial Data..................... P-1
Index to Financial Statements........ F-1
</TABLE>
---------------------
UNTIL , 1999, ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW
NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
OFFER TO EXCHANGE ALL
OUTSTANDING
11 5/8% SENIOR SUBORDINATED
NOTES DUE 2009
FOR
11 5/8% SENIOR SUBORDINATED
NOTES DUE 2009
LLS CORP.
---------------------------------
PROSPECTUS
---------------------------------
September , 1999
------------------------------------------------------
------------------------------------------------------
<PAGE> 104
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended Articles of Incorporation and the Amended and Restated Bylaws
of the Company provide for the indemnification of directors and officers to the
fullest extent permitted by the Illinois Business Corporation Act ("IBCA").
Pursuant to Section 8.75 of the IBCA, the Company generally has the power to
indemnify its present and former directors and officers against expenses
incurred by them in connection with any suit to which such directors and
officers are, or are threatened to be made, a party by reason of their serving
in such positions, so long as they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action, they had no reasonable cause
to believe their conduct was unlawful. Indemnification is not available if such
person has been adjudged to have been liable to the Company, unless and only to
the extent the court in which such action was brought determines that, despite
the adjudication of liability, but in view of all the circumstances, the person
is reasonably and fairly entitled to indemnification for such expenses as the
court shall deem proper. The Company has the power to purchase and maintain
insurance for such persons. The statute also expressly provides that the power
to indemnify authorized thereby is not exclusive of any rights granted under any
bylaw, agreement, vote of shareholders or disinterested directors, or otherwise.
The above discussion of the Amended Articles of Incorporation and Amended
and Restated Bylaws of the Company and of Section 8.75 of the IBCA is not
intended to be exhaustive and is qualified in its entirety by such Amended
Articles of Incorporation and Amended and Restated Bylaws of the Company and the
IBCA.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended (the "Act"), and is therefore unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer, or controlling
person thereof in the successful defense of any action, suit, or proceeding) is
asserted by a director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 -- Recapitalization Agreement, dated July 13, 1999, by and
among HMTF/CC Investments, L.P., Courtesy Corporation,
Creative Packaging Corp., Courtesy Sales Corp. and the
shareholders party thereto.*
3.1 -- Articles of Incorporation of LLS Corp., as amended.*
3.2 -- Amended and Restated Bylaws of LLS Corp.*
4.1 -- Indenture, dated July 30, 1999, by and between LLS Corp.,
as issuer, and The Bank of New York, as trustee.*
4.2 -- Registration Rights Agreement, dated July 30, by and
between LLS Corp. and Jefferies & Company, Inc.*
</TABLE>
II-1
<PAGE> 105
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the validity
of the securities registered hereby.+
10.1 -- Credit Agreement, dated July 30, 1999, by and among LLS
Corp., certain lenders, Bank of America, N.A., as
administrative agent, Credit Suisse First Boston, as
syndication agent, and Bankers Trust Company, as
documentation agent.*
10.2 -- Escrow Agreement, dated July 30, 1999, by an among LLS
Corp., Walter J. Kreiseder, Gerald J. Sommers and
American National Bank & Trust Company.*
10.3 -- Warrant Agreement, dated July 30, 1999, by and among LLS
Corp. and the purchasers party thereto.*
10.4 -- Shareholders Agreement, dated July 30, 1999, by and among
LLS Corp. and the securityholders listed on the signature
pages thereof.*
10.5 -- Monitoring and Oversight Agreement, dated July 30, 1999,
by and among LLS Corp., Courtesy Corporation, Creative
Packaging Corp., Courtesy Sales Corp. and Hicks Muse &
Co. Partners, L.P.*
10.6 -- Financial Advisory Agreement, dated July 30, 1999, by and
among LLS Corp., Courtesy Corporation, Creative Packaging
Corp., Courtesy Sales Corp. and Hicks Muse & Co.
Partners, L.P.*
10.7 -- Employment Agreement, dated July 30, 1999, by and between
LLS Corp. and James N. Mills.*
10.8 -- Employment Agreement, dated July 30, 1999, by and between
LLS Corp. and David M. Sindelar.*
10.9 -- Employment Agreement, dated July 30, 1999, by and between
Courtesy Corporation and Walter J. Kreiseder.*
10.10 -- Employment Agreement, dated July 30, 1999, by and between
Courtesy Corporation and Gerald J. Sommers.*
10.11 -- Courtesy Group 1999 Stock Option Plan for Key Employees.*
12.1 -- Computation of Earnings to Fixed Charges.*
21.1 -- Subsidiaries of LLS Corp.*
23.1 -- Consent of Weil, Gotshal & Manges LLP (to be included in
the opinion to be filed as Exhibit 5.1 to this
registration statement)
23.2 -- Consent of Altschuler, Melvoin and Glasser, independent
auditors.*
24.1 -- Powers of Attorney of the Directors and Executive
Officers of LLS Corp. (contained on the signature page to
this registration statement)
25.1 -- Statement of Eligibility and Qualification of The Bank of
New York, as trustee, under the Indenture listed as
Exhibit 4.1 to this registration statement on Form T-1.*
27.1 -- Financial Data Schedule for the Nine Months Ended June
30, 1999.*
27.2 -- Financial Data Schedule for the Fiscal Year Ended
September 30, 1998.*
99.1 -- Form of Letter of Transmittal.*
99.2 -- Form of Notice of Guaranteed Delivery.*
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by amendment.
II-2
<PAGE> 106
(b) Financial Statement Schedules.
All schedules have been omitted since the required information is either
not present or not in amounts sufficient to require submission of the schedule,
or because the information required is included in the financial statements or
the notes thereto.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request; and
(5) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-3
<PAGE> 107
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Louis, State of Missouri, on September 29, 1999.
LLS CORP.
By: /s/ DAVID M. SINDELAR
----------------------------------
David M. Sindelar
Chief Financial Officer
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of James N. Mills and David M. Sindelar, or
any of them, each acting alone, his true and lawful attorney-in-fact and agent,
with full Power of Substitution and Resubstitution, for such person and in his
name, place and stead, in any and all capacities, in connection with the
Registration Statement on Form S-4 of LLS Corp. under the Securities Act of
1933, including, the generality of the foregoing, to sign the Registration
Statement in the name and on behalf of LLS Corp., and any and all amendments or
supplements to the Registration Statement, including any and all stickers and
post-effective amendments to the Registration Statement, and to sign any and all
additional Registration Statements relating to the same offering of Securities
as the Registration Statement that are filed pursuant to Rule 462 under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or securities self-regulatory
body, granting unto said attorneys-in-fact and agents, each acting alone, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<C> <S> <C>
/s/ JAMES N. MILLS Chairman of the Board and Chief September 29, 1999
- ----------------------------------------------------- Executive Officer
James N. Mills
/s/ THOMAS O. HICKS Director September 29, 1999
- -----------------------------------------------------
Thomas O. Hicks
/s/ JACK D. FURST Director September 29, 1999
- -----------------------------------------------------
Jack D. Furst
/s/ DAVID M. SINDELAR Senior Vice President, Chief September 29, 1999
- ----------------------------------------------------- Financial Officer and Director
David M. Sindelar
/s/ WALTER J. KREISEDER Director September 29, 1999
- -----------------------------------------------------
Walter J. Kreiseder
/s/ GERALD J. SOMMERS Director September 29, 1999
- -----------------------------------------------------
Gerald J. Sommers
</TABLE>
II-4
<PAGE> 108
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
To the Board of Directors of
Courtesy Corporation
In connection with our audit of the combined financial statements of
Courtesy Corporation and Affiliates referred to in our audit report dated
December 11, 1998, which was included in this Form S-4, we have also audited
Schedule II as of and for the fiscal years ended September 30, 1996, 1997 and
1998. In our opinion, this schedule presents fairly, in all material respects,
the information required to be set therein.
ALTSHCULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
December 11, 1998
<PAGE> 109
COURTESY CORPORATION AND AFFILIATES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLLECTION OF
BALANCE AT PREVIOUSLY BALANCE AT
ALLOWANCE FOR DOUBTFUL ACCOUNTS -- DEDUCTED BEGINNING WRITTEN OFF END OF
FROM RECEIVABLES ON THE BALANCE SHEET OF PERIOD PROVISION WRITEOFFS ACCOUNTS ACQUISITIONS PERIOD
- ------------------------------------------- ---------- --------- --------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
For the year ended September 30, 1996.. $28 $10 $(10) -- -- $28
For the year ended September 30, 1997.. $28 $(3) -- $ 3 -- $28
For the year ended September 30, 1998.. $28 -- -- -- -- $28
Nine months ended June 30, 1999
(unaudited).......................... $28 -- -- -- -- $28
</TABLE>
<PAGE> 110
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 -- Recapitalization Agreement, dated July 13, 1999, by and
among HMTF/CC Investments, L.P., Courtesy Corporation,
Creative Packaging Corp., Courtesy Sales Corp. and the
shareholders party thereto.*
3.1 -- Articles of Incorporation of LLS Corp., as amended.*
3.2 -- Amended and Restated Bylaws of LLS Corp.*
4.1 -- Indenture, dated July 30, 1999, by and between LLS Corp.,
as issuer, and The Bank of New York, as trustee.*
4.2 -- Registration Rights Agreement, dated July 30, by and
between LLS Corp. and Jefferies & Company, Inc.*
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the validity
of the securities registered hereby.+
10.1 -- Credit Agreement, dated July 30, 1999, by and among LLS
Corp., certain lenders, Bank of America, N.A., as
administrative agent, Credit Suisse First Boston, as
syndication agent, and Bankers Trust Company, as
documentation agent.*
10.2 -- Escrow Agreement, dated July 30, 1999, by an among LLS
Corp., Walter J. Kreiseder, Gerald J. Sommers and
American National Bank & Trust Company.*
10.3 -- Warrant Agreement, dated July 30, 1999, by and among LLS
Corp. and the purchasers party thereto.*
10.4 -- Shareholders Agreement, dated July 30, 1999, by and among
LLS Corp. and the securityholders listed on the signature
pages thereof.*
10.5 -- Monitoring and Oversight Agreement, dated July 30, 1999,
by and among LLS Corp., Courtesy Corporation, Creative
Packaging Corp., Courtesy Sales Corp. and Hicks Muse &
Co. Partners, L.P.*
10.6 -- Financial Advisory Agreement, dated July 30, 1999, by and
among LLS Corp., Courtesy Corporation, Creative Packaging
Corp., Courtesy Sales Corp. and Hicks Muse & Co.
Partners, L.P.*
10.7 -- Employment Agreement, dated July 30, 1999, by and between
LLS Corp. and James N. Mills.*
10.8 -- Employment Agreement, dated July 30, 1999, by and between
LLS Corp. and David M. Sindelar.*
10.9 -- Employment Agreement, dated July 30, 1999, by and between
Courtesy Corporation and Walter J. Kreiseder.*
10.10 -- Employment Agreement, dated July 30, 1999, by and between
Courtesy Corporation and Gerald J. Sommers.*
10.11 -- Courtesy Group 1999 Stock Option Plan for Key Employees.*
12.1 -- Computation of Earnings to Fixed Charges.*
21.1 -- Subsidiaries of LLS Corp.*
23.1 -- Consent of Weil, Gotshal & Manges LLP (to be included in
the opinion to be filed as Exhibit 5.1 to this
registration statement)
23.2 -- Consent of Altschuler, Melvoin and Glasser, independent
auditors.*
24.1 -- Powers of Attorney of the Directors and Executive
Officers of LLS Corp. (contained on the signature page to
this registration statement)
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
25.1 -- Statement of Eligibility and Qualification of The Bank of
New York, as trustee, under the Indenture listed as
Exhibit 4.1 to this registration statement on Form T-1.*
27.1 -- Financial Data Schedule for the Nine Months Ended June
30, 1999.*
27.2 -- Financial Data Schedule for the Fiscal Year Ended
September 30, 1998.*
99.1 -- Form of Letter of Transmittal.*
99.2 -- Form of Notice of Guaranteed Delivery.*
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by amendment.
<PAGE> 1
EXHIBIT 2.1
RECAPITALIZATION AGREEMENT
by and among
HMTF/CC INVESTMENTS, L.P.,
COURTESY CORPORATION,
CREATIVE PACKAGING CORP.,
COURTESY SALES CORP.
and
EACH SHAREHOLDER OF
COURTESY CORPORATION,
CREATIVE PACKAGING CORP.
and
COURTESY SALES CORP.
Dated July 13, 1999
<PAGE> 2
<TABLE>
<S> <C>
Article I THE REORGANIZATION TRANSACTIONS............................................................2
1.1 Creative Exchange..............................................................................2
1.2 Courtesy Sales Exchange........................................................................2
1.3 Amendment of Articles, Bylaws and Recapitalization.............................................2
1.4 Statement of New Courtesy Preferred Stock......................................................2
1.5 Subsidiary Contribution........................................................................3
Article II THE RECAPITALIZATION.......................................................................3
2.1 Purchase and Sale of Newly Issued Shares.......................................................3
2.2 Purchase Price for Newly Issued Shares.........................................................3
2.3 Courtesy Purchase..............................................................................3
2.4 Purchase Price for Purchased Shares............................................................3
2.5 Designation of Representative; Indemnification of Representative...............................4
2.6 Closing........................................................................................5
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE SHAREHOLDERS......................6
3.1 Corporate Organization.........................................................................7
3.2 Authority; Absence of Conflicts................................................................7
3.3 Outstanding Capital Stock; Title to Shares.....................................................8
3.4 Financial Statements...........................................................................9
3.5 Absence of Undisclosed Liabilities.............................................................9
3.6 Absence of Material Adverse Changes...........................................................10
3.7 Real Property.................................................................................11
3.8 Tangible Personal Property....................................................................13
3.9 Accounts Receivable...........................................................................13
3.10 Accounts Payable..............................................................................14
3.11 Inventory.....................................................................................14
3.12 Backlog.......................................................................................14
3.13 Computer Software.............................................................................14
3.14 Material and Affiliated Contracts.............................................................14
3.15 Compliance with Laws..........................................................................16
3.16 Legal Proceedings.............................................................................16
3.17 Ability to Conduct the Business...............................................................16
3.18 Labor Matters.................................................................................16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
3.19 Employee Benefit Plans........................................................................18
3.20 Environmental Matters.........................................................................19
3.21 Products......................................................................................21
3.22 Tax Matters...................................................................................22
3.23 Insurance.....................................................................................24
3.24 Minute Books; Stock Record Books..............................................................24
3.25 Brokers' or Finders' Fees.....................................................................24
3.26 Material Customers and Suppliers..............................................................24
3.27 Bank Accounts; Powers of Attorney.............................................................25
3.28 Books and Records.............................................................................25
3.29 Intellectual Property Rights..................................................................25
3.30 Year 2000 Compliance..........................................................................26
3.31 Sales Representatives and Other Sales Agents/Sales Offices....................................27
Article IV REPRESENTATIONS AND WARRANTIES OF NEWCO...................................................27
4.1 Organization and Corporate Power..............................................................27
4.2 Corporate Authority; Absence of Conflicts.....................................................27
4.3 No Investigation..............................................................................28
4.4 Compliance with Securities Laws...............................................................28
4.5 Funding.......................................................................................28
4.6 Brokers' or Finders' Fees.....................................................................28
4.7 Hart-Scott-Rodino.............................................................................28
Article V COVENANTS.................................................................................29
5.1 Full Access and Cooperation...................................................................29
5.2 Preservation of Business......................................................................29
5.3 Negative Covenants............................................................................29
5.4 Third Party Consents..........................................................................31
5.5 Schedules.....................................................................................31
5.6 Transfer Taxes................................................................................32
5.7 Reasonable Efforts............................................................................32
5.8 Third-Party Offers............................................................................32
5.9 Termination of Shareholders Agreements........................................................33
5.10 Minimum Working Capital.......................................................................33
5.11 Class A Common Stock..........................................................................33
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
5.12 Stock Option Plan.............................................................................33
5.13 Employees.....................................................................................33
5.14 Indemnification of Aguilar Litigation.........................................................34
5.15 Krusinski Arbitration.........................................................................34
5.16 Automobile Leases.............................................................................34
5.17 Life Insurance................................................................................34
5.18 Updating Projections..........................................................................34
5.19 Employment Agreements.........................................................................35
5.20 Noncompetition Agreements.....................................................................35
5.21 Lease Amendments..............................................................................35
Article VI TAX MATTERS...............................................................................35
6.1 Tax Indemnification...........................................................................35
6.2 Tax Returns...................................................................................36
6.3 Control of Tax Proceedings....................................................................38
6.4 Survival of Indemnification...................................................................38
6.5 Sole Remedy...................................................................................38
6.6 Tax Deposit Reimbursements....................................................................39
6.7 Arbiter CPA...................................................................................39
Article VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANIES AND THE SHAREHOLDERS.............39
7.1 Representations, Warranties and Covenants.....................................................39
7.2 Closing Certificate...........................................................................39
7.3 Legal Opinion.................................................................................39
7.4 Injunction....................................................................................40
7.5 Shareholders Agreement........................................................................40
7.6 Escrow Agreement..............................................................................40
Article VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NEWCO..........................................40
8.1 Representations, Warranties and Covenants.....................................................40
8.2 Closing Certificate...........................................................................40
8.3 Legal Opinion.................................................................................40
8.4 Injunction....................................................................................40
8.5 Material Adverse Effect.......................................................................40
8.6 Regulatory Approvals and Consents.............................................................41
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
8.7 Funding.......................................................................................41
8.8 Shareholders Agreement........................................................................41
8.9 Escrow Agreement..............................................................................41
8.10 Employment Agreements.........................................................................41
8.11 Noncompetition Agreement......................................................................41
8.12 Lease Amendments..............................................................................41
8.13 Non-Foreign Person Affidavit..................................................................41
8.14 EBITDA Target.................................................................................41
Article IX TERMINATION...............................................................................42
9.1 Termination...................................................................................42
9.2 Liabilities Upon Termination..................................................................43
Article X MISCELLANEOUS.............................................................................43
10.1 Expenses......................................................................................43
10.2 Survival of Representations; Exclusive Remedy.................................................43
10.3 Attorneys' Fees...............................................................................44
10.4 Notices.......................................................................................44
10.5 Successors and Assigns........................................................................46
10.6 Entire Agreement and Modification.............................................................46
10.7 Section and Other Headings....................................................................46
10.8 Governing Law.................................................................................46
10.9 Counterparts..................................................................................46
10.10 Further Assurances............................................................................46
10.11 Severability..................................................................................46
10.12 Public Statements.............................................................................47
10.13 Specific Performance..........................................................................47
10.14 Limitations on Trustee's Representations and Warranties.......................................47
</TABLE>
Annexes
<TABLE>
<S> <C>
Amended and Restated Articles of Incorporation A
Amended and Restated Bylaws B
Terms for New Courtesy Preferred Stock C
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
Escrow Agreement D
Commitment Letters E
Kreiseder Employment Agreement F-1
Sommers Employment Agreement F-2
Greenberg Employment Agreement F-3
Noncompetition Agreement G
Lease Amendment Terms H
Weil, Gotshal & Manges LLP Legal Opinion I
Shareholders Agreement J
Katten Muchin & Zavis Legal Opinion K
Schedules
Creative Share Ownership/Exchange 1.1
Courtesy Sales Share Ownership/Exchange 1.2
Courtesy Purchase 2.3
Foreign Qualifications 3.1(a)
Companies' Share Ownership 3.3(c)(i)
New Courtesy Common Stock Ownership 3.3(c)(ii)
Voting Agreements 3.3(c)(iii)
Financial Statements 3.4
Deviations from GAAP 3.4(iii)
Undisclosed Liabilities 3.5
Material Adverse Changes 3.6
Real Property 3.7(a)
Real Property Liens 3.7(b)
Mechanic's and Materialmen's Liens 3.7(d)
Personal Property Liens 3.8(a)(i)
Tangible Personal Property Conditional Agreement 3.8(a)(ii)
Leased Tangible Personal Property 3.8(b)
Deferred Purchase Price Equipment 3.8(c)
Accounts Receivable 3.9
Accounts Payable 3.10
Inventory 3.11(a)
Inventory Locations 3.11(b)
Material Contracts 3.14(a)
Affiliate Agreements 3.14(b)
Contract Defaults 3.14(c)
Legal Proceedings 3.16
Officers and Directors 3.18(b)
Benefit Accruals, Employee Loans and Employee Agreements 3.18(c)
Employment Discrimination Claims 3.18(d)
Benefit Plans 3.19(b)
Material Employee Compensation 3.19(c)(i)
Benefit Plans - Legal Compliance 3.19(e)
Environmental Matters 3.20
Product Claims 3.21
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
Tax Matters 3.22
Tax Adjustments 3.22(c)
Internal Revenue Code Elections 3.22(i)
Tax Examinations 3.22(j)
Jurisdiction Taxation 3.22(k)
Insurance Policies 3.23
Brokers' and Finders' Fees 3.25
Customers 3.26(a)
Suppliers and Purchase Orders 3.26(b)
Bank Accounts 3.27
Books and Records 3.28
Intellectual Property 3.29(a)
Patent Infringements 3.29(c)
Licensed Intellectual Property 3.29(d)
Licenses 3.29(e)
Sales Representatives and Other Sales Agents 3.31
Brokers' and Finders' Fees 4.6
Sample Working Capital Computation 5.10
Class A Common Stock 5.11
Annual Bonuses and Raises 5.13
Automobile Leases 5.16
Sample Projections Computation 5.18
Calculation of EBITDA 8.14
</TABLE>
vi
<PAGE> 8
RECAPITALIZATION AGREEMENT
THIS RECAPITALIZATION AGREEMENT (this Agreement") is made and entered
into as of the 13th day of July, 1999, by and among HMTF/CC Investments, L.P.,
a Texas limited partnership ("Newco"), Courtesy Corporation, an Illinois
corporation ("Courtesy"), Creative Packaging Corp., an Illinois corporation
("Creative"), Courtesy Sales Corp., an Illinois corporation ("Courtesy Sales"
and, together with Courtesy and Creative, the "Companies"), and the undersigned
shareholders of the Companies (each, a "Shareholder" and, collectively, the
"Shareholders").
RECITALS:
WHEREAS, immediately prior to the consummation of the Recapitalization
(as hereinafter defined), (i) the shareholders of Creative and Courtesy Sales
will convey all outstanding shares of capital stock of Creative and Courtesy
Sales in consideration of shares of capital stock of Courtesy on the terms and
conditions set forth in Sections 1.1 and 1.2 of this Agreement; (ii) following
such exchanges, Courtesy will amend its articles of incorporation and
recapitalize its outstanding capital stock in the manner specified in Section
1.3 of this Agreement; (iii) Courtesy will file the appropriate statement with
the Secretary of State of the State of Illinois establishing and designating
the series, and fixing and determining the relative rights and preferences of
the New Courtesy Preferred Stock (as hereinafter defined), as set forth in
Section 1.4; and (iv) Courtesy will organize a new wholly-owned subsidiary
corporation under the laws of the State of Illinois and will contribute all or
substantially all of its assets and liabilities to such corporation, as set
forth in Section 1.5 of this Agreement (collectively, the "Reorganization
Transactions");
WHEREAS, immediately after the consummation of the Reorganization
Transactions contemplated by Sections 1.1 and 1.2 and the amendment of the
articles of incorporation of Courtesy contemplated by Section 1.3, the
Shareholders will own all of the issued and outstanding shares of common stock,
par value $.01 per share, of Courtesy ("New Courtesy Common Stock");
WHEREAS, following consummation of the Reorganization Transactions,
the Shareholders desire to sell to Courtesy, and Courtesy desires to purchase
from the Shareholders, 78 million shares of New Courtesy Common Stock owned by
the Shareholders (the "Redemption");
WHEREAS, following consummation of the Reorganization Transactions,
certain of the Shareholders will retain 42 million shares of New Courtesy
Common Stock; and
WHEREAS, contemporaneously with the Redemption, Courtesy desires to
issue and sell to Newco, and Newco desires to purchase from Courtesy (the
"Purchase" and, together with the Redemption, the "Recapitalization"), 78
million shares of New Courtesy Preferred Stock (the "Newly Issued Shares").
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement, and for other
good and valuable
<PAGE> 9
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
THE REORGANIZATION TRANSACTIONS
1.1 Creative Exchange. On the Closing Date (as hereinafter defined)
and immediately prior to the consummation of the Recapitalization, each of the
shareholders of Creative shall convey all right, title and interest in the
shares of Common Stock, no par value, of Creative held by such shareholder, all
as identified on Schedule 1.1 hereto, free and clear of all Encumbrances (as
hereinafter defined), to Courtesy, and in consideration therefor, Courtesy
shall issue to each such shareholder the number of shares of Class A Voting
Common Stock, no par value, of Courtesy and the specific stock certificates
representing such shares set forth opposite the name of such shareholder on
Schedule 1.1 hereto, all of which shares shall be duly authorized, validly
issued, fully paid and nonassessable. As a consequence of such exchange,
Creative will become a wholly-owned subsidiary of Courtesy.
1.2 Courtesy Sales Exchange. On the Closing Date and immediately prior
to the consummation of the Recapitalization, each of the shareholders of
Courtesy Sales shall convey all right, title and interest in the shares of
Common Stock, no par value, of Courtesy Sales held by such shareholder, all as
identified on Schedule 1.2 hereto, free and clear of all Encumbrances, to
Courtesy, and in consideration therefor, Courtesy shall issue to each such
shareholder the number of shares of Class A Voting Common Stock, no par value,
of Courtesy and the specific stock certificates representing such shares set
forth opposite the name of such shareholder on Schedule 1.2 hereto, all of
which shares shall be duly authorized, validly issued, fully paid and
nonassessable. As a consequence of such exchange, Courtesy Sales will become a
wholly-owned subsidiary of Courtesy.
1.3 Amendment of Articles, Bylaws and Recapitalization. Following
consummation of the share exchanges contemplated by Sections 1.1 and 1.2
hereof, the articles of incorporation of Courtesy shall be amended in
accordance with the applicable provisions of the Illinois Business Corporation
Act (the "IBCA") as set forth in Annex A hereto (the "Amended Articles"), the
bylaws of Courtesy shall be amended as set forth in Annex B hereto and each
outstanding share of Class A Voting Common Stock, no par value, and Class B
Non-voting Common Stock, no par value, of Courtesy shall be recapitalized as
1,544.0367 shares of New Courtesy Common Stock, in accordance with such
amendment. The name of Courtesy shall be changed to LLS Corp. under the terms
of the Amended Articles.
1.4 Statement of New Courtesy Preferred Stock. Immediately prior to
the consummation of the Recapitalization, Courtesy shall file the statement
attached hereto as Annex C with the Secretary of State of the State of
Illinois, in accordance with the applicable provisions of the IBCA,
establishing and designating the series, and fixing and determining the
relative rights and preferences of the Series A Convertible Preferred Stock,
par value $.01 per share, of Courtesy (the "New Courtesy Preferred Stock").
2
<PAGE> 10
1.5 Subsidiary Contribution. Immediately prior to the consummation of
the Recapitalization, Courtesy shall organize a new wholly-owned subsidiary
corporation under the laws of the State of Illinois under the name Courtesy
Corporation ("Courtesy Operating"). Courtesy shall contribute to Courtesy
Operating all or substantially all of the pre-Recapitalization assets and
liabilities of Courtesy.
ARTICLE II
THE RECAPITALIZATION
2.1 Purchase and Sale of Newly Issued Shares. Subject to the terms and
conditions, and in reliance upon the representations, warranties and covenants,
set forth in this Agreement, Courtesy agrees to sell the Newly Issued Shares to
Newco, and Newco agrees to purchase the Newly Issued Shares from Courtesy, at
the Closing.
2.2 Purchase Price for Newly Issued Shares. The aggregate purchase
price for the Newly Issued Shares shall be $78 million. The purchase price for
each share of New Courtesy Preferred Stock purchased pursuant to this Section
2.2 shall be equal to $1.00. Newco shall have the right to assign its right to
purchase Newly Issued Shares (but not its obligation to do so) to an affiliated
third party or parties.
2.3 Courtesy Purchase. Subject to the terms and conditions, and in
reliance upon the representations, warranties and covenants, set forth in this
Agreement, each Shareholder agrees to sell to Courtesy, at the Closing (as
hereinafter defined), and Courtesy agrees to purchase from such Shareholder, at
the Closing, the aggregate number of shares of New Courtesy Common Stock
evidenced by the specific stock certificates representing such shares
identified on Schedule 2.3 hereto opposite the name of such Shareholder (each
share, a "Repurchased Share"), which shall be equal to the number of shares of
New Courtesy Common Stock held by such Shareholder less the number of retained
shares of New Courtesy Common Stock identified on Schedule 2.3 hereto opposite
the name of such Shareholder (each share, a "Continuing Share").
2.4 Purchase Price for Purchased Shares. The purchase price (the
"Repurchase Price") for the Repurchased Shares held by each Shareholder shall
be equal to the Per Share Consideration (as hereinafter defined) multiplied by
the number of shares of New Courtesy Common Stock held by such Shareholder less
the Aggregate Share Value (as hereinafter defined) of the Continuing Shares
retained by such Shareholder. The "Per Share Consideration" shall be equal to
the quotient (expressed in U.S. dollars) obtained by dividing (i) $353 million,
less the amount necessary to discharge in full at Closing all outstanding
Indebtedness of the Companies (including, without limitation, interest,
charges, fees and penalties, including prepayment penalties, payable in respect
of the repayment of such Indebtedness at Closing), plus the book cash balance
of the Companies at Closing, by (ii) 308,807,342 representing the number of
shares of New Courtesy Common Stock that will be issued and outstanding
immediately prior to the consummation of the Recapitalization. For purposes of
this Section 2.4, "Indebtedness" means, all indebtedness for borrowed money,
all obligations evidenced by bonds, debentures, notes or other similar
instruments, all capitalized lease obligations, and all other such indebtedness
of third parties which is either guaranteed by the Companies or secured by the
assets of the Companies. For purposes of this Section 2.4, "Aggregate Share
Value" means the
3
<PAGE> 11
aggregate number of Continuing Shares retained by such Shareholder valued at
$1.00 per share. The Repurchase Price shall be payable in accordance with
Section 2.6(b)(iv) and (v) hereof.
2.5 Designation of Representative; Indemnification of Representative.
(a) Each Shareholder hereby designates Walter J. Kreiseder
and Gerald J. Sommers, jointly and acting in unison, as representatives (the
"Representatives") to act on behalf of such Shareholder as contemplated or
provided herein. Newco and the Companies shall be entitled to rely upon
instructions from the Representatives with respect to the payment of the Per
Share Consideration as provided for in Section 2.3 hereof, and none of Newco or
the Companies shall be liable for any acts or omissions of the Representatives
in connection with the performance by the Representatives of their obligations
hereunder. Each Shareholder hereby appoints the Representatives as his, her or
its agent for purposes of the preceding sentence. The Representatives are
hereby instructed to pay all costs, fees, expenses and Liabilities (as
hereinafter defined) of the Shareholders hereunder, which amounts shall include
any professional fees and expenses which the Representatives reasonably
determine to be necessary or advisable ("Costs"), and, if in the reasonable
judgment of the Representatives a reserve for future Costs is necessary or
appropriate, to establish an appropriate reserve for such Costs and place an
amount in cash equal to any such reserve(s) in an interest-bearing account for
the benefit of the Shareholders to meet future Costs (the "Reserve"). At such
time as the Representatives have determined in their reasonable discretion that
there is no longer any need for the Reserve, the Representatives shall
distribute any amounts remaining in the Reserve to the Shareholders, pro rata
in accordance with the Shareholders' relative ownership of New Courtesy Common
Stock immediately prior to the consummation of the Recapitalization as set
forth on Schedule 3.3(c)(ii) hereto. As used herein, "Liabilities" shall mean
all debts, obligations, guaranties and other liabilities of a Person (as
hereinafter defined) (whether absolute, accrued, contingent, fixed, known or
unknown or otherwise, or whether due or to become due).
(b) Each Shareholder hereby designates the Representatives,
jointly and acting in unison, to act on behalf of such Shareholder as
contemplated or provided in the Escrow Agreement (as hereinafter defined).
Newco, Courtesy and the Escrow Agent (as hereinafter defined) shall be entitled
to rely upon instructions and notices from the Representatives with respect to
the Escrow Agreement and none of Newco, Courtesy or the Escrow Agent shall be
liable for any acts or omissions of the Representatives in connection with the
performance by the Representatives of their obligations under the Escrow
Agreement.
(c) To the fullest extent permitted by law, the Shareholders,
pro rata in proportion to the number of shares of New Courtesy Common Stock
owned by each Shareholder immediately prior to the consummation of the
Recapitalization, shall indemnify and hold harmless the Representatives and
their agents and representatives from and against any and all losses, damages
and expenses (including, without limitation, reasonable attorneys' fees and
expenses), amounts paid in settlement, court costs and other expenses of
litigation (collectively, "Damages") to the extent relating to, resulting from
or arising out of any act or omission of the Representatives acting in such
capacity under this Agreement or any instrument or other document delivered
pursuant to this Agreement. Each Shareholder hereby expressly agrees that any
such Damages incurred by the Representatives may be withheld by the
Representatives
4
<PAGE> 12
from the Per Share Consideration, including any Escrowed Funds remaining in
escrow on the date of termination of the Escrow Agreement, prior to the
distribution to the Shareholders thereof.
(d) By execution of this Agreement, each Shareholder hereby
appoints the Representatives, jointly and acting in unison, his, her or its
attorney-in-fact to act on such Shareholder's behalf and to take such actions
and exercise such discretion as is required of the Representatives pursuant to
the terms of this Agreement and the Escrow Agreement, including, without
limitation, the following:
(i) to receive, hold and deliver to Courtesy the
Share Certificates (as hereinafter defined) and any other
documents relating thereto;
(ii) to execute, acknowledge, deliver, record and
file all ancillary agreements, certificates and documents
which the Representatives or the Shareholders deem necessary
or appropriate in connection with the consummation of the
transactions contemplated by the terms and provisions of this
Agreement or the Escrow Agreement, including, without
limitation, any amendments to this Agreement which change the
economics of this Agreement or otherwise;
(iii) to receive any payments or notices due under
this Agreement or the Escrow Agreement and to acknowledge
receipt for such payments or notices;
(iv) to waive any breach or default under this
Agreement or the Escrow Agreement, or to waive any condition
precedent to the Closing;
(v) to terminate this Agreement or the Escrow
Agreement;
(vi) to receive service of process in connection
with any claims under this Agreement or the Escrow Agreement;
(vii) to amend the Escrow Agreement and to defend
and settle any claims arising thereunder and to take any such
actions with respect to the Escrowed Funds as deemed
necessary or appropriate; and
(viii) to receive, hold and deliver to Courtesy or
Newco any documents relating to clause (vii) on behalf of the
Shareholders.
2.6 Closing.
(a) Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Article
IX hereof, and subject to the satisfaction or waiver of the conditions set
forth in Articles VII and VIII hereof, the closing of the transactions
contemplated hereby (the "Closing") shall take place at 10:00 a.m., Chicago,
Illinois time, on the fifth business day following satisfaction or waiver of
the conditions set forth in Articles VII and VIII hereof (the "Closing Date"),
at the offices of Katten Muchin & Zavis, 525 West Monroe Street, Chicago,
Illinois 60661-3693, unless another date (in which case such date shall be the
Closing Date for all purposes hereof), time or place is agreed to in writing by
the Representatives and Newco.
5
<PAGE> 13
(b) The closings of the Reorganization Transactions will occur
immediately prior to the closing of the Recapitalization, subject to all the
terms and conditions of this Agreement. The consummation of the Recapitalization
will occur in the sequence set forth below:
(i) Newco will (x) pay to Courtesy an amount equal to
$78 million by wire transfer of immediately available funds to
such account or accounts as Courtesy specifies to Newco in
writing at least three business days before the Closing Date
and (y) deliver to Courtesy such documents and instruments as
are required to be delivered to Courtesy by Newco under the
terms of this Agreement.
(ii) Courtesy will deliver to Newco a certificate or
certificates representing the Newly Issued Shares.
(iii) The Representatives will (x) surrender to
Courtesy the certificates representing all of the Repurchased
Shares (the "Share Certificates"), accompanied by stock
powers duly endorsed in blank, and (y) deliver such other
documents and instruments as are required to be delivered to
Courtesy by the Shareholders under the terms of this
Agreement.
(iv) Courtesy will pay and deliver to the
Shareholders, by wire transfer of immediately available funds
to such account or accounts as the Representatives specify to
Courtesy in writing at least three business days before the
Closing Date, an amount equal to the Repurchase Price less
the Escrowed Funds.
(v) Courtesy will (x) pay and deliver to American
National Bank & Trust Company, as escrow agent (the "Escrow
Agent"), by wire transfer of immediately available funds to
such account or accounts as the Escrow Agent specifies to
Courtesy in writing at least three business days before the
Closing Date, an amount equal to $20,000,000 (the "Escrowed
Funds"), to be held and distributed by the Escrow Agent
pursuant to the terms of the Escrow Agreement in
substantially the form attached hereto as Annex D (the
"Escrow Agreement"), to be executed by and among Courtesy,
Newco, the Representatives (on behalf of the Shareholders),
and the Escrow Agent and (y) deliver to the Escrow Agent such
documents and instruments as are required to be delivered to
the Escrow Agent by Courtesy under the terms of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
COMPANIES AND THE SHAREHOLDERS
The Companies and the Shareholders make the following representations
and warranties to Newco, each of which is true and correct as of the date
hereof and shall be true and correct as of the Closing Date and shall be
unaffected by any investigation heretofore or hereafter made by Newco:
6
<PAGE> 14
3.1 Corporate Organization.
(a) Each of the Companies is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois,
and has all requisite corporate power and authority to own, lease and operate
the properties and assets it now owns, leases or operates and to carry on its
business as presently conducted or proposed to be conducted pursuant to
existing plans. Each of the Companies is duly qualified to transact business as
a foreign corporation and is in good standing in each of the jurisdictions set
forth on Schedule 3.1(a) attached hereto, which are the only jurisdictions
where such qualification is required by reason of the nature or location of the
properties and assets owned, leased or operated by it or the business conducted
by it, except where the failure to be so qualified would not have a Material
Adverse Effect (as hereinafter defined). Each of the Companies has made
available to Newco complete and correct copies of such corporation's Articles
of Incorporation, as amended to date (certified by the competent authority of
the state of incorporation of such corporation within 30 days of the date
hereof), and its Bylaws, as amended to date (certified by the Secretary of such
corporation within 30 days of the date hereof).
(b) Prior to the Reorganization Transactions, the Companies
have no subsidiaries and do not own, of record or beneficially, directly or
indirectly, any equity or other proprietary interest, or possess the right to
acquire any such interest, contingent or otherwise, in any other corporation,
partnership, joint venture, limited liability company, business enterprise or
other entity (together with natural persons, "Persons").
3.2 Authority; Absence of Conflicts.
(a) The Companies have full corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Boards of Directors of the Companies and the Shareholders, and no other
corporate actions on the part of the Companies are necessary to authorize and
approve the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Companies and, assuming this Agreement
constitutes a valid and binding obligation of Newco, constitutes the valid and
binding obligation of the Companies, enforceable against them in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
relating to or affecting creditors' rights and by general equitable principles.
(b) The Shareholders have full legal capacity to execute and
deliver this Agreement and to perform the obligations of the Shareholders
hereunder. This Agreement has been duly and validly executed and delivered by
the Shareholders and, assuming this Agreement constitutes a valid and binding
obligation of Newco, constitutes a valid and binding obligation of the
Shareholders, enforceable against them in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general applicability relating to or affecting creditors'
rights and by general equitable principles.
7
<PAGE> 15
(c) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby, nor compliance with
the terms hereof, will (i) conflict with or result in a breach of the Articles
of Incorporation or Bylaws of any of the Companies, as amended, nor (ii) except
as set forth on Schedule 3.14(c) hereto, violate, conflict with or result in a
breach of or default (or any event which with the lapse of time or the giving
of notice or both would constitute an event of default) under any of the terms,
conditions or provisions of any Material Contract (as defined in Section 3.14)
nor (iii) except as set forth on Schedule 3.14(c) hereto, accelerate or give to
others any interests or rights, including rights of acceleration, termination,
modification or cancellation, under any Material Contract or in or with respect
to the business or assets of any of the Companies, nor (iv) result in the
creation of any Encumbrance (as hereinafter defined) on the assets, capital
stock or properties of any of the Companies, nor (v) conflict with, violate or
result in a breach of or constitute a default under any law, statute, rule,
judgment, order, decree, injunction, ruling or regulation of any government,
governmental agency, authority or instrumentality, court or arbitration
tribunal (each, a "Governmental Entity") to which any of the Companies or any
of their respective assets or properties are subject, nor (vi) require any of
the Companies to give notice to, or obtain an authorization, approval, order,
license, franchise, declaration or consent of, or make a filing with, any third
party, including, without limitation, any Governmental Entity, unless such
failure to notify, obtain, or make would not have a Material Adverse Effect.
3.3 Outstanding Capital Stock; Title to Shares.
(a) As of the date hereof, (i) the authorized capital stock
of Courtesy consists of 10,000 shares of Class A Voting Common Stock, no par
value, of which 5,000 shares are issued and outstanding, and 30,000 shares of
Class B Non-voting Common Stock, no par value, of which 15,000 shares are
issued and outstanding, (ii) the authorized capital stock of Creative consists
of 1,000 shares of Common Stock, no par value, of which 888.8888 shares are
issued and outstanding, and (iii) the authorized capital stock of Courtesy
Sales consists of 10,000 shares of Common Stock, no par value, of which 100
shares are issued and outstanding. No other class of capital stock of any of
the Companies is authorized or outstanding. All of the issued and outstanding
shares of capital stock of each of the Companies have been duly authorized and
are validly issued, fully paid and nonassessable, and none of such shares has
been issued in violation of any preemptive rights of shareholders.
(b) Immediately following the consummation of the
Reorganization Transactions, the authorized capital stock of Courtesy shall
consist of (i) 450 million shares of Common Stock, par value $.01 per share, of
which 308,807,342 shares will be issued and outstanding immediately prior to
the consummation of the Recapitalization, (ii) 50 million shares of Class A
Common Stock, par value $.01 per share ("New Courtesy Class A Common Stock"),
of which no shares will be issued and outstanding immediately prior to the
consummation of the Recapitalization, and (iii) 100 million shares of Preferred
Stock, par value $.01 per share, of which no shares will be issued and
outstanding immediately prior to the consummation of the Recapitalization.
(c) As of the date hereof, the Shareholders are the holders
of record and own beneficially that number of shares of capital stock of the
Companies set forth opposite their respective names on Schedule 3.3(c)(i)
hereto, free and clear of any Encumbrances. Following
8
<PAGE> 16
the consummation of the Reorganization Transactions and prior to the
consummation of the Recapitalization, the Shareholders will be the holders of
record and will own beneficially that number of shares of New Courtesy Common
Stock set forth opposite their respective names on Schedule 3.3(c)(ii) hereto,
free and clear of any Encumbrances. Except as set forth on Schedule
3.3(c)(iii), none of the Shareholders is a party to any voting trust, proxy or
other agreement or understanding (including, without limitation, options or
rights of first refusal) with respect to the voting, purchase, sale or other
disposition of any shares of capital stock of the Companies or any interest
therein which will remain in force or effect after the Closing.
(d) Except as contemplated by the express terms of this
Agreement, there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement of any kind to purchase
or otherwise to receive from the Companies or any Shareholder any shares of the
capital stock or any other security of the Companies, and there is no
outstanding security of any kind convertible into such capital stock or other
security.
3.4 Financial Statements. Schedule 3.4 hereto sets forth the following
financial statements:
(a) The combined unaudited balance sheets of the Companies as
of March 31, 1999 ("Interim Balance Sheet"), and the related combined unaudited
statements of income, retained earnings and cash flows for the six months then
ended (collectively the "Interim Financial Statements"); and
(b) The combined audited balance sheets of Courtesy and
Creative as of September 30, 1996 and September 30, 1997 and the combined
audited balance sheets of the Companies as of September 30, 1998, and the
related combined audited statements of income, retained earnings and cash flows
for the years then ended, and the notes thereto (such audited financial
statements and Interim Financial Statements being hereinafter referred to as
the "Financial Statements").
The Financial Statements (i) fairly present in all material respects the
financial position, results of operations and cash flows of the Companies for
the respective periods stated therein, (ii) have been prepared from and are
consistent in all material respects with the books and records of the
Companies, and (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the relevant periods
("GAAP"), except as set forth on Schedule 3.4(iii) hereto.
3.5 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 3.5 hereto, the Companies do not have any Liabilities or obligations
of any nature, whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due and whether arising out of transactions
entered into or any condition or state of facts existing on or prior to the
date hereof, which would in accordance with GAAP be required to be reflected
on, or disclosed in the notes to, a balance sheet, other than (a) Liabilities
and obligations set forth on the Interim Balance Sheet and (b) Liabilities and
obligations which have arisen after the date of the Interim Balance Sheet in
the ordinary course of business consistent with past practice, all of which are
accurately and fairly reflected in the books and records of the Companies and
which will not, individually or in the aggregate, have a Material Adverse
Effect.
9
<PAGE> 17
3.6 Absence of Material Adverse Changes. Except as set forth on
Schedule 3.6 hereto, since the date of the Interim Balance Sheet, each of the
Companies has carried on its business in the ordinary course and consistent
with past practice. Without limiting the generality of the foregoing, except as
set forth on Schedule 3.6 hereto and as otherwise contemplated by this
Agreement, since the date of the Interim Balance Sheet, the Companies have not:
(a) discharged or satisfied any Encumbrance, or paid any
obligation or Liability, absolute, accrued, contingent, or otherwise, whether
due or to become due, other than obligations or Liabilities incurred in the
ordinary course of the Companies' business;
(b) suffered any damage, destruction or loss of physical
property or goods resulting in costs or expenses to the Companies in excess of
$50,000, whether or not covered by insurance;
(c) mortgaged, pledged or subjected to any lien, charge or
other Encumbrance any of their assets, tangible or intangible, except for
Permitted Liens (as hereinafter defined);
(d) sold or transferred any of their assets or cancelled or
compromised any of their debts, except, in each such case, in the ordinary
course of business and consistent with past practice, or waived any claims or
rights of a material nature;
(e) leased, licensed or granted to any Person any rights in
any of their assets or properties except in the ordinary course of business;
(f) experienced any material adverse change in their
financial condition, results of operations, cash flows, assets, Liabilities,
businesses, prospects, or operations;
(g) received notice of any adverse change in their
relationship with any of their employees, salesmen, distributors, or
independent contractors, unless such change has not had or will not have a
Material Adverse Effect;
(h) made any capital expenditures or capital additions or
betterments in excess of an aggregate of $1,000,000;
(i) revalued any of their assets;
(j) entered into any material transaction, contract or
commitment of a kind required to be disclosed on one of the Schedules attached
hereto, except as disclosed on one of the Schedules hereto;
(k) made any change in any financial or tax accounting
method, principle or practice or in their method of applying any such principle
or practice;
(l) made any distributions (however characterized and whether
payable in cash or additional shares of stock) in respect of any shares of
their capital stock or declared or paid any dividends in a manner inconsistent
with the Companies' customary practices with respect to dividends;
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(m) repurchased or redeemed any shares of their capital
stock;
(n) issued any additional shares of their capital stock or
granted any options, warrants or other rights to purchase, or any securities
convertible into or exchangeable for, shares of their capital stock;
(o) increased the base compensation of any officer, director
or employee of the Companies ("Employee") other than increases that were made
in the ordinary and usual course of business;
(p) provided any Employee with any increased security or
tenure of employment;
(q) increased the amounts payable to any Employee upon the
termination of any such person's employment;
(r) adopted, amended, or revised the terms of any Benefit
Plan (as hereinafter defined) with respect to the benefits granted to or for
the benefit of any of the present or former Employees thereunder, other than as
required by law; or
(s) entered into any agreement to do any of the foregoing.
3.7 Real Property.
(a) Schedule 3.7(a) hereto sets forth a complete list of (i)
the real property owned in fee by the Companies (the "Owned Real Property") and
(ii) all real property leased by the Companies (the "Leased Real Property")
(the Owned Real Property, the Leased Real Property and all other rights or
interests of the Companies in real property (the "Other Real Property
Interests") are collectively referred to herein as the "Real Property"). The
Companies have made available to Newco true and correct copies of all leases,
subleases, abstracts of title, surveys, title opinions and title insurance
policies in the Companies' possession relating to all of the Real Property.
None of the Real Property reflected in the Interim Balance Sheet has been
disposed of, and no Real Property has been acquired by the Companies since the
date of the Interim Balance Sheet.
(b) Except for (i) liens disclosed on Schedule 3.7(b) hereto,
(ii) liens for current Taxes (as hereinafter defined) not yet delinquent, (iii)
covenants, conditions and restrictions of record, none of which materially
impairs the use of such property in the manner currently used or impairs the
ability of the Companies to deliver good title to such Real Property, and (iv)
any mechanic's, workmen's, repairmen's, materialmen's, contractor's,
warehousemen's, carrier's, supplier's or vendor's lien, if payment is not yet
due on the underlying obligation (the "Permitted Liens"), the Companies have
good title in fee simple to all Owned Real Property, and a valid leasehold
interest in all Leased Real Property, free and clear of any mortgage, pledge,
security interest, lien, claim, charge, conditional sales contract,
restriction, reservation, option, right of first refusal, or other encumbrance
of any nature whatsoever (collectively, "Encumbrances"). Except as set forth on
Schedule 3.7(b), the Companies have good title to all structures, plants,
leasehold improvements, systems, fixtures and other property located on or
about any of the Leased Real Property which are owned by the Companies, as
reflected in the
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Interim Balance Sheet, free and clear of any Encumbrances except for Permitted
Liens, and none of such assets is subject to any agreement, arrangement or
understanding for its use by any Person other than the Companies.
(c) Each of the leases and subleases relating to the Leased
Real Property is in full force and effect, there is no material default by the
Companies (or to the knowledge of the Companies and the Shareholders, by the
lessor) under any such lease or sublease, and each such lease and sublease will
remain in full force and effect following the Closing without any modification
in the rights or obligations of the parties under any such lease or sublease.
As used herein, the phrase "to the knowledge of the Companies and the
Shareholders" means the knowledge, after due inquiry of the heads of human
resources, purchasing and each manufacturing facility, of Walter J. Kreiseder,
Gerald J. Sommers, James M. Beck and Dennis Greenberg.
(d) Except as set forth on Schedule 3.7(d) hereto, no work
has been performed on or with respect to or in connection with any of the Real
Property that would cause such Real Property to become subject to any
additional mechanic's, materialmen's, workmen's, repairmen's, carrier's or
similar lien aggregating in excess of $250,000.
(e) To the knowledge of the Companies and the Shareholders,
the structures, plants, improvements, systems and fixtures (including, without
limitation, storage tanks or other impoundment vessels, whether above or below
ground) located on each parcel of Real Property comply in all material respects
with all federal, state and local laws, ordinances, rules, regulations and
similar governmental and regulatory requirements, and are in good operating
condition and repair, ordinary wear and tear excepted. Each such parcel of Real
Property (in view of the purposes for which it is currently used) conforms in
all material respects with all covenants or restrictions of record and conforms
with all applicable building codes and zoning requirements and there is not, to
the knowledge of the Companies and the Shareholders, any proposed change in any
such governmental or regulatory requirements or in any such zoning
requirements. To the knowledge of the Companies and the Shareholders, all
existing electrical, plumbing, fire sprinkler, lighting, air conditioning,
heating, ventilation, elevator and other mechanical systems located in or about
the Real Property are in good operating condition and repair, ordinary wear and
tear excepted.
(f) The Other Real Property Interests include all material
easements, rights-of-way and similar rights necessary to conduct the Companies'
business as presently conducted and to use all of their Real Property as
currently used, including, without limitation, easements and licenses for
pipelines, power lines, water lines, roadways and other access. All such
material easements and rights are valid, binding in favor of the Companies and
in full force and effect; any amounts due and payable thereon to date have been
paid or have been fully accrued for in the Interim Balance Sheet or in the
books and records of the Companies for periods after the date of the Interim
Balance Sheet, as applicable; neither the Companies nor (to the knowledge of
the Companies and the Shareholders) any other party thereto is in default
thereunder; and there exists no event or condition affecting the Companies or
(to the knowledge of the Companies and the Shareholders) any other party
thereto, which, with the passage of time or notice or both, would constitute a
default thereunder. No such material easement or right will be breached by,
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nor will any party thereto be given a right of termination as a result of, the
transactions contemplated by this Agreement.
3.8 Tangible Personal Property.
(a) The Companies have good title to all machinery and
equipment, tools, spare and maintenance parts, furniture, vehicles and all
other tangible personal property (collectively, the "Tangible Personal
Property") owned by the Companies, free and clear of any Encumbrance of any
kind or nature whatsoever, except as set forth on Schedule 3.8(a)(i) hereto and
except for Permitted Liens. To the knowledge of the Companies and the
Shareholders, all material items of Tangible Personal Property currently owned
or used by the Companies as of the date hereof are in good operating condition
and repair, ordinary wear and tear excepted, are physically located at or about
the Companies' places of business and are owned outright by the Companies or
validly leased. Except as set forth on Schedule 3.8(a)(i) hereto, the owned and
leased Tangible Personal Property consists of all tangible personal property
necessary for the operation of the business of the Companies as currently
conducted or as currently contemplated to be conducted. None of the Tangible
Personal Property is subject to any agreement, arrangement or understanding for
its use by any Person other than the Companies. The maintenance and operation
of the Tangible Personal Property complies in all material respects with all
applicable laws, regulations, ordinances, contractual commitments and
obligations. Except as set forth on Schedule 3.8(a)(ii), no item of Tangible
Personal Property owned or used by the Companies as of the date hereof is
subject to any conditional sale agreement, installment sale agreement or title
retention or security agreement or arrangement of any kind.
(b) Schedule 3.8(b) hereto sets forth a complete and correct
list of all material Tangible Personal Property leases to which the Companies
are a party, together with a brief description of the property leased. The
Companies have made available to Newco complete and correct copies of each
lease (and any amendments thereto) listed on Schedule 3.8(b). Except as set
forth on Schedule 3.8(b): (i) each such lease is in full force and effect; (ii)
all lease payments due to date on any such lease have been paid, and neither
the Companies nor (to the knowledge of the Companies and the Shareholders) any
other party is in default under any such lease, and no event has occurred which
constitutes, or with the lapse of time or the giving of notice or both would
constitute, a default by the Companies or (to the knowledge of the Companies
and the Shareholders) any other party under such lease; and (iii) to the
knowledge of the Companies and the Shareholders, there are no defaults alleged
against the Companies by any other party with respect to any such lease.
(c) Schedule 3.8(c) hereto sets forth a list of all property
and equipment, including the Krauss Maffei presses, owned by the Companies, the
purchase price of which is due more than six months following the delivery of
such property or equipment to the Companies or otherwise placing possession and
ownership with the Companies.
3.9 Accounts Receivable. The accounts receivable and notes receivable
(collectively, the "Accounts Receivable") reflected on the Interim Balance
Sheet are, and the Accounts Receivable of the Companies created from and after
the date of the Interim Balance Sheet to the Closing Date will be, free and
clear of any Encumbrance. Except as set forth on Schedule 3.9, all existing
Accounts Receivable of the Companies (i) arose from bona fide sales of goods or
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services in the ordinary course of business and consistent with past practice,
(ii) are accurately and fairly reflected on the Interim Balance Sheet or, with
respect to Accounts Receivable of the Companies created after the date thereof
and through the date of this Agreement, are accurately and fairly reflected in
the books and records of the Companies, and (iii) are valid and collectible,
net of the reserve for uncollectible accounts reflected on the Interim Balance
Sheet, and there is no contest, claim or right of set-off asserted by any maker
of any such Account Receivable relating to the amount or validity thereof.
3.10 Accounts Payable. Except as set forth on Schedule 3.10 hereto,
all accounts payable of the Companies (i) arose from bona fide purchases in the
ordinary course of business and consistent with past practice, and (ii) are
accurately and fairly reflected on the Interim Balance Sheet or, with respect
to accounts payable of the Companies created after the date thereof and through
the date hereof, are accurately and fairly reflected in the books and records
of the Companies consistent with past practices.
3.11 Inventory. Except as set forth on Schedule 3.11(a), the inventory
of the Companies, including, without limitation, raw materials, work in
progress and finished goods, consists only of items of a quality and quantity
useful or saleable in the ordinary course of business of the Companies. The
inventories as reflected on the Interim Balance Sheet are valued at the lower
of cost (determined by the FIFO method of accounting) or market value. The
inventory on hand on the date of this Agreement (and on the Closing Date) was
(or will be) purchased at prices and in quantities consistent with the
Companies' past practices and in the ordinary course of business. Schedule
3.11(b) hereto sets forth a list of each location of inventory of the
Companies, and a list of any agreements, including processing agreements and
consignment agreements, applicable to such inventory.
3.12 Backlog. All outstanding customer purchase orders for products of
the Companies have been entered at prices and upon terms and conditions
consistent with the past practices of the Companies, and the completion of such
orders will not, to the knowledge of the Companies and the Shareholders, have a
Material Adverse Effect.
3.13 Computer Software. All computer software programs (excluding
noncustomized computer software available to the Companies on an
over-the-counter basis through normal commercial channels) used by the
Companies in the conduct of their business are owned or licensed by the
Companies free and clear of Encumbrances, except for Permitted Liens, and do
not, to the knowledge of the Companies and the Shareholders, infringe any
copyright, trade secret, or trademark of any other Person.
3.14 Material and Affiliated Contracts.
(a) Except as set forth on Schedule 3.14(a) hereto, the
Companies are not parties to, or subject to:
(i) any contract, arrangement or understanding, or
series of related contracts, arrangements or understandings,
which involves annual expenditures or receipts by the
Companies of more than $500,000 or which provides for
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performance, regardless of amounts, over a period in excess
of one year after the date of such contract, arrangement or
commitment;
(ii) any license agreement, whether as licensor or
licensee;
(iii) any agreement with suppliers or customers for
discounts or allowances;
(iv) any note, bond, indenture, credit facility,
mortgage, security agreement or other instrument or document
relating to or evidencing indebtedness for money borrowed or
a security interest in or mortgage on the assets of the
Companies;
(v) any warranty, indemnity or guaranty issued by
the Companies (other than customary product warranties
provided by the Companies in the ordinary course of business,
which will be provided to Newco pursuant to Section 3.21
hereof);
(vi) any contract, arrangement or understanding
granting to any Person the right to use any property or
property right of the Companies, including any lease;
(vii) any contract, arrangement or understanding
restricting the right of the Companies to engage in any
business activity or to compete with any business;
(viii) any joint venture contract;
(ix) any agreement granting to others the right to
manufacture or distribute products of the Companies;
(x) any other material contract, arrangement or
understanding not made in the ordinary course of business and
consistent with past practice; or
(xi) any outstanding offer or commitment to enter
into any contract or arrangement of the nature described in
subsections (i) through (x) of this Section 3.14(a).
(b) Schedule 3.14(b) hereto contains an accurate and complete
list of all agreements, arrangements and understandings (including outstanding
indebtedness) which are currently in effect between the Companies and any of
the following and which involve a value of $50,000 or more: (i) each director
and officer of the Companies; (ii) the spouses, children, grandchildren,
siblings, parents, grandparents, uncles, aunts, nieces, nephews or first
cousins of any director or officer of the Companies or their spouses
(collectively, "near relatives"); (iii) any trust for the benefit of any
director or officer of the Companies or any of their respective near relatives;
and (iv) any corporation, partnership, joint venture or other entity owned or
controlled by any director or officer of the Companies or any of their
respective near relatives. (The
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contracts, arrangements and understandings described in Schedule 3.14(a) and
Schedule 3.14(b) are collectively referred to herein as "Material Contracts").
(c) The Companies have made available to Newco complete and
correct copies of each written Material Contract (and any amendments thereto),
and Schedule 3.14(a) and Schedule 3.14(b) contain accurate summary descriptions
of all oral Material Contracts. Except as set forth on Schedule 3.14(c) hereto:
(i) each Material Contract is in full force and effect; (ii) neither the
Companies nor, to the knowledge of the Companies and the Shareholders, any
other party is in material default under any such contract, and no event has
occurred which constitutes, or which with the lapse of time or the giving of
notice or both would constitute, a material default by the Companies or, to the
knowledge of the Companies and the Shareholders, by any other party under such
contract; and (iii) to the knowledge of the Companies and the Shareholders,
there are no defaults alleged against the Companies by any other party with
respect to any such contract.
3.15 Compliance with Laws. The Companies are complying and have
complied in all material respects with all laws, statutes, rules, regulations,
codes and ordinances applicable to their business, properties and operations,
and have secured all material permits, authorizations and licenses issued by
federal, state, local and foreign agencies and authorities, applicable to their
business, properties and operations. Neither the Companies nor any Shareholder
has received any notice alleging a failure to so comply or to secure such a
permit, authorization or license nor, to the knowledge of the Companies and the
Shareholders, is there any inquiry, investigation or proceeding relating
thereto.
3.16 Legal Proceedings. Except as set forth on Schedule 3.16 hereto,
there are no suits, actions, proceedings (including, without limitation,
arbitral and administrative proceedings), claims or governmental investigations
or audits pending or, to the knowledge of the Companies and the Shareholders,
threatened, against the Companies or their properties, assets or business, or
pending or, to the knowledge of the Companies and the Shareholders, threatened,
against, relating to or involving any of the officers, directors, Employees or
agents of the Companies in connection with the business of the Companies. There
are no such suits, actions, proceedings, claims, or investigations pending or,
to the knowledge of the Companies and the Shareholders, threatened, challenging
the validity or propriety of, or otherwise relating to or involving, this
Agreement or the transactions contemplated hereby. Except as set forth on
Schedule 3.16, there is no judgment, order, writ, injunction, decree or award
(whether issued by a court, an arbitrator, a governmental body or agency
thereof or otherwise) to which any of the Companies is a party, or involving
the property, assets or business of the Companies, which is unsatisfied or
which requires continuing compliance therewith by the Companies.
3.17 Ability to Conduct the Business. There is no agreement,
arrangement or understanding to which any of the Companies is a party, nor any
judgment, order, writ, injunction or decree of any court or any governmental
body or agency thereof directed at any of the Companies or in which any of the
Companies is named nor, to the knowledge of the Companies and the Shareholders,
any other judgment, order, writ, injunction or decree, that could in any such
case prevent the use by the Companies of their properties and assets or the
conduct by the Companies of their business as of the date hereof.
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3.18 Labor Matters.
(a) No union or other labor organization is certified or
recognized as collective bargaining agent to represent any Employees, and the
Shareholders and the Companies have no knowledge of any demand for recognition,
representation petition filed with the National Labor Relations Board or
campaign currently in progress to seek representation with respect to any
Employees. None of the Companies is a party to, the subject of, involved in or,
to the knowledge of the Companies and the Shareholders, threatened by any labor
dispute, unfair labor practice charge, strike, work stoppage, work slowdown,
picketing, boycott, handbilling, or other concerted action by or on behalf of
any Employees.
(b) Schedule 3.18(b) hereto sets forth the names of all
directors and officers of the Companies (whether or not such persons are
Employees or former Employees), together with the respective term of office and
titles for each such person and all remuneration payable to any such officers
and directors who are not Employees. The Companies have delivered to Newco a
statement setting forth: (i) with respect to each officer or director of the
Companies, such person's date of employment, the salary and commission terms of
such person for calendar year 1998, the date and amount of such person's most
recent salary increase, the amount of any bonuses or other cash compensation
(other than regular salary or commissions) paid during calendar year 1998 to
such person and (ii) with respect to all other Employees, their date of
employment and salary for calendar year 1998.
(c) Except as set forth on Schedule 3.18(c) hereto, the
Companies have properly accrued or reflected on the Interim Balance Sheet, and
have accrued and will continue to accrue or reflect on their books and records
through the Closing Date in accordance with past practice, all obligations for
salaries, vacations, medical, severance and other benefits and other
compensation of any kind with respect to their present and former Employees, to
the extent required by GAAP, including, but not limited to, vacation pay, sick
pay, medical, death and disability benefits, severance, bonuses, incentive, and
pension, retirement, profit sharing or other types of deferred compensation,
and all commissions and other fees payable to salespeople, sales
representatives and other agents. Except as set forth on Schedule 3.18(c),
there are no outstanding loans from the Companies to any Employee except normal
Employee advances in the ordinary course of business. Complete and correct
copies of all written agreements with or concerning Employees and all
employment policies of the Companies, and all amendments and supplements
thereto, have been delivered to Newco, and a list of all such agreements and
policies, whether written or oral, is set forth on Schedule 3.18(c).
(d) The Companies have not violated in any material respect
any law, statute, rule, or regulation applicable with respect to Employees in
any jurisdiction in which they operate and/or do business. In particular, the
Companies have not violated in any material respect any federal, state or local
law, statute, rule or regulation applicable to discriminatory employment
practices (including, without limitation, discrimination based on race, age,
disability, religion, national origin, sex or sexual preference), sexual
harassment, workplace safety (including rules and regulations of the
Occupational Safety and Health Administration), workers' compensation,
unemployment compensation, disability insurance, payment of minimum wages and
overtime rates, wage payment requirements, immigration, or otherwise relating
to the conduct of employers with respect to employees or prospective employees.
There have been no claims
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made or threatened thereunder against the Companies arising out of, relating to
or alleging any violation of any of the foregoing, except for claims which are
no longer pending or which are set forth on Schedule 3.18(d) hereto. The
Companies have complied in all material respects with the employment
eligibility verification requirements under the Immigration and Naturalization
Act, as amended ("INA"), and the Companies have complied in all material
respects with the paperwork provisions and anti-discrimination provisions of
the INA. The Companies have obtained and maintained in all material respects
the employee records and I-9 forms in proper order as required by law. The
Companies are not, to the knowledge of the Shareholders and the Companies,
currently employing any workers unauthorized to work in the United States in
the positions in which they are employed.
3.19 Employee Benefit Plans.
(a) For purposes of this Agreement, "Benefit Plan" means and
includes (i) any "employee benefit plan," within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
without regard to any exemption or exclusion therefrom under Department of
Labor regulations, (ii) any employment, consulting, severance or other
compensation agreement, (iii) any deferred compensation, stock ownership,
executive compensation, bonus or other incentive compensation, supplemental
retirement, vacation pay, sickness, disability, death benefit, retiree medical
or life insurance, employee stock option or stock purchase, employee discount,
club membership, educational assistance, Section 125 cafeteria, severance pay,
termination or salary continuation plan, arrangement or practice (whether
provided through insurance, on a funded or unfunded basis or otherwise), and
(iv) each other employee benefit plan, program or arrangement which relates to
any of the Employees or former Employees or in respect of which the Companies
have any Liability or obligation (contingent or otherwise).
(b) Schedule 3.19(b) sets forth a complete and correct list
of all Benefit Plans.
(c) Except as set forth on Schedule 3.19(c), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any material payment
becoming due, or materially increase the amount of compensation due, to any
Employee or former Employee, (ii) materially increase any benefits otherwise
payable under any Benefit Plan; or (iii) result in the acceleration of the time
of payment or vesting of any such benefits. None of the payments made or to be
made under any of the Benefit Plans shall constitute an excess parachute
payment for purposes of Section 4999 of the Code (as hereinafter defined), on
account of the transactions contemplated by this Agreement. None of the Benefit
Plans is an employee pension benefit plan subject to Title IV of ERISA or to
Section 412 of the Code. No Benefit Plan is a "voluntary employees beneficiary
association" (within the meaning of Section 501(c)(9) of the Code) and there
are no other "welfare benefit funds" relating to Employees or former Employees
within the meaning of Section 419 of the Code. With respect to each Benefit
Plan, the Companies have made available to Newco complete and correct copies of
the following documents, where applicable: (i) the annual reports (Form 5500
series), together with schedules, as required, filed with the Internal Revenue
Service (the "IRS"), and any financial statements and opinions required by
Section 103(a)(3) of ERISA for the three most recent plan years, (ii) the most
recent determination letter issued by the IRS, (iii) the most recent summary
plan description and all modifications, as well as all other material
descriptions
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distributed to Employees or set forth in any manuals or other documents, (iv)
the text of the Benefit Plan and of any trust, insurance or annuity contract
maintained in connection therewith, and (v) the most recent actuarial reports,
if any, relating to the Benefit Plan.
(d) All contributions required to be made to or with respect
to each Benefit Plan with respect to the service of Employees, former Employees
or other individuals with the Companies prior to the date hereof have been made
or have been accrued for in the Interim Balance Sheet or in the books and
records of the Companies for periods after the date of the Interim Balance
Sheet, as applicable. Each Benefit Plan intended to qualify under Section
401(a) of the Code so qualifies.
(e) Except as set forth on Schedule 3.19(e) hereto, each
Benefit Plan has in all material respects been administered to date in
accordance with the applicable provisions of ERISA, the Code and other
applicable laws and with the terms and provisions of all documents, contracts
or agreements pursuant to which such Benefit Plan is maintained, except as
otherwise permitted by law; there is no dispute, arbitration, claim, suit, or
grievance, pending or, to the knowledge of the Companies and the Shareholders,
threatened, involving a Benefit Plan (other than routine claims for benefits),
and, there is not, to the knowledge of the Companies and the Shareholders, any
basis for such a claim; none of the Benefit Plans nor, to the knowledge of the
Companies and the Shareholders, any fiduciary thereof (in such Person's
capacity as such) has been the direct or indirect subject of an order of, or,
to the knowledge of the Companies and the Shareholders, an investigation by, a
governmental or quasi-governmental agency; and there are no matters pending as
to which the Companies have received notice from the IRS, the Department of
Labor, the Pension Benefit Guaranty Corporation or any other domestic or
foreign governmental agency with respect to a Benefit Plan. No event or set of
conditions exists which would subject the Companies to any material Tax under
Section 4972, 4974-76, 4979, 4980, 4980B, or 5000 of the Code.
(f) None of the Benefit Plans provide for post-retirement
life insurance or health benefits coverage for any participant or any
beneficiary of a participant, except as may be required under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, or applicable state
continuation coverage law, to the extent not covered by ERISA.
3.20 Environmental Matters.
(a) Except as disclosed on Schedule 3.20 hereto:
(i) the Companies and their operations have been and
are, and the Real Property during the period that it is or
was owned, operated or leased by or for the Companies is or
was, in material compliance with all applicable Environmental
Laws (as hereinafter defined) and the Companies have
obtained, currently maintain and are in material compliance
with any permit, authorization, license or similar approval
required by Environmental Laws and neither the Companies nor
the Shareholders are aware of any facts, circumstances or
conditions that could reasonably be expected to interfere
with such continued material compliance or require capital
expenditures in excess of $50,000 to maintain such
compliance;
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(ii) no judicial or administrative proceedings are
pending or, to the knowledge of the Companies and the
Shareholders, threatened, against the Companies or the Real
Property as owned, operated or leased by or on behalf of the
Companies, alleging the violation of or seeking to impose
liability under or pursuant to any Environmental Law, and
there are no investigations pending or, to the knowledge of
the Companies and the Shareholders, threatened, under or
pursuant to Environmental Laws against the Companies or the
Real Property as owned, operated or leased by or on behalf of
the Companies;
(iii) neither the Companies nor any Shareholder has
received any written notice or other communication indicating
or otherwise alleging that any of the Companies is or could
be liable for the cost of investigating, remediating or
otherwise addressing Hazardous Material (as hereinafter
defined) under Environmental Laws;
(iv) the Companies are not subject to any
outstanding Environmental Costs and Liabilities (as
hereinafter defined) in excess of $50,000 and, there are not,
to the knowledge of the Companies and the Shareholders, any
facts, circumstances or conditions relating to, arising from,
associated with or attributable to the operations of the
Companies or any Real Property as owned, operated or leased
by or on behalf of the Companies that could reasonably be
expected to result in the Companies incurring Environmental
Costs and Liabilities in excess of $50,000;
(v) there is not now, nor, to the knowledge of the
Companies and the Shareholders, has there been in the past,
on, in or under any Real Property at the time owned, leased
or operated by the Companies (x) any underground storage
tanks, above-ground storage tanks, dikes or impoundments
containing Hazardous Material, (y) any asbestos-containing
materials, or (z) any polychlorinated biphenyls; and
(vi) the Companies have not filed any notice under
Environmental Laws indicating past or present treatment,
storage or disposal of hazardous wastes as defined under 40
C.F.R. Parts 260-270 or any state equivalent or reporting a
Release (as hereinafter defined) of Hazardous Material.
(b) The Companies have made available to Newco with copies of
all environmentally related audits, assessments, studies, reports, analyses,
and results of investigations of any Real Property that are in the Companies'
or any Shareholder's possession, custody or control.
(c) For purposes of this Agreement, the following terms have
the following definitions:
(i) "Environmental Costs and Liabilities" means any
and all losses, Liabilities, obligations, damages, fines,
penalties, judgments, actions, claims, costs and expenses
(including, without limitation, fees, disbursements and
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expenses of legal counsel, experts, engineers and consultants
and the costs of investigation and feasibility studies and
remedial action) arising from or under any Environmental Law
or any agreement with any Governmental Entity or other Person
thereunder or pursuant thereto.
(ii) "Environmental Law" means any applicable
federal, state, local, or foreign law (including common law),
statute, code, ordinance, rule, regulation or other
requirement relating to the environment, natural resources,
or public or employee health and safety and includes, but is
not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C.ss. 9601
et seq., the Hazardous Materials Transportation Act, 49
U.S.C.ss. 1801 et seq., the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C.ss. 6901 et seq., the Clean
Water Act, 33 U.S.C.ss. 1251 et seq., the Clean Air Act, 33
U.S.C.ss. 2601 et seq., the Toxic Substances Control Act, 15
U.S.C.ss. 2601 et seq., the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C.ss. 136 et seq., the Oil
Pollution Act of 1990, 33 U.S.Css. 2701 et seq. and the
Occupational Safety and Health Act, 29 U.S.C.ss. 651 et seq.,
as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous
state or local statutes.
(iii) "Hazardous Material" means any substance,
material or waste that is regulated by any Governmental
Entity as hazardous, toxic or words of similar meaning,
including, without limitation, any material, substance or
waste that is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic
waste" or "toxic substance" under any provision of
Environmental Law, as well as petroleum, petroleum products,
asbestos, urea formaldehyde and polychlorinated biphenyls.
(iv) "Real Property", for purposes of this Section
3.20 only, means any real property currently or formerly
owned, operated or leased by or for the Companies.
(v) "Release" means any release, spill, emission,
migration, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, or leaching into the indoor or outdoor
environment.
3.21 Products. The Companies have delivered to Newco copies of all
standard and other warranties which are currently extended or which have
previously been extended by the Companies with respect to products sold by the
Companies and for which the Companies may have continuing Liability or
obligations as of the date hereof. Except as disclosed on Schedule 3.21 hereto,
there are no pending claims, and there is not, to the knowledge of the
Companies and the Shareholders, any basis for any claims, based on defective
products, violation of product warranties, violation of product packaging or
labeling requirements or similar claims with respect to any products
manufactured or sold by the Companies or delivered to customers on or prior to
the date hereof ("Product Claims"), nor have the Companies or any Shareholder
received any notice from any Person threatening any such claim. Except as
disclosed on
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Schedule 3.21 hereto, the Companies have not experienced any Product Claims for
the three year period ended September 30, 1998 in an amount, individually or in
the aggregate, in excess of $250,000.
3.22 Tax Matters. Except as disclosed on Schedule 3.22 hereto:
(a) All material Tax Returns (as hereinafter defined)
required to be filed by or with respect to the Companies have been timely
filed. The Companies have timely paid all Taxes that are due, or claimed or
asserted by any taxing authority to be due, from or with respect to them. With
respect to any period for which Taxes are not yet due, the Companies have made
sufficient current accruals for all such Taxes in their financial statements
(including the Interim Financial Statements). The Companies have made all
required estimated Tax payments sufficient to avoid any underpayment penalties.
The Companies have withheld and paid all Taxes required by all applicable laws
to be withheld or paid in connection with any amounts paid or owing to any
Employee, creditor, independent contractor or other third party.
(b) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitations applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to the Companies for any taxable period, and no power of attorney
granted by or with respect to the Companies relating to Taxes is currently in
force. No closing agreement pursuant to Section 7121 of the Code (or any
predecessor provision) or any similar provision of any state, local, or foreign
law has been entered into by or with respect to the Companies. No audit or
other proceeding by any court, governmental or regulatory authority, or similar
Person is pending or threatened in writing, in regard to any Taxes due from or
with respect to the Companies or any Tax Return filed by or with respect to the
Companies. No assessment of Taxes is proposed against the Companies or any of
their assets.
(c) Except as set forth on Schedule 3.22(c) hereto, no
consent to the application of Section 341(f)(2) of the Code (or any predecessor
provision) has been made or filed by or with respect to the Companies or any of
their assets. The Companies have not agreed to make any adjustment pursuant to
Section 481(a) of the Code (or any predecessor provision) by reason of any
change in any accounting method, there is no application pending with any
taxing authority requesting permission for any changes in any accounting method
of the Companies, nor has the IRS proposed any such changes in accounting
method. None of the assets of the Companies is or will be required to be
treated as being owned by any Person (other than the Companies) pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately before the enactment of the Tax Reform Act of
1986.
(d) The Companies are not party to, are not bound by, and
have no obligation under, any Tax sharing agreement, Tax allocation agreement,
Tax indemnity agreement, or any other similar contract.
(e) There is no contract, agreement, plan or arrangement
covering any Person that, individually or collectively, could give rise to the
payment of any amount that would not be deductible by the Companies by reason
of Section 280G of the Code.
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(f) None of the Shareholders is a "foreign person" within the
meaning of Section 1445(b)(2) of the Code.
(g) The Companies have no Liability for Taxes of any other
corporation pursuant to Treasury Regulation Section 1.1502-6 or any similar or
analogous state, local or foreign law.
(h) None of the Companies has been a "distributing
corporation" or a "controlled corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code (i) in the two years prior to the date
of this Agreement or (ii) in a distribution which could otherwise constitute
part of a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Recapitalization.
(i) Except as set forth on Schedule 3.22(i), no election
under any of Sections 108, 168, 338, 441, 472, 1017, 1033 or 4977 of the Code
(or any predecessor provisions) is in effect with respect to the Companies,
(j) The Companies have made available complete copies of (i)
all filed federal and state and any other material Tax Returns of the Companies
relating to the taxable periods since September 30, 1995, (ii) any audit report
issued within the last three years relating to Taxes due from or with respect
to the Companies, their income, assets or operations, and (iii) any extensions
of the statute of limitations with respect to any Taxes due from or with
respect to the Companies, their income, assets or operations. All income and
franchise Tax Returns filed by or on behalf of the Companies for the taxable
years ended on the respective dates set forth on Schedule 3.22(j) hereto have
been examined by the relevant taxing authority or the statute of limitations
with respect to such Tax Returns has expired.
(k) Except as set forth on Schedule 3.22(k), since January 1,
1997, no claim has been made in writing addressed to the Companies or the
Shareholders by a taxing authority in a jurisdiction where the Companies do not
file Tax Returns asserting that any of the Companies is or may be subject to
taxation in that jurisdiction.
(l) There are no Encumbrances as a result of any unpaid
Taxes, other than Taxes not yet due and payable, upon any of the assets of the
Companies.
(m) None of the Companies has been a member of any
consolidated, combined, unitary or affiliated group of corporations for any Tax
purposes.
(n) "Taxes" shall mean all taxes, charges, fees, levies,
duties and other similar governmental assessments, including, without
limitation, (i) income, gross receipts, ad valorem, premium, excise, real
property, personal property, sales, use, transfer, withholding, employment,
payroll, medicare, and franchise taxes imposed by the United States of America,
or by any state, local, or foreign government, or any subdivision, agency, or
other similar Person of the United States or any such government and (ii) any
interest, fines, penalties, assessments, reassessments, or additions to Taxes
resulting from, attributable to, or incurred in connection with any Tax or any
contest, dispute, or refund thereof. "Tax Returns" shall mean reports, returns,
and
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statements required to be supplied to a taxing authority in connection with
Taxes. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations thereunder.
3.23 Insurance. Schedule 3.23 hereto sets forth a complete and correct
list and brief summary description of all insurance policies carried by, or
covering, the Companies with respect to their business. Complete and correct
copies of each such policy have been made available to Newco. All such policies
are in full force and effect, and no notice of cancellation has been received
with respect to any such policy. All premiums due thereon have been paid in a
timely manner. Except as set forth on Schedule 3.23, there are no pending
claims or, to the knowledge of the Companies and the Shareholders, threatened
claims, under any of the Companies' insurance policies with respect to the
Companies' property or assets.
3.24 Minute Books; Stock Record Books. True and correct copies of the
Companies' minute books and stock record books have been made available to
Newco. The minute books of the Companies contain true and complete originals or
copies of all minutes of meetings of and actions by the shareholders, Boards of
Directors and all committees of the Boards of Directors of the Companies, and
accurately reflect in all material respects all corporate actions of the
Companies which are required by law to be passed upon by the Boards of
Directors or shareholders of the Companies. The stock record books accurately
reflect all transactions in shares of the Companies' capital stock.
3.25 Brokers' or Finders' Fees. Except as set forth on Schedule 3.25
hereto, no agent, broker, investment banker, or other Person or firm acting on
behalf of the Companies or the Shareholders is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from the Companies or any of the Shareholders in connection with any
of the transactions contemplated by this Agreement.
3.26 Material Customers and Suppliers.
(a) Schedule 3.26(a) hereto sets forth a complete and correct
list of the ten largest customers of the Companies in terms of amounts invoiced
to such customers during the fiscal year of the Companies ended September 30,
1998 (each, a "Material Customer"), showing the total amount invoiced to each
such Material Customer for such period. Except as set forth and described on
Schedule 3.26(a), no Material Customer has given the Companies any notice
terminating, suspending or reducing in any material respect, or specifying an
intention to terminate, suspend or reduce in any material respect in the
future, or otherwise reflecting an adverse change in, the business relationship
between such customer and the Companies and there has not been any materially
adverse change in the business relationship of the Companies with any such
customer since January 1, 1999.
(b) Schedule 3.26(b) hereto sets forth a complete and correct
list of the ten largest suppliers of the Companies in terms of amounts
purchased from such suppliers during the fiscal year of the Companies ended
September 30, 1998 (each, a "Material Supplier"), showing the total amount
purchased from each such Material Supplier for such period. Schedule 3.26(b)
also correctly identifies all current outstanding purchase orders of the
Companies for goods or services with a value of $250,000 or more. Except as set
forth on Schedule 3.26(b), no supplier identified on Schedule 3.26(b) has given
the Companies any notice terminating, suspending or
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reducing in any material respect, or specifying an intention to terminate,
suspend or reduce in any material respect in the future, or otherwise
reflecting an adverse change in, the business relationship between such
supplier and the Companies and there has not been any materially adverse change
in the business relationship of the Companies with any such supplier since
January 1, 1999.
3.27 Bank Accounts; Powers of Attorney. Schedule 3.27 hereto sets
forth a complete and correct list showing: (i) all banks in which the Companies
maintain a bank account or safe deposit box (collectively, "Bank Accounts"),
together with, as to each such Bank Account, the account number, the names of
all signatories thereof and the authorized powers of each such signatory and,
with respect to each such safe deposit box, the number thereof and the names of
all persons having access thereto; and (ii) the names of all persons holding
powers of attorney from the Companies, true and correct copies thereof which
have been delivered to Newco.
3.28 Books and Records. Except as set forth on Schedule 3.28 hereto,
all of the records, data, information, databases, systems and controls
maintained, operated or used by the Companies in connection with the conduct or
administration of their business (including all means of access thereto and
therefrom) are located on the premises of the Companies and are under the
exclusive ownership or direct control of the Companies.
3.29 Intellectual Property Rights.
(a) As used herein, the term "Recorded Intellectual Property"
shall mean domestic and foreign letters patent, patents, patent applications,
patent licenses, software licenses and know-how licenses, trade names,
trademarks, trademark registrations and applications, service mark
registrations and applications and copyright registrations and applications.
Schedule 3.29(a) hereto sets forth all right, title and interest of the
Companies in and to all of the Recorded Intellectual Property owned or used by
the Companies in the operations of their businesses. Such Recorded Intellectual
Property, together with copyrights, service marks, trade secrets, technical
knowledge, know-how and other confidential proprietary information and related
ownership, use and other rights, shall be collectively referred to hereinafter
as the "Intellectual Property." Except as set forth on Schedule 3.29(a), the
Companies have the right to use, free and clear of any claims or rights of
others, all Intellectual Property owned or used by them in the operation of
their business, and such use does not, to the knowledge of the Companies and
the Shareholders, infringe on any patent, trademark, copyright, service mark or
trade name, or misappropriate any other Intellectual Property, of others.
(b) The Companies own or have the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the business of the Companies as presently
conducted and as presently proposed to be conducted. Each material item of
Intellectual Property owned or used by the Companies immediately prior to the
Closing hereunder will be owned or available for use by the Companies
immediately subsequent to the Closing hereunder. The Companies have taken all
necessary or reasonable action to protect and preserve the confidentiality of
all technical Intellectual Property not otherwise protected by patents, patent
applications or copyright. Each employee of the Companies has executed a
confidentiality agreement which included an agreement to assign to
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one of the Companies all rights to Intellectual Property originated or invented
by such employee relating to the business of the Companies.
(c) Except as set forth on Schedule 3.29(c), to the knowledge
of the Companies and the Shareholders, the Companies have not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and the Companies have not
received any charge, complaint, claim or notice alleging any such interference,
infringement, misappropriation, or violation. No third party has, to the
knowledge of the Companies and the Shareholders, interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of the Companies.
(d) Schedule 3.29(d) hereto identifies each material item of
Intellectual Property that any third party owns and that the Companies use
pursuant to license, sublicense, agreement or permission. To the knowledge of
the Companies and the Shareholders, with respect to each such item of used
Intellectual Property:
(i) the license, sublicense, agreement or permission
covering the item is legal, valid, binding, enforceable and
in full force and effect;
(ii) the license, sublicense, agreement or
permission will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms
following the Closing;
(iii) no party to the license, sublicense, agreement
or permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute
a breach or default or permit termination, modification or
acceleration thereunder; and
(iv) no party to the license, sublicense, agreement
or permission has repudiated any provision thereof.
(e) Except as set forth on Schedule 3.29(e) hereto, the
Companies have not granted any licenses of or other rights to use any of the
Intellectual Property of the Companies to any third party.
(f) The Companies have not entered into any agreement to
indemnify any other Person against any charge of infringement of any
Intellectual Property.
3.30 Year 2000 Compliance. All Date-Sensitive Systems are Year 2000
Compliant, except to the extent that any failure to be Year 2000 Compliant
would not have a Material Adverse Effect. "Date-Sensitive System" means any
software, microcode or hardware system or component, including any electronic
or electronically controlled system or component, that processes any Date Data
and that is installed, in development or on order by the Companies for their
internal use, or which the Companies sell, lease, license, assign or otherwise
provide, or the benefit of which the Companies provide, to their customers,
vendors, suppliers, affiliates or any other third party. "Date Data" means any
data of any type that includes date information or which is otherwise derived
from, dependent on or related to date information. "Year 2000
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Compliant" means, with respect to Date-Sensitive Systems, that each such system
accurately processes all Date Data, including for the twentieth and
twenty-first centuries, without loss of any functionality or performance,
including, but not limited to, calculating, comparing, sequencing, storing and
displaying such Date Data (including all leap year considerations), when used
as a stand-alone system or in combination with other software or hardware.
3.31 Sales Representatives and Other Sales Agents/Sales Offices.
Schedule 3.31 hereto sets forth a complete and correct list of the names and
addresses of each sales representative or other sales agent currently engaged
by any of the Companies who is not an Employee, and a summary description of
the territory assigned to each such Person (noting whether such territory is
exclusive or non-exclusive). Schedule 3.31 also sets forth a list of all
agreements between any of the Companies and any such Person, complete and
correct copies of which agreements have been made available to Newco.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWCO
Newco makes the following representations and warranties to the
Companies and the Shareholders, each of which is true and correct as of the
date hereof and shall be true and correct as of the Closing Date and shall be
unaffected by any investigation heretofore or hereafter made by the Companies
or the Shareholders:
4.1 Organization and Corporate Power. Newco is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Newco has full partnership power and authority to own, lease
and operate the properties and assets which it currently owns, leases or
operates and to carry on its business as presently conducted or proposed to be
conducted pursuant to existing plans.
4.2 Corporate Authority; Absence of Conflicts.
(a) Newco has full partnership power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the general partner of Newco, and no other partnership actions on the part of
Newco are necessary to authorize and approve the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Newco and,
assuming this Agreement constitutes a valid and binding obligation of the
Companies and the Shareholders, constitutes the valid and binding obligation of
Newco, enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general applicability relating to or affecting creditors' rights and by
general equitable principles.
(b) The execution and delivery of this Agreement by Newco,
consummation of the transactions contemplated herein and compliance with the
terms of this Agreement will not conflict with or violate any provision of the
limited partnership agreement of Newco; nor do
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such actions constitute a default of or require the consent or approval under
any agreement or instrument to which Newco is a party or by which Newco's
assets are bound, or require Newco to obtain the approval or consent of any
foreign, federal, state, county, local or other governmental or regulatory
body; nor will such actions violate any applicable law, rule, regulation,
judgment, order or decree of any government, governmental instrumentality or
court, domestic or foreign, presently applicable to Newco.
4.3 No Investigation. There exists no legal proceeding or
investigation by any governmental or regulatory authority, or any request for
information or action by any third party, known to Newco which could result in
the institution of legal proceedings to prohibit or restrain the consummation
or performance of this Agreement by Newco or the transactions contemplated
hereby.
4.4 Compliance with Securities Laws. With respect to each of the Newco
stockholders:
(i) each is an Accredited Investor as defined in
Rule 501(a) of Regulation D promulgated under the Securities
Act of 1933, as amended (the "Securities Act"); and
(ii) each understands that the Newly Issued Shares
or any portion thereof may not be sold, transferred or
otherwise disposed of without registration under the
Securities Act or an applicable exemption therefrom and that
in the absence of an effective registration statement
covering the Newly Issued Shares or an available exemption
from registration under the Securities Act, the Newly Issued
Shares must be held indefinitely.
4.5 Funding. Newco has obtained written commitment letters relating to
(i) a senior secured credit facility to be provided to Courtesy in the amount
of $200 million and (ii) the placement of $100 in subordinated indebtedness of
Courtesy, fully executed copies of which have been delivered to the
Representatives and are attached hereto as Annex E.
4.6 Brokers' or Finders' Fees. Except as disclosed on Schedule 4.6
hereto, no agent, broker, investment banker, or other Person or firm acting on
behalf of Newco is or will be entitled to any broker's or finder's fee or any
other commission or similar fee directly or indirectly from Newco in connection
with any of the transactions contemplated by this Agreement, other than
customary fees and expenses of attorneys, accountants and similar
professionals.
4.7 Hart-Scott-Rodino. On the Closing Date: (i) no person or entity
will own 50% or more of the voting securities of Newco or have the presently
exercisable contractual right to designate 50% or more of the Board of
Directors of Newco; (ii) Newco will not own 50% or more of the voting
securities or have the presently exercisable contractual right to designate 50%
or more of the board of directors of any corporation, other than the securities
of Courtesy acquired hereunder; (iii) Newco will not be entitled to 50% or more
of the profits or 50% or more of the assets upon dissolution of any partnership
or limited liability company; (iv) Newco, a newly-formed entity, prior to the
Closing Date, (x) has never had a regularly prepared balance
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sheet, and (y) does not have annual financial statements; and (v) the fair
market value of all assets held by Newco at the time of its acquisition of the
voting securities of the Company, minus (x) all cash to be used by Newco as
consideration in such acquisition and (y) all cash that will be used for
expenses incidental to such acquisition, is less than $10,000,000
ARTICLE V
COVENANTS
5.1 Full Access and Cooperation. From the date hereof through the
Closing Date, the Companies shall afford to Newco, its financing sources, and
their respective counsel, accountants and other representatives, including but
not limited to environmental professionals, reasonable access, during normal
business hours to, and the Companies shall disclose and make reasonably
available to them (with the right to make copies), all of the books and records
of the Companies relating to the ownership of the properties, operations,
financial condition, assets, obligations and Liabilities of the Companies, and
the Companies shall afford Newco, its counsel, accountants and other
representatives, including but not limited to environmental professionals, with
reasonable access to the facilities and properties of the Companies and to the
officers and directors of the Companies. The Companies agree to provide, and
will cause their respective officers, Employees and advisors to provide, all
necessary cooperation in connection with the arrangement of any financing to be
consummated contemporaneously with the Closing in respect of the transactions
contemplated by this Agreement, including, without limitation, (i) the
preparation of all financial statements required in connection therewith, (ii)
participation in meetings, due diligence sessions and road shows, (iii) the
preparation of offering memoranda, private placement memoranda, prospectuses
and similar documents, and (iv) the execution and delivery of any commitment
letters, underwriting or placement agreements, pledge and security documents,
other definitive financing documents, or other requested certificates or
documents, including solvency certificates, comfort letters of accountants and
such legal opinions as may be reasonably requested by Newco and in form and
substance reasonably satisfactory to the Companies; provided, that the terms
and conditions of any of the material agreements and other documents referred
to in clause (iv) shall be substantially consistent with the terms and
conditions of the financing required to satisfy the condition precedent set
forth in Section 8.7 hereof. Within 30 days of the end of each month through
the Closing Date, the Companies will deliver to Newco unaudited balance sheets
and income statements of the Companies for the month then ended.
5.2 Preservation of Business. From the date hereof through the Closing
Date, the Companies shall, and the Shareholders shall cause the Companies to,
conduct their business consistent with past business practices, and the
Companies and the Shareholders shall use their reasonable efforts to preserve
the Companies' business organizations intact, keep available the services of
and maintain their present relationships with their key Employees, consultants
and agents, and maintain their present relationships with material suppliers,
customers, and others having material business relationships with them and
preserve their goodwill.
5.3 Negative Covenants. The Companies and the Shareholders covenant
and agree that from and after the date hereof through the Closing Date, the
Companies shall not, except
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with the prior written consent of Newco, or except as directly related to the
completion of the transactions contemplated by this Agreement:
(a) amend their respective articles of incorporation or
bylaws;
(b) propose or effect a split or reclassification of their
outstanding capital stock or a recapitalization;
(c) incur or become liable for any other obligation or
Liability except obligations or Liabilities in the ordinary course of business
consistent with past practice;
(d) borrow or agree to borrow any funds other than (i) in the
ordinary course of business consistent with past practice or (ii) to make tax
distributions;
(e) prepay any obligation having a fixed maturity of more
than 90 days from the date such obligation was issued or incurred except in the
ordinary course of business;
(f) pay (except for salary under existing employment
arrangements and directors' fees under standard terms in effect prior to the
date hereof), loan or advance any amount to, or sell, transfer or lease any
properties or assets to, or enter into any agreement or arrangement with, any
of their officers or directors or any affiliate, associate or near relative of
any of their officers or directors;
(g) except in the ordinary course of business consistent with
past practice, write down (or write up) the value of any inventory or write off
as uncollectible any Accounts Receivable;
(h) sell or transfer any property or assets or cancel any
debts or waive any claims or rights of substantial value, other than in the
ordinary course of business consistent with past practice, or cancel or
terminate any Material Contract;
(i) lease, license or grant to any Person any rights in any
assets except in the ordinary course of business;
(j) dispose of or permit to lapse any rights to the use of
any patent, trademark, trade name, copyright or other intangible asset, or
dispose of or disclose to any Person any trade secret, formula, process or
know-how not theretofore a matter of public knowledge;
(k) change any of the banking or safe deposit arrangements
described in Schedule 3.27 hereto, except in the ordinary course of business;
(l) grant or extend any power of attorney or act as
guarantor, surety, co-signer, endorser, co-maker, indemnitor or otherwise, in
respect of the obligation of any Person;
(m) make any change in financial or tax accounting methods,
principles or practices or in the method of applying any such principle or
practice;
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(n) extend credit in the sale of products, collection of
receivables or otherwise, other than in the ordinary course of business
consistent with past practice;
(o) make any capital expenditure or capital additions or
betterments in excess of an aggregate of $1,000,000;
(p) enter into any material transaction, contract or
commitment of a kind required to be disclosed on one of the Schedules attached
hereto, except as disclosed on one of the Schedules attached hereto or in the
ordinary course of business consistent with past practice after disclosure to
and consultation with Newco;
(q) make any distributions (however characterized and whether
payable in cash or additional shares of stock) in respect of any shares of
capital stock or declare or pay any dividends in a manner inconsistent with the
Companies' customary practices with respect to dividends;
(r) repurchase or redeem any shares of their capital stock or
issue any additional shares of their capital stock or grant any options,
warrants or other rights to purchase, or any securities convertible into or
exchangeable for, shares of their capital stock;
(s) fail to maintain their books, accounts and records in the
usual, regular and ordinary manner on a basis consistent with prior years;
(t) adopt or amend in any material respect any collective
bargaining agreement or Benefit Plan other than as required by law;
(u) grant to any executive officer any increase in
compensation or in severance or termination pay, grant any severance or
termination pay, or enter into any employment agreement with any executive
officer, except as may be required under employment or termination agreements
in effect on the date of this Agreement; or
(v) agree, whether in writing or otherwise, to do any of the
foregoing.
5.4 Third Party Consents. The Shareholders and the Companies shall use
their reasonable efforts to obtain prior to the Closing Date all consents of
third parties necessary to the consummation of the transactions contemplated
hereby (the "Company Consents") and will provide to Newco copies of each such
Company Consent promptly after it is obtained. Newco agrees to cooperate fully
with the Shareholders and the Companies in connection with the obtaining of the
Company Consents; provided, however, that none of the Companies, the
Shareholders or Newco shall be required to pay any additional sums to secure
such Company Consents.
5.5 Schedules.
(a) Neither the specification (directly or indirectly by
reference to a defined term hereof) of any dollar amount in the representations
and warranties set forth in Article III nor the inclusion of any items in the
Schedules shall be deemed to constitute an admission by the Companies or the
Shareholders, or otherwise imply, that any such amount or such items so
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included are material for the purposes of this Agreement. The inclusion of, or
reference to, any item within any particular Schedule does not constitute an
admission by any of the Companies, the Shareholders or Newco that such item
meets any or all of the criteria set forth in this Agreement for inclusion in
such Schedule. The inclusion of, or reference to, any item within any
particular Schedule does not constitute an admission by any of the Companies,
the Shareholders or Newco that the item constitutes a violation of any federal,
state or local law, rule, statute, regulation, ordinance, permit, judgment,
decree or other equivalent.
(b) From the date hereof until the Closing Date, the
Companies and the Shareholders shall disclose to Newco any material variances
from the representations and warranties contained in Article III promptly upon
discovery thereof. The Companies and the Shareholders shall promptly provide
Newco with any supplemental information regarding such disclosures that is
reasonably requested. The applicable Schedule(s) shall be deemed supplemented
by any such disclosures that relate to occurrences subsequent to the date of
this Agreement; the Schedules shall not be otherwise amended or supplemented by
any such disclosures. Such supplements, however, shall not be given effect in
determining whether the Closing condition contained in Section 8.1 has been
satisfied. The satisfaction of such condition to Closing shall be established
based on the Schedules as delivered on the date of this Agreement without
regard to such supplements. In the event such Closing condition is satisfied or
waived by Newco, the right of Courtesy to recover under the indemnity
provisions appearing in Article II of the Escrow Agreement shall be determined
based upon the Schedules as so supplemented, which supplements will be deemed
to cure and correct any breach of the representations and warranties contained
in Article III that would have existed in the absence thereof. In the case of
any matters disclosed by the Companies or the Shareholders that do not result
in a supplement of the Schedules, as specified above, Courtesy will be entitled
to seek recovery under Article II of the Escrow Agreement for any breach of the
representations and warranties contained in Article III related to or arising
from such matters so disclosed.
5.6 Transfer Taxes. The Shareholders shall be responsible for the
payment of and shall indemnify and hold Newco and the Companies harmless from
and against any and all sales, use, transfer, recording, stamp, documentary,
real estate or other similar Taxes attributable to purchase and sale of the
Repurchased Shares. All payments under this Agreement shall be reduced by and
made net of any applicable withholding Taxes.
5.7 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, Newco, the Shareholders and the Companies will use their respective
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable to consummate the
transactions contemplated by this Agreement and to maintain the accuracy of
their representations and warranties hereunder. None of Newco, the Shareholders
or the Companies will take, agree to take or knowingly permit to be taken any
action or do or knowingly permit to be done anything in the conduct of the
business of the Companies, or otherwise, which would be contrary to or in
breach of any of the terms or provisions of this Agreement.
5.8 Third-Party Offers. None of the Shareholders or the Companies
shall, nor shall any of the Shareholders or the Companies authorize or permit
any of the Companies' respective officers, directors, Employees, investment
bankers, attorneys or other advisors or representatives
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to, (i) solicit or initiate any Competitive Proposal (as hereinafter defined)
or (ii) participate in any discussions or negotiations regarding, or furnish to
any Person any information with respect to, a Competitive Proposal. As used
herein, "Competitive Proposal" means a proposal from any Person to acquire all
or a material part of the assets or equity securities of the Companies or any
merger, consolidation or business combination involving the Companies, other
than the transactions contemplated by this Agreement.
5.9 Termination of Shareholders Agreements. Courtesy and the
shareholders of Courtesy party to that certain Shareholders' Agreement, dated
as of September 20, 1994, as amended from time to time (the "Courtesy
Shareholders' Agreement"), shall terminate the Courtesy Shareholders' Agreement
as of the Closing Date. Creative and the shareholders of Creative party to that
certain Shareholders' Agreement, dated as of December 23, 1998, as amended from
time to time (the "Creative Shareholders' Agreement"), shall terminate the
Creative Shareholders' Agreement as of the Closing Date.
5.10 Minimum Working Capital. The Working Capital of the Companies as
of June 30, 1999 (the "Third Quarter Working Capital") will, on a combined
basis, equal or exceed $21.0 million, as calculated in a manner consistent with
the example set forth on Schedule 5.10 hereto. "Working Capital" shall mean the
difference of (i) the sum of accounts receivable and inventories, minus (ii)
the sum of accounts payable (specifically excluding accounts payable relating
to the Krauss Maffei presses), customer deposits, accrued salaries and other
expenses and amounts due to employee benefit plans, all as determined in
accordance with GAAP. In the event it is determined that there is a shortfall
in the Third Quarter Working Capital as of the consummation of the
Recapitalization, the Shareholders shall promptly pay, in cash, to Courtesy the
full amount of such shortfall.
5.11 Class A Common Stock. Immediately following the consummation of
the Recapitalization, Courtesy will issue 13,333,333 shares of New Courtesy
Class A Common Stock to the persons identified on Schedule 5.11 hereto at a
purchase price of $.01 per share.
5.12 Stock Option Plan. Following the Closing, Courtesy will establish
a stock option plan providing for the grant of options to purchase up to
7,017,543 shares of New Courtesy Common Stock to eligible participants.
5.13 Employees.
(a) Except as otherwise established under the terms of the
Employment Agreements (as hereinafter defined), the current Employees of the
Companies shall continue to be employed in their current capacities and shall
receive the same salary and benefits as currently provided, including the
annual bonuses to be paid and raises to be implemented in July 1999, as set
forth on Schedule 5.13 hereto, unless and until changed following Closing by
action of the Courtesy board of directors consistent with applicable law and
the terms of the applicable benefit plans.
(b) Newco agrees that the Shareholders shall not incur any
Liability under the Workers Adjustment and Retraining Notification Act ("WARN
Act") that arises from any action taken by Courtesy or its subsidiaries on or
after the Closing Date, and Courtesy shall indemnify
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and hold harmless the Shareholders with respect to any such Liability. Neither
the Shareholders nor the Companies shall take or permit to be taken any action
on or before the Closing Date that would cause Courtesy to incur any Liability
under the WARN Act.
5.14 Indemnification of Aguilar Litigation. The Shareholders hereby
jointly and severally agree to indemnify, defend and hold harmless Courtesy and
its subsidiaries, employees, officers, directors, affiliates, parent companies,
successors, predecessors, parties, assigns, executors, agents, attorneys and
representatives of any kind, if any, for any and all losses, claims, costs,
damages, demands, deficiencies, entitlements, actions, causes of action, suits
in equity, Liabilities, awards, assessments, judgments, debts, accounts,
setoffs, payments, bills, fines, taxes, interests, penalties, expenses
(including, without limitation, reasonable attorneys' fees and expenses),
settlements, court costs, appeal costs, fees and expenses of accountants and
other experts, and any other litigation expenses suffered by Courtesy or any of
its subsidiaries, employees, officers, directors, affiliates, parent companies,
successors, predecessors, parties, assigns, executors, agents, attorneys and
representatives of any kind, if any, arising out of or relating to the claims
that were or could have been asserted in the cases entitled Aguilar et al. v.
Kreiseder et al., No. 95-1430-DRD, in the United States District Court of
Puerto Rico, and Courtesy Caribbean v. Aguilar, HAC 96-0062 (0107), in the
Superior Court of Puerto Rico, Humalo (together the "Litigation") or any other
action, including appeals, arising from or relating to the Litigation or from
the same occurrence, transactions, or events alleged, or that could have been
alleged, in the pleadings filed or in amended pleadings filed hereafter in the
Litigation. The Shareholders shall control all aspects of the Litigation,
including, but not limited to, decisions on settlements and appeals; provided,
however, that the Shareholders shall not enter into any settlement of the
Litigation which could reasonably be expected to adversely affect Courtesy or
the Newco stockholders without the prior written consent of Courtesy and Newco,
which consent shall not be unreasonably withheld.
5.15 Krusinski Arbitration. The parties hereby covenant and agree that
any and all amounts now or hereafter obtained by Courtesy from or relating to
the ongoing arbitration proceedings and any future negotiation, mediation,
litigation or settlement of the dispute between Krusinski Construction Company
("Krusinski") and Courtesy (the "Arbitration"), shall be the sole property of
the Shareholders, and Newco shall make no claim to any such amounts; provided,
however, that the first $165,000 of any amounts received from Krusinski shall
be the property of Courtesy, not the Shareholders, and shall be used for
certain painting and stair repairs on the Real Property. The Shareholders shall
control all aspects of the Arbitration and may cause Courtesy to dividend to
the Shareholders the entitlement to receive any amounts recovered from the
Arbitration in excess of $165,000 to the Shareholders prior to the Closing.
5.16 Automobile Leases. The Companies and the Shareholders party
thereto shall terminate the automobile leases identified on Schedule 5.16
hereto as of the Closing Date.
5.17 Life Insurance. On or prior to the Closing Date, the cash
surrender value with respect to the life insurance policies insuring the lives
of Walter J. Kreiseder and Gerald J. Sommers will be distributed by the
Companies to the shareholders of the respective Companies.
5.18 Updating Projections. Not later than five business days prior to
the Closing Date, the Companies shall deliver to Newco updated projections
covering the same post-Closing
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periods as those covered in the projections attached as Schedule 5.18 hereto,
which updated projections shall be prepared in good faith based upon reasonable
assumptions and otherwise shall be prepared in a manner consistent with those
projections set forth in Schedule 5.18; provided, however, that the failure to
achieve such projections shall not be deemed a breach of this Section 5.18 for
the purposes of this Agreement.
5.19 Employment Agreements. At Closing, Courtesy and each of Walter J.
Kreiseder, Gerald J. Sommers and Dennis A. Greenberg, respectively, shall
execute and deliver the Employment Agreements (the "Employment Agreements") in
substantially the form attached hereto as Annexes F-1, F-2 and F-3. The
Employment Agreements shall be effective as of the Closing Date and shall not
be modified or amended by the parties prior thereto.
5.20 Noncompetition Agreements. At Closing, Courtesy, Walter J.
Kreiseder, and Gerald J. Sommers shall execute and deliver the Confidentiality,
Non-Solicitation and Non-Competition Agreement (the "Noncompetition
Agreement"), dated the Closing Date and otherwise in substantially the form
attached hereto as Annex G.
5.21 Lease Amendments. At Closing, Courtesy and the landlords for the
relevant properties shall execute and deliver the amendments to Real Property
leases (the "Lease Amendments"), dated the Closing Date and otherwise on
substantially the same terms as set forth on Annex H.
ARTICLE VI
TAX MATTERS
6.1 Tax Indemnification.
(a) Courtesy agrees to indemnify and hold harmless the
Shareholders from and against any and all Taxes of the Companies that may be
imposed upon or assessed against the Shareholders or their assets: (i) with
respect to any taxable period of the Companies beginning after the Closing
Date, any and all such Taxes, and (ii) with respect to periods beginning prior
to and ending after the Closing Date, any and all such Taxes as are allocated
to Courtesy pursuant to Section 6.2(d).
(b) The Shareholders, jointly and severally, agree to
indemnify and hold harmless Courtesy from and against any and all Taxes that
may be imposed upon or assessed against Courtesy (or any affiliate thereof) or
any of its assets: (i) with respect to taxable periods (or portions thereof)
ending on or prior to the Closing Date, any and all Taxes of the Companies for
such periods; (ii) with respect to periods beginning prior to and ending after
the Closing Date, all such Taxes as are allocated to the Shareholders pursuant
to Section 6.2(d); (iii) arising by reason of any breach or inaccuracy of any
of the representations contained in Section 3.22 hereof (without regard to any
materiality or similar qualification contained in any of such representations);
and (iv) by reason of being a successor-in-interest or transferee of another
entity.
(c) The parties agree that the party making an
indemnification payment ("indemnitor") pursuant to Sections 6.1(a) or 6.1(b)
shall also indemnify and hold harmless the
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recipient of such payment ("indemnitee") from and against any losses, damages,
Liabilities, additional Taxes, obligations, deficiencies, costs and expenses
(including, without limitation, reasonable expenses and fees for attorneys and
accountants) ("Related Costs") incurred in connection with the Taxes for which
the indemnitor is responsible to indemnify the indemnitee pursuant to this
Section 6.1(c) (or any asserted deficiency, claim, demand, action, suit,
proceeding, judgment or assessment, including the defense or settlement
thereof, relating to such Taxes), or the receipt of payments under or the
enforcement of this Article VI.
(d) The parties agree to treat any indemnity payment made
pursuant to this Article VI as an adjustment to the Repurchase Price for
federal, state, local and foreign income tax purposes.
6.2 Tax Returns.
(a) The Shareholders shall properly prepare and timely file
(or cause to be properly prepared and timely filed) all federal, state, local
and foreign Tax Returns required to be filed by the Companies in respect of any
taxable periods ending on or prior to the Closing Date and shall pay any and
all Taxes due with respect to such returns. All Tax Returns described in this
Section 6.2(a) shall be prepared in a manner consistent with prior practice
unless a past practice has been finally determined to be incorrect by the
applicable taxing authority. The Shareholders shall provide Courtesy with
copies of such completed Tax Returns at least 15 business days prior to the
filing date, and Courtesy shall be provided an opportunity to review and
approve (which approval shall not be unreasonably withheld) such Tax Returns
and supporting workpapers and schedules prior to the filing of such Tax
Returns. The Shareholders and Courtesy shall attempt in good faith mutually to
resolve any disagreements regarding such Tax Returns prior to the due date for
filing thereof. In the event that any such disagreement shall not be resolved
prior to such due date, the Shareholders shall file (or cause to be filed) all
such Tax Returns in the manner deemed appropriate by the Shareholders;
provided, however, that the foregoing shall not in any manner terminate, limit
or alter the rights and obligations of the parties hereto under this Article
VI, and such disagreement shall be resolved in the manner prescribed under
Section 6.7 hereof.
(b) Following the Closing, Courtesy shall be responsible for
preparing or causing to be prepared all federal, foreign, state and local Tax
Returns required to be filed by the Companies in respect of any taxable periods
ending after the Closing Date. If any Taxes shown due on any such Tax Return
are indemnifiable by the Shareholders, (i) such Tax Return shall be prepared in
a manner consistent with prior practice unless a past practice has been finally
determined to be incorrect by the applicable taxing authority; (ii) Courtesy
shall provide the Shareholders with copies of such Tax Return at least 15
business days prior to the due date for filing such return; and (iii) the
Shareholders shall have the right to review and approve (which approval shall
not be unreasonably withheld) such Tax Returns and any schedule delivered
pursuant to Section 6.2(d) hereof for 15 business days following receipt
thereof. The Shareholders and Courtesy shall attempt in good faith mutually to
resolve any disagreements regarding such Tax Returns prior to the due date for
filing thereof. In the event that any such disagreement shall not be resolved
prior to such due date, Courtesy shall file or cause to be filed all such Tax
Returns in the manner deemed appropriate by Courtesy; provided, however, that
the foregoing shall not in any manner terminate, limit or alter the rights and
obligations of the parties
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hereto under this Article VI, and such disagreement shall be resolved in the
manner prescribed under Section 6.7 hereof.
(c) Not later than five (5) days before the due date for
payment of Taxes with respect to any Tax Returns which Courtesy has the
responsibility to file, the Shareholders shall pay to Courtesy an amount equal
to that portion of the Taxes shown on such return for which the Shareholders
have an obligation to indemnify Courtesy pursuant to the provisions of this
Article VI. If the Shareholders disagree as to the amount shown on any such Tax
Return for which a payment is due from the Shareholders to Courtesy, and the
parties are unable to resolve such disagreement prior to the date such Tax
Return is due to be filed, the Shareholders shall pay to Courtesy that amount
that the Shareholders agree is due from the Shareholders to Courtesy in respect
of such Tax Return and, thereafter, the parties shall resolve any disagreement
as to the amounts not so paid by the Shareholders to Courtesy pursuant to the
provisions of Section 6.7 hereof.
(d) For federal income tax purposes, the taxable year of the
Companies shall end as of the close of the Closing Date and, with respect to
all other Taxes, the Shareholders and Courtesy will, unless prohibited by
applicable law, close the taxable period of the Companies as of the close of
the Closing Date. Neither the Shareholders nor Courtesy shall take any position
inconsistent with the preceding sentence on any Tax Return. In any case where
applicable law does not permit the taxable year of the Companies to close on
the Closing Date or in any case in which a Tax is assessed with respect to a
taxable period which includes the Closing Date (but does not begin or end on
that day), then Taxes, if any, attributable to the taxable period of the
Companies beginning before and ending after the Closing Date shall be allocated
(i) to the Shareholders for the period up to and including the Closing Date,
and (ii) to Courtesy for the period subsequent to the Closing Date. Any
allocation of income or deductions required to determine any Taxes attributable
to any period beginning before and ending after the Closing Date shall be
prepared by, or under the direction of, Courtesy and shall be made by means of
a closing of the books and records of the Companies as of the close of the
Closing Date, provided that exemptions, allowances or deductions that are
calculated on an annual basis (including, but not limited to, depreciation and
amortization deductions) shall be allocated between the period ending on the
Closing Date and the period after the Closing Date in proportion to the number
of days in each such period. Courtesy shall provide the Shareholders with a
schedule showing the computation of the allocation at least 15 business days
prior to the due date for filing a Tax Return that includes the Closing Date.
The Shareholders shall have the right to review such schedule in the manner
described in and subject to the provisions of Section 6.2(b) hereof, and
Courtesy and the Shareholders shall attempt in good faith to mutually resolve
any disagreements regarding the determination of such allocation. Any amount
owing from the Shareholders under this Section 6.2(d) shall be paid no later
than five (5) days prior to the filing of the underlying Tax Return. If the
Shareholders disagree as to the amount shown on any such Tax Return for which a
payment is due from the Shareholders to Courtesy, and the parties are unable to
resolve such disagreement prior to the date such Tax Return is due to be filed,
the Shareholders shall pay to Courtesy that amount that the Shareholders agree
is due from the Shareholders to Courtesy in respect of such Tax Return and,
thereafter, the parties shall resolve any disagreement as to the amounts not so
paid by the Shareholders to Courtesy pursuant to the provisions of Section 6.7
hereof.
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6.3 Control of Tax Proceedings.
(a) If a claim is made by any taxing authority, which, if
successful, would result in an indemnity payment to Courtesy by the
Shareholders pursuant to Section 6.1(b) hereof, Courtesy shall promptly give
notice to the Shareholders in writing of such claim (a "Tax Claim"); provided,
however, that the failure to give such notice shall not affect the
indemnification provided pursuant to this Article VI except to the extent the
Shareholders have been actually prejudiced as a result of such failure.
(b) The Shareholders shall control all proceedings with
respect to any Tax Claim relating to a taxable period ending on or before the
Closing Date; provided, however, that if the resolution of such Tax Claim would
have a material adverse effect on a taxable period ending after the Closing
Date and such adverse effect would be the responsibility of Courtesy under
Section 6.1(c) hereof, then (i) the Shareholders shall promptly provide
Courtesy with copies of all correspondence, notices and other written materials
received from any taxing authority, (ii) the Shareholders shall provide
Courtesy the opportunity to review any materials prior to submission made to
such taxing authority, and (iii) in the case of any such Tax Claim the
settlement of which could adversely affect Courtesy (or any affiliate thereof),
the Shareholders shall not effect a settlement without the prior consent of
Courtesy, which consent shall not be unreasonably withheld.
(c) Courtesy shall control all proceedings with respect to
any Tax Claim relating to a taxable period ending after the Closing Date;
provided, however, that if the resolution of such Tax Claim would have a
material adverse effect on a taxable period ended on or prior to the Closing
Date and such adverse effect would be the responsibility of the Shareholders
under Section 6.1(b) hereof, then (i) Courtesy shall promptly provide the
Shareholders with copies of all correspondence, notices and other written
materials received from any taxing authority, (ii) Courtesy shall provide the
Shareholders the opportunity to review any materials prior to submission made
to such taxing authority, and (iii) Courtesy shall not effect a settlement
without the prior consent of the Shareholders, which consent shall not be
unreasonably withheld.
(d) The parties shall reasonably cooperate in contesting any
Tax Claim, which cooperation shall include the retention and, upon request, the
provision to the requesting person of records and information which are
reasonably relevant to such Tax Claim, and making employees available on a
mutually convenient basis to provide additional information or explanation of
any material provided hereunder or to testify at proceedings relating to such
Tax Claim.
6.4 Survival of Indemnification. The parties' respective rights to
indemnification pursuant to this Article VI shall survive the Closing Date and
remain in full force and effect until the date 60 days after the expiration of
the applicable Tax statutes of limitation (including all periods of extension,
whether automatic or permissive).
6.5 Sole Remedy. The indemnification provided in this Article VI shall
be the sole and exclusive remedy for any claim in respect of Taxes.
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6.6 Tax Deposit Reimbursements. Upon the receipt by any of the
Companies of all or any portion of the approximately $2.6 million previously
deposited with the U.S. Internal Revenue Service in respect of federal income
taxes payable in respect of income of the Companies applicable to prior
deferral periods pursuant to Section 444 of the Code, such amounts will be
promptly distributed to the Shareholders pro rata in accordance with the
Shareholders' relative ownership of New Courtesy Common Stock immediately prior
to the consummation of the Recapitalization, as set forth on Schedule
3.3(c)(ii) hereto; to the extent permitted by applicable law, such distribution
to the Shareholders will be treated as a dividend made during the
post-termination transition period pursuant to Section 1371(e) of the Code.
6.7 Arbiter CPA. If the Shareholders and Courtesy are unable to
resolve a disagreement under Section 6.2(a), (b), (c) or (d), then the dispute
shall be submitted for resolution to a "big five" public accounting firm
mutually selected by the Representatives and Courtesy (the "Arbiter CPA"), and
the determination made by the Arbiter CPA shall be binding and conclusive. The
entire cost of obtaining the determination of the Arbiter CPA shall be borne
equally by the Shareholders (each on a pro rata basis in accordance with the
Shareholders' relative ownership of New Courtesy Common Stock immediately prior
to the consummation of the Recapitalization, as set forth on Schedule
3.3(c)(ii) hereto), on the one hand, and by Courtesy, on the other hand.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE COMPANIES AND THE SHAREHOLDERS
The obligations of the Companies and the Shareholders hereunder are
subject to the fulfillment on or before the Closing Date of each of the
following conditions, any one or more of which may be waived in writing by the
Representatives, on behalf of the Shareholders, and the Companies:
7.1 Representations, Warranties and Covenants. All representations and
warranties of Newco contained herein shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date (except for any representation or warranty
that expressly relates to an earlier date, in which case it shall have been
true and correct as of such earlier date). Newco shall have performed and
complied in all material respects with all covenants and agreements contained
herein and required to be performed or complied with by it on or prior to the
Closing Date.
7.2 Closing Certificate. Newco shall have delivered to the
Representatives a certificate signed by its general partner, dated as of the
Closing Date, to the effect set forth in Section 7.1 hereof.
7.3 Legal Opinion. The Shareholders shall have received the opinion of
Weil, Gotshal & Manges LLP, counsel for Newco, dated as of the Closing Date, in
substantially the form attached hereto as Annex I.
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7.4 Injunction. No order, decree, statute, rule or regulation
prohibiting or restraining the consummation of the transactions contemplated by
this Agreement shall have been issued by any Governmental Entity.
7.5 Shareholders Agreement. The Shareholders Agreement (the
"Shareholders Agreement"), dated as of the Closing Date, among Courtesy, the
Shareholders and Newco, in substantially the form attached hereto as Annex J,
shall have been duly executed and delivered by Newco.
7.6 Escrow Agreement. The Escrow Agreement shall have been duly
executed and delivered by Newco and the Escrow Agent.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NEWCO
The obligations of Newco hereunder are subject to the fulfillment on
or before the Closing Date of each of the following conditions, any one or more
of which may be waived in writing by Newco:
8.1 Representations, Warranties and Covenants. All representations and
warranties of the Companies and the Shareholders contained herein shall be true
and correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date (except for
any representation or warranty that expressly relates to an earlier date, in
which case it shall have been true and correct as of such earlier date). The
Companies and the Shareholders shall have performed and complied in all
material respects with all covenants and agreements contained herein and
required to be performed or complied with by them on or prior to the Closing
Date.
8.2 Closing Certificate. Newco shall have received a certificate to
the effect set forth in Section 8.1 signed by the President or a Vice President
of Courtesy and the Representatives and dated as of the Closing Date.
8.3 Legal Opinion. Newco shall have received the opinion of Katten
Muchin & Zavis, counsel for the Companies and the Representatives, dated as of
the Closing Date, in substantially the form attached hereto as Annex K and
additionally addressed to, or accompanied by reliance letters in favor of, the
lenders providing the financing described in Section 4.5.
8.4 Injunction. No order, decree, statute, rule or regulation
prohibiting or restraining the consummation of the transactions contemplated by
this Agreement shall have been issued by any Governmental Entity.
8.5 Material Adverse Effect. There shall not have occurred any
Material Adverse Effect. For purposes of this Agreement, "Material Adverse
Effect" shall mean any event, circumstance, condition, fact, effect or other
matter which has had or could reasonably be expected to have a material adverse
effect (i) on the business, assets, financial condition, prospects, financial
projections or results of operations of the Companies taken as a whole or (ii)
on the ability of the Companies to perform on a timely basis any material
obligation under
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this Agreement or to consummate the transactions contemplated hereby. For the
purposes of Article III only, any event, circumstance, condition, fact or
effect resulting from changes in general economic conditions affecting the
business of the Companies or any competitors with respect to the Companies,
applicable laws or regulations or GAAP, shall not be deemed a Material Adverse
Effect. For purposes of this Section 8.5 only, the determination of whether any
particular event, circumstance, condition, fact, effect or other matter is
"material" shall be based upon whether a purchaser in a leveraged acquisition
transaction (such as the transaction contemplated by this Agreement) could
reasonably consider such event, circumstance, condition, fact, effect or other
matter to be material.
8.6 Regulatory Approvals and Consents. There shall have been duly and
validly obtained the Company Consents and any other consents, approvals,
authorizations, permits and orders of all federal, state, foreign and other
governmental regulatory agencies and third parties required in connection with
this Agreement and the consummation of the transactions contemplated hereby,
unless the failure to obtain such other consents, approvals, authorizations,
permits or orders would not have a Material Adverse Effect, and all such
consents, approvals, authorizations, permits and orders, including the Company
Consents shall be in full force and effect as of the Closing Date.
8.7 Funding. Newco shall have received the proceeds from the financing
arrangements on substantially the terms described in Annex E hereto.
8.8 Shareholders Agreement. The Shareholders Agreement shall have been
duly executed and delivered by Courtesy, Walter J. Kreiseder and Gerald J.
Sommers.
8.9 Escrow Agreement. The Escrow Agreement shall have been duly
executed and delivered by Courtesy, the Representatives (on behalf of the
Shareholders) and the Escrow Agent.
8.10 Employment Agreements. The Employment Agreements shall have been
duly executed and delivered by Courtesy and Messrs. Kreiseder and Sommers and
shall not have been modified or amended.
8.11 Noncompetition Agreement. The Noncompetition Agreement shall have
been duly executed and delivered by Courtesy and Messrs. Kreiseder and Sommers.
8.12 Lease Amendments. The Lease Amendments shall have been duly
executed and delivered by Courtesy and the landlords of such properties.
8.13 Non-Foreign Person Affidavit. An affidavit shall have been
executed by each Shareholder, in a form reasonably satisfactory to Newco,
stating, under penalties of perjury, the Shareholder's name, home address and
United States taxpayer identification number, and that such Shareholder is not
a foreign person within the meaning of Section 1445(b)(2) of the Code.
8.14 EBITDA Target. A certificate shall have been executed and
delivered by the President or Vice President of Courtesy stating that the
EBITDA of the Companies for the twelve months ending June 30, 1999 equals or
exceeds $50.0 million and the projected EBITDA of the Companies for the fiscal
year ending September 30, 1999 shall equal or exceed $50.0
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<PAGE> 49
million. For purposes of this Section 8.14, "EBITDA" means earnings of the
Companies before interest, taxes, depreciation and amortization, calculated on
a combined basis in accordance with GAAP and otherwise consistent with the
Companies' historic manner of presentation. The calculation of EBITDA for the
twelve months ending June 30, 1999 shall be based on the actual financial
results for such period, adjusted to exclude any expenses associated with the
transactions contemplated hereby. Projected EBITDA for the fiscal year ending
September 30, 1999 shall be based on the actual financial results for the nine
months ending June 30, 1999 and projected financial results (prepared in good
faith based on reasonable assumptions) for the three months ending September
30, 1999, and shall exclude any expenses associated with, and any pro forma
effect of, the transactions contemplated hereby. EBITDA for the twelve months
ending June 30, 1999 and projected EBITDA for the fiscal year ending September
30, 1999 shall be calculated in a manner consistent with the calculation of
EBITDA for the six months ended March 31, 1999 set forth on Schedule 8.14
hereto and as otherwise set forth above.
ARTICLE IX
TERMINATION
9.1 Termination. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing:
(a) By the mutual written consent of Newco and the
Representatives, on behalf of the Shareholders;
(b) By either Newco or the Representatives, on behalf of the
Shareholders, if the Closing shall not have occurred on or before the fifth
business day following satisfaction or waiver of the conditions set forth in
Articles VII and VIII hereof, but in any event on or before July 30, 1999;
provided, that the right to terminate this Agreement pursuant to this Section
9.1(b) shall not be available to any party who is in material breach of this
Agreement at the time the notice of termination is delivered or whose delay or
failure to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Closing to occur on or before such date;
(c) By either Newco or the Representatives, on behalf of the
Shareholders, if there shall have been entered a final, nonappealable order or
injunction of any Governmental Entity restraining or prohibiting the
consummation of the transactions contemplated hereby or any material part
hereof; or
(d) By either Newco or the Representatives, on behalf of the
Shareholders, if, prior to the Closing Date, the other party is in material
breach of any representation, warranty, covenant or agreement herein contained
and such breach shall not be cured within fifteen (15) days of the date of
notice of default served by the party claiming such material default, provided,
that such terminating party shall not also be in material breach of this
Agreement at the time notice of termination is delivered.
42
<PAGE> 50
If Newco or the Representatives terminates this Agreement pursuant to the
foregoing provisions of this Section 9.1, such termination shall be effected by
written notice to the other party specifying the provision pursuant to which
such termination is made.
9.2 Liabilities Upon Termination. Except for this Section 9.2 and
Sections 3.25, 4.6, 10.1 and 10.3, which shall survive any termination of this
Agreement, upon the termination of this Agreement, this Agreement shall
forthwith become null and void, and no party hereto or any of its officers,
directors, partners, employees, agents, consultants, stockholders, principals
or other affiliates shall have any rights, Liabilities or obligations hereunder
or with respect hereto; provided, however, that nothing contained in Section
9.1 or this Section 9.2 shall relieve any party from Liability for any willful
breach of any representation or warranty or willful failure to comply with any
covenant or agreement contained herein.
ARTICLE X
MISCELLANEOUS
10.1 Expenses. The Shareholders shall be responsible for the expenses
which the Shareholders and the Companies incur in connection with the
transactions provided for herein or contemplated hereby, including, without
limitation, the fees and expenses of counsel, accountants and investment
bankers, and the Shareholders shall not cause or permit the Companies to pay or
be liable for such costs; provided, however, Courtesy shall discharge the
expenses incurred by the Shareholders in connection with their retained
interest in Courtesy and certain other agreed upon expenses in an amount not to
exceed $380,000. At Closing, Newco shall be reimbursed by Courtesy for all
expenses which Newco incurs in connection with the transactions provided for
herein or contemplated hereby, including the fees and expenses of its counsel
and accountants.
10.2 Survival of Representations; Exclusive Remedy.
(a) The representations and warranties contained in Articles
III and IV hereof shall survive the Closing and remain in effect through the
first anniversary of the Closing Date; provided, that in the case of fraud,
such representations and warranties shall continue and remain actionable until
the expiration of the statutes of limitation applicable to such claims. Any
claim for indemnification with respect to any of such matters that is asserted
within such period of survival will be timely made for purposes hereof. Any
such claim that is not asserted by notice given as herein provided within such
period of survival may not be pursued and is irrevocably waived.
(b) Subsequent to the Closing, the Shareholders shall be
fully responsible for any claim relating to a breach of the representations and
warranties of the Companies and the Shareholders contained in Article III
hereof, the covenants of the Shareholders contained herein or the covenants of
the Companies contained herein that are to be performed on or prior to the
Closing Date. Subsequent to Closing, such claims shall be exclusively asserted
by Courtesy and any recoveries in respect thereof shall be payable to Courtesy.
Any rights in respect thereof held by Newco hereunder shall be assigned to
Courtesy, automatically and without any further action on the part of any
Person, effective as of the Closing. Newco and Courtesy agree that the sole
43
<PAGE> 51
and exclusive remedy of Newco and Courtesy with respect to any claim or cause
of action asserted subsequent to Closing relating to or arising from a breach
of the representations and warranties of the Companies and the Shareholders
contained in Article III hereof (in the absence of fraud) shall be limited to
the rights of Courtesy under, and shall be subject to the terms and conditions
of, the Escrow Agreement.
(c) Without limiting the rights of any party to this
Agreement under this Section 10.2, all claims for indemnification in respect of
the Aguilar Litigation are subject entirely and exclusively to the provisions
of Section 5.14 and all claims for indemnification in respect of Taxes are
subject entirely and exclusively to the provisions of Article VI of this
Agreement.
10.3 Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the party for whom
judgment is finally granted by a court in connection with such action shall be
entitled to recover in such action its reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which it may be
entitled.
10.4 Notices. Any notice, request, demand or other communication given
by any party under this Agreement (each a "notice") shall be in writing, may be
given by a party or its legal counsel, and shall be deemed to be duly given (i)
when personally delivered, or (ii) upon delivery by United States Express Mail
or similar overnight courier service which provides evidence of delivery, or
(iii) when five days have elapsed after its transmittal by registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party to whom directed at that party's address as it appears below or another
address of which that party has given written notice to the other parties
hereto, or (iv) when transmitted by telex (or equivalent service), the sender
having received the answer back of the addressee, or (v) when delivered by
facsimile transmission, the sender having received machine confirmation
thereof.
(a) Notice to the Companies prior to the Closing or to the
Shareholders or the Representatives prior to or after the Closing shall be
sufficient if given to:
Gerald J. Sommers
Walter J. Kreiseder
Courtesy Corporation
800 Corporate Grove Drive
Buffalo Grove, Illinois 60089-4552
Facsimile No.: (847) 808-3072
Janet A. Kritek, Trustee of the
(i) Gerald J. Sommers Gift Trust for Janet
(ii) Gerald J. Sommers Gift Trust for James
(iii) Gerald J. Sommers 1997 Gift Trust for Janet
(iv) Gerald J. Sommers 1997 Gift Trust for James
1611 Rosetree Lane
Mount Prospect, Illinois 60056
44
<PAGE> 52
Donald B. Levin, Trustee of the
(i) Walter J. Kreiseder Gift Trust for David
(ii) Walter J. Kreiseder Gift Trust for John
(iii) Walter J. Kreiseder 1997 Gift Trust for David
(iv) Walter J. Kreiseder 1997 Gift Trust for John
Levin & Ginsburg, Ltd.
180 North LaSalle Street
2nd Floor
Chicago, Illinois 60602-2794
with copies to:
Katten Muchin & Zavis
525 West Monroe Street
Chicago, Illinois 60661-3693
Facsimile No.: (312) 577-8768
Attention: David R. Shevitz
Stuart Grass
(b) Notice to Courtesy after the Closing or to Newco shall be
sufficient if given to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Facsimile No.: (214) 740-7313
Attention: Jack D. Furst
Lawrence D. Stuart, Jr.
Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
Facsimile No.: (314) 746-2299
Attention: David M. Sindelar
with a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Facsimile No.: (214) 746-7777
Attention: R. Scott Cohen
10.5 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors
and assigns. This Agreement or any part hereof may not be assigned by any party
without the prior written consent of the other parties hereto.
45
<PAGE> 53
10.6 Entire Agreement and Modification. This Agreement, the Schedules
and Annexes hereto and agreements executed concurrently herewith (all of which
are hereby incorporated by reference into and considered part of this
Agreement) supersede all prior agreements and understandings among the parties
or any of their respective affiliates (written or oral) relating to the subject
matter of this Agreement, and are intended to be the entire and complete
statement of the terms of the agreement among the parties, and may be amended
or modified only by a written instrument executed by all of the parties. The
waiver by one party of any breach of this Agreement by any other party shall
not be considered to be a waiver of any succeeding breach (whether of a similar
or a dissimilar nature) of any such provision or other provision or a waiver of
any such provision itself. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by any of the parties.
10.7 Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.
10.8 Governing Law. This Agreement, and the respective rights, duties
and obligations of the parties hereunder, shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to the
conflicts of laws provisions thereof. 10.9 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original, and such counterparts shall together constitute one and the same
instrument.
10.10 Further Assurances. Each of the parties shall, at any time and
from time to time after the Closing Date, and at the expense of the other
parties but without further consideration, execute and deliver such further
instruments, assignments or documents and other papers and take such further
actions as may be reasonably required to carry out the provisions hereof and
the transactions contemplated hereby. Each party shall use its reasonable
efforts to fulfill or obtain the fulfillment of the conditions to the Closing.
10.11 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.12 Public Statements. Newco, the Companies and the Representatives
agree that each of them will consult with each of the others before issuing,
and will provide each other the opportunity to review and comment upon, any
press release or other public statement with respect to any of the transactions
contemplated by this Agreement, including the Recapitalization, and prior to
the Closing shall not issue any such press release or make any such public
statement without mutual agreement, except as may be required by applicable law
or judicial process.
10.13 Specific Performance. In the event of a breach or threatened
breach by any party hereto of any of his, her or its obligations hereunder to
consummate the transactions provided for
46
<PAGE> 54
in Articles I and II hereof, any other party hereto shall be entitled to
specific performance with respect to said obligation. Nothing herein shall be
construed as prohibiting any party hereto from pursuing any other remedies
available for such breach or threatened breach, including the recovery of
damages.
10.14 Limitations on Trustee's Representations and Warranties. It is
expressly understood and agreed by and between the parties, anything herein to
the contrary notwithstanding, that each and all of the warranties, indemnities,
representations, covenants, undertakings, and agreements made herein on the
part of the various trustees signing on behalf of certain of the Shareholders
(the "Trustees") while in form purporting to be the warranties, indemnities,
representations, covenants, undertakings and agreements of the Trustees are
nevertheless each and every one of them made and intended not as personal
warranties, indemnities, representations, covenants, undertakings, and
agreements by the Trustees or for the purpose or with the intention of binding
the Trustees personally, but are made and intended for the purpose of binding
only that portion of the trust property specifically described here and this
instrument is executed and delivered by the Trustees not in their own right but
solely in the exercise of the powers conferred on them as Trustees. No personal
liability or personal responsibility is assumed by, nor shall at any time be
asserted or enforceable against the Trustees on account of this instrument or
on account of any warranty, indemnify, representation covenant, undertaking, or
agreement of the Trustees in this instrument, either express or implied. All
such personal liability, if any, is expressly waived and released.
47
<PAGE> 55
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
two or more counterparts, each of which shall be deemed one and the same
instrument, as of the day and year first above written.
NEWCO:
HMTF/CC INVESTMENTS, L.P.
By: HMTF/Courtesy GP, LLC,
its General Partner
By: /s/ PATRICK K. McGEE
----------------------------------
Name: Patrick K. McGee
--------------------------------
Title: Partner
-------------------------------
COMPANIES:
COURTESY CORPORATION
By: /s/ WALTER J. KREISEDER
----------------------------------
Name: Walter J. Kreiseder
--------------------------------
Title: Chairman and CEO
-------------------------------
CREATIVE PACKAGING CORP.
By: /s/ WALTER J. KREISEDER
----------------------------------
Name: Walter J. Kreiseder
--------------------------------
Title: Vice President
-------------------------------
COURTESY SALES CORP.
By: /s/ WALTER J. KREISEDER
----------------------------------
Name: Walter J. Kreiseder
--------------------------------
Title: Chairman and CEO
-------------------------------
<PAGE> 56
SHAREHOLDERS:
/s/ WALTER J. KREISEDER
-------------------------------------
Walter J. Kreiseder
/s/ GERALD J. SOMMERS
-------------------------------------
Gerald J. Sommers
/s/ WALTER J. KREISEDER
-------------------------------------
WALTER J. KREISEDER, not individually,
but solely as Trustee of the Walter J.
Kreiseder Trust.
/s/ GERALD J. SOMMERS
-------------------------------------
GERALD J. SOMMERS, not individually,
but solely as Trustee of the Gerald J.
Sommers Trust.
/s/ DONALD B. LEVINE
-------------------------------------
DONALD B. LEVINE, not individually,
but solely as Trustee of the Walter J.
Kreiseder Gift Trust for David, the
Walter J. Kreiseder Gift Trust for John,
the Walter J. Kreiseder 1997 Gift Trust
for David and the Walter J. Kreiseder 1997
Gift Trust for John.
/s/ JANET A. KRITEK
-------------------------------------
JANET A. KRITEK, not individually, but
solely as Trustee of the Gerald J. Sommers
Gift Trust for Janet, the Gerald J. Sommers
Gift Trust for James, the Gerald J. Sommers
1997 Gift Trust for Janet and the Gerald J.
Sommers 1997 Gift Trust for James.
<PAGE> 1
Certificate Number 69482
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO]
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Articles of Incorporation duly signed and verified of COURTESY
MOLD AND TOOL CORP. have been filed in the Office of the Secretary of State on
the 20th day of July A.D. 1972, as provided by "THE BUSINESS CORPORATION ACT" of
Illinois, in force July 13, A.D. 1933.
NOW THEREFORE, I, JOHN W. LEWIS, Secretary of State of the State of Illinois, by
virtue of the powers vested in me by law, do hereby issue this certificate of
incorporation and attach thereto a copy of the Articles of Incorporation of the
aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the Great
Seal of the State of Illinois, Done at the City of Springfield this 20th day of
July A.D. 1972 and of the Independence of the United States the one hundred and
97th.
/s/ JOHN W. LEWIS
-------------------------
SECRETARY OF STATE.
[SEAL]
<PAGE> 2
FORM B C A-47
BEFORE ATTEMPTING TO EXECUTE THESE BLANKS BE SURE TO READ CAREFULLY THE
INSTRUCTIONS ON THE BACK THEREOF.
(THESE ARTICLES MUST BE FILED IN DUPLICATE)
STATE OF ILLINOIS, ) -----------------------------
) (Do note write in this space)
COOK COUNTY )
Date Paid 7-20-72
TO JOHN W. LEWIS, Secretary of State: Initial License Fee $ 20.05
Franchise Tax $ 40.10
Filing Fee $ 75.00
-------
Clerk $135.15
The undersigned, ----------------------------
================================================================================
Address
Name Number Street City State
================================================================================
Walter J. Kreiseder 1819 Andoa Lane Mount Prospect, Illinois
- --------------------------------------------------------------------------------
Gerald J. Sommers 1507 Oneida Lane Mount Prospect, Illinois
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
being one or more natural persons of the age of twenty-one years or more or a
corporation, and having subscribed to shares of the corporation to be organized
pursuant hereto, for the purpose of forming a corporation under "The Business
Corporation Act" of the State of Illinois, do hereby adopt the following
Articles of Incorporation:
ARTICLE ONE
The name of the corporation hereby incorporated is: Courtesy Mold and Tool Corp.
ARTICLE TWO
The address of its initial registered office in the State of Illinois is: 2010
Lehigh Avenue, in the Village of Glenview (60025) County of Cook and the name
of its initial Registered Agent at said address is: James J. Kritek
ARTICLE THREE
The duration of the corporation is: Perpetual
<PAGE> 3
ARTICLE FOUR
The purpose or purposes for which the corporation is organized are:
To manufacture, process, purchase, otherwise acquire, prepare for
market, merchandise, sell, otherwise dispose of, at wholesale or retail or
both, or otherwise deal in all kinds of molds, tools and by-products thereof
and all other kinds of goods, wares, merchandise, commodities or other property
of any class whatsoever in any part of the world; and to carry on, and engage
in any phase of, a general business of manufacturing, merchandising and trading.
To engage in, carry on or otherwise conduct, directly or through
employees or others, research or investigation for general purposes or for the
development of new or improved products, by-products or processes, or uses
therefor, or for improving the ease or efficiency of the operations of the
Corporation or for other purposes.
To produce, process, otherwise acquire, own, modify, sell transport,
dispose of or deal in any and all kinds of raw materials, semi-finished or
finished materials, goods, products and any tangible or intangible interests or
property.
To purchase, erect, construct, build, rebuild, rent, otherwise acquire,
own, hold, use, operate, maintain, alter, manage, deal in, sell, exchange,
transfer, mortgage, pledge, encumber, lease, remove, otherwise dispose of or
deal with land, buildings, structures, equipment, machinery, facilities or any
other improvements or real property or personal property whatsoever, either
tangible or intangible, or any interest therein.
(......Continued on attached page).
ARTICLE FIVE
PARAGRAPH 1: The aggregate number of shares which the corporation is authorized
to issue is 10,000, divided into one class. The designation of each class, the
number of shares of each class, and the par value, if any, of the shares of
each class, or a statement that the shares of any class are without par value,
are as follows:
<TABLE>
<CAPTION>
Series Number of Par value per share or statement that
Class (If any) Shares shares are without par value
<S> <C> <C> <C>
Common None 10,000 No par value.
</TABLE>
PARAGRAPH 2: The preferences, qualifications, limitations, restrictions and the
special or relative rights in respect of the shares of each class are:
Any shareholder of the Corporation who is desirous of selling,
pledging or giving away or otherwise disposing of his shares must first offer
the shares to the other shareholder upon written notice under the following
terms and conditions:
a. Such shares shall be offered at either;
(1) the current market value, or
(2) the current book value
whichever of (1) or (2) is greater;
b. Such offer to purchase must be accepted within thirty (30) days of
the date at which written notice is received;
c. Payment in cash or in other valuable consideration will be made
within ninety (90) days of acceptance or at a date agreeable to
the parties, whichever is later.
If the above terms and conditions are not met, then the offeror may
offer same to parties who are not shareholders of the Corporation.
Notwithstanding any provisions of this paragraph, if the above
mentioned offer
<PAGE> 4
is accepted within thirty (30) days of the date at which written notice is
received, but offeree is unable to pay for the entire amount of shares at one
time, then, offeree must pay for one thousand (1,000) shares per year within
three (3) years from the date of acceptance of the offer and an interest rate
of six (6) percent per annum will be charged to offeree by offeror on the
remaining number of shares. In no way will the offeree be allowed to extend
payment beyond the stated three (3) year limit.
Upon the death of a shareholder, the remaining shareholder of the
Corporation shall have the same right to purchase the shares owned by the
deceased person as though an offer to sell had been made to him as in the case
of a voluntary offer of sale.
ARTICLE SIX
The class and number of shares which the corporation proposes to issue
without further report to the Secretary of State, and the consideration
(expressed in dollars) to be received by the corporation therefor, are:
<TABLE>
<CAPTION> Total consideration to be
Class of shares Number of shares received therefor:
<S> <C> <C>
Common 5,000 $40,102.00
</TABLE>
ARTICLE SEVEN
The corporation will not commence business until at least one thousand
dollars has been received as consideration for the issuance of shares.
ARTICLE EIGHT
The number of directors to be elected at the first meeting of the
shareholders is: Two
ARTICLE NINE
PARAGRAPH 1: It is estimated that the value of all property to be owned by the
corporation for the following year wherever located will be $____
PARAGRAPH 2: It is estimated that the value of the property to be located within
the State of Illinois during the following year will be $______
PARAGRAPH 3: It is estimated that the gross amount of business which will be
transacted by the corporation during the following year will be $_____
PARAGRAPH 4: it is estimated that the gross amount of business which will be
transacted at or from places of business in the State of Illinois during the
following year will be $______
NOTE: If all the property of the corporation is to be located in this
State and all of its business is to be transacted at or from places of business
in this State, or if the incorporators elect to pay the initial franchise tax
on the basis of its entire stated capital and paid-in surplus, then the
information called for in Article Nine need not be stated.
<PAGE> 5
FORM B C A-47
===============================================================================
ARTICLES OF INCORPORATION
- -------------------------------------------------------------------------------
===============================================================================
The following fees are required to be paid at the time of issuing Certificate
of Incorporation: Filing fee $75.00; Initial license fee of 50 cents per
$1,000.00 or 1/20th of 1% of the amount of stated capital and paid-in surplus
the corporation proposes to issue without further report (Article Six); Initial
franchise tax of 1/10th of 1% of the issued, as above noted. However, the
minimum initial franchise tax is $25.00 and varies monthly on $25,000, or less,
as follows: January, $37.50; February, $35.42; March, $33.33; April, $31.25;
May, $29.17; June, $27.08; July, $25.00; August, $22.92; September, $20.83;
October, $18.75; November, $16.67; December, $14.58; (See Sec. 133 BCA).
In excess of $25,000, the franchise tax per $1,000.00 is as follows: Jan.,
$1.50; Feb., 1.4167; March, 1.3334; April, 1.25; May, 1.1667; June, 1.0834;
July, 1.00; Aug., .9167; Sept., .8334; Oct., .75; Nov., .6667; Dec., .5834.
All shares issued in excess of the amount mentioned in article Six of this
application must be reported within 60 days from date of issuance thereof, and
franchise tax and license fee paid thereon; otherwise, the corporation is
subject to a penalty of 1% for each month on the amount until reported and
subject to a fine of not to exceed $500.00
The same fees are required for all subsequent issue of shares except the filing
fee is $1.00 instead of $75.00
[FILED]
JUL 20, 1972
/s/ JOHN W. LEWIS
----------------------------
===============================================================================
/s/ WALTER J. KREISEDER
---------------------------------------------
/s/ GERALD J. SOMMERS
---------------------------------------------
---------------------------------------------
--------------------------------------------- Incorporators
---------------------------------------------
---------------------------------------------
---------------------------------------------
NOTE: There may be one or more incorporators. Each incorporator shall
be either a corporation, domestic or foreign, or a natural person of the age of
twenty-one years or more. If a corporation acts as incorporator, the name of the
corporation and state of incorporation shall be shown and the execution must be
by its President or Vice-President and verified by him, and the corporate seal
shall be affixed and attested by its Secretary or an Assistant Secretary.
OATH AND ACKNOWLEDGMENT
STATE OF ILLINOIS
ss.
Cook County
I, John A. Schlechter, A Notary Public, do hereby certify that on the
8th day of July 1972 Walter J. Kreiseder and Gerald J. Sommers personally
appeared before me and being first duly sworn by me acknowledged the signing of
the foregoing document in the respective capacities therein set forth and
declared that the statements therein contained are true
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year above
written.
Place /s/ JOHN A. SCHLECTER
(NOTARIAL SEAL) -------------------------------
Here Notary Public
<PAGE> 6
ARTICLE FOUR
(Continued...)
To purchase, otherwise acquire, own, hold, invest in, deal in, sell,
exchange, assign, transfer, mortgage, pledge, encumber, otherwise dispose of,
or deal with, as principal or agent, stock of, or evidences of indebtedness
created or assumed by, this corporation or any other corporation or
corporations of the State of Illinois, any other state, the District of
Columbia, or any country or any political subdivision, territory, colony, or
possession thereof, or created by any other person or persons including,
without limiting the generality of the foregoing, securities shares, bonds,
debentures, notes, open accounts and other evidences of indebtedness, or other
interest in, or obligations of, corporations, foreign or domestic,
associations, partnerships, individuals, governmental bodies or authorities, or
any other person; and to exercise all the rights, powers and privileges with
respect thereto which corporations chartered by the State of Illinois might,
could or would exercise, including, except in the case of stock or any other
securities of this corporation having voting rights, the right to vote thereon.
To borrow money and to make or issue evidences of indebtedness of this
corporation of all kinds, including bonds, debentures, notes or other
evidences of indebtedness whether or not secured by mortgage or pledge of the
whole or any part of the corporation's property or otherwise.
To purchase or otherwise acquire the good will, rights, and other
property of all kinds, and to undertake and assume the whole or any part of the
liabilities, of any corporation, foreign, or domestic, association,
partnership, individual or other person; and to pay for the same in cash or
other property of the corporation, or with stock, bonds, debentures, notes,
other evidences of indebtedness issued or created by the corporation, or
otherwise.
To promote, finance, invest in, aid or assist, financially or
otherwise, any corporation, foreign or domestic, association, partnership,
individual or any other person in which or in whom the corporation has any
interest of whatever nature or with which or with whom it has business
dealings, and to aid in any manner any such corporation, foreign or domestic,
association, partnership, individual or any other person and generally to do
any acts or things permitted a domestic corporation under the Business
Corporation Act of the State of Illinois in order to protect, preserve, improve
or enhance the value of any such interest.
To apply for, obtain, register, purchase, license, otherwise acquire,
own, hold, use, operate, deal in, introduce, sell, assign, exchange, lease,
license, otherwise dispose of or deal with, in whole or in part, any trade
names, trademarks, distinctive marks, copyrights, patents, inventions,
formulas, secret processes, licenses, concessions, improvements, processes or
the like used in connection with, or secured under, letters patent of the
United States of America, or the laws of any other jurisdiction, or otherwise;
and to issue, exercise, develop, grant licenses in respect thereof or otherwise
turn them to account.
To perform services, or act as agent or broker, for others for any
purpose for which it might itself act.
To make and enter into contracts of every kind and description with
any corporation, foreign or domestic, association, partnership, individual,
governmental body or authority, or any other person; to do and transact all
acts, business and things incident
<PAGE> 7
to or relating to or convenient in connection with any business, objects or
purpose of the corporation as principal or agent or otherwise, and by or
through agents, and either alone or in conjunction with others; and to
remunerate any corporation, partnership, individual, or other person for
services rendered or to be rendered, including, without limitation, the placing
or assisting to place any stocks, bonds, debentures, or other securities of the
corporation or of any other corporation.
To carry on all or any of its operations and business without
restriction or limitation as to amount; to have one or more offices in any
state, territory or possession of the United States of America, or the District
of Columbia, and in any foreign country, or any political subdivision,
territory, colony or possession subject to the laws thereof.
In general, to carry on any business or to perform any service in
connection with the foregoing, and to have and exercise all the powers conferred
by the laws of the State of Illinois upon corporations formed under the general
corporation law of such state, and to do any or all of the things hereinbefore
set forth to the same extent as corporations chartered by the State of Illinois
might, could or would do.
The foregoing clauses shall be liberally construed, both as objects and
powers; and the objects and purposes specified therein shall, except where
otherwise expressed, be in nowise limited or restricted by reference to, or
inference from, the term of any other clause in this Certificate of
Incorporation.
<PAGE> 8
Certificate Number 18403
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO]
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Articles of amendment to the Articles of Incorporation duly signed and
verified of COURTESY MOLD AND TOOL CORP. have been filed in the Office of the
Secretary of State on the 20th day of April A.D. 1973, as provided by "THE
BUSINESS CORPORATION ACT" of Illinois, in force July 13, A.D. 1933.
NOW THEREFORE, I, MICHAEL J. HOWLETT, Secretary of State of the State of
Illinois, by virtue of the powers vested in me by law, do hereby issue this
certificate of amendment and attach thereto a copy of the Articles of Amendment
to the Articles of Incorporation of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, Done at the City of Springfield this 20th
day of April A.D. 1973 and of the Independence of the United States the one
hundred and 97th.
/s/ MICHAEL J. HOWLETT
-------------------------
SECRETARY OF STATE.
[SEAL]
<PAGE> 9
5006-479-4
----------------------------
(Do not write in this space)
Date Paid 4-26-73
License Fee $
Franchise Tax $
Filing Fee $ 25.00
Clerk [ILLEGIBLE] $
----------------------------
(File in Duplicate)
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
COURTESY MOLD AND TOOL CORP.
(Exact Corporate Name)
To MICHAEL J. HOWLETT
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles
of incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is:
COURTESY MOLD AND TOOL CORP.
ARTICLE SECOND: The following amendment or amendments were adopted in
the manner prescribed by "The Business Corporation Act" of the State of
Illinois: RESOLVED, That PARAGRAPH 1 of ARTICLE FIVE of the Certificate of
Incorporation of this corporation be amended to read as follows: "PARAGRAPH 1:
The aggregate number of shares which the corporation is authorized to issue is
10,200 divided into two classes. The designation of each class, the number of
shares of each class, and the par value, if any, of the shares of each class,
or a statement that the shares of any class are without par value, are as
follows:
<TABLE>
<CAPTION>
Series Number of Par value per share or statement
Class (if any) Shares that shares are without par value
- ------ -------- --------- ----------------------------------
<S> <C> <C> <C>
Common None 10,000 No par value.
Preferred None 200 $100.00 par value.
</TABLE>
FURTHER, That PARAGRAPH 2 of ARTICLE FIVE be amended to read as follows:
"PARAGRAPH 2: The preferences, qualifications, limitations, restrictions and the
special or relative rights in respect of the shares of each class are:
A. Any shareholder of the Corporation who is desirous of selling,
pledging or giving away or otherwise disposing of his shares must
<PAGE> 10
FURTHER, Whereas ARTICLE SIX of the Certificate of Incorporation of
this corporation contains errors concerning the number of shares to be
issued without further report to the Secretary of State, and the
consideration to be received by the corporation therefor, be it
resolved that ARTICLE SIX of said Certificate be amended to read as
follows; "The class and number of shares which the corporation
proposes to issue without further report to the Secretary of State,
and the consideration (expressed in dollars) to be received by the
corporation therefor, are:
<TABLE>
<CAPTION>
Class of shares Number of shares Total consideration to
be received therefor:
<S> <C> <C>
Common 5,000 $20,000.00
</TABLE>
(Disregard separation into classes if class voting does not apply to
the amendment voted on.)
ARTICLE THIRD: The number of shares of the corporation outstanding at
the time of the adoption of said amendment or amendments was 5,000; and the
number of shares of each class entitled to vote as a class on the adoption of
said amendment or amendments, and the designation of each such class were as
follows:
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES
<S> <C>
NOT APPLICABLE
</TABLE>
(Disregard separation into classes if class voting does not apply to
the amendment voted on.)
ARTICLE FOURTH: The number of shares voted for said amendment or
amendments was 5,000; and the number of shares voted against said amendment or
amendments was -0-. The number of shares of each class entitled to vote as a
class voted for and against said amendment or amendments, respectively, was:
<TABLE>
<CAPTION>
CLASS NUMBER OF SHARES VOTED
<S> <C> <C>
NOT APPLICABLE FOR AGAINST
</TABLE>
(Disregard these items unless the amendment restates the articles of
incorporation.)
Item 1. On the date of the adoption of this amendment, restating the articles
of incorporation, the corporation had _________ shares issued, itemized as
follows:
<TABLE>
<CAPTION>
CLASS SERIES NUMBER OF PAR VALUE PER SHARE OR STATEMENT
(IF ANY) SHARES THAT SHARES ARE WITHOUT PAR VALUE
<S> <C> <C> <C>
NOT APPLICABLE
</TABLE>
Item 2. On the date of the adoption of this amendment restating the articles of
incorporation, the corporation had a stated capital of $_________ and a paid-in
surplus of $_________ or a total of $__________.
NOT APPLICABLE
<PAGE> 11
(Disregard this Article where this amendment contains no such provisions.)
ARTICLE FIFTH: The manner in which the exchange, reclassification, or
cancellation of issued shares, or a reduction of the number of authorized shares
of any class below the number of issued shares of that class, provided for in,
or effected by, this amendment, is as follows:
NOT APPLICABLE
(Disregard this Paragraph where amendment does not affect stated capital or
paid-in surplus.)
ARTICLE SIXTH: Paragraph 1: The manner in which said amendment or
amendments effect a change in the amount of stated capital or the amount of
paid-in surplus, or both, is as follows:
Among other things, this amendment changes the consideration to be received for
shares to be issued without further report to the Secretary of State from
$40,102.00 to $20,000.00.
(Disregard this Paragraph where amendment does not affect stated capital or
paid-in surplus.)
Paragraph 2: The amounts of stated capital and of paid-in surplus as
changed by this amendment are as follows:
<TABLE>
<CAPTION>
Before Amendment After Amendment
<S> <C> <C>
Stated capital....... $40,102.00 $20,000.00
Paid-in surplus...... $ -0- $ -0-
</TABLE>
<PAGE> 12
FORM BCA-55
BOX 5006 File 4-79-4
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
COURTESY MOLD AND TOOL CORP.
----------------------------
FILED
APRIL 20, 1973
/s/ MICHAEL J. HOWLETT
----------------------
Secretary of State
FILE IN DUPLICATE
Filing Fee $25.00
Filing Fee for Re-Stated Articles $100.00
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be executed in its name by its __________________
President, and its corporate seal to be hereto affixed, attested by
its __________ Secretary, this 13th day of April, 1973.
COURTESY MOLD AND TOOL CORP.
----------------------------
(Exact Corporate Name)
Place
(CORPORATE SEAL) BY: /s/ WALTER J. KREISEDER
Here ------------------------
Its President
ATTEST:
/s/ JAMES J. KRITIK
- ---------------------------
Its Secretary
STATE OF Illinois
------------------
COUNTY OF Cook
------------------
I, /s/ LAURA K. SJOSTEDL, a Notary Public, do hereby certify that on
the 13th day of April 1973, Walter J. Kreiseder personally appeared before me
and, being first duly sworn by me, acknowledge that he signed the capacity
therein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ LAURA K. SJOSTEDL
----------------------
Notary Public
<PAGE> 13
ATTACHMENT
(CONTINUED FROM FORM BCA-55)
first offer the shares to the other shareholder(s) upon written notice under
the following terms and conditions:
1. Such shares shall be offered at either:
a. the current market value, or
b. the current book value
whichever of a. or b. is greater;
2. Such offer to purchase must be accepted within thirty(30)
days of the date at which written notice is received;
3. Payment in cash or in other valuable consideration will be
made within ninety(90) days of acceptance or at a date
agreeable to the parties, whichever is later.
If the above terms and conditions are not met, then the offeror may offer same
to parties who are not shareholders of the Corporation.
Notwithstanding any provisions of this sub-paragraph(A), if the above mentioned
offer is accepted within thirty(30) days of the date at which written notice is
received, but offeree is unable to pay for the entire amount of shares at one
time, then, offeree must pay for one thousand(1,000) shares per year within
three(3) years from the date of acceptance of the offer and an interest rate of
six(6) percent per annum will be charged to offeree by offeror on the remaining
number of shares. In no way will the offeree be allowed to extend payment
beyond the stated three(3) year limit.
Upon the death of a shareholder, the remaining shareholder(s) of the
Corporation shall have the same right to purchase the shares owned by the
deceased person as though an offer to sell had been made to him as in the case
of a voluntary offer of sale.
B. Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation the holders of
Preferred Stock shall be entitled to receive from the assets of the
Corporation a preferential amount in cash consisting of $100.00 per share plus
any and all accrued and unpaid dividends thereon to the date of payment before
any distribution of assets shall be made to the holders of Common Stock. The
holders of Preferred Stock shall be entitled to no further participation in
any such distribution, and the holders of Common Stock shall be entitled to
share ratably (to the exclusion of the holders of Preferred Stock) in all the
assets and funds of the Corporation remaining after payment to the holders of
Preferred Stock of the preferential amount aforesaid.
If upon such liquidation, dissolution or winding up, whether voluntary or
involuntary, the assets of the Corporation shall be insufficient to permit the
payment to such stockholders of the full preferential amount aforesaid, then
the entire assets of the Corporation to be distributed shall be distributed
ratably among the holders of the Preferred Stock.
A merger or consolidation of the Corporation with any other corporation or a
sale, lease or conveyance of assets shall not be considered as a liquidation,
dissolution or winding up of the Corporation within the meaning of this
sub-paragraph(B).
<PAGE> 14
File Number 5006-479-4
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO]
WHEREAS, ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF COURTESY MOLD
AND TOOL CORP. INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN
FILED IN THE OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS
CORPORATION ACT OF ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, Jim Edgar, Secretary of State of the State of Illinois, by
virtue of the powers vested in me by law, do hereby issue this certificate and
attach hereto a copy of the Application of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the Great
Seal of the State of Illinois, at the City of Springfield, this 17th day of
April A.D. 1987 and of the Independence of the United States the two hundred and
11th.
/s/ JIM EDGAR
-------------------------
SECRETARY OF STATE
[SEAL]
<PAGE> 15
JIM EDGAR
SECRETARY OF STATE
STATE OF ILLINOIS
ARTICLES OF AMENDMENT
Submit in Duplicate File #5006-479-4
Remit payment in Check or Money Order, This Space For Use By
payable to "Secretary of State". Secretary of State
DO NOT SEND CASH!
Date 4/17/87
License Fee $
Franchise Tax $
Filing Fee $25.00
Clerk [initials]
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned corporation hereby adopts these Articles of Amendment to its
Articles of Incorporation.
ARTICLE ONE
The name of the corporation is COURTESY MOLD AND TOOL CORP.
(Note 1)
ARTICLE TWO
The following amendment of the Articles of Incorporation was
adopted on March 27, 1987 in the manner indicated below. ("X" one
box only.)
/ / By a majority of the incorporators, provided no directors were
named in the articles of incorporation and no directors have
been elected; or by a majority of the board of directors, in
accordance with Section 10.10, the corporation having issued
no shares as of the time of adoption of this amendment;
(Note 2)
/ / By a majority of the board of directors, in accordance with
Section 10.15, shares having been issued but shareholder action
not being required for the adoption of the amendment;
(Note 3)
/ / By the shareholders, in accordance with Section 10.20, a
resolution of the board of directors having been duly adopted
and submitted to the shareholders. At a meeting of
shareholders, not less than the minimum number of votes
required by statute and by the articles of incorporation were
voted in favor of the amendment;
(Note 4)
/ / By the shareholders, in accordance with Sections 10.20 and
7.10, a resolution of the board of directors having been duly
adopted and submitted to the shareholders. A consent in writing
has been signed by shareholders having not less than the
minimum number of votes required by statute and by the articles
of incorporation. Shareholders who have not consented in
writing have been given notice in accordance with Section 7.10;
(Note 4)
/x/ By the shareholders, in accordance with Sections 10.20 and
7.10, a resolution of the board of directors have been duly
adopted and submitted to the shareholders. A consent in writing
has been signed by all the shareholders entitled to vote on
this amendment.
(Note 4)
(INSERT AMENDMENT)
(Any article being amended is required to be set forth in its entirety.)
(Suggested language for an amendment to change the corporate name is RESOLVED,
that the Articles of Incorporation be amended to read as follows:)
COURTESY MOLD & TOOL CORP. [INITIALS]
- -------------------------------------------------------------------------------
(NEW NAME)
All changes other than name, include on page 2
(over)
<PAGE> 16
Page 2
Resolution
<PAGE> 17
Page 3
ARTICLE THREE The manner in which any exchange, reclassification or
cancellation of issued shares, or a reduction of the number
of authorized shares of any class below the number of issued
shares of that class, provided for or effected by this
amendment, is as follows: (if not applicable, insert "No
change")
NO CHANGE
ARTICLE FOUR (a) The manner in which said amendment effects a change in
the amount of paid-in capital* is as follows: (If not
applicable, insert "No change")
NO CHANGE
(b) The amount of paid-in capital* as changed by this
amendment is as follows: (If not applicable, insert "No
change")
NO CHANGE
Before Amendment After Amendment
Paid-in Capital $ $
--------------- --------------
The undersigned corporation has caused these articles to be signed by its
duly authorized officers, each of whom affirm, under penalties of perjury, that
the facts stated herein are true.
Dated March 27, 1987 Courtesy Mold and Tool Corp.
------------------- --------------------------------
(Exact Name of Corporation)
attested by /s/ GERALD J. SOMMERS by /s/ WALTER J. KREISEDER
----------------------- -------------------------
(Signature of Secretary or (Signature of President or
Assistant Secretary) Vice President)
GERALD J. SOMMERS WALTER J. KREISEDER
--------------------- -----------------------
(Type or Print Name (Type or Print Name
and Title) and Title)
*"Paid-in Capital" replaces the terms Stated Capital & Paid-in Surplus and is
equal to the total of these accounts.
<PAGE> 18
Page 4
NOTES AND INSTRUCTIONS
NOTE 1: State the true exact corporate name as it appears on the records of the
office of the Secretary of State, BEFORE any amendments herein reported.
NOTE 2: Incorporators are permitted to adopt amendments ONLY before any shares
have been issued and before any directors have been named or elected.
(Section 10.10)
NOTE 3: Directors may adopt amendments without shareholder approval in only six
instances, as follows:
(a) to remove the names and addresses of directors named in the articles
of incorporation;
(b) to remove the name and address of the initial registered agent and
registered office, provided a statement pursuant to Section 5.10 is
also filed;
(c) to split the issued whole shares and unissued authorized shares by
multiplying them by a whole number, so long as no class or series is
adversely affected thereby;
(d) to change the corporate name by substituting the word "corporation",
"incorporated", "company", "limited", or the abbreviation "corp.",
"inc.", "co.", or "ltd." for similar word or abbreviation in the
name, or by adding a geographical attribution to the name;
(e) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with Section 9.05,
(f) to restate the articles of incorporation as currently amended.
(Section 10.15)
NOTE 4: All amendments not adopted under Section 10.10 or Section 10.15 require
(1) that the board of directors adopt a resolution setting forth the
proposed amendment and (2) that the shareholders approve the amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent, in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supercede the 2/3 vote requirement by
specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than a
majority within each class when class voting applies. (Section 10.20)
NOTE 5: When shareholder approval is by written consent, all shareholders must
be given notice of the proposed amendment at least 5 days before the
consent is signed. If the amendment is adopted, shareholders who have
not signed the consent must be promptly notified of the passage of the
amendment. (Sections 7.10 & 10.20)
FORM BCA-10.30
File No.
---------------------------------
=========================================
ARTICLES OF AMENDMENT
Filing Fee $25.00
Filing Fee for Re-Stated Articles $100.00
FILED
APR 17 1987
JIM EDGAR
SECRETARY OF STATE
PAID
APR 21 1987
RETURN TO:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone 217 -- 782-6961
=========================================
<PAGE> 19
File Number 5006-479-4
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO]
WHEREAS, ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF COURTESY
MOLD AND TOOL CORP. INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE
BEEN FILED IN THE OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS
CORPORATION ACT OF ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, Jim Edgar, Secretary of State of the State of Illinois, by
virtue of the powers vested in me by law, do hereby issue this certificate and
attach hereto a copy of the Application of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the Great
Seal of the State of Illinois, at the City of Springfield, this 7th day of
September A.D. 1990 and of the Independence of the United States the two hundred
and 15th.
/s/ JIM EDGAR
-------------------------
SECRETARY OF STATE
<PAGE> 20
JIM EDGAR
SECRETARY OF STATE
STATE OF ILLINOIS
ARTICLES OF AMENDMENT
BCA-10.30 (Form Rev. Jan. 1986)
Submit in Duplicate File #5006-479-4
Remit payment in Check or Money Order, This Space For Use By
payable to "Secretary of State". Secretary of State
DO NOT SEND CASH!
Date 9/7/90
License Fee $
Franchise Tax $
Filing Fee $25
Clerk
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned corporation hereby adopts these Articles of Amendment to its
Articles of Incorporation.
ARTICLE ONE
The name of the corporation is COURTESY MOLD AND TOOL CORP.
(Note 1)
ARTICLE TWO
The following amendment of the Articles of Incorporation was
adopted on August 13, 1990 in the manner indicated below. ("X" one
box only.)
/ / By a majority of the incorporators, provided no directors were
named in the articles of incorporation and no directors have
been elected; or by a majority of the board of directors, in
accordance with Section 10.10, the corporation having issued
no shares as of the time of adoption of this amendment;
(Note 2)
/ / By a majority of the board of directors, in accordance with
Section 10.15, shares having been issued but shareholder action
not being required for the adoption of the amendment;
(Note 3)
/ / By the shareholders, in accordance with Section 10.20, a
resolution of the board of directors having been duly adopted
and submitted to the shareholders. At a meeting of
shareholders, not less than the minimum number of votes
required by statute and by the articles of incorporation were
voted in favor of the amendment;
(Note 4)
/ / By the shareholders, in accordance with Sections 10.20 and
7.10, a resolution of the board of directors having been duly
adopted and submitted to the shareholders. A consent in writing
has been signed by shareholders having not less than the
minimum number of votes required by statute and by the articles
of incorporation. Shareholders who have not consented in
writing have been given notice in accordance with Section 7.10;
(Note 4)
/x/ By the shareholders, in accordance with Sections 10.20 and
7.10, a resolution of the board of directors have been duly
adopted and submitted to the shareholders. A consent in writing
has been signed by all the shareholders entitled to vote on
this amendment.
(Note 4)
(INSERT AMENDMENT)
(Any article being amended is required to be set forth in its entirety.)
(Suggested language for an amendment to change the corporate name is: RESOLVED,
that the Articles of Incorporation be amended to read as follows:)
COURTESY CORPORATION
- -------------------------------------------------------------------------------
(NEW NAME)
All changes other than name, include on page 2
(over)
<PAGE> 21
Page 2
Resolution
N/A
<PAGE> 22
Page 3
ARTICLE THREE The manner in which any exchange, reclassification or
cancellation of issued shares, or a reduction of the number of
authorized shares of any class below the number of issued shares
of that class, provided for or effected by this amendment, is as
follows: (If not applicable, insert "No change")
N/A
ARTICLE FOUR (a) The manner in which said amendment effects a change in
the amount of paid-in capital (Paid-in capital replaces the
terms Stated Capital and Paid in Surplus and is equal to the
total of these accounts) is as follows: (If not applicable,
insert "No change")
N/A
(b) The amount of paid-in capital (Paid in Capital replaces the
terms Stated Capital and Paid in Surplus and is equal to the
total of these accounts) as changed by this amendment
is as follows: (If not applicable, insert "No change")
N/A
Before Amendment After Amendment
Paid-in Capital $ $
--------------- --------------
(COMPLETE EITHER ITEM 1 OR 2 BELOW)
(1) The undersigned corporation has caused these articles to be signed by its
duly authorized officers, each of whom affirm, under penalties of perjury, that
the facts stated herein are true.
Dated August 13, 1990 COURTESY MOLD AND TOOL CORP.
------------------- --------------------------------
(Exact Name of Corporation)
attested by /s/ GERALD J. SOMMERS by /s/ WALTER J. KREISEDER
----------------------- -------------------------
(Signature of Secretary or (Signature of President or
Assistant Secretary) Vice President)
GERALD J. SOMMERS, SECRETARY WALTER J. KREISEDER, PRESIDENT
---------------------------- ------------------------------
(Type or Print Name (Type or Print Name
and Title) and Title)
(2) If amendment is authorized by the incorporators, the incorporators must
sign below.
OR
If amendment is authorized by the directors and there are no officers, then a
majority of the directors or such directors as may be designated by the board,
must sign below.
The undersigned affirms, under penalties of perjury, that the facts stated
herein are true.
Dated , 19
------------- -----
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
<PAGE> 23
Page 4
NOTES AND INSTRUCTIONS
NOTE 1: State the true exact corporate name as it appears on the records of the
office of the Secretary of State, BEFORE any amendments herein reported.
NOTE 2: Incorporators are permitted to adopt amendments ONLY before any shares
have been issued and before any directors have been named or elected.
(Section 10.10)
NOTE 3: Directors may adopt amendments without shareholder approval in only six
instances, as follows:
(a) to remove the names and addresses of directors named in the articles
of incorporation;
(b) to remove the name and address of the initial registered agent and
registered office, provided a statement pursuant to section 5.10 is
also filed;
(c) to split the issued whole shares and unissued authorized shares by
multiplying them by a whole number, so long as no class or series is
adversely affected thereby;
(d) to change the corporate name by substituting the word "corporation",
"incorporated", "company", "limited", or the abbreviation "corp.",
"inc.", "co.", or "ltd." for a similar word or abbreviation in the
name, or by adding a geographical attribution to the name;
(e) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with section 9.05,
(f) to restate the articles of incorporation as currently amended.
(Section 10.15)
NOTE 4: All amendments not adopted under section 10.10 or section 10.15 require
(1) that the board of directors adopt a resolution setting forth the
proposed amendment and (2) that the shareholders approve the amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent, in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supercede the 2/3 vote requirement by
specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than a
majority within each class when class voting applies. (Section 10.20)
NOTE 5: When shareholder approval is by written consent, all shareholders must
be given notice of the proposed amendment at least 5 days before the
consent is signed. If the amendment is adopted, shareholders who have
not signed the consent must be promptly notified of the passage of the
amendment. (Sections 7.10 & 10.20)
FORM BCA-10.30
File No.
---------------------------------
=========================================
ARTICLES OF AMENDMENT
Filing Fee $25.00
Filing Fee for Re-Stated Articles $100.00
COURTESY CORPORATION
FILED
SEP 07 1990
[ILLEGIBLE]
SECRETARY OF STATE
RETURN TO:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone 217 -- 782-6961
=========================================
LEVIN & GINSBURG, LTD. (117705)
180 N. LaSalle, Suite 2210
Chicago, Illinois 60601
<PAGE> 24
File Number 5006-479-4
---------------
STATE of ILLINOIS
Office of
The Secretary of State
Whereas, ARTICLES OF AMENDMENT TO THE ARTICLES OF
INCORPORATION OF
COURTESY CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of
[SEAL] Springfield, this 28th day of DECEMBER A.D. 1994 and of the
Independence of the United States the two hundred and 19TH.
/s/ GEORGE H. RYAN
C-212.1 Secretary of State
<PAGE> 25
GEORGE H. RYAN
SECRETARY OF STATE
DEPARTMENT OF BUSINESS SERVICES
SPRINGFIELD, IL 62756
TELEPHONE (217) 782-1832
Form BCA-10.30
(Rev. Jan. 1991)
ARTICLES OF AMENDMENT
Submit in Duplicate File #5006-479-4
Remit payment in Check or Money Order, This Space For Use By
payable to "Secretary of State". Secretary of State
Date 12/28/94
Franchise Tax $
Filing Fee $25.00
Clerk
1. CORPORATE NAME: COURTESY CORPORATION
(Note 1)
2. MANNER OF ADOPTION AND TEXT OF AMENDMENT:
The following amendment of the Articles of Incorporation was
adopted on December 23, 1994 in the manner indicated below. ("X"
one box only.)
/ / By a majority of the incorporators, provided no directors were
named in the articles of incorporation and no directors have
been elected; or by a majority of the board of directors, in
accordance with Section 10.10, the corporation having issued
no shares as of the time of adoption of this amendment;
(Note 2)
/ / By a majority of the board of directors, in accordance with
Section 10.15, shares having been issued but shareholder action
not being required for the adoption of the amendment;
(Note 3)
/ / By the shareholders, in accordance with Section 10.20, a
resolution of the board of directors having been duly adopted
and submitted to the shareholders. At a meeting of
shareholders, not less than the minimum number of votes
required by statute and by the articles of incorporation were
voted in favor of the amendment;
(Note 4)
/ / By the shareholders, in accordance with Sections 10.20 and
7.10, a resolution of the board of directors having been duly
adopted and submitted to the shareholders. A consent in writing
has been signed by shareholders having not less than the
minimum number of votes required by statute and by the articles
of incorporation. Shareholders who have not consented in
writing have been given notice in accordance with Section 7.10;
(Note 4)
/x/ By the shareholders, in accordance with Sections 10.20 and
7.10, a resolution of the board of directors have been duly
adopted and submitted to the shareholders. A consent in writing
has been signed by all the shareholders entitled to vote on
this amendment.
(Note 4)
When amendment effects a name change, insert the new corporate name below. Use
Page 2 for all other amendments.
ARTICLE 1: The name of the corporation is:
- -------------------------------------------------------------------------------
(NEW NAME)
All changes other than name, include on page 2
(over)
<PAGE> 26
TEXT OF AMENDMENT
(Any article being amended is required to be set forth in its entirety)
"ARTICLE 5
Paragraph 1.
<TABLE>
<CAPTION>
Class Par Value Number of
Per Share Shares Authorized
<S> <C> <C>
Class A Voting Common No Par Value 10,000
Class B Non-Voting Common No Par Value 30,000
</TABLE>
Paragraph 2. The preferences, qualifications, limitations, restrictions and
special or relative rights in respect of the shares of each class are:
Class A Voting Common and Class B Non-Voting Common Stock Rights
Except as otherwise provided by the Illinois Business Corporation Act of 1983,
as amended (the "Act"), or by the Corporation's Articles of Incorporation or
any amendments thereto, each holder of Class A Common Voting Stock will have
one vote per share held by such holder on all matters voted upon by the
shareholders, and holders of Class B Non-Voting Common Stock will have no
voting rights. The Class A Common Voting Stock and the Class B Non-Voting
Common Stock will be identical in all respects except voting as provided in
this paragraph.
Conversion
Each share of the Corporation's Common Stock ("Existing Common Stock") issued
and outstanding at the time of filing this Amendment with the Illinois
Secretary of State will, upon such filing, automatically be converted into one
share of Class A Voting Common Stock and three shares of Class B Non-Voting
Common Stock."
<PAGE> 27
4. The manner, if not set forth in Article 3b, in which any exchange,
reclassification or cancellation of issued shares, or a reduction of
the number of authorized shares of any class below the number of
issued shares of that class, provided for or effected by this
amendment, is as follows: (If not applicable, insert "No change")
Effective immediately upon the filing of these Articles of Amendment
with the Illinois Secretary of State, each share of the
Corporation's existing 5,000 common shares issued and outstanding
immediately prior to the filing of these Articles of Amendment with
the Illinois Secretary of State is automatically converted into one
share of Class A Voting Common Stock and three shares of Class B
Non-Voting Common Stock.
5. (a) The manner, if not set forth in Article 3b, in which said
amendment effects a change in the amount of paid-in capital (Paid-in
capital replaces the terms Stated Capital and Paid-in Surplus and is
equal to the total of these accounts) is as follows: (If not
applicable, insert "No change")
No Change
(b) The amount of paid-in capital (Paid-in Capital replaces the
terms Stated Capital and Paid in-Surplus and is equal to the total
of these accounts) as changed by this amendment is as follows: (If
not applicable, insert "No change")
No Change
Before Amendment After Amendment
Paid-in Capital $25,000.00 $25,000.00
--------------- --------------
(COMPLETE EITHER ITEM 6 OR 7 BELOW)
6. The undersigned corporation has caused this statement to be signed by its
duly authorized officers, each of whom affirms, under penalties of
perjury, that the facts stated herein are true.
Dated December , 1994 COURTESY CORPORATION
---------------------------------- ------------------------------
(Exact Name of Corporation)
attested by /s/ GERALD J. SOMMERS by /s/ WALTER J. KREISEDER
---------------------------- ----------------------------
(Signature of Secretary) (Signature of President or
Vice President)
GERALD J. SOMMERS, SECRETARY WALTER J. KREISEDER, PRESIDENT
---------------------------- ------------------------------
(Type or Print Name (Type or Print Name
and Title) and Title)
7. If amendment is authorized pursuant to Section 10.10 by the
incorporators, the incorporators must sign below.
OR
If amendment is authorized by the directors pursuant to Section 10.10 and
there are no officers, then a majority of the directors or such directors
as may be designated by the board, must sign below.
The undersigned affirms, under the penalties of perjury, that the facts
stated herein are true.
Dated , 19
------------- -----
---------------------------- ----------------------------
---------------------------- ----------------------------
---------------------------- ----------------------------
---------------------------- ----------------------------
Page 3
<PAGE> 28
NOTES AND INSTRUCTIONS
NOTE 1: State the true exact corporate name as it appears on the records of the
office of the Secretary of State, BEFORE any amendments herein reported.
NOTE 2: Incorporators are permitted to adopt amendments ONLY before any shares
have been issued and before any directors have been named or elected.
(Section 10.10)
NOTE 3: Directors may adopt amendments without shareholder approval in only six
instances, as follows:
(a) to remove the names and addresses of directors named in the articles
of incorporation;
(b) to remove the name and address of the initial registered agent and
registered office, provided a statement pursuant to Section 5.10 is
also filed;
(c) to split the issued whole shares and unissued authorized shares by
multiplying them by a whole number, so long as no class or series is
adversely affected thereby;
(d) to change the corporate name by substituting the word "corporation",
"incorporated", "company", "limited", or the abbreviation "corp.",
"inc.", "co.", or "ltd." for similar word or abbreviation in the
name, or by adding a geographical attribution to the name;
(e) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with Section 9.05,
(f) to restate the articles of incorporation as currently amended.
(Section 10.15)
NOTE 4: All amendments not adopted under Section 10.10 or Section 10.15 require
(1) that the board of directors adopt a resolution setting forth the
proposed amendment and (2) that the shareholders approve the amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent, in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supercede the 2/3 vote requirement by
specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than a
majority within each class when class voting applies. (Section 10.20)
NOTE 5: When shareholder approval is by consent, all shareholders must be given
notice of the proposed amendment at least 5 days before the consent is
signed. If the amendment is adopted, shareholders who have not signed
the consent must be promptly notified of the passage of the amendment.
(Sections 7.10 & 10.20)
Page 4
<PAGE> 29
JOINT WRITTEN CONSENT OF ALL OF THE
SHAREHOLDERS AND ALL OF THE DIRECTORS OF
COURTESY CORPORATION
(in lieu of a special meeting)
The undersigned, being all of the shareholders ("Shareholders") and all
of the directors of COURTESY CORPORATION, an Illinois corporation (the
"Corporation"), acting pursuant to Sections 10.20, 7.10 and 8.45 of the Illinois
Business Corporation Act of 1983, as amended (the "Act"), do hereby consent to
and adopt the following resolutions:
WHEREAS, the Corporation has authorized 200 shares of preferred stock
and 10,000 voting shares of common stock ("Existing Common Stock") and
the Board of Directors and Stockholders deem it to be in the best
interest of the Corporation to amend the Corporation's Articles of
Incorporation (the "Amendment") to eliminate the preferred stock, to
authorize 10,000 shares of Class A Voting Common Stock and 30,000
shares of Class B Non-Voting Common Stock, and to exchange the Existing
Common Stock into Class A Voting Common Stock and Class B Non-Voting
Common Stock on the basis hereinafter described.
WHEREAS, effective immediately upon the filing of the Amendment with
the Illinois Secretary of State, each share of the Corporation's 5,000
Existing Common Stock issued and outstanding immediately prior to the
filing of the Amendment with the Illinois Secretary of State will
automatically be converted into one share of Class A Common Voting
Stock and three shares of Class B Non-Voting Common Stock; and
WHEREAS, the Corporation intends to effectuate these changes in a
manner consistent with Section 1036 of the Internal Revenue Code
(including any amendments and regulations thereto) and in a manner that
will not cause either the Corporation or the Shareholders to incur any
federal tax liability under the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Articles of
Incorporation shall be amended so that Article 5 shall read in its
entirety as follows:
"ARTICLE 5
Paragraph 1.
<TABLE>
<CAPTION>
Class Par Value Number of
Per Share Shares Authorized
<S> <C> <C>
Class A Voting Common No Par Value 10,000
Class B Non-Voting Common No Par Value 30,000
</TABLE>
Paragraph 2. The preferences, qualifications, limitations, restrictions and
special or relative rights in respect of the shares of each class are:
<PAGE> 30
Class A Voting Common and Class B Non-Voting Common Stock Rights
Except as otherwise provided by the Illinois Business Corporation Act
of 1983, as amended (the "Act"), or by the Corporation's Articles of
Incorporation or any amendments thereto, each holder of Class A Voting
Common Stock will have one vote per share held by such holder on all
matters voted upon by the shareholders, and holders of Class B
Non-Voting Common Stock will have no voting rights. The Class A Voting
Common Stock and the Class B Non-Voting Common Stock will be identical
in all respects except voting as provided in this paragraph.
Conversion
Each share of the Corporation's Common Stock ("Existing Common Stock")
issued and outstanding at the time of filing this Amendment with the
Illinois Secretary of State will, upon such filing, automatically be
converted into one share of Class A Voting Common Stock and three
shares of Class B Non-Voting Common Stock."
RESOLVED, that all certificates representing shares of the Existing Common Stock
outstanding shall be surrendered and cancelled, and each holder of such Existing
Common Stock shall be entitled to receive new Certificates representing the
number of shares of Class A Voting Common Stock and Class B Non-Voting Stock
into which the Existing Common Stock shall have been converted;
FURTHER RESOLVED, that no amount shall be transferred to paid-in-capital in
respect of such stock exchange;
FURTHER RESOLVED, that any officer of the Corporation be, and hereby is,
authorized, empowered and directed, for and on behalf of the Corporation, to (i)
execute any stock certificates, (ii) cancel and reissue shares of common stock,
(iii) reflect all such cancellations and reissuances in the Corporation's stock
records, and (iv) execute and deliver any documents and take any action which
such officers deem necessary or appropriate to effect the foregoing resolutions;
FURTHER RESOLVED, that the proper officers of the Corporation are hereby
authorized and directed to execute, deliver, file, and record any and all
instruments necessary to effectuate the foregoing resolutions including, but not
limited to, the filing of Articles of Amendment to the Articles of Incorporation
with the Secretary of State of Illinois;
FURTHER RESOLVED, that any actions taken by any officer of the Corporation prior
to this date to effect the transactions contemplated by these resolutions set
forth above are hereby ratified and confirmed; and
FURTHER RESOLVED, that this Consent may be executed in two or more counterparts,
each of which shall be deemed an original and together constitute one and the
same consent.
-2-
<PAGE> 31
The actions taken by this Consent shall have the same force and effect
as if taken at special meetings of the shareholders and directors of the
Corporation duly called and constituted pursuant to the By-laws of the Company
and the Act.
Dated as of December _, 1994
- ------------------------------- ------------------------------
Walter J. Kreiseder Walter J. Kreiseder
- ------------------------------- ------------------------------
Gerald J. Sommers Gerald J. Sommers
------------------------------
Being all of the Shareholders of Marilyn Kreiseder
the Corporation
------------------------------
Judith Sommers
Being all of the Directors of
the Corporation
-3-
<PAGE> 32
FORM BCA-10.30 ARTICLES OF AMENDMENT File # D 5006-479-4
Jesse White SUMBIT IN DUPLICATE
Department of Business Services THIS SPACE FOR USE BY
Springfield, IL 62756 SECRETARY OF STATE
Telephone (217) 782-1832 Date
Remit payment in check or money Franchise Tax $______
order, payable to "Secretary of Filing Fee* $______
State." Penalty $______
Approved:______________
1. CORPORATE NAME: COURTESY CORPORATION
(Note 1)
2. MANNER OF ADOPTION OF AMENDMENT:
The following amendment of the Articles of Incorporation was adopted
on July 28, 1999 in the manner indicated below. ("X" one box only)
[ ] By a majority of the incorporators, provided no directors were named
in the articles of incorporation and no directors
(Note 2)
[ ] By a majority of the board of directors, in accordance with Section
10.10, the corporation having issued no shares
(Note 2)
[ ] By a majority of the board of directors, in accordance with Section
10.15, shares having been issued but
(Note 3)
[ ] By the shareholders, in accordance with Section 10.20, a resolution of
the board of directors having been duly adopted and submitted to the
shareholders. At a meeting of shareholders, not less than the minimum
number of
(Note 4)
[ ] By the shareholders, in accordance with Sections 10.20 and 7.10, a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A consent in writing has been signed by
shareholders having not less than the minimum number of votes required
by statute and by the articles of incorporation. Shareholders who
(Notes 4 & 5)
[X] By the shareholders, in accordance with Sections 10.20 and 7.10, a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A consent in writing has been signed by
all the shareholders
(Note 5)
3. TEXT OF AMENDMENT:
a. When amendment effects a name change, insert the new corporate name
below. Use Page 2 for all other amendments. LLS Corp.
- --------------------------------------------------------------------------------
(NEW NAME)
All changes other than name, include on page 2
(over)
<PAGE> 33
TEXT OF AMENDMENT
b. (If amendment affects the corporate purpose, the amended purpose is
required to be set forth in its entirety. If there is not sufficient
space to do so, add one or more sheets of this size.)
See attached.
Page 2
<PAGE> 34
4. The manner, if not set forth in Article 3b, in which any exchange,
reclassification or cancellation of issued shares, or a reduction of the
number of authorized shares of any class below the number of issued
shares of that class, provided for or effected by this amendment, is as
follows: (If not applicable, insert "No change")
See attached
5. (a) The manner, if not set forth in Article 3b, in which said amendment
effects a change in the amount of paid-in capital (Paid-in capital
replaces the terms Stated Capital and Paid-in Surplus and is equal to
the total of these accounts) is as follows: (if not applicable, insert
"No change")
<TABLE>
<CAPTION>
Authorized Issued Par Value
---------- ------ ---------
<S> <C> <C> <C>
Preferred 100,000,000 $0.01
Common 450,000,000 $0.01
Class A Common 50,000,000 $0.01
</TABLE>
(b) The amount of paid-in capital (Paid-in Capital replaces the terms
Stated Capital and Paid-in Surplus and is equal to the total of these
accounts) as changed by this amendment is as follows: (if not
applicable, insert "No change")
<TABLE>
<CAPTION>
Before After Amendment
<S> <C> <C>
Paid-in Capital $25,000.00 $ 25,000.00
</TABLE>
(COMPLETE EITHER ITEM 6 OR 7 BELOW. ALL SIGNATURES MUST BE IN BLACK INK.)
6. The undersigned corporation has caused this statement to be signed by
its duly authorized officers, each of whom affirms, under penalties of
perjury, that the facts stated herein are true.
<TABLE>
<S> <C>
Dated July 28, 1999 COURTESY CORPORATION
-------------------------------------------------------- -----------------------------------------------
(Exact Name of Corporation at date of execution)
attested by /s/ GERALD J. SOMMERS by /s/ GERALD J. SOMMERS
--------------------------------------------------- -----------------------------------------------
(Signature of Secretary or Assistant Secretary) (Signature of President or Vice President)
GERALD J. SOMMERS, SECRETARY GERALD J. SOMMERS, PRESIDENT
--------------------------------------------------- -----------------------------------------------
(Type or Print Name and Title] (Type or Print Name and Title]
</TABLE>
7. If amendment is authorized pursuant to Section 10.10 by the
incorporators, the incorporators must sign below, and type or print name
and title.
OR
If amendment is authorized by the directors pursuant to Section 10.10
and there are no officers, then a majority of the directors or such
directors as may be designated by the board, must sign below, and type
or print name and title.
The undersigned affirms, under the penalties of perjury, that the facts
stated herein are true.
Dated , 19
---------------------------
--------------------------------- -----------------------------------
--------------------------------- -----------------------------------
--------------------------------- -----------------------------------
--------------------------------- -----------------------------------
Page 3
<PAGE> 35
NOTES AND INSTRUCTIONS
NOTE 1: State the true exact corporate name as it appears on the records of the
office of the Secretary of State, BEFORE any amendments herein reported.
NOTE 2: Incorporators are permitted to adopt amendments ONLY before any shares
have been issued and before any directors have been named or elected.
(Section 10.10)
NOTE 3: Directors may adopt amendments without shareholder approval in only
seven instances, as follows:
(a) to remove the names and address of directors named in the articles
of incorporation;
(b) to remove the name and address of the initial registered agent and
registered office, provided a statement pursuant to Section 5.10 is
also filed;
(c) to increase, decrease, create or eliminate the par value of the
shares of any class, so long as no class or series of shares is
adversely affected.
(d) to split the issued whole shares and unissued authorized shares by
multiplying them by a whole number, so long as no class or series is
adversely affected thereby;
(e) to change the corporate name by substituting the word "corporation",
"incorporated", "company", "limited", or the abbreviation "corp.",
"inc.", "co.", or "ltd." for a similar word or abbreviation in the
name, or by adding a geographical attribution to the name;
(f) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with Section 9.0 5;
(g) to restate the articles of incorporation as currently amended.
(Section 10.15)
NOTE 4: All amendments not adopted under Section 10.10 or Section 10.15 require
(1) that the board of directors adopt a resolution setting forth the
proposed amendment and (2) that the shareholders approve the amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent, in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supersede the 2/3 vote requirement by
specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than a
majority within each class when class voting applies.
(Section 10.20)
NOTE 5: When shareholder approval is by consent, all shareholders must be given
notice of the proposed amendment at least 5 days before the consent is
signed. If the amendment is adopted, shareholders who have not signed
the consent must be promptly notified of the passage of the amendment.
(Sections 7.10 & 10.20)
Page 4
<PAGE> 36
ANNEX A
ARTICLE FOUR: The purpose or purposes for which the Corporation is
organized shall be the transaction of any and all business for which
corporations may be incorporated under the Illinois Business Corporation Act of
1983, as amended (the "Act").
ARTICLE FIVE: The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 600,000,000 shares consisting
of (a) 100,000,000 shares of a class designated as Preferred Stock, par value
$0.01 per share ("Preferred Stock"), (b) 450,000,000 shares of a class
designated Common Stock, par value $0.01 per share ("Common Stock"), and (c)
50,000,000 shares of a class designated Class A Common Stock, par value $0.01
per share ("Class A Common Stock").
The designations and the powers, preferences, rights, qualifications,
limitations, and restrictions of the Preferred Stock, the Common Stock and the
Class A Common Stock are as follows:
A. Provisions Relating to the Preferred Stock:
1. The Preferred Stock may be issued from time to time in one or
more classes or series, the shares of each class or series to have such
designations and powers, preferences, rights, qualifications, limitations, and
restrictions thereof, as are stated and expressed herein and in the resolution
or resolutions providing for the issuance of such class or series adopted by the
Board of Directors of the Corporation as hereinafter prescribed.
2. Authority is hereby expressly granted to and vested in the Board
of Directors of the Corporation to authorize the issuance of the Preferred Stock
from time to time in one or more classes or series, and with respect to each
class or series of the Preferred Stock, to fix and state by the resolution or
resolutions from time to time adopted providing for the issuance thereof the
following:
(a) whether the class or series is to have voting rights, full,
special, or limited, or is to be without voting rights, and whether such class
or series is to be entitled to vote as a separate class either alone or together
with the holders of one or more other classes or series of stock;
(b) the number of shares to constitute the class or series and
the designations thereof;
(c) the preferences, and relative, participating, optional, or
other special rights, if any, and the qualifications, limitations, or
restrictions thereof, if any, with respect to any class or series;
1
<PAGE> 37
(d) whether the shares of any class or series shall be redeemable
at the option of the Corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price or prices (which
may be payable in the form of cash, notes, securities or other property), and
the time or times at which, and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
(e) whether the shares of a class or series shall be subject to
the operation of retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement, and, if such retirement or sinking
fund or funds are to be established, the annual amount thereof, and the terms
and provisions relative to the operation thereof;
(f) the dividend rate, whether dividends are payable in cash,
stock of the Corporation, or other property, the conditions upon which and the
times when such dividends are payable, the preference to or the relation to the
payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative, and if
cumulative, the date or dates from which such dividends shall accumulate;
(g) the preferences, if any, and the amounts thereof which the
holders of any class or series thereof shall be entitled to receive upon the
voluntary or involuntary dissolution of, or upon any distribution of the assets
of, the Corporation;
(h) whether the shares of any class or series, at the option of
the Corporation or the holders thereof or upon the happening of any specified
event, shall be convertible into or exchangeable for the shares of any other
class or classes or of any other series of the same or any other class or
classes of stock, securities, or other property of the Corporation and the
conversion price or prices or ratio or the rate or rates at which such exchange
may be made, with such adjustments, if any, as shall be stated and expressed or
provided for in such resolution or resolutions; and
(i) such other special rights and protective provisions with
respect to any class or series as may to the Board of Directors of the
Corporation seem advisable.
3. The shares of each class or series of the Preferred Stock may
vary from the shares of any other class or series thereof in any or all of the
foregoing respects. The Board of Directors of the Corporation may increase the
number of shares of the Preferred Stock designated for any existing class or
series by a resolution adding to such class or series authorized and unissued
shares of the Preferred Stock not designated for any other class or series. The
Board of Directors of the Corporation may decrease the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
subtracting from such class or series authorized and unissued shares of the
Preferred Stock designated for such existing class or series, and the shares so
subtracted shall become authorized, unissued, and undesignated shares of the
Preferred Stock.
2
<PAGE> 38
B. Provisions Relating to the Common Stock and the Class A Common
Stock:
1. General. Except as otherwise provided herein, or as otherwise
provided by applicable law, all shares of Common Stock and Class A Common Stock
shall have identical rights and privileges in every respect.
2. Voting. The Common Stock and the Class A Common Stock will each
be fully voting stock entitled to one vote per share with respect to all matters
to be voted on by the Corporation's shareholders. Except as expressly required
under the Illinois Business Corporation Act, the Common Stock and the Class A
Common Stock will vote together as a single class with respect to all matters to
be voted on by the Corporation's shareholders.
3. Dividends. If at any time the Corporation shall pay a dividend on
the Common Stock (other than a dividend payable ratably on the Common Stock and
Class A Common Stock, as required by the immediately following sentence),
whether such dividend is payable in cash, property, or securities of the
Corporation, the then applicable Base Price (as defined in subparagraph 6(a)
below) of the Class A Common Stock shall be reduced (but not below zero),
effective at the close of business on the record date for determination of
holders of Common Stock entitled to such dividend, by the per share amount of
such dividend (which, in the case of a dividend payable other than in cash,
shall be the amount determined in good faith by the Corporation's Board of
Directors). Notwithstanding the foregoing, the holders of Common Stock and Class
A Common Stock shall be entitled to participate ratably, on a share-for-share
basis as if all shares were of a single class, in (i) ordinary dividends payable
in cash out of the current earnings of the Corporation and (ii) dividends in
shares of Common Stock or Class A Common Stock (or rights to subscribe for or
purchase shares of Common Stock and Class A Common Stock, as applicable, or
securities or indebtedness convertible into shares of Common Stock and Class A
Common Stock, as applicable); provided, however, that (i) dividends payable in
shares of Common Stock (or rights to subscribe for or purchase shares of Common
Stock or securities or indebtedness convertible into shares of Common Stock)
shall be paid only on shares of Common Stock and (ii) dividends payable in
shares of Class A Common Stock (or rights to subscribe for or purchase shares of
Class A Common Stock or securities or indebtedness convertible into shares of
Class A Common Stock) shall be paid only on shares of Class A Common Stock.
4. Conversion of Class A Common Stock
(a) Conversion Rights. Shares of Class A Common Stock may be
converted into shares of Common Stock at the option of any holder thereof at any
time. In addition, shares of Class A Common Stock (i) may be converted into
shares of Common Stock at the option of the Corporation effective immediately
prior to the consummation of a Triggering Event (as defined in subparagraph 6(d)
below) and (ii) shall automatically be converted into shares of Common Stock on
July 30, 2009 (either such date being referred to herein as the "Class A
Automatic Conversion Date"). For purposes of such conversions, each share of
Class A Common Stock shall be convertible into a fraction of a share of Common
Stock equal to the quotient of (1) the excess, if any, of the Fair Value (as
defined in subparagraph 6(c) below) of
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one share of Common Stock over the Conversion Price (as defined in subparagraph
6(b) below), divided by (2) the Fair Value of the Common Stock, all computed as
of the close of business on the date preceding the date of conversion.
(b) Optional Conversion Procedure. Any holder of Class A Common
Stock desiring to exercise such holder's option to convert such Class A Common
Stock in accordance with the foregoing shall surrender the certificate or
certificates representing the Class A Common Stock to be converted, duly
endorsed to the Corporation or in blank, at the principal executive office of
the Corporation, and shall give written notice to the Corporation at such office
that such holder elects to convert the number of shares represented by such
certificate or certificates, or a specified number thereof. As promptly as
practicable after the surrender for conversion of any Class A Common Stock, the
Corporation shall execute and deliver or cause to be executed and delivered to
the holder of such Class A Common Stock, certificates representing the shares of
Common Stock issuable upon such conversion. In case any certificate or
certificates representing shares of Class A Common Stock shall be surrendered
for conversion for only a part of the shares represented thereby, the
Corporation shall execute and deliver to the holders of the certificate or
certificates for shares of Class A Common Stock so surrendered a new certificate
or certificates representing the shares of Class A Common Stock not converted,
dated the same date as the certificate or certificates representing the Common
Stock. Shares of the Class A Common Stock converted pursuant to the aforesaid
shall be deemed to have been converted immediately prior to the close of
business on the date such shares are duly surrendered for conversion, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the recordholder or holders
of such shares of Common Stock as of such date.
(c) Mandatory Conversion Procedure. The Corporation shall, on or
prior to the Class A Automatic Conversion Date, provide notice (the "Class A
Mandatory Conversion Notice") to each holder of record of Class A Common Stock
at such holder's address as shown on the stock transfer records of the
Corporation of the fact that such automatic conversion will occur, the date on
which such automatic conversion will occur, an estimate, made in good faith, of
the number of shares of Common Stock issuable upon such automatic conversion
and, if applicable, a description of the Triggering Event giving rise to such
conversion. From and after the Class A Automatic Conversion Date, all shares of
Class A Common Stock shall cease to be outstanding and all outstanding
certificates which formerly represented shares of Class A Common Stock shall be
deemed to represent shares of Common Stock into which the shares of Class A
Common Stock have been converted in accordance with the terms hereof, and the
person or persons holding such certificates on the records of the Corporation
shall be treated for all purposes as the holders of record of such shares of
Common Stock as of such date. As promptly as practicable after the surrender by
any holder of Class A Common Stock of the certificate or certificates
representing shares of Class A Common Stock so converted, duly endorsed to the
Corporation or in blank, at the principal executive office of the Corporation,
the Corporation shall execute and deliver, or cause to be executed and
delivered, to such holder the certificate or certificates representing the
shares of Common Stock issuable upon such conversion.
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(d) Adjustments for Dividends on Converted Shares. Any dividends
declared but not paid on the shares of Class A Common Stock prior to conversion
thereof into Common Stock shall be paid, on the payment date, to the holder or
holders entitled thereto, notwithstanding such conversion; provided, however,
that such holder or holders shall not be entitled to receive the corresponding
dividends declared but not paid on the shares of Common Stock issuable upon such
conversion.
(e) Adjustments for Stock Splits and Stock Dividends. The
Corporation shall treat the Common Stock and Class A Common Stock identically in
respect of any subdivisions or combinations (for example, if the Corporation
effects a two-for-one stock split with respect to the Common Stock, it shall at
the same time effect a two-for-one stock split with respect to the Class A
Common Stock). If at any time the Corporation shall subdivide the Common Stock
and Class A Common Stock into a greater number of shares, or combine the Common
Stock and Class A Common Stock into a lesser number of shares, or pay to the
holders of Common Stock or Class A Common Stock a dividend in Common Stock or
Class A Common Stock, as applicable, the then applicable Base Price shall be
adjusted, effective at the close of business on the effective date of such split
or combination or the record date for determination of the holders of Common
Stock or Class A Common Stock entitled to such dividend, by multiplying the Base
Price then in effect times a fraction, (i) the numerator of which is the total
number of shares of Class A Common Stock outstanding immediately before such
subdivision, combination, or dividend and (ii) the denominator of which is the
total number of shares of Class A Common Stock outstanding immediately after
such subdivision, combination, or dividend.
(f) Recapitalization, Consolidation, or Merger of the
Corporation. In the event that the Corporation shall be recapitalized,
consolidated with, or merged with or into any other corporation (a
"Reorganization") and the terms thereof shall provide (i) that the Class A
Common Stock shall remain outstanding after such Reorganization and (ii) for any
change in the Common Stock, provision shall be made as part of the terms of such
Reorganization so that each holder of Class A Common Stock which will remain
outstanding following such Reorganization shall thereafter be entitled to
receive, upon conversion of its Class A Common Stock and in lieu of each share
of Common Stock issuable to it upon conversion of its Class A Common Stock prior
to such Reorganization, the same kind and amount of securities or assets as
shall be distributable upon such Reorganization with respect to one share of
Common Stock.
(g) Reservation of Shares. The Corporation shall at times reserve
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of Class A Common Stock as
herein provided, such number of shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of Class A
Common Stock and shall take all such corporate action as may be necessary to
assure that such shares of Common Stock may be validly and legally issued upon
conversion of all of the outstanding shares of Class A Common Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of the Class A Common Stock, the
Corporation shall take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
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(h) Fractional Shares. The Corporation shall not issue fractional
shares of Common Stock upon conversion of shares of Class A Common Stock.
Rather, in lieu of any fractional share of Common Stock that otherwise would be
issuable upon conversion of shares of Class A Common Stock, the Corporation
shall, at the time of such conversion, deliver to the holder of the shares of
Class A Common Stock being converted an amount in cash equal to the Fair Value
of such fractional shares on such conversion date. For the purpose of the
preceding sentence, all fractional shares that otherwise would have been issued
upon conversion of any shares of Class A Common Stock shall be aggregated so
that the holder of such shares shall in no event be entitled to receive an
amount in cash which equals or exceeds the Fair Value of one whole share of
Common Stock.
(i) Retirement of Shares. Shares of Class A Common Stock which
have been issued and have been converted into Common Stock, repurchased, or
reacquired in any other manner by the Corporation shall not be reissued.
5. Liquidation. The holders of the Common Stock and Class A Common
Stock shall share ratably on a share-for-share basis (for purposes of this
paragraph 5, a holder's share basis in the Class A Common Stock shall be
determined as if such shares were converted into Common Stock as provided in
subparagraph 4(a)) in all distributions of assets pursuant to any voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation. For the
purposes of this paragraph 5, neither the merger nor the consolidation of the
Corporation into or with another corporation or the merger or consolidation of
any other corporation into or with the Corporation, or the sale, transfer, or
other disposition of all or substantially all the assets of the Corporation,
shall be deemed to be a voluntary or involuntary liquidation, dissolution, or
winding-up of the Corporation.
6. Definitions. In addition to any terms defined elsewhere herein,
as used in this Section B of ARTICLE FIVE, the following terms shall have the
respective meanings set forth below:
(a) "Base Price" shall mean $0.99, subject to adjustment from
time to time as provided in paragraph 3 and subparagraph 4(e) hereof.
(b) "Conversion Price" shall mean, as to any share of Class A
Common Stock on any date, the Base Price, as adjusted from time to time, plus
imputed interest thereon at the rate of 8% per annum, compounded annually, from
and including the date of issuance of such share of such Class A Common Stock
through (but not including) the applicable date of determination.
(c) "Fair Value" shall mean (subject to the next sentence
hereof), in respect of any share of Common Stock (or fraction thereof) on any
date (i) if there is a public market for the Common Stock, the average closing
price for any Common Stock on the largest exchange on which such shares are
traded (or, if not traded on an exchange, then the average of the closing bid
and asked prices quoted over-the-counter) over the 10 trading days prior to the
date of determination (as such prices are reported in the Wall Street Journal or
if not so reported,
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in any nationally recognized financial journal or newspaper), (ii) if there is
no public market for the Common Stock, the highest price at which shares of
Common Stock are offered for sale in a public offering registered pursuant to
the Securities Act of 1933, as amended, or in an armslength private offering, if
any such offering is pending (unless such offer is revoked prior to such sale)
on the date of determination of the Fair Value, or (iii) if there is no public
market for the Common Stock and no such offering is pending, the fair market
value per share of Common Stock as determined in good faith by the Corporation's
Board of Directors. Notwithstanding the foregoing, if the Shares of Class A
Common Stock are automatically converted into shares of Common Stock on July
30, 2009 in accordance with paragraph 4 and if neither of the circumstances
specified in clauses (i) and (ii) of the preceding sentence are applicable, then
Fair Value shall mean, in respect of any share of Common Stock (or fraction
thereof) on any date, (1) the fair market value per share of Common Stock as
determined in good faith by the Corporation's Board of Directors or (2) upon the
written request of the holders of 10% or more of the then outstanding shares of
Class A Common Stock (the "Requesting Holders"), received by the Corporation
within 10 days following the giving of the Class A Mandatory Conversion Notice,
the fair market value per share of Common Stock as determined by an independent
investment banking firm selected by the Corporation and approved by the
Requesting Holders (which approval shall not be unreasonably withheld). The fees
and expenses of such investment banking firm shall be paid by the Corporation.
(d) "Triggering Event" shall mean any merger, consolidation, or
other business combination of the Corporation with one or more other persons or
entities in which any such other person or entity is the survivor, or any sale
of all or substantially all of the assets of the Corporation, and with respect
to which cash and/or non-cash consideration is to be distributed to holders of
Common Stock; provided, that, if any such merger, consolidation, sale of assets,
or other business combination in which holders of Common Stock receive cash or
noncash consideration in exchange for Common Stock is structured so that the
Corporation is the surviving entity, such transaction shall nevertheless be
deemed a Triggering Event. Notwithstanding the foregoing, a merger,
consolidation, sale of assets, or other business combination referred to in the
preceding sentence shall not constitute a Triggering Event if Hicks, Muse, Tate
& Furst Incorporated and/or its affiliates shall own beneficially, directly or
indirectly, in excess of 50% of the outstanding Common Stock (determined on a
fully-diluted basis, exclusive of shares issuable upon conversion of the Class A
Common Stock) of the surviving entity (an "Exempt Transaction"). Further, the
terms of any Exempt Transaction shall provide that the Class A Common Stock (or
another class of convertible common stock having terms, as nearly as may
reasonably be, identical to the terms of the Class A Common Stock) shall remain
outstanding after such Exempt Transaction, subject to the further provisions of
subparagraph 4(f) above.
C. General.
1. Subject to the foregoing provisions of these Articles of
Incorporation, the Corporation may issue shares of its Preferred Stock, Common
Stock and Class A Common Stock from time to time for such consideration (not
less than the par value thereof) as may be fixed by the Board of Directors of
the Corporation, which is expressly authorized to fix the same in its
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absolute and uncontrolled discretion subject to the foregoing conditions. Shares
so issued for which the consideration shall have been paid or delivered to the
Corporation shall be deemed fully paid stock and shall not be liable to any
further call or assessment thereon, and the holders of such shares shall not be
liable for any further payments in respect of such shares.
2. The Corporation shall have authority to create and issue rights
and options entitling their holders to purchase shares of the Corporation's
capital stock of any class or series or other securities of the Corporation, and
such rights and options shall be evidenced by instrument(s) approved by the
Board of Directors of the Corporation. The Board of Directors of the Corporation
shall be empowered to set the exercise price, duration, times for exercise, and
other terms of such options or rights; provided, however, that the consideration
to be received for any shares of capital stock subject thereto shall not be less
than the par value thereof.
ARTICLE TEN: No contract or transaction between the Corporation and
one or more of its directors, officers, or shareholders or between the
Corporation and any person (as used herein, "person" means any other
corporation, partnership, association, firm, trust, joint venture, political
subdivision, or instrumentality) or other organization in which one or more of
its directors, officers, or shareholders are directors, officers, or
shareholders, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the board or committee which authorizes the
contract or transaction, or solely because his, her, or their votes are counted
for such purpose, if: (i) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to the
board of directors or the committee, and the board of directors or committee in
good faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; (ii) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or transition is
specifically approved in good faith by vote of the shareholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the board of directors, a committee
thereof, or the shareholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
ARTICLE ELEVEN: The Corporation shall indemnify any person who was,
is, or is threatened to be made a party to a proceeding (as hereinafter defined)
by reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the Act, as the same exists or may hereafter be
amended. Such right shall be a contract right and as such shall run to the
benefit of any director or officer who is elected and accepts the position of
director or officer of the Corporation or elects to continue to serve as a
director or officer of the Corporation while this Article Eleven is in effect.
Any repeal or amendment of this Article Eleven shall be prospective only and
shall not limit the rights of any such director or officer or the obligations of
the
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Corporation with respect to any claim arising from or related to the services of
such director or officer in any of the foregoing capacities prior to any such
repeal or amendment to this Article Eleven. Such right shall include the right
to be paid by the Corporation expenses incurred in defending any such proceeding
in advance of its final disposition to the maximum extent permitted under the
Act, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
whole or in part, the claimant shall also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under the
Act, but the burden of proving such defense shall be on the Corporation. Neither
the failure of the Corporation (including its board of directors or any
committee thereof, independent legal counsel, or shareholders) to have made its
determination prior to the commencement of such action that indemnification of,
or advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
shareholders) that such indemnification or advancement is not permissible shall
be a defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any person having a
right of indemnification under the foregoing provisions, such right shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute, by-law,
resolution of shareholders or directors, agreement, or otherwise,
The Corporation may additionally indemnify any employee or agent of
the Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such an action,
suit or proceeding, any inquiry or investigation that could lead to such an
action, suit, or proceeding.
ARTICLE TWELVE: A director of the Corporation shall not be
personally liable to the Corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its shareholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or knowing violation of law, (iii) under Section 8.65 of the Act, or
(iv) for any transaction from which the director derived an improper personal
benefit. Any repeal or amendment of this Article Twelve by the shareholders of
the Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or amendment.
In addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Twelve, a director shall
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not be liable to the Corporation or its shareholders to such further extent as
permitted by any law hereafter enacted, including without limitation any
subsequent amendment to the Act.
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ATTACHMENT TO ARTICLES OF AMENDMENT
ITEM NO. 4
The Corporation's Class A Voting Common Stock and Class B Non-Voting
Common Stock shall be recapitalized as follows:
(1) Each share of Class A Voting Common Stock shall be converted into
One Thousand Five Hundred Forty-Four and 0367/10000 (1,544.0367)
shares of Common Stock;
and
(2) Each share of Class B Non-Voting Common Stock shall be converted
into One Thousand Five Hundred Forty-Four and 0367/10000
(1,544.0367) shares of Common Stock.
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
as of July 30, 1999
OF
LLS CORP.
a Corporation of the State of Illinois
ARTICLE I
OFFICES
SECTION I.1. Illinois Registered Office. The Corporation shall
continuously maintain in the State of Illinois a registered office and a
registered agent whose office is identical with such registered office.
SECTION I.2. Other Offices. The Corporation may have other offices
within or without Illinois.
ARTICLE II
SHAREHOLDERS
SECTION II.1. Annual Meeting. An annual meeting of the Shareholders
shall be held at 10:00 A.M. on the first Saturday in April beginning in the year
1987 for the purpose of electing Directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday, such meeting shall be held on the next succeeding
business day.
<PAGE> 2
SECTION II.2. Special Meetings. Special meetings of the Shareholders
may be called either by the President, the Board of Directors or by the holders
of not less than one-fifth of all outstanding shares of the Corporation, for the
purpose or purposes stated in the call of the meeting.
SECTION II.3. Place of Meeting. The Board of Directors may designate
any place as the place of meeting for any annual meeting or for any special
meeting called by the Board of Directors. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be at 1150
Willis, Wheeling, Illinois 60090.
SECTION II.4. Informal Action By Shareholders. Any action required to
be taken at a meeting of the Shareholders, or any other action which may be
taken at a meeting of the Shareholders, may be taken without a meeting, if a
consent in writing, setting forth the action so taken, shall be signed
(1) if five days prior notice of the proposed action is given in
writing to all of the Shareholders entitled to vote with
respect to the subject matter thereof, then by the holders of
outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were
present and voting, provided that prompt notice of the taking
of action is given to those Shareholders who have not
consented in writing, or
(b) by all of the Shareholders entitled to vote with respect to
the subject matter thereof.
SECTION II.5. Notice of Meetings. Written notice stating the place,
date and hour of the meeting, and in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be delivered not less than
ten nor more than sixty days before the date of the meeting, or in the case of a
merger, consolidation, share exchange,
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dissolution or sale, lease or exchange of assets, not less than twenty nor more
than sixty days before the meeting, either personally or by mail, by or at the
direction of the President, or the Secretary, or the officer or persons calling
the meeting, to each Shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited with the
United States Postal Service, addressed to the Shareholder at his address as it
appears on the records of the Corporation, with postage thereon prepaid. When a
meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken.
SECTION II.6. Waiver of Notice. Whenever any notice whatever is
required to be given under the provisions of these By-Laws, a waiver thereof in
writing signed by the person or persons entitled to much notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice. Attendance at any meeting shall constitute waiver of notice thereof
unless the person at the meeting objects to the holding of the meeting because
proper notice was not given.
SECTION II.7. Fixing of Record Date. For the purpose of determining the
Shareholders entitled to notice of or to vote at any meeting of Shareholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend, or any rights in
respect of any change, conversion or exchange of shares or for the purpose of
any other lawful action, the Board of Directors of the Corporation may fix in
advance a record date which shall not be more than sixty days and, for a meeting
of Shareholders, not less than ten days, or in the case
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<PAGE> 4
of a merger, consolidation, share exchange, dissolution or sale, lease or
exchange of assets, not less than twenty days, immediately preceding the date of
such meeting. If no record date is fixed, the record date for the determination
of Shareholders entitled to notice of or to vote at a meeting of Shareholders
shall be the date on which notice of the meeting is mailed, and the record date
for the determination of Shareholders for any other purpose shall be the date on
which the Board of Directors adopts the resolution relating thereto. A
determination of Shareholders of record entitled to notice of or to vote at a
meeting of Shareholders shall apply to any adjournment of the meeting.
SECTION II.8. Voting Lists. The officer or agent having charge of the
transfer books for shares of the Corporation shall make, within twenty days
after record date or ten days before each meeting of Shareholders, whichever is
earlier, a complete list of the Shareholders entitled to vote at such meeting,
arranged in alphabetical order, showing the address of and the number of shares
registered in the name of the Shareholder, which list, for a period of ten days
prior to such meeting, shall be kept on file at the registered office of the
Corporation and shall be open to inspection by any Shareholder for any purpose
germane to the meeting, at any time during usual business hours. Such list shall
also be produced and kept open at the time and place of the meeting and may be
inspected by any Shareholder during the whole time of the meeting. The original
share ledger or transfer book, or a duplicate thereof kept in this State, shall
be prima facie evidence as to who are the Shareholders entitled to examine such
list or share ledger or transfer book or to vote at any meeting of Shareholders.
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<PAGE> 5
SECTION II.9. Voting of Shares. Except as provided in Sections 2.11 and
2,12, each outstanding share, regardless of class, shall be entitled to one vote
upon each matter submitted to vote at a meeting of Shareholders. The Article of
Incorporation, or an amendment to the Articles of Incorporation, may, however,
limit or deny voting rights. or provide special voting rights to any class or
classes or series of shares of the Corporation.
SECTION II.10. Voting of Shares by Certain Holders. Shares standing in
the name of another Corporation, domestic or foreign, may be voted by such
officer, agent, or proxy as the By-Laws of such Corporation may prescribe, or,
in the absence of such provision, as the Board of Directors of such Corporation
may determine.
(1) Shares standing in the name of a deceased person, a minor ward
or an incompetent person, may be voted by his administrator,
executor, court appointed guardian, or conservator, either in
person or by proxy without a transfer of such shares into the
name of such administrator, executor, court appointed
guardian, or conservator. Shares standing in the name of a
trustee may be voted by him, either in person or by proxy.
(2) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a
receiver may be voted by such receiver without the transfer
thereof into his name if authority so to do be contained in an
appropriate order of the court by which such receiver was
appointed.
(3) A Shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into
the name of the pledgee, and thereafter the pledgee shall be
entitled to vote the shares so transferred.
(4) Any number of Shareholders may create a voting trust for the
purpose of conferring upon a trustee ar trustees the right to
vote or otherwise represent their share, for a period not to
exceed ten years, by entering into a written voting trust
agreement specifying the terms and conditions of the voting
trust, and by transferring their shares to such trustee or
trustees for the purpose of the agreement. Any such trust
agreement shall not become effective until a counterpart of
the agreement is deposited with the Corporation at its
registered office. The counterpart of the voting trust
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agreement so deposited with the Corporation shall be subject
to the same right of examination by a Shareholder of the
Corporation, in person or by agent or attorney, as are the
books and records of the Corporation, and shall be subject to
examination by any holder of a beneficial interest in the
voting trust, either in person or by agent or attorney, at any
reasonable time for any proper purpose.
(5) Shareholders may provide for the voting of their shares
signing an agreement for that purpose. A voting agreement
under this subsection is not subject to the provisions of
subsection (d) above.
(6) Shares of its own stock belonging to the corporation shall not
be voted, directly or indirectly, at any meeting and shall not
be counted in determining the total number of outstanding
shares at any given time, but shares of its own stock held by
it in a fiduciary capacity may be voted and shall be counted
in determining the total number of outstanding shares at any
given time.
SECTION II.11. Proxies. Each Shareholder entitled to vote at a meeting
of Shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
SECTION II.12. Cumulative Voting. Cumulative Voting is denied.
SECTION II.13. Quorum. The holders of a majority of the outstanding
shares of the Corporation, present in person or represented by proxy, shall
constitute a quorum at any meeting of Shareholders; provided that if less than a
majority of the outstanding shares are represented at said meeting, a majority
of the shares so represented may adjourn the meeting at any time without further
notice. If a quorum is present, the
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affirmative vote of the majority of the shares represented at the meeting shall
be the act of the Shareholders, unless the vote of a greater number or voting by
classes to required by the Business Corporation Act, the Articles of
Incorporation or these By-Laws. At any adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the original meeting. Withdrawal of Shareholders from any meeting shall not
cause failure of a duly constituted quorum at that meeting.
SECTION II.14. Inspectors. At any meeting of Shareholders, the chairman
of the meeting may, or upon the request of any Shareholder shall, appoint one or
more persons as inspectors for such meeting.
(1) Such inspectors shall ascertain and report the number of
shares represented at the meeting, based upon their
determination of the validity and effect of proxies; count all
votes and report the results; and do such other acts as are
proper to conduct the election and voting with impartiality
and fairness to all the Shareholders.
(2) Each report of an inspector shall be in writing and signed by
him or by a majority of them if there be more than one
inspector acting at such meeting. If there is more than one
inspector, the report of a majority shall be the report of the
inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of
the voting shall be prima facie evidence thereof.
SECTION II.15. Voting By Ballot. Voting on any question or in any
election may be by voice unless the presiding officer shall order or any
Shareholder shall demand that voting be by ballot.
7
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ARTICLE III
DIRECTORS
SECTION III.1. General Powers. The business of the Corporation shall be
managed by, or under the direction of, its Board of Directors.
SECTION III.2. Number, Tenure and Qualifications. The number of
Directors of the Corporation shall be no less than one and no more than nine.
Each Director shall hold office until the next annual meeting of Shareholders
or, thereafter, until his successor shall have been elected. Directors need not
be residents of Illinois or Shareholders of the Corporation. The number of
Directors may be increased or decreased from time to time by the amendment of
this Section; but no decrease shall have the effect of shortening the term of
any incumbent Director. A Director may resign at any time by giving written
notice to the Board of Directors, its Chairman, or to the President or Secretary
of the Corporation. A resignation is effective when the notice is given unless
the notice specifies a future date. The pending vacancy may be filled before the
effective date, but the successor shall not take office until the effective
date.
SECTION III.3. Quorum. A majority of the number of Directors fixed by
these By-Laws shall constitute a quorum for transaction of business at any
meeting of the Board of Directors, provided that if less than a majority of such
number of Directors are present at said meeting, a majority of the Directors
present may adjourn the meeting at any time without further notice.
SECTION III.4. Manner of Acting. The act of the majority of the
Directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors, unless the act of a greater number is required by
statute, these By-Laws, or the Articles of Incorporation.
8
<PAGE> 9
SECTION III.5. Regular Meetings. A regular meeting of the Board of
Directors shall be hold without other notice than this by-law, immediately after
the annual meeting of Shareholders. The Board of Directors may provide, by
resolution, the time and place for holding of additional regular meetings
without other notice than such resolution.
SECTION III.6. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President or any one or more
Directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place an the place for holding any special
meeting of the Board of Directors called by them.
SECTION III.7. Notice. Notice of any special meeting shall be given at
least 5 days previous thereto by written notice to each Director at his business
address. If mailed, such notice shall be deemed to be delivered when deposited
with the United States Postal Service so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegram company. The attendance
of a Director at any meeting shall constitute a waiver of notice of such
meeting, except where a Director attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting.
SECTION III.8. Vacancies. Any vacancy occurring in the Board of
Directors and any directorship to be filled by reason of an increase in the
number of Directors, may
9
<PAGE> 10
be filled by election at an annual meeting or at a special meeting of
Shareholders called for that purpose.
SECTION III.9. Removal of Directors. One or more of the Directors may
be removed, with or without cause, at a meeting of Shareholders by the
affirmative vote of the holders of a majority of the outstanding shares then
entitled to vote at an election of Directors, except as follows.
(1) No Director shall be removed at a meeting of Shareholders
unless the notice of such meeting shall state that a purpose
of the meeting is to vote upon the removal of one or more
Directors named in the notice. Only the named Director or
Directors may be removed at such meeting.
(2) In the case of a Corporation having cumulative voting, if less
than the entire Board is to be removed, no Director may be
removed, with or without cause, if the votes cast against his
or her removal would be sufficient to elect him or her if then
cumulatively voted at an election of the entire Board Of
Directors.
(3) If a Director is elected by a class or series of shares,
he or she may be removed only by the Shareholders of that
class or series.
SECTION III.10. Executive Committee. The Board of Directors, by
resolution adopted by a majority of the number of Directors fixed by the By-Laws
or otherwise, may designate two or more Directors to constitute an executive
committee, which committee, to the extent provided in such resolution, shall
have and exercise all of the authority of the Board of Directors in the
management of the Corporation, except as otherwise required by law. Vacancies in
the membership of the committee shall be filled by the Board of Directors at a
regular or special meeting of the Board of Directors. The executive committee
shall keep regular minutes of its proceedings and report the name to the Board
when required.
10
<PAGE> 11
SECTION III.11. Action Without a Meeting. Unless specifically
prohibited by the Articles of Incorporation or these By-Laws, any action
required to be taken at a meeting of the Board of Directors, or any other action
which may be taken at a meeting of the Board of Directors, or of any committee
thereof may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all the Directors entitled to vote with
respect to the subject matter thereof, or by all the members of such committee,
as the case may be. Any such consent signed by all the Directors or all the
members of the committee shall have the same effect as a unanimous vote, and may
be stated as such in any document filed with the Secretary of State or with
anyone else.
SECTION III.12. Compensation. The Board of Directors, by the
affirmative vote of a majority of Directors then in office, and irrespective of
any personal interest of any of its members, shall have authority to establish
reasonable compensation of all Directors for services to the Corporation as
Directors, officers, or otherwise. By resolution of the Board of Directors the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board. No such payment previously mentioned in this section shall preclude
any Director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION III.13. Presumption of Assent. A Director of the Corporation
who is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be conclusively presumed to have assented to the
action taken unless his dissent shall be entered in the minutes of the meeting
or unless he shall file his written dissent to such action with the person
acting as the Secretary of the meeting before the
11
<PAGE> 12
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of such
action.
ARTICLE IV
OFFICERS
SECTION IV.1. Number. The officers of the Corporation shall be a
President and a Secretary and, to the extent desired, a Chairman of the Board, a
Treasurer and any number of vice presidents, assistant Treasurers, Assistant
Secretaries, Certification Officers or other officers as may be elected by the
Board of Directors. Any two or more offices may be held by the name person.
SECTION IV.2. Election and Term of Office. The officers of the
Corporation shall be elected or appointed annually by the Board of Directors at
the first meeting of the Board of Directors held after each annual meeting of
Shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as conveniently may be. Vacancies
may be filled or new offices created and filled at any meeting of the Board of
Directors. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided. Election
of an officer shall not of itself create any right to employment or
compensation.
SECTION IV.3. Removal. Any officer elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best
12
<PAGE> 13
interests of the Corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
SECTION IV.4. Chairman of the Board. The chairman of the Board of
Directors shall be the principal executive officer of the Corporation. The
Chairman of the Board may utilize the titles "chairman", "chairman of the
Board", "chief executive officer" and "CEO", interchangeably. The chairman shall
generally supervise and direct the business of the Corporation and shall see
that all orders and resolutions of the Board are carried into effect. The
Chairman of the Board Shall have the powers granted by these By-Laws to the
President and, in addition, he shall have general power to execute instruments
requiring a seal, under the seal of the Corporation, he shall preside at
meetings of the Shareholders and of the Board of Directors, and he shall submit
a report as to the operation of the Corporation to the Shareholders at or prior
to each annual meeting of the Shareholders. In the absence or disability of the
Chairman of the Board or in the event the Office of the Chairman of the Board is
or becomes vacant for any reason, the duties of the Chairman of the Board shall
be performed and his powers may be exercised by the President unless otherwise
determined by the Board. The Board may also designate one or more vice chairmen
of the Board with such duties and powers as the Board or the Chairman of the
Board shall determine.
SECTION IV.5. President. The President shall be principal operating
officer of the Corporation. Subject to the direction and control of the Board of
Directors, he shall be in charge of this business of the Corporation; he shall
see that the resolutions and directions of the Board of Directors are carried
into effect except in those instances in
13
<PAGE> 14
which that responsibility is specifically assigned to some other person by the
Board of Directors; and, in general, he shall discharge any duties incident to
the office of President and such other duties as may be prescribed by the Board
of Directors from time to time. In the absence of the Chairman of the Board, he
shall preside at all meetings of the Shareholders and of the Board of Directors.
Except in those instances in which the authority to execute is expressly
delegated to another officer or agent of the Corporation or a different mode of
execution is expressly prescribed by the Board of Directors or these By-Laws, he
may execute for the Corporation certificates for its shares, and any contracts,
deeds, mortgages, bonds, or other instruments which the Board of Directors has
authorized to be executed, and he may accomplish such execution either under or
without the seal of the Corporation and either individually or with the
Secretary, any Assistant Secretary, or any other officer thereunto authorized by
the Board of Directors, according to the requirements of the form of the
instrument. He may vote all securities which the Corporation is entitled to vote
except as and to the extent such authority shall be vested in a different
officer or agent of the Corporation by the Board of Directors.
SECTION IV.6. The Vice-Presidents. The Vice-President (or in the event
there be more than one Vice-President, each of the vice-presidents the President
in the discharge of his duties as the President may direct and shall perform
such other duties as from time to time may be assigned to him by the President
or by the Board of Directors. In the absence of the President or in the event of
his inability or refusal to act, the Vice-President (or in the event there be
more than one Vice-President, the vice-presidents) shall assist in the order
designated by the Board of Directors, or by the President if the
14
<PAGE> 15
Board of Directors has not made such a designation, or in the absence of any
designation, then in the order of seniority of tenure as Vice-President) shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. Except in
those instances in which the authority to execute is expressly delegated to
another officer or agent of the Corporation or a different mode of execution is
expressly prescribed by the Board of Directors or these By-Laws, the
Vice-President (or each of them if there are more than one) may execute for the
Corporation certificates for its shares and any contracts, deeds, mortgages,
bonds or other instruments which the Board of Directors has authorized to be
executed, and be may accomplish such execution either under or without the seal
of the Corporation and either individually or with the Secretary, any Assistant
Secretary, or any other officer thereunto authorized by the Board of Directors,
according to the requirements of the form of the instrument.
SECTION IV.7. The Treasurer. The Treasurer shall be the principal
accounting and financial officer of the Corporation. He shall:
(1) have charge of and be responsible for the maintenance of
adequate books of account for the Corporation;
(2) have charge and custody of all funds and securities of the
Corporation, and be responsible therefor and for the receipt
and disbursement thereof; and
(3) perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
15
<PAGE> 16
If required by the Board of Directors, the Treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the Board of Directors may determine.
SECTION IV.8. The Secretary. The Secretary shall:
(1) record the minutes of the Shareholders' and of the Board of
Directors' meetings in one or more books provided for that
purpose;
(2) see that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law;
(3) be custodian of the corporate records and of the seal of the
Corporation;
(4) keep a register of the post-office address of each Shareholder
which shall be furnished to the Secretary by such Shareholder;
(5) sign with any other officer authorized by these By-Laws or by
the Board of Directors, certificates for shares of the
Corporation, the issuance of which shall have been authorized
by the Board of Directors, and any contracts, deeds,
mortgages, bonds, or other instruments which the Board of
Directors has authorized to be executed, according to the
requirements of the form of the instrument, except when a
different mode of execution is expressly prescribed by the
Board of Directors or these By-Laws;
(6) otherwise certify the By-Laws, resolutions of the Shareholders
and Board of Directors and committees thereof, and other
documents of the Corporation as true and correct copies
thereof;
(7) have general charge of the stock transfer books of the
Corporation; and
(8) perform all duties incident to the office of Secretary and
such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
SECTION IV.9. Assistant Treasurers and Assistant Secretaries. The
assistant Treasurers and Assistant Secretaries shall perform such duties as
shall be assigned to them by the Treasurer or the Secretary, respectively, or by
the President, or the Board of Directors. The Assistant Secretaries may sign
with the President or a Vice-President, or
16
<PAGE> 17
any other officer thereunto authorized by the Board of Directors, certificates
for shares of the Corporation, the issue of which shall have been authorized by
the Board of Directors, and any contracts, deeds. mortgages, bonds, or other
instruments which the Board of Directors has authorized to be executed,
according to the requirements of the form of the instrument, except when a
different mode of execution is expressly prescribed by the Board of Directors or
these By-Laws. The assistant Treasurers shall, respectively, if required by the
Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine.
SECTION IV.10. Certification Officers. The Certification Officer shall
have the authority to certify the By-Laws, resolutions of the Shareholders and
Board of Directors and committees thereof, and other documents of the
Corporation as true and correct copies thereof, and shall perform such other
duties and have other powers as the Board of Directors may from time to time
prescribe to the extent that such Certification Officer accepts such duties and
powers in writing.
SECTION IV.11. Salaries. The salaries of the officers shall be fixed
from time to time by the Board of Directors and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a Director of
the Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION V.1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument
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<PAGE> 18
in the name of and on behalf of the Corporation, and such authority may be
general or confined to specific instances.
SECTION V.2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION V.3. Checks, Drafts, Etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION V.4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION VI.1. Certificates for Shares. Certificates representing shares
of the Corporation shall be signed by the Chairman of the Board, the President,
a Vice-President or by such officer as shall be designated by resolution of the
Board of Directors, and by the Secretary or an Assistant Secretary, and may be
sealed with the seal or a facsimile of the seal of the Corporation. If both of
the signatures of the officers be by facsimile, the certificate shall be
manually signed by or on behalf of a duly authorized
18
<PAGE> 19
transfer agent or clerk. Each certificate representing shares shall be
consecutively numbered or otherwise identified, and shall also state the name of
the person to whom issued, the number and class of shares (with designation of
series, if any), the date of issue, that the Corporation is organized under
Illinois law, and the par value, if any. If the Corporation is authorized and
does issue shares of more than one class or of series within a class, the
certificate shall also contain such information or statement an may be required
by law. The name and address of each Shareholder, the number and class of shares
held and the date on which the certificates for the shares were issued shall be
entered on the books of the Corporation. The person in whose name shares stand
on the books of the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation.
SECTION VI.2. Lost Certificates. If a certificate representing shares
has allegedly been lost or destroyed the Board of Directors may in its
discretion, except as may be required by law, direct that a new certificate be
issued upon such indemnification and other reasonable requirements as it may
impose.
SECTION VI.3. Transfers of Shares. Transfers of shares of the
Corporation shall be recorded on the books of the Corporation and, except in the
case of a lost or destroyed certificate, on surrender for cancellation of the
certificate for such shares. A certificate presented for transfer must be duly
endorsed, or accompanied by an assignment thereof, together with a guaranty of
signature or other appropriate assurance that the endorsement or assignment is
signed by the party purportedly signing same.
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ARTICLE VII
FISCAL YEAR
Resolution of Directors. The fiscal year of the Corporation shall be the
calendar year unless otherwise fixed by resolution of the Board of Directors
from time to time.
ARTICLE VIII
DIVIDENDS AND DISTRIBUTIONS
Declared by Directors. The Board of Directors may from time to time declare, and
the Corporation may pay, dividends and distributions on its outstanding shares
in the manner and upon the terms and conditions provided by law and its Articles
of Incorporation.
ARTICLE IX
SEAL
Subscription. The corporate seal, if any, shall have inscribed thereon the name
of the Corporation and the words "Corporate Seal, Illinois". The seal may be
used, when required, by causing it or a facsimile thereof to be impressed or
affixed or in any manner reproduced.
ARTICLE X
WAIVER OF NOTICE
SECTION X.1. Waiver in Lieu of Notice . Whenever any notice is required
to be given under the provisions of these By-Laws or under the provisions of the
Articles of Incorporation or under the provisions of the Business Corporation
Act of the State of Illinois, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Attendance at
any meeting shall constitute waiver of notice thereof
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<PAGE> 21
unless the person at the meeting objects to the holding of the meeting because
notice was not given.
ARTICLE XI
AMENDMENTS
SECTION XI.1. Determined by Directors. Unless reserved to the
Shareholders by the Articles of Incorporation, the By-Laws of the Corporation
may be made, altered, amended or repealed by the Shareholders or the Board of
Directors, but no by-law adopted by the Shareholders may be altered, amended or
repealed by the Board of Directors if the By-Laws so provide. The By-Laws may
contain any provisions for the regulation and management of the affairs of the
Corporation not inconsistent with law or the Articles of Incorporation.
ARTICLE XII
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
SECTION XII.1. Power to Hold Harmless. The Corporation shall have power
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of Corporation) by reason of the fact that he or she is or
was a Director, officer, employee or agent of the Corporation, or who is or was
serving at the request of the Corporation as a Director, officer, employee or
agent of another Corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
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<PAGE> 22
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment or settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interest of the Corporation, or with respect to any criminal action or
proceeding, that the person had reasonable cause to believe that his or her
conduct was unlawful.
SECTION XII.2. Power to Indemnify Litigant. The Corporation shall have
power to indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys? fees)
actually and reasonably incurred by such person in connection with he defense or
settlement of such action or suit if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to the best
interests of the Corporation, provided that no indemnification shall be made in
respect of any claim, issue or matter as to which such persons shall have been
adjudged to be liable for
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<PAGE> 23
negligence or misconduct in the performance of his or her duty to the
Corporation, unless, and only to the extent that the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as the
court shall deem proper.
SECTION XII.3. Reimbursement Authorized. To the extent that a Director,
officer, employee, or agent of a Corporation has been successful, on the merits
or otherwise, in defense of any action, suit or proceeding referred to in
Section 12.1 and 12.2 above, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys?
fees) actually and reasonably incurred by him in connection therewith.
SECTION XII.4. Determination if Reimbursement is Proper. Any
indemnification under Sections 12.1 and 12.2 above (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case, upon a
determination that indemnification of the Director, officer, employee or agent
is proper in the circumstances because he or she has met the applicable standard
of conduct set forth in Sections 12.1 or 12.2 above. Such determination shall be
made:
(1) by the Board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to such action,
suit or proceeding, or
(2) if such a quorum is not obtainable, or, even if obtainable, a
quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or
(3) by the Shareholders.
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SECTION XII.5. Advance of Expenses. Expenses incurred in defending a
civil or criminal action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding, as
authorized by the Board of Directors in the specific case, upon receipt of an
undertaking by or on behalf of the Director, officer, employee or agent to repay
such amount, unless it shall ultimately he determined that he or she is entitled
to be indemnified by the Corporation as authorized in this Article.
SECTION XII.6. Non-Exclusivity. The indemnification provided by this
article shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any contract, agreement, vote of Shareholders
or disinterested Directors, or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION XII.7. Right to Acquire Insurance. The Corporation shall have
power to purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation, as a Director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article.
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SECTION XII.8. Notice to Shareholders. If a Corporation has paid
indemnity or has advanced expenses to a Director, officer, employee or agent,
the Corporation shall report the indemnification or advance in writing to the
Shareholders with or before the notice of the next Shareholders meeting.
SECTION XII.9. "Corporation"; Definition. For purposes of this Article,
references to "the Corporation" shall include, in addition to the surviving
Corporation, any merging Corporation (including any Corporation having merged
with a merging Corporation) absorbed in a merger which, if its separate
existence had continued, would have had the power and authority to indemnify its
Directors, officers, and employees or agents, so that any person who was a
Director, officer, employee or agent of such merging Corporation, or was serving
at this request of such merging Corporation as a Director, officer, employee or
agent of another Corporation, partnership, joint venture, trust or other
enterprise, shell stand in the same position under the provisions of this
Article with respect to the surviving Corporation as such person would have with
respect to such merging Corporation if its separate existence had continued.
SECTION XII.10. Miscellaneous Definitions. For purposes of this
Article, references to "other enterprises" shall include employees benefit
plans; references to "fines" shall include any excise taxes assessed on a person
with respect to an employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as Director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by such Director, officer, employee, or agent with respect to an
employee benefit plan, its participants, or beneficiaries. A person who acted in
25
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good faith and in a manner he or she reasonably believed to be in the best
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interest of
the Corporation" as referred to in this Article.
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EXHIBIT 4.1
-------------------------------------------------
LLS CORP.
11 5/8% Senior Subordinated Notes due 2009
------------
INDENTURE
Dated as of July 30, 1999
------------
THE BANK OF NEW YORK,
as Trustee
-------------------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1) .......................................................... 7.10
(a)(2) .......................................................... 7.10
(a)(3) .......................................................... N.A.
(a)(4) .......................................................... N.A.
(a)(5) .......................................................... N.A.
(b) .......................................................... 7.8; 7.10
(c) .......................................................... N.A.
311(a) .......................................................... 7.11
(b) .......................................................... 7.11
(c) .......................................................... N.A.
312(a) .......................................................... 2.5
(b) .......................................................... 11.3
(c) .......................................................... 11.3
313(a) .......................................................... 7.6
(b)(1) .......................................................... N.A.
(b)(2) .......................................................... 7.6
(c) .......................................................... 7.6
(d) .......................................................... 7.6
314(a) .......................................................... 4.2, 4.10; 11.2
(b) .......................................................... N.A.
(c)(1) .......................................................... 11.4
(c)(2) .......................................................... 11.4
(c)(3) .......................................................... N.A.
(d) .......................................................... N.A.
(e) .......................................................... 11.5
(f) .......................................................... N.A.
315(a) .......................................................... 7.1
(b) .......................................................... 7.5; 11.2
(c) .......................................................... 7.1
(d) .......................................................... 7.1
(e) .......................................................... 6.11
316(a)(last sentence) .......................................................... 11.6
(a)(1)(A) .......................................................... 6.5
(a)(1)(B) .......................................................... 6.4
(a)(2) .......................................................... N.A.
(b) .......................................................... 6.7
(c) .......................................................... N.A.
317(a)(1) .......................................................... 6.8
(a)(2) .......................................................... 6.9
(b) .......................................................... 2.4
318(a) .......................................................... 11.1
(b) .......................................................... N.A.
(c) .......................................................... 11.1
</TABLE>
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N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
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TABLE OF CONTENTS
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ARTICLE I Definitions and Incorporation by Reference...............................................................1
SECTION 1.1. Definitions............................................................................1
SECTION 1.2. Other Definitions.....................................................................19
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.....................................20
SECTION 1.4. Rules of Construction.................................................................20
ARTICLE II The Securities..........................................................................................21
SECTION 2.1. Form and Dating.......................................................................21
SECTION 2.2. Execution and Authentication..........................................................22
SECTION 2.3. Registrar and Paying Agent............................................................23
SECTION 2.4. Paying Agent To Hold Money in Trust...................................................23
SECTION 2.5. Securityholder Lists..................................................................24
SECTION 2.6. Transfer and Exchange.................................................................24
SECTION 2.7. Replacement Securities................................................................31
SECTION 2.8. Outstanding Securities................................................................31
SECTION 2.9. Temporary Securities..................................................................32
SECTION 2.10. Cancellation..........................................................................32
SECTION 2.11. Defaulted Interest....................................................................32
SECTION 2.12. CUSIP Numbers.........................................................................33
ARTICLE III Redemption..............................................................................................33
SECTION 3.1. Notices to Trustee....................................................................33
SECTION 3.2. Selection of Securities To Be Redeemed................................................33
SECTION 3.3. Notice of Redemption..................................................................34
SECTION 3.4. Effect of Notice of Redemption........................................................34
SECTION 3.5. Deposit of Redemption Price...........................................................35
SECTION 3.6. Securities Redeemed in Part...........................................................35
ARTICLE IV Covenants...............................................................................................35
SECTION 4.1. Payment of Securities.................................................................35
SECTION 4.2. SEC Reports...........................................................................35
SECTION 4.3. Limitation on Indebtedness............................................................36
SECTION 4.4. Limitation on Restricted Payments.....................................................37
SECTION 4.5. Limitation on Restrictions on Distributions
from Restricted Subsidiaries..........................................................40
SECTION 4.6. Limitation on Sales of Assets and Subsidiary Stock....................................41
SECTION 4.7. Limitation on Affiliate Transactions..................................................44
SECTION 4.8. Change of Control.....................................................................45
SECTION 4.9. Limitation on Capital Stock of Restricted Subsidiaries................................46
SECTION 4.10. Compliance Certificate................................................................46
SECTION 4.11. Further Instruments and Acts..........................................................46
SECTION 4.12. Rule 144A Information Requirement.....................................................47
SECTION 4.13. Maintenance of Office or Agency.......................................................47
SECTION 4.14. Taxes.................................................................................47
SECTION 4.15. Stay, Extension and Usury Laws........................................................47
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SECTION 4.16. Existence.............................................................................47
SECTION 4.17. Maintenance of Properties.............................................................48
SECTION 4.18. Maintenance of Insurance..............................................................48
ARTICLE V Successor Company.......................................................................................48
SECTION 5.1. When Company May Merge or Transfer Assets.............................................48
ARTICLE VI Defaults and Remedies...................................................................................49
SECTION 6.1. Events of Default.....................................................................49
SECTION 6.2. Acceleration..........................................................................51
SECTION 6.3. Other Remedies........................................................................51
SECTION 6.4. Waiver of Past Defaults...............................................................52
SECTION 6.5. Control by Majority...................................................................52
SECTION 6.6. Limitation on Suits...................................................................52
SECTION 6.7. Rights of Holders to Receive Payment..................................................53
SECTION 6.8. Collection Suit by Trustee............................................................53
SECTION 6.9. Trustee May File Proofs of Claim......................................................53
SECTION 6.10. Priorities............................................................................53
SECTION 6.11. Undertaking for Costs.................................................................54
ARTICLE VII Trustee.................................................................................................54
SECTION 7.1. Duties of Trustee.....................................................................54
SECTION 7.2. Rights of Trustee.....................................................................55
SECTION 7.3. Individual Rights of Trustee..........................................................56
SECTION 7.4. Trustee's Disclaimer..................................................................56
SECTION 7.5. Notice of Defaults....................................................................56
SECTION 7.6. Reports by Trustee to Holders.........................................................57
SECTION 7.7. Compensation and Indemnity............................................................57
SECTION 7.8. Replacement of Trustee................................................................58
SECTION 7.9. Successor Trustee by Merger...........................................................59
SECTION 7.10. Eligibility; Disqualification.........................................................59
SECTION 7.11. Preferential Collection of Claims Against Company.....................................59
ARTICLE VIII Discharge of Indenture; Defeasance......................................................................59
SECTION 8.1. Discharge of Liability on Securities; Defeasance......................................59
SECTION 8.2. Conditions to Defeasance..............................................................60
SECTION 8.3. Application of Trust Money............................................................61
SECTION 8.4. Repayment to Company..................................................................62
SECTION 8.5. Indemnity for U.S. Government Obligations.............................................62
SECTION 8.6. Reinstatement.........................................................................62
ARTICLE IX Amendments..............................................................................................62
SECTION 9.1. Without Consent of Holders............................................................62
SECTION 9.2. With Consent of Holders...............................................................63
SECTION 9.3. Compliance with Trust Indenture Act...................................................64
SECTION 9.4. Revocation and Effect of Consents and Waivers.........................................64
SECTION 9.5. Notation on or Exchange of Securities.................................................65
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SECTION 9.6. Trustee To Sign Amendments............................................................65
ARTICLE X Subordination...........................................................................................65
SECTION 10.1. Agreement To Subordinate..............................................................65
SECTION 10.2. Liquidation, Dissolution, Bankruptcy..................................................65
SECTION 10.3. Default on Senior Indebtedness........................................................66
SECTION 10.4. Acceleration of Payment of Securities.................................................66
SECTION 10.5. Subrogation...........................................................................67
SECTION 10.6. Relative Rights.......................................................................67
SECTION 10.7. Subordination May Not Be Impaired by Company..........................................67
SECTION 10.8. Rights of Trustee and Paying Agent....................................................67
SECTION 10.9. Distribution or Notice to Representative..............................................67
SECTION 10.10. Article X Not To Prevent Events of Default
or Limit Right o Accelerate...........................................................68
SECTION 10.11. Trust Moneys Not Subordinated.........................................................68
SECTION 10.12. Trustee Entitled To Rely..............................................................68
SECTION 10.13. Trustee To Effectuate Subordination...................................................68
SECTION 10.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness..........................................................................68
SECTION 10.15. Reliance by Holders of Senior Indebtedness
on Subordination Provisions...........................................................69
ARTICLE XI Miscellaneous...........................................................................................69
SECTION 11.1. Trust Indenture Act Controls..........................................................69
SECTION 11.2. Notices...............................................................................69
SECTION 11.3. Communication by Holders with other Holders...........................................70
SECTION 11.4. Certificate and Opinion as to Conditions Precedent....................................70
SECTION 11.5. Statements Required in Certificate or Opinion.........................................70
SECTION 11.6. When Securities Disregarded...........................................................71
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar..........................................71
SECTION 11.8. Legal Holidays........................................................................71
SECTION 11.9. Governing Law.........................................................................71
SECTION 11.10. No Recourse Against Others............................................................71
SECTION 11.11. Successors............................................................................72
SECTION 11.12. Multiple Originals....................................................................72
SECTION 11.13. Variable Provisions...................................................................72
SECTION 11.14. Qualification of Indenture............................................................72
SECTION 11.15. Table of Contents; Headings...........................................................72
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EXHIBIT A [FORM OF FACE OF INITIAL NOTE].......................................................................A-1
EXHIBIT B [FORM OF FACE OF EXCHANGE NOTE]......................................................................B-1
EXHIBIT C Transferee Letter of Representation..................................................................C-1
</TABLE>
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<PAGE> 7
INDENTURE dated as of July 30, 1999, by and between LLS CORP.,
an Illinois corporation (the "Company"), and The Bank of New York, a New York
banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
11 5/8% Senior Subordinated Notes due 2009 (the "Initial Notes") and, if and
when issued in exchange for Initial Notes as provided in the Registration Rights
Agreement (as hereinafter defined), the Company's 11 5/8% Senior Subordinated
Notes due 2009 (the "Exchange Notes" and, together with the Initial Notes, the
"Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Additional Assets" means: (i) any property or assets (other
than Indebtedness and Capital Stock) in a Related Business; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or a Restricted Subsidiary of
the Company; (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary of the Company; or (iv) Permitted
Investments of the type and in the amounts described in clause (viii) of the
definition thereof; provided, however, that, in the case of clauses (ii) and
(iii) of this definition, such Restricted Subsidiary is primarily engaged in a
Related Business.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Premium" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1)
105.813% of the principal amount of such Security plus (2) all required interest
payments due on such Security through August 1, 2004, computed using a discount
rate equal to the Treasury Rate plus 100 basis points, over (B) the principal
amount of such Security.
"Asset Disposition" means any sale, lease, transfer, issuance
or other disposition (or series of related sales, leases, transfers, issuances
or dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a
<PAGE> 8
merger, consolidation or similar transaction) other than (i) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly-Owned Subsidiary, (ii) a disposition of inventory in the
ordinary course of business, (iii) a disposition of obsolete or worn out
equipment or equipment that is no longer useful in the conduct of the business
of the Company and its Restricted Subsidiaries and that is disposed of in each
case in the ordinary course of business, (iv) dispositions of property for net
proceeds which, when taken collectively with the net proceeds of any other such
dispositions under this clause (iv) that were consummated since the beginning of
the calendar year in which such disposition is consummated, do not exceed 1.50%
of the consolidated book value of the Company's assets as of the most recent
date prior to such disposition for which a consolidated balance sheet of the
Company has been regularly prepared, (v) transactions permitted under Section
5.1, (vi) transactions permitted under Section 4.4, and (vii) any transaction
that constitutes a Change of Control.
"Asset Swap" means the execution of a definitive agreement,
subject only to customary closing conditions that the Company in good faith
believes will be satisfied, for a substantially concurrent purchase and sale, or
exchange, of Productive Assets between the Company or any of its Restricted
Subsidiaries and another Person or group of affiliated Persons; provided,
however, that any amendment to or waiver of any closing condition that
individually or in the aggregate is material to the Asset Swap shall be deemed
to be a new Asset Swap.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption multiplied by the amount of such payment by (ii) the sum of all such
payments.
"Bank Indebtedness" means any and all amounts, whether
outstanding on the Issue Date or thereafter incurred, payable or guaranteed by
the Company under or in respect of the Credit Agreement or any Interest Rate
Agreement or Currency Agreement with a holder of Bank Indebtedness and any
related notes, collateral documents, letters of credit and guarantees, including
principal, premium (if any), interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not a claim for post filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees and
all other amounts payable thereunder or in respect thereof.
2
<PAGE> 9
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board
of Directors.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP, and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date such lease may be terminated without penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries to
any Person or group of related Persons for purposes of Section 13(d) of
the Exchange Act (a "Group") (whether or not otherwise in compliance
with the provisions of this Indenture), other than to Permitted
Holders; or
(ii) a majority of the Board of Directors shall consist of
Persons who are not Continuing Directors; or
(iii) the acquisition by any Person or Group (other than the
Permitted Holders or any direct or indirect Subsidiary of any Permitted
Holder) of the power, directly or indirectly, to vote or direct the
voting of securities having more than 50% of the ordinary voting power
for the election of directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means LLS Corp., an Illinois corporation formerly
known as Courtesy Corporation, until a successor replaces it and, thereafter,
means the successor.
"Consolidated Cash Flow" for any period means the Consolidated
Net Income for such period, plus without duplication, the following to the
extent deducted in calculating such Consolidated Net Income: (i) income tax
expense, (ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense, (v) exchange or translation losses on foreign currencies,
and (vi) all other non-cash items reducing Consolidated Net Income (excluding
any
3
<PAGE> 10
non-cash item to the extent it represents an accrual of or reserve for cash
disbursements for any subsequent period prior to the Stated Maturity of the
Securities) and less, to the extent added in calculating Consolidated Net
Income, (x) exchange or translation gains on foreign currencies, and (y)
non-cash items (excluding such non-cash items to the extent they represent an
accrual for cash receipts reasonably expected to be received prior to the Stated
Maturity of the Securities), in each case for such period. Notwithstanding the
foregoing, the income tax expense, depreciation expense and amortization expense
of a Subsidiary of the Company shall be included in Consolidated Cash Flow only
to the extent (and in the same proportion) that the net income of such
Subsidiary was included in calculating Consolidated Net Income.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination and as to which financial statements are available to
(ii) Consolidated Interest Expense for such four fiscal quarters; provided,
however, that (1) if the Company or any of its Restricted Subsidiaries has
Incurred any Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (A) such Indebtedness
as if such Indebtedness had been Incurred on the first day of such period
(provided that if such Indebtedness is Incurred under a revolving credit
facility (or similar arrangement or under any predecessor revolving credit or
similar arrangement) only that portion of such Indebtedness that constitutes
the one year projected minimum balance of such Indebtedness (as determined in
good faith by senior management of the Company and assuming a constant level of
sales) shall be deemed outstanding for purposes of this calculation) and (B) the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period any Indebtedness of the Company or any of its Restricted Subsidiaries has
been repaid, repurchased, defeased or otherwise discharged (other than
Indebtedness under a revolving credit or similar arrangement unless such
revolving credit Indebtedness has been permanently repaid and has not been
replaced), Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Indebtedness had been repaid,
repurchased, defeased or otherwise discharged on the first day of such period,
(3) if since the beginning of such period the Company or any of its Restricted
Subsidiaries shall have made any Asset Disposition or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an Asset
Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for
such period shall be (i) reduced by an amount equal to the Consolidated
Interest Expense attributable to any Indebtedness of the Company or any of its
Restricted Subsidiaries repaid, repurchased, defeased or otherwise discharged
with respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such
4
<PAGE> 11
period (or, if the Capital Stock of any Restricted Subsidiary of the Company is
sold, the Consolidated Interest Expense for such period directly attributable to
the Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale) and (ii) increased by interest income attributable to the
assets which are the subject of such Asset Disposition for such period, (4) if
since the beginning of such period the Company or any of its Restricted
Subsidiaries (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary of the Company (or any Person which becomes a Restricted
Subsidiary of the Company) or an acquisition of assets, including any Investment
in a Restricted Subsidiary of the Company or any acquisition of assets occurring
in connection with a transaction causing a calculation to be made hereunder,
which constitutes all or substantially all of an operating unit of a business,
or if the transaction giving rise to such calculation is a transaction subject
to Section 5.1, Consolidated Cash Flow and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness and the use of the proceeds therefrom) as if
such Investment or acquisition occurred on the first day of such period and (5)
if since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary of the Company or was merged with or into the Company or
any Restricted Subsidiary of the Company since the beginning of such period)
shall have made any Asset Disposition, Investment or acquisition of assets that
would have required an adjustment pursuant to clause (3) or (4) above if made by
the Company or a Restricted Subsidiary of the Company during such period,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be
determined in good faith by a responsible financial or accounting Officer of the
Company. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Indebtedness if such Interest Rate Agreement has a
remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Restricted Subsidiaries, plus, to
the extent not included in such interest expense, (i) interest expense
attributable to capital leases, (ii) amortization of debt discount, (iii)
capitalized interest, (iv) non-cash interest expense, (v) commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (vi) interest actually paid by the Company or any such
Restricted Subsidiary under any Guarantee of Indebtedness or other obligation of
any other Person, (vii) net payments (whether positive or negative) pursuant to
Interest Rate Agreements, (viii) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebted ness Incurred by such plan or trust and
(ix) cash and Disqualified Stock dividends in
5
<PAGE> 12
respect of all Preferred Stock of Restricted Subsidiaries and Disqualified Stock
of the Company held by Persons other than the Company or a Wholly-Owned
Subsidiary and less (a) to the extent included in such interest expense, the
amortization of capitalized debt issuance costs and debt discount solely to the
extent relating to the issuance and sale of Indebtedness together with any
equity security as part of an investment unit and (b) interest income.
Notwithstanding the foregoing, the Consolidated Interest Expense with respect to
any Restricted Subsidiary of the Company, that was not a Wholly-Owned
Subsidiary, shall be included only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net
income (loss) of the Company and its consolidated Restricted Subsidiaries;
provided, however, that there shall not be included in such Consolidated Net
Income: (i) any net income (loss) of any Person acquired by the Company or any
of its Restricted Subsidiaries in a pooling of interests transaction for any
period prior to the date of such acquisition; (ii) any net income of any
Restricted Subsidiary of the Company if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company (other than restrictions in effect on the Issue Date with respect to a
Restricted Subsidiary of the Company and other than restrictions that are
created or exist in compliance with Section 4.5 (excluding clause (g) thereof
from the operation of this parenthetical)); (iii) any gain or loss realized
upon the sale or other disposition of any assets of the Company or its
consolidated Restricted Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which are not sold or otherwise disposed of in the ordinary course
of business and any gain or loss realized upon the sale or other disposition of
any Capital Stock of any Person; (iv) any extraordinary gain or loss; (v) the
cumulative effect of a change in accounting principles; (vi) one-time
transaction expenses incurred in connection with the Transactions that are not
capitalized or amortized pursuant to GAAP; (vii) charges relating to the
writeoff of acquired in-process research and development expenses and other
intangibles in connection with the application of the purchase method of
accounting to the net assets of a Person acquired by the Company and its
Restricted Subsidiaries and charges relating to writeoff of intangible assets;
(viii) charges relating to start-up or organizational costs (for a period not to
exceed 12 months after the purchase or opening of any facility) of any
facilities purchased or otherwise opened by the Company or any of its
consolidated Restricted Subsidiaries, after the Issue Date, including any
operating inefficiencies associated therewith, not to exceed $4.0 million in the
aggregate per facility; (ix) the net income of any Person, other than a
Restricted Subsidiary, except to the extent of the lesser of (A) dividends or
distributions paid to the Company or any of its Restricted Subsidiaries by such
Person and (B) the net income of such Person (but in no event less than zero),
and the net loss of such Person (other than an Unrestricted Subsidiary) shall be
included only to the extent of the aggregate Investment of the Company or any of
its Restricted Subsidiaries in such Person and (x) any non-cash expenses
attributable to grants or exercises of employee stock options. Notwithstanding
the foregoing, for the purpose of Section 4.4 only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances or other
transfers of assets from Unrestricted Subsidiaries to the Company or a
6
<PAGE> 13
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted under Section 4.4 pursuant
to clause (a)(3)(E) thereof.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of the Company ending prior to the
taking of any action for the purpose of which the determination is being made
and for which financial statements are available (but in no event ending more
than 180 days prior to the taking of such action), as (i) the par or stated
value of all outstanding Capital Stock of the Company plus (ii) paid-in capital
or capital surplus relating to such Capital Stock plus (iii) any retained
earnings or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Continuing Director" means, as of the date of determination,
any Person who (i) was a member of the Board of Directors on the Issue Date,
(ii) was nominated for election or elected to the Board of Directors of the
Company with the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election, or (iii) is a representative of a Permitted Holder.
"Courtesy Sales" means Courtesy Sales Corp., an Illinois
corporation.
"Creative Packaging" means Creative Packaging Corp., an
Illinois corporation.
"Credit Agreement" means (i) the Credit Agreement, dated as of
July 30, 1999, among the Company, Bank of America, National Association, as
Administrative Agent, Credit Suisse First Boston, as Syndication Agent, Bankers
Trust Company, as Documentation Agent, and the lenders from time to time parties
thereto as the same may be amended, supplemented or otherwise modified from time
to time, including amendments, supplements or modifications relating to the
addition or elimination of Subsidiaries of the Company as borrowers or other
credit parties thereunder, and (ii) any renewal, extension, refunding,
restructuring, replacement or refinancing thereof (whether with the original
Administrative Agent, and lenders or another administrative agent or agents or
one or more other lenders and whether provided under the original Credit
Agreement or one or more other credit or other agreements or indentures).
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
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<PAGE> 14
"Depositary" means The Depository Trust Company, its nominees
and their respective successors and assigns, or such other depository
institution hereinafter appointed by the Company.
"Designated Senior Indebtedness" means (i) the Bank
Indebtedness and (ii) any other Senior Indebtedness which, at the date of
determination, has an aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof are committed to lend up to,
at least $20.0 million and is specifically designated by the Company in the
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock of such Person which by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable) or upon the
happening of any event (i) matures (other than as a result of a Change of
Control) or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified
Stock (excluding capital stock which is convertible or exchangeable solely at
the option of the Company or a Restricted Subsidiary) or (iii) is redeemable at
the option of the holder thereof (other than as a result of a Change of
Control), in whole or in part, in each case on or prior to the Stated Maturity
of the Securities, provided, that only the portion of Capital Stock which so
matures or is mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such Stated Maturity
shall be deemed to be Disqualified Stock.
"Equity Offering" means an offering for cash by the Company of
its common stock, or options, warrants or rights with respect to its common
stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" shall have the meaning set forth in the
Registration Rights Agreement.
"Financial Advisory Agreement" means the Financial Advisory
Agreement among the LLS Entities and Hicks Muse & Co. Partners, L.P., as in
effect on the Issue Date.
"Foreign Subsidiaries" means a Restricted Subsidiary not
organized or existing under the laws of the United States, any state thereof,
the District of Columbia, or any territory thereof.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or the Commission or
in such other statements by such other entity as approved by a significant
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<PAGE> 15
segment of the accounting profession. All ratios and computations based on GAAP
contained in this Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hicks Muse" means Hicks, Muse, Tate & Furst, Incorporated, a
Texas corporation.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication), (i) the principal of and premium (if
any) in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto) (other
than obligations with respect to letters of credit securing obligations (other
than obligations described in clauses (i), (ii) and (v)) entered into in the
ordinary course of business of such Person to the extent that such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third business day following receipt by such Person
of a demand for reimbursement following payment on the letter of credit), (iv)
all obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course of business), which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person, (vi) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the
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<PAGE> 16
extent Guaranteed by such Person, (viii) the amount of all obligations of such
Person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Restricted Subsidiary of the Company,
any Preferred Stock of such Restricted Subsidiary to the extent such obligation
arises on or before the Stated Maturity of the Securities (but excluding, in
each case, any accrued dividends) and (ix) to the extent not otherwise included
in this definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be the
outstanding principal amount of all unconditional obligations as described
above, as such amount would be reflected on a balance sheet prepared in
accordance with GAAP, and the maximum liability of such Person, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations described above at such date.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business) or other extension of credit (including by way of Guarantee or similar
arrangement, but excluding any debt or extension of credit represented by a bank
deposit other than a time deposit) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person.
For purposes of Section 4.4, (i) "Investment" shall include the portion
(proportionate to the Company's equity interest in a Restricted Subsidiary to be
designated as an Unrestricted Subsidiary) of the fair market value of the net
assets of such Restricted Subsidiary of the Company at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Unrestricted Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is so re-designated a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors and
evidenced by a resolution of such Board of Directors certified in an Officers'
Certificate to the Trustee.
"Issue Date" means the date on which the Initial Notes are
originally issued.
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"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"LLS Entities" means the Company, Creative Packaging, Courtesy
Sales and New Courtesy.
"Mills & Partners" means Mills & Partners, Inc., a Delaware
corporation.
"Monitoring and Oversight Agreement" means the Monitoring and
Oversight Agreement among the LLS Entities and Hicks Muse & Co. Partners, L.P.,
as in effect on the Issue Date.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets subject to such Asset
Disposition) therefrom, in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all Federal,
state, foreign and local taxes required to be paid or accrued as a liability
under GAAP in connection with such Asset Disposition, (ii) all payments made on
any Indebtedness which is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon such assets, or which
must by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments required to be made to
any Person owning a beneficial interest in assets subject to sale or minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition, (iv) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary of the Company after such Asset Disposition
and (v) any portion of the purchase price from an Asset Disposition placed in
escrow (whether as a reserve for adjustment of the purchase price, for
satisfaction of indemnities in respect of such Asset Disposition or otherwise in
connection with such Asset Disposition); provided, however, that upon the
termination of such escrow, Net Available Cash shall be increased by any portion
of funds therein released to the Company or any Restricted Subsidiary.
"Net Cash Proceeds" means, with respect to any issuance or
sale of Capital Stock, the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.
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<PAGE> 18
"New Courtesy" means Courtesy Corporation, a newly formed
Illinois corporation and wholly owned subsidiary of the Company.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any Restricted Subsidiary (a) provides any guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor or otherwise) and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Offering Circular" means the Offering Circular, dated July
23, 1999, relating to the Initial Notes; provided that after the issuance of
Exchange Notes, all references herein to "Offering Circular" shall be deemed
references to the prospectus relating to the Exchange Notes.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company, as applicable.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holders" means [HICKS MUSE], Mills & Partners, or
any of their Affiliates, officers or directors.
"Permitted Indebtedness" means (i) Indebtedness of the Company
owing to and held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted
Subsidiary owing to and held by the Company or any Wholly-Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any Capital Stock
or any other event which results in any such Wholly-Owned Subsidiary ceasing to
be a Wholly-Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Company or a Wholly-Owned Subsidiary) shall be deemed, in each
case, to constitute the Incurrence of such Indebtedness by the issuer thereof;
(ii) Indebtedness represented by (x) the Securities, (y) any Indebtedness (other
than the Indebtedness described in clauses (i), (ii) and (iv) of Section 4.3(b)
and other than Indebtedness Incurred pursuant to clause (i) above or clauses
(iv), (v), (vi) or (vii) below) outstanding on the Issue Date and (z) any
Refinancing Indebtedness Incurred in respect of any Indebtedness described in
this clause (ii) or Incurred pursuant to Section 4.3(a); (iii) (A) Indebtedness
of a Restricted Subsidiary Incurred and outstanding on the date on which such
Restricted Subsidiary was acquired by the Company or its Restricted Subsidiaries
(other than Indebtedness Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
or series of
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<PAGE> 19
related transactions pursuant to which such Restricted Subsidiary became a
Subsidiary or was otherwise acquired by the Company); provided, however, that at
the time such Restricted Subsidiary is acquired by the Company, the Company
would have been able to Incur $1.00 of additional Indebtedness pursuant to
Section 4.3(a) after giving effect to the Incurrence of such Indebtedness
pursuant to this clause (iii) and (B) Refinancing Indebtedness Incurred by the
Company or a Restricted Subsidiary in respect of Indebtedness Incurred by such
Restricted Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A) in
respect of performance bonds, bankers' acceptances and surety or appeal bonds
provided by the Company or any of its Restricted Subsidiaries to their customers
in the ordinary course of their business, (B) in respect of performance bonds or
similar obligations of the Company or any of its Restricted Subsidiaries for or
in connection with pledges, deposits or payments made or given in the ordinary
course of business in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or environmental
obligations, (C) arising from Guarantees to suppliers, lessors, licensees,
contractors, franchisees or customers of obligations (other than Indebtedness)
Incurred in the ordinary course of business and (D) under Currency Agreements
and Interest Rate Agreements; provided, however, that in the case of Currency
Agreements and Interest Rate Agreements, such Currency Agreements and Interest
Rate Agreements are entered into for bona fide hedging purposes of the Company
or its Restricted Subsidiaries (as determined in good faith by the Board of
Directors or senior management of the Company) and correspond in terms of
notional amount, duration, currencies and interest rates, as applicable, to
Indebtedness of the Company or its Restricted Subsidiaries Incurred without
violation of this Indenture or to business transactions of the Company or its
Restricted Subsidiaries on customary terms entered into in the ordinary course
of business; (v) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries pursuant to
such agreements, in each case Incurred in connection with the disposition of any
business, assets or Restricted Subsidiary of the Company (other than Guarantees
of Indebtedness or other obligations Incurred by any Person acquiring all or any
portion of such business assets or Restricted Subsidiary of the Company for the
purpose of financing such acquisition) in a principal amount not to exceed the
gross proceeds actually received by the Company or any of its Restricted
Subsidiaries in connection with such disposition; provided, however, that the
principal amount of any Indebtedness Incurred pursuant to this clause (v), when
taken together with all Indebtedness Incurred pursuant to this clause (v) and
then outstanding, shall not exceed $15.0 million; (vi) Indebtedness consisting
of (A) Guarantees by the Company or a Restricted Subsidiary of Indebtedness
Incurred by a Wholly-Owned Subsidiary without violation of this Indenture and
(B) Guarantees by a Restricted Subsidiary of Senior Indebtedness Incurred by the
Company without violation of this Indenture (so long as such Restricted
Subsidiary could have Incurred such Indebtedness directly without violation of
this Indenture); (vii) Indebtedness arising from agreements with governmental
agencies of any foreign country, or political subdivision or agency thereof,
relating to the construction of plants and the purchase and installation
(including related training costs) of equipment to be used in a Related
Business; provided that such Indebtedness (A) has a maturity in excess of ten
years and 91 days and (B) in the aggregate does not exceed $15.0 million since
the Issue Date; (viii) Indebtedness of
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<PAGE> 20
all Foreign Subsidiaries for working capital purposes and overdraft facilities
in an aggregate amount not to exceed $15.0 million at any one time outstanding;
and (ix) Indebted ness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business, provided that such Indebtedness is
extinguished promptly in accordance with customary practices.
"Permitted Investment" means an Investment by the Company or
any of its Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of the
Company; provided, however, that the primary business of such Wholly-Owned
Subsidiary is a Related Business; (ii) another Person if as a result of such
Investment such other Person becomes a Wholly-Owned Subsidiary of the Company or
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Wholly-Owned Subsidiary of the
Company; provided, however, that in each case such Person's primary business is
a Related Business; (iii) Temporary Cash Investments; (iv) receivables owing to
the Company or any of its Restricted Subsidiaries, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (v) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business; (vi) loans or advances to employees for purposes of purchasing the
Company's common stock in an aggregate amount outstanding at any one time not to
exceed $7.5 million since the Issue Date and other loans and advances to
employees made in the ordinary course of business consistent with past practices
of the Company or such Restricted Subsidiary; (vii) stock, obligations or
securities received in settlement of debts created in the ordinary course of
business and owing to the Company or any of its Restricted Subsidiaries or in
satisfaction of judgments or claims; (viii) a Person engaged in a Related
Business or a loan or advance to the Company the proceeds of which are used
solely to make an Investment in a Person engaged in a Related Business or a
Guarantee by the Company of Indebtedness of any Person in which such Investment
has been made; provided, however, that no Permitted Investments may be made
pursuant to this clause (viii) to the extent the amount thereof would, when
taken together with all other Permitted Investments made pursuant to this clause
(viii) since the Issue Date, exceed $20.0 million in the aggregate (plus, to the
extent not previously reinvested, any return of capital realized since the Issue
Date on Permitted Investments made pursuant to this clause (viii), or any
release or other cancellation of any Guarantee constituting such Permitted
Investment); (ix) Persons to the extent such Investment is received by the
Company or any Restricted Subsidiary as consideration for Asset Dispositions
effected in compliance with Section 4.6; (x) prepayments and other credits to
suppliers made in the ordinary course of business consistent with the past
practices of the Company and its Restricted Subsidiaries; and (xi) Investments
in connection with pledges, deposits, payments or performance bonds made or
given in the ordinary course of business in connection with or to secure
statutory, regulatory or similar obligations, including obligations under
health, safety or environmental obligations.
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<PAGE> 21
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock" means, as applied to the Capital Stock of
any corporation, Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Private Exchange Securities" shall be defined in the
Registration Rights Agreement.
"Productive Assets" means assets of a kind used or usable by
the Company and its Restricted Subsidiaries in the Company's business or any
Related Business.
A "Public Market" exists at any time with respect to the
common stock of the Company if (a) the common stock of the Company is then
registered with the SEC pursuant to Section 12(b) or 12(g) of the Exchange Act
and traded either on a national securities exchange or in the National
Association of Securities Dealers Automated Quotation System and (b) at least
15% of the total issued and outstanding common stock of the Company has been
distributed prior to such time by means of an effective registration statement
under the Securities Act.
"QIB" means any "qualified institutional buyer" (as defined
under the Securities Act).
"Recapitalization" means the recapitalization of the Company
pursuant to the Recapitalization Agreement, dated July 13, 1999, by and among
the Company, HMTF/CC Investments, LLC (successor by merger to HMTF/CC
Investments, L.P), Creative Packing and Courtesy Sales and the shareholders of
each of the Company, Creative Packaging and Courtesy Sales.
"Redemption Date" means the date specified by the Company in a
notice delivered pursuant to Section 3.3 as the date on which the Company has
elected to redeem all of the Securities pursuant to paragraph 5 of the
Securities.
"Refinancing Indebtedness" means Indebtedness that is Incurred
to refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinance") any Indebtedness
existing on the date of the Indenture or Incurred in compliance with the
Indenture (including Indebtedness of the Company that refinances Indebted ness
of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of another Restricted Subsidiary) including Indebtedness
that refinances Refinancing Indebtedness; provided, however, that (i) the
Refinancing Indebtedness has a Stated Maturity no earlier than the earlier of
(A) the ninety-first day after the Stated Maturity of the Securities and (B) the
Stated Maturity of the Indebtedness being refinanced, (ii) the Refinancing
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Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the lesser of (A) the Average Life of
the Securities and (B) the Average Life of the Indebtedness being refinanced,
and (iii) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue price)
that is equal to (or 101% of, in the case of a refinancing of the Securities in
connection with a Change of Control) or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced, plus
applicable premium and reasonable costs paid in connection with such
refinancing.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated July 30, 1999, by and between the Company and Jefferies &
Company, Inc.
"Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Restricted Subsidiaries on the Issue Date, as reasonably determined by the
Board of Directors.
"Representative" means any trustee, agent or representative
(if any) of an issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities" means the securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depositary), or any successor Person
thereto and shall initially be the Trustee.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien.
"Senior Indebtedness" means the Bank Indebtedness and all
other Indebtedness of the Company, including interest and fees thereon, unless,
in the instrument creating or evidencing the same or pursuant to which the same
is outstanding, it is provided that the obligations in respect of such
Indebtedness are not superior in right of payment to the Securities; provided,
however, that Senior Indebtedness shall not include (1) any obligation of the
Company to any Subsidiary, (2)
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any liability for Federal, state, foreign, local or other taxes owed or owing by
the Company, (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities), or (4) any Indebtedness, Guarantee or
obligation of the Company that is expressly subordinate or junior in right of
payment to any other Indebtedness, Guarantee or obligation of the Company,
including any Senior Subordinated Indebtedness and any Subordinated
Indebtedness.
"Senior Subordinated Indebtedness" means the Securities and
any other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision.
"Subordinated Indebtedness" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
"Temporary Cash Investments" means any of the following: (i)
any Investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, (ii) Investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital, surplus and
undivided profits aggregating in excess of $250.0 million (or the foreign
currency equivalent thereof) and whose long-term debt, or whose parent holding
company's long-term debt, is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act), (iii) repurchase obligations with
a term of not more than 30 days for
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underlying securities of the types described in clause (i) above entered into
with a bank meeting the qualifications described in clause (ii) above, (iv)
Investments in commercial paper, maturing not more than 180 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard
and Poor's Ratings Group, (v) Investments in securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Group or "A" by Moody's Investors Service, Inc. and
(vi) Investments in mutual funds whose investment guidelines restrict
substantially all of such funds' investments to those satisfying the provisions
of clauses (i) through (v) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture, except as set
forth in Section 9.3 hereof.
"Transactions" means, collectively, the Recapitalization, the
initial borrowings under the Credit Facility on the Issue Date, the offering of
the Initial Notes hereunder and the application of the use of the proceeds
therefrom as described in the Offering Circular, dated July 23, 1999.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6 hereof.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two business days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to August 1, 2004; provided, however, that if
the period from the Redemption Date to August 1, 2004 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to August 1, 2004 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
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<PAGE> 25
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that either (A) the Subsidiary to be so
designated has total consolidated assets of $10,000 or less or (B) if such
Subsidiary has consolidated assets greater than $10,000, then such designation
would be permitted under Section 4.4. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (x) the Company could Incur
$1.00 of additional Indebtedness under Section 4.3(a) and (y) no Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, at least 99% of the Capital Stock of which (other than directors'
qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary.
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction"............................................. 4.7
"Agent Member"...................................................... 2.1
"Bankruptcy Law".................................................... 6.1
"Blockage Notice"................................................... 10.3
"covenant defeasance option"........................................ 8.1(b)
"Custodian"......................................................... 6.1
"Definitive Securities"............................................. 2.1
"Event of Default"................................................. 6.1
</TABLE>
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<PAGE> 26
<TABLE>
<S> <C>
"Global Security"................................................... 2.1(b)
"legal defeasance option"........................................... 8.1(b)
"Legal Holiday" .................................................... 11.8
"Non-Global Purchaser".............................................. 2.1
"Offer" ............................................................ 4.6
"pay the Securities"................................................ 10.3
"Paying Agent"...................................................... 2.3
"Payment Blockage Period"........................................... 10.3
"Registrar"......................................................... 2.3
"Restricted Payment"................................................ 4.4
"Rule 144A"......................................................... 2.1(b)
"Successor Company"................................................. 5.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by the TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
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<PAGE> 27
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.1. Form and Dating.
(a) The Initial Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A, which
is hereby incorporated in and expressly made a part of this Indenture.
The Exchange Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit B, which is hereby
incorporated by reference and expressly made a part of this Indenture.
The Private Exchange Securities shall be in the Form of Exhibit A, but
shall bear the CUSIP Number of the Exchange Notes. The Securities may
have notations, legends or endorsements required by law, stock exchange
rule or usage, in addition to those set forth on Exhibits A and B. The
Company and the Trustee shall approve the forms of the Securities and
any notation, endorsement or legend on them. Each Security shall be
dated the date of its authentication. The terms of the Securities set
forth in Exhibit A and Exhibit B are part of the terms of this
Indenture and, to the extent applicable, the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to
be bound by such terms.
(b) Global Securities. The Initial Notes are being offered and
sold by the Company pursuant to a Purchase Agreement, dated July 23,
1999, by and between the Company, Creative Packaging, Courtesy Sales
and Jefferies & Company, Inc. (the "Purchase Agreement").
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<PAGE> 28
Initial Notes shall be issued initially in the form of one or
more permanent global Securities in definitive, fully registered form without
interest coupons with the Global Securities Legend and Restricted Securities
Legend set forth in Exhibit A hereto (each, a "Global Security"), which shall be
deposited on behalf of the purchasers of the Initial Notes represented thereby
with the Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by endorsements made on such Global Securities
by the Trustee and the Depositary or its nominee as hereinafter provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply
only to Global Securities deposited with the Trustee, as custodian for
the Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Security.
(d) Certificated Securities. Except as provided in Section
2.6, owners of beneficial interests in Global Securities will not be
entitled to receive certificated Securities ("Definitive Securities").
Definitive Securities will bear the Restricted Securities Legend set
forth on Exhibit A unless removed in accordance with Section 2.6(f)
hereof.
SECTION 2.2. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. If an
Officer whose signature is on a Security no longer holds that office at the time
the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually authenticates the Security. The signature of the Trustee on
a Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture.
The Trustee shall authenticate and make available for
delivery: (1) Initial Notes for original issue in an aggregate principal amount
of $100.0 million and (2) Exchange Notes for issue only in an Exchange Offer
pursuant to the Registration Rights Agreement, and only in exchange for Initial
Notes of an equal principal amount, and (3) Private Exchange Securities, and
only in
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<PAGE> 29
exchange for Initial Notes of an equal principle amount pursuant to the
Registration Rights Agreement in each case upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company. Such order shall specify the amount of the
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and whether the Securities are to be Initial
Notes or Exchange Notes. The aggregate principal amount of Securities
outstanding at any time may not exceed $100.0 million except as provided in
Section 2.7.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent.
SECTION 2.3. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent for the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at least
10:00 a.m. (New York City time) on the date on which any principal of or
interest on any Security is due and payable, the Company shall irrevocably
deposit with the Paying Agent a sum sufficient to pay such principal, premium,
if any, and/or interest when due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that such Paying Agent shall hold
in trust for the benefit of Securityholders or the Trustee all money held by
such Paying Agent for the payment of principal, premium, if any, and/or interest
on the Securities and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent (other than the
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<PAGE> 30
Trustee) to pay all money held by it to the Trustee and to account for any funds
disbursed by such Paying Agent. Upon complying with this Section, the Paying
Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money delivered to the Trustee. Upon any bankruptcy,
reorganization or similar proceeding with respect to the Company, the Trustee
shall serve as Paying Agent for the Securities.
SECTION 2.5. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented by a Holder to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that:
(i) such Definitive Securities shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-registrar, duly
executed by such Holder or his attorney duly authorized in writing; and
(ii) if such Definitive Securities are Transfer Restricted
Securities, such Definitive Securities shall also be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Securities are being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from
such Holder to that effect (in the form set forth on the
reverse of the Security); or
(B) if such Transfer Restricted Securities are being
transferred (x) to the Company or to a QIB in accordance with
Rule 144A under the Securities Act or (y) pursuant to an
effective registration statement under the Securities Act, a
certification
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<PAGE> 31
from such Holder to that effect (in the form set forth on the
reverse of the Security); or
(C) if such Transfer Restricted Securities are being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act; or (x) to
an institutional "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act that
is acquiring the security for its own account, or for the
account of such an institutional accredited investor, in each
case in a minimum principal amount of the Securities of
$250,000 for investment purposes and not with a view to, or
for offer or sale in connection with, any distribution in
violation of the Securities Act; or (y) in reliance on another
exemption from the registration requirements of the Securities
Act: (i) a certification to that effect from such Holder (in
the form set forth on the reverse of the Security), (ii) if
the Company or the Trustee so requests, an Opinion of Counsel
reasonably acceptable to the Company and to the Trustee to the
effect that such transfer is in compliance with the Securities
Act and (iii) in the case of clause (x), a signed letter from
the transferee substantially in the form of Exhibit C hereto.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not
be exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the
Trustee of a Definitive Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the
Trustee, together with:
(i) certification, in the form set forth on the reverse of the
Security, to the effect that such Definitive Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act or an institutional "accredited investor" within the meaning of
Rule 501(a)(1),(2),(3) or (7) under the Securities Act; and
(ii) written instructions from the Holder thereof directing
the Trustee to make, or to direct the Securities Custodian to make, an
endorsement on the Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global Security in
the appropriate principal amount. The Trustee shall deliver copies of each
certification and instruction received by it pursuant to clauses (i) and (ii)
above to the Depositary and, upon receipt thereof, the Depositary shall make
25
<PAGE> 32
appropriate adjustments to its books and records to reflect exchange of such
Definitive Security for an interest in the Global Security in accordance with
Section 2.6(c).
(c) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests
therein shall be effected through the Depositary or the Trustee, as the
custodian for the Depositary, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if
any) and the procedures of the Depositary therefor.
(ii) A Global Security deposited with the Depositary or with
the Trustee as custodian for the Depositary pursuant to Section 2.1
shall be transferred to the beneficial owners thereof only if such
transfer complies with this Section 2.6 and (i) the Depositary notifies
the Company that it is unwilling or unable to continue as Depositary
for such Global Security or if at any time such Depositary ceases to be
a "clearing agency" registered under the Exchange Act and a successor
depositary is not appointed by the Company within 90 days of such
notice, (ii) the Company, at its option, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities
or (iii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depositary or the Trustee to
issue Definitive Securities.
(iii) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section shall be surrendered
by the Depositary to the Trustee to be so transferred, in whole or from
time to time in part, without charge, and the Company shall sign and
the Trustee shall authenticate and deliver, upon such transfer of each
portion of such Global Security, an equal aggregate principal amount of
Definitive Securities of authorized denominations. Each Definitive
Security delivered in exchange for any portion of a Global Security
transferred pursuant to this Section shall be executed, authenticated
and delivered only in denominations of $1,000 and any integral multiple
thereof and shall be registered in such names as the Depositary shall
direct. Any Definitive Security delivered in exchange for an interest
in the Global Security shall, except as otherwise provided in Section
2.6(f), bear the Restricted Securities Legend set forth in Exhibit A
hereto.
(iv) The registered Holder of a Global Security may grant
proxies and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Indenture or the
Securities.
(v) In the event of the occurrence of any of the events
specified in Section 2.6(c)(ii), the Company will promptly make
available to the Trustee a reasonable supply of certificated Securities
in definitive, fully registered form without interest coupons.
(d) Restriction on Transfer of a Beneficial Interest in a
Global Security for a Definitive Security.
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<PAGE> 33
(i) Any person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security of the same aggregate principal amount; provided
that such request is accompanied by the information specified below.
Upon receipt by the Trustee of written instructions (or such other form
of instructions as is customary for the Depositary) from the
Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Security and, in the case of a Transfer Restricted
Security, the following additional information and documents (all of
which may be submitted by facsimile):
(A) if such beneficial interest is being transferred
to the Person designated by the Depositary as being the owner
of a beneficial interest in a Global Security, a certification
from such Person to that effect (in the form set forth on the
reverse of the Security); or
(B) if such beneficial interest is being transferred
(x) to a QIB in accordance with Rule 144A under the Securities
Act or (y) pursuant to an effective registration statement
under the Securities Act, a certification from such person to
that effect (in the form set forth on the reverse of the
Security); or
(C) if such beneficial interest is being transferred
(w) pursuant to an exemption from registration in accordance
with Rule 144 under the Securities Act; or (x) to an
institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act that is
acquiring the security for its own account, or for the account
of such an institutional accredited investor, in each case in
a mini mum principal amount of the Securities of $250,000 for
investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the
Securities Act; or (y) in reliance on another exemption from
the registration requirements of the Securities Act: (i) a
certification to that effect from the transferee (in the form
set forth on the reverse of the Security), (ii) if the Company
or the Trustee so requests, an Opinion of Counsel reasonably
acceptable to the Company and to the Trustee to the effect
that such transfer is in compliance with the Securities Act,
and (iii) in the case of clause (x), a signed letter from the
transferee in the form of Exhibit C hereto;
then the Securities Custodian, at the direction of the Trustee, will cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Securities Custodian, the aggregate principal amount of the
Global Security to be reduced accordingly and, following such reduction, the
Company will execute and the Trustee will authenticate and deliver to the
transferee one or more Definitive Securities in accordance with clause (ii)
below.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.6(d) shall be
registered in such names and in such
27
<PAGE> 34
authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct
the Trustee in writing. The Trustee shall deliver such Definitive
Securities to the Persons in whose names such Securities are so
registered in accordance with the instructions of the Depositary.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture
(other than the provisions set forth in subsection (c) of this Section
2.6), a Global Security may not be transferred as a whole except by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
(f) Legend.
(i) Except as permitted by the following paragraph (ii) each
Security certificate evidencing Global Securities and Definitive
Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHER WISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE WHICH IS TWO YEARS (OR SUCH OTHER PERIOD THAT MAY
HEREAFTER BE PROVIDED UNDER RULE 144(K) AS PERMITTING RESALES
OF RESTRICTED SECURITIES BY NON-AFFILIATES WITHOUT
RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) ONLY (A) TO THE ISSUER, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
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<PAGE> 35
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR
ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR IN VESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E)
PURSUANT TO ANOTHER AVAIL ABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Security that does not bear the legend set
forth in paragraph (i) above and rescind any restriction on
the transfer of such Security; and
(B) in the case of any such Transfer Restricted
Security represented by a Global Security, such Transfer
Restricted Security shall not be required to bear the legend
set forth in paragraph (i) above, although it shall continue
to be subject to the provisions of Section 2.6(d) hereof;
provided, however, that with respect to any request for an
exchange of a Transfer Restricted Security that is represented
by a Global Security for a Definitive Security that does not
bear the legend set forth in paragraph (i) above, which
request is made in reliance upon Rule 144, the Holder thereof
shall certify in writing to the Trustee that such request is
being made pursuant to Rule 144 (such certification to be as
set forth on the reverse of the Security).
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(g) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, re deemed, repurchased or
canceled, such Global Security shall be returned to the Depositary for
cancellation or retained and canceled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security
is exchanged for Definitive Securities, redeemed, repurchased or
canceled, the principal amount of Securities represented by such Global
Security shall be reduced and an endorsement shall be made on such
Global Security by the Securities Custodian to reflect such reduction.
(h) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall, subject to the other terms and conditions of this
Article II, execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charges payable upon
exchange or transfer pursuant to Sections 4.6, 4.8 or 9.5 or pursuant
to paragraph 5 of the Securities).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article III,
except the unredeemed portion of any Definitive Security being redeemed
in part, for a period beginning 15 days before a selection of
Securities to be redeemed and ending at the close of business on the
date of such selection; or (b) any Security for a period beginning 15
days before an interest payment date and ending on such interest
payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(i) No Obligation of the Trustee. (i) The Trustee shall have
no responsibility or obligation to any beneficial owner of a Global
Security, a member of, or a participant in, the Depositary or other
Person with respect to the accuracy of the records of the Depositary or
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its nominee or of any participant or member thereof, with respect to
any ownership interest in the Securities or with respect to the
delivery to any participant, member, beneficial owner or other Person
(other than the Depositary) of any notice (including any notice of
redemption) or the payment of any amount or delivery of any Securities
(or other security or property) under or with respect to such
Securities. All notices and communications to be given to the Holders
and all payments to be made to Holders in respect of the Securities
shall be given or made only to or upon the order of the registered
Holders (which shall be the Depositary or its nominee in the case of a
Global Security). The rights of beneficial owners in any Global
Security shall be exercised only through the Depositary subject to the
applicable rules and procedures of the Depositary. The Trustee may rely
and shall be fully protected in relying upon information furnished by
the Depositary with respect to its members, participants and any
beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers
between or among Depositary participants, members or beneficial owners
in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
SECTION 2.7. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the Issuer and the
Trustee receive evidence to their satisfaction of the loss, destruction or
wrongful taking of the Security, and the Holder satisfies any other reasonable
requirements of the Trustee. Such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from
any loss which any of them may suffer if a Security is replaced. The Company and
the Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.8. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless a Trust Officer of the Trustee and the Company actually
receive proof satisfactory to them that the replaced Security is held by a bona
fide purchaser.
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If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive Securities
are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreason able delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities.
After the preparation of definitive Securities, the temporary Securities shall
be exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency maintained by the Company for that purpose
and such exchange shall be without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute,
and the Trustee shall authenticate and make available for delivery in exchange
therefor, one or more definitive Securities representing an equal principal
amount of Securities. Until so exchanged, the Holder of temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as a
holder of Definitive Securities.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and dispose of all Securities surrendered for registration of transfer,
exchange, payment or cancellation in accordance with its customary procedures
and shall deliver a certificate of such destruction to the Company. The Company
may not issue new Securities to replace Securities it has redeemed, paid or
delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed (or upon the Company's request, the Trustee shall fix) any
such special record date and payment date to the reasonable satisfaction of the
Trustee which specified record date shall not be less than 10 days prior to the
payment date for such defaulted interest and shall promptly mail or cause to be
mailed to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid. The Company shall
notify the Trustee in writing of the amount of defaulted interest proposed to be
paid on each Security and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such defaulted interest or
shall make arrangements satisfactory to the Trustee
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for such deposit prior to the date of the proposed payment, such money when so
deposited to be held in trust for the benefit of the Person entitled to such
defaulted interest as provided in this Section.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE III
Redemption
SECTION 3.1. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of Securities
to be redeemed.
The Company shall give each notice to the Trustee provided for
in this Section 3.1 at least 60 days before the redemption date unless the
Trustee consents to a shorter period. Such notice shall be accompanied by an
Officers' Certificate from the Company to the effect that such redemption will
comply with the conditions herein. If fewer than all the Securities are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and set forth in the related notice given to the Trustee, which record
date shall be not less than 15 days after the date of such notice.
SECTION 3.2. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
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SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed at its registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion thereof) called for redemption ceases to accrue on and
after the redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued and unpaid interest to the redemption
date; provided that if the redemption date is after a regular record date and on
or prior to the interest payment date, the accrued and unpaid interest shall be
payable to the Securityholder of the redeemed Securities registered on the
relevant record date. Failure to give notice or any defect in the notice to any
Holder shall not affect the validity of the notice to any other Holder.
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SECTION 3.5. Deposit of Redemption Price. Prior to 10:00 a.m.
(New York City time) on the date on which any principal of or interest on any
Security is due and payable, the Company shall deposit with the Paying Agent
(or, if the Company or a Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which are owned by
the Company or a Subsidiary and have been delivered by the Company or such
Subsidiary to the Trustee for cancellation. If the Company complies with the
preceding paragraph, then, unless the Company defaults in the payment of such
redemption price, interest on the Securities to be redeemed will cease to accrue
on and after the applicable redemption date, whether or not such Securities are
presented for payment.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in a principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV
Covenants
SECTION 4.1. Payment of Securities. The Company shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in this Indenture. Principal and interest
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 4.2. SEC Reports. So long as any of the Securities are
outstanding, the Company will provide to the Holders and file with the
Commission, to the extent such submissions are accepted for filing by the
Commission, copies of the annual reports and of the information, documents and
other reports that the Company would have been required to file with the
Commission pursuant to Sections 13 or 15(d) of the Exchange Act, regardless of
whether the Company is then obligated to file such reports, within 15 days after
it would have been required to
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file such reports with the SEC. Upon qualification of this Indenture under the
TIA, the Company shall also comply with the other provisions of TIA 314(a).
Delivery of such reports, information and documents to the
Trustee is for informational purposes only, and the Trustee's receipt thereof
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.3. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness; provided, however,
that the Company and any of its Restricted Subsidiaries may Incur
Indebtedness if on the date thereof the Consolidated Coverage Ratio
would be greater than 2.00:1.00.
(b) Notwithstanding Section 4.3(a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness: (i)
Indebtedness Incurred pursuant to (A) the Credit Agreement (including,
without limitation, any renewal, extension, refunding, restructuring,
replacement or refinancing thereof referred to in clause (ii) of the
definition thereof) or (B) any other agreements or indentures governing
Senior Indebtedness; provided, however, that the aggregate principal
amount of all Indebtedness Incurred pursuant to this clause (i) does
not exceed $200.0 million at any time outstanding, less the aggregate
principal amount thereof repaid with the net proceeds of Asset
Dispositions (to the extent, in the case of a repayment of revolving
credit Indebtedness, the commitment to advance the loans repaid has
been terminated); (ii) Indebtedness represented by Capitalized Lease
Obligations, mortgage financings or purchase money obligations, in each
case Incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property used
in a Related Business or Incurred to Refinance any such purchase price
or cost of construction or improvement, in each case Incurred no later
than 365 days after the date of such acquisition or the date of
completion of such construction or improvement; provided, however, that
the principal amount of any Indebtedness Incurred pursuant to this
Section 4.3(b)(ii) shall not exceed $15.0 million at any time
outstanding; (iii) Permitted Indebted ness; and (iv) Indebtedness
(other than Indebtedness described in clauses (i) - (iii)) in a
principal amount which, when taken together with the principal amount
of all other Indebtedness Incurred pursuant to this Section 4.3(b)(iv)
and then outstanding, will not exceed $40.0 million (it being
understood that any Indebtedness Incurred under this Section 4.3(b)(iv)
shall cease to be deemed Incurred or outstanding for purposes of this
Section 4.3(b)(iv) (but shall be deemed to be Incurred for purposes of
Section 4.3(a)) from and after the first date on which the Company or
its Restricted Subsidiaries could have Incurred such Indebtedness under
Section 4.3(a) without reliance upon this Section 4.3(b)(iv)).
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(c) The Company shall not Incur any Secured Indebtedness which
is not Senior Indebtedness unless contemporaneously therewith effective
provision is made to secure the Securities equally and ratably with
such Secured Indebtedness for so long as such Secured Indebtedness is
secured by a Lien.
(d) The Company shall not permit any Unrestricted Subsidiary
to Incur any Indebtedness other than Non-Recourse Debt; provided,
however, if any such Indebtedness ceases to be Non-Recourse Debt, such
event shall be deemed to constitute an Incurrence of Indebtedness by
the Company or a Restricted Subsidiary.
(e) The Company shall not Incur any Indebtedness if such
Indebtedness is subordinate or junior in right of payment to any Senior
Indebtedness, unless such Indebtedness is Senior Subordinated
Indebtedness or is contractually subordinated in right of payment to
Senior Subordinated Indebtedness.
(f) For purposes of determining compliance with any U.S.
dollar-denominated restriction on the Incurrence of Indebtedness, the
U.S. dollar-equivalent principal amount of Indebtedness denominated in
a foreign currency shall be calculated based on the relevant currency
exchange rate in effect on the date such Indebtedness was Incurred, in
the case of term debt, or first committed, in the case of revolving
credit debt; provided that if such Indebtedness is Incurred to
refinance other indebtedness denominated in a foreign currency, and
such refinancing would cause the applicable U.S. dollar-denominated
restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, such U.S.
dollar-denominated restriction shall be deemed not to have been
exceeded so long as the principal amount of such refinancing
Indebtedness does not exceed the principal amount of such Indebtedness
being refinanced. The principal amount of any Indebtedness Incurred to
refinance other Indebtedness, if Incurred in a different currency from
the Indebtedness being refinanced, shall be calculated based on the
currency exchange rate applicable to the currencies in which such
respective Indebtedness is denominated that is in effect on the date of
such refinancing.
SECTION 4.4. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries, directly or indirectly, to (i) declare or pay
any dividend or make any distribution on or in respect of its Capital
Stock (including any payment in connection with any merger or
consolidation involving the Company or any of its Restricted
Subsidiaries) except (A) dividends or distributions payable in its
Capital Stock (other than Disqualified Stock) or in options, warrants
or other rights to purchase such Capital Stock (other than Disqualified
Stock), and (B) dividends or distributions payable to the Company or a
Restricted Subsidiary of the Company (and, if such Restricted
Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of
Capital Stock on a pro rata basis), (ii) purchase, redeem, retire or
otherwise acquire for value any Capital Stock of the Company held by
Persons other than a Restricted
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Subsidiary of the Company or any Capital Stock of a Restricted
Subsidiary of the Company held by Persons other than the Company or
another Restricted Subsidiary of the Company (in either case, other
than in exchange for its Capital Stock (other than Disqualified Stock)
or to the extent that after giving effect to such purchase, redemption,
retirement or acquisition, such Restricted Subsidiary would become a
Wholly Owned Subsidiary), (iii) purchase, repurchase, redeem, defease
or otherwise acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment, any Subordinated
Indebtedness (other than the purchase, repurchase or other acquisition
of Subordinated Indebtedness purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in
each case due within one year of the date of purchase, repurchase or
acquisition) or (iv) make any Investment (other than a Permitted
Investment) in any Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or
Investment being herein referred to in clauses (i) through (iv) as a
"Restricted Payment"), if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); or (2) the
Company is not able to incur an additional $1.00 of Indebtedness
pursuant to Section 4.3(a); or (3) the aggregate amount of such
Restricted Payment and all other Restricted Payments declared or made
subsequent to the Issue Date would exceed the sum of: (A) 50% of the
Consolidated Net Income accrued during the period (treated as one
accounting period) from the Issue Date to the end of the most recent
fiscal quarter ending prior to the date of such Restricted Payment as
to which financial results are available (or, in case such Consolidated
Net Income shall be a deficit, minus 100% of such deficit); (B) the
aggregate net proceeds received by the Company from the issue or sale
of its Capital Stock (other than Disqualified Stock) or other capital
contributions subsequent to the Issue Date (other than net proceeds
received from an issuance or sale of such Capital Stock to a Subsidiary
of the Company or an employee stock ownership plan or similar trust);
provided, however, that the value of any non-cash net proceeds (which
in each case shall be assets of the type used in a Related Business or
Capital Stock of a Person engaged in a Related Business) shall be as
determined by the Board of Directors in good faith, except that in the
event the value of any non cash net proceeds shall be $15.0 million or
more, the value shall be as determined in writing by an independent
investment banking firm of nationally recognized standing; (C) the
aggregate Net Cash Proceeds received by the Company from the issue or
sale of its Capital Stock (other than Disqualified Stock) to an
employee stock ownership plan or similar trust subsequent to the Issue
Date; provided, however, that if such plan or trust Incurs any
Indebtedness owed to or Guaranteed by the Company or any of its
Restricted Subsidiaries to finance the acquisition of such Capital
Stock, such aggregate amount shall be limited to such Net Cash Proceeds
less such Indebted ness Incurred to or Guaranteed by the Company or any
of its Restricted Subsidiaries and any increase in the Consolidated Net
Worth of the Company resulting from principal repayments made by such
plan or trust with respect to Indebtedness Incurred by it to finance
the purchase of such Capital Stock; (D) the amount by which
Indebtedness of the Company is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Restricted Subsidiary
of the Company) subsequent to the Issue Date of any Indebtedness of the
Company for Capital Stock (other
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than Disqualified Stock) of the Company (less the amount of any cash,
or other property, distributed by the Company upon such conversion or
exchange); (E) the amount equal to the net reduction in Investments
since the Issue Date (other than Permitted Investments) made by the
Company or any of its Restricted Subsidiaries in any Person resulting
from (i) repurchases or redemptions of such Investments by such Person,
proceeds realized upon the sale of such Investment to an unaffiliated
purchaser, and repayments of loans or advances or other transfers of
assets by such Person to the Company or any Restricted Subsidiary of
the Company or (ii) the redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the
definition of "Investment") not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously made by
the Company or any Restricted Subsidiary in such Unrestricted
Subsidiary, which amount was included in the calculation of the amount
of Restricted Payments; provided, however, that no amount shall be
included under this clause (E) of this Section 4.4(a) to the extent it
is already included in Consolidated Net Income; (F) the aggregate Net
Cash Proceeds received by a Person in consideration for the issuance of
such Person's Capital Stock (other than Disqualified Stock) which are
held by such Person at the time such Person is merged with and into the
Company in accordance with Section 5.1 subsequent to the Issue Date;
provided, however, that concurrently with or immediately following such
merger the Company uses an amount equal to such Net Cash Proceeds to
redeem or repurchase the Company's Capital Stock; and (G) $5.0 million
since the Issue Date.
(b) The provisions of Section 4.4(a) shall not prohibit: (i) any
purchase or redemption of Capital Stock or Subordinated Indebtedness of
the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to
a Subsidiary or an employee stock ownership plan or similar trust);
provided, however, that (A) such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments and
(B) the Net Cash Proceeds from such sale shall be excluded from clause
(3) (B) of Section 4.4(a); (ii) any purchase or redemption of
Subordinated Indebtedness of the Company made by exchange for, or out
of the proceeds of the substantially concurrent sale of, Subordinated
Indebtedness of the Company; provided, however, that such purchase or
redemption shall be excluded in the calculation of the amount of
Restricted Payments; (iii) any purchase or redemption of Subordinated
Indebtedness from Net Avail able Cash to the extent permitted under
Section 4.6; provided, however, that such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration if at
such date of declaration such dividend would have complied with the
requirements of Section 4.4(a); (v) payments of dividends on the
Company's common stock after an initial public offering of common stock
of the Company in an annual amount not to exceed 6% of the gross
proceeds (before deducting underwriting discounts and commissions and
other fees and expenses of the offering) received by the Company from
shares of common stock sold for the account of the Company (and not for
the account of any stockholder) in such initial public offering; (vi)
payments by the Company to repurchase Capital Stock or other securities
of the Company from members of management
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of the Company in an aggregate amount not to exceed $10.0 million since
the Issue Date; (vii) payments to enable the Company to redeem or
repurchase stock purchase or similar rights granted by the Company with
respect to its Capital Stock in an aggregate amount not to exceed $5.0
million since the Issue Date; (viii) payments, not to exceed $200,000
in the aggregate since the Issue Date, to enable the Company to make
cash payments to holders of its Capital Stock in lieu of the issuance
of fractional shares of its Capital Stock; and (ix) payments made
pursuant to any merger, consolidation or sale of assets effected in
accordance with Section 5.1; provided, however, that no such payment
may be made pursuant to this clause (ix) unless, after giving effect to
such transaction (and the incurrence of any Indebtedness in connection
therewith and the use of the proceeds thereof), the Company would be
able to Incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.3 such that, after Incurring
that $1.00 of additional Indebtedness, the Consolidated Coverage Ratio
would be greater than 3.5:1.00; provided, however, that in the case of
clauses (v), (vi), (vii), (viii) and (ix) no Default or Event of
Default shall have occurred or be continuing at the time of such
payment or as a result thereof; provided further, however, that for
purposes of determining the aggregate amount expended for Restricted
Payments in accordance with clause (3) of Section 4.4(a), only the
amounts expended under clauses (iv) through (ix) shall be included.
SECTION 4.5. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any such Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligation owed to the Company, (ii) make
any loans or advances to the Company or (iii) transfer any of its property or
assets to the Company; except: (a) any encumbrance or restriction pursuant to an
agreement in effect at or entered into on the Issue Date, including the Credit
Agreement; (b) any encumbrance or restriction with respect to such a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness or Preferred
Stock issued by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Company and outstanding on such date
(other than Indebtedness or Preferred Stock issued as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary of the Company or was
acquired by the Company); (c) any encumbrance or restriction with respect to
such a Restricted Subsidiary pursuant to an agreement evidencing Indebtedness
Incurred without violation of this Indenture or effecting a refinancing of
Indebtedness issued pursuant to an agreement referred to in clauses (a) or (b)
or this clause (c) or contained in any amendment to an agreement referred to in
clauses (a) or (b) or this clause (c); provided, however, that the encumbrances
and restrictions with respect to such Restricted Subsidiary contained in any of
such agreement, refinancing agreement or amendment, taken as a whole, are not
materially less favorable to the Holders, as determined in good faith by the
senior management of the Company or Board of Directors, than encumbrances and
restrictions with respect to such Restricted Subsidiary contained in agreements
in effect at, or entered into on, the Issue Date; (d) in the case
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of clause (iii) of this Section 4.5, any encumbrance or restriction (A) that
restricts in a customary manner the subletting, assignment or transfer of any
property or asset that is a lease, license, conveyance or contract or similar
property or asset, (B) by virtue of any transfer of, agreement to transfer,
option or right with respect to, or Lien on, any property or assets of the
Company or any Restricted Subsidiary not otherwise prohibited by this Indenture,
(C) that is included in a licensing agreement to the extent such restrictions
limit the transfer of the property subject to such licensing agreement or (D)
arising or agreed to in the ordinary course of business and that does not,
individually or in the aggregate, detract from the value of property or assets
of the Company or any of its Subsidiaries in any manner material to the Company
or any such Restricted Subsidiary as determined in good faith by senior
management of the Company; (e) in the case of clause (iii) of this Section 4.5,
restrictions contained in security agreements, mort gages or similar documents
securing Indebtedness of a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such security agreements; (f)
any restriction with respect to such a Restricted Subsidiary imposed pursuant to
an agreement entered into for the sale or disposition of all or substantially
all the Capital Stock or assets of such Restricted Subsidiary pending the
closing of such sale or disposition; (g) encumbrances or restrictions with
respect to Indebtedness of Foreign Subsidiaries; provided that (1) such
encumbrances or restrictions do not limit in any manner the ability of the
Restricted Subsidiaries of the Company from performing any of the acts referred
to in clauses (i) through (iii) of this Section 4.5 and (2) the aggregate
principal amount of the Indebtedness of the Foreign Subsidiaries of the Company
which includes such an encumbrance or restriction does not exceed $25.0 million;
and (h) encumbrances or restrictions arising or existing by reason of applicable
law.
SECTION 4.6. Limitation on Sales of Assets and Subsidiary
Stock.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any Asset Disposition unless (i) the
Company or such Restricted Subsidiary receives consideration at the
time of such Asset Disposition at least equal to the fair market value,
as determined in good faith by the Company's senior management or the
Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset
Disposition, (ii) at least 75% of the consideration thereof received by
the Company or such Restricted Subsidiary is in the form of cash or
cash equivalents and (iii) an amount equal to 100% of the Net Available
Cash from such Asset Disposition is applied by the Company (or such
Restricted Subsidiary, as the case may be) (A) first, to the extent the
Company or any Restricted Subsidiary elects (or is required by the
terms of any Senior Indebtedness), to prepay, repay or purchase (x)
Senior Indebtedness or (y) Indebtedness (other than Preferred Stock)
of a Wholly-Owned Subsidiary (in each case other than Indebtedness owed
to the Company) within 180 days from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash; (B)
second, within one year from the receipt of such Net Available Cash, to
the extent of the balance of such Net Available Cash after application
in accordance with clause (A), at the Company's election either (x) to
the investment in or acquisition of Additional Assets or (y) to prepay,
repay or purchase (1) Senior Indebtedness or (2) Indebtedness (other
than Preferred Stock) of a Wholly-Owned
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Subsidiary (in each case other than Indebtedness owed to the Company);
and (C) third, within 45 days after the later of the application of Net
Available Cash in accordance with clauses (A) and (B) and the date that
is one year from the receipt of such Net Available Cash, to the extent
of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B), to make an offer to purchase
Securities and other Senior Subordinated Indebtedness, to the extent
required pursuant to the terms thereof, pro rata at 100% of the
tendered principal amount thereof (or 100% of the accreted value of
such other Senior Subordinated Indebtedness so tendered, if such Senior
Subordinated Indebtedness was issued at a discount), plus accrued and
unpaid interest, if any, thereon to the date of pur chase. The balance
of such Net Available Cash after application in accordance with clauses
(A), (B) and (C) may be used by the Company in any manner not otherwise
prohibited under this Indenture. Notwithstanding anything herein to the
contrary, in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A), (B) or (C) above, the Company or
such Restricted Subsidiary shall retire such Indebtedness and shall
cause the related loan commitment (if any) to be permanently reduced in
an amount equal to the principal amount so prepaid, repaid or
purchased. Notwithstanding the foregoing provisions, the Company and
its Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance herewith except to the extent that the
aggregate Net Available Cash from all Asset Dispositions since the
Issue Date which are not applied in accordance with this Section 4.6 at
any time exceed $5.0 million. The Company shall not be required to make
an offer for Securities pursuant to this Section 4.6 if the Net
Available Cash available therefor (after application of the proceeds as
provided in clauses (A) and (B)) is less than $10.0 million for any
particular Asset Disposition (which lesser amounts shall be carried
forward for purposes of determining whether an offer is required with
respect to the Net Available Cash from any subsequent Asset
Disposition).
For the purposes of this Section 4.6, the following will be
deemed to be cash: (x) the assumption by the transferee of Senior Indebtedness
of the Company or Indebtedness of any Restricted Subsidiary of the Company and
the release of the Company or such Restricted Subsidiary from all liability on
such Senior Indebtedness or Indebtedness in connection with such Asset
Disposition (in which case the Company shall, without further action, be deemed
to have applied such assumed Indebtedness in accordance with clause (A) of the
preceding paragraph) and (y) securities received by the Company or any
Restricted Subsidiary of the Company from the transferee that are promptly
converted by the Company or such Restricted Subsidiary into cash.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries shall be permitted to consummate an Asset Swap if (i) immediately
after giving effect to such Asset Swap, no Default or Event of Default shall
have occurred or be continuing, (ii) in the event such Asset Swap involves an
aggregate amount in excess of $2.5 million, the terms of such Asset Swap have
been approved by a majority of the members of the Board of Directors, and (iii)
in the event such Asset Swap involves an aggregate amount in excess of $10.0
million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing
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that such Asset Swap is fair to the Company or such Restricted Subsidiary, as
the case may be, from a financial point of view.
(b) In the event of an Asset Disposition that requires the
purchase of Securities pursuant to Section 4.6(a)(iii)(C), the Company
will be required to purchase Securities tendered pursuant to an offer
by the Company for the Securities (the "Offer") at a purchase price of
100% of their principal amount plus accrued and unpaid interest, if
any, to the purchase date in accordance with the procedures (including
prorating in the event of oversubscription as well as proration
required as a result of tenders of other Senior Subordinated
Indebtedness) set forth in Section 4.6(c). If the aggregate purchase
price of the Securities tendered pursuant to the Offer is less than the
Net Available Cash allotted to the purchase of the Securities, the
Company may use the remaining Net Available Cash for any purpose not
prohibited by this Indenture. Upon the consummation of the purchase of
Securities properly tendered in response to such offer to purchase, the
amount of Net Available Cash subject to future offers to purchase shall
be deemed to be reset to zero.
(c) (1) Promptly, and in any event within 10 days after the
Company is required to make an Offer, the Company shall deliver to the
Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by
the Company either in whole or in part (subject to prorating as
hereinafter described in the event the Offer is oversubscribed) in
integral multiples of $1,000 of principal amount, at the applicable
purchase price. The notice shall specify a purchase date not less than
30 days nor more than 60 days after the date of such notice (the
"Purchase Date").
(2) Not later than the date upon which such written notice of
an Offer is delivered to the Trustee and the Holders, the Company
shall deliver to the Trustee an Officers' Certificate setting forth (i)
the amount of the Offer (the "Offer Amount"), (ii) the allocation of
the Net Available Cash from the Asset Dispositions as a result of which
such Offer is being made and (iii) the compliance of such allocation
with the provisions of Section 4.6(a). Upon the expiration of the
period (the "Offer Period") for which the Offer remains open, the
Company shall deliver to the Trustee for cancellation the Securities or
portions thereof which have been properly tendered to and are to be
accepted by the Company. The Trustee shall, on the Purchase Date, mail
or deliver payment to each tendering Holder in the amount of the
purchase price of the Securities tendered by such Holder to the extent
such funds are available to the Trustee.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly
completed, to the Company at the address specified in the notice prior
to the expiration of the Offer Period. Each Holder will be entitled to
withdraw its election if the Trustee or the Company receives, not later
than one Business Day prior to the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter from such Holder
setting forth the name of such Holder, the principal amount of the
Security or Securities which were delivered for purchase by such Holder
and a statement that such
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Holder is withdrawing his election to have such Security or Securities
purchased. If at the expiration of the Offer Period the aggregate
principal amount of Securities surrendered by Holders exceeds the Offer
Amount, the Company shall select the Securities to be purchased on a
pro rata basis or by such other method as may be required by law (with
such adjustments as may be deemed appropriate by the Company so that
only Securities in denominations of $1,000, or integral multiples
thereof, shall be purchased). Holders whose Securities are purchased
only in part will be issued new Securities equal in principal amount to
the unpurchased portion of the Securities surrendered.
(d) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of
Securities pursuant to this Section 4.6. To the extent that the
provisions of any securities laws or regulations conflict with
provisions of this Section 4.6, the Company will comply with the
applicable securities laws and regulations and will not be deemed to
have breached its obligations under this Indenture by virtue thereof.
SECTION 4.7. Limitation on Affiliate Transactions.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or
conduct any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any
Affiliate of the Company other than a Wholly-Owned Subsidiary (an
"Affiliate Transaction") unless: (i) the terms of such Affiliate
Transaction are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arm's-length dealings with a Person who
is not such an Affiliate; (ii) in the event such Affiliate Transaction
involves an aggregate amount in excess of $5 million, the terms of such
transaction have been approved by a majority of the members of the
Board of Directors and by a majority of the disinterested members of
such Board of Directors, if any (and such majority or majorities, as
the case may be, determines that such Affiliate Transaction satisfies
the criteria in clause (i) above); and (iii) in the event such
Affiliate Transaction involves an aggregate amount in excess of $10.0
million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such
Affiliate Transaction is fair to the Company or such Restricted
Subsidiary, as the case may be, from a financial point of view.
(b) The provisions of Section 4.7(a) shall not prohibit (i)
any Restricted Payment permitted to be made pursuant to Section 4.4,
(ii) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the Board of Directors, (iii) loans or advances to
employees in the ordinary course of business of the Company or any of
its Restricted Subsidiaries, (iv) any transaction between Wholly-Owned
Subsidiaries, (v) indemnification agreements with, and the payment of
fees and indemnities to, directors, officers and employees of the
Company and its Restricted Subsidiaries, in each
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case in the ordinary course of business, (vi) transactions pursuant to
agreements as in existence on the Issue Date, (vii) any employment,
non-competition or confidentiality agreements entered into by the
Company or any of its Restricted Subsidiaries with its employees in the
ordinary course of business, (viii) the issuance of Capital Stock of
the Company (other than Disqualified Stock), (ix) any obligations of
the Company pursuant to the Monitoring and Oversight Agreement and the
Financial Advisory Agreement, and (x) transactions pursuant to supply
or similar agreements entered into in the ordinary course of business
on customary terms that are not less favorable to the Company than
those that would have been obtained in a comparable transaction with an
unrelated Person, as deter mined in good faith by senior management of
the Company.
SECTION 4.8. Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder
shall have the right to require the Company to repurchase all or any
part of such Holder's Securities at a purchase price in cash equal to
101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive accrued and unpaid
interest due on the relevant interest payment date in respect of the
then outstanding Securities), such repurchase to be made in accordance
with Section 4.8(b).
(b) Within 30 days following any Change of Control, unless the
Company has mailed a redemption notice with respect to all the
outstanding Securities in connection with such Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee
stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on a record date to
receive accrued and unpaid interest on the relevant interest payment
date in respect of the then outstanding Securities);
(2) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(3) the procedures determined by the Company, consistent with
this Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly
completed, to the Company at the address specified in the notice at
least three Business Days prior to the purchase date. Each Holder will
be entitled to withdraw its election if the Company receives, not later
than one Business Day
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prior to the purchase date, a facsimile transmission or letter from
such Holder setting forth the name of such Holder, the principal amount
of the Security or Securities which were delivered for purchase by such
Holder and a statement that such Holder is withdrawing his election to
have such Security or Securities purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued
and unpaid interest, if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of
Securities pursuant to this Section 4.8. To the extent that the
provisions of any securities laws or regulations conflict with
provisions of this Section 4.8, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Indenture by virtue thereof.
SECTION 4.9. Limitation on Capital Stock of Restricted
Subsidiaries. The Company will not permit any of its Restricted Subsidiaries to
issue any Capital Stock (other than Preferred Stock) to any Person (other than
to the Company or a Wholly-Owned Subsidiary or permit any Person (other than the
Company or a Wholly-Owned Subsidiary) to own any Capital Stock (other than
Preferred Stock) of a Restricted Subsidiary of the Company, if in either case as
a result thereof such Restricted Subsidiary would no longer be a Restricted
Subsidiary of the Company; provided, however, that this Section 4.9 shall not
prohibit (x) the Company or any of its Restricted Subsidiaries from selling,
leasing or otherwise disposing of all of the Capital Stock of any Restricted
Subsidiary or (y) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary in compliance with this Indenture.
SECTION 4.10. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate (which shall include the signature of the
principal executive, financial or accounting officer of the Company) stating
that in the course of the performance by the signers of their duties as Officers
of the Company they would normally have knowledge of any Default or Event of
Default and whether or not the signers know of any Default or Event of Default
that occurred during such period. If they do, the certificate shall describe the
Default or Event of Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with TIA
Section. 314(a)(4).
SECTION 4.11. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.12. Rule 144A Information Requirement. The Company
shall furnish to the Holders of Securities, upon their request, and to
prospective purchasers thereof designated
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by such Holders, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act for so long as is required for an offer or
sale of the Securities to qualify for an exemption under Rule 144A.
SECTION 4.13. Maintenance of Office or Agency. The Company
shall maintain an office or agency (which may be an office of the Trustee,
Registrar or co-registrar) in the Borough of Manhattan, the City of New York
where Securities may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
SECTION 4.14. Taxes. The Company shall, and shall cause its
Subsidiaries to, file all tax returns required to be filed and to pay prior to
delinquency all material taxes, assessments and governmental levies except as
contested in good faith and by appropriate proceedings and for which reserves
have been established in accordance with GAAP.
SECTION 4.15. Stay, Extension and Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension, usury or other law, wherever enacted, now
or at any time hereafter in force, that would prohibit or forgive the payment of
all or any portion of the principal of or interest on the Securities, or that
may affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.16. Existence. Subject to Article 5 of this
Indenture, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its corporate existence, and the
corporate, partnership or other existence of each of the Subsidiaries, in
accordance with their respective organizational documents (as the same may be
amended from time to time) and (ii) its (and the Subsidiaries') rights (charter
and statutory), licenses and franchises; provided, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any Subsidiary, if the Board of Directors on
behalf of the Company shall determine in good faith that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
the Subsidiaries taken as a whole and that the loss thereof is not adverse in
any material respect to the Holders.
SECTION 4.17. Maintenance of Properties. The Company shall,
and shall cause each of its Subsidiaries to, maintain their properties and
assets in normal working order and
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condition as on the date of this Indenture (reasonable wear and tear excepted)
and make all necessary repairs, renewals, replacements, additions, betterments
and improvements thereto, as shall be reasonably necessary for the proper
conduct of the business of the Company and the Subsidiaries taken as a whole;
provided, that nothing herein shall prevent the Company or any of the
Subsidiaries from discontinuing any maintenance of any such properties if the
Company determines that such discontinuance is desirable in the conduct of the
business of the Company and the Subsidiaries taken as a whole.
SECTION 4.18. Maintenance of Insurance. The Company shall, and
shall cause each of its Subsidiaries to, maintain liability, casualty and other
insurance (including self-insurance consistent with prior practice) with
responsible insurance companies in such amounts and against such risks as is in
accordance with customary industry practice in the general areas in which the
Company and the Subsidiaries operate.
ARTICLE V
Successor Company
SECTION 5.1. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation, partnership, trust or limited
liability company organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary of the Successor Company as a result
of such transaction as having been Incurred by the Successor Company or
such Restricted Subsidiary at the time of such transaction), no Default or
Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Company would be able to incur at least an additional $1.00
of Indebtedness pursuant to Section 4.3(a); and
(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, transfer or lease and such supplemental indenture
(if any) comply with this Indenture.
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The Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but, in the case of a lease of all or substantially all its assets,
the Company shall not be released from the obligation to pay the principal of
and interest on the Securities.
Notwithstanding clauses (ii) and (iii) of the first sentence
of this Section 5.1: (1) any Restricted Subsidiary of the Company may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company; and (2) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
jurisdiction to realize tax or other benefits, provided, that the Trustee shall
receive an Opinion of Counsel that, as a result of such Affiliate merger, the
Holders of the Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such Affiliate merger and will be subject to
Federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such Affiliate merger had not occurred.
ARTICLE VI
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article X, and such default continues
for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, whether or not such payment shall be
prohibited by Article X;
(3) the Company fails to comply with Section 5.1;
(4) the Company fails to comply with Section 4.3, 4.4, 4.5,
4.6, or 4.8 (in each case other than a failure to repurchase Securities
when required pursuant to Section 4.6 or 4.8, which failure shall
constitute an Event of Default under Section 6.1(2));
(5) the Company fails to comply with its obligations under
Article IV hereof (other than those referred to in (4) above) and such
failure continues for 30 days after the notice specified below;
(6) the Company fails to comply with any of its other
agreements in the Securities or this Indenture and such failure
continues for 30 days after the notice specified below;
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(7) Indebtedness of the Company or any Restricted Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and the
total amount of such unpaid or accelerated Indebtedness exceeds $15.0
million and such default shall not have been cured, including by way of
repayment, or such acceleration rescinded within a 10 day period;
(8) the Company or a Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors; or takes any comparable action under any foreign
laws relating to insolvency;
(9) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order, decree or
relief remains unstayed and in effect for 60 days; or
(10) any judgment or decree for the payment of money in excess
of $15.0 million (to the extent not covered by insurance) is entered
against the Company or any Significant Subsidiary and such judgment or
decree remains undischarged or unstayed for a period of 60 days after
such judgment becomes final and non-appealable.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or
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pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (5) or
(6) of this Section 6.1 will not constitute an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified in said clause (5) or (6) after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, as soon as possible
but in any event within 30 days after the Company becomes aware of the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Default that could result in an Event of Default under clauses (4), (5),
(6), (7) or (10) of this Section 6.1. and the action that the Company proposes
to take with respect thereto.
SECTION 6.2. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.1(8) or (9)) with respect to the
Company occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in outstanding principal amount of the Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
and unpaid interest, if any, on all the Securities to be due and payable
immediately. Upon such a declaration, such principal and accrued and unpaid
interest shall, subject to Section 10.4, be immediately due and payable. If an
Event of Default specified in Section 6.1(8) or (9) with respect to the Company
occurs, the principal of and accrued and unpaid interest on all the Securities
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholders. The
Holders of a majority in principal amount of the Securities by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of acceleration. No such rescission shall affect any
subsequent Default or Event of Default or impair any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall
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not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of at least
a majority in principal amount of the Securities then outstanding may, by
written notice to the Trustee, waive an existing Default or Event of Default and
its consequences except (i) a Default or Event of Default in the payment of the
principal of or interest on a Security or (ii) a Default or Event of Default in
respect of a provision that under Section 9.2 cannot be amended without the
consent of each Securityholder affected. When a Default or Event of Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.1, that the Trustee determines is unduly prejudicial to the
rights of any other Securityholder or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.6. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal
amount of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 30
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
outstanding Securities do not give the Trustee a direction that, in the
opinion of the Trustee, is inconsistent with the request during such
30-day period.
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A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of
Default specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount then due and owing (together with interest on
any unpaid interest to the extent lawful) and the amounts provided for in
Section 7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries or
their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Indebtedness to the extent
required by Article X;
THIRD: to Securityholders for amounts due and payable on the
Securities for principal and interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company
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shall mail to each Securityholder and the Trustee a notice that states the
record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7
or a suit by Holders of more than 10% in outstanding principal amount of the
Securities.
ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise
as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall examine the certificates and opinions
to determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
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(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this
Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the
Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of
any of its rights or powers, if it shall have reasonable grounds to
believe that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section and to the
provisions of the TIA.
SECTION 7.2. Rights of Trustee.
(a) The Trustee may conclusively rely on any document believed
by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in
the document; provided, however, that the Trustee, in its sole
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and if the Trustee shall determine
to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or
by agent or attorney, at the sole cost and expense of the Company and
shall incur no liability or additional liability of any kind by reason
of such inquiry or investigation.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officers' Certificate or Opinion of Counsel.
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(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Trustee's
conduct does not constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating
to this Indenture and the Securities shall be full and complete
authorization and protection from liability in respect to any action
taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right
to be indemnified, are extended to, and shall be enforceable by, the
Trustee in each of its capacities hereunder, and each of the Trustee's
agents, custodians and other Persons employed by the Trustee to act
hereunder.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if a Trust Officer has actual knowledge
thereof, the Trustee shall mail to each Securityholder notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a Default
or Event of Default in payment of principal of, premium (if any) or interest on
any Security (including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as its board of directors, a committee of its board of
directors or a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders. The Trustee shall
not be deemed to have notice of any Default or Event of Default unless a Trust
Officer of the Trustee has actual knowledge thereof or unless written notice of
any event which is in fact a Default or Event of Default is received by the
Trustee at the Corporate Trust Office of the Trustee, and such notice references
the Securities and this Indenture.
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SECTION 7.6. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA Section. 313(a). The Trustee also shall comply with TIA
Section. 313(b). The Trustee shall also transmit by mail all reports required by
TIA Section. 313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.7. Compensation and Indemnity. The Company shall pay
to the Trustee from time to time such compensation for its services as the
parties shall agree in writing from time to time. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection,
costs of preparing and reviewing reports, certificates and other documents,
costs of preparation and mailing of notices to Securityholders and reasonable
costs of counsel retained by the Trustee in connection with the delivery of an
Opinion of Counsel or otherwise, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
damage, liability or expense (including reasonable attorneys' fees and expenses)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture (including this Section 7.7) and of defending itself
against any claims (whether asserted by any Securityholder, the Company or
otherwise). The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee may have separate counsel and the Company shall pay the
fees and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, damage, liability or expense incurred by the Trustee
through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default
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specified in Section 6.1(8) or (9) with respect to the Company, the expenses are
intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
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SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $100 million as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance.
(a) When (i) the Company delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to
Section 2.7) for cancellation or (ii) all outstanding Securities have
become due and payable, whether at maturity or as a result of the
mailing of a notice of redemption pursuant to Article III hereof and
the Company irrevocably deposits with the Trustee funds sufficient to
pay at maturity or upon redemption all outstanding Securities (other
than Securities replaced pursuant to Section 2.7), including interest
thereon to maturity or such redemption date, and if in either case the
Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 8.1(c), cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of
this
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Indenture on demand of the Company (accompanied by an Officers'
Certificate and an Opinion of Counsel stating that all conditions
precedent specified herein relating to the satisfaction and discharge
of this Indenture have been complied with) and at the cost and expense
of the Company.
(b) Subject to Sections 8.1(c) and 8.2, the Company at any
time may terminate (i) all its obligations under the Securities and
this Indenture ("legal defeasance option") or (ii) its obligations
under Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.17,
4.18, 5.1(iii) and 5.1(iv) and the operation of Sections 6.1(4),
6.1(5), 6.1(7), 6.1(8) (but only with respect to a Significant
Subsidiary), 6.1(9) (but only with respect to a Significant Subsidiary)
and 6.1(10) ("covenant defeasance option"). The Company may exercise
its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Sections 6.1(4),
6.1(5), 6.1(7) 6.1(8) (but only with respect to a Significant Subsidiary),
6.1(9) (but only with respect to a Significant Subsidiary) or 6.1(10) or because
of the failure of the Company to comply with Section 5.1(iii) or Section
5.1(iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 8.1(a) and (b),
the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7,
7.8, 8.4, 8.5 and 8.6 shall survive until the Securities have been paid
in full. Thereafter, the Company's obligations in Sections 7.7, 8.4 and
8.5 shall survive.
SECTION 8.2. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Securities to maturity or
redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
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(3) the Company shall have delivered to the Trustee an Opinion
of Counsel, subject to certain customary qualifications, to the effect
that (i) the funds so deposited will not be subject to any rights of
any other holders of Indebtedness of the Company, and (ii) the funds so
deposited will not be subject to avoidance under applicable Bankruptcy
Law;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such legal defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities and this
Indenture as contemplated by this Article VIII have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.3. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article X.
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SECTION 8.4. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them upon payment of all the obligations under this
Indenture.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company, upon request, any money held by
them for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the money
must look to the Company for payment as general creditors.
SECTION 8.5. Indemnity for U.S. Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.1. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, that the uncertificated
Securities are issued in registered form for purposes of Section 163(f)
of the Code, or in a manner such that the uncertificated Securities are
described in Section 163(f)(2)(B) of the Code;
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<PAGE> 69
(4) to make any change in Article X that would limit or
terminate the benefits available to any holder of Senior Indebtedness
(or Representatives therefor) under Article X;
(5) to add any guarantee with respect to the Securities or to
secure the Securities;
(6) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(7) to comply with any requirement of the SEC in connection
with qualifying this Indenture under the TIA;
(8) to make any other change that does not adversely affect
the rights of any Securityholder; or
(9) to provide for the issuance of the Exchange Notes, which
will have terms substantially identical in all material respects to the
Initial Notes (except that the transfer restrictions contained in the
Initial Notes will be modified or eliminated, as appropriate), and
which will be treated, together with any outstanding Initial Notes, as
a single issue of securities.
No amendment may be made to Article X that adversely affects
the rights of any holder of Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.2. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding. However,
without the consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the stated rate of or extend the stated time for
payment of interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
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(4) reduce the premium payable upon the redemption or
repurchase of any Security or change the time at which any Security may
or shall be redeemed or repurchased in accordance with this Indenture;
(5) make any Security payable in money other than that stated
in the Security;
(6) modify or affect in any manner adverse to the Holders the
terms and conditions of the obligation of the Company for the due and
punctual payment of the principal of or interest on Securities; or
(7) make any change in Section 6.4 or 6.7 or the second
sentence of this Section 9.2.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
No amendment may be made to Article X that adversely affects
the rights of any holder of Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons,
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<PAGE> 71
shall be entitled to give such consent or to revoke any consent previously given
or to take any such action, whether or not such Persons continue to be Holders
after such record date. No such consent shall become valid or effective more
than 120 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.6. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.1) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
ARTICLE X
Subordination
SECTION 10.1. Agreement To Subordinate. The Company agrees,
and each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article X, to the prior payment when due of
all Senior Indebtedness and that the subordination is for the benefit of and
enforceable by the holders of Senior Indebtedness. The Securities shall in all
respects rank pari passu with all other Senior Subordinated Indebtedness of the
Company and only Indebtedness of the Company which is Senior Indebtedness will
rank senior to the Securities in accordance with the provisions set forth
herein. All provisions of this Article X shall be subject to Section 10.11.
SECTION 10.2. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full of all Senior Indebtedness of the
Company before Securityholders shall be entitled to receive any payment
of principal of or interest on or other amounts with respect to the
Securities from the Company; and
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<PAGE> 72
(2) until the Senior Indebtedness of the Company is paid in
full, any payment or distribution to which Securityholders would be
entitled but for this Article X shall be made to holders of Senior
Indebtedness of payments or distributions made by the Company, as their
respective interests may appear.
SECTION 10.3. Default on Senior Indebtedness. During the
continuance of any default in the payment of the principal of, premium, if any,
interest or liquidated damages, if any, on Designated Senior Indebtedness or any
other default with respect to any Designated Senior Indebtedness pursuant to
which the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Company shall not pay the
principal of, premium (if any) or interest on or other amounts with respect to
the Securities or make any deposit pursuant to Section 8.1 or repurchase, redeem
or otherwise retire any Securities, ("pay the Securities") (except in (i)
Capital Stock (other than Disqualified Stock) issued by the Company to pay
interest on the Securities or issued in exchange for the Securities, (ii) in
securities substantially identical to the Securities issued by the Company in
payment of interest thereon or (iii) in securities issued by the Company which
are subordinated to Senior Indebtedness at least to the same extent as the
Securities and having an Average Life at least equal to the remaining Average
Life of the Securities) for a period (a "Payment Blockage Period") commencing
upon the receipt by the Trustee (with a copy to the Company) of written notice
(a "Blockage Notice") of such default from the Representative of the holders of
such Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) because
the default giving rise to such Blockage Notice is no longer continuing or (iii)
because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions of the immediately preceding sentence, unless the
holders of such Designated Senior Indebtedness or the Representative of such
holders shall have accelerated the maturity of such Designated Senior
Indebtedness, the Company may resume payments on the Securities, after the end
of such Payment Blockage Period. Not more than one Blockage Notice may be given
in any consecutive 360-day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness during such period.
SECTION 10.4. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company and the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness (or their Representatives) of the acceleration. If any
Designated Senior Indebtedness is outstanding, the Company shall not pay the
Securities until five Business Days after the holder or Representative of such
Designated Senior Indebtedness receives notice of such acceleration and,
thereafter, may pay the Securities, only if this Article X otherwise permits
payments at that time.
SECTION 10.5. Subrogation. After all Senior Indebtedness is
paid in full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution
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made under this Article X to holders of Senior Indebtedness which otherwise
would have been made to Securityholders is not, as between the Company and
Securityholders, a payment by the Company of Senior Indebtedness.
SECTION 10.6. Relative Rights. This Article X defines the
relative rights of Securityholders and holders of Senior Indebtedness. Nothing
in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders of Senior Indebtedness to receive distributions
otherwise payable to Securityholders.
SECTION 10.7. Subordination May Not Be Impaired by Company. No
right of any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by the failure of any of them to comply with this
Indenture.
SECTION 10.8. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.3, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article X. The Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness may give the
notice; provided, however, that, if an issue of Senior Indebtedness has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article X with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article VII shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article X shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.7.
SECTION 10.9. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.10. Article X Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment in respect of the
Securities by reason of any provision
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in this Article X shall not be construed as preventing the occurrence of a
Default or Event of Default. Nothing in this Article X shall have any effect on
the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 10.11. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebted ness or subject to the
restrictions set forth in this Article X, and none of the Securityholders shall
be obligated to pay over any such amount to the Company, any holder of Senior
Indebtedness of the Company, or any other creditor of the Company.
SECTION 10.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of Senior Indebted ness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article X. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article X, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and other facts pertinent to the rights of such
Person under this Article X, and, if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment. The provisions of Sections 7.1 and
7.2 shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article X.
SECTION 10.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness as provided in this Article X and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article X or otherwise.
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SECTION 10.15. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE XI
Miscellaneous
SECTION 11.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.
SECTION 11.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
LLS Corp.
101 South Hanley Road, Suite 400
St. Louis, MO 63105
Attention: James N. Mills
With a copy to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, TX 75201
Attention: Lawrence D. Stuart, Jr.
if to the Trustee:
The Bank of New York
101 Barclay Street Floor 21 West
New York, NY 10286
Attention: Corporate Trust Trustee Administration
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The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
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(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 11.8. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or a day on which banking institutions are not required to be open in
the State of New York. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 11.9. Governing Law. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the State of
New York including, without limitation, Section 5-1401 of the New York General
Obligations Law.
SECTION 11.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 11.13. Variable Provisions. The Company initially
appoints the Trustee as Paying Agent and Registrar and custodian with respect to
any Global Securities.
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SECTION 11.14. Qualification of Indenture. The Company shall
qualify this Indenture under the TIA in accordance with the terms and conditions
of the Registration Rights Agreement and shall pay all reasonable costs and
expenses (including attorneys' fees for the Company, the Trustee and the
Holders) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of the Indenture and the Securities and printing
this Indenture and the Securities. The Trustee shall be entitled to receive from
the Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 11.15. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
LLS CORP.
By: /s/ WESLEY D. DeHAVEN
--------------------------------
Name: Wesley D. DeHaven
-----------------------
Title: Vice President -- Finance
--------------------------
THE BANK OF NEW YORK, as trustee
By: /s/ MARY LaGUMINA
--------------------------------
Name: Mary LaGumina
---------------------------
Title: Assistant Vice President
--------------------------
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EXHIBIT A
[FORM OF FACE OF INITIAL NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE WHICH IS TWO YEARS (OR SUCH OTHER PERIOD THAT MAY HEREAFTER BE
PROVIDED UNDER RULE 144(K) AS PERMITTING RESALES OF RESTRICTED
SECURITIES BY NON-AFFILIATES
A-1
<PAGE> 81
WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY)
EXCEPT (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
PURCHASING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (E) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE.
A-2
<PAGE> 82
No. [___] Principal Amount $[______________]
CUSIP NO. ___________
11 5/8% Senior Subordinated Note due 2009
LLS Corp., an Illinois corporation, promises to pay to
[________], or registered assigns, the principal sum of [_______________]
Dollars on August 1, 2009.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Additional provisions of this Security are set forth on the
other side of this Security.
A-3
<PAGE> 83
IN WITNESS WHEREOF, the Issuer has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
LLS CORP.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By
--------------------------------
Authorized Signatory
A-4
<PAGE> 84
[FORM OF REVERSE SIDE OF INITIAL NOTE]
11 5/8% Senior Subordinated Note due 2009
1. Interest
LLS Corp., an Illinois corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above.
The Company will pay interest semiannually on February 1 and
August 1 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no interest
has been paid, from July 30, 1999. The Company shall pay interest on overdue
principal or premium, if any (plus interest on such interest to the extent
lawful), at the rate borne by the Securities to the extent lawful. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment
Prior to 10:00 a.m. (New York City time) on the date on which
any principal of or interest on any Security is due and payable, the Company
shall irrevocably deposit with the Trustee or the Paying Agent money sufficient
to pay such principal, premium, if any, and/or interest when due. The Company
will pay interest (except defaulted interest) to the Persons who are registered
Holders of Securities at the close of business on the January 15 or July 15 next
preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice to
any Securityholder. The Company or any of its domestically incorporated Wholly
Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.
A-5
<PAGE> 85
4. Indenture
The Company issued the Securities under an Indenture dated as
of July 30, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $100.0 million aggregate principal amount
(subject to Section 2.7 of the Indenture). This Security is one of the Initial
Notes referred to in the Indenture. The Securities include the Initial Notes and
any Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture and the Registration Rights Agreement. The Initial Notes and the
Exchange Notes are treated as a single class of securities under the Indenture.
The Indenture imposes certain limitations on the Incurrence of Indebtedness by
the Company and its Restricted Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and its Restricted
Subsidiaries, the purchase or redemption of Capital Stock of the Company and
Capital Stock of its Restricted Subsidiaries, certain purchases or redemptions
of Subordinated Indebtedness, the sale or transfer of assets and Capital Stock
of Restricted Subsidiaries, the issuance or sale of Capital Stock of Restricted
Subsidiaries, the business activities and investments of the Company and its
Restricted Subsidiaries and transactions with Affiliates. In addition, the
Indenture limits the ability of the Company and its Restricted Subsidiaries to
restrict distributions and dividends from Subsidiaries.
5. Optional Redemption
Except as set forth in this paragraph 5, the Securities will
not be redeemable at the option of the Company prior to August 1, 2004. On and
after such date, the Securities will be redeemable, at the Company's option, in
whole or in part, at any time upon not less than 30 nor more than 60 days' prior
notice mailed by first-class mail to each Holder's registered address, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
If redeemed during the 12-month period commencing on August 1
of the years set forth below:
A-6
<PAGE> 86
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2004.......................................... 105.813%
2005.......................................... 103.875%
2006.......................................... 101.938%
2007 and thereafter........................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to August 1, 2002, the Company may redeem in the aggregate up to
$35.0 million principal amount of the Securities with the Net Cash Proceeds of
one or more Equity Offerings by the Company so long as there is a Public Market
at the time of such redemption, at a redemption price (expressed as a percentage
of principal amount) of 111.625%, plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date in
respect of then outstanding Securities); provided, however, that at least $65.0
million of the Securities must remain outstanding after each such redemption.
At any time on or prior to August 1, 2004, the Securities may
also be redeemed in whole, but not in part, at the option of the Company upon
the occurrence of a Change of Control, upon not less than 30 nor more than 60
days' prior notice (but in no event more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued and unpaid interest, if any, to,
the date of redemption (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date in respect of then outstanding Securities).
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at its registered address. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon the occurrence of a Change of Control, each Holder of
Securities will have the right to require the Company to repurchase all or any
part of such Holder's
A-7
<PAGE> 87
Securities at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase as
provided in, and subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company agrees,
and each Securityholder by accepting a Security agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give them
effect and appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange (i) any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
for a period beginning 15 days before a selection of Securities to be redeemed
and ending on the date of such selection or (ii) any Securities for a period
beginning 15 days before an interest payment date and ending on such interest
payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company, at its request, unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
A-8
<PAGE> 88
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company may, at any time, terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the Securities then
outstanding and (ii) any past default or noncompliance with any provisions may
be waived with the written consent of the Holders of at least a majority in
principal amount of the Securities then outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add any
guarantee with respect to the Securities or to secure the Securities, or to add
to the covenants of the Company for the benefit of the Holders, or to surrender
any right or power conferred on the Company, or to comply with any request of
the SEC in connection with qualifying the Indenture under the Act, or to make
any other change that does not adversely affect the rights of any
Securityholder, or to provide for the issuance of Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, upon required repurchase, upon declaration or otherwise;
(iii) failure by the Company to comply with other agreements in the Indenture or
the Securities, in certain cases subject to notice and lapse of time; (iv)
certain accelerations (including failure to pay within any grace period after
final maturity) of other indebtedness of the Company or any Restricted
Subsidiary if the amount accelerated (or so unpaid) exceeds $15.0 million and
such acceleration or failure to pay is not rescinded or cured, including by way
of repayment, within a 10 day period; (v) certain events of bankruptcy or
insolvency with respect to the Company or any Significant Subsidiary; and (vi)
certain final, non-appealable judgments or decrees for the payment of money in
excess of $15.0 million. If an Event of Default (other than as specified in the
following sentence) occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare the principal of and
accrued and unpaid interest, if any, on all of the Securities to be due and
payable immediately.
A-9
<PAGE> 89
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default without further action by any Holder of the Trustee.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default or Event of Default (except a Default or Event of Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
A-10
<PAGE> 90
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York including, without
limitation, Section 5-1401 of the New York General Obligations Law.
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
LLS Corp.
101 South Hanley Road, Suite 400
St. Louis, MO 63105
Attention of General Counsel
A-11
<PAGE> 91
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ______________________________ as agent to transfer
this Security on the books of the Company. The agent may substitute another to
act for him.
Date:____________________ Your Signature:_________________________
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed)
- -------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1[ ] acquired for the undersigned's own account, without transfer;
or
2[ ] transferred to the Company; or
3[ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
4[ ] transferred pursuant to an effective registration statement
under the Securities Act; or
A-12
<PAGE> 92
5[ ] transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
6[ ] transferred to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933), that has furnished to the Trustee a
signed letter containing certain representations and
agreements (the form of which letter appears as Exhibit C to
the Indenture); or
7[ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
---------------------------
Signature
Signature Guarantee:
- ------------------------------ ---------------------------
(Signature must be guaranteed) Signature
- ------------------------------------------------------------
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
A-13
<PAGE> 93
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal Amount of this Signature of authorized
Date of Principal Amount of Principal Amount of Global Security following signatory of Trustee or
Exchange this Global Security this Global Security such decrease or increase Securities Custodian
- ---------- --------------------- --------------------- ------------------------- -----------------------
<S> <C> <C> <C> <C>
</TABLE>
A-14
<PAGE> 94
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state
the amount you want to have purchased in aggregate principal amount (must be
integral multiple of $1,000): $
Date: Your Signature
---------- ------------------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
-------------------------------------------------
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
A-15
<PAGE> 95
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
No. [_____] Principal Amount $[____________]
CUSIP NO. _____________
11 5/8% Senior Subordinated Notes due 2009
LLS Corp., an Illinois corporation, promises to pay to
[____________], or registered assigns, the principal sum of [__________] Dollars
on August 1, 2009.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Additional provisions of this Security are set forth on the
other side of this Security.
B-1
<PAGE> 96
IN WITNESS WHEREOF, the Issuer has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
LLS CORP.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
-------------------------------
Authorized Signatory
B-2
<PAGE> 97
[FORM OF REVERSE SIDE OF EXCHANGE NOTE]
11 5/8% Senior Subordinated Note due 2009
1. Interest
LLS Corp., an Illinois corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above.
The Company will pay interest semiannually on February 1 and
August 1 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no interest
has been paid, from July 30, 1999. The Company shall pay interest on overdue
principal or premium, if any (plus interest on such interest to the extent
lawful), at the rate borne by the Securities to the extent lawful. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment
Prior to 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company shall
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such principal, premium, if any, and/or interest when due. The Company will pay
interest (except defaulted interest) to the Persons who are registered Holders
of the Securities at the close of business on the January 15 or July 15 next
preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice to any
Securityholder. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
B-3
<PAGE> 98
4. Indenture
The Company issued the Securities under an Indenture dated as of
July 30, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $100.0 million aggregate principal amount
(subject to Section 2.7 of the Indenture). This Security is one of the Exchange
Notes referred to in the Indenture. The Securities include the Initial Notes and
any Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture and the Registration Rights Agreement. The Initial Notes and the
Exchange Notes are treated as a single class of securities under the Indenture.
The Indenture imposes certain limitations on the Incurrence of Indebtedness by
the Company and its Restricted Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and its Restricted
Subsidiaries, the purchase or redemption of Capital Stock of the Company and
Capital Stock of its Restricted Subsidiaries, certain purchases or redemptions
of Subordinated Indebtedness, the sale or transfer of assets and Capital Stock
of Restricted Subsidiaries, the issuance or sale of Capital Stock of Restricted
Subsidiaries, the business activities and investments of the Company and its
Restricted Subsidiaries and transactions with Affiliates. In addition, the
Indenture limits the ability of the Company and its Restricted Subsidiaries to
restrict distributions and dividends from Subsidiaries.
5. Optional Redemption
Except as set forth in this paragraph 5, the Securities will not
be redeemable at the option of the Company prior to August 1, 2004. On and after
such date, the Securities will be redeemable, at the Company's option, in whole
or in part, at any time upon not less than 30 nor more than 60 days' prior
notice mailed by first-class mail to each Holder's registered address, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
If redeemed during the 12-month period commencing on August 1, of
the years set forth below:
B-4
<PAGE> 99
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2004.......................................... 105.813%
2005.......................................... 103.875%
2006.......................................... 101.983%
2007 and thereafter........................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to August 1, 2002, the Company may redeem in the aggregate up to
$35.0 million principal amount of the Securities with the Net Cash Proceeds of
one or more Equity Offerings by the Company so long as there is a Public Market
at the time of such redemption, at a redemption price (expressed as a percentage
of principal amount) of 111.625%, plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date in
respect of then outstanding Securities); provided, however, that at least $65.0
million of the Securities must remain outstanding after each such redemption.
At any time on or prior to August 1, 2004, the Securities may
also be redeemed in whole, but not in part, at the option of the Company upon
the occurrence of a Change of Control, upon not less than 30 nor more than 60
days' prior notice (but in no event more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued and unpaid interest, if any, to,
the date of redemption (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date in respect of then outstanding Securities).
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at its registered address. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon the occurrence of a Change of Control, each Holder of
Securities will have the right to require the Company to repurchase all or any
part of such Holder's
B-5
<PAGE> 100
Securities at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase as
provided in, and subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company agrees,
and each Securityholder by accepting a Security agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give them
effect and appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange (i) any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or for a period beginning 15 days before a selection of Securities to be
redeemed and ending on the date of such selection or (ii) any Securities for a
period beginning 15 days before an interest payment date and ending on such
interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company, at its request, unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
B-6
<PAGE> 101
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company may, at any time, terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the Securities then
outstanding and (ii) any past default or noncompliance with any provisions may
be waived with the written consent of the Holders of at least a majority in
principal amount of the Securities then outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or comply
with Article 5 of the Indenture, or provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add any guarantee with
respect to the Securities or secure the Securities, or to add to the covenants
of the Company for the benefit of the Holders, or to surrender any right or
power conferred on the Company, or to comply with any request of the SEC in
connection with qualifying the Indenture under the Act, or to make any other
change that does not adversely affect the rights of any Securityholder, or to
provide for the issuance of Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events or Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, upon required repurchase, upon declaration or otherwise;
(iii) failure by the Company to comply with other agreements in the Indenture or
the Securities, in certain cases subject to notice and lapse of time; (iv)
certain accelerations (including failure to pay within any grace period after
final maturity) of other Indebtedness of the Company or any Restricted
Subsidiary if the amount accelerated (or so unpaid) exceeds $15.0 million and
such acceleration or failure to pay is not rescinded or cured, including by way
of repayment, within a 10 day period; (v) certain events of bankruptcy or
insolvency with respect to the Company or any Significant Subsidiary; and (vi)
certain final, non-appealable judgments or decrees for the payment of money in
excess of $15.0 million. If an Event of Default (other than as specified in the
following sentence) occurs and is continuing, the Trustee or Holders of at least
25% in principal amount of the Securities may declare the principal of and
accrued and unpaid interest, if any, on all of the Securities to be due and
payable immediately.
B-7
<PAGE> 102
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default without further action by any Holder or the Trustee.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default or Event of Default (except a Default or Event of Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
B-8
<PAGE> 103
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York including, without
limitation, Section 5-1401 of the New York General Obligations Law.
The Company will furnish to any Securityholder upon request and without
charge to the Securityholder a copy of the Indenture. Requests may be made to:
LLS Corp.
101 South Hanley Road, Suite 400
St. Louis, MO 63105
Attention of General Counsel
B-9
<PAGE> 104
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ________________________________ as agent to transfer
this Security on the books of the Company. The agent may substitute another to
act for him.
Date: Your Signature
---------------- ----------------------
Signature Guarantee:
----------------------------------------------------------
(Signature must be guaranteed)
- -------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-10
<PAGE> 105
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state
the amount you want to have purchased in aggregate principal amount (must be
integral multiple of $1,000): $
Date: Your Signature:
------------------------ ----------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
-------------------------------------------------
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-11
<PAGE> 106
EXHIBIT C
Transferee Letter of Representation
LLS Corp.
c/o The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Trustee Administration
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the 11 5/8% Senior Subordinated Notes due 2009 (the "Notes")
of LLS Corp. (the "Company").
Upon transfer, the Notes would be registered in the name of
the new beneficial owner as follows:
Name:
-----------------------------------
Address:
--------------------------------
Taxpayer ID Number:
---------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor," at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risk of our investment in the Notes and invest in
or purchase securities similar to the Notes in the normal course of our
business. We and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
C-1
<PAGE> 107
2. We understand that the Notes have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date which is two years after the
later of the date of original issue and the last date on which the Company or
any affiliate of the Company was the owner of such Notes (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been declared effective under
the Securities Act, (c) in a transaction complying with the requirements of Rule
144A under the Securities Act, to a person we reasonably believe is a qualified
institutional buyer under Rule 144A (a "QIB") that purchases for its own account
or for the account of a QIB and to whom notice is given that the transfer is
being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur
outside the United States within the meaning of Regulation S under the
Securities Act, (e) to an institutional "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing
for its own account or for the account of such an institutional "accredited
investor," in each case in a minimum principal amount of Notes of $250,000 or
(f) pursuant to any other available exemption from the registration requirements
of the Securities Act, subject in each of the foregoing cases to any requirement
of law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Notes is proposed to be made pursuant to
clause (e) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it
is acquiring such Notes for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to any offer, sale or other transfer
prior to the Resale Termination Date of the Notes pursuant to clauses (d), (e)
or (f) above to require the delivery of an opinion of counsel, certifications
and/or other information satisfactory to the Company and the Trustee.
TRANSFEREE:
---------------------
BY
-----------------------------
C-2
<PAGE> 1
EXHIBIT 4.2
LLS CORP.
$100,000,000 11 5/8% Senior Subordinated Notes due 2009
REGISTRATION RIGHTS AGREEMENT
July 30, 1999
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Ladies and Gentlemen:
LLS Corp., an Illinois corporation (the "Company"), is issuing
and selling to Jefferies & Company, Inc. (the "Purchaser"), upon the terms set
forth in a purchase agreement, dated as of July 23, 1999 (the "Purchase
Agreement"), $100,000,000 aggregate principal amount of its 11 5/8% Senior
Subordinated Notes due 2009, Series A (the "Notes"). As an inducement to the
Purchaser to enter into the Purchase Agreement, the Company agrees with the
Purchaser, for the benefit of the holders of the Securities (defined below)
(including, without limitation, the Purchaser), as follows:
1. Definitions
Capitalized terms used herein without definition shall have
their respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
Advice: See Section 5.
Agreement: This Registration Rights Agreement.
Applicable Period: See Section 2(f).
<PAGE> 2
Business Days: Any day other than (i) Saturday or Sunday, or
(ii) a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to be closed.
Closing Date: July 30, 1999.
DTC: See Section 5(i).
Effectiveness Date: The 150th day following the Closing Date.
Effectiveness Period: See Section 3(a).
Event: See Section 4(a).
Event Date: See Section 4(a).
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
Exchange Offer Registration Statement: See Section 2(a).
Exchange Securities: 11 5/8% Senior Subordinated Notes due
2009, Series B, of the Company, identical in all respects to the Notes, except
for references to series and restrictive legends.
Filing Date: The 90th day following the Closing Date.
Holder: Each holder of Registrable Securities.
Indenture: The Indenture, dated the date hereof, by and
between the Company and The Bank of New York, as trustee, pursuant to which the
Notes are being issued, as amended or supplemented from time to time, in
accordance with the terms thereof.
Initial Shelf Registration: See Section 3(a).
Losses: See Section 7(a).
2
<PAGE> 3
NASD: The National Association of Securities Dealers, Inc.
Participating Broker-Dealer: See Section 2(f).
Person: An individual, trustee, corporation, partnership,
limited liability company, joint stock company, joint venture, trust,
unincorporated organization or government or any agency or political subdivision
thereof, union, business association, firm or other entity.
Private Exchange: See Section 2(g).
Private Exchange Securities: See Section 2(g).
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Securities covered by
such Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Registrable Securities: (i) Notes, (ii) Private Exchange
Securities and (iii) Exchange Securities received in the Exchange Offer that may
not be sold without restriction under federal or state securities law.
Registration Statement: Any registration statement of the
Company that covers any of the Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 under the Securities Act, as such rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.
3
<PAGE> 4
Rule 144A: Rule 144A under the Securities Act, as such rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Notes, the Private Exchange Securities and the
Exchange Securities, collectively.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(i).
Shelf Registration: The Initial Shelf Registration and any
Subsequent Shelf Registration.
Special Counsel: Counsel chosen by the holders of a majority
in aggregate principal amount of Securities.
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if any, the
trustee under any indenture governing the Exchange Securities or the Private
Exchange Securities.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
Weekly Liquidated Damages Amount: means, with respect to any
Event, an amount per week per $1,000 principal amount of Registrable Securities
equal to (i) $.05 for the first 90-day period immediately following the
applicable Event Date, (ii) $.10 for the second 90-day period immediately
following the
4
<PAGE> 5
applicable Event Date, (iii) $.15 for the third 90-day period immediately
following the applicable Event Date, and (iv) $.20 thereafter.
2. Exchange Offer
(a) The Company shall:
(i) prepare and file with the SEC promptly after the date
hereof, but in no event later than the Filing Date, a registration statement
(the "Exchange Offer Registration Statement") on an appropriate form under the
Securities Act with respect to a proposed offer (the "Exchange Offer") to the
Holders to issue and deliver to such Holders, in exchange for the Notes, a like
aggregate principal amount of Exchange Securities,
(ii) use its best efforts to cause the Exchange Offer
Registration Statement to become effective as promptly as practicable after the
filing thereof, but in no event later than the Effectiveness Date,
(iii) keep the Exchange Offer Registration Statement
effective until the consummation of the Exchange Offer pursuant to its terms,
and
(iv) unless the Exchange Offer would not be permitted by a
policy of the SEC, commence the Exchange Offer and use its best efforts to
issue, on or prior to 30 days after the date on which the Exchange Offer
Registration Statement is declared effective, Exchange Securities in exchange
for all Notes tendered prior thereto in the Exchange Offer.
The Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate applicable law or any applicable interpretation
of the staff of the SEC.
(b) The Exchange Securities shall be issued under, and
entitled to the benefits of, the Indenture or a trust indenture that is
identical to the Indenture (other than such changes as are necessary to comply
with any requirements of the SEC to effect or maintain the qualification thereof
under the TIA).
(c) In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with an appropriate
letter of
5
<PAGE> 6
transmittal that is an exhibit to the Exchange Offer Registration Statement, and
any related documents;
(ii) keep the Exchange Offer open for not less than 20
Business Days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law);
(iii) utilize the services of a depositary for the
Exchange Offer with an address in the Borough of Manhattan, The City of New
York;
(iv) permit Holders to withdraw tendered Notes at any
time prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and
(v) otherwise comply with all laws applicable to the
Exchange Offer.
(d) As soon as practicable after the close of the Exchange
Offer, the Company shall:
(i) accept for exchange all Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and
deliver to each Holder of Notes, Exchange Securities equal in aggregate
principal amount to the Notes of such Holder so accepted for exchange.
(e) Interest on each Exchange Security and Private Exchange
Security will accrue from the last interest payment date on which interest was
paid on the Notes surrendered in exchange therefor or, if no interest has been
paid on the Notes, from the date of original issue of the Notes. Each Exchange
Security and Private Exchange Security shall bear interest at the rate set forth
thereon; provided, that interest with respect to the period prior to the
issuance thereof shall accrue at the rate or rates borne by the Notes
surrendered in exchange therefor from time to time during such period.
6
<PAGE> 7
(f) The Company shall include within the Prospectus contained
in the Exchange Offer Registration Statement a section entitled "Plan of
Distribution," containing a summary statement of the positions taken or policies
made by the staff of the SEC with respect to the potential "underwriter" status
of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of Exchange Securities received by such broker-dealer in
the Exchange Offer (a "Participating Broker-Dealer"). Such "Plan of
Distribution" section shall also allow the use of the Prospectus by all Persons
subject to the prospectus delivery requirements of the Securities Act, including
(without limitation) all Participating Brokers-Dealers, and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Securities. The Company shall use its reasonable best efforts to keep
the Exchange Offer Registration Statement effective and to amend and supplement
the Prospectus to be lawfully delivered by all Persons subject to the prospectus
delivery requirement of the Securities Act for such period of time as such
Persons must comply with such requirements in order to resell the Exchange
Securities (the "Applicable Period").
(g) If, prior to consummation of the Exchange Offer, the
Purchaser holds any Notes acquired by it and having the status as an unsold
allotment in the initial distribution of the Notes, the Company shall, upon the
request of the Purchaser, simultaneously with the delivery of the Exchange
Securities in the Exchange Offer, issue (pursuant to the same indenture as the
Exchange Securities) and deliver to the Purchaser, in exchange for the Notes
held by the Purchaser (the "Private Exchange"), a like principal amount of debt
securities of the Company that are identical to the Exchange Securities (the
"Private Exchange Securities"). The Company shall use its reasonable best
efforts to cause the Private Exchange Securities to bear the same CUSIP number
as the Exchange Securities.
(h) The Company may require each Holder participating in the
Exchange Offer to represent to the Company that, at the time of the consummation
of the Exchange Offer, (i) any Exchange Securities received by such Holder in
the Exchange Offer will be acquired in the ordinary course of its business, (ii)
such Holder will have no arrangement or understanding with any Person to
participate in the distribution of the Exchange Securities within the meaning of
the Securities Act or resale of the Exchange Securities in violation of the
Securities Act, (iii) if such Holder is not a broker-dealer, that it is not
engaged in and does not intend to engage in, the distribution of the Exchange
Securities, (iv) if such Holder is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Notes that were acquired as a
result of market-making or other trading activities, that it will deliver a
prospectus, as required by law, in connection with any resale of such Exchange
7
<PAGE> 8
Securities, and (v) if such Holder is an affiliate of the Company, that it will
comply with the registration and prospectus delivery requirements of the
Securities Act applicable to it.
(i) If (i) prior to the consummation of the Exchange Offer,
either the Company or the Holders of a majority in aggregate principal amount of
Registrable Securities determines that the Exchange Securities would not, upon
receipt, be tradeable by the Holders thereof without restriction under the
Securities Act and the Exchange Act and without material restrictions under
applicable Blue Sky or state securities laws, (ii) applicable interpretations of
the staff of the SEC would not permit the consummation of the Exchange Offer
prior to the Effectiveness Date, (iii) subsequent to the consummation of the
Private Exchange, the Purchaser so requests, (iv) the Exchange Offer is not
consummated within 180 days of the Closing Date for any reason or (v) in the
case of any Holder not permitted to participate in the Exchange Offer or of any
Holder participating in the Exchange Offer that receives Exchange Securities
that may not be sold without restriction under state and federal securities laws
(other than due solely to the status of such Holder as an affiliate of the
Company within the meaning of the Securities Act) and, in either case
contemplated by this clause (v), such Holder notifies the Company within 120
days of consummation of the Exchange Offer, then the Company shall promptly
deliver to the Holders (or in the case of any occurrence of the event described
in clause (v) hereof, to any such Holder) and the Trustee notice thereof (the
"Shelf Notice") and shall as promptly as possible thereafter file an Initial
Shelf Registration pursuant to Section 3.
3. Shelf Registration
If a Shelf Notice is required to be delivered pursuant to
Section 2(i)(i), (ii), (iii) or (iv), then this Section 3 shall apply to all
Registrable Securities. Otherwise, upon consummation of the Exchange Offer in
accordance with Section 2, the provisions of this Section 3 shall apply solely
with respect to (i) Notes held by any Holder thereof not permitted to
participate in the Exchange Offer and (ii) Exchange Securities that are not
freely tradeable as contemplated by Section 2(i)(v) hereof.
(a) Initial Shelf Registration. The Company shall prepare and
file with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable Securities
(the "Initial Shelf Registration"). If the Company has not yet filed an Exchange
Offer Registration Statement, the Company shall file with the SEC the Initial
Shelf Registration on or prior to the Filing Date. Otherwise, the Company shall
use its reasonable best efforts to file the Initial Shelf Registration within 30
days of the delivery of the Shelf Notice
8
<PAGE> 9
or as promptly as possible following the request of the Purchaser. The Initial
Shelf Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Securities for resale by such Holders in the
manner or manners designated by them (including, without limitation, one or more
underwritten offerings); provided, that no Holder (other than the Purchaser)
shall be entitled to have Notes held by it covered by the Initial Shelf
Registration unless such Holder agrees to be bound by all of the provisions of
this Agreement applicable to such Holder. The Company shall (i) not permit any
securities other than the Registrable Securities to be included in any Shelf
Registration, and (ii) use its best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act as promptly as
practicable after the filing thereof and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date that is 24 months
after the Effectiveness Date (subject to extension pursuant to the last
paragraph of Section 5 hereof) (the "Effectiveness Period"), or such shorter
period ending when (i) all Registrable Securities covered by the Initial Shelf
Registration have been sold or (ii) a Subsequent Shelf Registration covering all
of the Registrable Securities has been declared effective under the Securities
Act.
(b) Subsequent Shelf Registrations. If any Shelf Registration
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the Registrable Securities
registered thereunder), the Company shall use its best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in any
event shall within 30 days of such cessation of effectiveness amend the Shelf
Registration in a manner reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Securities (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Company shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as practicable
after such filing and to keep such Subsequent Shelf Registration continuously
effective for a period equal to the number of days in the Effectiveness Period
less the aggregate number of days during which the Initial Shelf Registration,
and any Subsequent Shelf Registration, was previously effective.
4. Liquidated Damages.
(a) The Company acknowledges and agrees that the Holders will
suffer damages, and that it would not be feasible to ascertain the extent of
such damages with precision, if the Company fails to fulfill its obligations
hereunder.
9
<PAGE> 10
Accordingly, in the event of such failure, the Company agrees to pay liquidated
damages to each Holder under the circumstances and to the extent set forth
below:
(i) if neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration has been filed with the SEC on or prior to the
Filing Date; or
(ii) if neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration is declared effective by the SEC on or prior to
the Effectiveness Date; or
(iii) if the Company has not exchanged Exchange Securities for
all Notes validly tendered in accordance with the terms of the Exchange Offer
within 45 days after the date on which an Exchange Offer Registration Statement
is declared effective by the SEC; or
(iv) if a Shelf Registration is filed and declared effective
by the SEC but thereafter ceases to be effective without being succeeded within
30 days by a Subsequent Shelf Registration filed and declared effective;
(each of the foregoing an "Event," and the date on which the Event occurs being
referred to herein as an "Event Date").
Upon the occurrence of any Event, the Company shall pay, or
cause to be paid, in addition to amounts otherwise due under the Indenture and
the Registrable Securities, as liquidated damages, and not as a penalty, to each
Holder for each weekly period beginning on the Event Date an amount equal to the
Weekly Liquidated Damages Amount per $1,000 principal amount of Registrable
Securities held by such Holder; provided, that such liquidated damages will, in
each case, cease to accrue (subject to the occurrence of another Event) on the
date on which all Events have been cured. An Event under clause (i) above shall
be cured on the date that either the Exchange Offer Registration Statement or
the Initial Shelf Registration is filed with the SEC; an Event under clause (ii)
above shall be cured on the date that either the Exchange Offer Registration
Statement or the Initial Shelf Registration is declared effective by the SEC; an
Event under clause (iii) above shall be cured on the earlier of the date (A) the
Exchange Offer is consummated with respect to all Notes validly tendered or (B)
the Company delivers a Shelf Notice to the Holders; and an Event under clause
(iv) above shall be cured on the earlier of (A) the date on which the applicable
Shelf Registration is no longer subject to an order suspending the effectiveness
thereof or proceedings relating thereto or (B) a new Subsequent Shelf
Registration is declared effective.
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<PAGE> 11
(b) The Company shall notify the Trustee within five Business
Days after each Event Date. The Company shall pay the liquidated damages due on
the Registrable Securities by depositing with the Trustee, in trust, for the
benefit of the Holders thereof, by 12:00 noon, New York City time, on or before
the applicable semi-annual interest payment date for the Registrable Securities,
immediately available funds in sums sufficient to pay the liquidated damages
then due. The liquidated damages amount due shall be payable on each interest
payment date to the record Holder entitled to receive the interest payment to be
made on such date as set forth in the Indenture.
5. Registration Procedures
In connection with the registration of any Securities pursuant
to Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of such Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall:
(a) Prepare and file with the SEC, as soon as practicable
after the date hereof but in any event on or prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by Section 2 or
3, and use its best efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; provided, that, if (i) such
filing is pursuant to Section 3 or (ii) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto,
the Company shall, if requested, furnish to and afford the Holders of the
Registrable Securities covered by such Registration Statement, their Special
Counsel, each Participating Broker-Dealer, the managing underwriters, if any,
and their counsel a reasonable opportunity to review and make available for
inspection by such Persons copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed, such financial and other information and books and records
of the Company, and cause the officers, directors and employees of the Company,
Company counsel and independent certified public accountants of the Company, to
respond to such inquiries, as shall be necessary, in the opinion of the
respective counsel to such Holders, Participating Broker-Dealer and
underwriters, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company may require each Holder to agree to keep
confidential any non-public information relating to the Company received by such
Holder and not disclose such
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information (other than to an Affiliate or prospective purchaser who agrees to
respect the confidentiality provisions of this Section 5(a)) until such
information has been made generally available to the public unless the release
of such information is required by law or necessary to respond to inquiries of
regulatory authorities (including the National Association of Insurance
Commissioners, or similar organizations or their successors). The Company shall
not file any Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders must be afforded an
opportunity to review prior to the filing of such document, if the Holders of a
majority in aggregate principal amount of the Registrable Securities covered by
such Registration Statement, their Special Counsel, any Participating
Broker-Dealer or the managing underwriters, if any, or their counsel shall
reasonably object within 5 Business Days after receipt thereof.
(b) Provide an indenture trustee for the Registrable
Securities or the Exchange Securities, as the case may be, and cause the
Indenture (or other indenture relating to the Registrable Securities) to be
qualified under the TIA not later than the effective date of the first
Registration Statement; and in connection therewith, to effect such changes to
such indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its reasonable best
efforts to cause such trustee to execute, all documents as may be required to
effect such changes, and all other forms and documents required to be filed with
the SEC to enable such indenture to be so qualified in a timely manner.
(c) Prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the time periods
required hereby; cause the related Prospectus to be supplemented by any
Prospectus supplement required by Applicable Law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply in all material respects with the provisions of the
Securities Act and the Exchange Act applicable thereto with respect to the
disposition of all securities covered by such Registration Statement, as so
amended, or in such Prospectus, as so supplemented, in accordance with the
intended methods of distribution set forth in such Registration Statement or
Prospectus as so amended.
(d) Furnish to such selling Holders and Participating
Broker-Dealers who so request (i) upon the Company's receipt, a copy of the
order of the SEC declaring such Registration Statement and any post-effective
amendment thereto effective and (ii) such reasonable number of copies of such
Registration Statement and of each amendment and supplement thereto (in each
case including any
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<PAGE> 13
documents incorporated therein by reference and all exhibits), (iii) such
reasonable number of copies of the Prospectus included in such Registration
Statement (including each preliminary Prospectus), and such reasonable number of
copies of the final Prospectus as filed by the Company pursuant to Rule 424(b)
under the Securities Act, in conformity with the requirements of the Securities
Act, and (iv) such other documents (including any amendments required to be
filed pursuant to clause (c) of this Section), as any such Person may reasonably
request. The Company hereby consents to the use of the Prospectus by each of the
selling Holders of Registrable Securities or each such Participating
Broker-Dealer, as the case may be, and the underwriters or agents, if any, and
dealers (if any), in connection with the offering and sale of the Registrable
Securities covered by, or the sale by Participating Broker-Dealers of the
Exchange Securities pursuant to, such Prospectus and any amendment thereto.
(e) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Registrable Securities, their
Special Counsel, each Participating Broker-Dealer and the managing underwriters,
if any, promptly (but in any event within two Business Days), and confirm such
notice in writing, (i) when a Prospectus has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective under the Securities Act, (ii) of the issuance by the SEC of any stop
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any Prospectus or the initiation of any
proceedings for that purpose, (iii) if, at any time when a Prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Securities, the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 5(m) below cease to be true and correct in any material respect, (iv)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of a Registration Statement
or any of the Registrable Securities or the Exchange Securities to be sold by
any Participating Broker-Dealer for offer or sale in any jurisdiction, or the
contemplation, initiation or threatening of any proceeding for such purpose, (v)
of the happening of any event that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus or
documents so that it will not contain any untrue statement of a material fact or
omit to state any
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<PAGE> 14
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(f) Use its best efforts to register or qualify, and, if
applicable, to cooperate with the selling Holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, Securities to be included in a Registration Statement for
offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling Holder, Participating Broker-Dealer or
the managing underwriters reasonably request in writing; and, if Securities are
offered other than through an Underwritten Offering, the Company shall cause its
counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(f) at the expense
of the Company; keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Securities
covered by the applicable Registration Statement, provided, however, that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) take action that would
subject it to general service of process in any jurisdiction where it is not so
subject or (iii) take action that would subject it to taxation in respect of
doing business in any such jurisdiction where it is not then subject.
(g) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Securities for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible time.
(h) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, and if requested by the managing underwriters, if any, or the
Holders of a majority in aggregate principal amount of the Registrable
Securities, (i) promptly incorporate in a Prospectus or post-effective amendment
such information as the managing underwriters, if any, or such Holders
reasonably request to be
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<PAGE> 15
included therein as required to comply with any Applicable Law and (ii) make all
required filings of such Prospectus or such post-effective amendment as soon as
practicable after the Company has received notification of such matters required
by Applicable Law to be incorporated in such Prospectus or post-effective
amendment.
(i) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company ("DTC"); and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, or Holders may request.
(j) If (i) a Shelf Registration is filed pursuant to Section 3
or (ii) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(e)(v) or 5(e)(vi) above, as promptly as practicable prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder
or to the purchasers of the Exchange Securities to whom such Prospectus will be
delivered by a Participating Broker-Dealer, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(k) Use its reasonable best efforts to cause the Securities
covered by a Registration Statement to be rated with the appropriate rating
agencies, if appropriate, if so requested by the holders of a majority in
aggregate principal amount of Securities covered by such Registration Statement
or the managing underwriters, if any.
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<PAGE> 16
(l) Prior to the effective date of the first Registration
Statement relating to the Securities, (i) provide the applicable trustee with
printed certificates for the Securities in a form eligible for deposit with DTC
and (ii) provide a CUSIP number for each of the Securities.
(m) If a Shelf Registration is filed pursuant to Section 3,
enter into such agreements (including, if requested, an underwriting agreement
in form, scope and substance as is customary in Underwritten Offerings) and take
all such other actions in connection therewith (including those reasonably
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of Registrable Securities being sold) in order to
expedite or facilitate the registration or the disposition of such Registrable
Securities, and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an Underwritten
Registration, (i) make such representations and warranties to the Holders and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries, and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, in
form, substance and scope as are customarily made by issuers to underwriters in
Underwritten Offerings, and confirm the same if and when reasonably requested;
(ii) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the Holders of a majority
in aggregate principal amount of the Registrable Securities being sold),
addressed to each selling Holder and each of the underwriters, if any, covering
the matters customarily covered in opinions requested in Underwritten Offerings;
(iii) obtain "cold comfort" letters and updates thereof (which letters and
updates (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters) from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the underwriters
and each selling Holder, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with Underwritten Offerings and such other matters as reasonably requested by
underwriters; and (iv) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority in principal amount of the
Registrable Securities being sold and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties of the
Company and its subsidiaries made pursuant to clause (i) above and to evidence
compliance with any conditions contained in the underwriting agreement or other
similar agreement entered into by the Company.
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<PAGE> 17
(n) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing on the first
day of the fiscal quarter following each fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company after the
effective date of a Registration Statement, which statements shall cover said
12-month periods.
(o) Upon consummation of an Exchange Offer or Private
Exchange, obtain an opinion of counsel to the Company (in form, scope and
substance reasonably satisfactory to the Purchaser), addressed to all Holders
participating in the Exchange Offer or Private Exchange, as the case may be, to
the effect that (i) the Company has duly authorized, executed and delivered the
Exchange Securities or the Private Exchange Securities, as the case may be, and
the Indenture, and (ii) the Exchange Securities or the Private Exchange
Securities, as the case may be, and the Indenture constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforcement may be
subject to (x) applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and (y) general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
(p) If an Exchange Offer or Private Exchange is to be
consummated, upon delivery of the Registrable Securities by such Holders to the
Company (or to such other Person as directed by the Company) in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be, the
Company shall mark, or caused to be marked, on such Registrable Securities that
such Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, and in no
event shall such Registrable Securities be marked as paid or otherwise
satisfied.
(q) Cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
NASD.
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<PAGE> 18
(r) Use its reasonable best efforts to take all other steps
necessary to effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Securities
or Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities as the Company may, from time to time, reasonably request in writing.
The Company may exclude from such registration the Registrable Securities of any
seller or Exchange Securities of any Participating Broker-Dealer who
unreasonably fails to furnish such information.
Each Holder and each Participating Broker-Dealer agrees by
acquisition of such Registrable Securities or Exchange Securities of any
Participating Broker-Dealer that, upon receipt of written notice from the
Company of the happening of any event of the kind described in Section 5(e)(ii),
5(e)(iv), 5(e)(v) or 5(e)(vi), such Holder will forthwith discontinue
disposition (in the jurisdictions specified in a notice of a 5(e)(iv) event, and
elsewhere in a notice of a 5(e)(ii), 5(e)(v) or 5(e)(vi) event) of such
Securities covered by such Registration Statement or Prospectus until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j), or until it is advised in writing (the "Advice")
by the Company that offers or sales in a particular jurisdiction may be resumed
or that the use of the applicable Prospectus may be resumed, as the case may be,
and has received copies of any amendments or supplements thereto. If the Company
shall give such notice, each of the Effectiveness Period and the Applicable
Period shall be extended by the number of days during such periods from and
including the date of the giving of such notice to and including the date when
each seller of such Securities covered by such Registration Statement shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(j) or (y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation:
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(i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with
the NASD and (B) fees and expenses of compliance with state securities
or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of
the Registrable Securities or Exchange Securities and determination of
the eligibility of the Registrable Securities or Exchange Securities
for investment under the laws of such jurisdictions (x) where the
Holders are located, in the case of the Exchange Securities, or (y) as
provided in Section 5(f), in the case of Registrable Securities or
Exchange Securities to be sold by a Participating Broker-Dealer during
the Applicable Period));
(ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities or
Exchange Securities in a form eligible for deposit with DTC and of
printing prospectuses if the printing of prospectuses is requested by
the managing underwriters, if any, or, in respect of Registrable
Securities or Exchange Securities to be sold by a Participating
Broker-Dealer during the Applicable Period, by the Holders of a
majority in aggregate principal amount of the Registrable Securities
included in any Registration Statement or of such Exchange Securities,
as the case may be);
(iii) messenger, telephone, duplication, word processing
and delivery expenses incurred by the Company in the performance of its
obligations hereunder;
(iv) fees and disbursements of counsel for the Company;
(v) fees and disbursements of all independent certified
public accountants referred to in Section 5(m)(iii) (including, without
limitation, the expenses of any special audit and "cold comfort"
letters required by or incident to such performance); and
(vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an
offering pursuant to Section 3 of Schedule E to the By-laws of the
NASD, but only where the need for such a "qualified independent
underwriter" arises due to a relationship with the Company.
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(b) The Company shall reimburse the Holders for the reasonable
fees and disbursements of not more than one counsel (in addition to appropriate
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Registrable Securities to be included in any Registration Statement and
other reasonable and necessary out-of-pocket expenses of the Holders incurred in
connection with the registration of the Registrable Securities.
7. Indemnification
(a) Indemnification by the Company. The Company shall, without
limitation as to time, indemnify and hold harmless each Holder and each
Participating Broker-Dealer, each Person who controls each such Holder (within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) and the officers, directors, partners, employees, representatives and
agents of each such Holder, Participating Broker-Dealer and controlling person,
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and reasonable attorneys' fees) and expenses (including, without limitation,
costs and expenses incurred in connection with investigating, preparing,
pursuing or defending against any of the foregoing) (collectively, "Losses"), as
incurred, directly or indirectly caused by, related to, based upon, arising out
of or in connection with any untrue or alleged untrue statement of a material
fact contained in any Registration Statement, Prospectus or form of prospectus,
or in any amendment or supplement thereto, or in any preliminary prospectus, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
Losses are based upon information relating to such Holder or Participating
Broker-Dealer and furnished in writing to the Company by such Holder or
Participating Broker-Dealer expressly for use therein.
(b) Indemnification by Holders of Registrable Securities. In
connection with any Registration Statement, Prospectus or form of prospectus,
any amendment or supplement thereto, or any preliminary prospectus in which a
Holder is participating, such Holder shall furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
any Registration Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and shall, without limitation
as to time, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person, if any, who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20(a) of the Exchange
Act), and the directors, officers,
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<PAGE> 21
agents or employees of such controlling persons, to the fullest extent lawful,
from and against all Losses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or form of prospectus or in any amendment or supplement thereto or in
any preliminary prospectus, or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading to the extent, but only to the extent, that such untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission of a material fact is contained in or omitted from any information so
furnished in writing by such Holder to the Company expressly for use therein. In
no event shall the liability of any selling Holder be greater in amount than the
dollar amount of the proceeds (net of payment of all expenses) received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnification
hereunder (an "indemnified party"), such indemnified party shall promptly notify
the party or parties from which such indemnification is sought (the
"indemnifying parties") in writing; provided, that the failure to so notify the
indemnifying parties shall not relieve the indemnifying parties from any
obligation or liability except to the extent (but only to the extent) that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal) that the indemnifying parties have been
prejudiced materially by such failure.
The indemnifying party shall have the right, exercisable by
giving written notice to an indemnified party, within 20 business days after
receipt of written notice from such indemnified party of such Proceeding, to
assume, at its expense, the defense of any such Proceeding, provided, that an
indemnified party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or parties
unless: (1) the indemnifying party has agreed to pay such fees and expenses; or
(2) the indemnifying party shall have failed promptly to assume the defense of
such Proceeding or shall have failed to employ counsel reasonably satisfactory
to such indemnified party; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party or any of its affiliates or controlling persons, and such
indemnified party shall have been advised by counsel that there may be one or
more defenses available to such indemnified party that are in addition to, or in
conflict with, those defenses available to the indemnifying party or such
affiliate or controlling
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person (in which case, if such indemnified party notifies the indemnifying
parties in writing that it elects to employ separate counsel at the expense of
the indemnifying parties, the indemnifying parties shall not have the right to
assume the defense thereof and the reasonable fees and expenses of such counsel
shall be at the expense of the indemnifying party; it being understood, however,
that, the indemnifying party shall not, in connection with any one such
Proceeding or separate but substantially similar or related Proceedings in the
same jurisdiction, arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified
party).
No indemnifying party shall be liable for any settlement of
any such Proceeding effected without its written consent, but if settled with
its written consent, or if there be a final judgment for the plaintiff in any
such Proceeding, each indemnifying party jointly and severally agrees, subject
to the exceptions and limitations set forth above, to indemnify and hold
harmless each indemnified party from and against any and all Losses by reason of
such settlement or judgment. The indemnifying party shall not consent to the
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such Proceeding for
which such indemnified party would be entitled to indemnification hereunder
(whether or not any indemnified party is a party thereto).
(d) Contribution. If the indemnification provided for in this
Section 7 is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of which this Section 7
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 7), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the amount paid or payable by such indemnified party as a
result of such Losses, (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party, on the one hand, and such
indemnified party, on the other hand, from the offering of the Notes, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand,
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shall be determined by reference to, among other things, whether any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such statement or
omission. The amount paid or payable by an indemnified party as a result of any
Losses shall be deemed to include any legal or other fees or expenses incurred
by such party in connection with any Proceeding, to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided
for in Section 7(a) or 7(b) was available to such party.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 7(d), an indemnifying
party that is a selling Holder shall not be required to contribute, in the
aggregate, any amount in excess of such Holder's Maximum Contribution Amount. A
selling Holder's "Maximum Contribution Amount" shall equal the excess of (i) the
aggregate proceeds received by such Holder pursuant to the sale of such
Registrable Securities over (ii) the aggregate amount of damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The indemnification and contribution agreements contained in
this Section 7 are in addition to any liability that the indemnifying parties
may have to the indemnified parties.
8. Rule 144 and Rule 144A
The Company covenants that it shall (a) file the reports
required to be filed by it (if so required) under the Securities Act and the
Exchange Act in a timely manner and, if at any time any such Person is not
required to file such reports, it will, upon the request of any Holder, make
publicly available other information necessary to permit sales pursuant to Rule
144 and Rule 144A and (b) take such further action as any Holder 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
pursuant to the exemptions provided by Rule 144 and Rule 144A.
23
<PAGE> 24
Upon the request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such information
requirements.
9. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an Underwritten Offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Registrable Securities included in such offering.
No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Company of any
of its obligations under this Agreement, each Holder, in addition to being
entitled to exercise all rights provided herein, in the Indenture or, in the
case of the Purchaser, in the Purchase Agreement, or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not entered
into, as of the date hereof, and shall not enter into, after the date of this
Agreement, any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
24
<PAGE> 25
may not be given, unless the Company has obtained the written consent of Holders
of at least a majority of the then outstanding aggregate principal amount of
Registrable Securities; provided, that Sections 5(a) and 7 shall not be amended,
modified or supplemented, and waivers or consents to departures from this
proviso may not be given, unless the Company has obtained the written consent of
each Holder. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Securities being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, certified
first-class mail, return receipt requested, next-day air courier or facsimile:
(i) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 10(d), which address initially is, with respect to each Holder,
the address of such Holder maintained by the Registrar under the
Indenture, with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, 300
South Grand Avenue, Los Angeles, California 90071, telecopy number
(213) 687-5600, Attention: Jonathan Friedman, Esq.; and
(ii) if to the Company, initially at 101 South Hanley
Road, Suite 400, St. Louis, Missouri, 63105, Attention: General
Counsel, telecopy number (314) 746-2251, and thereafter at such other
address, notice of which is given in accordance with the provisions of
this Section 10(d).
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
25
<PAGE> 26
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 329(b). THE COMPANY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY IRREVOCABLY CONSENTS, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE
OF
26
<PAGE> 27
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE COMPANY AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement, and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration rights granted by the
Company in respect of securities sold pursuant to the Purchase Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
(k) Attorneys' Fees. In any Proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the courts, shall be
entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
(l) Securities Held by the Company or its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities
27
<PAGE> 28
is required hereunder, Registrable Securities held by the Company or its
affiliates (as such term is defined in Rule 405 under the Securities Act) (other
than Holders deemed to be such affiliates solely by reason of their holdings of
such Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
[Signature pages follow this page.]
28
<PAGE> 29
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
LLS CORP.
By: /S/ WESLEY D. DEHAVEN
-----------------------------------
Name: Weslely D. DeHaven
---------------------------------
Title:Vice President-Finance
--------------------------------
ACCEPTED AND AGREED TO:
JEFFERIES & COMPANY, INC.
By: /s/ CHRIS KANOFF
-----------------------------------
Name: Chris Kanoff
---------------------------------
Title: Executive Vice President
--------------------------------
S-1
<PAGE> 1
EXHIBIT 10.1
===============================================================================
CREDIT AGREEMENT
AMONG
LLS CORP.
CERTAIN LENDERS
BANK OF AMERICA, N.A.,
AS ADMINISTRATIVE AGENT
CREDIT SUISSE FIRST BOSTON, AS SYNDICATION AGENT
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT
July 30, 1999
===============================================================================
BANC OF AMERICA SECURITIES LLC, AS LEAD ARRANGER
AND BOOK MANAGER
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
Definitions
Section 1.1 Defined Terms...............................................1
Section 1.2 Amendments and Renewals....................................26
Section 1.3 Construction...............................................26
ARTICLE 2
Advances
Section 2.1 The Advances...............................................27
Section 2.2 Manner of Borrowing and Disbursement.......................28
Section 2.3 Interest...................................................31
Section 2.4 Fees.......................................................32
Section 2.5 Prepayment and Payments....................................33
Section 2.6 Reduction of Commitments...................................36
Section 2.7 Non-Receipt of Funds by the Administrative Agent...........36
Section 2.8 Payment of Principal of Advances...........................37
Section 2.9 Reimbursement..............................................39
Section 2.10 Manner of Payment..........................................40
Section 2.11 LIBOR Lending Offices......................................42
Section 2.12 Sharing of Payments........................................42
Section 2.13 Calculation of LIBOR Rate..................................42
Section 2.14 Booking Loans..............................................43
Section 2.15 Taxes......................................................43
Section 2.16 Letters of Credit..........................................46
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the
Initial Letters of Credit..................................51
Section 3.2 Conditions Precedent to All Advances and Letters of
Credit.....................................................54
Section 3.3 Conditions Precedent to Conversions and Continuations......55
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE 4
Representations and Warranties
<S> <C>
Section 4.1 Representations and Warranties.............................55
Section 4.2 Survival of Representations and Warranties, etc............61
ARTICLE 5
General Covenants
Section 5.1 Preservation of Existence and Similar Matters..............62
Section 5.2 Business; Compliance with Applicable Law...................62
Section 5.3 Maintenance of Properties..................................62
Section 5.4 Accounting Methods and Financial Records...................62
Section 5.5 Insurance..................................................63
Section 5.6 Payment of Taxes and Claims................................63
Section 5.7 Visits and Inspections.....................................63
Section 5.8 Use of Proceeds............................................64
Section 5.9 INDEMNITY..................................................64
Section 5.10 Environmental Law Compliance...............................65
Section 5.11 Further Assurances.........................................65
Section 5.12 Subsidiaries...............................................66
ARTICLE 6
Information Covenants
Section 6.1 Quarterly Financial Statements and Information.............67
Section 6.2 Annual Financial Statements and Information; Certificate
of No Default..............................................67
Section 6.3 Compliance Certificate.....................................67
Section 6.4 Copies of Other Reports and Notices........................67
Section 6.5 Notice of Litigation, Default and Other Matters;
Deliveries.................................................68
Section 6.6 ERISA Reporting Requirements...............................69
Section 6.7 Year 2000 Compliance.......................................70
ARTICLE 7
Negative Covenants
Section 7.1 Indebtedness...............................................70
Section 7.2 Liens......................................................72
Section 7.3 Investments................................................72
Section 7.4 Liquidation, Merger, New Subsidiaries......................74
Section 7.5 Sale of Assets.............................................74
Section 7.6 Restricted Payments........................................75
Section 7.7 Affiliate Transactions.....................................75
Section 7.8 Leverage Ratio.............................................76
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<S> <C>
Section 7.9 Interest Coverage Ratio....................................76
Section 7.10 Sale and Leaseback.........................................76
Section 7.11 Capital Expenditures.......................................76
Section 7.12 Amendments and Waivers of Senior Subordinated Notes,
Bridge Notes and Other Institutional Debt..................76
Section 7.13 Amendment of Organizational Documents......................77
ARTICLE 8
Default
Section 8.1 Events of Default..........................................77
Section 8.2 Remedies...................................................80
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate.......................81
Section 9.2 Illegality.................................................81
Section 9.3 Increased Costs............................................81
Section 9.4 Effect On Base Rate Advances...............................83
Section 9.5 Capital Adequacy...........................................83
Section 9.6 Replacement of Lenders under Certain Circumstances.........83
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders....................................84
Section 10.2 Lender Credit Decision.....................................87
Section 10.3 Benefits of Article........................................87
ARTICLE 11
Miscellaneous
Section 11.1 Notices....................................................87
Section 11.2 Expenses...................................................89
Section 11.3 Waivers....................................................89
Section 11.4 Determination by the Lenders Conclusive and Binding........90
Section 11.5 Set-Off....................................................90
Section 11.6 Assignment.................................................90
Section 11.7 Counterparts...............................................93
Section 11.8 Severability...............................................93
</TABLE>
- iii -
<PAGE> 5
<TABLE>
<S> <C>
Section 11.9 Interest and Charges.......................................93
Section 11.10 Headings...................................................94
Section 11.11 Amendment and Waiver.......................................94
Section 11.12 No Liability of Issuing Bank...............................94
Section 11.13 Confidentiality............................................95
Section 11.14 No Duties of Syndication Agent or Documentation Agent......95
Section 11.15 GOVERNING LAW..............................................96
Section 11.16 WAIVER OF JURY TRIAL.......................................96
Section 11.17 ENTIRE AGREEMENT...........................................96
</TABLE>
- iv -
<PAGE> 6
Schedules and Exhibits
Schedule 1.1(a): Commitments and Specified Percentages
Schedule 1.1(b): LIBOR Lending Offices
Schedule 1.1(c): Existing Liens
Schedule 4.1(a): Subsidiaries-Authorization, Qualification and Good Standing
Schedule 4.1(g): Existing Litigation
Schedule 4.1(h): Taxes
Schedule 4.1(u): Labor Matters
Schedule 7.1(g): Existing Indebtedness
Schedule 7.3(c): Existing Investments
Exhibit A: Revolving Credit Note
Exhibit B: Facility A Term Loan Note
Exhibit C: Facility B Term Loan Note
Exhibit D: Security Agreement
Exhibit E: Compliance Certificate
Exhibit F: Assignment Agreement
Exhibit G: Subsidiary Guaranty
Exhibit H: Swing Line Note
Exhibit I: Deed of Trust
Exhibit J: Intellectual Property Security Agreement and Assignment
Exhibit K: Notice of Borrowing
Exhibit L: Notice of Continuation/Conversion
- v -
<PAGE> 7
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of July 30, 1999, among LLS CORP., an
Illinois corporation (the "Borrower"), the Lenders from time to time party
hereto, CREDIT SUISSE FIRST BOSTON, as syndication agent, BANKERS TRUST
COMPANY, as documentation agent, and BANK OF AMERICA, N.A., as administrative
agent for the Lenders.
BACKGROUND
The Lenders have been requested to provide the Borrower the funds to
(a) consummate the Courtesy Recapitalization (as hereinafter defined), (b) pay
certain fees and expenses related to the Courtesy Recapitalization, and (c)
finance the ongoing working capital and general corporate requirements of the
Borrower and its Subsidiaries. The Lenders have agreed to provide a portion of
such financing, subject to the terms and conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Defined Terms. For purposes of this Agreement:
"Acquisition" means an acquisition by the Borrower or any of its
Subsidiaries of a business (whether by the acquisition of stock, assets or
otherwise) related to their respective businesses.
"Adjusted LIBOR Rate" means, for any LIBOR Advance for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100th of 1%) determined by the Administrative Agent to be equal to
the quotient obtained by dividing (a) the LIBOR Rate for such LIBOR Advance for
such Interest Period by (b) 1 minus the Reserve Requirement for such LIBOR
Advance for such Interest Period.
"Adjustment Date" means, for purposes of the Applicable Base Rate
Margin, the Applicable LIBOR Rate Margin, the Commitment Fee and the Letter of
Credit fees payable pursuant to Section 2.16(f)(i) hereof, the date of receipt
by the Administrative Agent of the financial statements required to be
delivered pursuant to Section 6.1 or 6.2 hereof, as applicable, and the
Compliance Certificate required pursuant to Section 6.3 hereof.
"Administrative Agent" means Bank of America, N.A., a national banking
association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
<PAGE> 8
"Advance" means any amount advanced or deemed advanced by a Lender to
the Borrower pursuant to Article 2 hereof on the occasion of any borrowing.
"Affected LIBOR Advances" has the meaning specified in Section 2.5(e)
hereof.
"Affiliate" means any Person that, directly or indirectly, through one
or more Persons, Controls or is Controlled By or Under Common Control with such
Person, or a Person who Controls or is Controlled By, such Person, or in the
case of any Lender which is an investment fund, the investment advisor thereof
and any investment fund having the same investment advisor.
"Agreement" means this Credit Agreement, as amended, modified,
supplemented or restated from time to time.
"Agreement Date" means the date of this Agreement.
"Applicable Base Rate Margin" means the following per annum
percentages, applicable in the following situations:
<TABLE>
<CAPTION>
Facility A Term
Loan Advances Facility B
and Revolving Term Loan
Applicability Advances Advances
------------- ---------------- -----------
<S> <C> <C>
(a) The Leverage Ratio is greater than or 1.25 1.75
equal to 4.50 to 1
(b) The Leverage Ratio is greater than or 1.00 1.50
equal to 4.00 to 1 but less than 4.50 to 1
(c) The Leverage Ratio is greater than or 0.75 1.25
equal to 3.50 to 1 but less than 4.00 to 1
(d) The Leverage Ratio is less than 3.50 to 1 0.50 1.25
</TABLE>
The Applicable Base Rate Margin payable by the Borrower on the Base Rate
Advances outstanding hereunder shall be adjusted on each Adjustment Date as
tested by using the Leverage Ratio set forth in the Compliance Certificate
received on each such Adjustment Date. If the financial statements required
pursuant to Section 6.1 or 6.2 hereof, as applicable, and the related
Compliance Certificate are not received by the Administrative Agent by the date
required, the Applicable Base Rate Margin shall be determined as if the
Leverage Ratio is greater than or equal to 4.50 to 1 until such time as such
financial statements and Compliance Certificate are received. Notwithstanding
the foregoing, the Applicable Base Rate Margin from and after the Agreement
Date until and including the Adjustment Date determined following the date of
receipt of the financial statements for the fiscal year ending September 30,
1999 and the related Compliance Certificate shall be determined as if the
Leverage Ratio is greater than or equal to 4.50 to 1.
- 2 -
<PAGE> 9
"Applicable Environmental Laws" means Applicable Laws pertaining to
the environment, including without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended from time to time,
"CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended by
the Used Oil Recycling Act of 1980, and the Solid Waste Disposal Act amendments
of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as amended from
time to time, "RCRA").
"Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas, "Applicable Law" shall mean
the laws of the United States of America, including without limitation 12 USC
ss.ss. 85 and 86, as amended from time to time, and any other statute of the
United States of America now or at any time hereafter prescribing the maximum
rates of interest on loans and extensions of credit, and the laws of the State
of New York.
"Applicable LIBOR Rate Margin" means the following per annum
percentages, applicable in the following situations:
<TABLE>
<CAPTION>
Facility A Term
Loan Advances Facility B
and Revolving Term Loan
Applicability Advances Advances
------------- ---------------- -----------
<S> <C> <C>
(a) The Leverage Ratio is greater than or 2.50 3.00
equal to 4.50 to 1
(b) The Leverage Ratio is greater than or 2.25 2.75
equal to 4.00 to 1 but less than 4.50 to 1
(c) The Leverage Ratio is greater than or 2.00 2.50
equal to 3.50 to 1 but less than 4.00 to 1
(d) The Leverage Ratio is less than 3.50 to 1 1.75 2.50
</TABLE>
The Applicable LIBOR Rate Margin payable by the Borrower on the LIBOR Advances
outstanding hereunder shall be adjusted on each Adjustment Date as tested by
using the Leverage Ratio set forth in the Compliance Certificate received on
each such Adjustment Date. If the financial statements required pursuant to
Section 6.1 or 6.2 hereof, as applicable, and the related Compliance
Certificate are not received by the Administrative Agent by the date required,
the Applicable LIBOR Rate Margin shall be determined as if the Leverage Ratio
is greater than or equal to 4.50 to 1 until such time as such financial
statements and Compliance Certificate are received. Notwithstanding the
foregoing, the Applicable LIBOR Rate Margin from and after the Agreement Date
until and
- 3 -
<PAGE> 10
including the Adjustment Date determined following the date of receipt of the
financial statements for the fiscal quarter ending September 30, 1999 and the
related Compliance Certificate shall be determined as if the Leverage Ratio is
greater than or equal to 4.50 to 1.
"Applicable Specified Percentages" means the Revolving Credit
Specified Percentage, the Facility A Term Loan Specified Percentage, the
Facility B Term Loan Specified Percentage, or the Total Specified Percentage,
as applicable in the context used.
"Assignee" has the meaning specified in Section 11.6(d) hereof.
"Assignment Agreement" shall have the meaning specified in Section
11.6(d) hereof.
"Authorized Signatory" means the chief executive officer, the
president, any vice president, the treasurer, the chief financial officer, any
assistant treasurer, the secretary, any assistant secretary, the controller,
any principal or any partner as may be or is designated in writing by the
Borrower, or any of its Subsidiaries to execute documents, agreements and
instruments on behalf of the Borrower or any Subsidiary, and to request
Advances hereunder.
"BankAmerica" means Bank of America, N.A., a national banking
association, in its capacity as a Lender.
"Base Rate Advance" means any Advance bearing interest at the Base
Rate Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal
to the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on
such day plus (iii) the Applicable Base Rate Margin, or (b) the sum of (i) the
Prime Rate on such day plus (ii) the Applicable Base Rate Margin. The Base Rate
Basis shall be adjusted automatically as of the opening of business on the
effective date of each change in the Prime Rate or Federal Funds Rate, as
applicable, to account for such change.
"Borrower" has the meaning assigned to such term in the preamble.
"Bridge Notes" means those certain senior subordinated increasing rate
notes of the Borrower to be issued by the Borrower in connection with the
Courtesy Recapitalization not to exceed $100,000,000 in aggregate principal
amount, together with any additional such notes issued in lieu of cash payment
of interest thereon, all of which shall be subordinated to the Obligations on
terms reasonably satisfactory to the Determining Lenders.
"Business Day" means a day on which commercial banks are open (a) for
the transaction of business in Charlotte, North Carolina and New York, New York
and (b) with respect to any LIBOR Advance, for the transaction of international
business (including dealings in Dollar deposits) in London, England.
"Capital Expenditures" means, for any period, expenditures made by the
Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals,
- 4 -
<PAGE> 11
improvements and replacements during such period and the aggregate amount of
items leased or acquired under Capital Leases at the cost of the item) computed
in accordance with GAAP (excluding any such asset acquired (w) in connection
with normal replacement and maintenance programs properly expensed in
accordance with GAAP, (x) with the proceeds of any casualty insurance or any
condemnation award (with such expenditures to be made in accordance with and as
permitted by Section 2.5(b)(iv) hereof), (y) with the cash proceeds of any
asset sale made pursuant to Section 7.5 hereof and (z) in connection with
Acquisitions permitted under Section 7.3(k) hereof).
"Capital Leases" means capital leases and subleases, as defined in the
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 13, dated November 1976, as amended.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital
stock in any Person that is a corporation, each class of partnership interest
in any Person that is a partnership, and each class of membership interest in
any Person that is a limited liability company.
"Capitalized Lease Obligations" means that portion of any obligation
of the Borrower or any of its Subsidiaries as lessee under a lease which at the
time would be required to be capitalized on a balance sheet prepared in
accordance with GAAP.
"Cash and Cash Equivalents" means with respect to the Borrower and
each of its Subsidiaries (a) cash, (b) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than one year from the
date of acquisition, (c) certificates of deposit and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case with any Lender that is a domestic commercial bank having capital
and surplus in excess of $500,000,000 or any other domestic commercial bank
having capital and surplus in excess of $500,000,000, (d) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (b) and (c) entered into with any financial
institution meeting the qualifications specified in clause (c) above, and (e)
commercial paper issued by any Lender or the parent corporation of any Lender,
and commercial paper rated A-1 or the equivalent thereof by Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc., a New York corporation or P-1
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within six months after the date of acquisition.
"Change of Control" means the earlier to occur of (a) Hicks Muse,
Mills & Partners, Inc., their principals and their Affiliates and the
management of the Borrower and its Subsidiaries ("HMTF") shall cease to have
the power, directly or indirectly, to vote or direct the voting of securities
having a majority of the ordinary voting power for the election of directors of
the Borrower, provided that the occurrence of the foregoing event shall not be
deemed a Change of Control if (i) at any time prior to the consummation of an
Initial Public Offering, and for any reason whatsoever, (A) HMTF otherwise has
the right to designate (and does so designate) a majority of the board of
directors of the Borrower or (B) HMTF and their employees, directors and
officers (the "HMTF Group") own of record and beneficially an amount of common
stock of the Borrower equal
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<PAGE> 12
to at least 50% of the amount of common stock of the Borrower owned by the HMTF
Group of record and beneficially as of the Closing Date and such ownership by
the HMTF Group represents the largest single block of voting securities of the
Borrower held by any Person or related group for purposes of section 13(d) of
the Securities Exchange Act of 1934, as amended or (ii) at any time after the
consummation of an Initial Public Offering, and for any reason whatsoever, (A)
no "Person" or "group" (as such terms are used in sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), excluding the HMTF Group,
shall become the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5
under such Act), directly or indirectly, of more than the greater of (x) 15% of
the shares outstanding or (y) the percentage of the then outstanding voting
stock of the Borrower owned beneficially by the HMTF Group and (B) the board of
directors of the Borrower shall consist of a majority of the Continuing
Directors and (b) any Change of Control as defined in any document pertaining
to the Senior Subordinated Notes, the Bridge Notes or any other Institutional
Debt.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any collateral granted by any Person to the
Administrative Agent to secure the Obligations.
"Collateral Document" means any document under which Collateral is
granted and any document related thereto.
"Commitment Fee" has the meaning specified in Section 2.4(a) hereof.
"Commitments" means, collectively, the Revolving Credit Commitment,
the Facility A Term Loan Commitment and the Facility B Term Loan Commitment.
"Compliance Certificate" means a certificate, signed by an Authorized
Signatory, in substantially the form of Exhibit E, appropriately completed.
"Consulting Agreements" means, collectively, that certain (a)
Financial Advisory Agreement, dated as of July 30, 1999, among the Borrower,
each Guarantor and Hicks, Muse & Co. Partners, L.P. and (b) Monitoring and
Oversight Agreement, dated as of July 30, 1999, among the Borrower, each
Guarantor and Hicks, Muse & Co. Partners, L.P.
"Continuing Directors" means the directors of the Borrower on the
Closing Date, after giving effect to the Courtesy Recapitalization and the
other transactions contemplated hereby, and each other director, if, in each
case, such other directors' nominations for election to the board of directors
of the Borrowers are recommended by a majority of the then Continuing Directors
or such other director receives the vote of HMTF in his or her election by the
stockholders of the Borrower.
"Control" or "Controlled By" or "Under Common Control" means
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of voting securities, by
contract or otherwise); provided, however, that in any event any Person which
beneficially owns, directly or indirectly, more than 50% (in number of votes)
of the
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<PAGE> 13
securities having ordinary voting power for the election of directors of a
corporation shall be conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person
not an individual, all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) which are under common
control with such Person and which, together with such Person, are treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code; provided,
however, that the Subsidiaries of the Borrower shall be deemed to be members of
the Borrower's Controlled Group.
"Courtesy Recapitalization Agreement" means that certain
Recapitalization Agreement, dated as of July 13, 1999, by and among the
Borrower and Courtesy Corporation, Creative Packaging Corp., Courtesy Sales
Corp., and each shareholder of Courtesy Corporation, Creative Packaging Corp.,
and Courtesy Sales Corp., as amended, modified and supplemented.
"Courtesy Recapitalization Documents" means the Courtesy
Recapitalization Agreement and all other contracts, agreements or documents
executed or delivered in connection therewith, as amended, modified or
supplemented.
"Courtesy Recapitalization" means, collectively, (a) the HMTF/Courtesy
Partners, L.P. Cash Contribution, (b) the Courtesy Stock Redemption, and (c)
the issuance by the Borrower of the Senior Subordinated Notes or the Bridge
Notes.
"Courtesy Stock Redemption" means the redemption by the Borrower of
its outstanding Capital Stock from existing shareholders of the Borrower in an
amount equal to the remainder of $311,000,000 less the aggregate outstanding
principal amount of Indebtedness of the Borrower immediately prior to the
Courtesy Recapitalization.
"Current Assets" means at any date, the amount which, in conformity
with GAAP, would be set forth opposite the caption "Total Current Assets" (or
any like caption) on a consolidated balance sheet of the Borrower and its
Subsidiaries at such date, except that there shall be excluded therefrom Cash
and Cash Equivalents.
"Current Liabilities" means at any date, the amount which, in
conformity with GAAP, would be set forth opposite the caption "Total Current
Liabilities" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date, except that there shall be excluded
therefrom the current portion of (a) all Advances, and (b) all long-term
Indebtedness for borrowed money (including Capitalized Lease Obligations) in
each case, to the extent included therein.
"Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar debtor relief Laws affecting the rights of creditors
generally from time to time in effect.
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<PAGE> 14
"Deed of Trust" means any fee simple deed of trust or mortgage, as
applicable, relating to the real fee owned property of the Borrower and each of
its Subsidiaries required to be pledged to the Administrative Agent, in
substantially the form set forth in Exhibit I hereto.
"Default" means an Event of Default and/or any of the events specified
in Section 8.1, regardless of whether there shall have occurred any passage of
time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"Default Application Notice" has the meaning specified in Section
2.10(d)(ii)(B) hereof.
"Default Rate" means a simple per annum interest rate equal to (a)
with respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or
(ii) the Base Rate Basis plus two percent or (b) with respect to LIBOR
Advances, the lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis
plus two percent.
"Determining Lenders" means, on any date of determination, any
combination of Lenders whose Total Specified Percentages aggregate more than
50%; provided, however, in the event that all of the Commitments have been
terminated, "Determining Lenders" means, on any date of determination, any
combination of Lenders having more than 50% of the Advances (calculated with
respect to Swing Line Advances by using each Lender's (including the Swing Line
Bank's) Revolving Credit Specified Percentage of any outstanding Swing Line
Advances) then outstanding.
"Dividend" means, as to any Person, (a) any declaration or payment of
any dividend (other than a stock dividend) on, and (b) any purchase, redemption
or other acquisition or retirement for value by such Person of, any shares of
Capital Stock of such Person.
"Documentation Agent" means Bankers Trust Company.
"Dollar" or "$" means the lawful currency of the United States of
America.
"Domestic Subsidiary" means any Subsidiary of the Borrower other than
a Foreign Subsidiary.
"EBITDA" means, for any period, the sum of (without duplication) the
following: (a) Pretax Net Income (excluding therefrom, to the extent included
in determining Pretax Net Income, any items of extraordinary gain, including
net gains on the sale of assets other than asset sales in the ordinary course
of business, and adding thereto, to the extent included in determining Pretax
Net Income, any items of extraordinary loss, including net losses on the sale
of assets other than asset sales in the ordinary course of business), plus (b)
to the extent included in determining Pretax Net Income, interest and dividend
expense, whether paid in cash or in kind (including the amortization or
write-off of debt discount and issuance costs and commissions and discounts and
other fees and charges associated with Indebtedness), plus (c) to the extent
included in determining Pretax Net Income, depreciation and amortization
(including but not limited to, goodwill and organizational costs and any
write-offs of purchased technology), plus (d) to the extent included in
determining Pretax Net Income, other non-cash charges, minus (e) for any period
prior to the Agreement Date
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<PAGE> 15
included in the calculation of EBITDA, interest and investment income, minus
(f) to the extent included in determining Pretax Net Income, other non-cash
credits, minus (g) cash payments made with respect to non-cash charges added
back in determining EBITDA in any prior period which would otherwise be
excluded in determining EBITDA, plus (h) to the extent included in determining
Pretax Net Income, one-time transaction expenses incurred in connection with
the Courtesy Recapitalization which are not capitalized or amortized pursuant
to GAAP, plus (i) to the extent included in determining Net Income, charges
related to pre-operating costs and start-up costs (for a period not to exceed
12 months after the purchase or opening of any facility) with respect to
facilities purchased or otherwise opened by the Borrower or its Subsidiaries
not to exceed $4,000,000 per facility, plus (j) for each fiscal quarter prior
to September 30, 1999, to the extent included in determining Net Income, the
aggregate amount of compensation of officers of the Borrower and its
Subsidiaries in excess of such amounts provided in the employment agreements
entered into in connection with the Courtesy Recapitalization.
"Environmental Reports" means, collectively, the following
Environmental Assessments: (i) Phase I Environmental Site Assessments, Courtesy
Corporation, Various Locations in Illinois, dated February 15, 1999, by Lexicon
Environmental Associates, Inc., (ii) Phase I Environmental Assessment of 2491
Vista Drive, Lake Geneva, Walworth County, Wisconsin, dated December 3, 1998,
by The Green Environmental Group, and (iii) Phase I Environmental Summary
Report, 200 Masters Boulevard, Andersen, South Carolina, dated August 7, 1998,
by S&ME.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its
Subsidiaries, (a) a Reportable Event (other than a Reportable Event as to which
the 30-day notice to the PBGC is waived by the applicable PBGC regulation) with
respect to a Plan, (b) the withdrawal of any such Person or any member of its
Controlled Group from a Plan subject to Section 4063 of ERISA during a plan
year in which it was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA, (c) the filing of a notice of intent to terminate under Section
4041(c) of ERISA, (d) the institution of proceedings to terminate a Plan by the
PBGC, (e) the failure to make required contributions which would result in the
imposition of a Lien under Section 412 of the Code or Section 302 of ERISA, (f)
a withdrawal from a Multiemployer Plan, or (g) any other event or condition
which would reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any Plan or Multiemployer Plan or the imposition of any liability under Title
IV of ERISA other than PBGC premiums due but not delinquent under Section 4007
of ERISA.
"Event of Default" means any of the events specified in Section 8.1,
provided that any requirement for notice or lapse of time has been satisfied.
"Excess Cash Flow" means, for the Borrower and its Subsidiaries on a
consolidated basis for any period, an amount equal to (without duplication) (a)
Net Income for such period, plus (b) depreciation and amortization for such
period, plus (c) any decreases in Working Capital for such period, plus or
minus as the case may be, (d) any items of extraordinary loss, including net
losses on the sale of assets other than asset sales in the ordinary course of
business, and any items of
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<PAGE> 16
extraordinary gain, including net gains on the sale of assets other than asset
sales in the ordinary course of business (in each case to the extent such
extraordinary gain or loss is included in Net Income), minus (e) scheduled
payments of Indebtedness for such period and, without duplication, payments of
Indebtedness during such period which result in a permanent reduction of any
commitment related thereto, minus (f) Capital Expenditures during such period
(excluding, however, the portion of such Capital Expenditures, if any, financed
by purchase money debt (other than the Advances) or Capitalized Lease
Obligations), minus (g) any increases in Working Capital for such period, minus
(h) the cash portion of any consideration paid during such period in respect of
an Acquisition, minus (i) Investments made pursuant to Sections 7.3(g), (i) and
(j) hereof; provided that (y) increases or deceases in Working Capital as a
result of an Acquisition shall be excluded from the calculation of Excess Cash
Flow and (z) Net Income of a Foreign Subsidiary will only be included to the
extent distributed to an Obligor.
"Facility A Term Loan Advance" means an Advance made pursuant to
Section 2.1(b) hereof.
"Facility A Term Loan Commitment" means the commitments of the
Lenders, subject to the terms and conditions hereof, to make Facility A Term
Loan Advances up to an aggregate principal amount of $65,000,000, as terminated
pursuant to Section 2.1(b) hereof.
"Facility A Term Loan Maturity Date" means July 31, 2005, or the
earlier date of acceleration of the Facility A Term Loan Advances pursuant to
Section 8.2 hereof.
"Facility A Term Loan Note" means any Promissory Note of the Borrower
evidencing Facility A Term Loan Advances hereunder, substantially in the form
of Exhibit B hereto, together with any extension, renewal or amendment thereof,
or substitution therefor.
"Facility A Term Loan Specified Percentage" means, as to any Lender,
the percentage indicated beside its name on Schedule 1.1(a) hereto as its
Facility A Term Loan Specified Percentage, or as adjusted or specified in any
amendment to this Agreement or in any Assignment Agreement.
"Facility B Term Loan Advance" means an Advance made pursuant to
Section 2.1(c) hereof.
"Facility B Term Loan Commitment" means the commitments of the
Lenders, subject to the terms and conditions hereof, to make Facility B Term
Loan Advances up to an aggregate principal amount of $80,000,000, as terminated
pursuant to Section 2.1(c) hereof.
"Facility B Term Loan Maturity Date" means July 31, 2006, or the
earlier date of acceleration of the Facility B Term Loan Advances pursuant to
Section 8.2 hereof.
"Facility B Term Loan Note" means any Promissory Note of the Borrower
evidencing Facility B Term Loan Advances hereunder, substantially in the form
of Exhibit C hereto, together with any extension, renewal or amendment thereof,
or substitution therefor.
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<PAGE> 17
"Facility B Term Loan Specified Percentage" means, as to any Lender,
the percentage indicated beside its name on Schedule 1.1(a) hereto as its
Facility B Term Loan Specified Percentage, or as adjusted or specified in any
amendment to this Agreement or in any Assignment Agreement.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to
the Administrative Agent by three federal funds brokers of recognized standing
selected by it.
"Fee Letter" has the meaning specified in Section 2.4(b) hereof.
"Financial Statements" has the meaning specified in Section 4.1(i)(i)
hereof.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
organized under the Laws of any state of the United States of America or the
District of Columbia.
"Form 4224" has the meaning specified in Section 2.15(e) hereof.
"Form 1001" has the meaning specified in Section 2.15(e) hereof.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the rules and regulations of the Securities
and Exchange Commission, or their successors which are applicable in the
circumstances as of the date of determination, except that for purposes of
Sections 7.8 and 7.9 hereof, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used in the
preparation of the Financial Statements. In the event that any "Accounting
Change" (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Determining Lenders, all
financial covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not occurred. The
term "Accounting Changes" refers to changes in accounting principles required
by the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board or the
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<PAGE> 18
American Institute of Certified Public Accountants or, if applicable, the
Securities and Exchange Commission (or successors thereto or agencies with
similar functions).
"Guarantor" means each direct and indirect Domestic Subsidiary of the
Borrower which executes a Subsidiary Guaranty.
"Guaranty" or "Guaranteed", means (a) as applied to an obligation of
another Person, (i) a guaranty, direct or indirect, in any manner, of any part
or all of such obligation, and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation, including, without
limiting the foregoing, any reimbursement obligations with respect to amounts
which may be drawn by beneficiaries of outstanding letters of credit and (b) an
agreement, direct or indirect, contingent or otherwise, to maintain net worth,
working capital, earnings or other financial performance of another Person;
provided, however, that the term "Guaranty" or "Guaranteed" shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty of any guaranteeing Person shall be deemed
to be the lesser of (a) an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Guaranty is made and (b) the
maximum amount for which such guaranteeing Person may be liable pursuant to the
terms of the instrument embodying such Guaranty, unless such primary obligation
and the maximum amount for which such guaranteeing Person may be liable are not
stated or determinable, in which case the amount of such Guaranty shall be such
guaranteeing Person's maximum reasonably anticipated liability in respect
thereof as determined by such guaranteeing Person in good faith.
"Hicks Muse" means HMTF Operating, Inc., a Texas corporation.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, the Lenders are then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, the Lenders are permitted to charge on the Obligations
shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to the Borrower.
"HMTF/Courtesy Partners, L.P. Cash Contribution" means the
contribution of cash by HMTF/Courtesy Partners, L.P. to the Borrower in an
amount equal to $78,000,000.
"HMTF" has the meaning specified in the definition of "Change of
Control".
"HMTF Group" has the meaning specified in the definition of "Change of
Control".
"Increased Costs" has the meaning specified in Section 9.3(a) hereof.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or
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<PAGE> 19
assets purchased by such Person, (d) all obligations issued or assumed as the
deferred purchase price of property or services (other than current trade
payables and accrued expenses incurred in the ordinary course of such Person's
business), (e) all obligations secured by any Lien on any property or asset
owned by such Person, whether or not the obligation secured thereby shall have
been assumed, (f) to the extent not otherwise included, all Capitalized Lease
Obligations of such Person, all obligations in respect of letters of credit,
bankers' acceptances and similar instruments, and all obligations under
Interest Hedge Agreements, (g) the principal portion of all obligations of such
Person under any Synthetic Lease, and (h) any Guaranty of such Person of any
obligation of another Person constituting obligations of a type set forth
above. The amount of any such Indebtedness of any Person described in clause
(e) shall be deemed to be the lesser of such (i) Indebtedness and (ii) the fair
market value of such asset or property encumbered, as determined by such Person
in good faith.
"Indemnified Matters" has the meaning specified in Section 5.9(a)
hereof.
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
"Institutional Debt" means unsecured subordinated Indebtedness for
borrowed money which may be raised by the Borrower in private placement or
public debt markets on terms reasonably satisfactory to the Determining
Lenders, with only such changes or amendments which are not prohibited by
Section 7.12 hereof.
"Initial Public Offering" means an underwritten public offering by the
Borrower of Capital Stock of the Borrower or any Subsidiary thereof pursuant to
a registration statement filed with the Securities and Exchange Commission in
accordance with the Securities Act of 1933, as amended.
"Intellectual Property Security Agreement" means the Intellectual
Property Security Agreement and Assignment executed by the Borrower and each of
its Subsidiaries, substantially in the form of Exhibit J hereto.
"Interest Coverage Ratio" means, for any date of determination, the
ratio of (a) EBITDA to (b) cash interest expense (net of cash interest income)
of the Borrower and its Subsidiaries (including cash interest expense pursuant
to Capitalized Lease Obligations, but excluding amortization or write-off of
debt discount, issuance costs and commissions and discounts and other fees and
charges associated with Indebtedness), in each case for the immediately
preceding four consecutive fiscal quarters. Notwithstanding the immediately
preceding sentence, for purposes of the calculation of the Interest Coverage
Ratio prior to June 30, 2000, cash interest expense shall be determined by
annualizing the amount of cash interest paid from June 30, 1999 until such date
of determination.
"Interest Hedge Agreements" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts and
warrants, as the same may be amended or modified and
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<PAGE> 20
in effect from time to time, and any and all cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.
"Interest Period" means the period beginning on the day any LIBOR
Advance is made and ending one, two, three or six months thereafter, and if
available to all Lenders, nine or twelve months thereafter (as the Borrower
shall select); provided, however, that all of the foregoing provisions are
subject to the following:
(a) if any Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day, unless the result of such extension
would be to extend such Interest Period into another calendar month,
in which event such Interest Period shall end on the immediately
preceding Business Day;
(b) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(c) there shall be outstanding at any one time no more than
ten Interest Periods in the aggregate.
"Investment" means any (a) Acquisition or (b) any other direct or
indirect acquisition of assets of any Person which is not an Acquisition, or
any other direct or indirect purchase or other acquisition of, or beneficial
interest in, Capital Stock or other securities of any other Person, or any
direct or indirect loan, advance (other than advances to employees for moving
and travel expenses, drawing accounts and similar expenditures in the ordinary
course of business), capital contribution to, or investment in any other
Person, including without limitation the occurrence or sufferance of
Indebtedness or the purchase of accounts receivable of any other Person that
are not current assets or do not arise in the ordinary course of business. The
amount of any equity Investment shall be the original cost of such Investment
plus the cost of all additions thereto and the amount of any debt Investment
shall be the outstanding principal amount thereof, in each case without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.
"Issuing Bank" means Bank of America, N.A. in its capacity as issuer
of the Letters of Credit.
"Law" means any statute, law, ordinance, regulation, rule, order,
writ, injunction or decree of any Tribunal.
"L/C Cash Collateral Account" has the meaning specified in Section
2.16(g)(i) hereof.
"L/C Related Documents" has the meaning specified in Section
2.16(e)(i) hereof.
"Lender" means each financial institution shown on the signature pages
hereof so long as such financial institution maintains a portion of any of the
Commitments or is owed any part of the
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<PAGE> 21
Obligations (including the Administrative Agent in its individual capacity),
and each Assignee that hereafter becomes party hereto pursuant to Section 11.6
hereof, subject to the limitations set forth therein.
"Letters of Credit" has the meaning specified in Section 2.16(a)
hereof, provided that letters of credit which have been cash collateralized
(excluding, however, pursuant to the L/C Cash Collateral Account) or for which
back-up letters of credit have been obtained, in each case in a manner
reasonably acceptable to the Administrative Agent with notice to the Lenders,
shall no longer be considered Letters of Credit for purposes of calculating
availability under the Revolving Credit Commitment.
"Letter of Credit Agreement" has the meaning specified in Section
2.16(b) hereof.
"Letter of Credit Facility" has the meaning specified in Section
2.16(a) hereof.
"Leverage Ratio" means, for any date of determination, the ratio of
(a) Total Debt minus unencumbered Cash and Cash Equivalents as of the date of
determination to (b) EBITDA for the immediately preceding four consecutive
fiscal quarters.
"LIBOR Advance" means an Advance bearing interest at the LIBOR Basis.
"LIBOR Basis" means with respect to any LIBOR Advance, a per annum
interest rate equal to the lesser of (a) the Highest Lawful Rate, or (b) the
sum of the Adjusted LIBOR Rate plus the Applicable LIBOR Rate Margin.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule 1.1(b) attached hereto, and
such other office of the Lender or any of its affiliates hereafter designated
by notice to the Borrower and the Administrative Agent.
"LIBOR Rate" means, for any Interest Period the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not available, the term
"LIBOR Rate" shall mean, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If more than one rate is specified on
Telerate Page 3750 or Reuters Screen LIBO Page, as the case may be, the
applicable rate shall be the arithmetic mean of all such rates (rounded
upwards, if necessary, to the nearest 1/100th of 1%).
"Lien" means, with respect to any property, any mortgage, lien,
pledge, collateral assignment, hypothecation, charge, security interest, title
retention agreement or other encumbrance of any kind in respect of such
property.
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"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement
or other instrument.
"Loan Documents" means this Agreement, the Notes, if any, the Security
Agreement, the Fee Letter, any Interest Hedge Agreements entered into with any
Lender or any Affiliate of any Lender, each Subsidiary Guaranty, the
Intellectual Property Security Agreement, the Deeds of Trust, and any other
agreement executed, delivered or performable by any Obligor in connection
herewith or as security for the Obligations.
"Material Adverse Effect" means any act or circumstance or event that
has a material adverse effect in or on (a) the business, assets, financial
condition, results of operations, or prospects of the Borrower and its
Subsidiaries taken as a whole, (b) the validity or enforceability of any Loan
Documents or (c) the rights or remedies of the Lenders or the Administrative
Agent under any of the Loan Documents.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations.
"Multiemployer Plan" means, as to any Person, at any time, a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which such Person or any member of its Controlled Group has any obligation or
liability (contingent or otherwise) under Title IV of ERISA.
"Necessary Authorization" means any right, franchise, license, permit,
consent, approval or authorization from, or any filing or registration with,
any governmental or other regulatory authority or any Person necessary or
appropriate to enable the Borrower or any of its Subsidiaries to maintain and
operate its business and properties, provided a failure to have such license,
permit, consent, approval or authorization could reasonably be expected to
result on a Material Adverse Effect.
"Negative Pledge" means any agreement, contract or other arrangement
whereby the Borrower or any of its Subsidiaries is prohibited from, or would
otherwise be in default as a result of, creating, assuming, incurring or
suffering to exist, directly or indirectly, any Lien on any of its assets.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any asset by or of, or the issuance of Institutional
Debt to, any Person or any Recovery Event, the amount of cash received by such
Person in connection with such transaction after deducting therefrom the
aggregate, without duplication, of the following amounts to the extent properly
attributable to such transaction or to any asset that may be the subject
thereof: (i) reasonable brokerage commissions, legal fees, finder's fees,
financial advisory fees, fees for solvency opinions, accounting fees,
underwriting fees, investment banking fees, survey, title insurance,
appraisals, notaries and other similar commissions and fees, and expenses, in
each case, to the extent paid, payable or reimbursed by such Person; (ii)
filing, recording or registration fees or charges or similar
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<PAGE> 23
fees or charges paid by such Person; (iii) taxes paid or payable by such Person
or any shareholder, partner or member of such Person to governmental taxing
authorities as a result of such sale or other disposition (after taking into
account any available tax credits or deductions or any tax sharing
arrangements); (iv) payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness (other than the Obligations)
that is secured by a Lien on the asset in question; and (v) any reserve for
adjustment in respect of the price of any such sale, lease, transfer or other
disposition of such asset or assets.
"Net Income" means net profit (or loss) after taxes of the Borrower
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
"Non-Consenting Lender" has the meaning specified in Section 9.6
hereof.
"Non-Funding Lender" has the meaning specified in Section 9.6 hereof.
"Notes" means, collectively, the Revolving Credit Notes, the Facility
A Term Loan Notes, the Facility B Term Loan Notes and the Swing Line Notes.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
hereof.
"Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(d) hereof.
"Notice of Issuance" has the meaning specified in Section 2.16(b)
hereof.
"Obligations" means all obligations of any nature (whether matured or
unmatured, fixed or contingent, including the Reimbursement Obligations) of the
Borrower or any of its Subsidiaries to any Lender or any Affiliate of any
Lender under any of the Loan Documents.
"Obligor" means the Borrower and each Guarantor.
"Operating Lease" means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial Accounting Standards
No. 13, dated November, 1976 or otherwise in accordance with GAAP.
"Other Taxes" has the meaning specified in Section 2.15(b) hereof.
"Ownership Information" has the meaning specified in Section 11.6(j)
hereof.
"Participant" has the meaning specified in Section 11.6(c) hereof.
"Participation" has the meaning specified in Section 11.6(c) hereof.
"Payment Date" means the last day of the Interest Period for any LIBOR
Advance; provided, however, if the Interest Period for any LIBOR Advance
exceeds three months, "Payment Date" shall
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<PAGE> 24
also mean each day which is three months, or a whole multiple thereof after the
first day of such Interest Period.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means, as applied to any Person:
(a) Any Lien in favor of the Lenders or the Administrative
Agent or any Affiliate of any Lender to secure the Obligations
hereunder;
(b) (i) Liens on real estate for ad valorem taxes not yet
delinquent, (ii) Liens on leasehold interests created by the lessor in
favor of any mortgagee of the leased premises, and (iii) Liens for
taxes, assessments, governmental charges, levies or claims not yet
delinquent, or in each case for clauses (i) and (iii) that are being
diligently contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on such Person's
books in accordance with GAAP, but only so long as no foreclosure,
restraint, sale or similar proceedings have been commenced with
respect thereto that has not been stayed;
(c) Liens of carriers, landlords, warehousemen, mechanics,
laborers and materialmen and other similar Liens incurred in the
ordinary course of business for sums not overdue for a period of more
than 60 days or being contested in good faith, if such reserve or
appropriate provision, if any, as shall be required by GAAP shall have
been made therefor;
(d) (i) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or
similar legislation and (ii) deposits to secure the performance of
bids, trade contracts (other than for borrowed money), leases,
statutory obligations, insurance contracts, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) Easements, right-of-way, restrictions, covenants, minor
exceptions to title and other similar encumbrances on the use of real
property which in the aggregate do not materially interfere with the
ordinary conduct of the business of such Person or which are set forth
in any title policy or "marked up" commitment thereof delivered
pursuant hereto and reasonably acceptable to the Administrative Agent;
(f) Liens created to secure the purchase price of assets
acquired by such Person or created to secure Indebtedness permitted by
Section 7.1(c), (l) or (n) hereof, which is incurred solely for the
purpose of financing the acquisition of such assets and incurred at
the time of acquisition or within 90 days thereafter, so long as each
such Lien shall at all times be confined solely to the asset or assets
so acquired (and proceeds thereof), and refinancings, refundings,
renewals or extensions thereof so long as any such Lien remains solely
on the asset or assets acquired and the amount of Indebtedness related
thereto is not increased;
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<PAGE> 25
(g) Liens in respect of judgments or awards not constituting
an Event of Default under Section 8.1(h) hereof;
(h) Any Liens which are described on Schedule 1.1(c) hereto,
and Liens resulting from the refinancing, refunding, renewal, or
extension of the related Indebtedness, provided that the Indebtedness
secured thereby shall not be increased and the Liens shall not cover
additional assets of the Borrower (other than after-acquired title in
or on such property and proceeds of the existing collateral in
accordance with the document creating such Lien);
(i) Liens arising from precautionary UCC financing statements
with respect to operating leases or consignment arrangements in the
ordinary course of business;
(j) Liens in favor of banking institutions arising by
operation of law encumbering deposits (including the right of setoff)
held by such banking institution incurred in the ordinary course of
business and which are within the general parameters customary in the
banking industry;
(k) Liens existing on any property or asset at the time of
acquisition thereof by the Borrower and its Subsidiaries or existing
on the property or assets of any Person that becomes a Subsidiary
after the Agreement Date at the time such Person becomes a Subsidiary
(provided, that (x) such Lien is not created in contemplation of or in
connection with such acquisition or such Person becoming a Subsidiary,
as the case may be, (y) such Lien shall not apply to any other
property or assets of the Borrower or its Subsidiaries and (z) such
Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as
the case may be);
(l) Any obligations or duties affecting any of the property
of the Borrower or its Subsidiaries to any municipality or public
authority with respect to any franchise, grant, license or permit
which do not materially impair the use of such property for the
purposes for which it is held and do not materially impair the value
of the Collateral;
(m) Liens on property of the Borrower and its Subsidiaries in
favor of landlords securing licenses, subleases and leases permitted
hereunder and not interfering in any material respect with the
business of the Borrower or any of its Subsidiaries;
(n) Licenses, leases or subleases permitted hereunder granted
to others but not interfering in any material respect with any rights
to the Collateral or with the business of the Borrower or any of its
Subsidiaries;
(o) Deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, insurance contracts, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
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<PAGE> 26
(p) Any interest or title of a lessor under any lease entered
into by the Borrower or any of its Subsidiaries in the ordinary course
of its business and covering only the assets so leased; and
(q) Liens not otherwise permitted hereunder which secure
obligations not to exceed $12,500,000 in aggregate amount outstanding
at any time; provided that the Liens secure only such Indebtedness
which would otherwise be permitted pursuant to Section 7.1(c) or (n)
hereof but for the limitations on the amount of such Indebtedness set
forth therein.
"Person" means an individual, corporation, partnership, limited
liability company, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA subject to Title IV of ERISA or Section 412 of the Code (other than a
Multiemployer Plan) pursuant to which any employees of the Borrower or any
member of its Controlled Group participate.
"Preferred Stock" means, as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class or classes of such
corporation.
"Pretax Net Income" means net profit (or loss) before taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in Dollars
to United States residents of varying degrees of creditworthiness and being
quoted at such time by the Reference Lender as its "prime rate;" it being
understood that such rate may not be the lowest rate of interest charged by the
Reference Lender.
"Quarterly Date" means the last day of each April, July, October and
January beginning October 31, 1999.
"Recovery Event" means any settlement of or payment in respect of any
property insurance or casualty insurance claim or any condemnation proceeding
in or deed in lieu thereof relating to any Collateral, excluding any such
settlement or payment which, together with any related settlement or payment,
yields gross proceeds to the Borrower or any of its Subsidiaries of less than
$5,000,000.00.
"Reference Lender" means BankAmerica; provided that if BankAmerica's
portion of the Commitments shall terminate and it shall have no Advances
outstanding hereunder, BankAmerica shall cease to be the Reference Lender, and
the Administrative Agent (after consultation with Borrower) shall, with notice
to the Borrower and the Lenders, designate another Lender as the Reference
Lender.
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<PAGE> 27
"Register" has the meaning specified in Section 11.6(j) hereof.
"Reimbursement Obligations" means, in respect of any Letter of Credit
as at any date of determination, the sum of (a) the maximum aggregate amount
which is then available to be drawn under such Letter of Credit plus (b) the
aggregate amount of all drawings under such Letter of Credit and not
theretofore reimbursed by the Borrower.
"Reinvestment Deferred Amount" means with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by the Borrower or any of its
Subsidiaries in connection therewith which are not applied to prepay the
Advances.
"Reinvestment Event" means any Recovery Event in respect of which the
Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice" means a written notice by an Authorized
Signatory stating that no Event of Default has occurred and is continuing and
that the Borrower (directly or indirectly through a Subsidiary) intends to use
all or a specified portion of the Net Cash Proceeds of a Recovery Event to
acquire assets useful in its business.
"Reinvestment Prepayment Amount" means with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any
amount expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Borrower's business.
"Reinvestment Prepayment Date" means with respect to any Reinvestment
Event, the earlier of (a) the date occurring 365 days after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire assets useful in the Borrower's
business with all or any portion of the relevant Reinvestment Deferred Amount.
"Related Fund" means, with respect to any Lender which is a fund that
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"Release Date" means the date on which the Notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" shall have the meaning set forth in Section 4043(b)
of ERISA.
"Required Facility A Term Loan Lenders" means, on any date of
determination, any combination of Lenders having more than 50% of the Facility
A Term Loan Advances then outstanding.
"Required Facility B Term Loan Lenders" means, on any date of
determination, and combination of Lenders having more than 50% of the Facility
B Term Loan Advances then outstanding.
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<PAGE> 28
"Required Revolving Credit Lenders" means, on any date of
determination, any combination of Lenders whose Revolving Credit Specified
Percentages aggregate more than 50%, provided, however, in the event that the
Revolving Credit Commitment has terminated, "Required Revolving Credit Lenders"
means, on any date of determination, any combination of Lenders having more
than 50% of the Revolving Credit Advances then outstanding.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by reference to which the
Adjusted LIBOR Rate (as the case may be) is to be determined, or (ii) any
category of extensions of credit or other assets which include LIBOR Advances.
The Adjusted LIBOR Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Restricted Payments" means, collectively, (a) Dividends, and (b) any
payment or prepayment of principal, interest, premium or penalty on any of the
Senior Subordinated Notes, the Bridge Notes or any other Institutional Debt of
the Borrower or any of its Subsidiaries or any defeasance, redemption,
purchase, repurchase or other acquisition or retirement for value, in whole or
in part, of any of the Senior Subordinated Notes, the Bridge Notes or any other
Institutional Debt (including, without limitation, the setting aside of assets
or the deposit of funds therefor) of the Borrower or any of its Subsidiaries.
"Revolving Commitment Maturity Date" means July 31, 2005, or the
earlier date of termination in whole of the Revolving Credit Commitment
pursuant to Section 2.6 or 8.2 hereof.
"Revolving Credit Advance" means an Advance made pursuant to Section
2.1(a) hereof or Section 2.2(g) hereof in respect of a Swing Line Advance.
"Revolving Credit Commitment" means the commitments of the Lenders,
subject to the terms and conditions of this Agreement, to make Revolving Credit
Advances up to an aggregate principal amount of $55,000,000.00, as reduced or
terminated pursuant to Section 2.6 or 8.2 hereof.
"Revolving Credit Note" means any Promissory Note of the Borrower
evidencing Revolving Credit Advances hereunder, substantially in the form of
Exhibit A hereto, together with any extension, renewal, or amendment thereof,
or substitution therefor.
"Revolving Credit Specified Percentage" means, as to any Lender, the
percentage indicated beside its name on Schedule 1.1(a) hereto as its Revolving
Credit Specified Percentage, or as adjusted or specified in any amendment to
this Agreement or in any Assignment Agreement.
"Rights" means rights, remedies, powers and privileges.
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<PAGE> 29
"Security Agreement" means the Security Agreement executed by the
Borrower and each of its Subsidiaries, substantially in the form of Exhibit D
hereto.
"Senior Subordinated Notes" means (a) those certain senior
subordinated notes of the Borrower to be issued by the Borrower in connection
with the Courtesy Recapitalization, the proceeds of which will refinance the
Bridge Notes and which shall be subordinated to the Obligations on terms
reasonably satisfactory to the Determining Lenders and (b) all senior
subordinated notes of the Borrower issued in exchange for the Senior
Subordinated Notes on terms substantially the same as the terms of the Senior
Subordinated Notes.
"Solvent" means, with respect to any Person, that the fair value of
the assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and such Person does not
have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time,
such liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability discounted to
present value at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., or such other legal counsel as the Administrative Agent may select.
"Specified Percentage" means, as applicable or as the context
requires, the Revolving Credit Specified Percentage, the Facility A Term Loan
Specified Percentage or the Facility B Term Loan Specified Percentage.
"Subsidiary" of any Person means any corporation, partnership, limited
liability company, joint venture, trust or estate or other Person of which (or
in which) more than 50% of:
(a) the outstanding Capital Stock having voting power to
elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time Capital Stock of any other class
or classes of such corporation shall or might have voting power upon
the occurrence of any contingency),
(b) the interest in the capital or profits of such limited
liability company, partnership or joint venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
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"Subsidiary Guaranty" means the Subsidiary Guaranty executed by each
Domestic Subsidiary of the Borrower, substantially in the form of Exhibit G
hereto.
"Swing Line Advance" means an Advance made pursuant to Section 2.1(d)
hereof.
"Swing Line Bank" means Bank of America, N.A. and any successor
thereto appointed in accordance with Section 10.1(b) hereof.
"Swing Line Facility" has the meaning specified in Section 2.1(d)
hereof.
"Swing Line Note" means the promissory note of the Borrower payable to
the order of the Swing Line Bank, evidencing Swing Line Advances hereunder,
substantially in the form of Exhibit H hereto, together with any extension,
renewal or amendment thereof or substitution therefor.
"Syndication Agent" means Credit Suisse First Boston.
"Synthetic Lease" means any synthetic lease, tax retention generating
lease, or off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but which is classified
as an Operating Lease pursuant to GAAP.
"Taxes" has the meaning specified in Section 2.15(a) hereof.
"Term Loan Advance" means a Facility A Term Loan Advance or a Facility
B Term Loan Advance.
"Total Debt" means, as of any date of determination, determined for
the Borrower and its Subsidiaries on a consolidated basis, without duplication,
(a) indebtedness for borrowed money, (b) obligations evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations to pay the
deferred purchase price of property or services other than trade payables and
accrued expenses incurred in the ordinary course of business, and (d)
Capitalized Lease Obligations.
"Total Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on Schedule 1.1(a) hereto as its Total Specified
Percentage, or as adjusted or specified in any amendment to this Agreement or
in any Assignment Agreement, as adjusted to account for any permanent
reductions in the Revolving Credit Commitment and any payments of Facility A
Term Loan Advances or Facility B Term Loan Advances which result in a reduction
of the outstanding Facility A Term Loan Advances or outstanding Facility B Term
Loan Advances.
"Tribunal" means any (a) state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency,
department, commission, board, bureau, or instrumentality of a governmental or
other regulatory or public body or authority or (b) private arbitration board
or panel.
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"UCC" means the Uniform Commercial Code of New York, as amended from
time to time, or, where applicable to specific Collateral, any other relevant
state.
"Unused Portion" means an amount equal to the result of (a) the
Revolving Credit Commitment minus (b) the sum of (i) the outstanding Revolving
Credit Advances plus (ii) outstanding Reimbursement Obligations in respect of
the Letters of Credit.
"Working Capital" means Current Assets minus Current Liabilities.
Section 1.2 Amendments and Renewals. Each definition of an agreement
in this Article 1 shall include such agreement as amended to date, and as
amended, modified, renewed, supplemented or restated from time to time in
accordance with its terms.
Section 1.3 Construction. The terms defined in this Article 1 (except
as otherwise expressly provided in this Agreement) for all purposes shall have
the meanings set forth in Section 1.1 hereof, and the singular shall include
the plural, and vice versa, unless otherwise specifically required by the
context. All accounting terms used in this Agreement which are not otherwise
defined herein shall be construed in accordance with GAAP on a consolidated
basis for the Borrower and its Subsidiaries, unless otherwise expressly stated
herein. For purposes of computing the Leverage Ratio (and any financial
calculations required to be made or included within the Leverage Ratio) as of
the end of any fiscal quarter of any fiscal year, all components of the
Leverage Ratio for the four fiscal quarter period ending at the end of such
fiscal quarter shall include, without duplication, such components of the
Leverage Ratio attributable to any business or assets that have been acquired
or disposed of by the Borrower or any of its Subsidiaries (including through
permitted Acquisitions) after the first day of such four fiscal quarter period
and prior to the end of such period, as determined in good faith by the
Borrower on a pro forma basis for such period as if such acquisition or
disposition had occurred on the first day of such period (including, whether or
not such inclusion would be permitted under GAAP or Regulation S-X of the
Securities and Exchange Commission, cost savings that would have been realized
had such acquisition or disposition occurred on such day). For purposes of
computing the Interest Coverage Ratio (and any financial calculations required
to be made or included within the Interest Coverage Ratio), there shall not be
included any pro forma EBITDA or cash interest expense attributable to any
business or assets acquired prior to the date of such acquisition.
ARTICLE 2
Advances
Section 2.1 The Advances.
(a) Revolving Credit Advances. Each Lender with a Revolving Credit
Specified Percentage severally agrees, upon the terms and subject to the
conditions of this Agreement, to make Revolving Credit Advances to the Borrower
from time to time in an aggregate amount not to exceed such Lender's Revolving
Credit Specified Percentage of the Revolving Credit Commitment
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less such Lender's Revolving Credit Specified Percentage of the aggregate
amount of all (i) Reimbursement Obligations then outstanding (assuming
compliance with all conditions to drawing) and (ii) Swing Line Advances then
outstanding for the purposes set forth in Section 5.8 hereof. Subject to
Section 2.9 hereof, Revolving Credit Advances may be repaid and then
reborrowed. Notwithstanding any provision in any Loan Document to the contrary,
in no event shall the principal amount of all outstanding Revolving Credit
Advances, Reimbursement Obligations and Swing Line Advances exceed the
Revolving Credit Commitment.
(b) Facility A Term Loan Advances. Each Lender with a Facility A Term
Loan Specified Percentage severally agrees, upon the terms and subject to the
conditions of this Agreement, to make Facility A Term Loan Advances to the
Borrower on the Agreement Date in an aggregate amount not to exceed such
Lender's Facility A Term Loan Specified Percentage of the Facility A Term Loan
Commitment for the purposes set forth in Section 5.8 hereof. Notwithstanding
any provision in any Loan Document to the contrary, in no event shall the
principal amount of all outstanding Facility A Term Loan Advances exceed the
Facility A Term Loan Commitment. Immediately upon the making of the Facility A
Term Loan Advances, the Facility A Term Loan Commitment shall be automatically
terminated. Facility A Term Loan Advances may not be repaid and then
reborrowed.
(c) Facility B Term Loan Advances. Each Lender with a Facility B Term
Loan Specified Percentage severally agrees, upon the terms and subject to the
conditions of this Agreement, to make Facility B Term Loan Advances to the
Borrower on the Agreement Date in an aggregate amount not to exceed such
Lender's Facility B Term Loan Specified Percentage of the Facility B Term Loan
Commitment for the purposes set forth in Section 5.8 hereof. Notwithstanding
any provision in any Loan Document to the contrary, in no event shall the
principal amount of all outstanding Facility B Term Loan Advances exceed the
Facility B Term Loan Commitment. Immediately upon the making of the Facility B
Term Loan Advances, the Facility B Term Loan Commitment shall be automatically
terminated. Facility B Term Loan Advances may not be repaid and then
reborrowed.
(d) Swing Line Advances. The Borrower may request the Swing Line Bank
to make, and the Swing Line Bank shall make, on the terms and conditions
hereinafter set forth, Swing Line Advances to the Borrower from time to time on
any Business Day during the period from the Agreement Date to the Revolving
Commitment Maturity Date in an aggregate principal amount not to exceed at any
time outstanding the lesser of (a) $5,000,000 or (b) an amount equal to the
Revolving Credit Commitment minus (i) the aggregate principal amount of
Revolving Credit Advances then outstanding and (ii) the aggregate amount of all
Reimbursement Obligations then outstanding (the "Swing Line Facility"). Each
Swing Line Advance shall be in an amount not less than $100,000. Within the
limits of the Swing Line Facility and subject to the terms hereof, Swing Line
Advances may be repaid and then reborrowed.
(e) Type and Number of Advances. Any Advance, other than a Swing Line
Advance, shall, at the option of the Borrower as provided in Section 2.2 hereof
(and, in the case of LIBOR Advances, subject to availability and to the
provisions of Article 9 hereof), be made as a Base Rate Advance or a LIBOR
Advance; provided that there shall not be outstanding to any Lender, at any one
time, more than ten LIBOR Advances.
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Section 2.2 Manner of Borrowing and Disbursement.
(a) Base Rate Advances. In the case of Base Rate Advances (other than
Swing Line Advances), the Borrower, through an Authorized Signatory, shall give
the Administrative Agent prior to 12:00 noon, Charlotte, North Carolina time,
on the date of any proposed Base Rate Advance irrevocable written notice, or
irrevocable telephonic notice followed immediately by written notice, in
substantially the form of Exhibit K hereto (a "Notice of Borrowing") (provided,
however, that the Borrower's failure to confirm any telephonic notice in
writing shall not invalidate any notice so given), of its intention to borrow
or reborrow a Base Rate Advance hereunder. Such Notice of Borrowing shall
specify the requested funding date, which shall be a Business Day, the amount
of the proposed aggregate Base Rate Advances to be made by the Lenders, and
whether such Advance is a Revolving Credit Advance, Facility A Term Loan
Advance or Facility B Term Loan Advance.
(b) LIBOR Advances. In the case of LIBOR Advances, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent at least
three Business Days' irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice (provided, however, that the
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given) pursuant to a Notice of Borrowing, of its
intention to borrow or reborrow a LIBOR Advance hereunder. Notice shall be
given to the Administrative Agent prior to 12:00 noon, Charlotte, North
Carolina time, in order for such Business Day to count toward the minimum
number of Business Days required. LIBOR Advances shall in all cases be subject
to availability and to Article 9 hereof. For LIBOR Advances, the Notice of
Borrowing shall specify the requested funding date, which shall be a Business
Day, the amount of the proposed aggregate LIBOR Advances to be made by Lenders,
whether such Advance is a Revolving Credit Advance, Facility A Term Loan
Advance or Facility B Term Loan Advance, and the Interest Period selected by
the Borrower, provided that no such Interest Period shall extend past the
Revolving Commitment Maturity Date, the Facility A Term Loan Maturity Date or
the Facility B Term Loan Maturity Date, as appropriate, or prohibit or impair
the Borrower's ability to comply with Section 2.5 or 2.8 hereof.
(c) Swing Line Advances. In the case of Swing Line Advances, the
Borrower, through an Authorized Signatory, shall give the Swing Line Bank and
the Administrative Agent prior to 2:00 p.m., Charlotte, North Carolina time, on
the date of any proposed Swing Line Advance irrevocable telephonic notice
(provided, however, (i) the Borrower shall deliver written notice at least once
a week confirming the telephonic notices given by the Borrower with respect to
Swing Line Advances during the immediately preceding week and (ii) that the
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given), of its intention to borrow or reborrow a Swing
Line Advance. Such Notice of Borrowing shall specify (i) the requested funding
date, which shall be a Business Day and (ii) the amount of the proposed Swing
Line Advance.
(d) Continuation/Conversion. Subject to Sections 2.1 and 2.9 hereof,
the Borrower shall have the option (i) to convert at any time all or any part
of the outstanding Base Rate Advances to LIBOR Advances and all or any part of
the outstanding LIBOR Advances to Base Rate Advances or (ii) upon expiration of
any Interest Period applicable to a LIBOR Advance, to continue all or any
portion of such LIBOR Advance equal to $2,000,000 and integral multiples of
$500,000 in excess of that amount as a LIBOR Advance and the succeeding
Interest Period(s) of such continued LIBOR
- 27 -
<PAGE> 34
Advance shall commence on the last day of the Interest Period of the LIBOR
Advance to be continued; provided, however, (A) LIBOR Advances may be converted
into Base Rate Advances at any time only if the Borrower concurrently
reimburses the Lenders (to the extent required) in accordance with Section 2.9
hereof and (B) notwithstanding anything in this Agreement to the contrary, no
outstanding Advance may be continued as, or converted into, a LIBOR Advance
when any Event of Default has occurred and is continuing. Not later than 12:00
noon, Charlotte, North Carolina time on the date of any proposed continuation
of or a conversion to a Base Rate Advance and not later than 12:00 noon,
Charlotte, North Carolina time at least three Business Days prior to any
proposed continuation of or conversion to a LIBOR Advance, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent
irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice, in substantially the form of Exhibit L hereto (a
"Notice of Continuation/Conversion") (provided, however, that the Borrower's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given), stating (i) the proposed conversion/continuation date (which
shall be a Business Day), (ii) the amount of the Advance to be
converted/continued, (iii) in the case of a conversion to, or a continuation
of, a LIBOR Advance, the requested Interest Period, and (iv) in the case of a
conversion of a Base Rate Advance to a LIBOR Advance or continuation of a LIBOR
Advance, that no Event of Default has occurred and is continuing. If the
Borrower shall fail to give any notice in accordance with this Section 2.2(d)
prior to the expiration of any then-relevant Interest Period with respect to
any LIBOR Advance, the Borrower shall be deemed irrevocably to have requested
that such LIBOR Advance be converted to a Base Rate Advance in the same
principal amount.
(e) Minimum Amounts. The aggregate amount of Base Rate Advances (other
than Swing Line Advances) to be made by the Lenders on any day shall be in a
principal amount which is at least $1,000,000 or is an integral multiple of
$500,000 in excess thereof; provided, however, that such amount may equal the
unused amount of the applicable Commitment. The aggregate amount of LIBOR
Advances having the same Interest Period and to be made by the Lenders on any
day shall be in a principal amount which is at least $2,000,000 or is an
integral multiple of $500,000 in excess thereof.
(f) Notice and Disbursement. The Administrative Agent shall promptly
notify the Lenders of each notice (other than with respect to a Swing Line
Advance) received from the Borrower pursuant to this Section 2.2. Each Lender
shall, not later than 1:00 p.m., Charlotte, North Carolina time, on the date of
any Advance, deliver to the Administrative Agent, at its address set forth
herein, such Lender's Revolving Credit Specified Percentage, Facility A Term
Loan Specified Percentage and Facility B Term Loan Specified Percentage, as the
case may be, of such Advance in immediately available funds in accordance with
the Administrative Agent's instructions. Prior to 4:00 p.m., Charlotte, North
Carolina time, on the date of any Advance hereunder, the Administrative Agent
shall, subject to satisfaction of the conditions set forth in Article 3,
disburse the amounts made available to the Administrative Agent by the Lenders
by (i) transferring such amounts by wire transfer pursuant to the Borrower's
instructions, or (ii) in the absence of such instructions, crediting such
amounts to the account of the Borrower maintained with the Administrative
Agent. All Revolving Credit Advances shall be made by each Lender according to
its Revolving Credit Specified Percentage. All Facility A Term Loan Advances
shall be made by each Lender according to its Facility A Term Loan Specified
Percentage. All Facility B Term Loan
- 28 -
<PAGE> 35
Advances shall be made by each Lender in accordance with its Facility B Term
Loan Specified Percentage.
(g) Swing Line Advances. The Swing Line Bank shall, not later than
3:00 p.m., Charlotte, North Carolina time, on the date of any Swing Line
Advance, deliver to the Administrative Agent at its address set forth herein,
the amount of such Swing Line Advance in immediately available funds in
accordance with the Administrative Agent's instructions. Prior to 4:00 p.m.,
Charlotte, North Carolina time, on the date of any Swing Line Advance, the
Administrative Agent shall, subject to the conditions set forth in Article 3,
disburse the amount made available to the Administrative Agent by the Swing
Line Bank by (i) transferring such amounts by wire transfer pursuant to the
Borrower's instruction or (ii) in the absence of such instructions, crediting
such amounts to the account of the Borrower maintained with the Administrative
Agent. Forthwith upon demand by the Swing Line Bank at any time, including
after a Default or Event of Default, and in any event upon the making of the
direction specified by Section 8.2 to authorize the Administrative Agent to
declare the Advances due and payable pursuant to the provisions of Section 8.2,
each Lender, including the Swing Line Bank, notwithstanding the failure of the
Borrower at such time to satisfy each condition specified in Article 3, shall
make, by 12:00 noon, Charlotte, North Carolina time, on the first Business Day
following receipt by such Lender of notice from the Swing Line Bank, a
Revolving Credit Advance which is a Base Rate Advance in an amount equal to the
product of (i) the Revolving Credit Specified Percentage of such Lender times
(ii) the aggregate outstanding principal amount of the Swing Line Advances. The
proceeds of such Revolving Credit Advances shall be applied by the
Administrative Agent to repay the outstanding Swing Line Advances.
Section 2.3 Interest.
(a) On Base Rate Advances.
(i) The Borrower shall pay interest on the outstanding unpaid
principal amount of the Base Rate Advances outstanding from time to
time, until such Base Rate Advances are due (whether at maturity, by
reason of acceleration, by scheduled reduction, or otherwise) and
repaid at a simple interest rate per annum equal to the Base Rate
Basis for the Base Rate Advances as in effect from time to time,
provided that interest on the Base Rate Advances shall not exceed the
Maximum Amount. If at any time the Base Rate Basis would exceed the
Highest Lawful Rate, interest payable on the Base Rate Advances shall
be limited to the Highest Lawful Rate, but the Base Rate Basis shall
not thereafter be reduced below the Highest Lawful Rate until the
total amount of interest accrued on the Base Rate Advances equals the
amount of interest that would have accrued if the Base Rate Basis had
been in effect at all times.
(ii) Subject to Section 11.9 hereof, interest on the Base
Rate Advances shall be computed on the basis of a year of 365 or 366
days, as applicable, for the number of days actually elapsed, and
shall be payable in arrears on each Quarterly Date and on the
Revolving Commitment Maturity Date, Facility A Term Loan Maturity Date
or Facility B Term Loan Maturity Date, as appropriate.
- 29 -
<PAGE> 36
(b) On LIBOR Advances.
(i) The Borrower shall pay interest on the unpaid principal
amount of each LIBOR Advance, from the date such Advance is made until
it is due (whether at maturity, by reason of acceleration, by
scheduled reduction, or otherwise) and repaid, at a rate per annum
equal to the LIBOR Basis for such Advance. The Administrative Agent,
whose determination shall be controlling in the absence of manifest
error, shall determine the LIBOR Basis on the second Business Day
prior to the applicable funding date and shall notify the Borrower and
the Lenders of such LIBOR Basis.
(ii) Subject to Section 11.9 hereof, interest on each LIBOR
Advance shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be payable in arrears on the
applicable Payment Date and on the Revolving Commitment Maturity Date,
Facility A Term Loan Maturity Date and Facility B Term Loan Maturity
Date, as appropriate.
(c) On Swing Line Advances.
(i) The Borrower shall pay interest on the outstanding
principal amount of such Swing Line Advance, from the date such Swing
Line Advance is made until it is due (whether at maturity, by reason
of acceleration or otherwise) and repaid, at an interest rate per
annum equal to the Base Rate Basis in effect from time to time, but in
no event higher than the Highest Lawful Rate.
(ii) Subject to Section 11.9 hereof, interest on Swing Line
Advances shall be computed on the basis of a 365 or 366-day year, as
applicable, for the actual number of days elapsed, and shall be
payable in arrears on each Quarterly Date and on the Revolving
Commitment Maturity Date.
(d) Interest if No Notice of Selection of Interest Rate Basis. If the
Borrower fails to give the Administrative Agent timely notice of its selection
of a LIBOR Advance or an Interest Period for a LIBOR Advance, or if for any
reason a determination of a LIBOR Basis for any Advance is not timely concluded
due to the fault of the Borrower, the Base Rate Basis shall apply to the
applicable Advance.
(e) Interest After an Event of Default. (i) After an Event of Default
specified in Section 8.1(b) hereof and during any continuance thereof,
automatically and without any action by the Administrative Agent or any Lender,
the Obligations shall bear interest at a rate per annum equal to the Default
Rate. Such interest shall be payable on the earlier of written demand by the
Administrative Agent or such Lender or the Revolving Commitment Maturity Date,
Facility A Term Loan Maturity Date or Facility B Term Loan Maturity Date, as
appropriate, and shall accrue until the earlier of (i) waiver or cure (to the
reasonable satisfaction of the Determining Lenders) of the applicable Event of
Default, (ii) agreement by the Lenders affected thereby to rescind the charging
of interest at the Default Rate, or (iii) payment in full of the Obligations.
The Lenders shall not be
- 30 -
<PAGE> 37
required to accelerate the maturity of the Advances, to exercise any other
rights or remedies under the Loan Documents, or to give notice to the Borrower
of the decision to charge interest at the Default Rate.
Section 2.4 Fees.
(a) Revolving Commitment Fee. Subject to Section 11.9 hereof, the
Borrower agrees to pay to the Administrative Agent, for the ratable account of
the Lenders, a commitment fee on the daily average Unused Portion (the
"Commitment Fee") at the following per annum percentages, applicable in the
following situations:
<TABLE>
<CAPTION>
Applicability Percentage
------------- ----------
<S> <C>
(i) The Leverage Ratio is greater than or equal to 4.00 to 1 0.500%
(ii) The Leverage Ratio is less than 4.00 to 1 0.375%
</TABLE>
The Commitment Fee shall be payable in arrears on each Quarterly Date and on
the Revolving Commitment Maturity Date. The Commitment Fee shall be adjusted on
each Adjustment Date by using the Leverage Ratio set forth in the Compliance
Certificate received on each such Adjustment Date. If the financial statements
required pursuant to Section 6.1 or 6.2 hereof, as applicable, and the
Compliance Certificate required pursuant to Section 6.3 hereof are not received
by the Administrative Agent by the date required, the Commitment Fee shall be
determined as if the Leverage Ratio is greater than or equal to 4.00 to 1 until
such time as such financial statements and Compliance Certificate are received.
Notwithstanding the foregoing, from and including the Agreement Date to and
including the Adjustment Date following the date of receipt by the
Administrative Agent of the audited financial statements for September 30, 1999
and related Compliance Certificate, the Commitment Fee shall be determined as
if the Leverage Ratio is greater than or equal to 4.00 to 1. Subject to Section
11.9 hereof, the Commitment Fee shall be calculated on the basis of a 360-day
year for the actual number of days elapsed.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower agrees to
pay to the Administrative Agent, for the account of the Administrative Agent
and one of its Affiliates, the fees provided for in the letter agreement (the
"Fee Letter"), dated as of July 14, 1999, between the Borrower and the
Administrative Agent on the dates and in the amounts specified therein.
Section 2.5 Prepayment and Payments.
(a) Voluntary Prepayments. Upon three Business Days' prior telephonic
notice (to be promptly followed by written notice) by an Authorized Signatory
to the Administrative Agent, Advances may be voluntarily prepaid but only so
long as (in the case of prepayments of LIBOR Advances) the Borrower
concurrently reimburses the Lenders (to the extent required) in accordance with
Section 2.9 hereof. Any notice of prepayment shall be irrevocable unless such
notice is given
- 31 -
<PAGE> 38
in connection with a refunding of Advances under this Agreement in full and a
termination of this Agreement, in which case the parties hereto acknowledge
that such refunding may occur on a date after the date given in such notice as
a result of normal delay with respect to such refunding; provided, however, the
Borrower shall (in the case of prepayments of LIBOR Advances) reimburse each
Lender (to the extent required) in accordance with Section 2.9 hereof.
(b) Mandatory Prepayment.
(i) Commitment Reductions. On or before the date of any
reduction of the Revolving Credit Commitment, the Borrower shall
first, prepay applicable outstanding Revolving Credit Advances and
second, prepay Swing Line Advances in an amount necessary to reduce
the sum of outstanding Revolving Credit Advances, Swing Line Advances
and Reimbursement Obligations to an amount less than or equal to the
Revolving Credit Commitment as so reduced. To the extent required by
the preceding sentence, the Borrower shall first prepay all Base Rate
Advances and shall thereafter prepay LIBOR Advances. To the extent
that any prepayment requires that a LIBOR Advance be repaid on a date
other than the last day of its Interest Period, the Borrower shall
reimburse each Lender in accordance with Section 2.9 hereof. To the
extent that aggregate outstanding Revolving Credit Advances,
Reimbursement Obligations, and Swing Line Advances exceed the
Revolving Credit Commitment after any reduction thereof, the Borrower
shall repay any such excess amount and all accrued interest
attributable to such excess Revolving Credit Advances on the date of
such reduction.
(ii) Prepayments from Sales of Assets. Within 10 Business
Days of the receipt of Net Cash Proceeds from the sale or disposition
by the Borrower or any of its Subsidiaries of any assets (including
the Capital Stock of any Subsidiary) (other than any such sales or
dispositions permitted under clauses (a) through (j) of Section 7.5
hereof), the Borrower shall prepay Facility A Term Loan Advances and
Facility B Term Loan Advances in an aggregate principal amount equal
to 100% of such Net Cash Proceeds received. Each such prepayment shall
be applied as provided in Section 2.5(c) hereof.
(iii) Prepayments from Excess Cash Flow. Commencing on April
15, 2001 and on each April 15 thereafter, the Borrower shall prepay
Facility A Term Loan Advances and Facility B Term Loan Advances in an
aggregate principal amount equal to the lesser of (i) 70% of Excess
Cash Flow, if any, for the fiscal year ending immediately preceding
each such April 15 or (ii) an amount, if any, which would result (on a
pro forma basis) in the Leverage Ratio being less than 3.50 to 1 after
such prepayment. Each such prepayment shall be applied as provided in
Section 2.5(c) hereof.
(iv) Prepayment from Recovery Events. Within 10 Business Days
after receipt of Net Cash Proceeds by the Borrower or any of its
Subsidiaries from any Recovery Event, unless a Reinvestment Notice
shall have been delivered in respect thereof, the Borrower shall
prepay Facility A Term Loan Advances and Facility B Term Loan Advances
in an aggregate principal amount of 100% of such Net Cash Proceeds
received, provided that if a Reinvestment Notice shall be delivered in
respect thereof, an amount equal to the
- 32 -
<PAGE> 39
Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied to payment of the Advances on the
Reinvestment Prepayment Date. Each such prepayment shall be applied as
provided in Section 2.5(c) hereof.
(v) Prepayment from Sales of Institutional Debt. Concurrently
with the receipt of Net Cash Proceeds from the issuance of any
Institutional Debt by the Borrower, the Borrower shall prepay the
Facility A Term Loan Advances and the Facility B Term Loan Advances in
an aggregate principal amount equal to 100% of such Net Cash Proceeds;
provided, however, the Borrower shall not be required to prepay the
Facility A Term Loan Advances and the Facility B Term Loan Advances
with the Net Cash Proceeds from the issuance of the Senior
Subordinated Notes to the extent that the Net Cash Proceeds thereof
are used (A) to prepay the Bridge Notes, (B) to refinance any
Indebtedness permitted pursuant to Section 7.1 hereof, and (C) to
finance an Acquisition permitted pursuant to Section 7.11 hereof, and
such Indebtedness is permitted under Section 7.1 hereof. Each such
prepayment shall be applied as provided in Section 2.5(c) hereof.
(c) Payments, Generally. Any partial payment of a (i) Base Rate
Advance shall be in a principal amount which is at least $100,000 and which is
an integral multiple of $100,000 and (ii) a LIBOR Rate Advance shall be in a
principal amount which is at least $1,000,000 and which is an integral multiple
of $500,000, and to the extent that any payment of a LIBOR Advance is made on a
date other than the last day of its Interest Period, the Borrower shall
reimburse each Lender (to the extent required) in accordance with Section 2.9
hereof. Any voluntary prepayment of any Term Loan Advance shall be allocated
among the Facility A Term Loan Advances and the Facility B Term Loan Advances
as the Borrower may elect. Any prepayments required to be made pursuant to
clauses (ii) through (v) of Section 2.5(b) hereof shall (i) include and be
applied to accrued interest to the date of such prepayment on the principal
amount prepaid, (ii) be allocated among the Facility A Term Loan Advances and
the Facility B Term Loan Advances, pro rata based on the outstanding principal
amount of the Facility A Term Loan Advances and the Facility B Term Loan
Advances and applied first, to the next two immediately succeeding installments
of the Facility A Term Loan Advances and the Facility B Term Loan Advances (to
be applied to each of such installments as the Borrower selects), and second,
to the then remaining installments of the Facility A Term Loan Advances and the
Facility B Term Loan Advances pro rata based on the number of then remaining
installments in respect of the Facility A Term Loan Advances and the Facility B
Term Loan Advances (i.e. each then remaining installment of the applicable Term
Loan Advance shall be reduced by an amount equal to the aggregate amount to be
applied to such Term Loan Advances divided by the number of the then remaining
installments for such Term Loan Advance), provided that if the amount to be
applied to any installment required by this Agreement would exceed the then
remaining amount of such installment, then an amount equal to such excess shall
be applied to the remaining installments in the order of maturity after giving
effect to all prior reductions thereto (including the amount of prepayments
theretofore allocated pursuant to the preceding portion of this sentence),
(iii) not be subject to the notice and minimum payment provisions of this
Section 2.5; provided, however, the Borrower shall be required to reimburse
each Lender for any loss, cost or expense incurred by each Lender in connection
with any such prepayment as set forth in Section 2.9 hereof if any prepayment
results in a LIBOR Advance being paid on a day other than the last day of an
Interest Period for such LIBOR Advance, and (iv) be
- 33 -
<PAGE> 40
applied first to Base Rate Advances, if any, and then to LIBOR Advances. With
respect to any voluntary payment of Term Loan Advances made by the Borrower
within fifteen days of any Quarterly Date on which amortization of any Term
Loan Advance is required, the Borrower shall have the right to designate such
payment as a prepayment or as payment of the Term Loan Advances required to be
made on such Quarterly Date.
(d) Any Lender holding Facility A Term Loan Advances or Facility B
Term Loan Advances may elect on not less than one Business Day's prior written
notice to the Administrative Agent with respect to any mandatory prepayment
required to be made pursuant to Section 2.5(b) hereof, not to have such
prepayment made with respect to such Lender's Facility A Term Loan Advances or
Facility B Term Loan Advances, as applicable. The Borrower may retain, and
shall not be required to prepay any other Advances from, any amounts refused by
such Lenders.
(e) Notwithstanding the foregoing provisions of this Section 2.5, if
at any time the mandatory prepayment of any Advances pursuant to this Agreement
would result, after giving effect to the procedures set forth in this
Agreement, in the Borrower incurring costs under Section 2.9 hereof as a result
of LIBOR Advances ("Affected LIBOR Advances") being prepaid other than on the
last day of an Interest Period applicable thereto, which costs are required to
be paid pursuant to Section 2.9 hereof, then, the Borrower may, in its sole
discretion, initially deposit a portion (up to 100%) of the amounts that
otherwise would have been paid in respect of the Affected LIBOR Advances with
the Administrative Agent (which deposit must be equal in amount to the amount
of the Affected LIBOR Advances not immediately prepaid) to be held as security
for the obligations of the Borrower to make such mandatory prepayment pursuant
to a cash collateral agreement to be entered into in form and substance
reasonably satisfactory to the Administrative Agent, with such cash collateral
to be directly applied upon the first occurrence (or occurrences) thereafter of
the last day of an Interest Period applicable to the relevant Advance that is a
LIBOR Advance (or such earlier date or dates as shall be requested by the
Borrower), to repay an aggregate principal amount of such LIBOR Advance equal
to the Affected LIBOR Advances not initially repaid pursuant to this Section
2.5(e).
Section 2.6 Reduction of Commitments.
(a) Voluntary Reduction. The Borrower shall have the right, upon not
less than 2 Business Days' notice by an Authorized Signatory to the
Administrative Agent (if telephonic, to be confirmed by telex or in writing on
or before the date of reduction or termination), to terminate or reduce the
Revolving Credit Commitment, in whole or in part. Each partial termination
shall be in an aggregate amount which is at least $5,000,000 or is an integral
multiple of $100,000 in excess thereof, and no voluntary reduction in the
Revolving Credit Commitment shall cause any LIBOR Advance to be repaid prior to
the last day of its Interest Period, unless the Borrower shall reimburse each
Lender (to the extent required) in accordance with Section 2.9 hereof.
(b) Mandatory Reduction. On the Revolving Commitment Maturity Date,
the Revolving Credit Commitment shall automatically reduce to zero.
- 34 -
<PAGE> 41
(c) General Requirements. Upon any reduction of the Revolving Credit
Commitment pursuant to this Section, the Borrower shall immediately make a
repayment of applicable Advances in accordance with Section 2.5(b) hereof. The
Borrower shall reimburse each Lender for any loss or out-of-pocket expense
incurred by such Lender in connection with any such payment, as set forth in
Section 2.9 hereof to the extent applicable. The Borrower shall not have any
right to rescind any termination or reduction, except as otherwise provided in
the last sentence of Section 2.5(a) hereof. Once reduced, the Revolving Credit
Commitment may not be increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Agent. Unless
the Administrative Agent shall have been notified by a Lender prior to the date
of any proposed Advance (which notice shall be effective upon receipt) that
such Lender does not intend to make the proceeds of such Advance available to
the Administrative Agent, the Administrative Agent may assume that such Lender
has made such proceeds available to the Administrative Agent on such date, and
the Administrative Agent may (but shall not be required to) make available to
the Borrower a corresponding amount in reliance upon such assumption. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
amount on demand from such Lender (or, if such Lender fails to pay such amount
forthwith upon such demand, from the Borrower) together with interest thereon
in respect of each day during the period commencing on the date such amount was
available to the Borrower and ending on (but excluding) the date the
Administrative Agent receives such amount from the Lender, with interest
thereon at a per annum rate equal to the lesser of (i) the Highest Lawful Rate
or (ii) the Federal Funds Rate. No Lender shall be liable for any other
Lender's failure to fund an Advance hereunder.
Section 2.8 Payment of Principal of Advances.
(a) Revolving Credit Advances. To the extent not otherwise required to
be paid earlier as provided herein, the principal amount of the Revolving
Credit Advances shall be due and payable on the Revolving Commitment Maturity
Date.
(b) Facility A Term Loan Advances. To the extent not otherwise
required to be paid earlier as provided herein, the principal amount of the
Facility A Term Loan Advances shall be repaid on each Quarterly Date (except as
provided in the last sentence of Section 2.5(c) hereof) and on the Facility A
Term Loan Maturity Date in such amounts as set forth next to each such date
below:
<TABLE>
<CAPTION>
Amount of Reduction of Facility A
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
<S> <C>
July 31, 2001 $3,000,000
October 31, 2001 $3,000,000
January 31, 2002 $3,000,000
April 30, 2002 $3,000,000
</TABLE>
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<PAGE> 42
<TABLE>
<S> <C>
July 31, 2002 $3,000,000
October 31, 2002 $3,750,000
January 31, 2003 $3,750,000
April 30, 2003 $3,750,000
July 31, 2003 $3,750,000
October 31, 2003 $4,250,000
January 31, 2004 $4,250,000
April 30, 2004 $4,250,000
July 31, 2004 $4,250,000
October 31, 2004 $4,500,000
January 31, 2005 $4,500,000
April 30, 2005 $4,500,000
July 31, 2005 $4,500,000
or such other amounts of Facility A
Term Loan Advances then outstanding
</TABLE>
(c) Facility B Term Loan Advances. To the extent not otherwise
required to be paid earlier as provided herein, the principal amount of the
Facility B Term Loan Advances shall be repaid on each Quarterly Date (except as
provided in the last sentence of Section 2.5(c) hereof) and on the Facility B
Term Loan Maturity Date in such amounts as set forth next to each such date
below:
<TABLE>
<CAPTION>
Amount of Reduction of Facility B
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
<S> <C>
July 31, 2001 $200,000
October 31, 2001 $200,000
January 31, 2002 $200,000
April 30, 2002 $200,000
July 31, 2002 $200,000
October 31, 2002 $200,000
January 31, 2003 $200,000
April 30, 2003 $200,000
</TABLE>
- 36 -
<PAGE> 43
<TABLE>
<S> <C>
July 31, 2003 $200,000
October 31, 2003 $200,000
January 31, 2004 $200,000
April 30, 2004 $200,000
July 31, 2004 $200,000
October 31, 2004 $200,000
January 31, 2005 $200,000
April 30, 2005 $200,000
July 31, 2005 $200,000
October 31, 2005 $19,150,000
January 31, 2006 $19,150,000
April 30, 2006 $19,150,000
July 31, 2006 $19,150,000
or such other amount of Facility B
Term Loan Advances then outstanding
</TABLE>
(d) Swing Line Advances. To the extent not otherwise required to be
paid earlier as provided herein, the outstanding principal amount of each Swing
Line Advance shall be due and payable on the earlier of (i) the tenth Business
Day after the making thereof and (ii) the Revolving Commitment Maturity Date.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or incur
any losses or reasonable out-of-pocket expenses in connection with (a) failure
by the Borrower to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason of
the Borrower's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article 3 hereof), (b) any prepayment for any reason of
any LIBOR Advance in whole or in part (including a prepayment pursuant to
Section 9.3(b) hereof) on other than the last day of an Interest Period
applicable to such LIBOR Advance, (c) any prepayment of any of its LIBOR
Advances that is not made on any date specified in a notice of prepayment given
by the Borrower, or (d) the selling by BankAmerica, Credit Suisse First Boston
or Bankers Trust Company of all or any of their respective rights and
obligations under this Agreement to an Assignee within 60 days after the
Agreement Date, the Borrower agrees to pay to any such Lender, upon its demand,
an amount sufficient to compensate such Lender for all such losses and
out-of-pocket expenses (provided that with respect to sales pursuant to clause
(d) above, BankAmerica shall only be reimbursed for the lost profits and
reasonable expenses incurred by it in connection with the re-employment of
funds prepaid as a result of such a sale), subject to Section 11.9 hereof. Such
Lender's good faith determination of the amount of such losses or out-of-pocket
expenses, calculated in its usual fashion, absent manifest error, shall be
controlling. Such losses shall include, without
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<PAGE> 44
limiting the generality of the foregoing, lost profits and reasonable expenses
incurred by such Lender in connection with the re-employment of funds prepaid,
repaid, converted or not borrowed, converted or paid, as the case may be. Upon
request of the Borrower, such Lender shall provide a certificate setting forth
the amount to be paid to it by the Borrower hereunder and calculations therefor
and that it is generally charging such costs to other similarly situated
borrowers. The covenants set forth in this Section 2.9 shall survive
termination of this Agreement and the repayment of Advances in full and other
amounts payable hereunder for a period of nine months thereafter.
Section 2.10 Manner of Payment.
(a) Payment Timing and Type. Each payment (including prepayments) by
the Borrower of the principal of or interest on the Advances, fees, and any
other amount owed under this Agreement or any other Loan Document shall be made
not later than 1:00 p.m., Charlotte, North Carolina time, on the date specified
for payment under this Agreement to the Administrative Agent at the
Administrative Agent's office, in Dollars constituting immediately available
funds.
(b) Non-Business Day Payments. If any payment under this Agreement or
any other Loan Document shall be specified to be made upon a day which is not a
Business Day, it shall be made on the next succeeding day which is a Business
Day, unless, with respect to a payment due in respect of a LIBOR Advance, such
Business Day falls in another calendar month, in which case payment shall be
made on the preceding Business Day. Any extension of time shall in such case be
included in computing interest and fees, if any, in connection with such
payment.
(c) Payments without Deduction. The Borrower agrees to pay principal,
interest, fees and all other amounts due under the Loan Documents without
deduction for set-off or counterclaim or any deduction whatsoever other than as
provided in Section 2.15 of this Agreement.
(d) Apportionment of Payments.
(i) Prior to (A) the occurrence of an Event of Default and
(B) delivery by the Determining Lenders of a Default Application
Notice to the Administrative Agent, all payments in respect of the
Obligations shall be applied in the following order:
(1) first, to pay the Administrative Agent's fees and
expenses incurred on behalf of the Lenders then due
and payable;
(2) second, to pay all other fees then due and payable
in respect of the Advances and the Reimbursement
Obligations under the Loan Documents;
(3) third, to pay all other amounts other than principal
and interest (including, without limitation, expense
reimbursements and indemnities) not otherwise
referred in clauses (1) and (2) immediately
preceding then due and payable in respect of the
Advances and the Reimbursement Obligations under the
Loan Documents;
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<PAGE> 45
(4) fourth, to pay interest then due and payable on the
Advances and the Reimbursement Obligations, to be
applied in accordance with the Applicable Specified
Percentages (except that (A) prior to the Lenders
making Revolving Credit Advances pursuant to Section
2.2(g) hereof, all interest due and payable on the
Swing Line Advances shall be payable to the Swing
Line Bank and (B) at such time, if any, that the
Lenders make a Revolving Credit Advance pursuant to
Section 2.2(g) hereof, the Administrative Agent
shall distribute all interest payments in respect of
Swing Line Advances to the Lenders in accordance
with their respective Revolving Credit Specified
Percentages).
(5) fifth, to pay principal then due and payable on the
Advances and Reimbursement Obligations, to be
applied in accordance with Applicable Specified
Percentages (except that (A) prior to the Lenders
making a Revolving Credit Advance pursuant to
Section 2.2(g) hereof, all principal due and payable
on the Swing Line Advances shall be payable to the
Swing Line Bank and (B) at such time, if any, that
the Lenders make a Revolving Credit Advance pursuant
to Section 2.2(g) hereof, the Administrative Agent
shall distribute all principal payments in respect
of Swing Line Advances to the Lenders in accordance
with their respective Revolving Credit Specified
Percentages).
(ii) After (A) the occurrence of an Event of Default and
during the continuance thereof and (B) the Determining Lenders shall
have delivered the notice to the Administrative Agent to apply
payments in respect of the Obligations as provided in this Section
2.10(d)(ii) (a "Default Application Notice"), all payments in respect
of the Obligations and (proceeds of Collateral and payments under any
Subsidiary Guaranty) shall be applied in the following order:
(1) first, to pay the Administrative Agent's fees and
expenses incurred on behalf of the Lenders then due
and payable;
(2) second, to pay all other fees then due and payable
in respect of the Advances and the Reimbursement
Obligations under the Loan Documents;
(3) third, to pay all other amounts other than principal
and interest (including; without limitation, expense
reimbursements and indemnities) not otherwise
referred to in clauses (1) and (2) immediately
preceding then due and payable in respect of the
Advances and the Reimbursement Obligations under the
Loan Documents;
(4) fourth, to pay interest then due and payable on the
Advances and the Reimbursement Obligations, to be
applied in accordance with each Lenders' Total
Specified Percentage; and
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<PAGE> 46
(5) fifth, to pay principal then due and payable on the
Advances and Reimbursement Obligations, and in the
case of proceeds of Collateral and payments under
any Subsidiary Guaranty, to pay any other
obligations to any Secured Party (as defined in the
Security Agreement) not covered in first through
fourth above, ratably among the Secured Parties in
accordance with the aggregate principal amount of
Advances and the Reimbursement Obligations and, in
the case of proceeds of Collateral or payments under
any Subsidiary Guaranty, the obligations secured or
guaranteed thereby, owed to each Secured Party.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR
Lending Office is set forth opposite its name in Schedule 1.1(b) attached
hereto. Each Lender shall have the right at any time and from time to time to
designate a different office of itself or of any Affiliate as such Lender's
LIBOR Lending Office, and to transfer any outstanding LIBOR Advance to such
LIBOR Lending Office. No such designation or transfer shall result in any
liability on the part of the Borrower for increased costs or expenses resulting
solely from such designation or transfer (except any such transfer which is
made by a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the
purpose of complying with Applicable Law).
Section 2.12 Sharing of Payments. Any Lender obtaining a payment
(whether voluntary or involuntary, due to the exercise of any right of set-off,
or otherwise) on account of its Advances (other than pursuant to Section
2.4(b), 2.15, 2.16(d), 9.3 or 9.5) in excess of its share of payments made by
the Borrower according to (a) before the Determining Lenders have delivered a
Default Application Notice to the Administrative Agent, its Applicable
Specified Percentage, and (b) after the Determining Lenders have delivered a
Default Application Notice to the Administrative Agent, its Total Specified
Percentage, then in each case, such Lender shall purchase from each other
Lender such participation in the Advances made by such other Lender as shall be
necessary to cause such purchasing Lender to share a ratable portion of the
excess payment with each other Lender (based on its Applicable Specified
Percentage if the Determining Lenders have not delivered a Default Application
Notice to the Administrative Agent, and based on its Total Specified Percentage
if the Determining Lenders have delivered a Default Application Notice to the
Administrative Agent); provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section, to the
fullest extent permitted by law, may exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this
Agreement relating to calculation of the LIBOR Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that each Lender
shall be entitled to fund and maintain its funding of all or any part of a
LIBOR Advance as it sees fit.
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<PAGE> 47
Section 2.14 Booking Loans. Any Lender may make, carry or transfer
Advances at, to or for the account of any of its branch offices or the office
of any Affiliate. No such action shall result in any liability on the part of
the Borrower from such action (except any such action which is made by a Lender
pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of
complying with Applicable Law).
Section 2.15 Taxes.
(a) Any and all payments by the Borrower and each other Obligor
hereunder and under the other Loan Documents (including, without limitation,
payments pursuant to Sections 2.9, 5.9, 9.3, 9.5, 11.2 hereof and this Section
2.15) shall be made, in accordance with Section 2.10, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges and withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Administrative Agent, taxes
imposed on, based upon or measured by its overall net income, net worth or
capital, and franchise taxes, doing business taxes or minimum taxes imposed on
it, (i) by the jurisdiction under the laws of which such Lender or the
Administrative Agent (as the case may be) is organized and in which it has its
applicable lending office or any political subdivision thereof; (ii) by any
other jurisdiction, or any political subdivision thereof, other than those
imposed solely by reason of (A) an asserted relation of such jurisdiction to
the transactions contemplated by this Agreement, (B) the activities of the
Borrower in such jurisdiction, or (C) the activities in connection with the
transactions contemplated by this Agreement or any other Loan Document of a
Lender or the Administrative Agent; (iii) by reason of failure by the Lender or
the Administrative Agent to comply with the requirements of paragraph (e) of
this Section 2.15; and (iv) in the case of any Lender, any taxes in the nature
of transfer, stamp, recording or documentary taxes resulting from a transfer
(other than as a result of foreclosure) by such Lender of all or any portion of
its interest in this Agreement, the Notes or any other Loan Documents (all such
non- excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, (x) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.15) such Lender or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been
made, (y) the Borrower shall make such deductions and (z) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than Taxes described in clause (iv) of the first sentence
of Section 2.15(a)) that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes").
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.15) paid by such Lender or the
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<PAGE> 48
Administrative Agent (as the case may be) and all liabilities (including
penalties, additions to tax, interest and reasonable expenses) arising
therefrom or with respect thereto whether or not such Taxes or Other Taxes were
correctly or legally asserted, other than penalties, additions to tax, interest
and expenses arising as a result of gross negligence on the part of such Lender
or the Administrative Agent, provided, however, that the Borrower shall have no
obligation to indemnify such Lender or the Administrative Agent (i) for any
such amounts payable to any Lender that is not organized under the Laws of the
United States of America or a state thereof if such Lender fails to comply with
the requirements of Section 2.15(e) hereof and (ii) unless and until such
Lender or the Administrative Agent shall have delivered to the Borrower a
certificate setting forth in reasonable detail the basis of the Borrower's
obligation to indemnify such Lender or the Administrative Agent pursuant to
this Section 2.15. This indemnification shall be made within 30 days from the
date such Lender or the Administrative Agent (as the case may be) makes written
demand therefor.
(d) Within 60 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent the original or a certified
copy of a receipt evidencing payment thereof. For purposes of this Section 2.15
the terms "United States" and "United States Person" shall have the meanings
set forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees
that:
(i) it shall (except as provided in Section 2.15(e)(vi)
hereof), no later than the Agreement Date (or, in the case of a Lender
which becomes a party hereto pursuant to Section 11.6 after the
Agreement Date, the date upon which such Lender becomes a party
hereto) deliver to the Borrower through the Administrative Agent, with
a copy to the Administrative Agent:
(A) if any lending office is located in the United
States of America, two (2) accurate and complete signed
originals of Internal Revenue Service Form 4224 or any
successor thereto ("Form 4224"),
(B) if any lending office is located outside the
United States of America, two (2) accurate and complete
signed originals of Internal Revenue Service Form 1001 or any
successor thereto ("Form 1001").
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such lending office or lending offices under this
Agreement free from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office or
lending offices or selects an additional lending office it shall, at
the same time or reasonably promptly thereafter but only to the extent
the forms previously delivered by it hereunder are no longer
effective, deliver to the Borrower through the Administrative Agent,
with a copy to the Administrative Agent, in replacement for the forms
previously delivered by it hereunder:
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<PAGE> 49
(A) if such changed or additional lending office is
located in the United States of America, two (2) accurate and
complete signed originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed
originals of Form 1001, in each case indicating that such
Lender is on the date of delivery thereof entitled to receive
payments of principal, interest and fees for the account of
such changed or additional lending office under this
Agreement free from withholding of United States Federal
income tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event
mentioned in clause (ii) above) requiring a change in the most recent
Form 4224 or Form 1001 previously delivered by such Lender and if the
delivery of the same be lawful, deliver to the Borrower through the
Administrative Agent with a copy to the Administrative Agent, two (2)
accurate and complete original signed copies of Form 4224 or Form 1001
in replacement for the forms previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrower to
such effect, deliver to the Borrower such other forms or similar
documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Lender's
tax status for withholding purposes;
(v) it shall notify the Borrower within 30 days after any
event (including an amendment to, or a change in any applicable law or
regulation or in the written interpretation thereof by any regulatory
authority or any judicial authority, or by ruling applicable to such
Lender of any governmental authority charged with the interpretation
or administration of any law) shall occur that results in such Lender
no longer being capable of receiving payments without any deduction or
withholding of United States federal income tax; and
(vi) if such Lender is not a "bank" or other person described
in Section 881(c)(3) of the Code and cannot deliver either Form 4224
or Form 1001, a statement that such Lender is not a "bank" under
Section 881(c)(3)(A) of the Code and two original copies of Internal
Revenue Service Form W-8 (or any successor form), properly completed
and duly executed by such Lender.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.15 shall survive termination of this Agreement and the payment
in full of the Advances and all other amounts payable hereunder for a period of
one year thereafter.
(g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.15 shall use its reasonable best efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office, if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter
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<PAGE> 50
accrue and would not, in the reasonable judgment of such Lender, be materially
disadvantageous to such Lender.
(h) Each Lender (and the Administrative Agent with respect to payments
to the Administrative Agent for its own account) agrees that (i) it will take
all reasonable actions by all usual means to maintain all exemptions, if any,
available to it from United States withholding taxes (whether available by
treaty, existing administrative waiver, by virtue of the location of any
Lender's lending office) and (ii) otherwise cooperate with the Borrower to
minimize amounts payable by the Borrower under this Section 2.15; provided,
however, the Lenders and the Administrative Agent shall not be obligated by
reason of this Section 2.15(h) to contest the payment of any Taxes or Other
Taxes or to disclose any information regarding its tax affairs or tax
computations or reorder its tax or other affairs or tax or other planning.
Subject to the foregoing, to the extent the Borrower pays sums pursuant to this
Section 2.15 and any Lender or the Administrative Agent receives a refund of
any or all of such sums, such refund shall be applied to reduce any amounts
then due and owing under this Agreement or, to the extent that no amounts are
due and owing under this Agreement at the time such refunds are received, the
party receiving such refund shall promptly pay over all such refunded sums to
the Borrower, provided that no Default or Event of Default is in existence at
such time.
Section 2.16 Letters of Credit.
(a) The Letter of Credit Facility. The Borrower may request the
Issuing Bank, on the terms and conditions hereinafter set forth, to issue, and
the Issuing Bank shall, if so requested, issue, letters of credit to be
denominated in Dollars (the "Letters of Credit") for the account of the
Borrower or for the joint account of the Borrower and any of its Subsidiaries
from time to time on any Business Day from the date of the initial Advance
until the Revolving Commitment Maturity Date in an aggregate maximum amount
(assuming compliance with all conditions to drawing) not to exceed, at any time
outstanding, the lesser of (i) $10,000,000 (the "Letter of Credit Facility")
and (ii) the sum of (A) the Revolving Credit Commitment, minus (B) the
aggregate principal amount of Revolving Credit Advances and Swing Line Advances
then outstanding. No Letter of Credit shall have an expiration date (including
all rights of renewal) later than the earlier of (i) 5 Business Days before the
Revolving Commitment Maturity Date or (ii) one year after the date of issuance
thereof (provided that any Letter of Credit may provide for the renewal thereof
for additional periods of up to one year, which in no event extend beyond the
date referred to in clause (i) of this sentence). Immediately upon the issuance
of each Letter of Credit issued in accordance with the terms hereof, the
Issuing Bank shall be deemed to have sold and transferred to each Lender, and
each Lender shall be deemed to have purchased and received from the Issuing
Bank, in each case irrevocably and without any further action by any party, an
undivided interest and participation in such Letter of Credit, each drawing
thereunder and the obligations of the Borrower under this Agreement in respect
thereof in an amount equal to the product of (x) such Lender's Revolving Credit
Specified Percentage times (y) the maximum amount available to be drawn under
such Letter of Credit (assuming compliance with all conditions to drawing).
Within the limits of the Letter of Credit Facility, and subject to the limits
referred to above, the Borrower may request the issuance of Letters of Credit
under this Section 2.16(a), repay any Revolving Credit Advances resulting from
drawings thereunder
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<PAGE> 51
pursuant to Section 2.16(c) and request the issuance of additional Letters of
Credit under this Section 2.16(a).
(b) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 12:00 noon, Charlotte, North Carolina time, on the
third Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank. Each Letter of Credit shall be
issued upon notice given in accordance with the terms of any separate agreement
between the Borrower and the Issuing Bank in form and substance reasonably
satisfactory to the Borrower and the Issuing Bank providing for the issuance of
Letters of Credit pursuant to this Agreement and containing terms and
conditions not inconsistent with this Agreement (a "Letter of Credit
Agreement"), provided that if any such terms and conditions are inconsistent
with this Agreement, this Agreement shall control. Each such notice of issuance
of a Letter of Credit by the Borrower (a "Notice of Issuance") shall be by
tested telex, telecopier or tested cable, specifying therein, the requested (A)
date of such issuance (which shall be a Business Day), (B) maximum amount of
such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name
and address of the beneficiary of such Letter of Credit, (E) form of such
Letter of Credit and (F) such other information as shall be required pursuant
to the relevant Letter of Credit Agreement. If the requested terms of such
Letter of Credit are acceptable to the Issuing Bank in its reasonable
discretion, the Issuing Bank will, upon fulfillment of the applicable
conditions set forth in Article 3 hereof, make such Letter of Credit available
to the Borrower at its office referred to in Section 11.1 or as otherwise
agreed with the Borrower in connection with such issuance. At least once each
calendar month, the Administrative Agent shall obtain from the Issuing Bank and
deliver to each Lender a summary report of the issued and outstanding Letters
of Credit.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Revolving Credit Advance,
which shall bear interest at the Base Rate Basis, in the amount of such draft
(but without any requirement for compliance with the conditions set forth in
Article 3 hereof). In the event that a drawing under any Letter of Credit is
not reimbursed by the Borrower by 11:00 a.m., Charlotte, North Carolina time,
on the first Business Day after such drawing, the Issuing Bank shall promptly
notify the Administrative Agent and each other Lender. Each such Lender shall,
on the first Business Day following such notification, make a Revolving Credit
Advance (or, if as a result of any Debtor Relief Law, the Lenders are
prohibited from making a Revolving Credit Advance, each Lender shall fund its
participation purchased pursuant to Section 2.16(a) hereof by making such
amount available to the Administrative Agent), which shall bear interest at the
Base Rate Basis, and shall be used to repay the applicable portion of the
Issuing Bank's Advance with respect to such Letter of Credit, in an amount
equal to the amount of its participation in such drawing for application to
reimburse the Issuing Bank (but without any requirement for compliance with the
applicable conditions set forth in Article 3 hereof) and shall make available
to the Administrative Agent for the account of the Issuing Bank, by deposit at
the Administrative Agent's office, in same day funds, the amount of such
Advance. In the event that any Lender fails to make available to the
Administrative Agent for the account of the Issuing Bank the amount of such
Advance, the Issuing Bank shall be entitled to recover such amount on demand
from such Lender together with interest thereon at a rate per annum equal to
the lesser of (i) the Highest Lawful Rate or (ii) the Federal Funds Rate.
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<PAGE> 52
(d) Increased Costs. If the adoption, effectiveness, phase-in or
applicability after the Agreement Date of any Law (or any provision thereof) or
if any change in any Law or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration
thereof shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit or guarantees issued
by, or assets held by, or deposits in or for the account of, the Issuing Bank
or any Lender or (ii) impose on the Issuing Bank or any Lender any other
condition regarding this Agreement or such Lender or any Letter of Credit, and
the result of any event referred to in the preceding clause (i) or (ii) shall
be to increase the cost to the Issuing Bank of issuing or maintaining any
Letter of Credit or to any Lender of purchasing any participation therein or
making any Advance pursuant to Section 2.16(c) hereof, then, upon demand by the
Issuing Bank or such Lender, the Borrower shall, subject to Section 11.9
hereof, pay to the Issuing Bank or such Lender, from time to time as specified
by the Issuing Bank or such Lender, additional amounts that shall be sufficient
to compensate the Issuing Bank or such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
by the Issuing Bank or such Lender, shall include in reasonable detail the
basis for the demand for additional compensation, shall certify that it is
generally charging such costs to other similarly situated borrowers under
similar credit facilities and shall be controlling for all purposes, absent
manifest error; provided that the determination of such amounts shall be made
in good faith in a manner generally consistent with the Issuing Bank's or such
Lender's standard practices. The obligations of the Borrower under this Section
2.16(d) shall survive termination of this Agreement for a period of one year
thereafter. The Issuing Bank or any Lender claiming any additional compensation
under this Section 2.16(d) shall use reasonable efforts (consistent with legal
and regulatory restrictions) to reduce or eliminate any such additional
compensation which may thereafter accrue and which efforts would not, in the
sole discretion of the Issuing Bank or such Lender, cause such Lender or
Issuing Bank to suffer economic, legal or regulatory disadvantage.
(e) Obligations Absolute. The obligations of the Borrower under this
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit or any
Revolving Credit Advance pursuant to Section 2.16(c) hereof shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement, such Letter of Credit Agreement and such other
agreement or instrument under all circumstances, including, without limitation,
the following circumstances unless such circumstance is caused by the gross
negligence or willful misconduct of the Issuing Bank:
(i) any lack of validity or enforceability of this Agreement,
any other Loan Document, any Letter of Credit Agreement, any Letter of
Credit or any other agreement or instrument relating thereto
(collectively, the "L/C Related Documents");
(ii) (A) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations of the
Borrower in respect of the Letters of Credit or any Revolving Credit
Advance pursuant to Section 2.16(c) hereof or (B) any other amendment
or waiver of or any consent to departure from all or any of the L/C
Related Documents;
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(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary
or any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Issuing
Bank, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the L/C Related
Documents or any unrelated transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply
with the terms of the Letter of Credit, except for any payment made
upon the Issuing Bank's gross negligence or willful misconduct;
(vi) any exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the Letters of Credit or any Revolving Credit
Advance pursuant to Section 2.16(c) hereof; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a Guarantor, other
than the Issuing's Bank gross negligence or wilful misconduct.
(f) Compensation for Letters of Credit.
(i) Letter of Credit Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the account of each
Lender a fee (which shall be payable quarterly in arrears on each
Quarterly Date and on the Revolving Commitment Maturity Date) equal to
the product of (A) an amount equal to the remainder of (y) 100% of the
applicable LIBOR Rate Margin for Revolving Credit Advances in effect
from time to time minus (z) 0.250% multiplied by (B) the average daily
amount available for drawing under all Letters of Credit. Subject to
Section 11.9 hereof, such fee shall be computed on the basis of a
360-day year for the actual number of days elapsed.
(ii) Fronting Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the account of the
Issuing Bank a per annum fronting fee (which shall be payable
quarterly in arrears on each Quarterly Date and on the Revolving
Commitment Maturity Date) in an amount equal to the product of (A)
0.250% multiplied by (B) the average daily amount available for
drawing under all outstanding Letters of Credit. Subject to Section
11.9 hereof, such fee shall be computed on the basis of a 360-day year
for the actual number of days elapsed.
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(g) L/C Cash Collateral Account.
(i) Upon the occurrence and during the continuance of an
Event of Default and within thirty days of demand by the
Administrative Agent pursuant to Section 8.2(c) (but in the case of an
Event of Default specified in Section 8.1(f) or (g) hereof immediately
and without any demand or taking of any other action by the
Administrative Agent or any Lender), the Borrower will (A) pay to the
Administrative Agent in immediately available funds an amount equal to
the maximum amount then available to be drawn under the Letters of
Credit then outstanding or (B) deliver to the Issuing Bank back-up
letters of credit reasonably acceptable to the Issuing Bank which,
together with any funds deposited in the L/C Cash Collateral Account,
are in an amount equal to the maximum amount then available to be
drawn under the Letters of Credit then outstanding. Any amounts so
received by the Administrative Agent shall be deposited by the
Administrative Agent in a deposit account maintained by the
Administrative Agent (the "L/C Cash Collateral Account").
(ii) As security for the payment of all Reimbursement
Obligations and for any other Obligations, the Borrower hereby grants,
conveys, assigns, pledges, sets over and transfers to the
Administrative Agent (for the benefit of the Issuing Bank and
Lenders), and creates in the Administrative Agent's favor (for the
benefit of the Issuing Bank and Lenders) a Lien in, all money,
instruments and securities at any time held in or acquired in
connection with the L/C Cash Collateral Account, together with all
proceeds thereof. The L/C Cash Collateral Account shall be under the
sole dominion and control of the Administrative Agent and the Borrower
shall have no right to withdraw or to cause the Administrative Agent
to withdraw any funds deposited in the L/C Cash Collateral Account. At
any time and from time to time, upon the Administrative Agent's
request, the Borrower promptly shall execute and deliver any and all
such further instruments and documents, including UCC financing
statements, as may be necessary, appropriate or desirable in the
Administrative Agent's reasonable judgment to obtain the full benefits
(including perfection and priority) of the security interest created
or intended to be created by this paragraph (ii) and of the rights and
powers herein granted. The Borrower shall not create or suffer to
exist any Lien on any amounts or investments held in the L/C Cash
Collateral Account other than the Lien granted under this paragraph
(ii).
(iii) The Administrative Agent shall (A) apply any funds in
the L/C Cash Collateral Account on account of Reimbursement
Obligations when the same become due and payable if and to the extent
that the Borrower shall fail directly to pay such Reimbursement
Obligations and (B) after the Revolving Commitment Maturity Date,
apply any proceeds remaining in the L/C Cash Collateral Account first
to pay any unpaid Obligations then outstanding hereunder and then to
refund any remaining amount to the Borrower.
(iv) The Borrower, no more than once in any calendar month,
may direct the Administrative Agent to invest the funds held in the
L/C Cash Collateral Account (so long as the aggregate amount of such
funds exceeds any relevant minimum investment requirement) in (A)
direct obligations of the United States or any agency thereof, or
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<PAGE> 55
obligations guaranteed by the United States or any agency thereof and
(B) one or more other types of investments permitted by the
Administrative Agent, in each case with such maturities as the
Borrower, with the consent of the Administrative Agent, may specify,
pending application of such funds on account of Reimbursement
Obligations or on account of other Obligations, as the case may be. In
the absence of any such direction from the Borrower, the
Administrative Agent shall invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds
exceeds any relevant minimum investment requirement) in one or more
types of investments with such maturities as the Administrative Agent
may specify, pending application of such funds on account of
Reimbursement Obligations or on account of other Obligations, as the
case may be. All such investments shall be made in the Administrative
Agent's name for the account of the Lenders, subject to the ownership
interest therein of the Borrower. The Borrower recognizes that any
losses or taxes with respect to such investments shall be borne solely
by the Borrower, and the Borrower agrees to hold the Administrative
Agent and the Lenders harmless from any and all such losses and taxes.
Administrative Agent may liquidate any investment held in the L/C Cash
Collateral Account in order to apply the proceeds of such investment
on account of the Reimbursement Obligations (or on account of any
other Obligation then due and payable, as the case may be) without
regard to whether such investment has matured and without liability
for any penalty or other fee incurred (with respect to which the
Borrower hereby agrees to reimburse the Administrative Agent) as a
result of such application.
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the
Initial Letters of Credit. The obligation of each Lender to make the initial
Advance and the obligations of the Issuing Bank to issue any Letter of Credit
issued on the Agreement Date, is subject to (i) receipt by the Administrative
Agent of each of the following, in form and substance reasonably satisfactory
to each Lender, with a copy (except for the Notes) for each Lender, and (ii)
satisfaction of the following conditions:
(a) a loan certificate of each Obligor certifying as to the accuracy
of its representations and warranties in the Loan Documents, certifying that no
Default has occurred and is continuing, and including a certificate of
incumbency with respect to each officer executing any Loan Document, and
including (i) a copy of the articles or certificate of incorporation (or other
similar organizational documents) of such Obligor certified to be true,
complete and correct by the secretary of state of its state of incorporation or
organization, (ii) a copy of the bylaws, partnership agreement or other similar
governance document of such Obligor, as in effect on the Agreement Date, (iii)
a copy of the resolutions of such Obligor authorizing it to execute, deliver
and perform the Loan Documents to which it is a party and all other
transactions contemplated thereby, and (iv) a copy of a certificate of good
standing and a certificate of existence for its state of incorporation and each
state in which it is qualified to do business;
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<PAGE> 56
(b) a duly executed Revolving Credit Note, Facility A Term Loan Note
and Facility B Term Loan Note payable to the order of each Lender with a
related Commitment and in an amount for each Lender equal to its Specified
Percentage of each such Commitment, respectively, and which has specifically
requested such Note;
(c) the duly executed Swing Line Note, payable to the order of the
Swing Line Bank in the amount of the Swing Line Facility;
(d) UCC-11 searches in appropriate jurisdictions where Collateral is
located;
(e) opinion of counsel to the Borrower and each Subsidiary (including
foreign counsel with respect to any Capital Stock of a Foreign Subsidiary as
Collateral) addressed to the Lenders;
(f) reimbursement to the Administrative Agent for Special Counsel's
reasonable and customary fees (on an hourly basis) and expenses incurred
through the date hereof;
(g) any fees required to be paid pursuant to the Fee Letter;
(h) duly executed and completed Security Agreements and Intellectual
Property Security Agreements executed by the Borrower and each of its Domestic
Subsidiaries, granting a first priority perfected Lien in all Collateral
covered thereby, together with related financing statements, stock powers,
stock certificates evidencing ownership of (i) 100% of the issued and
outstanding Capital Stock of each Domestic Subsidiary and (ii) 65% of the
issued and outstanding Capital Stock of each Foreign Subsidiary which has the
Borrower or a Domestic Subsidiary as its direct parent, and insurance
certificates listing the Administrative Agent as loss payee and additional
insured and otherwise in a form required by the Collateral Documents;
(i) a duly executed and completed Subsidiary Guaranty by each Domestic
Subsidiary;
(j) duly executed and completed Deeds of Trusts, together with such
environmental reports and title insurance policies or commitments as shall
reasonably be required by the Administrative Agent, in form or substance
reasonably satisfactory to the Administrative Agent and Special Counsel;
(k) simultaneously with the making of the initial Advance, executed
UCC-3 Termination Statements to be filed in appropriate jurisdictions to
terminate all Liens against assets of the Borrower and its subsidiaries other
than Permitted Liens;
(l) all Courtesy Recapitalization Documents, which shall be on terms
and conditions reasonably acceptable to the Administrative Agent;
(m) the Courtesy Recapitalization shall have occurred
contemporaneously pursuant to terms and conditions of the Courtesy
Recapitalization Documents;
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<PAGE> 57
(n) evidence reasonably satisfactory to the Administrative Agent, that
contemporaneously with the Courtesy Recapitalization (i) the Borrower shall
receive (A) at least $100,000,000 in gross proceeds from the sale of the Senior
Subordinated Notes or the Bridge Notes and (B) the HMTF/Courtesy Partners, L.P.
Cash Contribution; and (iii) the Unused Portion shall be equal to or greater
than $45,000,000;
(o) (i) audited financial statements of the Borrower and its
Subsidiaries for the fiscal years ending 1996, 1997 and 1998, (ii) unaudited
financial statements of the Borrower and its Subsidiaries for the fiscal
quarter ending December 31, 1998, March 31, 1999 and June 30, 1999 (iii) a pro
forma balance sheet and income statement of the Borrower and its Subsidiaries,
taking into account the Courtesy Recapitalization as if the Courtesy
Recapitalization had taken place on June 30, 1999, together with a pro-forma
calculation of the Leverage Ratio indicating that the Leverage Ratio will not
exceed 5.20 to 1, and (iv) such other information relating to the Courtesy
Recapitalization as the Administrative Agent shall reasonably request, in each
case in form and substance reasonably satisfactory to the Administrative Agent;
(p) all requisite approvals or consents of all Tribunals or third
parties with respect to the Courtesy Recapitalization and the other
transactions contemplated hereby to the extent required shall have been
obtained (but excluding any approvals or consents that could not reasonably be
expected to have a Material Adverse Effect);
(q) after giving effect to the Courtesy Recapitalization, there shall
have occurred no material adverse change in the business, assets, operations,
prospects or condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole, since September 30, 1998;
(r) a solvency opinion (taking into account the Courtesy
Recapitalization) delivered by Brownstone Associates or such other financial
advisor acceptable to the Administrative Agent, in form and substance
reasonably satisfactory to the Administrative Agent; and
(s) such other documents, instruments and certificates as the
Administrative Agent or any Lender may reasonably require in connection with
the transactions contemplated hereby.
Section 3.2 Conditions Precedent to All Advances and Letters of
Credit. The obligation of each Lender to make each Advance hereunder (including
the initial Advance) and the obligation of the Issuing Bank to issue or extend
each Letter of Credit (including the initial Letter of Credit) is subject to
fulfillment of the following conditions immediately prior to or
contemporaneously with each such Advance or issuance or extension:
(a) With respect to each Advance and each issuance of a Letter of
Credit, all of the representations and warranties of the Borrower under this
Agreement, which, pursuant to Section 4.2 hereof, are made at and as of the
time of such Advance or Letter of Credit, shall be true and correct at such
time in all material respects, both before and after giving effect to the
application of the proceeds of such Advance or Letter of Credit;
(b) There shall not exist a Default or Event of Default hereunder;
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(c) The aggregate Advances and Letters of Credit, after giving effect
to such proposed Advance or Letter of Credit, shall not exceed the maximum
principal amount then permitted to be outstanding hereunder;
(d) No order, judgment, injunction or decree of any Tribunal shall
purport to enjoin or restrain any Lender or the Issuing Bank from making any
Advance or issuing any Letter of Credit; and
(e) There shall be no Litigation pending against, or, to the
Borrower's current actual knowledge, threatened against the Borrower or any of
its Subsidiaries, or in any of their respective properties, which could
reasonably be expected to have a Material Adverse Effect.
Notwithstanding the above, the obligation of each Lender to make a
Revolving Credit Advance pursuant to Sections 2.2(g) and 2.16(c) hereof (or
fund its participation in respect of Letters of Credit pursuant to Section
2.16(c) hereof) shall be absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, (i) the occurrence of any
Default or Event of Default, (ii) the failure of the Borrower to satisfy any
condition set forth in this Section 3.2, or (iii) any other circumstance,
happening or event whatsoever, except that the conditions precedent set forth
in Section 3.1 and 3.2 hereof with respect to the Swing Line Advance or the
Letter of Credit for which such Revolving Credit Advance is made pursuant to
Section 2.2(g) or 2.16(c) hereof (or participation funded) shall have been
satisfied in full at the time of the making of such Swing Line Advance or the
issuance or extension of such Letter of Credit.
Section 3.3 Conditions Precedent to Conversions and Continuations. The
obligation of the Lenders to convert any existing Base Rate Advance into a
LIBOR Advance or to continue any existing LIBOR Advance as provided in Section
2.2(d) hereof is subject to the condition precedent that on the date of such
conversion or continuation no Event of Default shall have occurred and be
continuing or would result from the making of such conversion or continuation.
The acceptance of the benefits of each such conversion and continuation shall
constitute a representation and warranty by the Borrower to each of the Lenders
that no Event of Default shall have occurred and be continuing or would result
from the making of such conversion or continuation.
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. As of the Agreement Date, the
respective jurisdiction of incorporation or organization and percentage
ownership by the Borrower or another Subsidiary of the Subsidiaries listed on
Schedule 4.1(a) are true and correct. All of the outstanding Capital Stock of
the Borrower and its Subsidiaries is validly issued, fully paid and
non-assessable.
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Each of the Borrower and its Subsidiaries is a corporation, partnership or
limited liability company duly organized, validly existing and in good standing
under the laws of its state of organization. Each of the Borrower and its
Subsidiaries has the corporate or other legal power and authority to own its
properties and to carry on its business as now being and hereafter proposed to
be conducted. Each of the Borrower and its Subsidiaries is authorized to do
business, duly qualified and in good standing in the jurisdictions set forth in
Schedule 4.1(a) and no qualification or authorization is necessary in any other
jurisdictions in which the character of its properties or the nature of its
business requires such qualification or authorization except where the failure
to be so qualified or authorized could not reasonably be expected to have a
Material Adverse Effect.
(b) Authorization. The Borrower has the corporate power and has taken
all necessary corporate action to authorize it to borrow hereunder and enter
into the Courtesy Recapitalization. Each Obligor has corporate or other legal
power and has taken all necessary corporate or other legal action to execute,
deliver and perform the Loan Documents to which it is party in accordance with
the terms thereof, and to consummate the transactions contemplated thereby.
Each Loan Document has been duly executed and delivered by the Obligor
executing it. Each of the Loan Documents to which an Obligor is a party is a
legal, valid and binding respective obligation of such Obligor, enforceable in
accordance with its terms, subject, to enforcement of remedies, to the
following qualifications: (i) equitable principles generally, and (ii) Debtor
Relief Laws (insofar as any such law relates to the bankruptcy, insolvency or
similar event of such Obligor).
(c) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance by each Obligor of the
Loan Documents to which it is a party, and the consummation of the transactions
contemplated thereby, do not and will not (i) require any consent or approval
other than (x) those already obtained, (y) consents under immaterial
contractual obligations, the failure to obtain which could not reasonably be
expected to have a Material Adverse Effect, and (z) UCC and mortgage filings in
connection with the Loan Documents, (ii) violate any material Applicable Law,
except for any violations thereof which could not reasonably be expected to
have a Material Adverse Effect, (iii) conflict with, result in a breach of, or
constitute a default under the certificate of incorporation, bylaws,
partnership agreement, operating agreement or other similar governing document
or agreement of such Obligor, (iv) conflict with, result in a breach of, or
constitute a default under any Necessary Authorization, indenture, agreement or
other instrument, to which such Obligor is a party or by which they or their
respective properties may be bound, or (v) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by such Obligor other than the Liens created pursuant to the
Loan Documents.
(d) Business. The Borrower and its Subsidiaries are engaged primarily
in the business of designing, manufacturing and marketing precision injection
molded plastic components, closures and dispensing systems and the design and
manufacture of tooling related thereto and activities reasonably related,
ancillary or complimentary thereto.
(e) Compliance with Law. The Borrower and its Subsidiaries are in
compliance in all respects with all Applicable Laws, except where the failure
to so comply could not reasonably be expected to have a Material Adverse
Effect.
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(f) Title to Properties. The Borrower and its Subsidiaries have good
and indefeasible title to, or a valid leasehold interest in, all of their
material assets. None of their assets are subject to any Liens, except
Permitted Liens. No financing statement or other Lien filing (except relating
to Permitted Liens and other Liens for which releases and UCC-3 Termination
Statements have been obtained pursuant to Section 3.1(k) hereof) is on file in
any state or jurisdiction that names the Borrower or any of its Subsidiaries as
debtor or covers (or purports to cover) any assets of the Borrower or any of
its Subsidiaries, except for Indebtedness permitted hereunder or with respect
to which the requirements of Section 3.1(k) hereof have been satisfied.
(g) Litigation. Except as reflected on Schedule 4.1(g) hereto, as of
the Agreement Date, there is no Litigation pending against, or, to the
Borrower's current actual knowledge, threatened against the Borrower, or in any
other manner relating directly and adversely to the Borrower or any of its
Subsidiaries, or any of their properties, in, before, or by any Tribunal which
if adversely determined could reasonably be expected to have a Material Adverse
Effect.
(h) Taxes. Except as set forth in Schedule 4.1(h) hereto, all federal
and other material tax returns of the Borrower and its Subsidiaries required by
law to be filed have been duly filed or extensions have been timely filed, and
all federal and other material taxes, assessments and other governmental
charges or levies upon the Borrower, its Subsidiaries or any of their
respective properties, income, profits and assets, which are due and payable,
have been paid, except for the filing of such tax returns or the payment of
such taxes, assessments and other charges the failure to file or pay of which
could not reasonably be expected to have a Material Adverse Effect, unless the
same are being contested in good faith by appropriate proceedings, with
adequate reserves established therefor, and no Lien (other than a Permitted
Lien) has attached and no foreclosure, distraint, sale or similar proceedings
have been commenced that have not been vacated, discharged, bonded or stayed.
The charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of their taxes are, in the judgment of the Borrower,
adequate.
(i) Financial Statements; Material Liabilities.
(i) The Borrower has heretofore delivered to Lenders the (A)
audited combined balance sheets of the Borrower as at September 30,
1998, and the related statements of earnings and changes in
shareholders' equity and statement of cash flows for the twelve-month
period then ended and (B) unaudited combined balance sheets of the
Borrower as at December 31, 1998, March 31, 1999 and June 30, 1999 and
the related statements of earnings and changes in shareholders' equity
and statement of cash flows for the three-month, sixth-month and
nine-month periods, respectively, then ended (collectively, the
"Financial Statements"). The Financial Statements were prepared in
conformity with GAAP and fairly present, in all material respects, the
financial position of the Borrower and its Subsidiaries as at the date
thereof and the combined results of operations and cash flows for the
period covered thereby.
(ii) The projected consolidated financial statements of the
Borrower, delivered to the Lenders prior to or on the Agreement Date
are based on good faith estimates and
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assumptions made by the management of the Borrower and believed to be
reasonable at the time made, it being recognized by the Lenders that
such projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any such
projections may differ from the projected results by a material
amount.
(iii) The financial statements of the Borrower and its
Subsidiaries delivered to the Lenders pursuant to Section 6.1 and 6.2
hereof fairly present in all material respects their respective
financial condition and their respective results of operations as of
the dates and for the periods shown, all in accordance with GAAP,
subject to normal year-end adjustments. The latest of such financial
statements reflects all material liabilities, direct and contingent,
of the Borrower and each Subsidiary of the Borrower that are required
to be disclosed in accordance with GAAP.
(j) No Adverse Change. Since the date of the Financial Statements and
thereafter any financial statements delivered pursuant to Section 6.2(a)
hereof, no event or circumstance has occurred or arisen which could reasonably
be expected to have a Material Adverse Effect.
(k) ERISA. None of the Borrower or any of its Subsidiaries maintains
or contributes to any Plan or Multiemployer Plan pursuant to which employees of
the Borrower or any of its Subsidiaries participate other than those disclosed
to the Administrative Agent in writing. Each such Plan (other than any
Multiemployer Plan) is in compliance in all material respects with the
applicable provisions of ERISA and the Code, except where the failure to comply
could not reasonably be expected to have a Material Adverse Effect. No
accumulated funding deficiency (as defined in Section 412(a) of the Code) with
respect to a Plan has occurred (without regard to any waiver granted under
Section 412 of the Code), the result of which could reasonably be expected to
have a Material Adverse Effect. None of the Borrower or any member of its
Controlled Group has failed to make any contribution or pay any amount due or
owing as required under the terms of any Plan or Multiemployer Plan, the result
of which could reasonably be expected to have a Material Adverse Effect. There
has been no ERISA Event, the result of which could reasonably be expected to
have a Material Adverse Effect. The present value of the benefit liabilities,
as defined in Title IV of ERISA, of each Plan subject to Title IV of ERISA
(other than a Multiemployer Plan) of (i) the Borrower does not exceed by more
than$5,000,000 the present value of the assets of each such Plan as of the most
recent valuation date using each such Plan's actuarial assumptions at such date
and (ii) each member of its Controlled Group does not exceed the present value
of the assets of each such Plan as of the most recent valuation date using each
such Plan's actuarial assumptions at such date by an amount which could
reasonably be expected to have a Material Adverse Effect. There are no pending,
or to the Borrower's knowledge threatened, claims, lawsuits or actions (other
than routine claims for benefits in the ordinary course) asserted or instituted
against, and neither the Borrower nor any member of its Controlled Group has
knowledge of any threatened litigation or claims against, the assets of any
Plan or its related trust or against any fiduciary of a Plan with respect to
the operation of such Plan the result of which could reasonably be expected to
have a Material Adverse Effect. None of the Borrower, any member of its
Controlled Group, or any organization to which the Borrower or any member of
its Controlled Group is a successor or parent corporation within the meaning of
ERISA Section 4069(b), has engaged in a transaction within the meaning of
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ERISA Section 4069 the result of which could reasonably be expected to have
Material Adverse Effect.
(l) Compliance with Regulations T, U and X. The Borrower is not
engaged principally or as one of its important activities in the business of
extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulations T, U and X of the Board of Governors of the
Federal Reserve System, and no proceeds of any Advances or Letters of Credit
will be used, directly or indirectly, to purchase or carry any such margin
stock. No more than 25% of the assets of the Borrower and its Subsidiaries will
be margin stock. Neither the making of any Advances, the issuance of any
Letters of Credit nor the application of any proceeds thereof will violate, or
be inconsistent with, the provisions of Regulations T, U and X of the Board of
Governors of the Federal Reserve System.
(m) Necessary Authorization. The Borrower and its Subsidiaries are not
required to obtain any Necessary Authorization that has not already been
obtained from, or effect any material filing or registration that has not
already been effected with, any federal, state or local regulatory authority in
connection with the execution and delivery of this Agreement or any other Loan
Document, or the performance thereof, in accordance with their respective
terms, including any borrowing hereunder. All Necessary Authorizations have
been duly obtained, and are in full force and effect without any known conflict
with the rights of others and are free from any unduly burdensome restrictions.
(n) Absence of Default. No event has occurred or failed to occur,
which has not been remedied or waived, the occurrence or non-occurrence of
which constitutes, or which with the passage of time or giving of notice or
both would constitute, (i) an Event of Default or (ii) a default by the
Borrower or any of its Subsidiaries under any indenture, agreement or other
instrument, or any judgment, decree or order to which the Borrower or any of
its Subsidiaries or by which they or any of their respective properties is
bound, the result of which with respect to any default set forth in clause (ii)
immediately preceding could reasonably be expected to have a Material Adverse
Effect.
(o) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is 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. Neither the entering into or
performance by the Borrower of this Agreement nor the issuance of the Notes
violates any provision of such act or requires any consent, approval, or
authorization of, or registration with, the Securities and Exchange Commission
or any other Tribunal pursuant to any provisions of such act.
(p) Environmental Matters. Except as disclosed in Borrower's
Environmental Reports, (i) neither the Borrower nor any of its Subsidiaries has
any current actual knowledge that any substance deemed hazardous by any
Applicable Environmental Law, has been installed (A) on any real property fee
title to which is now owned by the Borrower or any of its Subsidiaries or (B)
by Borrower or any of its Subsidiaries on any real property leased by the
Borrower or any of its Subsidiaries, in either case in a manner which could
give rise to a violation of Applicable
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Environmental Laws which could reasonably be expected to have a Material
Adverse Effect; (ii) the Borrower and its Subsidiaries are not in material
violation of or subject to any existing, pending or, to the Borrower's
knowledge, threatened investigation or inquiry by any governmental authority or
to any material remedial obligations under any Applicable Environmental Laws
which could reasonably be expected to have a Material Adverse Effect; and (iii)
the Borrower and its Subsidiaries have obtained all permits, licenses, and
authorizations required by Applicable Environmental Laws except where failure
to obtain such permits could not reasonably be expected to have a Material
Adverse Effect. The Borrower and its Subsidiaries have taken reasonable steps
to determine, and, except as disclosed in the Borrower's Environmental Reports,
the Borrower and its Subsidiaries have no current actual knowledge, that any
hazardous substances or solid wastes have been disposed of or otherwise
released (y) on or to the real property fee title to which is owned by the
Borrower or any of its Subsidiaries or (z) by Borrower or any of its
Subsidiaries on or to any real property leased by Borrower or any of its
Subsidiaries, all within the meaning of the Applicable Environmental Laws,
which could reasonably be expected to have a Material Adverse Effect.
(q) Certain Fees. No broker's, finder's or other fee or commission
will be payable by the Borrower (other than to the Lenders hereunder and HMTF
and its Affiliates) with respect to the making of the Commitments or the
Advances hereunder, other than fees payable in connection with the Courtesy
Recapitalization. The Borrower agrees to indemnify and hold harmless the
Administrative Agent and each Lender from and against any claims, demand,
liability, proceedings, costs or expenses asserted with respect to or arising
in connection with any such fees or commissions.
(r) Intellectual Property. The Borrower and its Subsidiaries have
collectively obtained or applied for or licensed or otherwise obtained the
right to use all patents, trademarks, service marks, trade names, copyrights,
and other rights, free from Liens (except Permitted Liens), that are necessary
for the operation of their business as presently conducted and as proposed to
be conducted other than those of which the failure to obtain or to apply for
could not reasonably be expected to have a Material Adverse Effect. Nothing has
come to the current actual knowledge of the Borrower or any of its Subsidiaries
to the effect that (i) any process, method, part or other material presently
contemplated to be employed by the Borrower or any of its Subsidiaries
infringes any valid and enforceable patent, trademark, service mark, trade
name, copyright, license or other right owned by any other Person, or (ii)
there is pending or overtly threatened any claim or litigation against or
affecting the Borrower or any of its Subsidiaries contesting its right to sell
or use any such process, method, part or other material, in each case which if
adversely determined could reasonably be expected to result in a Material
Adverse Effect.
(s) Disclosure. All factual information, reports, financial
statements, exhibits and schedules furnished in writing by the Borrower or any
of its Subsidiaries to the Administrative Agent or any Lender in connection
with this Agreement or the other Loan Documents prior to or on the Agreement
Date is, and all other such factual written information furnished by or on
behalf of the Borrower or any of its Subsidiaries to the Administrative Agent
or any Lender after the Agreement Date will be, true and accurate in all
material respects (or, in the case of projections based on reasonable estimates
and assumptions) on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make
such information not
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materially misleading at such time in light of the circumstances under which
such information was provided. There is no fact known to the Borrower and not
known to the public generally that could reasonably be expected to have a
Material Adverse Effect, which has not been set forth in this Agreement or in
the documents, certificates and statements furnished to the Lenders by or on
behalf of the Borrower hereof in connection with the transactions contemplated
hereby or thereby.
(t) Solvency. The Borrower is, and Borrower and its Subsidiaries on a
consolidated basis are, Solvent.
(u) Labor Relations. Except as set forth on Schedule 4.1(u) hereto, as
of the Agreement Date neither the Borrower nor any of its Subsidiaries is a
party to a collective bargaining agreement or similar agreement. The Borrower
and each of its Subsidiaries is in compliance in all respects with all Laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours and other laws related to the employment of its
employees, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. There are no arrears in the payment
of wages, withholding or social security taxes, unemployment insurance premiums
or other similar obligations of the Borrower or any of its Subsidiaries or for
which the Borrower or any such Subsidiary may be responsible other than in the
ordinary course of business. There is no strike, work stoppage or labor dispute
with any union or group of employees pending or overtly threatened involving
the Borrower or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect.
(v) Common Enterprise. The Borrower and its Subsidiaries are engaged
in the businesses set forth in Section 4.1(d) hereof. These operations require
financing on a basis such that the credit supplied can be made available from
time to time to the Borrower and various of its Subsidiaries, as required for
the continued successful operation of the Borrower and its Subsidiaries as a
whole. The Borrower and its Subsidiaries expect to derive benefit (and the
boards of directors of the Borrower and its Subsidiaries have determined that
the Borrower and its Subsidiaries may reasonably be expected to derive
benefit), directly or indirectly, from the credit extended by the Lenders
hereunder, both in their separate capacities and as members of the group of
companies, since the successful operation and condition of the Borrower and its
Subsidiaries is dependent on the continued successful performance of the
functions of the group as a whole.
(w) Year 2000 Compliance. To the extent that such problem could
reasonably be expected to cause a Material Adverse Effect, the Borrower is (i)
developing a review and assessment of all areas within its and each of its
Subsidiaries' business and operations that could be adversely affected by the
"Year 2000 Problem" (that is, the risk that computer applications used by the
Borrower or any of its Subsidiaries may be unable to recognize and perform
properly date-sensitive involving certain dates prior to and any date after
December 31, 1999), (ii) developing a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (iii) to date, implementing that plan in
accordance with that timetable. The Borrower reasonably believes that all
computer applications that are material to its or any of its Subsidiaries'
business and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 Compliant"), except to the extent that a failure to do so
could not reasonably be expected to have a Material Adverse Effect.
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Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance, and each shall be true and correct in all
material respects when made, except to the extent (a) previously fulfilled in
accordance with the terms hereof, (b) applicable to a specific date or
otherwise subsequently inapplicable, or (c) previously waived in writing by the
Determining Lenders with respect to any particular factual circumstance. All
such representations and warranties shall survive, and not be waived by, the
execution hereof by any Lender, any investigation or inquiry by any Lender, or
by the making of any Advance under this Agreement.
ARTICLE 5
General Covenants
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 5.1 Preservation of Existence and Similar Matters . The
Borrower shall, and shall cause each Subsidiary to:
(a) except as otherwise permitted pursuant to Section 7.4 hereof,
preserve and maintain, or timely obtain and thereafter preserve and maintain,
(a) its existence, and (b) all rights, franchises, licenses, authorizations,
consents, privileges and all other Necessary Authorizations from federal, state
and local governmental bodies and any tribunal (regulatory or otherwise), the
loss of which could reasonably be expected to have a Material Adverse Effect;
and
(b) except as otherwise permitted pursuant to Section 7.4 hereof,
qualify and remain qualified and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its business requires
such qualification or authorization, unless the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower and
its Subsidiaries shall (a) engage primarily in the businesses set forth in
Section 4.1(d) hereof, and (b) comply in all material respects with the
requirements of all material Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower shall, and shall
cause each Subsidiary to, maintain or cause to be maintained all its material
properties (whether owned or held under lease) in reasonably good repair,
working order and condition, taken as a whole, and from time to time make or
cause to be made all appropriate repairs, renewals and replacements as Borrower
shall in good faith deem necessary, except where the failure to maintain or
make repairs could not in the aggregate reasonably be expected to have a
Material Adverse Effect.
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Section 5.4 Accounting Methods and Financial Records. The Borrower
shall, and shall cause each Subsidiary to, maintain a system of accounting
established and administered in accordance with GAAP, keep adequate records and
books of account in which complete entries will be made and all transactions
reflected in accordance with sound business practices, and keep accurate and
complete records of its respective assets. The Borrower and each of its
Subsidiaries shall maintain a fiscal year ending on the last day of December.
Section 5.5 Insurance.
(a) The Borrower shall, and shall cause each Subsidiary to, maintain
insurance from responsible companies in such amounts and against such risks
(but including in any event public liability, business interruption and flood
as to any portion of the real estate Collateral which shall at any time be
located in an identified "flood prone" area in which flood insurance has been
made available pursuant to the Federal Flood Protection Act of 1973 as amended)
as shall be customary and usual in the industry for companies of similar size
and capability. Each insurance policy shall provide for at least 30 days' prior
notice to the Administrative Agent of any proposed termination or cancellation
of such policy, whether on account of default or otherwise and name the
Administrative Agent as loss payee or additional insured, as the case may be.
(b) The Borrower shall furnish, upon request of the Administrative
Agent, evidence of the insurance required to be maintained in accordance with
Section 5.5(a) hereof in form and content reasonably satisfactory to the
Administrative Agent. If the Borrower or any of its Subsidiaries fails to
maintain the insurance required to be maintained in accordance with Section
5.5(a) hereof, the Administrative Agent may at its option obtain insurance on
the Collateral, and any premium thereby paid by the Administrative Agent shall
become part of the Obligation and shall bear interest at the lesser of the (i)
Base Rate Basis and (ii) Highest Lawful Rate. In the event that the
Administrative Agent maintains such substitute insurance, the additional
premium for such insurance shall be due on demand and payable by the Borrower
to the Administrative Agent in accordance with any notice delivered to the
Borrower by the Administrative Agent.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and shall
cause each Subsidiary to, pay and discharge all material taxes, assessments and
governmental charges or levies imposed upon it or its income or properties
prior to the date of delinquency, and to pay all lawful material claims for
labor, materials and supplies which, if unpaid, might become a Lien upon any of
its properties; in each case unless such tax, assessment, charge, levy or claim
is being diligently contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on the appropriate books in
accordance with GAAP, but only so long as no Lien (other than a Permitted Lien)
shall attach with respect thereto and no foreclosure, distraint, sale or
similar proceedings shall have been commenced which has not been vacated,
discharged, bonded or stayed.
Section 5.7 Visits and Inspections. The Borrower shall, and shall
cause each of its Subsidiaries to, permit representatives of the Administrative
Agent or any Lender from time to time after reasonable notice by the
Administrative Agent or any Lender to (a) visit and inspect the properties of
the Borrower and its Subsidiaries (i) as often as the Administrative Agent or
any Lender shall reasonably deem advisable, and (ii) at reasonable times, (b)
audit, inspect and make
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extracts from and copies of the Borrower's and each such Subsidiary's books and
records, and (c) discuss with the Borrower's and each such Subsidiary's
directors, officers, employees and auditors its business, assets, liabilities,
financial positions, results of operations and business prospects, provided
that the Administrative Agent or such Lender shall notify the Borrower prior to
any contact with such auditors and give the Borrower the opportunity to
participate in such discussions. After the occurrence and during the
continuance of an Event of Default, the Borrower shall pay the reasonable
expenses related to inspections and audits performed by the Administrative
Agent. Prior to the occurrence of an Event of Default, all such visits and
inspections shall be conducted during normal business hours and shall not be
conducted more often than once per fiscal quarter. Following the occurrence and
during the continuance of an Event of Default, such visits and inspections
shall be conducted during normal business hours without any requirement for
advance notice.
Section 5.8 Use of Proceeds. The Borrower shall use the proceeds of
Advances and the Letters of Credit to (a) consummate the Courtesy
Recapitalization, (b) pay certain fees and expenses related to the Courtesy
Recapitalization, and (c) finance the ongoing working capital and general
corporate requirements of the Borrower and its Subsidiaries, including
Acquisitions permitted hereunder.
Section 5.9 INDEMNITY.
(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT, EACH LENDER, THE ISSUING BANK, EACH OF THEIR
RESPECTIVE AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH
AFFILIATES') OFFICERS, DIRECTORS, TRUSTEES, EMPLOYEES, AGENTS, ATTORNEYS,
SHAREHOLDERS AND CONSULTANTS (INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN
CONNECTION WITH THE SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE
CONDITIONS SET FORTH HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY,
"INDEMNITEES") FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, REASONABLE COSTS,
REASONABLE EXPENSES AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES IN CONNECTION WITH ANY
INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH
INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO), IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL
AND WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND REGULATIONS, UNDER
COMMON LAW OR AT EQUITABLE CAUSE, OR ON CONTRACT, TORT OR OTHERWISE, ARISING
FROM OR CONNECTED WITH THE PAST, PRESENT OR FUTURE OPERATIONS OF THE BORROWER,
OR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE PREDECESSORS IN INTEREST, OR THE
PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR
ANY OF
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ITS SUBSIDIARIES), IN ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT,
EVENT OR TRANSACTION RELATING OR ATTENDANT HERETO OR THERETO, INCLUDING IN
CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF ANY NEGLIGENCE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER (OTHER THAN THOSE MATTERS RAISED EXCLUSIVELY
BY A PARTICIPANT OR A LENDER AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER AND
NOT THE BORROWER), OR THE USE OR INTENDED USE OF THE PROCEEDS OF THE ADVANCES
OR LETTERS OF CREDIT HEREUNDER, OR IN CONNECTION WITH ANY INVESTIGATION OF ANY
POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING (i) IN THE CASE OF EACH
INDEMNITEE, ANY CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR SUCH INDEMNITEE'S
MATERIAL BREACH OF THIS AGREEMENT, AS FINALLY JUDICIALLY DETERMINED BY A COURT
OF COMPETENT JURISDICTION, (ii) ANY CLAIM OR LIABILITY THAT ARISES OUT OF OR
RELATES TO MATERIAL DEEMED HAZARDOUS UNDER APPLICABLE ENVIRONMENTAL LAWS THAT
ARE FIRST GENERATED, RELEASED, DISPOSED, EMITTED OR MANUFACTURED ON ANY REAL
PROPERTY OWNED BY THE BORROWER AFTER SUCH PROPERTY HAS BEEN TRANSFERRED TO AN
INDEMNIFIED PARTY OR ITS SUCCESSOR OR ASSIGN BY FORECLOSURE, DEED IN LIEU OF
FORECLOSURE OR SIMILAR TRANSFER, AND (iii) MATTERS RAISED BY ONE LENDER AGAINST
ANOTHER LENDER OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS
MANAGEMENT AND (iii) LEGAL FEES OF ANY LENDER EXCEPT AS OTHERWISE PROVIDED IN
SECTIONS 5.9(b) AND 11.2 HEREOF (COLLECTIVELY, "INDEMNIFIED MATTERS").
(b) IN ADDITION, THE BORROWER SHALL PERIODICALLY, UPON REQUEST,
REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER ACTUAL REASONABLE
EXPENSES (INCLUDING THE REASONABLE COST OF ANY INVESTIGATION AND PREPARATION)
INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER. THE REIMBURSEMENT,
INDEMNITY AND CONTRIBUTION OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION
TO ANY LIABILITY WHICH THE BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE
SAME TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL
REPRESENTATIVES OF THE BORROWER, THE ADMINISTRATIVE AGENT, THE LENDERS AND ALL
OTHER INDEMNITEES. THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT
AND PAYMENT OF THE OBLIGATIONS.
Section 5.10 Environmental Law Compliance. The Borrower and its
Subsidiaries shall comply with all Applicable Environmental Laws, except for
non-compliance the result of which could not reasonably be expected to have a
Material Adverse Effect.
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Section 5.11 Further Assurances. At any time or from time to time upon
reasonable request by the Administrative Agent, the Borrower or any of its
Subsidiaries shall execute and deliver such further documents and do such other
acts and things as the Administrative Agent may reasonably request in order to
effect fully the purposes of this Agreement and the other Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement and the other Loan Documents. At the time of delivery of the
financial statements set forth in Sections 6.1 and 6.2 hereof, if the
information provided therein has changed since the last delivery thereof, the
Borrower agrees to update and deliver to the Administrative Agent a revised
Schedule 4.1(a) hereto(with respect to the identities, jurisdictions of
organization and ownership of the Borrower's Subsidiaries). The Borrower agrees
to update the information on Schedule 2 to the Security Agreements promptly
upon discovery that the information provided therein is not complete and
correct in all material respects. The Borrower agrees to execute and deliver,
or cause its Subsidiaries to execute and deliver, to the Administrative Agent
Deeds of Trust, in substantially the form of Exhibit I hereto with respect to
any fee owned real property hereafter acquired by the Borrower or any
Subsidiary, as applicable, with a fair market value in excess of $500,000 at
the time of acquisition thereof, together with any existing surveys and
environmental reports in form reasonably satisfactory to the Administrative
Agent and title insurance thereon in form and amount (not to exceed the fair
market value thereof) reasonably satisfactory to the Administrative Agent, and
such board resolutions, officer's certificates, corporate and other documents
and opinions of counsel as the Administrative Agent shall reasonably request
with respect thereto.
Section 5.12 Subsidiaries. At any time that any Person becomes a
Domestic Subsidiary, (a) such Subsidiary shall execute a Subsidiary Guaranty of
the Obligations and Collateral Documents granting a first priority Lien in all
unencumbered assets of such Subsidiary required by the Administrative Agent to
be pledged, except, to the extent applicable, for Permitted Liens, to secure
the Obligations, (b) 100% of such Subsidiary's Capital Stock shall be pledged
to secure the Obligations and (c) the Lenders shall receive such board
resolutions, officer's certificates, corporate and other documents and opinions
of counsel as the Administrative Agent shall reasonably request in connection
with the actions described in clauses (a) and (b) above. At any time that any
Person becomes a Foreign Subsidiary which has the Borrower or a Domestic
Subsidiary as its direct parent, (a) 65% of such Subsidiary's Capital Stock
shall be pledged to secure the Obligations and (b) the Lenders shall receive
such board resolutions, officers' certificates, corporate and other documents
and opinions of counsel as the Administrative Agent shall reasonably request in
connection with the action described in the immediately preceding clause (a)
above.
ARTICLE 6
Information Covenants
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), the Borrower shall furnish or cause to be furnished to
the Administrative Agent for redelivery to each Lender:
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Section 6.1 Quarterly Financial Statements and Information. Within 45
days after the end of each of the first three fiscal quarters of each fiscal
year, an unaudited consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal quarter and the related unaudited
consolidated statement of operations for such fiscal quarter and for the
elapsed portion of the year ended with the last day of such fiscal quarter, and
an unaudited consolidated statement of cash flow of the Borrower and its
Subsidiaries for the elapsed portion of the year ended with the last day of
such fiscal quarter; all of which shall be certified by the chief executive
officer, chief financial officer, vice president-finance or other officer of
the Borrower reasonably acceptable to the Administrative Agent, to be, in his
or her opinion acting solely in his or her capacity as an officer of the
Borrower, complete and correct in all material respects and to present fairly,
in accordance with GAAP, the financial position and results of operations of
the Borrower and its Subsidiaries as at the end of and for such fiscal quarter,
and for the elapsed portion of the year ended with the last day of such fiscal
quarter, subject only to normal year-end adjustments.
Section 6.2 Annual Financial Statements and Information; Certificate
of No Default.
(a) Within 90 days after the end of each fiscal year, (i) a copy of
the consolidated balance sheets of the Borrower and its Subsidiaries, as of the
end of the current and prior fiscal year (provided that the balance sheet for
the first prior fiscal year shall be on a combined basis) and (ii) the
consolidated statements of operations of the Borrower and its Subsidiaries and
consolidated statements of changes in shareholders' equity of the Borrower and
its Subsidiaries, and consolidated statements of cash flow of the Borrower and
its Subsidiaries for such fiscal year, all of which are prepared in accordance
with GAAP, and certified by independent certified public accounts reasonably
acceptable to the Lenders (provided, however, any "big five" public accounting
firm and Altschuler, Melvoin and Glasser LLP, the Borrower's accounting firm as
of the Agreement Date, shall be acceptable to the Lenders), whose opinion shall
be in scope and substance in accordance with generally accepted auditing
standards and shall be unqualified.
(b) Simultaneously with the delivery of the statements required by
this Section 6.2, a letter from the Borrower's public accountants certifying
that no Default or Event of Default under Sections 7.8, 7.9 and 7.11 was
detected during the examination of the books and records of the Borrower and
its Subsidiaries, except as may be specified in such certificate.
(c) As soon as available, but in any event within 90 days following
the end of each fiscal year, a copy of the annual consolidated operating budget
of the Borrower for such current fiscal year.
Section 6.3 Compliance Certificate. At the time financial statements
are furnished pursuant to Sections 6.1 and 6.2 hereof, the Compliance
Certificate, completed as provided therein.
Section 6.4 Copies of Other Reports and Notices.
(a) Promptly upon their becoming available, a copy of (i) all material
final management letters submitted to any Obligor by accountants in connection
with any annual, interim or special audit, (ii) each material financial
statement, report, notice or proxy statement sent by any Obligor to
stockholders, and (iii) each regular, periodic or other report and any
registration statement (other
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than statements on Form S-8) or prospectus (or material written communication
in respect of any thereof) filed by any Obligor with any securities exchange,
with the Securities and Exchange Commission or any successor agency;
(b) Promptly upon becoming aware (i) that the holder(s) of any note(s)
or other evidence of Indebtedness or other security of the Borrower or any of
its Subsidiaries in excess of $5,000,000 in the aggregate has given notice or
taken any action with respect to a breach, failure to perform, claimed default
or event of default thereunder or (ii) of any event, circumstance or condition
which could reasonably be expected to have a Material Adverse Effect, a written
notice specifying the details thereof (or the nature of any claimed default or
event of default) and what action is being taken or is proposed to be taken
with respect thereto;
(c) Promptly upon receipt thereof, information with respect to and
copies of any notices received from any federal, state or local regulatory
agencies or any tribunal relating to any order, ruling, law, information or
policy that relates to a breach of or noncompliance with any Law by the
Borrower or any of its Subsidiaries, the effect of which could reasonably be
expected to have a Material Adverse Effect or result in the loss or suspension
of any Necessary Authorization; and
(d) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the assets, business, liabilities, financial position, projections, results of
operations or business prospects of the Borrower or any of its Subsidiaries, as
the Administrative Agent or any Lender may reasonably request.
Section 6.5 Notice of Litigation, Default and Other Matters;
Deliveries.
(a) Prompt notice of the following events after the Borrower has
actual knowledge or notice thereof:
(i) The commencement of all proceedings and investigations by
or before any governmental body, and all actions and proceedings in
any court or before any arbitrator, against or in any other way
relating directly to the Borrower or any of its Subsidiaries, or any
of their respective properties or businesses which if adversely
determined could reasonably be expected to (A) result in a judgment
with an uninsured liability in excess of $5,000,000 or (B) have a
Material Adverse Effect;
(ii) Promptly upon the happening of any condition or event of
which the Borrower has knowledge which constitutes a Default, a
written notice specifying the nature and period of existence thereof
and what action is being taken or is proposed to be taken with respect
thereto; and
(iii) Any change with respect to the business, assets,
liabilities, financial position, results of operations or prospective
business of the Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
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(b) Prompt delivery to the Administrative Agent, together with the
delivery of each Compliance Certificate, of Instruments (as defined in the
Security Agreement), duly endorsed as required by the Security Agreement, such
that the aggregate principal amount of all Instruments owned by the Borrower
and its Subsidiaries and not delivered to the Administrative Agent shall not
exceed $5,000,000.
Section 6.6 ERISA Reporting Requirements.
(a) Promptly and in any event within 30 days after the Borrower has
knowledge that any ERISA Event has occurred, a written notice describing such
event and describing what action is being taken or is proposed to be taken with
respect thereto, together with a copy of any notice of event that is given to
the PBGC;
(b) Promptly and in any event within ten Business Days after receipt
thereof by the Borrower or any member of its Controlled Group, copies of each
notice received by the Borrower or any member of its Controlled Group of the
PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(c) Promptly upon the request of the Administrative Agent, copies of
the three most recently filed reports (including Schedule B thereto, if
applicable) with respect to each Plan (other than a Multiemployer Plan)
covering employees of the Borrower or any of its Subsidiaries;
(d) Promptly, and in any event within 10 Business Days after receipt
thereof, a copy of any correspondence the Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Multiemployer Plan or Plan subject to Section 4064
of ERISA concerning potential withdrawal liability pursuant to Section 4064,
4219 or 4202 of ERISA;
(e) Notification within ten Business Days after the Borrower or any
member of its Controlled Group knows that the Borrower or any such member of
its Controlled Group has filed a notice of intent to terminate any Plan under a
distress termination within the meaning of Section 4041(c) of ERISA and a copy
of such notice; and
(f) Within ten Business Days after receipt of written notice of
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any member of
its Controlled Group with respect to any Plan, which, in the aggregate, if
adversely determined could reasonably be expected to have a Material Adverse
Effect.
Section 6.7 Year 2000 Compliance. Prompt notice to the Administrative
Agent in the event the Borrower discovers or determines that any computer
application that is material to its or any of its Subsidiaries' business and
operations will not be Year 2000 Compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to have a Material
Adverse Effect.
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ARTICLE 7
Negative Covenants
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 7.1 Indebtedness. The Borrower shall not, and shall not permit
any of its Subsidiaries to, create, assume, incur or otherwise become or remain
obligated in respect of, or permit to be outstanding, or suffer to exist any
Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable, accrued liabilities and deferred taxes incurred
in the ordinary course of business;
(c) Indebtedness, including in respect of Capitalized Lease
Obligations and Synthetic Leases, incurred to purchase, or to finance the
purchase of, assets which constitute property, plant and equipment, not to
exceed $15,000,00 in aggregate principal amount outstanding at any time;
(d) Interest hedging obligations under Interest Hedge Agreements,
provided that such Interest Hedge Agreements were entered into in the ordinary
course of business for the purpose of limiting risks that arise in the ordinary
course of business;
(e) Indebtedness (including as the result of intercompany transfers
made in the ordinary course of business) owing (i) among the Borrower and its
Subsidiaries; provided, that (A) all such intercompany Indebtedness shall be
noted in the books and records, (B) all such intercompany Indebtedness owed by
the Borrower, any Obligor or any direct Foreign Subsidiary shall be
subordinated to the Obligations pursuant to terms reasonably acceptable to the
Determining Lenders, (C) all such intercompany Indebtedness owing from any
Foreign Subsidiary to the Obligors shall be evidenced by a promissory note
pledged to the Administrative Agent and (D) the total Investments in indirect
Foreign Subsidiaries is permitted pursuant to Section 7.3(d) hereof;
(f) (i) Indemnities and guaranties (including guaranties of
Indebtedness if such Indebtedness is permitted hereunder) made in the ordinary
course of business provided such indemnities and guaranties could not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect, (ii) guaranties of (A) real property leases and (B) personal
property leases, (iii) indemnities in favor of the Persons issuing title
insurance policies, (iv) indemnities made in the Courtesy Recapitalization
Documents, the Loan Documents, the Consulting Agreements or in any agreements
contemplated thereunder or thereby and in connection with Acquisitions
permitted pursuant to Section 7.3(k) hereof, and (v) indemnities in the
corporate charter and/or bylaws or other constituent documents of the Borrower
and its Subsidiaries;
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(g) Indebtedness existing on the Agreement Date which is described on
Schedule 7.1(g) hereto, including renewals, refinancings or extensions (but no
increases in the principal amount thereof other than pursuant to the instrument
creating such Indebtedness) thereof;
(h) Indebtedness in respect of endorsement of negotiable instruments
in the ordinary course of business;
(i) Indebtedness, including guaranties thereof, in respect of the
Senior Subordinated Notes or the Bridge Notes;
(j) Indebtedness (i) of the Borrower or any of its Subsidiaries to the
seller in any Acquisition or (ii) assumed in connection with any Acquisition;
(k) At any time following the termination of the Revolving Credit
Commitment and following payment in full of principal of and interest on the
Revolving Credit Advances, the Swing Line Advances, the Reimbursement
Obligations and all other fees and other amounts payable herewith in respect of
the Revolving Credit Advances, the Swing Line Advances and the Letters of
Credit, Indebtedness of the Borrower or its Subsidiaries in respect of
unsecured revolving lines of credit in aggregate amount outstanding not to
exceed $55,000,000 at any one time;
(l) Indebtedness of all Foreign Subsidiaries of the Borrower for
working capital purposes and overdraft facilities in an aggregate amount not to
exceed $15,000,000 at any one time outstanding;
(m) Institutional Debt of the Borrower, the Net Cash Proceeds of which
are applied in accordance with clause (v) of Section 2.5(b) hereof;
(n) Indebtedness in respect of obligations under governmental
sponsored financings of plant and equipment industrial revenue bond financings
or similar Indebtedness not to exceed $15,000,000 in aggregate principal amount
outstanding at any time; and
(o) Other Indebtedness not to exceed $25,000,000 in aggregate amount
outstanding at any time;
provided, however, that no Indebtedness otherwise permitted pursuant to clauses
(c), (j), (m), (n) or (o) above may be incurred if, immediately before or after
giving effect to the incurrence thereof, any Default or Event of Default shall
have occurred and be continuing.
Section 7.2 Liens. The Borrower shall not, and shall not permit any of
its Subsidiaries to, create, assume, incur, permit or suffer to exist, directly
or indirectly, any Lien on any of its assets, whether now owned or hereafter
acquired, except Permitted Liens. Except with respect to the Senior
Subordinated Notes, the Bridge Notes, and Indebtedness permitted by Sections
7.1(c), (g), (i), (j)(ii), (k), (l), (m), (n) or (o) hereof (provided that such
agreement relates only to any assets purchased or acquired with the proceeds of
such Indebtedness), the Borrower shall not, and shall not permit any of its
Subsidiaries to enter into a Negative Pledge with another Person.
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Section 7.3 Investments. The Borrower shall not, and shall not permit
any of its Subsidiaries to, make any Investment, except that the Borrower may
make, purchase or otherwise acquire and own:
(a) Cash and Cash Equivalents;
(b) Accounts receivable and trade credit that arise in the ordinary
course of business and deposits made in the ordinary course of business in
connection with the purchase price of goods or services;
(c) Investments in existence on the Agreement Date which are described
on Schedule 7.3(c) hereto and including any extensions and renewals thereof;
(d) Investments in (i) Domestic Subsidiaries which have complied with
Section 5.12 hereof, (ii)(A) to the extent made by an Obligor, Foreign
Subsidiaries which have the Borrower or a Domestic Subsidiary as its direct
parent 65% of whose Capital Stock shall be pledged to secure the Obligations,
(B) to the extent made by an indirect Foreign Subsidiary, any Foreign
Subsidiary and (C) to the extent made by an Obligor or any direct Foreign
Subsidiary, indirect Foreign Subsidiaries not to exceed $25,000,000 in
aggregate amount outstanding at any time, and (iii) the Borrower (including, in
each of clauses (i) and (ii) any new Subsidiary);
(e) Investments permitted under Sections 7.1, 7.4, 7.6, 7.7 and 7.11
hereof or received as consideration in connection with any asset sale or other
disposition of assets permitted by Section 7.5 hereof;
(f) The Courtesy Recapitalization and the transactions contemplated
thereby;
(g) Investments in Interest Hedge Agreements satisfying the
requirements of Section 7.1(d) hereof;
(h) Investments (including debt obligations and Capital Stock)
received in connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of and other disputes
with, customers and suppliers arising in the ordinary course of business;
(i) Loans and advances by the Borrower and any of its Subsidiaries to
its suppliers in an aggregate principal amount not exceeding $1,000,000 at any
one time outstanding;
(j) Other Investments not to exceed an aggregate amount outstanding at
any time greater than 5% of annual net sales of the Borrower and its
Subsidiaries for the most recent fiscal year, without regard to any write down
or write up thereof; provided that, in the event of a decrease in annual net
sales of the Borrower and its Subsidiaries or a sale of any assets, neither the
Borrower nor any Subsidiary shall be required to divest any Investment if the
Investment was made at a time when the Borrower and its Subsidiaries were in
compliance with this Section 7.3(j); and
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(k) Acquisitions, if (i) immediately after giving effect to the
proposed transaction the Unused Portion (as reduced by any Swing Line Advances
outstanding) (or, if a revolving credit arrangement has been entered into in
accordance with Section 7.1(k), availability thereunder) shall be no less than
$5,000,000, (ii) such Acquisition shall not be opposed by the board of
directors of the Person being acquired, (iii) the Administrative Agent shall
have received written notice thereof at least 5 Business Days prior to the date
of such Acquisition, (iv) the Administrative Agent shall have received prior to
the date of such Acquisition a Compliance Certificate setting forth the
covenant calculations both immediately prior to and after giving effect to the
proposed Acquisition, (v) the assets, property or business acquired shall be in
the business described in Section 4.1(d) hereof and the Administrative Agent
for the benefit of the Lenders shall have a first priority Lien in
substantially all of such assets (or, if less than substantially all of such
assets, such assets required by the Administrative Agent to be pledged), except
for Permitted Liens, (vi) if such Acquisition results in a Domestic Subsidiary,
(A) such Subsidiary shall execute a Subsidiary Guaranty of the Obligations and
Collateral Documents granting a first priority Lien in substantially all of
such assets (or, if less than substantially all of such assets, all assets
required by the Administrative Agent to be pledged), except for Permitted Liens
to secure the Obligations, (B) 100% of such Subsidiary's Capital Stock shall be
pledged to secure the Obligations and (C) the Administrative Agent on behalf of
the Lenders shall have received such board resolutions, officer's certificates
and opinions of counsel as the Administrative Agent shall reasonably request in
connection with the actions described in clauses (A) and (B) above, and (vii)
if such Acquisition results in a Foreign Subsidiary which has the Borrower or a
Domestic Subsidiary as its direct parent, (A) 65% of such Subsidiary's Capital
Stock shall be pledged to secure the Obligations and (B) the Administrative
Agent on behalf of the Lenders shall have received such board resolutions,
officer's certificates and opinions of counsel as the Administrative Agent
shall reasonably request in connection with clause (A) immediately preceding;
provided, however, (A) that no Investment otherwise permitted by clauses (e)
and (k) above shall be permitted if, immediately before or after giving effect
thereto, any Default or Event of Default shall have occurred and be continuing,
and (B) notwithstanding anything in this Section 7.4 to the contrary,
Investments in indirect Foreign Subsidiaries shall not exceed $25,000,000 in
aggregate amount outstanding at any time.
Section 7.4 Liquidation, Merger, New Subsidiaries. The Borrower shall
not, and shall not permit any of its Subsidiaries to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that a Subsidiary of the Borrower may
liquidate or dissolve into the Borrower or a Subsidiary of the Borrower which
is (i) a Domestic Subsidiary or (ii) a Foreign Subsidiary so long as after such
liquidation, dissolution or other wind-up, the Investment in the Foreign
Subsidiary is permitted pursuant to Section 7.3(d) hereof; or
(b) enter into any merger or consolidation unless (i) with respect to
a merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation or the survivor expressly assumes the obligations of the
Borrower hereunder, (ii) with respect to a merger
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or consolidation involving a Subsidiary of the Borrower which is an Obligor and
not the Borrower, such Subsidiary shall be the surviving corporation, or such
merger or consolidation shall be a part of an Acquisition permitted by Section
7.3 hereof or part of a disposition permitted by Section 7.5 hereof (provided
that the total Investment in Foreign Subsidiaries after any such merger or
consolidation is permitted pursuant to Section 7.3(d) hereof), and (iii) no
Default or Event of Default shall then be in existence or occur as a result of
such transaction.
Section 7.5 Sale of Assets. The Borrower shall not, and shall not
permit any of its Subsidiaries to, sell (including for discount or otherwise),
lease, transfer or otherwise dispose of assets, except (a) sales of inventory
and other assets sold in the ordinary course of business, (b) sales or other
dispositions of worn-out or obsolete assets or assets no longer useful in the
conduct of the Borrower's business in the ordinary course of business, (c)
sales of Cash and Cash Equivalents in the ordinary course of business, (d)
sales of assets in which the Net Cash Proceeds thereof are used within 365 days
of such sale to purchase assets useful in the business of the Borrower and its
Subsidiaries, provided that the aggregate amount of Net Cash Proceeds
outstanding and pending reinvestment pursuant to this clause (d) shall not
exceed $10,000,000 at any time (or such greater amount that shall be agreed to
by the Administrative Agent), (e) sales and dispositions (i) from the Borrower
or any Domestic Subsidiary (A) to the Borrower or any other Domestic Subsidiary
and (B) to any Foreign Subsidiary so long as after such sale or disposition the
Borrower is in compliance with Section 7.3(d) hereof, and (ii) from any Foreign
Subsidiary to the Borrower or any of its Subsidiaries, (f) transfers resulting
from any casualty or condemnation of property or assets, (g) the sale or
discount of overdue accounts receivable in the ordinary course of business, in
connection with the compromise or collection thereof, (h) licenses or
sublicenses of intellectual property and general intangibles and licenses,
leases or subleases of other property in each case in the ordinary course of
business and which do not materially interfere with the business of the
Borrower and its Subsidiaries, (i) sales of assets during any fiscal year the
aggregate Net Cash Proceeds of which do not exceed $1,000,000, and (j) asset
sales, the Net Cash Proceeds of which are applied in accordance with clause
(ii) of Section 2.5(b) hereof.
Section 7.6 Restricted Payments. The Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly declare, pay or make
any Restricted Payments, except (a) Dividends payable by a Subsidiary to the
Borrower or another Subsidiary, (b) Dividends payable in stock and not cash,
(c) regularly scheduled payments of interest on the Senior Subordinated Notes,
the Bridge Notes or any Institutional Debt or dividends payable in kind on any
Preferred Stock in accordance with its terms, (d) Restricted Payments as the
result of the repurchase of the Capital Stock of the Borrower or other
securities of the Borrower from outside directors, employees or members of
management of the Borrower or any Subsidiary of the Borrower, in an aggregate
amount not to exceed $10,000,000 plus the amount of any simultaneous equity
investment during the term of this Agreement, net of the proceeds received by
the Borrower and its Subsidiaries as a result of any resales of any such
Capital Stock or other securities, (e) Restricted Payments as a result of a
purchase of Capital Stock made in order to fulfill the obligations of the
Borrower or its Subsidiaries under an employee stock purchase plan or similar
plan covering employees of the Borrower or any Subsidiary as from time to time
in effect in an aggregate net amount not to exceed $5,000,000 during the term
of this Agreement, and (f) Restricted Payments made pursuant to the Courtesy
Recapitalization and the Courtesy Merger; provided, however, the Borrower shall
not pay or make
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any Restricted Payments permitted by this Section 7.6 unless there shall exist
no Default prior to or after giving effect to any such proposed Restricted
Payment.
Section 7.7 Affiliate Transactions.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, at any time engage in any transaction with an Affiliate (other
than the Borrower or any of its Subsidiaries), nor make an assignment or other
transfer of any of its assets or properties to any Affiliate (other than the
Borrower or any of its Subsidiaries), unless such transaction is (i) otherwise
permitted under this Agreement, or (ii)(x) in the ordinary course of business
of the Borrower and the relevant Subsidiary of the Borrower, as the case may
be, and (y) upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate.
(b) In addition, notwithstanding the foregoing, the Borrower and its
Subsidiaries shall be entitled to make the following payments and/or enter into
the following: (i) the payment of reasonable and customary fees and
reimbursement of expenses payable to the directors of the Borrower; (ii) the
payment of fees and expenses pursuant to the Consulting Agreements (provided
that after occurrence and during the continuance of an Event of Default, any
modification of any management, advisory, consulting and similar fees to any
Affiliate of the Borrower or any of its Subsidiaries or the calculation or
components by which any such fees are determined, including but not limited to
all fees payable pursuant to the Consulting Agreements, shall be upon fair and
reasonable terms no less favorable to the Borrower or any of its Subsidiaries,
as the case may be, and shall be in an amount that it would pay in a comparable
arm's length transaction with a Person which is not an Affiliate); (iii) the
employment arrangements with respect to the procurement of services of
directors, officers and employees in the ordinary course of business and the
payment of reasonable fees in connection therewith and (iv) any other
transaction specifically permitted under this Agreement.
Section 7.8 Leverage Ratio. The Borrower shall not permit the Leverage
Ratio to be greater than (a) 5.60 to 1 at the end of any fiscal quarter
occurring during the period from the Agreement Date through and including June
30, 2001, (b) 5.00 to 1 at the end of any fiscal quarter occurring during the
period from and including September 30, 2001 through and including June 30,
2002, (c) 4.50 to 1 at the end of any fiscal quarter occurring during the
period from and including September 30, 2002 through and including June 30,
2003, (d) 4.00 to 1 at the end of any fiscal quarter occurring during the
period from and including September 30, 2003 through and including June 30,
2004, and (e) 3.50 to 1 at September 30, 2004 and at the end of any fiscal
quarter thereafter.
Section 7.9 Interest Coverage Ratio. The Borrower shall not permit the
Interest Coverage Ratio to be less than (a) 1.70 to 1 at the end of any fiscal
quarter occurring during the period from the Agreement Date through and
including June 30, 2001, (b) 2.00 to 1 at the end of any fiscal quarter
occurring during the period from and including September 30, 2001 through and
including June 30, 2002, (c) 2.25 to 1 at the end of any fiscal quarter
occurring during the period from and including September 30, 2002 through and
including June 30, 2003, and (d) 2.50 to 1 at September 30, 2003 and at the end
of any fiscal quarter thereafter.
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Section 7.10 Sale and Leaseback. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any arrangement whereby it sells
or transfers any of its assets, and thereafter rents or leases such assets,
provided that this Section 7.10 hereof does not prohibit any sale and leaseback
resulting from the incurrence of any lease or purchase money financing in
respect of any capital assets entered into within 90 days of the acquisition of
such capital asset for the purpose of providing permanent financing of such
capital asset permitted under Section 7.1 hereof.
Section 7.11 Capital Expenditures. The Borrower shall not permit the
Capital Expenditures to be paid or incurred by it and its Subsidiaries to
exceed (a) $10,000,000 in aggregate amount during the period from the Agreement
Date to and including December 31, 1999 and (b) 8% of cumulative net revenues
of the Borrower and its Subsidiaries from and after January 1, 2000 (including
an adjustment to annualize the net revenues of any business acquired by the
Borrower and its Subsidiaries that has been owned for less than twelve months);
provided however, notwithstanding the immediately preceding, the Borrower and
its Subsidiaries may also make additional Capital Expenditures during the term
of this Agreement not to exceed $35,000,000 in aggregate amount.
Section 7.12 Amendments and Waivers of Senior Subordinated Notes,
Bridge Notes and Other Institutional Debt. The Borrower shall not, and shall
not permit any Subsidiary to, change or amend (or take any action or fail to
take any action the result of which is an effective amendment or change) or
accept any waiver or consent with respect to, any document, instrument or
agreement relating to the Senior Subordinated Notes, the Bridge Notes or any
other Institutional Debt that would result in (a) an increase in the principal,
interest, overdue interest, fees or other amounts payable under the Senior
Subordinated Notes, the Bridge Notes or any other Institutional Debt, (b) an
acceleration in any date fixed for payment or prepayment of principal,
interest, fees or other amounts payable under the Senior Subordinated Notes,
the Bridge Notes or any other Institutional Debt (including, without
limitation, as a result of any redemption), (c) a change in the definition of
"Change of Control" or "Change in Control" or similar event or circumstance,
however defined or designated, as provided in the Senior Subordinated Notes,
the Bridge Notes or any other Institutional Debt which would result in such
definition being more restrictive than such definition in this Agreement, (d) a
change in any of the subordination provisions of the Senior Subordinated Notes
or the Bridge Notes or, to the extent applicable, any other Institutional Debt,
(e) a change in any covenant, term or provision in the Senior Subordinated
Notes, the Bridge Notes or any other Institutional Debt which would result in
such term or provision being more restrictive than the terms of this Agreement
and the other Loan Documents or (f) a change in any term or provision of the
Senior Subordinated Notes, the Bridge Notes or any other Institutional Debt
that could reasonably be expected to have, in any material respect, an adverse
effect on the interest of the Lenders.
Section 7.13 Amendment of Organizational Documents. The Borrower shall
not, and shall not permit any of its Subsidiaries to, amend its articles of
incorporation, bylaws or other applicable organizational documents in any
manner that could reasonably be expected to have a Material Adverse Effect.
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ARTICLE 8
Default
Section 8.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event, and whether voluntary,
involuntary, or effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or
non-governmental body:
(a) Any representation or warranty made under any Loan Document shall
prove to have been incorrect or misleading in any material respect when made or
deemed made;
(b) The Borrower shall fail to pay (i) principal of any Advance when
due and (ii) interest under any Advance or under any Loan Document or any fees
payable hereunder or any other costs, fees, expenses or other amounts payable
hereunder or under the other Loan Documents, when due, which failure to pay
with respect to clause (ii) above is not cured within five days after such
amounts become due in accordance with the terms hereof;
(c) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any agreement or covenant contained in Section
5.1(a) or Article 7 hereof;
(d) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this Section 8.1, and such
default shall not be cured within a period of 30 days after written notice
thereof from the Administrative Agent;
(e) The Borrower or any of its Subsidiaries shall default or breach in
the performance or observance of any agreement or covenant not specifically
referred to elsewhere in this Section 8.1 (after the expiration of any
applicable notice and cure or grace period) in any of the Loan Documents (other
than this Agreement) and such default or breach shall not be cured within a
period of 30 days after written notice thereof from the Administrative Agent to
the Borrower;
(f) There shall be commenced an involuntary proceeding or an
involuntary petition shall be filed in a court having competent jurisdiction
seeking (i) relief in respect of the Borrower or any of its Subsidiaries or a
substantial part of the property or assets of the Borrower or any of its
Subsidiaries under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal or state bankruptcy law or
other similar law, (ii) the appointment of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or similar official of the Borrower or any of
its Subsidiaries, or of any substantial part of any of their respective
property or assets, or (iii) the winding-up or liquidation of the affairs of
the Borrower or any of its Subsidiaries, and any such proceeding or petition
shall continue unstayed and in effect for a period of 60 consecutive days;
(g) The Borrower or any of its Subsidiaries shall (i) file a petition,
answer or consent seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable Federal or state
bankruptcy law or other similar law, (ii) consent to the
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institution of proceedings thereunder or to the filing of any such petition or
to the appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Borrower or
any of its Subsidiaries or of any substantial part of their respective
properties, (iii) file an answer admitting the material allegations filed
against it in any such proceeding, (iv) make a general assignment for the
benefit of creditors, (v) fail generally to pay its debts as they become due,
or (vi) take any action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court
against the Borrower or any of its Subsidiaries for the payment of money which
exceeds $5,000,000 in the aggregate, or a warrant of attachment or execution or
similar process shall be issued or levied against property of the Borrower or
any of its Subsidiaries which, together with all other such property of the
Borrower and its Subsidiaries subject to other such process, exceeds in value
$5,000,000 in the aggregate, and if such judgment or award is not insured or,
within 45 days after the entry, issue or levy thereof, such judgment, warrant
or process shall not have been paid or discharged or stayed pending appeal, or
if, after the expiration of any such stay, such judgment, warrant or process
shall not have been paid or discharged;
(i) (i) the Borrower or any member of its Controlled Group shall incur
any accumulated funding deficiency, as defined in Section 412 of the Code; (ii)
the Borrower or any member of its Controlled Group shall incur any withdrawal
liability as a result of a complete or partial withdrawal within the meaning of
Section 4063, 4203 or 4205 of ERISA; (iii) the Borrower or any member of its
Controlled Group shall fail to make a required contribution by the due date
under Section 412 of the Code or Section 302 of ERISA which would result in the
imposition of a Lien under Section 412 of the Code or Section 302 of ERISA;
(iv) the Borrower or any member of its Controlled Group shall notify the PBGC
of an intent to terminate a Plan under Section 4201(c) of ERISA, or the PBGC
shall institute proceedings to terminate, any Plan; (v) a trustee shall be
appointed by a court of competent jurisdiction to administer any Plan or the
assets thereof; (vi) the benefits of any Plan shall be increased, or the
Borrower or any member of its Controlled Group shall begin to maintain, or
begin to contribute to, any Plan; or (vii) any ERISA Event with respect to a
Plan shall have occurred; provided, however, that the events listed in
subsections (i) through (vii) above shall constitute Events of Default only if,
as of the date thereof or any subsequent date, the amount of liability that the
Borrower is likely to incur in the aggregate under ERISA or any other provision
of law with respect to all such Plans, computed by the actuary of the Plan
taking into account any applicable rules and regulations of the PBGC at such
time, and based on the actuarial assumptions used by the Plan, resulting from
or otherwise associated with such event could reasonably be expected to have a
Material Adverse Effect;
(j) Any Obligor shall challenge in any manner whatsoever the validity
or enforceability of, or disaffirm or deny its obligations under, all or any
portion of the Loan Documents or the Collateral;
(k) The Borrower or any of its Subsidiaries shall default in any
payment in respect of Indebtedness beyond any grace period provided with
respect thereto, or shall default in the performance of any agreement or
instrument under which such Indebtedness is created or evidenced beyond any
applicable grace period, or any other event or condition shall occur in respect
of such
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Indebtedness, if the effect of such default, event or condition is to permit or
cause the holder of such Indebtedness (or a trustee on behalf of any such
holder) to cause such Indebtedness to become due, repurchased or redeemed prior
to its date of maturity, provided that a default, event or condition of the
type described above in this Section 8.1(k) shall not constitute an Event of
Default under this Agreement unless, at such time, one or more defaults, events
or conditions of the type described above in this Section 8.1(k) shall have
occurred and be continuing with respect to Indebtedness the outstanding amount
of which exceeds in the aggregate $5,000,000;
(l) Any provision of any Loan Document shall for any reason cease to
be valid and binding on or enforceable against any party to it (other than the
Administrative Agent or any Lender) in all material respects unless released by
the Administrative Agent at the direction of the Determining Lenders or all
Lenders (to the extent required by Section 11.11 hereof) or as otherwise
permitted by the terms of this Agreement or the other Loan Documents;
(m) Any Collateral Document shall for any reason (other than as
expressly provided or permitted pursuant to the terms thereof) cease to create
a valid and perfected first priority Lien in any material Collateral, and if
such invalidity is amenable to cure, the relevant Obligor shall have failed to
cure such invalidity within 30 days after notice from the Administrative Agent;
or
(n) A Change of Control shall have occurred.
Section 8.2 Remedies. If an Event of Default shall have occurred and
shall be continuing:
(a) With the exception of an Event of Default specified in Section
8.1(f) or (g) hereof, the Administrative Agent shall, (i) upon the direction of
the Required Revolving Credit Lenders, terminate the Revolving Credit
Commitment, and/or (ii) upon the direction of the Determining Lenders,
terminate the Commitments and/or declare the principal of and interest on the
Advances and all Obligations and other amounts owed under the Loan Documents to
be forthwith due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived, anything in the Loan
Documents to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in Section
8.1(f) or (g) hereof, such principal, interest and other amounts shall
thereupon and concurrently therewith become due and payable and the Commitments
shall forthwith terminate, all without any action by the Administrative Agent,
any Lender or any holders of the Notes and without presentment, demand, protest
or other notice of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the
Administrative Agent may make demand upon the Borrower to, and within 30 days
of such demand (but in the case of an Event of Default specified in Section
8.1(f) or (g) hereof, immediately and without any demand or taking of any other
action by the Administrative Agent or any Lender), the Borrower shall, pay to
the Administrative Agent in same day funds at the office of the Administrative
Agent in such demand for deposit in the L/C Cash Collateral Account, an amount
equal to the maximum amount available to be drawn under the Letters of Credit
then outstanding and/or provide back-up letters of credit
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satisfactory to the Issuing Bank in an amount, together with any funds
deposited in the L/C Cash Collateral Account, equal to the maximum amount
available to be drawn under the Letters of Credit then outstanding.
(d) The Administrative Agent, and the Lenders may exercise all of the
post-default rights granted to them under the Loan Documents or under
Applicable Law.
(e) The rights and remedies of the Administrative Agent and the
Lenders hereunder shall be cumulative, and not exclusive.
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate. If with respect to
any proposed LIBOR Advance for any Interest Period, any Lender reasonably
determines that (i) deposits in Dollars (in the applicable amount) are not
being offered to that Lender in the relevant market for such Interest Period or
(ii) the LIBOR Rate for such proposed LIBOR Advance does not adequately cover
the cost to such Lender of making and maintaining such proposed LIBOR Advance
for such Interest Period, such Lender shall forthwith give notice thereof to
the Borrower, whereupon until such Lender notifies the Borrower that the
circumstances giving rise to such situation no longer exist (which notice such
Lender agrees to promptly give when the circumstances giving rise to such
determination no longer exist), the obligation of such Lender to make LIBOR
Advances shall be suspended.
Section 9.2 Illegality. If any applicable law, rule or regulation, or
any change therein or adoption thereof, or interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender (or its LIBOR Lending Office) with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for such Lender (or its LIBOR
Lending Office) to make, maintain or fund its LIBOR Advances, such Lender shall
so notify the Borrower and the Administrative Agent. Before giving any notice
to the Borrower pursuant to this Section, the notifying Lender shall designate
a different LIBOR Lending Office or other lending office if such designation
will avoid the need for giving such notice and will not, in the reasonable
judgment of the Lender, cause such Lender to suffer economic, legal or
regulatory disadvantage. Upon receipt of such notice, notwithstanding anything
contained in Article 2 hereof, the Borrower shall repay in full the then
outstanding principal amount of each LIBOR Advance owing to the notifying
Lender, together with accrued interest thereon, on either (a) the last day of
the Interest Period applicable to such Advance, if the Lender may lawfully
continue to maintain and fund such Advance to such day, or (b) immediately, if
the Lender may not lawfully continue to fund and maintain such Advance to such
day. Concurrently with repaying each affected LIBOR Advance owing to such
Lender if the Borrower does not terminate this Agreement, notwithstanding
anything contained in Article 2 hereof, the Borrower shall borrow a Base Rate
Advance from such Lender, and such Lender shall make such Base Rate Advance, in
an amount such
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that the outstanding principal amount of the Advances owing to such Lender
shall equal the outstanding principal amount of the Advances owing immediately
prior to such repayment.
Section 9.3 Increased Costs.
(a) If the adoption, effectiveness, phase-in or applicability after
the Agreement Date of any Law (or any provision thereof) or any change in the
interpretation or administration thereof after the Agreement Date by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by any Lender (or its
LIBOR Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to
any Tax (net of any tax benefit engendered thereby and excluding any
taxes referred to in clauses (i) through (iv) of Section 2.15(a)
hereof) with respect to its LIBOR Advances or its obligation to make
such Advances, or shall change the basis of taxation of payments to a
Lender (or to its LIBOR Lending Office) of the principal of or
interest on its LIBOR Advances or in respect of any other amounts due
under this Agreement, as the case may be, or its obligation to make
such Advances (except for changes in the rate of tax on the overall
net income, net worth or capital of the Lender and franchise taxes,
doing business taxes or minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, a Lender's LIBOR Lending Office or shall impose on the
Lender (or its LIBOR Lending Office) or on the United States market
for certificates of deposit or the London interbank market any other
condition affecting its LIBOR Advances or its obligation to make such
Advances;
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, in each case by an amount reasonably
deemed by a Lender to be material ("Increased Costs"), then, within 15 days
after demand by such Lender, the Borrower agrees to pay to such Lender such
additional amount as will compensate such Lender for such Increased Costs,
subject to Section 11.9 hereof. The affected Lender will as soon as practicable
notify the Borrower of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to this
Section and will designate a different LIBOR Lending Office or other lending
office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable judgment of the affected
Lender made in good faith, cause such Lender to suffer economic, legal or
regulatory disadvantage. Notwithstanding the foregoing, any Lender's demand for
Increased Costs shall not include any Increased Costs with respect to any
period more than 90 days prior to the date that such Lender has knowledge or
should have knowledge of such Increased Costs.
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(b) A certificate of any Lender claiming compensation under this
Section and setting forth in reasonable detail the additional amounts to be
paid to it hereunder and calculations therefor (and certifying that such Lender
is generally charging such costs to similarly situated borrowers) shall be
controlling in the absence of manifest error. In determining such amount, a
Lender may use any reasonable averaging and attribution methods. If a Lender
demands compensation under this Section, the Borrower may at any time, upon at
least five Business Days' prior notice to the Lender, after reimbursement to
the Lender by the Borrower in accordance with this Section of all costs
incurred, prepay in full the then outstanding LIBOR Advances of the Lender,
together with accrued interest thereon to the date of prepayment, along with
any reimbursement required under Section 2.9 hereof. Concurrently with
prepaying such LIBOR Advances, the Borrower shall borrow a Base Rate Advance
from the Lender, and the Lender shall make such Base Rate Advance, in an amount
such that the outstanding principal amount of the Advances owing to such Lender
shall equal the outstanding principal amount of the Advances owing immediately
prior to such prepayment. The obligation of the Borrower pursuant to this
Section 9.3 shall survive termination of this Agreement in full and all other
amounts payable hereunder and repayment of the Advances in full for a period of
nine months thereafter.
Section 9.4 Effect On Base Rate Advances. If notice has been given
pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a
Lender to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be
repaid or prepaid, then, unless and until the Lender notifies the Borrower that
the circumstances giving rise to such repayment no longer apply which such
Lender agrees to do when the circumstances giving rise to such suspension no
longer exist, all Advances which would otherwise be made by such Lender as
LIBOR Advances shall be made instead as Base Rate Advances.
Section 9.5 Capital Adequacy. If either (a) the adoption or
applicability after the Agreement Date of any Law (or any provision thereof) or
the introduction of or any change in or in the interpretation of any Law after
the Agreement Date or (b) compliance by a Lender with any Law or any guideline
or request from any central bank or other governmental authority (whether or
not having the force of law) adopted, phased-in or made applicable after the
Agreement Date affects or would affect the amount of capital required or
expected to be maintained by a Lender or any corporation controlling such
Lender, and such Lender determines that the amount of such capital is increased
by or based upon the existence of such Lender's commitment or Advances
hereunder and other commitments or advances of such Lender of this type, then,
within 30 days after written notice and demand by such Lender, subject to
Section 11.9, the Borrower shall pay to such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender with respect to such circumstances, to the extent that such Lender
reasonably determines in good faith such increase in capital to be allocable to
the existence of such Lender's portion of the Commitments hereunder. A
certificate as to such amounts submitted to the Borrower by a Lender hereunder,
(and certifying that such Lender is generally charging such amounts to
similarly situated borrowers) shall, in the absence of manifest error, be
conclusive and binding for all purposes.
Section 9.6 Replacement of Lenders under Certain Circumstances. If at
any time (a) the Borrower becomes obligated to pay additional amounts described
in Sections 2.15, 2.16, 9.2, 9.3, or 9.5 hereof, or any Lender ceases to make
LIBOR Advances pursuant to such sections, (b) any
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Lender becomes insolvent and its assets become subject to a receiver,
liquidator, trustee, custodian or other Person having similar powers, (c) any
Lender becomes a Non-Consenting Lender or (d) any Lender becomes a Non-Funding
Lender, then the Borrower may replace such Lender by causing such Lender to
(and such Lender shall be obligated to) assign pursuant to Section 11.6 all of
its rights and obligations under this Agreement to a Lender or other entity
selected by the Borrower and reasonably acceptable to the Administrative Agent
for a purchase price equal to the outstanding principal amount of such Lender's
Advances and all accrued interest and fees and other amounts payable hereunder
(including amounts payable under Sections 9.2, 9.3 or 9.5 hereof as though such
Advances were being paid instead of being purchased). In the event that (x) the
Borrower or the Administrative Agent has requested the Lenders to consent to a
departure or waiver of any provisions of the Loan Documents or to agree to any
amendment thereto, (y) the consent, waiver or amendment in question requires
the agreement of all Lenders in accordance with the terms of Section 11.11
hereof or all the Lenders with respect to a certain class of the Advances and
(z) Determining Lenders or more than 50% of the class of such Lenders have
agreed to such consent, waiver or amendment then any Lender who does not agree
to such consent, waiver or amendment shall be deemed a "Non-Consenting Lender".
In the event that any Lender has (y) failed to make any Advance required to be
made by it hereunder or (z) given notice to the Administrative Agent that it
will not make, or that it has disaffirmed or repudiated any obligation to make,
any Advance required to be made by it hereunder such Lender shall be deemed a
"Non-Funding Lender". The Borrower's right to replace a Non-Funding Lender
pursuant to this Section 9.6 is, and shall be, in addition to, and not in lieu
of, all other rights and remedies available to the Borrower against such
Non-Funding Lender under this Agreement, at law, in equity, or by statute.
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders. The Lenders agree among
themselves that:
(a) Administrative Agent. Each Lender hereby appoints the
Administrative Agent as its nominee in its name and on its behalf, to receive
all documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by the
Determining Lenders, provided that, unless and until the Administrative Agent
shall have received such requests, the Administrative Agent may take such
administrative action, or refrain from taking such administrative action, as it
may deem advisable and in the best interests of the Lenders; to arrange the
means whereby the proceeds of the Advances of the Lenders are to be made
available to the Borrower; to distribute promptly to each Lender information,
requests and documents received from the Borrower, and each payment (in like
funds received) with respect to any of such Lender's Advances, fee or other
amount; and to deliver to the Borrower requests, demands, approvals and
consents received from the Lenders. The Administrative Agent agrees to promptly
distribute to each Lender, at such Lender's address set forth below
information, requests, documents and payments received from the Borrower. The
Administrative Agent agrees to promptly notify the Lenders of any receipt of
cash collateral or back-up letter of credit which would cause any Letter of
Credit to no
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longer be considered a Letter of Credit hereunder. The Administrative Agent
shall have no fiduciary relationship in respect of any Lender by reason of this
Agreement or any other Loan Document. The Administrative Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement.
The duties of the Administrative Agent are mechanical and administrative in
nature.
(b) Replacement of Administrative Agent. Should the Administrative
Agent or any successor Administrative Agent ever cease to be a Lender
hereunder, or should the Administrative Agent or any successor Administrative
Agent ever resign as Administrative Agent, or should the Administrative Agent
or any successor Administrative Agent ever be removed with cause or without
cause by the action of the Determining Lenders (other than the Administrative
Agent), then the Lender appointed by the other Lenders (with the consent of the
Borrower, which consent shall not be unreasonably withheld) shall forthwith
become the Administrative Agent, and the Borrower and the Lenders shall execute
such documents as such successors to the Administrative Agent may reasonably
request to reflect such change. If the Administrative Agent also then serves in
the capacity of the Swing Line Bank or the Issuing Bank, such resignation or
removal shall constitute resignation or removal of the Swing Line Bank and the
Issuing Bank and the successor Administrative Agent shall serve in the capacity
of the Swing Line Bank and the Issuing Bank. Any resignation or removal of the
Administrative Agent or any successor Administrative Agent shall become
effective upon the appointment by the Lenders of a successor Administrative
Agent; provided, however, if no successor Administrative Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Lenders'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor Administrative Agent,
which shall be a commercial bank organized under the Laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $500,000,000 and with the consent of the Borrower, which consent will
not be unreasonably withheld. Upon the acceptance of any appointment as the
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under the Loan Documents. Notwithstanding any Administrative
Agent's resignation or removal hereunder, the provisions of this Article shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was the Administrative Agent under this Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on its
Total Specified Percentage, of any expenses paid by the Administrative Agent
directly and solely in connection with any of the Loan Documents if
Administrative Agent does not receive reimbursement therefor from other sources
within 60 days after the date incurred, unless payment of such fees is being
diligently disputed by such Lender or the Borrower in good faith. Any amount so
paid by the Lenders to the Administrative Agent shall be returned by the
Administrative Agent pro rata to each paying Lender to the extent later paid by
the Borrower or any other Person on the Borrower's behalf to the Administrative
Agent.
(d) Delegation of Duties. The Administrative Agent may execute any of
its duties hereunder by or through officers, directors, employees, attorneys or
agents, and shall be entitled to
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(and shall be protected in relying upon) advice of counsel concerning all
matters pertaining to its duties hereunder.
(e) Reliance by Administrative Agent. The Administrative Agent and its
officers, directors, employees, attorneys and agents shall be entitled to rely
and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation reasonably
believed by it or them in good faith to be genuine and correct and to have been
signed or made by the proper Person and, with respect to legal matters, upon
opinions of counsel selected the Administrative Agent. The Administrative Agent
may, in its reasonable judgment, deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent.
(f) Limitation of Administrative Agent's Liability. Neither the
Administrative Agent nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and believed by it or them to be within the
discretion or power conferred to it or them by the Loan Documents or be
responsible for the consequences of any error of judgment, except for its or
their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Agent shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Agent
shall not be compelled to do any act hereunder or to take any action towards
the execution or enforcement of the powers hereby created or to prosecute or
defend any suit in respect hereof, unless indemnified to its satisfaction
against loss, cost, liability and expense. The Administrative Agent shall not
be responsible in any manner to any Lender for the effectiveness,
enforceability, genuineness, validity or due execution of any of the Loan
Documents, or for any representation, warranty, document, certificate, report
or statement made herein or furnished in connection with any Loan Documents, or
be under any obligation to any Lender to ascertain or to inquire as to the
performance or observation of any of the terms, covenants or conditions of any
Loan Documents on the part of the Borrower. TO THE EXTENT NOT REIMBURSED BY THE
BORROWER, EACH LENDER HEREBY SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE
ADMINISTRATIVE AGENT, PRO RATA ACCORDING TO ITS TOTAL SPECIFIED PERCENTAGE,
FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND/OR DISBURSEMENTS OF
ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, ASSERTED AGAINST, OR
INCURRED BY THE ADMINISTRATIVE AGENT IN ANY WAY WITH RESPECT TO ANY LOAN
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER THE
LOAN DOCUMENTS (INCLUDING ANY NEGLIGENT ACTION OF THE ADMINISTRATIVE AGENT),
EXCEPT TO THE EXTENT THE SAME ARE FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION TO RESULT FROM GROSS NEGLIGENCE OR WILFUL MISCONDUCT BY THE
ADMINISTRATIVE AGENT. THE INDEMNITY PROVIDED IN THIS SECTION 10.1(f) SHALL
SURVIVE TERMINATION OF THIS AGREEMENT.
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(g) Liability Among Lenders. No Lender shall incur any liability
(other than the sharing of expenses and other matters specifically set forth
herein and in the other Loan Documents) to any other Lender, except for acts or
omissions in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder, the
Advances made by it and the Notes issued to it, the Administrative Agent shall
have the same rights as a Lender and may exercise the same as though it were
not the Administrative Agent, and the term "Lender" or "Lenders" shall, unless
the context otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent or any Lender may accept deposits
from, act as trustee under indentures of, and generally engage in any kind of
business with, the Borrower and any of its Affiliates, and any Person who may
do business with or own securities of the Borrower or any of its Affiliates,
all as if the Administrative Agent were not the Administrative Agent hereunder
and without any duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based upon the financial statements referred to in Sections
4.1(j), 6.1 and 6.2 hereof, and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender and based
upon 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 and the other Loan Documents.
Section 10.3 Benefits of Article. None of the provisions of this
Article shall inure to the benefit of any Person other than Lenders (and where
the Borrowers's consent is required, the Borrower); consequently, no Person
shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of the Administrative Agent or any Lender to comply
with such provisions.
ARTICLE 11
Miscellaneous
Section 11.1 Notices.
(a) All notices and other communications under this Agreement shall be
in writing (except in those cases where giving notice by telephone is expressly
permitted) and shall be deemed to have been given on the date personally
delivered or sent by telecopy (answerback received), or three days after
deposit in the mail, designated as certified mail, return receipt requested,
postage-prepaid, or one day after being entrusted to a reputable commercial
overnight delivery service, or one day after being delivered to the telegraph
office or sent out by telex addressed to the party to which such notice is
directed at its address determined as provided in this Section. All notices and
other communications under this Agreement shall be given to the parties hereto
at the following addresses:
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(i) If to the Borrower, at:
Courtesy Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Facsimile: (314) 746-2251
Attention: Chief Financial Officer
With a copy to:
Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
Facsimile: (314) 746-2251
Attention: David M. Sindelar
David J. Webster
With a copy to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Facsimile: (214) 720-7888
Attention: Lawrence D. Stuart, Jr.
(ii) If to the Administrative Agent, at:
Bank of America, N.A.
100 North Tryon Street, 13th Floor
Charlotte, North Carolina 28255-0001
Facsimile: (704) 386-9607
Attention: W. Thomas Barnett
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With a copy to:
Bank of America, N.A.
1 Independent Center
101 North Tryon Street, 15th Floor
Charlotte, North Carolina 28255-0001
Facsimile: (704)
---------------
Attention: Kathy Mumpower
(iii) If to a Lender, at its address or facsimile number
shown below its name on the signature pages hereof,
or if applicable, set forth in its Assignment
Agreement.
(b) Any party hereto may change the address to which notices shall be
directed by giving 10 days written notice of such change to the other parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
(a) all reasonable out-of-pocket expenses of the Administrative Agent
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, the transactions contemplated hereunder
and thereunder, and the making of Advances hereunder, including without
limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses and reasonable attorneys'
fees of the Administrative Agent in connection with the administration of the
transactions contemplated in this Agreement and the other Loan Documents and
the preparation, negotiation, execution and delivery of any waiver, amendment
or consent by the Administrative Agent relating to this Agreement or the other
Loan Documents; and
(c) all (i) reasonable costs and out-of-pocket expenses and attorneys'
fees of the Administrative Agent incurred for enforcement, collection,
restructuring, refinancing and "workout", or otherwise incurred in obtaining
performance under the Loan Documents, which in each case shall include without
limitation reasonable fees and expenses of consultants, legal counsel for the
Administrative Agent, and administrative fees for the Administrative Agent; and
(ii) from and after the occurrence and during the continuance of an Event of
Default, all reasonable costs and out-of-pocket expenses of each Lender,
including reasonable legal fees of one counsel for all the Lenders.
Section 11.3 Waivers. The rights and remedies of the Lenders under
this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which they would otherwise have. No failure
or delay by the Administrative Agent or any Lender in exercising any right
shall operate as a waiver of such right. The Lenders expressly reserve the
right to require strict compliance with the terms of this Agreement in
connection with any funding of a request for an Advance or issuance of a Letter
of Credit. In the event that any Lender decides to fund an Advance at a time
when the Borrower is not in strict compliance with the terms of this
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Agreement, such decision by such Lender shall not be deemed to constitute an
undertaking by the Lender to fund any further requests for Advances or preclude
the Lenders from exercising any rights available under the Loan Documents or at
law or equity. Any waiver or indulgence granted by the Lenders shall not
constitute a modification of this Agreement, except to the extent expressly
provided in such waiver or indulgence, or constitute a course of dealing by the
Lenders at variance with the terms of the Agreement such as to require further
notice by the Lenders of the Lenders' intent to require strict adherence to the
terms of the Agreement in the future. Any such actions shall not in any way
affect the ability of the Administrative Agent or the Lenders, in their
discretion, to exercise any rights available to them under this Agreement or
under any other agreement, whether or not the Administrative Agent or any of
the Lenders are a party thereto, relating to the Borrower.
Section 11.4 Determination by the Lenders Conclusive and Binding. Any
calculation required or expressly permitted to be made by the Administrative
Agent or any Lender under this Agreement shall when made in good faith, absent
manifest error, be controlling.
Section 11.5 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence and during the continuation of an Event of Default, each
Lender and any subsequent holder of any Note, and any assignee or participant
in any Note is hereby authorized by the Borrower at any time or from time to
time, without notice to the Borrower or any other Person, any such notice being
hereby expressly waived, to set-off, appropriate and apply any deposits
(general or special (except trust and escrow accounts), time or demand,
including without limitation Indebtedness evidenced by certificates of deposit,
in each case whether matured or unmatured) and any other Indebtedness at any
time held or owing by such Lender or holder to or for the credit or the account
of the Borrower, against and on account of the Obligations and other
liabilities of the Borrower to such Lender or holder, irrespective of whether
or not (a) the Lender or holder shall have made any demand hereunder, or (b)
the Lender or holder shall have declared the principal of and interest on the
Advances and other amounts due hereunder to be due and payable as permitted by
Section 8.2, provided, however, such Lender, holder, assignee or participant
shall promptly notify the Borrower and the Administrative Agent after any such
set-off and the application made by such Lender. Any sums obtained by any
Lender or by any assignee, participant or subsequent holder of any Note shall
be subject to pro rata treatment and shared as provided in Section 2.12 hereof.
Section 11.6 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of all of the Lenders.
(b) No Lender shall be entitled to assign its interest in this
Agreement, its Notes (if any) or its Advances, except as hereinafter set forth.
(c) Each Lender may sell participations to one or more banks or other
entities (the "Participants") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Advances or Reimbursement Obligations owing to it and any Note
or Notes held by it) (the "Participations"); provided, however, that (i) such
Lender's
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obligations under this Agreement (including, without limitation, its Specified
Percentage of the Commitments) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and (v) no Participant under any such Participation shall have any
right to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by the Borrower therefrom, except to the extent
that such amendment, waiver or consent would (A) waive or reduce the amount or
waive or postpone any date fixed for payment of principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, (B) increase the
commitment of any Participant or (C) waive, extend or postpone the date of
maturity of any Advance. The Lenders may, subject to Section 11.13 hereof,
provide copies of all financial information received from the Borrower to such
Participants.
(d) Each Lender may assign to one or more banks, financial
institutions or entities other than the Borrower or an Affiliate of the
Borrower (an "Assignee") all or any part of its rights and obligations under
this Agreement and the other Loan Documents; provided, however, that (i) each
such assignment shall be subject to the prior written consent of the
Administrative Agent and Borrower, which consent shall not be unreasonably
withheld (provided, however, notwithstanding anything herein to the contrary,
no consent of the Borrower or the Administrative Agent is required for any
assignment (A) during any time that an Event of Default specified in Section
8.1(f) or (g) hereof shall have occurred, (B) during any time that any other
Event of Default has occurred and is continuing for a period of 45 consecutive
days, (C) to an Affiliate of a Lender, (D) to an existing Lender hereunder or
(E) to a Related Fund), (ii) the applicable Lender, the Assignee and the
Borrower and the Administrative Agent, where applicable, shall execute and
deliver to the Administrative Agent an Assignment and Acceptance Agreement (an
"Assignment Agreement") in substantially the form of Exhibit F hereto, together
with any Notes subject to such assignment, (iii) the Assignee or the assigning
Lender, as the case may be, shall deliver to the Administrative Agent a
processing fee of $3,500; and (iv) no such Assignment, other than to an
Affiliate of a Lender, to an existing Lender hereunder or to a Related Fund,
shall be in an amount of less than $5,000,000, unless the portion of the
Commitments or Advances of a Lender is less than $5,000,000, in which case such
assignment may be in the total amount of such Lender's portion of the
Commitments or Advances. Upon such execution, delivery and acceptance from and
after the effective date specified in each Assignment Agreement and the
recordation of the information therein in the Register pursuant to Section
11.6(j) hereof, (A) the Assignee thereunder shall be party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment Agreement, have the rights and obligations of a Lender
hereunder and (B) the applicable Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish such rights and be released from such obligations under
this Agreement.
(e) Notwithstanding anything in clause (d) above to the contrary, (i)
any Lender may assign and pledge all or any portion of its Advances to any
Federal Reserve Bank as collateral security pursuant to Regulation A of F.R.S.
Board and any Operating Circular issued by such Federal Reserve Bank and (ii)
any Lender that is a fund may at any time assign or pledge all or any portion
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of its rights under this Agreement to secure such Lender's Indebtedness;
provided, however, that no such assignment under this clause (e) shall release
the assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a Lender
and an Assignee, and any Note or Notes subject to such assignment, the Borrower
shall, within five Business Days after its receipt of such Assignment
Agreement, at no expense to the Borrower, execute and deliver to the
Administrative Agent in exchange for any such surrendered Notes new Notes to
the order of such Assignee in an amount equal to the portion of the Advances
and Commitments assigned to it pursuant to such Assignment Agreement and new
Notes to the order of the Administrative Agent in an amount equal to the
portion of the Advances and Commitments retained by it hereunder. Such new
Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Notes, shall be dated the effective date
of such Assignment Agreement and shall otherwise be in substantially the form
of Exhibit A, B or C hereto, as applicable. The Administrative Agent agrees to
promptly return the surrendered Notes marked "exchanged" to the Borrower.
(g) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 11.6, disclose
to the Assignee or Participant or its investment advisor or proposed assignee
or Participant or its investment advisor, any information relating to the
Borrower furnished to such Lender by or on behalf of the Borrower, provided
such Person agrees in writing to be bound by the standards set forth in Section
11.13 hereof.
(h) Except as specifically set forth in this Section 11.6, nothing in
this Agreement or any other Loan Documents, expressed or implied, is intended
to or shall confer on any Person other than the respective parties hereto and
thereto and their successors and assignees permitted hereunder and thereunder
any benefit or any legal or equitable right, remedy or other claim under this
Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary, no
Assignee or Participant shall be entitled to receive any greater payment under
Section 2.15 or Section 9.3 than such assigning or participating Lender or any
other Lender would have been entitled to receive with respect to the interest
assigned or participated to such Assignee or Participant.
(j) The Administrative Agent shall maintain at its address referred to
in Section 11.1 a copy of each Assignment Agreement delivered to and accepted
by it and a register (the "Register") for the recordation of the names and
addresses of the Lenders, any U.S. taxpayer identification number, the
applicable Specified Percentages of the Lenders, whether such Lender is an
original Lender or the assignee of another Lender pursuant to an Assignment
Agreement and the effective date and amount of each Assignment Agreement
delivered to and accepted by it and the parties thereto (the "Ownership
Information"). Any transfer of an ownership interest in any Advance (whether or
not evidenced by a Note), including any right to principal or interest payable
with respect to such Advance, shall be subject to and conditioned upon the due
recordation of such transfer and Ownership Information with respect to the
transferee in the Register and such transfer shall be effective only upon such
recordation (and not prior thereto). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the
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Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes hereof. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
Section 11.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument.
Section 11.8 Severability. Any provision of this Agreement which is
for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability without invalidating the
remaining provisions hereof in such jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Maximum Amount. If
any Lender or participant ever receives, collects or applies, as interest, any
such excess, such amount which would be excessive interest shall be deemed a
partial repayment of principal and treated hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the Borrower. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Amount, the Borrower and the Lenders shall, to
the maximum extent permitted under Applicable Law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations are paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Amount, the Lenders
shall refund to the Borrower the amount of such excess or credit the amount of
such excess against the total principal amount of the Obligations owing, and,
in such event, the Lenders shall not be subject to any penalties provided by
any laws for contracting for, charging or receiving interest in excess of the
Maximum Amount. This Section shall control every other provision of all
agreements pertaining to the transactions contemplated by or contained in the
Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. The provisions of this Agreement
may not be amended, modified or waived except by the written agreement of the
Borrower and the Determining Lenders; provided, however, that no such
amendment, modification or waiver shall be made (a) without the consent of each
Lender affected thereby, if it would (i) increase the aggregate amount of the
commitment of any Lender, or (ii) waive, extend or postpone the date of
maturity of, waive, extend or postpone the due date for any scheduled payment
of principal or interest on, reduce the
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amount of any installment of principal or interest on, or reduce the rate of
interest on, any Advance, the Reimbursement Obligations or other amount owing
under any Loan Documents, or (iii) reduce the fees payable hereunder to which
such Lender is entitled, (b) without the consent of all Lenders, if it would
(i) release all or substantially all of the Guarantors or all or substantially
all of the Collateral, (ii) revise Section 11.6(a) hereof, or (iii) revise this
Section 11.11, (c) without the consent of each Lender encompassed within such
definition, reduce the percentages specified in the definition of "Determining
Lenders", "Required Revolving Credit Lenders", "Required Facility A Term Loan
Lenders" or "Required Facility B Term Loan Lenders"; (d) without the consent of
the Required Revolving Credit Lenders, amend, modify or waive any condition
precedent to an extension of a Revolving Credit Advance under Section 3.2
hereof; (e) without the consent of the Administrative Agent, if it would alter
the rights, duties or obligations of the Administrative Agent; (f) without the
consent of the Issuing Bank, if it would alter the rights, duties or
obligations of the Issuing Bank; or (g) without the consent of the Swing Line
Bank, if it would alter rights, duties or obligations of the Swing Line Bank.
Notwithstanding anything in this Agreement to the contrary, no amendment,
waiver or consent that changes the application of payments or prepayments to,
or allocations of payments or prepayments between, the Facility A Term Loan
Advances and the Facility B Term Loan Advances and no waiver of any mandatory
prepayments pursuant to clauses (ii), (iii), (iv) or (v) of Section 2.5(b)
hereof may be made without the express written consent of the Required Facility
A Term Loan Lenders and Required Facility B Term Loan Lenders. Neither this
Agreement nor any term hereof may be amended orally, nor may any provision
hereof be waived orally but only by an instrument in writing signed by the
Administrative Agent and, in the case of an amendment, by the Borrower.
Section 11.12 No Liability of Issuing Bank. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter
of Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any Lender nor any of their respective officers or directors shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the
Issuing Bank against presentation of documents that do not comply with the
terms of a Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the Letter of Credit, except for any payment
made upon the Issuing Bank's gross negligence or willful misconduct; or (d) any
other circumstances whatsoever in making or failing to make payment under any
Letter of Credit, except that the Borrower shall have a claim against the
Issuing Bank, and the Issuing Bank shall be liable to the Borrower, to the
extent of any direct, but not consequential, damages suffered by the Borrower
that the Borrower proves were caused by (i) the Issuing Bank's willful
misconduct or gross negligence in determining whether documents presented under
any Letter of Credit comply with the terms of the Letter of Credit or (ii) the
Issuing Bank's willful failure to make lawful payment under a Letter of Credit
after the presentation to it of a draft and certificates strictly complying
with the terms and conditions of the Letter of Credit. In furtherance and not
in limitation of the foregoing, the Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
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Section 11.13 Confidentiality. Each Lender and the Administrative
Agent agrees (on behalf of itself and each of its Affiliates, directors,
officers and employees) to use reasonable efforts to keep confidential, in
accordance with customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking or investment
practices, any non-public information supplied to it by the Borrower or any of
its Affiliates pursuant to this Agreement, provided that nothing herein shall
limit the disclosure of any such information (a) to the extent required by
statute, rule, regulation or judicial process, (b) to counsel for any Lender or
the Administrative Agent, (c) to bank or other examiners, regulatory bodies
(including the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access
to information about any Lender's investment portfolio), auditors or
accountants of any Lender, (d) to the Administrative Agent or any other Lender
or any Affiliate thereof, (e) in connection with any Litigation relating to the
transactions contemplated by the Loan Documents to which any one or more of
Lenders is a party, (f) to the extent necessary in connection with the exercise
of any Right under this Agreement or any other Loan Document, or (g) to any
Assignee or Participant (or prospective Assignee or Participant) or to any
direct or indirect contractual counterparties in swap agreements or to the
professional advisors of such swap counterparties so long as such Assignee or
Participant (or prospective Assignee or Participant) or direct or indirect
contractual counterparties in swap agreements or such swap counterparties'
professional advisors agrees in writing to be bound by the provisions of this
Section 11.13. Non-public information does not include information that (a)
was publicly known prior to the time of disclosure by the Borrower or any of
its Subsidiaries, (b) after disclosure by the Borrower to any Lender or the
Administrative Agent becomes publicly known through no act or omission by any
Lender or the Administrative Agent or by any Person acting on behalf of any
Lender or the Administrative Agent or (c) otherwise becomes known to any Lender
or the Administrative Agent other than through disclosure by the Borrower or
any of its Subsidiaries or Affiliates or any of their respective
representatives or consultants.
Section 11.14 No Duties of Syndication Agent or Documentation Agent.
The Borrower and the Lenders acknowledge that the Syndication Agent and the
Documentation Agent shall have no duties, responsibilities or liabilities in
their capacities as Syndication Agent and Documentation Agent.
Section 11.15 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS AND THE
APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA. THE LOAN DOCUMENTS ARE
PERFORMABLE IN NEW YORK, NEW YORK, AND BORROWER AND EACH SURETY, GUARANTOR,
ENDORSER AND ANY OTHER PARTY EVER LIABLE FOR PAYMENT OF ANY MONEY PAYABLE WITH
RESPECT TO THE LOAN DOCUMENTS, JOINTLY AND SEVERALLY WAIVE THE RIGHT TO BE SUED
ELSEWHERE. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE BORROWER AND EACH
LENDER AGREE THAT THE STATE AND FEDERAL COURTS OF NEW YORK LOCATED IN NEW YORK,
NEW YORK SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
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HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS PROPERTY TO THE JURISDICTION OF
ANY SUCH COURT FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING OR JUDGMENT
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
Section 11.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY ADVANCES HEREUNDER.
Section 11.17 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH
THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
===============================================================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
===============================================================================
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IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
BORROWER: LLS CORP.
By: /s/ WESLEY D. DEHAVEN
--------------------------
Wesley D. DeHaven
Vice President of Finance
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ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A., as
Administrative Agent
By: /s/ HAROLD R. BEATTIE, JR.
--------------------------
Name: Harold R. Beattie, Jr.
Title: Senior Vice President
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SYNDICATION AGENT: CREDIT SUISSE FIRST BOSTON, as
Syndication Agent
By: /s/ BILL O'DALY
--------------------------
Name: Bill O'Daly
--------------------
Title: Vice President
-------------------
By: /s/ KRISTIN LEPRI
--------------------------
Name: Kristin Lepri
--------------------
Title: Associate
-------------------
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DOCUMENTATION AGENT: BANKERS TRUST COMPANY, as
Documentation Agent
By: /s/ MARY KAY COYLE
--------------------------
Name: Mary Kay Coyle
Title: Managing Director
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LENDERS: BANK OF AMERICA, N.A., as a Lender
By: /s/ HAROLD R. BEATTIE, JR.
--------------------------
Name: Harold R. Beattie, Jr.
Title: Senior Vice President
100 North Tryon Street, 13th Floor
Charlotte, North Carolina 28255-0001
Attention: W. Thomas Barnett
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CREDIT SUISSE FIRST BOSTON, as a
Lender
By: /s/ BILL O'DALY
--------------------------
Name: Bill O'Daly
--------------------
Title: Vice President
--------------------
By: /s/ KRISTIN LEPRI
--------------------------
Name: Kristin Lepri
--------------------
Title: Associate
--------------------
Address
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BANKERS TRUST COMPANY, as a Lender
By: /s/ MARY KAY COYLE
--------------------------
Name: Mary Kay Coyle
Title: Managing Director
Address
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<PAGE> 1
EXHIBIT 10.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement") is made and entered
into as of this 30th day of July, 1999, by and among LLS Corp., an Illinois
corporation ("Courtesy"), Walter J. Kreiseder and Gerald J. Sommers, as
representatives of the Shareholders (the "Representatives"), and American
National Bank & Trust Company, as escrow agent (the "Escrow Agent").
RECITALS
a. Pursuant to the Recapitalization Agreement (the "Recapitalization
Agreement"), dated as of July __, 1999 among HMTF/CC Investments, L.P.,
Courtesy, Creative Packaging Corp., Courtesy Sales Corp., and the shareholders
of Courtesy, Creative Packaging Corp., and Courtesy Sales Corp. (the
"Shareholders"), Courtesy was recapitalized (the "Recapitalization").
b. This Escrow Agreement is entered into pursuant to, and as a
condition precedent to the closing of the transactions contemplated by, the
Recapitalization Agreement (the "Closing").
c. Capitalized terms used herein, unless otherwise defined (as
indicated in Article V), shall have the meanings assigned to them in the
Recapitalization Agreement.
AGREEMENTS
Accordingly, in consideration of the recitals and of the respective
agreements and covenants contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
Section 1.1 Escrowed Funds. (a) At the Closing, Courtesy shall deliver
the Escrowed Funds to the Escrow Agent pursuant to Section 2.6(b)(v)(x) of the
Recapitalization Agreement. The Escrowed Funds shall be delivered by wire
transfer of immediately available funds to an account designated by the Escrow
Agent.
(b) The Escrowed Funds shall be held by the Escrow Agent in a separate
account (the "Escrow Account") for the benefit of Courtesy and the Shareholders
as provided in this Escrow Agreement.
(c) The Escrow Agent shall maintain for each of the Shareholders an
account (each, an "Account") reflecting (i) such person's allocable portion of
the Escrowed Funds hereunder, plus (ii) all amounts earned on the cash
allocated to such person's Account, less (iii) the portion of all amounts
distributed pursuant to Section 1.3(c) or 1.4 allocated to such person's
Account,
<PAGE> 2
and less (iv) the portion of the Escrow Agent Fees and Expenses allocable to
such person's Account.
Section 1.2 Acceptance of Appointment as Escrow Agent. The Escrow
Agent, by signing this Escrow Agreement, accepts the appointment as Escrow
Agent and agrees to hold and distribute all Escrowed Funds in accordance with
the terms of this Escrow Agreement.
Section 1.3 Distributions; Investments. (a) Pending disbursement of
the Escrowed Funds, the Escrow Agent shall invest the Escrowed Funds in
Permitted Investments. All interest and other income earned on the Escrowed
Funds shall, until disbursed, also constitute a part of the Escrowed Funds and
shall, pending disbursement, be invested in Permitted Investments. For purposes
of this Escrow Agreement, "Permitted Investments" shall mean (i) money market
funds consisting of short-term U.S. Treasury securities, (ii) obligations of or
guaranteed by the United States of America or any agency thereof, either
outright or in connection with repurchase agreements covering such obligations,
or obligations of or guaranteed by any state or political subdivision thereof
with a maturity not later than six months from the date of investment, (iii)
certificates of deposit or bankers' acceptances issued by the Escrow Agent or
by any other national or state-chartered bank having total assets of at least
$500,000,000 with a maturity not later than six months from the date of
investment, and (iv) such other investments as may be specified from time to
time to the Escrow Agent by joint written instructions of Courtesy and the
Representatives.
(b) As and when any amount is needed for a payment under this Escrow
Agreement, the Escrow Agent shall cause a sufficient amount of the Permitted
Investments to be converted into cash. The Escrow Agent shall select the
investments or types of investments to be so converted. Neither the
Representatives nor Courtesy shall be liable for any loss of principal or
income due to the choice of Permitted Investments in which the Escrowed Funds
are invested or the Permitted Investments sold or converted pursuant to this
paragraph (b).
(c) Notwithstanding any other provision hereof, the Escrow Agent shall
distribute to the Shareholders, on a pro rata basis based upon a fraction
(expressed as a percentage), the numerator of which is the amount of cash
originally allocated to such person's Account and the denominator of which is
the aggregate amount of Escrowed Funds originally deposited with the Escrow
Agent pursuant to Section 1.1 hereof (the "Pro Rata Basis"), on a quarterly
basis on or before the tenth day of April, June, September and January, an
amount equal to all interest, dividends and other income earned on the Escrowed
Funds.
(d) For tax purposes, all interest and other income earned on the
Escrowed Funds shall be income of the Shareholders and all parties hereto shall
file all Tax Returns consistent with such treatment.
Section 1.4 Distribution of Escrowed Funds to Indemnitees. (a) The
Escrow Agent shall disburse to the applicable Indemnitee such portion of the
Escrowed Funds as may be necessary to pay the Damages for which the Indemnitee
is entitled to reimbursement pursuant to Section 2.1. Any amount distributed
pursuant to this Section 1.4 shall be allocated among, and deducted from, the
Accounts maintained pursuant to Section 1.1(c) on a Pro Rata Basis. Such
distribution shall be made in cash to the extent available in such Accounts,
including cash
2
<PAGE> 3
derived from liquidation of Permitted Investments in accordance with Section
1.3(b). Payment shall be made not more than ten days after (i) the delivery to
the Escrow Agent of written instructions signed by Courtesy and the
Representatives specifying an amount to be paid from the Escrowed Funds to an
Indemnitee or (ii) the delivery to the Escrow Agent and the Representatives of
a copy of a Final Determination establishing the Indemnitee's right to
reimbursement under this Escrow Agreement with respect to such Damages. A
"Final Determination" shall mean a final judgment of a court of competent
jurisdiction or an administrative agency having the authority to determine the
amount of, and liability with respect to, the item resulting in Damages for
which reimbursement is sought hereunder and the denial of, or expiration of all
rights to, appeal related thereto.
(b) The parties hereto hereby agree that all distributions of Escrowed
Funds to the Indemnitees hereunder shall be treated as adjustments to the
Repurchase Price that are neither deductible by the Shareholders, nor
includable in any Indemnitee's income for any federal, state, local or foreign
income or franchise tax purpose, and each party hereto hereby agrees (i) to
file all applicable Tax Returns in a manner consistent in all material respects
with such treatment and (ii) in otherwise dealing with a taxing authority, to
act in a manner that is consistent in all material respects with such
treatment.
Section 1.5 Segregation of the Escrowed Funds. (a) Notwithstanding any
other provision of this Escrow Agreement to the contrary, the Escrow Agent
shall restrict such portion of the Escrowed Funds (other than Escrowed Funds
that are at the time necessary to make a payment required under Sections 1.3(c)
and 1.4) as may be necessary to satisfy in full all Pending Claims, and shall
hold such portion in accordance with this Section 1.5. "Pending Claims" shall
mean unresolved Claims that are the subject of Claim Notices properly delivered
under Section 2.2.
(b) Any portion of the Escrowed Funds restricted under Section 1.5(a)
shall continue to be restricted by the Escrow Agent until the Escrow Agent is
directed to release such Escrowed Funds by (i) written instructions signed by
Courtesy and the Representatives instructing the Escrow Agent how to pay all or
any portion of such segregated Escrowed Funds or (ii) a copy of a Final
Determination establishing the Indemnitee's right to reimbursement under
Section 1.4.
Section 1.6 Distribution of Escrowed Funds to Shareholders. Not later
than the fifth business day after the Expiration Date, the Escrow Agent shall
distribute to the Shareholders in accordance with their respective Accounts,
the Escrowed Funds minus any Escrowed Funds that are then being restricted with
respect to Pending Claims under Section 1.5. "Expiration Date" shall mean the
date that is the first anniversary of the Closing Date. Any amounts segregated
with respect to Pending Claims on the Expiration Date shall be released as
provided in Section 1.5(b) and promptly thereafter distributed as provided in
this Section 1.6.
ARTICLE II
Section 2.1 Claims Against the Escrowed Funds. (a) From and after the
Closing, but subject to the conditions and limitations set forth in this Escrow
Agreement and the Recapitalization Agreement, Courtesy and its successors and
assigns (collectively, the "Indemnitees") shall be entitled to reimbursement
out of the Escrowed Funds for any and all
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losses, costs, damages, claims, fines, taxes, interest, penalties, expenses
(including, without limitation, reasonable attorneys' fees and expenses),
amounts paid in settlement, court costs, fees and expenses of accountants,
investment bankers, environmental consultants and other experts, and other
expenses of litigation (collectively, "Damages") actually incurred or suffered
by an Indemnitee to the extent resulting from (i) any inaccuracy in any
representation or warranty of the Companies or the Shareholders contained in
the Recapitalization Agreement or in any certificate delivered pursuant
thereto, or (ii) any breach of any covenant or agreement of the Companies or
the Shareholders contained in the Recapitalization Agreement and required to be
performed by the Companies or the Shareholders at or prior to the Closing
(collectively, "Claims"); provided, however, Indemnitees shall not be entitled
to reimbursement out of Escrowed Funds under this Section 2.1 (except in the
case of any claim asserted in respect of a breach of Section 5.10 of the
Recapitalization Agreement, as to which this proviso shall be inapplicable)
unless and until Indemnitees' Damages exceed $2,000,000, in which event the
Indemnitee will be entitled to make a Claim only to the extent of such excess.
(b) In calculating any Damage payable to Courtesy pursuant to Section
2.1(a), any amount payable shall be reduced by (i) any insurance or third party
recoveries of Courtesy or its subsidiaries less any costs, expenses, allocable
portions of premiums or taxes incurred in connection therewith and (ii) any Tax
Benefit actually realized by Courtesy or its subsidiaries in connection with
the payment, incurrence or accrual of the indemnified loss, calculated at the
Effective Tax Rate plus (iii) any Offsetting Tax Benefit, calculated at the
Effective Tax Rate. The term "Effective Tax Rate" shall mean the maximum
federal income tax rate imposed on corporations or individuals, as the case may
be, for the period in question. The term "Tax Benefit" means the amount by
which the tax liability payable and owing to the appropriate taxing authority
by Courtesy or its subsidiaries is actually reduced by loss, deduction, refund
or credit, determined as set forth below. The term "Offsetting Tax Benefit"
means the amount of any Tax Benefit realized by Courtesy or its subsidiaries in
a taxable period ending after the Closing Date attributable to an adjustment
resulting in an additional liability for taxes in a taxable period ending on or
before the Closing Date, determined as set forth below. For purposes of the
determination of the amount of any Tax Benefit and any Offsetting Tax Benefit,
it shall be assumed that (i) any Tax Benefit of Courtesy or any subsidiary
(including any Offsetting Tax Benefit) will currently reduce income that is
taxable at the Effective Tax Rate; (ii) Courtesy or any subsidiary shall have
sufficient taxable income to use any Tax Benefit (including any Offsetting Tax
Benefit) in the respective taxable periods in which such Tax Benefit (including
any Offsetting Tax Benefit) first arose or will first arise; and (iii) the
failure of Courtesy or any subsidiary to claim a Tax Benefit or an Offsetting
Tax Benefit shall not preclude an indemnifying party from receiving the benefit
thereof hereunder. None of Courtesy or any subsidiary shall file any amended
Tax Return with respect to taxable periods subject to indemnification hereunder
without the consent of the Representatives. As soon as practicable after
Courtesy presents a Third Party Claim Notice pursuant to Section 2.2 with
respect to any Damages, Courtesy shall present to the Representatives and
Escrow Agent in writing its computation of any Tax Benefit and Offsetting Tax
Benefit attributable to such Damages. Unless, within 15 days after receipt of
such written computation, the Representatives give Courtesy written notice that
they disagree with such computation, such computation shall be binding and
conclusive for all purposes of this Escrow Agreement. If the Representatives
timely notify Courtesy in writing of their disagreement, and if Courtesy and
the Representatives are not able to resolve such disagreement within 10 days
thereafter, then the dispute shall be submitted
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<PAGE> 5
for resolution to a "big five" public accounting firm mutually selected by the
Representatives and Courtesy (the "Arbiter CPA"), and the determination made by
the Arbiter CPA with respect to the amount of any Tax Benefit and Offsetting
Tax Benefit, if consistent with the applicable provisions of this Escrow
Agreement, shall be binding and conclusive. The entire cost of obtaining the
determination of the Arbiter CPA shall be borne equally by the Shareholders
(each on a Pro Rata Basis), on one hand, and by Courtesy, on the other hand.
Section 2.2 Notice of Claims; Other Procedures. (a) In the event that
any action, claim or demand is asserted against or sought to be collected from,
any notice given to, or audit commenced with respect to any Indemnitee for
which the Indemnitee intends to assert a right of reimbursement from the
Escrowed Funds, Courtesy shall notify the Representatives and the Escrow Agent
with reasonable promptness of such action, claim or demand (the "Third Party
Claims"), specifying, to the extent known, the nature, circumstances and the
amount of such Third Party Claim (a "Third Party Claim Notice"). The
Representatives shall have 30 days from their receipt of a Third Party Claim
Notice (the "Third Party Claim Notice Period") to notify Courtesy (i) whether
the Representatives dispute the Indemnitee's right of reimbursement from the
Escrowed Funds with respect to such Third Party Claim, and (ii) if the
Representatives do not dispute such right of reimbursement, whether or not they
desire to defend the Indemnitee against such Third Party Claim.
(b) If the Representatives notify Courtesy within the Third Party
Claim Notice Period that (i) the Representatives do not dispute the
Indemnitee's right of reimbursement and (ii) the Representatives desire to
defend against such Third Party Claim and, if the estimated amount of such
Third Party Claim, together with all other Pending Claims, is less than the
remaining balance of the Escrow Account, then the Representatives shall have
the right to assume and control the defense of such Third Party Claim by
appropriate proceedings with counsel reasonably acceptable to Courtesy, and the
Representatives shall be entitled to reimbursement out of the Escrowed Funds
for such defense. The Indemnitee may participate in, but not control, any such
defense or settlement, at its sole cost and expense; provided, however, that
the Representatives and Courtesy shall jointly control the defense of any tax
audit or proceeding which could reasonably be expected to have a material
adverse effect on the business or condition of Courtesy or any subsidiary for
any taxable period ending on or after the Closing.
(c) If the Representatives (i) dispute the Indemnitee's right of
reimbursement with respect to a Third Party Claim, (ii) do not dispute such
right of reimbursement but fail to promptly assume and prosecute the defense of
such Third Party Claim, or (iii) are not entitled to assume the defense of such
Third Party Claim under Section 2.2(b), then Courtesy or the Indemnitee shall
be entitled to assume and control the defense of such Third Party Claim with
counsel reasonably acceptable to the Representatives. Unless the
Representatives have disputed the Indemnitee's right to reimbursement for a
Third Party Claim, the Indemnitee shall be entitled to reimbursement out of the
Escrowed Funds for such defense. If the Representatives do not assume the
defense of a Third Party Claim for any reason, they may still participate in,
but not control, the defense of such Third Party Claim at the Representatives'
sole cost and expense.
(d) The party responsible for the defense of any Third Party Claim
(the "Responsible Party") shall, to the extent reasonably requested by the
other party, keep such other party informed as to the status of any Third Party
Claim for which such party is not the Responsible
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<PAGE> 6
Party, including, without limitation, all settlement negotiations and offers
and allow such other party to participate in any defense or settlement. With
respect to a Third Party Claim for which the Representatives are the
Responsible Party, Courtesy shall, and shall cause each Indemnitee to, make
available to the Representatives and their representatives all books and
records of Courtesy and the Indemnitees relating to such Third Party Claim and
shall render to the Representatives such assistance and access to records and
the representatives of Courtesy and the Indemnitees as the Representatives and
their representatives may reasonably request.
(e) In the event that an Indemnitee has a claim for reimbursement out
of the Escrowed Funds which does not involve a Third Party Claim (a "Direct
Claim"), Courtesy shall notify the Representatives of such Direct Claim with
reasonable promptness, specifying, to the extent known, the section of the
Recapitalization Agreement giving rise to such Direct Claim and the nature,
circumstances and amount of such Direct Claim (a "Direct Claim Notice" and,
together with Third Party Claim Notices, the "Claim Notices"). If the
Representatives notify Courtesy that they dispute an Indemnitee's right of
reimbursement from the Escrowed Funds with respect to a Direct Claim set forth
in a Direct Claim Notice, Courtesy and the Representatives shall use reasonable
efforts to resolve such dispute. In the event Courtesy and the Representatives
are unable to promptly resolve such dispute, the Indemnitee will be free to
pursue such remedies as may be available before any court of competent
jurisdiction.
(f) Neither the Representatives, on the one hand, nor Courtesy or any
other Indemnitee, on the other hand, shall enter into any settlement of any
Third Party Claim without the prior written consent of the other party, which
consent shall not be unreasonably withheld. The Responsible Party shall
promptly notify the other party of each settlement offer (including whether or
not the Responsible Party is willing to accept the proposed settlement offer)
with respect to a Third Party Claim. Such other party agrees to notify the
Responsible Party with reasonable promptness whether or not such party is
willing to accept the proposed settlement offer. If an Indemnitee fails to
consent to any settlement offer of a Third Party Claim (whether or not Courtesy
is the Responsible Party with respect to such Third Party Claim), Courtesy or
the Indemnitee may continue to contest or defend such Third Party Claim and, in
such event, the maximum reimbursement from the Escrowed Funds with respect to
such Third Party Claim (including the reasonable costs and expenses of
contesting or defending such Third Party Claim incurred after the Indemnitee
fails to consent to such settlement offer) shall not exceed the amount of such
settlement offer. If the Representatives fail to consent to any settlement
offer of a Third Party Claim (whether or not the Representatives are the
Responsible Party with respect to such Third Party Claim), the Representatives
may continue to contest or defend such Third Party Claim and, in such event,
subject to the limitations on indemnification set forth in Section 2.1(a), the
Indemnitee may make a Claim against the Escrowed Funds for the excess, if any,
of (i) the amount of Damages ultimately recovered against an Indemnitee as a
result of such Third Party Claim minus (ii) the amount of such settlement
offer, and the portion of the Damages equal to the settlement offer plus the
Damages of the Indemnitees incurred in connection with the defense of such
Third Party Claim through the date on which the Representatives rejected the
settlement offer.
Section 2.3 Survival of Claims. Any claim for reimbursement from the
Escrow Account that is not asserted in accordance with Section 2.2 prior to
5:00 p.m. (New York City time) on the Expiration Date may not be pursued and
shall be irrevocably waived.
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ARTICLE III
Section 3.1 Appointment of Representatives. (a) The Representatives
have been appointed, pursuant to the Recapitalization Agreement, as agent and
representative of the Shareholders. The Representatives have been authorized
and empowered to perform the obligations and exercise the rights of the
Representatives as set forth in this Escrow Agreement and the Recapitalization
Agreement and agree to abide by the terms and provisions of this Escrow
Agreement and the Recapitalization Agreement.
(b) The Representatives shall, after the Closing, (i) receive all
information and notices required under the Recapitalization Agreement and this
Escrow Agreement on behalf of the Shareholders; (ii) take, on behalf of the
Shareholders, any action they may deem appropriate with respect to any dispute
arising out of or relating to the Recapitalization Agreement or this Escrow
Agreement; and (iii) execute and deliver all instruments and documents of every
kind incident to the foregoing.
(c) The Representatives may confer with counsel with respect to any
question relating to their duties or responsibilities under the
Recapitalization Agreement or this Escrow Agreement. The Representatives shall
not be liable or responsible for anything done or omitted to be done by them in
good faith or on the advice of counsel.
ARTICLE IV
Section 4.1 Rights and Responsibilities of the Escrow Agent. (a) The
duties and responsibilities of the Escrow Agent shall be limited to those
expressly set forth in this Escrow Agreement and it shall not be subject to,
nor obligated to recognize, any other agreement between, or direction or
instruction of, any or all of the parties to this Escrow Agreement with respect
to the matters addressed herein.
(b) If any Escrowed Funds are at any time attached, garnished or
levied upon under any court order or in case the payment of any such Escrowed
Funds shall be stayed or enjoined by any court order, or in case any order,
judgment or decree shall be made or entered by any court affecting such
Escrowed Funds or any part thereof, then and in any of such events, the Escrow
Agent is authorized, in its sole discretion, to rely upon and comply with any
such order, writ, judgment or decree which it is advised by legal counsel is
binding upon it. If the Escrow Agent complies with any such order, writ,
judgment or decree, it shall not be liable to any of the parties to this Escrow
Agreement or to any other person by reason of such compliance even though such
order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
(c) The Escrow Agent shall not be liable for any act taken or omitted
under this Escrow Agreement if taken or omitted by it in good faith and in the
exercise of reasonable care under the circumstances. The Escrow Agent shall
also be fully protected in relying upon any written notice, demand, certificate
or document which it in good faith believes to be genuine.
(d) The Escrow Agent, and any successor Escrow Agent, may resign at
any time as Escrow Agent hereunder by giving at least 30 days' written notice
to the Representatives and Courtesy. Upon such resignation and the appointment
of a successor Escrow Agent, the
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resigning Escrow Agent shall be absolved from any and all liability in
connection with the exercise of its powers and duties as Escrow Agent hereunder
except for liability arising in connection with its negligence or willful
misconduct. Upon their receipt of notice of resignation from the Escrow Agent,
Courtesy and the Representatives shall use reasonable efforts jointly to
designate a successor Escrow Agent. In the event Courtesy and the
Representatives do not agree upon a successor Escrow Agent within 30 days after
the receipt of such notice, the Escrow Agent so resigning may petition any
court of competent jurisdiction for the appointment of a successor Escrow Agent
or other appropriate relief and any such resulting appointment shall be binding
upon all parties hereto. By mutual agreement, Courtesy and the Representatives
shall have the right at any time upon not less than 10 days' written notice to
the Escrow Agent to terminate their appointment of the Escrow Agent, or
successor Escrow Agent, as Escrow Agent. The Escrow Agent or successor Escrow
Agent shall continue to act as Escrow Agent until a successor is appointed and
qualified to act as Escrow Agent.
Section 4.2 Fees and Expenses of Escrow Agent. The Escrow Agent shall
(a) be paid a fee for its services under this Escrow Agreement as provided by
Exhibit A and (b) be entitled to reimbursement for reasonable expenses
(including the reasonable fees and disbursements of its counsel) actually
incurred by the Escrow Agent in connection with its duties under this Escrow
Agreement (collectively, the "Escrow Agent Fees and Expenses"). All Escrow
Agent Fees and Expenses shall be paid one-half by the Shareholders, on a Pro
Rata Basis, and one-half by Courtesy.
ARTICLE V
DEFINITIONS
The following terms are defined in this Escrow Agreement in the
Sections indicated:
"Account" - - Section 1.1(c)
"Arbiter CPA" - - Section 2.1(b)
"Claim Notices" - - Section 2.2(e)
"Claims" - - Section 2.1(a)
"Closing" - - Recitals
"Code" - - Section 1.3(c)
"Courtesy" - - Preamble
"Damages" - - Section 2.1(a)
"Direct Claim" - - Section 2.2(e)
"Direct Claim Notice" - - Section 2.2(e)
"Effective Tax Rate" -- Section 1.3(c)
"Escrow Account" - - Section 1.1(b)
"Escrow Agent" - - Preamble
"Escrow Agent Fees and Expenses" - - Section 4.2
"Escrow Agreement" - - Preamble
"Expiration Date" - - Section 1.6
"Final Determination" - - Section 1.4(a)
"Indemnitees" - - Section 2.1(a)
"Offsetting Tax Benefit" - - Section 2.1(b)
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"Pending Claims" - - Section 1.5(a)
"Permitted Investments" - - Section 1.3(a)
"Pro Rata Basis" - - Section 1.3(c)
"Recapitalization" - - Recitals
"Recapitalization Agreement" - - Recitals
"Representatives" - - Preamble
"Responsible Party" - - Section 2.2(d)
"Shareholders" - - Recitals
"Tax Benefit" - - Section 2.1(b)
"Third Party Claim Notice" - - Section 2.2(a)
"Third Party Claim Notice Period" - - Section 2.2(a)
"Third Party Claims" - - Section 2.2(a)
ARTICLE VI
Section 6.1 Notices. All notices, requests, consents or other
communications required or permitted under this Escrow Agreement shall be in
writing and shall be deemed to have been duly given or delivered by any party
(a) when received by such party if delivered by hand, (b) upon confirmation
when delivered by telecopy, (c) within one day after being sent by recognized
overnight delivery service, or (d) within three business days after being
mailed by first-class mail, postage prepaid, and in each case addressed as
follows:
(i) if to the Representatives or any Shareholder:
800 Corporate Grove Drive
Buffalo Grove, Illinois 60089-4552
Facsimile No.: (847) 808-3072
Attention: Walter J. Kreiseder/Gerald J. Sommers
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Chicago, Illinois 60661-3693
Facsimile No.: (312) 577-8768
Attention: David R. Shevitz
Stuart Grass
(ii) If to Courtesy or any Indemnitee to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Facsimile No.: (214) 740-7313
Attention: Jack D. Furst
Lawrence D. Stuart, Jr.
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<PAGE> 10
Mills & Partners
101 South Hanley Road
St. Louis, Missouri 63105
Facsimile No.: (314) 746-2299
Attention: David M. Sindelar
with a copy to:
Weil, Gotshal & Manges LLP
100 Cresent Court, Suite 1300
Dallas, Texas 75201
Facsimile No.: (214) 746-7777
Attention: R. Scott Cohen
(iii) if to the Escrow Agent, to:
American National Bank & Trust Company
120 South LaSalle
4th Floor
Chicago, Illinois 60603
Phone No.: 312-661-5000
Any party by written notice to the other parties pursuant to this Section 6.1
may change the address or the persons to whom notices or copies thereof shall
be directed.
Section 6.2 Assignment. This Escrow Agreement and the rights and
duties hereunder shall be binding upon and inure to the benefit of the parties
hereto and the successors and assigns of each of the parties to this Escrow
Agreement. No rights, obligations or liabilities hereunder shall be assignable
by any party without the prior written consent of the other parties, except
that Courtesy may assign its rights under this Escrow Agreement without
obtaining the prior written consent of the other parties hereto to any Person
who acquires (whether in a single transaction or a series of related
transactions) (i) all or substantially all of the assets of Courtesy or (ii) a
majority of the outstanding capital stock of Courtesy. Notwithstanding the
foregoing, Courtesy may make a collateral assignment of its rights under this
Escrow Agreement to any institutional lender who provides funds to Courtesy for
the consummation of the Recapitalization. The Representatives agree to execute
acknowledgments of such assignment(s) and collateral assignments in such forms
as Courtesy's institutional lender(s) may from time to time reasonably request.
Section 6.3 Amendment. This Escrow Agreement may be amended or
modified only by an instrument in writing duly executed by the parties to this
Escrow Agreement.
Section 6.4 Waivers. Any waiver by any party hereto of any breach of
or failure to comply with any provision of this Escrow Agreement by any other
party hereto shall be in writing and shall not be construed as, or constitute,
a continuing waiver of such provision, or a waiver of any other breach of, or
failure to comply with, any other provision of this Escrow Agreement.
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Section 6.5 Governing Law. This Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois without
regard to conflicts-of-laws rules thereof.
Section 6.6 Construction. The headings in this Escrow Agreement are
solely for convenience of reference and shall not be given any effect in the
construction or interpretation of this Escrow Agreement. Unless otherwise
stated, references to Sections and Exhibits are references to Sections and
Exhibits of this Escrow Agreement.
Section 6.7 Third Parties. Nothing expressed or implied in this Escrow
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than the Indemnitees, the Representatives, and the Escrow Agent
any rights or remedies under, or by reason of, this Escrow Agreement.
Section 6.8 Termination. This Escrow Agreement shall terminate at the
time of the final distribution by the Escrow Agent of all Escrowed Funds in
accordance with the provisions of this Escrow Agreement.
Section 6.9 Counterparts. This Escrow Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of
which together shall constitute a single instrument.
Section 6.10 Waiver of Offset Rights. The Escrow Agent hereby waives
any and all rights to offset that it may have against the Escrowed Funds
including, without limitation, claims arising as a result of any claims,
amounts, liabilities, costs, expenses, damages, or other losses that the Escrow
Agent may be otherwise entitled to collect from any party to this Escrow
Agreement or any Shareholder.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement in two or more counterparts, each of which shall be deemed one and
the same instrument, as of the day and year first above written.
COURTESY:
By: /s/ WESLEY D. DeHAVEN
-------------------------------
Name: Wesley D. DeHaven
-----------------------------
Title: Vice President - Finance
----------------------------
REPRESENTATIVES:
/s/ WALTER J. KREISEDER
----------------------------------
Walter J. Kreiseder
/s/ GERALD J. SOMMERS
----------------------------------
Gerald J. Sommers
ESCROW AGENT:
AMERICAN NATIONAL BANK & TRUST COMPANY
By: /s/ TIMOTHY P. MARTIN
-------------------------------
Name:Timothy P. Martin
-----------------------------
Title: Assistant Vice President
----------------------------
<PAGE> 1
EXHIBIT 10.3
LLS CORP.
WARRANT AGREEMENT
This WARRANT AGREEMENT is dated as of July 30, 1999 (the "Agreement")
and entered into by and among LLS Corp., an Illinois corporation (the
"Company"), and the purchasers party hereto (each, a "Purchaser" and
collectively, the "Purchasers").
WHEREAS, the Company proposes to issue to the Purchasers certain
Warrants, as hereinafter described (the "Warrants"), to purchase an aggregate of
1,800,000 shares (subject to adjustment) of the common stock, par value $0.01
per share (together with all other classes of common stock of the Company, the
"Common Stock"), of the Company (the shares of Common Stock and any other
securities issuable upon exercise of the Warrants being referred to herein as
the "Warrant Shares");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The Company will issue and deliver to
the Purchasers a certificate or certificates evidencing the Warrants (the
"Warrant Certificates"). Each Warrant Certificate shall be substantially in the
form set forth as Exhibit A attached hereto. The Warrant Certificates shall be
dated the date of issuance by the Company.
SECTION 2. Execution of Warrant Certificates. The Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board, Chief
Executive Officer, President or a Vice President. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, Chief Executive Officer, President or Vice
President, and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, Chief
Executive Officer, President or Vice President, notwithstanding the fact that at
the time the Warrant Certificates shall be delivered or disposed of he shall
have ceased to hold such office.
SECTION 3. Registration. The Company shall number and register the
Warrant Certificates in a register (the "Warrant Register") as they are issued.
The Company may deem and treat the registered holder(s) from time to time of the
Warrant Certificates (the "Holders") as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing on the Warrant
Certificate made by anyone) for all purposes and shall
<PAGE> 2
not be affected by any notice to the contrary. The Warrants shall be registered
initially in such name or names as the Purchasers shall designate.
SECTION 4. Restrictions on Transfer: Registration of Transfers and
Exchanges. Prior to any proposed transfer of the Warrants or the Warrant Shares,
unless such transfer is made pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Act"), the transferring
Holder or holder of Warrant Shares, upon request by the Company, will deliver to
the Company an opinion of counsel, reasonably satisfactory in form and substance
to the Company and its counsel, to the effect that the Warrants or the Warrant
Shares, as applicable, may be sold or otherwise transferred without registration
under the Act; provided, however, that with respect to transfers by Holders or a
holder of Warrant Shares to their affiliates, as such term is defined in Rule
144 promulgated under the Act (each, an "Affiliate"), no such opinion shall be
required. A transfer made by a Holder or a holder of Warrant Shares which is a
state-sponsored employee benefit plan to a successor trust or fiduciary pursuant
to a statutory reconstitution shall be expressly permitted, and no opinions of
counsel shall be required in connection therewith. Upon original issuance
thereof, and until such time as the same shall have been sold pursuant to Rule
144 promulgated thereunder (or any similar rule or regulation), each Warrant
Certificate shall bear the legends included on the first page of Exhibit A,
unless in the opinion of such counsel, the legend regarding securities law
transfer restrictions is no longer required by the Act.
Subject to the transfer restrictions set forth in this Section 4
hereof, the Company shall from time to time register the transfer of any
outstanding Warrant Certificates in the Warrant Register to be maintained by the
Company upon surrender thereof accompanied by a written instrument or
instruments of transfer in form reasonably satisfactory to the Company, duly
executed by the registered Holder or Holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee Holder(s) and the surrendered Warrant Certificate shall be canceled
and disposed of by the Company.
SECTION 5. Warrants: Exercise of Warrants. Subject to the terms of this
Agreement, each Holder shall have the right, which may be exercised commencing
on the earlier of (i) the first anniversary of the date hereof, (ii) receipt of
a Qualified IPO Notice (as defined below), and (iii) receipt of a Sale of the
Company Notice (as defined below), to receive from the Company the number of
fully paid and nonassessable Warrant Shares (and such other consideration as may
be deliverable upon exercise of such Warrants) which the Holder may at the time
be entitled to receive upon exercise of such Warrants and payment of the
Exercise Price (as defined below) then in effect for such Warrant Shares. No
adjustments as to dividends will be made upon exercise of the Warrants, except
as otherwise expressly provided herein.
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<PAGE> 3
The price at which each Warrant shall be exercisable (the "Exercise
Price") shall initially be $0.50 per share, subject to adjustment pursuant to
the terms hereof.
The Company and the Purchasers hereby agree (A) that the issuance of
the Warrants to the Purchasers will be subject to section 83 of the Internal
Revenue Code of 1986, as amended (the "Code"), and section 1.83-7 of the
Treasury regulations promulgated thereunder, and, accordingly, that (i) the
receipt of the Warrants will not be a taxable event and (ii) the exercise of the
Warrant will be a taxable event, and (B) unless otherwise required by a final
"determination" as such term is defined under section 1313(a) of the Code, to
treat the issuance and exercise of the Warrants for United States Federal and
state income and other tax purposes on a basis consistent with the tax treatment
of the Warrants as described in the immediately preceding clause (A).
A Warrant may be exercised by surrender to the Company at its office
designated for such purpose (as provided for in Section 13 hereof) of the
Warrant Certificate or Certificates to be exercised, with the form of election
to purchase attached thereto duly filled in and signed, and by payment to the
Company of the Exercise Price for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made by one of the following methods or any combination thereof: (a) by
delivering to the Company the aggregate Exercise Price in cash or by certified
or official bank check payable to the order of the Company, or (b) by deducting
from the number of Warrant Shares to be received by the exercising Holder that
number of Warrant Shares which has an aggregate Specified Value (as defined
below) on the date of exercise equal to the aggregate Exercise Price for all
Warrant Shares as to which the Warrant is then being exercised ("Net Exercise").
Subject to the provisions of Section 6 hereof, upon such surrender of
Warrant Certificates and payment of the Exercise Price, the Company shall issue
and cause to be delivered, as promptly as practicable, to or upon the written
order of the Holder and in such name or names as such Holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants (and such other consideration as may be
deliverable upon exercise of such Warrants) together with cash for any
fractional Warrant Share as provided in Section 11 hereof. The certificate or
certificates for such Warrant Shares shall be deemed to have been issued, and
the Person (as defined below) so named therein shall be deemed to have become a
holder of record of such Warrant Shares, as of the date of the surrender of such
Warrants and payment of the Exercise Price, irrespective of the date of delivery
of such certificate or certificates for Warrant Shares. A "Person" includes any
individual, partnership, corporation, limited liability company, trust or
unincorporated organization or a government or agency or political subdivision
thereof.
Each Warrant shall be exercisable, at the election of the Holder
thereof, either in full or from time to time in part and, in the event that a
Warrant Certificate is exercised
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<PAGE> 4
in respect of fewer than all of the Warrant Shares issuable on such exercise at
any time prior to the date of expiration of the Warrants, a new Warrant
Certificate evidencing the remaining Warrant or Warrants will be issued and
delivered pursuant to the provisions of this Section and of Section 2 hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Holders during normal business hours at its office.
Upon exercise of the Warrant in accordance with the terms hereof, the
holder of Warrant Shares issued upon such exercise shall be entitled to become a
party to that certain Shareholders Agreement, dated as of July 30, 1999, by and
among the Company and the Company's shareholders party thereto (the
"Shareholders Agreement") in accordance with the terms thereof, and, in such
event, shall be subject to, and entitled to the benefits of, the provisions
thereof.
SECTION 6. Payment of Taxes. The Company will pay all documentary stamp
taxes and other governmental charges (excluding all Federal, state or foreign
income, franchise, intangibles, property, estate, inheritance, gift or similar
taxes) imposed in connection with the issuance or delivery of the Warrants
hereunder, as well as all such taxes attributable to the initial issuance or
delivery of Warrant Shares upon the exercise of Warrants and payment of the
Exercise Price. The Company shall not, however, be required to pay any tax that
may be payable in respect of any subsequent transfer of the Warrants or any
transfer involved in the issuance and delivery of Warrant Shares in a name other
than that in which the Warrants to which such issuance relates were registered,
and, if any such tax would otherwise be payable by the Company, no such issuance
or delivery shall be made unless and until the Person requesting such issuance
has paid to the Company the amount of any such tax, or it is established to the
reasonable satisfaction of the Company that any such tax has been paid.
SECTION 7. Mutilated or Missing Warrant Certificates. If a mutilated
Warrant Certificate is surrendered to the Company, or if the Holder of a Warrant
Certificate claims and submits an affidavit or other evidence satisfactory to
the Company to the effect that the Warrant Certificate has been lost, destroyed
or wrongfully taken, the Company shall issue a replacement Warrant Certificate.
If required by the Company such Holder must provide an indemnity bond, or other
form of indemnity, sufficient in the judgment of the Company to protect the
Company from any loss which it may suffer if a Warrant Certificate is replaced.
If any Purchaser or any other institutional Holder (or nominee thereof) is the
owner of any such lost, stolen or destroyed Warrant Certificate, then the
affidavit of an authorized officer of such owner, setting forth the fact of
loss, theft or destruction and of its ownership of the Warrant Certificate at
the time of such loss, theft or destruction shall be accepted as satisfactory
evidence thereof and no further
4
<PAGE> 5
indemnity shall be required as a condition to the execution and delivery of a
new Warrant Certificate other than the unsecured written agreement of such owner
to indemnify the Company or, at the option of such Purchaser or other
institutional Holder, an indemnity bond in the amount of the Specified Value (as
defined in Section 9(f) hereof) of the Warrant Shares for which such Warrant
Certificate was exercisable.
SECTION 8. Reservation of Warrant Shares. The Company shall at all
times reserve and keep available, free from preemptive rights (except as
otherwise provided in the Shareholders Agreement), out of the aggregate of its
authorized but unissued Common Stock or its authorized and issued Common Stock
held in its treasury, for the purpose of enabling it to satisfy any obligation
to issue Warrant Shares upon exercise of Warrants, the maximum number of shares
of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
The Company or, if appointed, the transfer agent for the Common Stock
and each transfer agent for any and all other equity securities of the Company
(the "Capital Stock") issuable upon the exercise of any of the Warrants
(collectively, the "Transfer Agent") will be irrevocably authorized and directed
at all times to reserve such number of authorized shares as shall be required
for such purpose. The Company shall keep a copy of this Agreement on file with
any such Transfer Agent. The Company will supply any such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise make
available all other consideration that may be deliverable to the Holders upon
exercise of the Warrants. The Company will furnish any such Transfer Agent a
copy of all notices of adjustments and certificates related thereto, transmitted
to each Holder pursuant to Section 12 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 9 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
The Company covenants that all Warrant Shares and other Capital Stock
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue thereof, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights (except as may be granted by the
Shareholders Agreement) and free, subject to Section 6 hereof, from all taxes,
liens, charges and security interests with respect to the issue thereof.
SECTION 9. Adjustment of Exercise Price and Warrant Number. The number
of shares of Common Stock issuable upon the exercise of each Warrant (the
"Warrant Number") is initially one, and the initial number of Warrant Shares is
1,800,000. The
5
<PAGE> 6
Warrant Number is subject to adjustment from time to time upon each occurrence
of an event described in, or as otherwise provided in, this Section 9.
(a) Adjustment for Change in Capital Stock
If the Company hereafter:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides or reclassifies its outstanding shares of Common Stock
into a greater number of shares;
(3) combines or reclassifies its outstanding shares of Common Stock
into a smaller number of shares;
(4) makes a distribution on Common Stock in shares of its Capital Stock
other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of its
Capital Stock (other than reclassifications arising solely as a result of a
change in the par value or no par value of the Common Stock); then the Warrant
Number in effect immediately prior to such action shall be proportionately
adjusted so that the Holder of any Warrant thereafter exercised may receive the
aggregate number and kind of shares of Capital Stock of the Company which it
would have owned immediately following such action if such Warrant had been
exercised immediately prior to such action.
The adjustment shall be determined as of the record date in the case of
a dividend or distribution and upon the effective date in the case of a
subdivision, combination or reclassification and shall be effective
simultaneously with the consummation of any such action.
Such adjustment shall be made successively whenever any event listed
above shall occur. If the occurrence of any event listed above results in an
adjustment under subsection (b) below or a distribution under Section 10 hereof,
no further adjustment shall be made under this subsection (a).
The Company shall not issue shares of Common Stock as a dividend or
distribution on any class of Capital Stock other than Common Stock unless the
Holders also receive such dividend or distribution on a ratable basis or the
appropriate adjustment to the Warrant Number is made under this Section 9.
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<PAGE> 7
(b) Adjustment for Rights Issue
If the Company hereafter distributes (without receipt of consideration
therefor) any rights, options or warrants (whether or not immediately
exercisable) to all holders of any class of its Common Stock entitling them to
purchase shares of Common Stock at a price per share less than the Specified
Value (as defined in subsection 9(f) hereof) per share on the record date
relating to such distribution, the Warrant Number shall be adjusted in
accordance with the formula:
W' = W x O + N
---------
O + N x P
-----
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record date for any
such distribution.
O = the number of shares of Common Stock outstanding on the record
date for any such distribution.
N = the number of additional shares of Common Stock issuable upon
exercise of such rights, options or warrants.
P = the exercise price per share of such rights, options or warrants.
M = the Specified Value per share of Common Stock on the record date
for any such distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are so issued. Such adjustments shall be determined as of
the record date for the determination of stockholders entitled to receive the
rights, options or warrants and shall become effective simultaneously with the
issuance of such rights, options or warrants. If at the end of the period during
which such rights, options or warrants are exercisable, not all rights, options
or warrants shall have been exercised, the adjusted Warrant Number shall be
immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares actually issued upon exercise of those rights,
options or warrants. If any such rights, options, or warrants are subsequently
amended to reduce the purchase price per share of Common Stock upon exercise of
such rights, options, or warrants, such amendment will be treated as a
distribution of such rights, options, or warrants subject to this subsection
9(b).
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<PAGE> 8
(c) Adjustment for Redemptions
If the Company hereafter redeems any shares of Common Stock for
consideration per share more than the Specified Value per share, on the date the
Company fixes the redemption price of such shares, the Warrant Number shall be
adjusted in accordance with the formula:
P
-
W' = W x O + M
-----
A
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such issuance.
O = the number of shares of Common Stock outstanding immediately after
the redemption of the shares of Common Stock.
P = the aggregate consideration provided for the redemption of such
shares of Common Stock.
M = the Specified Value per share of Common Stock on the date of the
redemption.
A = the number of shares of Common Stock outstanding immediately prior
to the redemption of the Common Stock.
The adjustment shall be made successively whenever any such redemption
is made, and shall become effective immediately after such redemption. Such
adjustments shall be determined as of the date on which the Company fixes the
redemption price and shall become effective simultaneously with such redemption.
This subsection (c) does not apply to any of the transactions described
in subsection (a) of this Section 9.
(d) Adjustment for Common Stock Issue
If the Company hereafter issues shares of Common Stock (other than the
issuance of (i) shares of Common Stock upon exercise of (A) performance options
that may be granted by the Company with respect to 4,340,749 shares of Common
Stock (the "Performance Options") and (B) awards granted pursuant to the
Company's 1999 Stock
8
<PAGE> 9
Option Plan with respect to 7,017,543 shares of Common Stock (the "Plan Awards")
and (ii) Class A Common (as defined below) to Mills & Partners, Inc. in
connection with an acquisition of all or substantially all of another business
in the plastic injection molding industry (a "Mills Issuance")) for a
consideration per share (determined in accordance with subsection 9(g)) less
than the Specified Value per share, on the date the Company fixes the offering
price of such additional shares, the Warrant Number shall be adjusted in
accordance with the formula:
W' = W x A
-----
O + P
-
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such issuance.
O = the number of shares of Common Stock outstanding immediately prior
to the issuance of such additional shares of Common Stock.
P = the aggregate consideration received for the issuance of such
additional shares of Common Stock.
M = the Specified Value per share of Common Stock on the date of
issuance of such additional shares.
A = the number of shares of Common Stock outstanding immediately after
the issuance of such additional shares of Common Stock.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to any of the transactions described
in subsection (a) of this Section 9.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is, at the date of determination, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person or (ii) a partnership in
which such Person or a Subsidiary of such Person is, at the date of
determination, a general or limited partner of such partnership, but, in the
case of a limited partner, only if such Person or its Subsidiary is entitled to
receive more than 50% of the assets of such partnership upon its dissolution, or
(iii) any limited liability
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<PAGE> 10
company or any other Person (other than a corporation or a partnership) in which
such Person, a Subsidiary of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination, has (a) at least a majority ownership interest or (b) the power
to elect or direct the election of a majority of the directors or other
governing body of such Person.
Notwithstanding anything to the contrary herein and regardless of
whether the consideration per share is equal to or greater than the Specified
Value on the date the Company fixed the offering price for such shares, in the
event any PIK Securities (as defined below) are ever exercised or converted by
the holder thereof, the Warrant Number on the date of such exercise or
conversion shall be adjusted pursuant to this subsection 9(d) by applying the
formula set forth above, except that any interest or dividends paid in kind or
any consideration paid with interest or dividends paid in kind shall be excluded
from the calculation of "P" and "M". The term "PIK Securities" means any
securities issued by the Company which are convertible into or exchangeable or
exercisable for shares of Common Stock and which provide for payment of interest
or dividends in kind or permit the payment of the exercise price of any option,
warrant or other convertible security with interest or dividends paid in kind.
(e) Adjustment for Convertible Securities Issue
If the Company hereafter issues any options, warrants or other
securities convertible into or exchangeable or exercisable for Common Stock
(other than (i) securities issued in transactions described in subsection 9(b),
and (ii) issuances of (A) Performance Options, (B) Plan Awards, and (C) Mills
Issuances) for an aggregate consideration per share of Common Stock (determined
in accordance with clause (3) of subsection 9(g)) initially deliverable upon
conversion, exchange or exercise of such securities less than the Specified
Value per share on the date of issuance of such options, warrants or other
securities, the Warrant Number shall be adjusted in accordance with the
following formula:
W' = W x O + D
-----
O + P
-
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such issuance.
O = the number of shares of Common Stock outstanding immediately prior
to the issuance of such securities.
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<PAGE> 11
P = the sum of the aggregate consideration received for the
issuance of such securities and the aggregate minimum
consideration receivable by the Company for issuance of Common
Stock upon conversion or in exchange for, or upon exercise of,
such securities.
M = the Specified Value per share of Common Stock on the date of
issuance of such securities.
D = the maximum number of shares of Common Stock deliverable
upon conversion or in exchange for or upon exercise of such
securities at the initial conversion, exchange or exercise
rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance. If any such
options, warrants, or other securities convertible into or exchangeable for
Common Stock are subsequently amended to reduce the aggregate consideration per
share of Common Stock upon conversion, exchange or exercise of such options,
warrants, or securities, such amendment will be treated as an issuance of such
rights, options, or warrants subject to this subsection 9(e).
If all of the Common Stock deliverable upon conversion, exchange or
exercise of such options, warrants or other securities has not been issued when
the conversion, exchange or exercise rights of such options, warrants or other
securities have expired, become permanently unexercisable or been terminated,
then the adjusted Warrant Number shall promptly be readjusted to the adjusted
Warrant Number which would then be in effect had the adjustment upon the
issuance of such options, warrants or other securities been made on the basis of
the actual number of shares of Common Stock issued upon conversion, exchange or
exercise of such options, warrants or other securities. If the aggregate minimum
consideration receivable by the Company for issuance of Common Stock upon
conversion or in exchange for, or upon exercise of, such options, warrants or
other securities shall be increased by virtue of provisions therein contained or
upon the arrival of a specified date or the happening of a specified event, then
the Warrant Number shall promptly be readjusted to the Warrant Number which
would then be in effect had the adjustment upon the issuance of such options,
warrants or other securities been made on the basis of such increased minimum
consideration.
This subsection (e) does not apply to any issuance of the Warrants or
to any of the transactions described in subsection 9(b).
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<PAGE> 12
(f) Specified Value
"Specified Value" per share of Common Stock or of any other security
(herein collectively referred to as a "Security") at any date shall be:
(1) if the Security is not registered under the Act, the value of the
Security determined in good faith by the Board of Directors of the Company and
certified in a board resolution adopted by the Board of Directors, or
(2) if the Security is registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the average of the daily market prices
(as defined below) for each day that is not a Legal Holiday (as defined below)
(a "Business Day") during the period commencing 30 Business Days before such
date and ending on the date one Business Day prior to such date or, if the
Security has been registered under the Exchange Act for less than 30 consecutive
Business Days before such date, then the average of the daily market prices (as
defined below) for all of the Business Days before such date for which daily
market prices are available. If the market price is not determinable for at
least 15 Business Days in such period, the Specified Value of the Security shall
be determined as if the Security was not registered under the Exchange Act. A
"Legal Holiday" is any Saturday, Sunday or day on which banks and trust
companies in the principal place of business of the Company or in New York are
not required to be open.
The "market price" for any Security on each Business Day means: (A) if
such Security is listed or admitted to trading on any securities exchange, the
closing price, regular way, on such day on the principal exchange on which such
Security is traded, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day or (B) if such Security is not then
listed or admitted to trading on any securities exchange, the last reported sale
price on such day, or if there is no such last reported sale price on such day,
the average of the closing bid and the asked prices on such day, as reported by
a reputable quotation source designated by the Company. If there are no such
prices on a Business Day, then the market price shall not be determinable for
such Business Day.
In the case of Common Stock, if more than one class of Common Stock is
outstanding, the "Specified Value" shall be the Specified Value per share of the
class or classes of Common Stock to which compensation is apportioned.
(g) Consideration Received
For purposes of any computation respecting consideration received
pursuant to subsections (c), (d) and (e) of this Section 9, the following shall
apply:
(1) in the case of the issuance or redemption of shares of Common Stock
for cash, the consideration shall be the amount of such cash (without any
deduction being
12
<PAGE> 13
made for any commissions, discounts or other expenses incurred by the Company
for any underwriting of the issue or otherwise in connection therewith);
(2) in the case of the issuance or redemption of shares of Common Stock
for a consideration in whole or in part other than cash, the value of the
consideration other than cash shall be determined in the same manner as
Specified Value is determined in subsection 9(f); and
(3) in the case of the issuance of options, warrants or other
securities convertible into or exchangeable or exercisable for shares of Common
Stock, the aggregate consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such options, warrants
or other securities plus the additional minimum consideration, if any, to be
received by the Company upon the conversion, exchange or exercise thereof (the
consideration in each case to be determined in the same manner as provided in
clauses (1) and (2) of this subsection(g)).
(h) When De Minimis Adjustment May Be Deferred
No adjustment in the Warrant Number need be made unless the adjustment
would require an increase or decrease of at least 1.0% in the Warrant Number.
Any adjustment that is not so made shall be carried forward and taken into
account in any subsequent adjustment; provided that no such adjustment as to a
particular Warrant shall be deferred beyond the date on which that Warrant is
exercised.
All calculations under this Section 9 shall be made to the nearest
1/100th of a share.
(i) Adjustment to Exercise Price
Upon each adjustment to the Warrant Number pursuant to this Section 9,
the Exercise Price shall be adjusted so that it is equal to (i) the Exercise
Price in effect immediately prior to such adjustment, multiplied by (ii) a
quotient, the numerator of which is the Warrant Number in effect immediately
prior to such adjustment, and the denominator of which is the Warrant Number in
effect immediately after such adjustment.
(j) When No Adjustment Required
If an adjustment is made upon the establishment of a record date for a
distribution subject to subsection (a) or (1)) hereof or a redemption subject to
subsection (c) hereof and such distribution or redemption is subsequently
cancelled, the Warrant Number and the Exercise Price then in effect shall be
readjusted, effective as of the date when the Board of Directors determines to
cancel such distribution or redemption, to that which
13
<PAGE> 14
would have been in effect if such record date for such distribution or
redemption had not been fixed.
No readjustment under this Section 9 to reverse or amend an adjustment
made under this Section 9 may have the effect of decreasing the Warrant Number
or increasing the Exercise Price in excess of the amount of the increase in the
Warrant Number or decrease in the Exercise Price effected by the adjustment
being reversed or amended.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the amount of cash into which such Warrants are
exercisable. Interest will not accrue on the cash.
(k) Notice of Adjustment
Whenever the Warrant Number and the Exercise Price is adjusted, the
Company shall provide the notices required by Section 12 hereof.
(l) Reorganizations
In case of any capital reorganization or reclassification of the
Capital Stock of the Company (other than in the cases referred to in subsections
9(a), (b), (c), (d) or (e) of this Section 9 other than a change in par value
without a change in the number of shares), the consolidation or merger of the
Company with or into another corporation or other entity (other than a merger or
consolidation in which the Company is the continuing corporation and which does
not result in any reclassification of the outstanding shares of Common Stock
into shares of other stock or other securities or property of any other Person),
or the sale of the property of the Company as an entirety or substantially as an
entirety (collectively, such actions being hereinafter referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise of any
Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the kind and number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization if such Warrant had been exercised in
full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a duly adopted resolution
certified by the Company's Secretary or Assistant Secretary, shall be made in
the application of the provisions herein set forth with respect to the rights
and interests of Holders so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than
14
<PAGE> 15
the Company) or other entity resulting from such Reorganization or the
corporation purchasing or leasing such assets or other appropriate corporation
or entity shall expressly assume, by a supplemental Warrant Agreement or other
acknowledgment satisfactory to the Holders executed and delivered to the
Holders, the obligation to deliver to each such Holder such shares of stock or
other securities or property as, in accordance with the foregoing provisions,
such Holder may be entitled to purchase, and all other obligations and
liabilities under this Agreement.
(m) Form of Certificates
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, the Warrant
Certificates theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrant Certificates
initially issuable pursuant to this Agreement.
(n) Other Dilutive Events
In case any event shall occur as to which the provisions of this
Section 9 are not strictly applicable, but the failure to make any adjustment
would not fairly protect the purchase rights represented by the Warrants in
accordance with the essential intent and principles of this Section 9, then, in
each such case, the Company shall make a good faith adjustment to the Exercise
Price and the Warrant Number in accordance with the intent of this Section 9
and, upon the written request of the holders of a majority of the Warrants,
shall appoint a firm of independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company), which
shall give their opinion upon the adjustment, if any, on a basis consistent with
the essential intent and principles established in this Section 9, necessary to
preserve, without dilution, the purchase rights represented by these Warrants.
Upon receipt of such opinion, the Company shall promptly mail a copy thereof to
the Holder of each Warrant and shall make the adjustments described therein.
(o) Miscellaneous
For the purpose of this Section 9, the term "shares of Common Stock"
shall mean (i) shares of any class of stock designated as Common Stock of the
Company as of the date of this Agreement, (ii) shares of any other class of
stock resulting from successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value and (iii) shares of Common Stock of the Company
or options, warrants or rights to purchase Common Stock of the Company or
securities convertible into or exchangeable for shares of Common Stock of the
Company outstanding on the date hereof and shares of Common Stock of the Company
issued upon exercise, conversion or exchange of such options,
15
<PAGE> 16
warrants, rights or securities. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9, the Holders of Warrants shall become
entitled to purchase any securities of the Company other than, or in addition
to, shares of Common Stock, thereafter the number or amount of such other
securities so purchasable upon exercise of each Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
subsections (a) through (n) of this Section 9, inclusive, and the provisions of
Sections 5, 6, 8 and 11 with respect to the Warrant Shares or the Common Stock
shall apply on like terms to any such other securities.
SECTION 10. Required Distributions. The Company shall not declare, make
or pay any dividend or otherwise distribute to all holders of any class of its
Common Stock (i) any evidences of indebtedness of the Company or any of its
Subsidiaries, (ii) any assets of the Company or any of its Subsidiaries, or
(iii) to the extent an adjustment to the Warrant Number is not required pursuant
to the provisions of Section 9, any rights, options or warrants to acquire any
of the foregoing or to acquire any other securities of the Company or any of its
Subsidiaries, unless it concurrently makes a cash payment to the holders of the
Warrants equal to (x) the amount of cash or the fair market value (as determined
in good faith by the Board of Directors) of any assets or securities distributed
with respect to each outstanding share of Common Stock, multiplied by (y) the
number of shares of Common Stock then issuable upon exercise of the Warrants.
SECTION 11. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares 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 Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 11,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company may pay (in lieu of the fractional Warrant Share) an amount in cash
equal to the Specified Value of a Warrant Share (determined in accordance with
subsection 9(f) hereof), multiplied by such fraction.
SECTION 12. Notices to Warrant Holders.
(a) Upon any adjustment pursuant to Section 9 hereof, the Company shall
promptly thereafter (i) cause to be prepared and maintained in the records of
the Company a certificate of an officer of the Company setting forth the Warrant
Number and Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based, and (ii) cause to be given to each of the Holders at its address
appearing on the Warrant Register written notice of such adjustments in
accordance with the provisions of Section 13 hereof.
16
<PAGE> 17
Where appropriate, such notice may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this Section 12.
(b) In addition, in case:
(i) the Company shall authorize the issuance
to all holders of shares of Common Stock, rights, options or warrants
to subscribe for or purchase shares of Common Stock, any other
subscription rights or warrants;
(ii) the Company shall authorize the
distribution to all holders of shares of Common Stock of assets,
including cash, evidences of its indebtedness, or other securities;
(iii) of any consolidation or merger to which
the Company is a party and for which approval of any shareholders of
the Company is required, or of the conveyance or transfer of the
properties and assets of the Company as an entirety or substantially as
an entirety, or of any reclassification or change of Common Stock
issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or a tender
offer or exchange offer for shares of Common Stock;
(iv) of the voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
(v) the Company proposes to take any action
that would require an adjustment to the Warrant Number or the Exercise
Price pursuant to Section 9 hereof; or
(vi) the Company proposes to take any action
which would give rise to the preemptive rights as specified in the
Shareholders Agreement;
then the Company shall cause to be given to each of the Holders at its address
appearing on the Warrant Register, at least 10 days prior to the applicable
record date hereinafter specified, or to the date of the event in the case of
events for which there is no record date, in accordance with the provisions of
Section 13 hereof, a written notice stating (x) the date as of which the holders
of record of shares of Common Stock to be entitled to receive any such rights,
options, warrants or distribution are to be determined, or (y) the initial
expiration date set forth in any tender offer or exchange offer for shares of
Common Stock, or (z) the date on which any such consolidation, merger,
conveyance,
17
<PAGE> 18
transfer, dissolution, liquidation or winding up is expected to become effective
or consummated, and the date as of which it is expected that holders of record
of shares of Common Stock shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 12, or any defect
therein, shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any Warrant Certificate shall
be construed as conferring upon the Holders (prior to the exercise of such
Warrants) the right to vote or to consent or to receive notice as shareholder in
respect of the meetings of shareholders or the election of directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company; provided, however, that nothing in the foregoing provision is intended
to detract from any rights explicitly granted to any Holder hereunder.
(c) Within 5 Business Days following the filing by the Company of a
registration statement with the Securities and Exchange Commission in connection
with a Qualified IPO (as defined in the Shareholders Agreement), the Company
shall deliver to each Holder at its address appearing on the Warrant Register a
written notice of such filing (a "Qualified IPO Notice"). The Qualified IPO
Notice shall set forth a statement that the Company intends to consummate a
Qualified IPO and the Company's good faith estimate of the anticipated effective
date of the applicable registration statement.
(d) With 5 Business Days following the execution by the Company of a
definitive agreement in connection with a Sale of the Company (as defined
below), the Company shall deliver to each Holder at its address appearing on the
Warrant Register a written notice of such event (a "Sale of the Company
Notice"). The Sale of the Company Notice shall set forth a statement that the
Company intends to consummate a Sale of the Company and the anticipated closing
date thereof. Notwithstanding the foregoing, if the date of execution of such
definitive agreements is expected in good faith by the Company to be the same
date as the closing date, the Company shall provide a Sale of the Company Notice
to each Holder at least 10 Business Days prior such expected date.
As used herein, a "Sale of the Company" means the sale of all or
substantially all of the Company's assets or Capital Stock (whether by merger,
consolidation or otherwise) to any other Person.
SECTION 13. Address for Notices to the Company and Warrant Holders. All
notices and other communications provided for or permitted hereunder shall be
made
18
<PAGE> 19
by hand-delivery, first-class mail, telex, telecopier, or reputable overnight
air courier promising next day delivery:
(a) if to Purchasers, at TCW/Crescent Mezzanine, L.L.C., 11100 Santa
Monica Blvd., Suite 2000, Los Angeles, California 90025, Telecopy No.
(310)235-5967, Attention: Jean Marc Chapus, with a copy to TCW/Crescent
Mezzanine, L.L.C., at 200 Crescent Court, Suite 1600, Dallas, Texas 75201,
Attention: Timothy P. Costello and to Skadden, Arps, Slate, Meagher & Flom LLP,
at 300 South Grand Avenue, 34th Floor, Los Angeles, California 90071, Telecopy
No. (213) 687-5600, Attention: Jonathan Friedman, Esq.; and
(b) if to the Company, at 101 South Hanley Road, Suite 400, St. Louis,
Missouri 63105, Telecopy No. (314) 746-2251, Attention: General Counsel, with a
copy to Weil, Gotshal & Manges LLP, at 100 Crescent Court, Suite 1300, Dallas,
Texas 75201, Telecopy No. (214) 746-7777, Attention: R. Scott Cohen, Esq.
All such notices and communications shall be deemed to have been duly
given:
at the time delivered by hand or by local courier, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back if telexed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery. A Person may change the addresses to
which notices are to be given by giving five days' prior written notice of such
change in accordance with this Section 13.
SECTION 14. Certain Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval of any
Holders in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions in regard to matters or questions
arising hereunder which the Company may deem necessary or desirable; provided
that any such supplement or amendment shall not in any way adversely affect the
rights or interests of the Holders.
SECTION 15. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its successors and permitted assigns hereunder.
SECTION 16. Termination. The Holders' rights to exercise the Warrants
shall terminate upon the earlier of (i) exercise of all Warrants pursuant to
this Agreement, (ii) consummation of a Qualified IPO and (iii) the tenth
anniversary of the date hereof.
19
<PAGE> 20
SECTION 17. Governing Law: Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois, without regard to principles of conflicts of laws thereof.
SECTION 18. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company and the Holders any
legal or equitable right, remedy or claim under this Agreement. This Agreement
shall be for the sole and exclusive benefit of the Company and the Holders
(including holders of Warrant Shares).
SECTION 19. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 20. Amendments and Waivers. Subject to Section 14, no provision
of this Agreement may be amended or waived except by an instrument in writing
signed by the party sought to be bound; provided that any amendment or waiver
sought from the Holders (including holders of Warrant Shares) of any provision
of this Agreement which affects Holders or holders of Warrant Shares generally
shall be given by Holders of at least a majority of the Warrants outstanding
(or, in the case of amendments or waivers affecting holders of Warrant Shares
generally, by holders of at least a majority of the Warrants and Warrant Shares,
taken as one class), with each Warrant (and each Warrant Share) representing the
right to one vote and any amendment or waiver so given shall be binding on all
Holders (including holders of Warrant Shares). No failure or delay by any party
in exercising any right or remedy hereunder shall operate as a waiver thereof,
and a waiver of a particular right or remedy on one occasion shall not be deemed
a waiver of any other right or remedy or a waiver of the same right or remedy on
any subsequent occasion.
SECTION 21. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Purchasers as follows:
(a) The Company has taken all actions necessary to authorize it (i) to
execute, deliver and perform all of its obligations under this Agreement and the
Shareholders Agreement, (ii) to issue and perform all of its obligations under
the Warrants and (iii) to consummate the transactions contemplated hereby and
thereby. Each of this Agreement, the Warrants and the Shareholders Agreement is
a legally valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except for (a) the effect thereon of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally and (b) limitations imposed by
equitable principles upon the specific enforceability of any
20
<PAGE> 21
of the remedies, covenants or other provisions thereof and upon the availability
of injunctive relief or other equitable remedies.
(b) The recapitalization of the Company and the other transactions
contemplated thereby (the "Recapitalization"), as more fully described in the
Recapitalization Agreement, dated as of July 13, 1999 (the "Recapitalization
Agreement"), and the other documents contemplated thereby, has been duly
consummated in accordance with the terms of the Recapitalization Agreement
without amendment or waiver of any material term or provision thereof. True and
correct copies of the Recapitalization Agreement have been delivered to the
Purchaser's counsel. The Company and its Affiliates are not in default under the
Recapitalization Agreement or under any instrument or document required or
contemplated to be delivered in connection therewith. All of the transactions
engaged in by the Company and its Affiliates as part of the Recapitalization
were legal and valid and in compliance with all applicable laws.
(c) The Company's only Subsidiaries are Courtesy Corporation, an
Illinois corporation, Creative Packing Corp., an Illinois corporation, and
Courtesy Sales Corp., an Illinois corporation. The total authorized Capital
Stock of the Company consists of 450 million shares of Common Stock, of which 42
million shares are issued and outstanding, (ii) 50 million shares of Class A
Common Stock, par value $0.01 per share (the "Class A Common"), of which
13,333,333 shares are issued and outstanding, and (iii) 100 million shares of
preferred stock, par value $0.01 per share, of which 78 million shares have been
designated the Series A Convertible Preferred Stock ("Series A Preferred") and
are issued and outstanding.
(d) All of the outstanding shares of Capital Stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
have not been issued in violation of, and are not subject to, any preemptive or
similar rights, other than those contemplated in the Shareholders Agreement. In
addition, other than the Class A Common and the Series A Preferred and any
agreements provided for herein or in the Shareholders Agreement, there are no
outstanding (i) securities convertible into or exchangeable for any Capital
Stock, (ii) options, warrants or other rights to purchase or subscribe to
Capital Stock or securities convertible into or exchangeable for Capital Stock,
(iii) contracts, commitments, agreements, understandings, arrangements, calls or
claims of any kind relating to the issuance of any Capital Stock, any such
convertible or exchangeable securities or any such options, warrants or rights
or (iv) voting trusts, agreements, contracts, commitments, understandings or
arrangements with respect to the voting of any of the Capital Stock.
(e) The Warrant, when issued and delivered in accordance with the terms
hereof, will be duly authorized and validly issued, and the Warrant Shares
issuable upon the exercise of the Warrants, when issued pursuant to the terms
hereof and upon
21
<PAGE> 22
payment of the Exercise Price, will have been duly authorized and validly
issued, will be fully paid and nonassessable and will not be issued in violation
of, and will not be subject to, any preemptive or similar rights, other than
those contemplated in the Shareholders Agreement.
(f) No form of solicitation or general advertising was used by the
Company or its representatives in connection with the offer or sale of the
Warrants to the Warrant Shares. No registration of the Warrants or the Warrant
Shares pursuant to the provisions of the Act or the state securities "blue sky"
laws of any state will be required by the offer, sale or issuance of the
Warrants or the Warrant Shares pursuant to this Agreement. The Company agrees
that neither it, nor anyone acting on its behalf, will offer or sell Warrants or
Warrant Shares or any other security so as to require the registration of such
Warrants or Warrant Shares pursuant to the provisions of the Act or any state
securities "blue sky" laws, unless such Warrants or Warrant Shares are so
registered.
SECTION 22. Representations and Warranties of the Purchasers. Each of
the Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
(a) The Purchaser is purchasing Warrants with its own funds for its own
account, and not as a nominee or agent for any other person, for investment and
not with a view to, or for resale in connection with, a public offering or
distribution thereof in any transaction that would be in violation of the
federal securities laws, and it has no present intention of selling, granting
participations in, or otherwise distributing Warrants or any Warrant Shares.
(b) The Purchaser understands that the Warrants being issued hereunder
and the Warrant Shares are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and have not been registered under
the Act nor qualified under applicable state securities laws and that under such
laws and applicable regulations such securities may not be resold without
registration under the Act, except in certain limited circumstances. In this
connection, each Purchaser represents that it is familiar with Rule 144
promulgated under the Act, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
(c) The Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Act.
(d) The Purchaser represents that it can bear the economic risk of its
investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of an investment
in Warrants and Warrant
22
<PAGE> 23
Shares. Each Purchaser also represents it has not been organized solely for the
purpose of acquiring Warrants or Warrant Shares.
(e) The Purchaser acknowledges that it has had the opportunity to
discuss the Company's business, management and financial affairs with the
Company's management and to obtain all information that it believes necessary to
an informed decision to purchase Warrants and Warrant Shares.
SECTION 23. Opinions. In connection with the execution of this
Agreement, the Purchasers shall receive an opinion (in form and substance
satisfactory to the Purchasers and counsel to the Purchasers), dated July 30,
1999, of Katten, Muchin & Zavis in the form of Exhibit B hereto.
[SIGNATURE PAGES FOLLOW]
23
<PAGE> 24
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties set forth below as of the date first written above.
LLS CORP.
By:/S/ WESLEY D. DEHAVEN
------------------------------------------------
Name: Wesley D. DeHaven
Title: Vice President-Finance
24
<PAGE> 25
PURCHASERS:
TCW/CRESCENT MEZZANINE PARTNERS II, L.P.
TCW/CRESCENT MEZZANINE TRUST II
By: TCW/Crescent Mezzanine II, L.P.,
as general partner or managing owner
By: TCW/Crescent Mezzanine, L.L.C.,
its general partner
By: /S/ JOHN C. RICCHIO
----------------------------
Name: John C. Ricchio
Title: Managing Director
Address for Notices:
c/o TCW/Crescent Mezzanine, L.L.C.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Timothy P. Costello
Phone: 214/740-7348
Fax: 214/740-7382
25
<PAGE> 26
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisors (Bermuda), Limited,
as general partner
By: /s/ ROBERT D. BEYER
----------------------------
Name: Robert D. Beyer
Title: Group Managing Director
By: TCW Investment Management Company,
as Investment Advisor
By: /s/ JOHN C. RICCHIO
----------------------------
Name: John C. Ricchio
Title: Managing Director
Address for Notices:
c/o TCW/Crescent Mezzanine, L.L.C.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Timothy P. Costello
Phone: 214/740-7348
Fax: 214/740-7382
26
<PAGE> 27
TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW (LINC II), L.P.,
as general partner
By: TCW Advisors (Bermuda), Ltd.,
as general partner
By: /s/ ROBERT D. BEYER
----------------------------
Name: Robert D. Beyer
Title: Group Managing Director
By: TCW Investment Management Company,
as Investment Advisor
By: /s/ JOHN C. RICCHIO
----------------------------
Name: John C. Ricchio
Title: Managing Director
Address for Notices:
c/o TCW/Crescent Mezzanine, L.L.C.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Timothy P. Costello
Phone: 214/740-7348
Fax: 214/740-7382
27
<PAGE> 28
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Investment Management Company,
its Investment Advisor
By: /s/ ROBERT D. BEYER
----------------------------
Name: Robert D. Beyer
Title: Group Managing Director
By: /s/ JOHN C. RICCHIO
----------------------------
Name: John C. Ricchio
Title: Managing Director
Address for Notices:
c/o TCW/Crescent Mezzanine, L.L.C.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Timothy P. Costello
Phone: 214/740-7348
Fax: 214/740-7382
28
<PAGE> 29
TCW SHARED OPPORTUNITY FUND III, L.P.
By: TCW (SHOP III), L.P.,
as general partner
By: TCW Asset Management Company,
as General Partner
By: /s/ ROBERT D. BEYER
----------------------------
Name: Robert D. Beyer
Title: Group Managing Director
Address for Notices:
c/o TCW/Crescent Mezzanine, L.L.C.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Timothy P. Costello
Phone: 214/740-7348
Fax: 214/740-7382
29
<PAGE> 30
Crescent/MACH I Partners, L.P.
By: TCW Asset Management Company,
as Portfolio Manager and as Attorney-in-Fact for the Partnership
By: /s/ ROBERT D. BEYER
----------------------------
Name: Robert D. Beyer
Title: Group Managing Director
Address for Notices:
c/o TCW/Crescent Mezzanine, L.L.C.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Timothy P. Costello
Phone: 214/740-7348
Fax: 214/740-7382
30
<PAGE> 31
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON JULY 30, 1999 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
WARRANT AGREEMENT DATED AS OF JULY 30, 1999, AMONG THE ISSUER OF SUCH SECURITIES
(THE "COMPANY"), THE PURCHASERS REFERRED TO THEREIN AND THE OTHER PARTIES
THERETO. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED
IN SUCH AGREEMENT AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF
THIS CERTIFICATE UNLESS SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER. A COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
THE SHARES ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF
EACH CLASS AND SERIES OF CAPITAL STOCK OF THE COMPANY SET FORTH IN THE COMPANY'S
ARTICLES OF INCORPORATION. THE COMPANY WILL FURNISH A COPY OF SUCH ARTICLES OF
INCORPORATION TO THE HOLDER OF THIS CERTIFICATE, WITHOUT CHARGE, UPON WRITTEN
REQUEST.
No: _______ ______ Warrants
WARRANT CERTIFICATE
LLS CORP.
This Warrant Certificate certifies that _____________________, or
registered assigns, is the registered holder (the "Holder") of the number of
Warrants (the "Warrants") set forth above to purchase common stock, par value
$0.01 per share (the "Common Stock"), of LLS Corp., an Illinois corporation (the
"Company"). Each Warrant entitles Holder to receive from the Company one fully
paid and nonassessable share of Common Stock (a "Warrant Share"), at the initial
exercise price (the "Exercise Price") of $0.50, payable in lawful money of the
United States of America, upon exercise
A - 1
<PAGE> 32
by surrender of this Warrant Certificate and payment of the Exercise Price at
the office of the Company designated for such purpose, but only subject to the
conditions set forth herein and in the Warrant Agreement referred to
hereinafter. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events, as set forth in the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Agreement dated as of July 30, 1999 (the "Warrant Agreement"), duly
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the Holder
hereof upon written request to the Company.
The Holder may exercise any or all Warrants evidenced by this Warrant
Certificate may exercise such Warrants under and pursuant to the terms and
conditions of the Warrant Agreement by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon (and by this reference
made a part hereof) properly completed and executed, together with payment of
the Exercise Price in cash or by certified or bank check at the office of the
Company designated for such purpose. In the alternative, the Holder may exercise
through a Net Exercise (as defined in the Warrant Agreement) in accordance with
the terms of Section 5 of the Warrant Agreement. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
by the Company to the Holder or its registered assignee a new Warrant
Certificate evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrant Shares issuable upon exercise of a Warrant and the
Exercise Price set forth on the face hereof may, subject to certain conditions,
be adjusted.
Upon exercise of the Warrant in accordance with the terms of the
Warrant Agreement, the Holder will be entitled to become a party to that certain
Shareholders Agreement, dated as of July 30, 1999, by and among the Company and
the Company's shareholders party thereto (the "Shareholders Agreement") and, in
such event, will have certain registration rights and other rights and
obligations with respect to the Warrant Shares as provided therein. Copies of
the Shareholders Agreement may be obtained by the Holder, without charge, upon
written request to the Company.
This Warrant Certificate, when surrendered at the office of the Company
by the Holder in person or by legal representative or attorney duly authorized
in writing, may
A - 2
<PAGE> 33
be exchanged, in the manner and subject to the limitations provided in the
Warrant Agreement, but without payment of any service charge, for another
Warrant Certificate or Warrant Certificates of like tenor evidencing in the
aggregate a like number of Warrants.
Subject to the terms and conditions of the Warrant Agreement, upon due
presentation for registration of transfer of this Warrant Certificate at the
office of the Company a new Warrant Certificate or Warrant Certificates of like
tenor and evidencing in the aggregate a like number of Warrants shall be issued
to the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge (except for any
tax or other governmental charge imposed in connection therewith as described in
the Warrant Agreement).
The Company may deem and treat the Holder as the absolute owner of this
Warrant Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone) for the purpose of any exercise hereof, of any
distribution to the Holder, and for all other purposes, and the Company shall
not be affected by any notice to the contrary. Neither the Warrants nor this
Warrant Certificate entitles the Holder to any rights of a stockholder of the
Company evidenced hereby before exercise of one or more of the Warrants
evidenced hereby.
The Holder, by the acceptance hereof, represents that he, she or it is
acquiring this warrant for his, her or its own account for investment and not
with a view to, or sale in connection with, any distribution in violation of the
Securities Act or of any of the shares of Common Stock or other securities
issuable upon the exercise thereof, nor with any present intention of
distributing any of the same in violation of the Securities Act.
A - 3
<PAGE> 34
IN WITNESS WHEREOF, LLS Corp. has caused this Warrant Certificate to be
signed by its Chairman of the Board, Chief Executive Officer, President or Vice
President.
Dated: July 30, 1999
LLS CORP.
By:
-----------------------------------
Name: Wesley D. DeHaven
Title: Vice President-Finance
A - 4
<PAGE> 35
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED UPON EXERCISE OF WARRANT)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and:
[ ] herewith tenders payment for such shares to the order of LLS Corp.
in the amount of $_______ in accordance with the terms hereof; or
[ ] elects to make a Net Exercise.
The undersigned requests that a certificate for such shares be
registered in the name of ______________ whose address is
___________________________________ and that such name of shares be delivered to
___________________________ whose address is _____________________________.
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_____________________, whose address is _________________________ and that such
Warrant Certificate be delivered to ______________________ whose address is
_____________________________.
Signature(s):
-------------------------------
NOTE: The above signature(s) must
correspond with the name written
upon the face of this Warrant
Certificate in every particular,
without alteration or enlargement
or any change whatever. If this
Warrant is held of record by two or
more joint owners, all such owners
must sign.
Date:
-------------------------
SIGNATURE GUARANTEED*
*NOTICE: The signature must be guaranteed by an institution which is a member of
one of the following recognized signature guarantee program:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP);
(3) The Stock Exchange Medallion Program (SEMP).
A - 5
<PAGE> 36
FORM OF ASSIGNMENT
(To be signed only upon assignment of Warrant Certificate)
FOR VALUE RECEIVED, __________________ hereby sells, assigns and
transfers unto ________________ whose address is ____________________________
and whose social security number or other identifying number is
____________________, the within Warrant Certificate, together with all right,
title and interest therein and to the Warrants represented thereby, and does
hereby irrevocably constitute and appoint __________, attorney, to transfer said
Warrant Certificate on the books of the within-named Company, with full power of
substitution in the premises.
Signature(s):
-------------------------------
NOTE: The above signature(s) must
correspond with the name written
upon the face of this Warrant
Certificate in every particular,
without alteration or enlargement
or any change whatever. If this
Warrant is held of record by two or
more joint owners, all such owners
must sign.
Date:
-----------------------------
SIGNATURE GUARANTEED*
*NOTICE: The signature must be guaranteed by an institution which is a member of
one of the following recognized signature guarantee program:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP)
(3) The Stock Exchange Medallion Program (SEMP).
A - 6
<PAGE> 37
EXHIBIT B
Form of Opinion of Katten, Muchin & Zavis
1. The Company is a corporation duly incorporated, existing
and in good standing under the laws of the State of Illinois. The Company is in
good standing as a foreign corporation in the States of South Carolina and
Wisconsin. The Company has all requisite statutory authority to own, lease and
operate its properties and to carry on its business as now being conducted.
2. The Company has all requisite corporate power and authority
to enter into and perform its obligations under the Documents.
3. The execution, delivery and performance of the Documents
have been duly authorized by all requisite corporate action, and the Documents
have been duly executed and delivered by the Company.
4. Each of the Agreement and the Shareholders Agreement
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
5. The Warrants, when delivered to and paid for by the
Purchasers in accordance with the terms of the Agreement, will constitute the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms and the terms of the Agreement, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
6. Except for any federal or state securities filings, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any Illinois or federal government authority, except for those
already obtained, is required for the execution, delivery and performance by the
Company of the Documents.
7. The Company is not in violation of, or in default under,
its Articles of Incorporation or Bylaws.
8. The execution, delivery and performance of the Documents
will not violate (i) the Articles of Incorporation or Bylaws of the Company,
(ii) any of the terms conditions or provisions of any document, agreement or
other instrument set forth on Schedule 3.14(a) of the Disclosure Schedules to
the Recapitalization Agreement, or (iii) any Illinois or federal law, statute,
rule or regulation which in such counsel's experience is typically applicable to
transactions similar to the transactions contemplated by the Agreement.
B - 1
<PAGE> 38
9. Assuming that the representations of the Purchasers
contained in the Agreement are true, correct and complete, it is not necessary
in connection with the issuance of the Warrants and the Warrant Shares to the
Holders pursuant to the Agreement or any proposed transfer of the Warrants or
the Warrant Shares in the manner contemplated by the Agreement to register the
Warrants or the Warrant Shares under the Securities Act.
10. The authorized, issued and outstanding capital stock of
the Company immediately prior to the Recapitalization is as set forth in Section
3.3(b) of the Recapitalization Agreement. All of such outstanding Common Stock
is duly authorized, validly issued, fully paid and nonassessable and the
issuance of such Common Stock was not subject to preemptive rights under the
Company's Amended and Restated Articles of Incorporation and By-laws.
11. The shares of the Company's Series A Convertible Preferred
Stock to be issued pursuant to the Recapitalization Agreement have been duly
authorized and, when issued as contemplated by the Recapitalization Agreement,
will be validly issued, fully paid and nonassessable and the issuance of the
Series A Convertible Preferred Stock is not subject to preemptive rights under
the Company's Amended and Restated Articles of Incorporation and By-laws. The
shares of the Company's Class A Common to be issued pursuant to the Securities
Purchase Agreement relating thereto have been duly authorized and, when issued
as contemplated by such Securities Purchase Agreement, will be validly issued,
fully paid and nonassessable and the issuance of the Class A Common is not
subject to preemptive rights under the Company's Amended and Restated Articles
of Incorporation and By-laws.
12. Immediately prior to the consummation of the transactions
contemplated by the Recapitalization Agreement, the Company was the sole
registered owner of all of the outstanding shares of capital stock of Courtesy
Corporation ("Courtesy"), Creative Packaging Corp. ("Creative") and Courtesy
Sales Corp. ("Sales"). All of the outstanding shares of capital stock of
Courtesy, Creative and Sales are duly authorized, validly issued, fully paid and
nonassessable and the issuance of such stock was not subject to preemptive
rights under the Articles of Incorporation or By-laws of Courtesy, Creative or
Sales, as the case may be.
13. The Warrants, when issued and delivered in accordance with
the terms of the Agreement, will be duly authorized and validly issued, and the
Warrant Shares issuable upon the exercise of the Warrants, when issued pursuant
to the terms of the Agreement and upon payment of the Exercise Price, will have
been duly authorized and validly issued, will be fully paid and nonassessable
and will not be issued in violation of, and will not be subject to, any
preemptive or similar rights, other than those contained in the Shareholders
Agreement.
"Documents" means the Agreement, the Shareholders Agreement and the
Warrants.
B - 2
<PAGE> 1
EXHIBIT 10.4
SHAREHOLDERS AGREEMENT
LLS CORP.
--------------------
Dated as of July 30, 1999
--------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C>
Article 1 DEFINITIONS..............................................................................1
Section 1.1 Definitions.........................................................................1
Section 1.2 Rules of Construction...............................................................8
Article 2 MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES.........................................8
Section 2.1 Board of Directors..................................................................8
2.1.1 Board Representation................................................................8
2.1.2 Vacancies...........................................................................9
2.1.3 Termination of Rights..............................................................10
2.1.4 Costs and Expenses.................................................................10
Section 2.2 Voting of Capital Stock............................................................11
Section 2.3 Other Activities of the Holders; Fiduciary Duties..................................11
Section 2.4 Grant of Proxy.....................................................................11
Article 3 REGISTRATION RIGHTS.....................................................................12
Section 3.1 Demand Registration................................................................12
3.1.1 Request for Registration...........................................................12
3.1.2 Effective Registration and Expenses................................................13
3.1.3 Selection of Underwriters..........................................................13
3.1.4 Rights of Holders..................................................................14
3.1.5 Priority on Demand Registrations...................................................14
3.1.6 Deferral of Filing.................................................................14
Section 3.2 Piggyback Registrations............................................................15
3.2.1 Right to Piggyback.................................................................15
3.2.2 Priority on Registrations..........................................................15
Section 3.3 Holdback Agreement.................................................................16
Section 3.4 Registration Procedures............................................................17
Section 3.5 Suspension of Dispositions.........................................................21
Section 3.6 Registration Expenses..............................................................21
Section 3.7 Indemnification....................................................................22
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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Article 4 TRANSFERS OF SECURITIES.................................................................25
Section 4.1 Preemptive Rights..................................................................25
4.1.1 Rights to Participate in Future Sales..............................................25
4.1.2 Exceptions to Preemptive Rights....................................................25
Section 4.2 Drag Along Rights..................................................................26
4.2.1 Applicability......................................................................26
4.2.2 Notice of Significant Drag Sale....................................................26
Section 4.3 Tag Along Rights...................................................................27
4.3.1 Applicability......................................................................27
4.3.2 Terms of Participation Offer.......................................................27
Section 4.4 Certain Events Not Deemed Transfers................................................27
Section 4.5 Transfer and Exchange..............................................................28
Section 4.6 Replacement Securities.............................................................28
Article 5 LIMITATION ON TRANSFERS.................................................................28
Section 5.1 Restrictions on Transfer...........................................................28
Section 5.2 Restrictive Legends................................................................28
5.2.1 Securities Act Legend..............................................................28
5.2.2 Other Legends......................................................................29
Section 5.3 Notice of Proposed Transfers.......................................................29
Section 5.4 Termination of Certain Restrictions................................................29
Article 6 TERMINATION.............................................................................30
Section 6.1 Termination........................................................................30
Article 7 MISCELLANEOUS...........................................................................30
Section 7.1 Notices............................................................................30
Section 7.2 Legal Holidays.....................................................................31
Section 7.3 Governing Law......................................................................31
Section 7.4 Successors and Assigns.............................................................31
Section 7.5 Duplicate Originals................................................................32
Section 7.6 Severability.......................................................................32
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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Section 7.7 No Waivers; Amendments.............................................................32
Section 7.8 Furnishing Information; Confidentiality............................................32
Section 7.9 Additional Parties.................................................................33
</TABLE>
iii
<PAGE> 5
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Shareholders Agreement")
dated as of July 30, 1999, is entered into by and among LLS Corp., an Illinois
corporation (including its successors, the "Company"), and the securityholders
listed on the signature pages hereof.
In consideration of the premises, mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS.
"ACCREDITED INVESTOR" means an "Accredited Investor,"
as defined in Regulation D, or any successor rule then in
effect.
"ACCREDITED OFFEREE" shall have the meaning provided
in Section 4.1.1 hereof.
"ADVICE" shall have the meaning provided in Section
3.5 hereof.
"AFFILIATE" means, with respect to any Person, any
Person who, directly or indirectly, controls, is controlled by
or is under common control with that Person. For purposes of
this definition, "control" when used with respect to any
Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
"AFFILIATED SUCCESSOR" shall have the meaning set
forth in Section 4.1.1 hereof.
"BENEFICIAL OWNERSHIP" with respect to any securities
shall mean having "beneficial ownership" (as determined
pursuant to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or understanding,
whether or not in writing. Without duplicative counting of the
same securities by the same Holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned
by all other Persons who are Affiliates of such Person
(excluding officers and directors of the Company, the Company
and their controlled Affiliates) who together with such Person
would constitute a "group" within the meaning of Section
13(d)(3) of the Exchange Act.
"BUSINESS DAY" means a day that is not a Legal
Holiday.
<PAGE> 6
"CLASS A COMMON STOCK" means shares of the Class A
Common Stock, $.01 par value per share, of the Company, and
any capital stock into which such Class A Common Stock
thereafter may be changed.
"CLOSING" shall mean the date on which the
transactions contemplated by the Recapitalization Agreement
are consummated.
"COMMON STOCK" means shares of the Common Stock, $.01
par value per share, of the Company, and any capital stock
into which such Common Stock thereafter may be changed.
"COMMON STOCK EQUIVALENTS" means, without duplication
with any other Common Stock or Common Stock Equivalents, any
rights, warrants, options, convertible securities or
indebtedness, exchangeable securities or indebtedness, or
other rights, exercisable for or convertible or exchangeable
into, directly or indirectly, Common Stock of the Company and
securities convertible or exchangeable into Common Stock of
the Company, whether at the time of issuance or upon the
passage of time or the occurrence of some future event.
"COMPANY" shall have the meaning set forth in the
introductory paragraph hereof.
"CONVERSION STOCK" means Common Stock issued or
issuable upon the conversion of shares of Class A Common Stock
or Series A Preferred Stock.
"CO-SELLER" shall have the meaning set forth in
Section 4.2.1 hereof.
"DEMAND REGISTRATION" shall have the meaning set
forth in Section 3.1.1 hereof.
"DEMAND REQUEST" shall have the meaning set forth in
Section 3.1.1 hereof.
"DESIGNEES" shall have the meaning set forth in
Section 2.1.1(e) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated by
the SEC thereunder.
"EXCLUDED REGISTRATION" means a registration under
the Securities Act of (i) securities pursuant to one or more
Demand Registrations pursuant to Article 3 hereof, (ii)
securities registered on SEC Form S-8 or any similar successor
form and (iii) securities registered to effect the acquisition
by the Company of or combination of the Company with another
Person.
2
<PAGE> 7
"FAMILY MEMBER" means, as to any natural Person, such
Person's spouse, grandparent or descendant of that
grandparent, children (natural and adopted), natural or
adopted siblings, mothers and fathers-in-law, sons and
daughters-in-law, and brothers and sisters-in-law.
"FULLY-DILUTED COMMON STOCK" means, at any time, the
then outstanding Common Stock of the Company plus (without
duplication) all shares of Common Stock issuable, whether at
such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion, or exchange of
all then outstanding Common Stock Equivalents.
"HMC GROUP" means, collectively, HMTF/CC and any
direct or indirect transferee of such shareholder who shall
become a party hereto in accordance with Section 5.1 hereof;
provided, however, that for purposes of Section 2.1, Section
4.2, Section 4.3 and Section 4.4 of this Shareholders
Agreement, the "HMC Group" shall mean, collectively, HMTF/CC
and any direct or indirect transferee of any such shareholder
who shall become a party hereto in accordance with Section 5.1
hereof and who is an Affiliate of such shareholder or an
officer, director or employee of such shareholder or its
Affiliates (and any of their respective Family Members, their
estates or trusts for the primary benefit of such Family
Members); provided further, however, that for all purposes of
this Shareholders Agreement, Mills & Partners shall be deemed
not to be an Affiliate of HMTF/CC.
"HMTF" means Hicks, Muse, Tate & Furst Incorporated,
a Texas corporation.
"HMTF/CC" means HMTF/CC Investments, LLC, a Delaware
limited liability company.
"HMTF DESIGNEE" shall have the meaning set forth in
Section 2.1.1(b) hereof.
"HOLDER" means (i) a securityholder listed on a
signature page hereof and (ii) any direct or indirect
transferee of any such securityholder who shall become a party
to this Shareholders Agreement.
"INDEPENDENT DIRECTOR" means a Person who is not (i)
a member of the HMC Group, (ii) a Mills & Partners
Shareholder, (iii) an Existing Shareholder, (iv) an employee
of the Company or any of its Subsidiaries or a Family Member
of any such employee or (v) an employee of HMTF or Mills &
Partners or any of their respective Affiliates.
"INFORMATION" shall have the meaning set forth in
Section 7.8.1 hereof.
3
<PAGE> 8
"INSPECTORS" shall have the meaning set forth in
Section 3.4(x) hereof.
"KREISEDER" means Walter J. Kreiseder.
"KREISEDER DESIGNEE" shall have the meaning set forth
in Section 2.1.1(d) hereof.
"KREISEDER SHAREHOLDERS" means, collectively, Walter
J. Kreiseder, as Trustee of the Walter J. Kreiseder Trust
U/A/D 6/23/88; Donald B. Levine, Trustee of the Walter J.
Kreiseder Gift Trust for John U/A/D 12/29/94; Donald B.
Levine, Trustee of the Walter J. Kreiseder Gift Trust for
David U/A/D 12/29/94; Donald B. Levine, Trustee of the Walter
J. Kreiseder 1997 Gift Trust for John U/A/D 12/29/97; and
Donald B. Levine, Trustee of the Walter J. Kreiseder 1997 Gift
Trust for David U/A/D 12/29/97; and any direct or indirect
transferee of any such shareholder who shall become a party
hereto in accordance with Section 5.1 hereof and who is an
Affiliate of such shareholder or an officer, director or
employee of such shareholder or its Affiliates (and any of
their respective Family Members, their estates or trusts for
the primary benefit of such Family Members).
"LEGAL HOLIDAY" shall have the meaning provided in
Section 7.2 hereof.
"MATERIAL ADVERSE EFFECT" shall have the meaning
provided in Section 3.1.4 hereof.
"MILLS & PARTNERS" means Mills & Partners, Inc., a
Delaware corporation.
"MILLS & PARTNERS DESIGNEE" shall have the meaning
set forth in Section 2.1.1(c) hereof.
"MILLS & PARTNERS SHAREHOLDERS" means, collectively,
those shareholders of the Company listed on Exhibit A attached
hereto, any other securityholders of Class A Common Stock who
are or were employed by Mills & Partners at any time during
the pendency of this Shareholders Agreement and any direct or
indirect transferee of any such shareholder who shall become a
party hereto in accordance with Section 5.1 hereof; provided,
however, that for purposes of Section 2.1 of this Shareholders
Agreement, "Mills & Partners Shareholders" shall mean,
collectively, those shareholders of the Company listed on
Exhibit A attached hereto, any other securityholders of Class
A Common Stock who are or were employed by Mills & Partners at
any time during the pendency of this Shareholders Agreement
and any direct or indirect transferee of any such shareholder
who shall become a party hereto in accordance with Section 5.1
hereof and who is an Affiliate of such shareholder or an
officer, director or employee of such
4
<PAGE> 9
shareholder or its Affiliates (and any of their respective
Family Members, their estates or trusts for the primary
benefit of such Family Members); provided further, however,
that for all purposes of this Shareholders Agreement, HMTF/CC
shall be deemed not to be an Affiliate of Mills & Partners.
"NASD" shall have the meaning provided in Section
3.4(xiv) hereof.
"OFFER NOTICE" shall have the meaning provided in
Section 4.1.1 hereof.
"OFFERED SECURITIES" shall have the meaning provided
in Section 4.1.1 hereof.
"PARTICIPATION OFFER" shall have the meaning provided
in Section 4.3.1 hereof.
"PERSON" or "person" means any individual,
corporation, partnership, limited liability company, joint
venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or
political subdivision thereof.
"PREEMPTIVE RIGHTS TRANSACTION" shall have the
meaning set forth in Section 4.1.1 hereof.
"PREFERRED STOCK" means shares of stock of the
Company which have a preference as to dividends or
distribution upon liquidation or dissolution of the Company,
and any capital stock into which such Preferred Stock
thereafter may be changed.
"QUALIFIED IPO" means a firm commitment underwritten
public offering of Common Stock and/or Class A Common Stock
pursuant to a registration statement under the Securities Act
where both (i) the proceeds (prior to deducting any
underwriters' discounts and commissions) equal or exceed Fifty
Million Dollars ($50,000,000) and (ii) upon consummation of
such offering, the Common Stock and/or Class A Common Stock is
listed on the New York Stock Exchange or authorized to be
quoted and/or listed on the Nasdaq National Market.
"RECAPITALIZATION AGREEMENT" shall mean the
Recapitalization Agreement, dated as of July 13, 1999, among
the Company, Creative Packaging Corp., an Illinois corporation
("Creative"), Courtesy Sales Corp., an Illinois corporation
("Courtesy Sales"), each shareholder of the Company, Creative
and Courtesy Sales,
and HMTF/CC.
"RECORDS" shall have the meaning set forth in Section
3.4(x) hereof.
5
<PAGE> 10
"REGISTRABLE SHARES" means at any time the Common
Stock or Conversion Stock of the Company owned by the Holders,
whether owned on the date hereof or acquired hereafter;
provided, however, that Registrable Shares shall not include
any shares (i) the sale of which has been registered pursuant
to the Securities Act and which shares have been sold pursuant
to such registration or (ii) which have been sold pursuant to
Rule 144 under the Securities Act.
"REGISTRATION EXPENSES" shall have the meaning
provided in Section 3.6 hereof.
"REGULATION D" means Regulation D promulgated under
the Securities Act by the SEC.
"REQUESTING HOLDERS" shall have the meaning provided
in Section 3.1.1(a) hereof.
"REQUIRED FILING DATE" shall have the meaning
provided in Section 3.1.1(b) hereof.
"REQUIRED HOLDERS" means Holders who then own
beneficially more than 66-2/3% of the aggregate number of
shares of Common Stock, Class A Common Stock and Series A
Preferred Stock (taken together as one class) subject to this
Shareholders Agreement.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means the Common Stock, Class A Common
Stock and Series A Preferred Stock .
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
"SELLER AFFILIATES" shall have the meaning provided
in Section 3.7.1 hereof.
"SERIES A PREFERRED STOCK" means shares of the Series
A Convertible Preferred Stock, $.01 par value per share, of
the Company, and any capital stock into which such Series A
Convertible Preferred Stock thereafter may be changed.
"SIGNIFICANT DRAG SALE" shall have the meaning
provided in Section 4.2.1 hereof.
"SIGNIFICANT TAG SALE" shall have the meaning
provided in Section 4.3.1 hereof.
6
<PAGE> 11
"SOMMERS" means Gerald J. Sommers.
"SOMMERS DESIGNEE" shall have the meaning set forth
in Section 2.1.1(e) hereof.
"SOMMERS SHAREHOLDERS" means, collectively, Gerald J.
Sommers, as Trustee of the Gerald J. Sommers Trust U/A/D
5/10/89; Janet A. Kritek, as Trustee of the Gerald J. Sommers
Gift Trust for Janet U/A/D 12/29/94; Janet A. Kritek, as
Trustee of the Gerald J. Sommers Gift Trust for James U/A/D
12/29/94; Janet A. Kritek, as Trustee of the Gerald J. Sommers
1997 Gift Trust for Janet U/A/D 12/29/97; and Janet A. Kritek,
as Trustee of the Gerald J. Sommers 1997 Gift Trust for James
U/A/D 12/29/97; and any direct or indirect transferee of any
such shareholder who shall become a party hereto in accordance
with Section 5.1 hereof and who is an Affiliate of such
shareholder or an officer, director or employee of such
shareholder or its Affiliates (and any of their respective
Family Members, their estates or trusts for the primary
benefit of such Family Members).
"SHAREHOLDERS AGREEMENT" means this Shareholders
Agreement, as the same may be amended from time to time.
"SUBSIDIARY" of any Person means (i) a corporation a
majority of whose outstanding shares of capital stock or other
equity interests with voting power, under ordinary
circumstances, to elect directors, is at the date of
determination, directly or indirectly, owned by such Person,
by one or more subsidiaries of such Person or by such Person
and one or more subsidiaries of such Person, and (ii) any
other Person (other than a corporation) in which such Person,
a subsidiary of such Person or such Person and one or more
subsidiaries of such Person, directly or indirectly, at the
date of determination thereof, has (x) at least a majority
ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such
Person.
"SUSPENSION EVENT" shall have the meaning provided in
Section 3.5 hereof.
"SUSPENSION NOTICE" shall have the meaning provided
in Section 3.5 hereof.
"TRANSFER" means any disposition of any Security or
any interest therein that would constitute a "sale" thereof
within the meaning of the Securities Act.
"TRANSFER NOTICE" shall have the meaning provided in
Section 5.3 hereof.
"WARRANTS" means the warrants to purchase 1,800,000
shares of Common Stock to affiliates of TCW/Crescent
Mezzanine, L.L.C. in
7
<PAGE> 12
connection with the issuance of the Company's 11 5/8% Senior
Subordinated Notes due 2009.
SECTION 1.2 RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and
words in the plural include the singular;
(4) provisions apply to successive events and
transactions; and
(5) "herein," "hereof" and other words of similar
import refer to this Shareholders Agreement as a whole and not
to any particular Article, Section or other subdivision.
ARTICLE 2
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
SECTION 2.1 BOARD OF DIRECTORS.
2.1.1 Board Representation. (a) At all times during the term
hereof, subject to Section 2.1.3, the Board of Directors of the Company shall
consist of six (6) members, plus (i) such number of directors as may be elected
from time to time pursuant to the terms of any Preferred Stock that may be
issued and outstanding from time to time and (ii) such number of Independent
Directors as may be designated from time to time in accordance with Section
2.1.1(f).
(b) HMTF Designees. Subject to Section 2.1.3, HMTF shall be entitled to
designate to the Board of Directors of the Company (i) two individuals as long
as the HMC Group owns, in the aggregate, at least 50% of the number of shares of
Series A Preferred Stock (or, if converted pursuant to its terms, Common Stock)
owned by the HMC Group at the Closing and (ii) one individual as long as the HMC
Group owns, in the aggregate, at least 10% of the number of shares of Series A
Preferred Stock (or, if converted pursuant to its terms, Common Stock) owned by
the HMC Group at the Closing (such designees being referred to herein
individually as an "HMTF Designee" and collectively as the "HMTF Designees").
(c) Mills & Partners Designees. Subject to Section 2.1.3, Mills &
Partners shall be entitled to designate to the Board of Directors of the Company
(i) two individuals as long as the Mills & Partners Shareholders own, in the
aggregate, at least 50% of the number of shares of Class A Common Stock (or , if
converted pursuant to its terms, Common Stock) owned by the Mills & Partners
Shareholders at the Closing and (ii) one individual as long as the Mills &
Partners Shareholders own, in the aggregate, at least 10% of the number of
shares of Class A Common Stock (or, if converted pursuant to its terms, Common
Stock)
8
<PAGE> 13
owned by the Mills & Partners Shareholders at the Closing (such designees being
referred to herein individually as a "Mills & Partners Designee" and
collectively as the "Mills & Partners Designees").
(d) Kreiseder. Subject to Section 2.1.3, for so long as the Kreiseder
Shareholders own at least 5% of the Fully-Diluted Common Stock, Kreiseder or, in
the event of Kreiseder's death or disability, a designee of the Kreiseder
Shareholders who is reasonably acceptable to HMTF and Mills & Partners, shall be
entitled to serve on the Board of Directors of the Company (Kreiseder or such
designee being referred to in this Section 2.1 as a "Kreiseder Designee").
(e) Sommers. Subject to Section 2.1.3, for so long as the Sommers
Shareholders own at least 5% of the Fully-Diluted Common Stock, Sommers or, in
the event of Sommers' death or disability, a designee of the Sommers
Shareholders who is reasonably acceptable to HMTF and Mills & Partners, shall be
entitled to serve on the Board of Directors of the Company (Sommers or such
designee being referred to in this Section 2.1 individually as a "Sommers
Designee" and, together with the HMTF Designees, the Mills & Partners Designees
and the Kreiseder Designee, as the "Designees").
(f) Independent Directors. Subject to Section 2.1.3, the number of
members on the Board of Directors of the Company may be expanded by the mutual
agreement of HMTF and Mills & Partners to include Independent Directors who are
reasonably acceptable to the Kreiseder Designee and the Sommers Designee.
(g) Voting of Holders. Each Holder shall vote his or its shares of
Common Stock, Class A Common Stock and Series A Preferred Stock at any regular
or special meeting of shareholders of the Company or in any written consent
executed in lieu of such a meeting of shareholders and shall take all other
actions necessary to give effect to the agreements contained in this
Shareholders Agreement (including without limitation the election of the
Designees) and to ensure that the articles of incorporation and bylaws of the
Company as in effect immediately following the date hereof do not, at any time
thereafter, conflict in any respect with the provisions of this Shareholders
Agreement. In order to effectuate the provisions of this Article 2, each Holder
hereby agrees that when any action or vote is required to be taken by such
Holder pursuant to this Shareholders Agreement, such Holder shall use his or its
best efforts to call, or cause the appropriate officers and directors of the
Company to call, a special or annual meeting of shareholders of the Company, as
the case may be, or execute or cause to be executed a consent in writing in lieu
of any such meeting pursuant to the applicable provisions of the corporate laws
of the Company's state of incorporation.
2.1.2 Vacancies. If, prior to his election to the Board of
Directors of the Company pursuant to Section 2.1.1 hereof, any Designee shall be
unable or unwilling to serve as a director of the Company, the Person or Persons
who designated such Designee shall be entitled to designate a replacement who
shall, subject to the provisions of Section 2.1.1, be a Designee for purposes of
this Article 2. If, following an election to the Board of Directors of the
Company pursuant to Section 2.1.1 hereof, any Designee shall resign or be
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removed (which may only be done by the Person or Persons who designated such
Designee) or be unable to serve for any reason prior to the expiration of his
term as a director of the Company, the Person who designated such Designee
shall, within thirty (30) days of notice from the Company of such event, notify
the Board of Directors of the Company in writing of a replacement Designee, and,
subject to the provisions of Section 2.1.1, either (i) the Holders shall comply
with the provisions of Section 2.1.1(g) to ensure the election to the Board of
Directors of the Company of such replacement Designee to fill the unexpired term
of the Designee whom such replacement Designee is replacing or (ii) the Board of
Directors shall elect or appoint such replacement Designee to fill the unexpired
term of the Designee whom such replacement Designee is replacing. If HMTF
requests that any HMTF Designee, Mills & Partners requests that any Mills &
Partners Designee, a majority in interest of the Kreiseder Shareholders request
that any Kreiseder Designee, or a majority in interest of the Sommers
Shareholders request that any Sommers Designee, be removed as a director (with
or without cause) by written notice thereof to the Company, then the Company
shall take all action necessary to effect, and each of the Holders shall vote
all his or its capital stock in favor of, such removal upon such request.
2.1.3 Termination of Rights. The right of HMTF to designate
directors under Section 2.1.1, and the obligation of the Holders to vote their
shares for the HMTF Designees, shall terminate upon the first to occur of (i)
the termination or expiration of this Shareholders Agreement or this Article 2,
(ii) such time as HMTF elects in writing to terminate its rights under this
Article 2, or (iii) such time as the HMC Group ceases to own at least ten
percent (10%) of the number of shares of Series A Preferred Stock (or, if
converted pursuant to its terms, Common Stock) owned by the HMC Group at the
Closing. The right of Mills & Partners to designate directors under Section
2.1.1, and the obligation of the Holders to vote their shares for the Mills &
Partners Designees, shall terminate upon the first to occur of (i) the
termination or expiration of this Shareholders Agreement or this Article 2, (ii)
such time as Mills & Partners elects in writing to terminate its rights under
this Article 2, or (iii) such time as the Mills & Partners Shareholders cease to
own, in the aggregate, at least 10% of the number of shares of Class A Common
Stock (or, if converted pursuant to its terms, Common Stock) owned by the Mills
& Partners Shareholders at the Closing. The right of a Kreiseder Designee to
serve as a director under Section 2.1.1, and the obligation of the Holders to
vote their shares for the Kreiseder Designee, shall terminate upon the first to
occur of (i) the termination or expiration of this Shareholders Agreement or
this Article 2, (ii) such time as a majority in interest of the Kreiseder
Shareholders elect in writing to terminate their rights under this Article 2, or
(iii) such time as the Kreiseder Shareholders cease to own at least 5% of the
Fully-Diluted Common Stock. The right of a Sommers Designee to serve as a
director under Section 2.1.1, and the obligation of the Holders to vote their
shares for the Sommers Designee, shall terminate upon the first to occur of (i)
the termination or expiration of this Shareholders Agreement or this Article 2,
(ii) such time as a majority in interest of the Sommers Shareholders elect in
writing to terminate their rights under this Article 2, or (iii) such time as
the Sommers Shareholders cease to own at least 5% of the Fully-Diluted Common
Stock.
2.1.4 Costs and Expenses. The Company will pay all reasonable
out-of-pocket expenses incurred by the directors of the Company in connection
with their
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participation in meetings of the Board of Directors (and committees thereof) of
the Company and the Boards of Directors (and committees thereof) of the
Subsidiaries of the Company.
2.1.5 Calculation of Share Numbers. For purposes of this Article 2
only, any calculation of the number of shares of Common Stock, Class A Common
Stock or Series A Preferred Stock owned by a Holder at any date shall be
determined by the Board of Directors of the Company as follows: (i) "owned"
shall mean Beneficial Ownership and (ii) each calculation shall be equitably
adjusted for subsequent stock splits, reverse stock splits, stock combinations,
recapitalizations, stock dividends and the like.
SECTION 2.2 VOTING OF CAPITAL STOCK. To the extent any Holder owns
shares of any class or series of capital stock of the Company or any Subsidiary
of the Company which it may vote on any particular matter which comes before
such corporation's shareholders, as a class or series separate from the common
stock of such corporation ordinarily entitled to vote for the election of
directors, such Holder shall vote all such shares on such matter in such
separate class or series vote as holders of a majority of the outstanding shares
of common stock of such corporation vote thereon; provided, however, that such
Holder may nevertheless vote such shares as a separate class or series without
regard to the provisions of this Section 2.2 in respect of (a) amendments to the
articles or certificate of incorporation of such corporation, or the certificate
of designation which created such class or series, which change the provisions
thereof expressly applicable to such separate class or series, and (b) any
matter as to which such class or series is expressly entitled to vote as a
separate class or series pursuant to such corporation's articles or certificate
of incorporation or the certificate of designation which created such class or
series; provided further, however, that any statement in such articles or
certificate of incorporation or certificate of designation that such class or
series may vote as a separate class or series "as required by law" or similar
language shall not permit such class or series to be voted without regard to the
provisions of this Section 2.2.
SECTION 2.3 OTHER ACTIVITIES OF THE HOLDERS; FIDUCIARY DUTIES. It is
understood and accepted that the Holders and their Affiliates have interests in
other business ventures which may be in conflict with the activities of the
Company and its Subsidiaries and that, subject to applicable law, nothing in
this Shareholders Agreement shall limit the current or future business
activities of the Holders whether or not such activities are competitive with
those of the Company and its Subsidiaries. Nothing in this Shareholders
Agreement, express or implied, shall relieve any Holder of any obligation
undertaken pursuant to any other agreement or any officer or director of the
Company or any of its Subsidiaries, or any Holder, of any fiduciary or other
duties or obligations he or it may have to the Company's shareholders.
SECTION 2.4 GRANT OF PROXY. Each Mills & Partners Shareholder hereby
constitutes and appoints James N. Mills (for so long as he is an officer or
director of the Company, or, in the event James N. Mills is no longer an officer
or director of the Company, HMTF), with full power of substitution, as his or
its true and lawful proxy and attorney-in-fact to vote any and all shares of any
class or series of capital stock of the Company or any
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Subsidiary of the Company held by such Holder in accordance with the provisions
of Sections 2.1 and 2.2 of this Shareholders Agreement. Each Mills & Partners
Shareholder acknowledges that the proxy granted hereby is irrevocable, being
coupled with an interest, and that such proxy will continue until the
termination of such Holder's obligation to vote any shares in accordance with
this Article 2.
ARTICLE 3
REGISTRATION RIGHTS
SECTION 3.1 DEMAND REGISTRATION.
3.1.1 Request for Registration.
(a) At any time after one hundred eighty (180) days
after the consummation of a Qualified IPO, any Holder or
Holders may request the Company, in writing (a "Demand
Request"), to effect the registration under the Securities Act
of all or part of its or their Registrable Shares (a "Demand
Registration"). Notwithstanding the foregoing, no Demand
Request will be effective hereunder unless (i) the Registrable
Shares proposed to be sold by the Holders requesting the
Demand Registration (the "Requesting Holders," which term
shall include parties deemed "Requesting Holders" pursuant to
Section 3.1.5 hereof) represent, in the aggregate, more than
thirty percent (30%) of the total number of Registrable Shares
held by all Holders or (ii) (A) either (x) the Registrable
Shares proposed to be sold by the Requesting Holders represent
fifty-one percent (51%) or more of the total number of
Registrable Shares held by all Holders other than the members
of the HMC Group or (y) two (2) of the Requesting Holders are
not members of the HMC Group, (B) the Registrable Shares
proposed to be sold by the Requesting Holders have a fair
market value (determined in good faith by the Company's Board
of Directors), at the time of the Company's receipt of the
Demand Request, of Twenty-Five Million Dollars ($25,000,000)
or more and (C) the offering to be consummated pursuant to
such Demand Request will not, in the reasonable opinion of an
investment banking firm selected by the Company, have a
material adverse effect on the market price of the Common
Stock or Class A Common Stock.
(b) Each Demand Request shall specify the number of
Registrable Shares proposed to be sold. Subject to Section
3.1.6, the Company shall file the registration statement
relating to the Demand Registration (including by means of a
shelf registration pursuant to Rule 415 under the Securities
Act if so requested by the Requesting Holder submitting the
Demand Request to the Company (but, in the case of a shelf
registration, only if the Company is then eligible to use such
a shelf registration and if Form S-3 (or any successor form)
is then available to the Company) within ninety (90) days
after receiving a Demand Request (the "Required Filing Date")
and shall use all commercially reasonable efforts to cause the
same to be declared effective by
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the SEC as promptly as practicable after such filing;
provided, that the Company need effect only two (2) Demand
Registrations pursuant to Demand Requests made under clause
(i) of the second sentence of paragraph (a) of this Section
3.1.1 and only one (1) Demand Registration pursuant to a
Demand Request made under clause (ii) of the second sentence
of paragraph (a) of this Section 3.1.1; provided, further,
that no such Holders will be entitled to make such a request
while any other registration statement (other than a shelf
registration statement) is on file with the SEC prior to its
becoming effective or within 90 days after such registration
statement has been declared effective, or, in the case of a
shelf registration, until 90 days after such shelf
registration ceases to be effective; provided, further, that
if any Registrable Shares requested to be registered pursuant
to a Demand Request made under clause (i) or clause (ii) of
the second sentence of paragraph (a) of this Section 3.1.1 are
excluded from the applicable Demand Registration pursuant to
Section 3.1.4 below, the Holders shall have the right, with
respect to each such exclusion, to request one additional
Demand Registration under such clause (i) (in the event such
excluded shares were excluded from a Demand Registration
effected pursuant to a Demand Request made under such clause
(i)) or such clause (ii) (in the event such excluded shares
were excluded from a Demand Registration effected pursuant to
a Demand Request made under such clause (ii)) with respect to
such excluded Registrable Shares. No Holder can request a
Demand Registration within 270 days following the termination
of a prior shelf registration that was the result of such
Holder's Demand Request.
3.1.2 Effective Registration and Expenses. A registration will
not count as a Demand Registration until the related registration statement has
become effective (unless the Requesting Holders withdraw from registration all
their Registrable Shares and the Company has performed its obligations hereunder
in all material respects, in which case such demand will count as a Demand
Registration unless the Requesting Holders pay all Registration Expenses in
connection with such withdrawn registration); provided, that if, after it has
become effective, an offering of Registrable Shares pursuant to a registration
is interfered with by any stop order, injunction, or other order or requirement
of the SEC or other governmental agency or court, such registration will be
deemed not to have been effected and will not count as a Demand Registration.
The Company shall not be required to maintain a shelf registration after 270
days from the date of effectiveness.
3.1.3 Selection of Underwriters. The offering of Registrable
Shares pursuant to a Demand Registration shall be in the form of a "firm
commitment" underwritten offering. The Requesting Holders of a majority of the
Registrable Shares to be registered in a Demand Registration shall select the
investment banking firm or firms to manage the underwritten offering; provided,
that such selection shall be subject to the consent of the Company, which
consent shall not be unreasonably withheld. Notwithstanding the prior sentence,
no shelf registration will be required to be in the form of an underwritten
offering.
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3.1.4 Rights of Holders. Upon receipt of any Demand Request,
the Company shall promptly (but in any event within ten (10) days) give written
notice of such proposed Demand Registration to all other Holders, who shall have
the right, exercisable by written notice to the Company within twenty (20) days
of their receipt of the Company's notice, to elect to include in such Demand
Registration such portion of their Registrable Shares as they may request. All
Holders requesting to have their Registrable Shares included in a Demand
Registration in accordance with the preceding sentence shall be deemed to be
"Requesting Holders" for purposes of this Section 3.1.
3.1.5 Priority on Demand Registrations. No securities to be
sold for the account of any Person (including the Company) other than a
Requesting Holder shall be included in a Demand Registration unless the managing
underwriter or underwriters shall advise the Company or the Requesting Holders
in writing that the inclusion of such securities will not materially and
adversely affect the price or success of the offering (a "Material Adverse
Effect"). Furthermore, in the event the managing underwriter or underwriters
shall advise the Company or the Requesting Holders that even after exclusion of
all securities of other Persons pursuant to the immediately preceding sentence,
the amount of Registrable Shares proposed to be included in such Demand
Registration by Requesting Holders is sufficiently large to cause a Material
Adverse Effect, the Registrable Shares of the Requesting Holders to be included
in such Demand Registration shall equal the number of shares which the Company
is so advised can be sold in such offering without a Material Adverse Effect and
such shares shall be allocated pro rata among the Requesting Holders on the
basis of the number of Registrable Shares requested to be included in such
registration by each such Requesting Holder.
3.1.6 Deferral of Filing. The Company may defer the filing
(but not the preparation) of a registration statement required by Section 3.1
until a date not later than one hundred twenty (120) days after the Required
Filing Date (or, if longer, one hundred twenty (120) days after the effective
date of the registration statement contemplated by clause (ii) below) if (i) at
the time the Company receives the Demand Request, the Company or any of its
Subsidiaries is engaged in confidential negotiations or other confidential
business activities, disclosure of which would be required in such registration
statement (but would not be required if such registration statement were not
filed), and the Board of Directors of the Company determines in good faith that
such disclosure would be materially detrimental to the Company and its
shareholders or would have a material adverse effect on any such confidential
negotiations or other confidential business activities, or (ii) prior to
receiving the Demand Request, the Board of Directors had determined to effect a
registered underwritten public offering of the Company's securities for the
Company's account and the Company had taken substantial steps (including, but
not limited to, selecting a managing underwriter for such offering) and is
proceeding with reasonable diligence to effect such offering. A deferral of the
filing of a registration statement pursuant to this Section 3.1.6 shall be
lifted, and the requested registration statement shall be filed forthwith, if,
in the case of a deferral pursuant to clause (i) of the preceding sentence, the
negotiations or other activities are disclosed or terminated, or, in the case of
a deferral pursuant to clause (ii) of the preceding sentence, the proposed
registration for the Company's account is abandoned. In order to defer the
filing of a registration statement pursuant to this Section 3.1.6, the
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<PAGE> 19
Company shall promptly (but in any event within ten (10) days), upon determining
to seek such deferral, deliver to each Requesting Holder a certificate signed by
an executive officer of the Company stating that the Company is deferring such
filing pursuant to this Section 3.1.6 and a general statement of the reason for
such deferral and an approximation of the anticipated delay. Within twenty (20)
days after receiving such certificate, the holders of a majority of the
Registrable Shares held by the Requesting Holders and for which registration was
previously requested may withdraw such Demand Request by giving notice to the
Company; if withdrawn, the Demand Request shall be deemed not to have been made
for all purposes of this Shareholders Agreement. The Company may defer the
filing of a particular registration statement pursuant to this Section 3.1.6
only once.
SECTION 3.2 PIGGYBACK REGISTRATIONS.
3.2.1 Right to Piggyback. Each time the Company proposes to
register any of its equity securities (other than pursuant to an Excluded
Registration) under the Securities Act for sale to the public (whether for the
account of the Company or the account of any securityholder of the Company) and
the form of registration statement to be used permits the registration of
Registrable Shares, the Company shall give prompt written notice to each Holder
of Registrable Shares (which notice shall be given not less than thirty (30)
days prior to the effective date of the Company's registration statement), which
notice shall offer each such Holder the opportunity to include any or all of his
or its Registrable Shares in such registration statement, subject to the
limitations contained in Section 3.2.2 hereof. Each Holder who desires to have
his or its Registrable Shares included in such registration statement shall so
advise the Company in writing (stating the number of shares desired to be
registered) within twenty (20) days after the date of such notice from the
Company. Any Holder shall have the right to withdraw such Holder's request for
inclusion of such Holder's Registrable Shares in any registration statement
pursuant to this Section 3.2.1 by giving written notice to the Company of such
withdrawal. Subject to Section 3.2.2 below, the Company shall include in such
registration statement all such Registrable Shares so requested to be included
therein; provided, however, that the Company may at any time withdraw or cease
proceeding with any such registration if it shall at the same time withdraw or
cease proceeding with the registration of all other equity securities originally
proposed to be registered.
3.2.2 Priority on Registrations. If the Registrable Shares
requested to be included in the registration statement by any Holder differ from
the type of securities proposed to be registered by the Company and the managing
underwriter, if any, of the related offering or, in the event there is no
managing underwriter, the Board of Directors of the Company, advises the Company
that due to such differences the inclusion of such Registrable Shares would
cause a Material Adverse Effect, then (i) the number of such Holder's or
Holders' Registrable Shares to be included in the registration statement shall
be reduced to an amount which, in the judgment of the managing underwriter or
the Board of Directors of the Company, as applicable, would eliminate such
Material Adverse Effect or (ii) if no such reduction would, in the judgment of
the managing underwriter or the Board of Directors of the Company, as
applicable, eliminate such Material Adverse Effect, then the Company shall have
the right to exclude all such Registrable Shares from such registration
statement provided no other securities of such type are included and offered for
the account of any other Person in such registration
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<PAGE> 20
statement. Any partial reduction in the number of Registrable Shares to be
included in the registration statement pursuant to clause (i) of the immediately
preceding sentence shall be effected pro rata based on the ratio which such
Holder's requested Registrable Shares bears to the total number of Registrable
Shares and other securities requested to be included in such registration
statement by all Persons (including Requesting Holders) who have requested
(pursuant to contractual registration rights) that their Registrable Shares or
other securities be included in such registration statement. If the Registrable
Shares requested to be included in the registration statement are of the same
type as the securities being registered by the Company and the managing
underwriter, if any, of the related offering or, in the event there is no
managing underwriter, the Board of Directors of the Company, advises the Company
that the inclusion of such Registrable Shares would cause a Material Adverse
Effect, the Company will be obligated to include in such registration statement,
as to each Requesting Holder, only a portion of the Registrable Shares such
Holder has requested be registered equal to the ratio which such Holder's
requested Registrable Shares bears to the total number of Registrable Shares and
other securities requested to be included in such registration statement by all
Persons (including Requesting Holders) who have requested (pursuant to
contractual registration rights) that their Registrable Shares or other
securities be included in such registration statement. If as a result of the
provisions of this Section 3.2.2 any Holder shall not be entitled to include all
Registrable Shares in a registration that such Holder has requested to be so
included, such Holder may withdraw such Holder's request to include Registrable
Shares in such registration statement. No Person may participate in any
registration statement hereunder unless such Person (x) agrees to sell such
Person's Registrable Shares on the basis provided in any underwriting
arrangements approved by the Company and (y) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents, each in customary form, reasonably required under the terms of
such underwriting arrangements; provided, however, that no such Person shall be
required to make any representations or warranties in connection with any such
registration other than representations and warranties as to (i) such Person's
ownership of his or its Registrable Shares to be Transferred free and clear of
all liens, claims, and encumbrances, (ii) such Person's power and authority to
effect such Transfer, and (iii) such matters pertaining to compliance with
securities laws as may be reasonably requested; provided further, however, that
the obligation of such Person to indemnify pursuant to any such underwriting
arrangements shall be several, not joint and several, among such Persons selling
Registrable Shares, and the liability of each such Person will be in proportion
to, and provided further that such liability will be limited to, the net amount
received by such Person from the sale of his or its Registrable Shares pursuant
to such registration.
SECTION 3.3 HOLDBACK AGREEMENT. Unless the managing underwriter
otherwise agrees, each of the Company and the Holders agrees (and the Company
agrees, in connection with any underwritten registration, to use its reasonable
efforts to cause its Affiliates to agree) not to effect any public sale or
private offer or distribution of any Common Stock or Common Stock Equivalents
during the ten (10) Business Days prior to the effectiveness under the
Securities Act of any underwritten registration subject to the provisions hereof
and during such time period after the effectiveness under the Securities
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<PAGE> 21
Act of any underwritten registration subject to the provisions hereof (not to
exceed one hundred eighty (180) days) (except, if applicable, as part of such
underwritten registration) as the Company and the managing underwriter may
agree.
SECTION 3.4 REGISTRATION PROCEDURES. Whenever any Holder has requested
that any Registrable Shares be registered pursuant to this Shareholders
Agreement, the Company will use its commercially reasonable efforts to effect
the registration and the sale of such Registrable Shares in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(i) prepare and file with the SEC a registration
statement on any appropriate form under the Securities Act
with respect to such Registrable Shares and use its
commercially reasonable efforts to cause such registration
statement to become effective;
(ii) prepare and file with the SEC such amendments,
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 a period of not less than one hundred
eighty (180) days (or such lesser period as is necessary for
the underwriters in an underwritten offering to sell unsold
allotments) and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered
by such registration statement during such period in
accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(iii) furnish to each seller of Registrable Shares
and the underwriters of the securities being registered such
number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary
prospectus), any documents incorporated by reference therein
and such other documents as such seller or underwriters may
reasonably request in order to facilitate the disposition of
the Registrable Shares owned by such seller or the sale of
such securities by such underwriters (it being understood
that, subject to Section 3.5 and the requirements of the
Securities Act and applicable state securities laws, the
Company consents to the use of the prospectus and any
amendment or supplement thereto by each seller and the
underwriters in connection with the offering and sale of the
Registrable Shares covered by the registration statement of
which such prospectus, amendment or supplement is a part);
(iv) use its commercially reasonable efforts to
register or qualify such Registrable Shares under such other
securities or "blue sky" laws of such jurisdictions as the
managing underwriter reasonably requests (or, in the event the
registration statement does not relate to an underwritten
offering, as the holders of a majority of such Registrable
Shares may reasonably request); use its commercially
reasonable efforts to keep each such registration or
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<PAGE> 22
qualification (or exemption therefrom) effective during the
period in which such registration statement is required to be
kept effective; and do any and all other acts and things which
may be reasonably necessary or advisable to enable each seller
to consummate the disposition of the Registrable Shares owned
by such seller in such jurisdictions (provided, however, that
the Company will not be required to (A) qualify generally to
do business in any jurisdiction where it would not otherwise
be required to qualify but for this subparagraph or (B)
consent to general service of process in any such
jurisdiction);
(v) promptly notify each seller and each underwriter
and (if requested by any such Person) confirm such notice in
writing (A) when a prospectus or any prospectus supplement or
post-effective amendment has been filed and, with respect to a
registration statement or any post-effective amendment, when
the same has become effective, (B) of the issuance by any
state securities or other regulatory authority of any order
suspending the qualification or exemption from qualification
of any of the Registrable Shares under state securities or
"blue sky" laws or the initiation of any proceedings for that
purpose, and (C) of the happening of any event which makes any
statement made in a registration statement or related
prospectus untrue or which requires the making of any changes
in such registration statement, prospectus or documents so
that they will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, and, as promptly as practicable thereafter,
prepare and file with the SEC and furnish a supplement or
amendment to such prospectus so that, as thereafter
deliverable to the purchasers of such Registrable Shares, such
prospectus will not contain any untrue statement of a material
fact or omit a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading;
(vi) make generally available to the Company's
securityholders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act no later
than thirty (30) days after the end of the twelve (12) month
period beginning with the first day of the Company's first
fiscal quarter commencing after the effective date of a
registration statement, which earnings statement shall cover
said twelve (12) month period, and which requirement will be
deemed to be satisfied if the Company timely files complete
and accurate information on Forms 10-Q, 10-K and 8-K under the
Exchange Act and otherwise complies with Rule 158 under the
Securities Act;
(vii) if requested by the managing underwriter or any
seller, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing
underwriter or any seller reasonably requests to be included
therein, including, without limitation, with respect to the
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Registrable Shares being sold by such seller, the purchase
price being paid therefor by the underwriters and with respect
to any other terms of the underwritten offering of the
Registrable Shares to be sold in such offering, and promptly
make all required filings of such prospectus supplement or
post-effective amendment;
(viii) as promptly as practicable after filing with
the SEC of any document which is incorporated by reference
into a registration statement (in the form in which it was
incorporated), deliver a copy of each such document to each
seller;
(ix) cooperate with the sellers and the managing
underwriter to facilitate the timely preparation and delivery
of certificates (which shall not bear any restrictive legends
unless required under applicable law) representing securities
sold under any registration statement, and enable such
securities to be in such denominations and registered in such
names as the managing underwriter or such sellers may request
and keep available and make available to the Company's
transfer agent prior to the effectiveness of such registration
statement a supply of such certificates;
(x) promptly make available for inspection by any
seller, any underwriter participating in any disposition
pursuant to any registration statement, and any attorney,
accountant or other agent or representative retained by any
such seller or underwriter (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records"),
as shall be reasonably necessary to enable them to exercise
their due diligence responsibilities, and cause the Company's
officers, directors and employees to supply all information
requested by any such Inspector in connection with such
registration statement; provided, that, unless the disclosure
of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement or the
release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, the
Company shall not be required to provide any information under
this subparagraph (x) if (A) the Company believes, after
consultation with counsel for the Company, that to do so would
cause the Company to forfeit an attorney-client privilege that
was applicable to such information or (B) if either (1) the
Company has requested and been granted from the SEC
confidential treatment of such information contained in any
filing with the SEC or documents provided supplementally or
otherwise or (2) the Company reasonably determines in good
faith that such Records are confidential and so notifies the
Inspectors in writing unless prior to furnishing any such
information with respect to (A) or (B) such Holder of
Registrable Shares requesting such information agrees to enter
into a confidentiality agreement in customary form and subject
to customary exceptions; and provided, further, that each
Holder of Registrable Shares agrees that it will, upon
learning that disclosure of such Records is sought in
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a court of competent jurisdiction, give notice to the Company
and allow the Company, at its expense, to undertake
appropriate action and to prevent disclosure of the Records
deemed confidential;
(xi) furnish to each seller and underwriter a signed
counterpart of (A) an opinion or opinions of counsel to the
Company, and (B) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary
form and covering such matters of the type customarily covered
by opinions or comfort letters, as the case may be, as the
sellers or managing underwriter reasonably request;
(xii) cause the Registrable Shares included in any
registration statement to be (A) listed on each securities
exchange, if any, on which similar securities issued by the
Company are then listed, or (B) listed on the Nasdaq Stock
Market if the Registrable Shares so qualify;
(xiii) provide a CUSIP number for the Registrable
Shares included in any registration statement not later than
the effective date of such registration statement;
(xiv) cooperate with each seller and each underwriter
participating in the disposition of such Registrable Shares
and their respective counsel in connection with any filings
required to be made with the National Association of
Securities Dealers, Inc. (the "NASD");
(xv) during the period when the prospectus is
required to be delivered under the Securities Act, promptly
file all documents required to be filed with the SEC pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;
(xvi) notify each seller of Registrable Shares
promptly of any request by the SEC for the amending or
supplementing of such registration statement or prospectus or
for additional information;
(xvii) prepare and file with the SEC promptly any
amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for the Company or
the managing underwriter, are required in connection with the
distribution of the Registrable Shares;
(xviii) enter into such agreements (including
underwriting agreements in the managing underwriter's
customary form) as are customary in connection with an
underwritten registration; and
(xix) advise each seller of such Registrable Shares,
promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for such
purpose and promptly use its best efforts to prevent the
issuance of any stop order or to
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obtain its withdrawal at the earliest possible moment if such
stop order should be issued.
SECTION 3.5 SUSPENSION OF DISPOSITIONS. Each Holder agrees by
acquisition of any Registrable Shares that, upon receipt of any notice (a
"Suspension Notice") from the Company of the happening of any event of the kind
described in Section 3.4(v)(C) or 3.4(xix) (a "Suspension Event"), such Holder
will forthwith discontinue disposition of Registrable Shares until such Holder's
receipt of the copies of the supplemented or amended prospectus, or until it is
advised in writing (the "Advice") by the Company that the use of the prospectus
may be resumed, and has received copies of any additional or supplemental
filings which are incorporated by reference in the prospectus, and, if so
directed by the Company, such Holder will deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Shares current at the time of receipt of
such notice. In the event the Company shall give any such notice, the time
period regarding the effectiveness of registration statements set forth in
Section 3.4(ii) hereof shall be extended by the number of days during the period
from and including the date of the giving of the Suspension Notice to and
including the date when each seller of Registrable Shares covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus or the Advice. The Company shall use its commercially
reasonable efforts and take such actions as are reasonably necessary to render
the Advice as promptly as practicable following the conclusion of a Suspension
Event. The Company shall suspend the use of any shelf registration statement
during a Suspension Event and shall so notify any Holders having securities
registered thereunder in accordance with this Section 3.5.
SECTION 3.6 REGISTRATION EXPENSES. All expenses incident to the
Company's performance of or compliance with this Article 3, including, without
limitation, all registration and filing fees, all fees and expenses associated
with filings required to be made with the NASD (including, if applicable, the
fees and expenses of any "qualified independent underwriter" as such term is
defined in Rule 2720(b)(15) of the NASD Conduct Rules and of its counsel), fees
and expenses of compliance with securities or "blue sky" laws (including
reasonable fees and disbursements of counsel in connection with "blue sky"
qualifications of the Registrable Shares), rating agency fees, printing expenses
(including expenses of printing certificates for the Registrable Shares in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by a Holder of
Registrable Shares), messenger and delivery expenses, the Company's internal
expenses (including without limitation all salaries and expenses of its officers
and employees performing legal or accounting duties), the fees and expenses
incurred in connection with any listing of the Registrable Shares, fees and
expenses of counsel for the Company and its independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance), Securities Act liability
insurance (if the Company elects to obtain such insurance), the fees and
expenses of any special experts retained by the Company in connection with such
registration, and the fees and expenses of other persons retained by the Company
and reasonable fees and expenses of one firm of counsel for the sellers (which
shall be selected by the Holders of a majority of the Registrable Shares being
included in
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<PAGE> 26
any particular registration statement) (all such expenses being herein called
"Registration Expenses"), will be borne by the Company whether or not any
registration statement becomes effective; provided, that in no event shall
Registration Expenses include any underwriting discounts, commissions, or fees
attributable to the sale of the Registrable Shares or any counsel (except as
provided above), accountants, or other persons retained or employed by the
Holders.
SECTION 3.7 INDEMNIFICATION.
3.7.1 The Company agrees to indemnify and reimburse, to the
fullest extent permitted by law, each seller of Registrable Shares, and each of
its employees, advisors, agents, representatives, partners, officers, and
directors and each Person who controls such seller (within the meaning of the
Securities Act or the Exchange Act) and any agent or investment advisor thereof
(collectively, the "Seller Affiliates") (A) against any and all losses, claims,
damages, liabilities, and expenses, joint or several (including, without
limitation, attorneys' fees and disbursements except as limited by Section
3.7.3) based upon, arising out of, related to or resulting from any untrue or
alleged untrue statement of a material fact contained in any registration
statement, prospectus, or preliminary prospectus or any amendment thereof or
supplement thereto, or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (B) against any and all loss, liability, claim, damage, and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon,
arising out of, related to or resulting from any such untrue statement or
omission or alleged untrue statement or omission, and (C) against any and all
costs and expenses (including reasonable fees and disbursements of counsel) as
may be reasonably incurred in investigating, preparing, or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon, arising out of,
related to or resulting from any such untrue statement or omission or alleged
untrue statement or omission, to the extent that any such expense or cost is not
paid under subparagraph (A) or (B) above; except insofar as the same are made in
reliance upon and in strict conformity with information furnished in writing to
the Company by such seller or any Seller Affiliate for use therein or arise from
such seller's or any Seller Affiliate's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such seller or Seller Affiliate with a
sufficient number of copies of the same. The reimbursements required by this
Section 3.7.1 will be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.
3.7.2 In connection with any registration statement in which a
seller of Registrable Shares is participating, each such seller will furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the fullest extent permitted by law, each such seller will
indemnify the Company and its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act or the Exchange
Act) against any and all losses, claims, damages, liabilities, and expenses
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<PAGE> 27
(including, without limitation, reasonable attorneys' fees and disbursements
except as limited by Section 3.7.3) resulting from any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, prospectus, or any preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission is contained in any information or
affidavit so furnished in writing by such seller or any of its Seller Affiliates
specifically for inclusion in the registration statement; provided, that the
obligation to indemnify will be several, not joint and several, among such
sellers of Registrable Shares, and the liability of each such seller of
Registrable Shares will be in proportion to, and provided further that such
liability will be limited to, the net amount received by such seller from the
sale of Registrable Shares pursuant to such registration statement; provided,
however, that such seller of Registrable Shares shall not be liable in any such
case to the extent that prior to the filing of any such registration statement
or prospectus or amendment thereof or supplement thereto, such seller has
furnished in writing to the Company information expressly for use in such
registration statement or prospectus or any amendment thereof or supplement
thereto which corrected or made not misleading information previously furnished
to the Company.
3.7.3 Any Person entitled to indemnification hereunder will
(A) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
such notice shall not limit the rights of such Person) and (B) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
Person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless (X)
the indemnifying party has agreed to pay such fees or expenses or (Y) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person. If such defense is not
assumed by the indemnifying party as permitted hereunder, the indemnifying party
will not be subject to any liability for any settlement made by the indemnified
party without its consent (but such consent will not be unreasonably withheld).
If such defense is assumed by the indemnifying party pursuant to the provisions
hereof, such indemnifying party shall not settle or otherwise compromise the
applicable claim unless (1) such settlement or compromise contains a full and
unconditional release of the indemnified party or (2) the indemnified party
otherwise consents in writing. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the
reasonable fees and disbursements of such additional counsel or counsels.
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3.7.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 3.7.1 or Section 3.7.2 are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities, or expenses (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 3.7.4
were determined by pro rata allocation (even if the Holders or any underwriters
or all of them were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this Section 3.7.4. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities, or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or, except as provided in Section 3.7.3, defending
any such action or claim. Notwithstanding the provisions of this Section 3.7.4,
no Holder shall be required to contribute an amount greater than the dollar
amount by which the net proceeds received by such Holder with respect to the
sale of any Registrable Shares exceeds the amount of damages which such Holder
has otherwise been required to pay by reason of any and all untrue or alleged
untrue statements of material fact or omissions or alleged omissions of material
fact made in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto related to such sale of Registrable
Shares. 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. The Holders'
obligations in this Section 3.7.4 to contribute shall be several in proportion
to the amount of Registrable Shares registered by them and not joint.
If indemnification is available under this Section 3.7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 3.7.1 and Section 3.7.2 without regard to the relative fault
of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 3.7.4 subject, in the case of the
Holders, to the limited dollar amounts set forth in Section 3.7.2.
3.7.5 The indemnification and contribution provided for under
this Shareholders Agreement will remain in full force and effect regardless of
any investigation made by or on behalf of the indemnified party or any officer,
director, or controlling Person of such indemnified party and will survive the
Transfer of Securities and the termination of this Shareholders Agreement.
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ARTICLE 4
TRANSFERS OF SECURITIES
SECTION 4.1 PREEMPTIVE RIGHTS.
4.1.1 Rights to Participate in Future Sales. In case the
Company or any Affiliated Successor proposes to issue or sell any shares of
Common Stock or Common Stock Equivalents (the "Offered Securities"), the Company
shall, no later than thirty (30) days prior to the consummation of such
transaction (a "Preemptive Rights Transaction"), give notice in writing (the
"Offer Notice") to each Holder of such Preemptive Rights Transaction. The Offer
Notice shall describe the proposed Preemptive Rights Transaction, identify the
proposed purchaser, and contain an offer to sell to each Holder who certifies
(to the reasonable satisfaction of the Company) that such Holder is an
Accredited Investor (an "Accredited Offeree"), at the same price and for the
same consideration to be paid by the proposed purchaser, all or part of such
Accredited Offeree's pro rata portion of the Offered Securities (which shall be
the percentage ownership of the Fully-Diluted Common Stock held by such Holder,
excluding, for the purposes of such calculation, any shares of Common Stock
issuable upon exercise of any Common Stock Equivalents granted pursuant to any
employee, officer or director benefit plan or arrangement). As used herein, the
term "Affiliated Successor" means a successor entity to the Company (whether by
merger, consolidation, reorganization, or otherwise) in which the HMC Group owns
a majority of the fully-diluted common stock of such entity (after giving effect
to the merger, consolidation, reorganization, or other transaction). If any such
Holder fails to accept such offer by written notice twenty-five (25) days after
his or its receipt of the Offer Notice, the Company or such Affiliated Successor
may proceed with the proposed issue or sale of the Offered Securities, free of
any right on the part of such Holder under this Section 4.1.1 in respect
thereof.
4.1.2 Exceptions to Preemptive Rights. This Section 4.1 shall
not apply to (i) issuances or sales of Common Stock or Common Stock Equivalents
in an aggregate amount not in excess of 10% of the Fully-Diluted Common Stock to
employees, officers, and/or directors of the Company and/or any of its
Subsidiaries pursuant to employee benefit or similar plans or arrangements of
the Company and/or its Subsidiaries, (ii) issuances or sales of Common Stock or
Common Stock Equivalents upon exercise of any Common Stock Equivalent which,
when issued, was subject to or exempt from the preemptive rights under this
Section 4.1 (including, without limitation, the Class A Common Stock and the
Series A Preferred Stock), (iii) securities distributed or set aside ratably to
all holders of Common Stock and Common Stock Equivalents (or any class or series
thereof) on a per share equivalent basis, (iv) issuances or sales of Common
Stock or Common Stock Equivalents pursuant to or in connection with a registered
underwritten public offering, a merger of the Company or a Subsidiary of the
Company into or with another entity or an acquisition by the Company or a
Subsidiary of the Company of another business or corporation, (v) the issuance
of the Warrants or the issuance of Common Stock upon exercise thereof, (vi)
issuances of Common Stock or Class A Common Stock by the Company in payment of
all or any portion of the principal of, or interest or premium on, any
indebtedness of the Company or any of its Subsidiaries or (vii) issuances or
sales of Common Stock or Class A
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Common Stock pursuant to the Securities Purchase Agreement of even date
herewith. In the event of any issuances or sales of Common Stock or Common Stock
Equivalents as a unit with any other security of the Company or its
Subsidiaries, the preemptive rights under this Section 4.1 shall be applicable
to the entire unit rather than only the Common Stock or Common Stock Equivalent
included in the unit.
SECTION 4.2 DRAG ALONG RIGHTS.
4.2.1 Applicability. In connection with any Transfer by
members of the HMC Group of shares of Series A Preferred Stock (or, if converted
pursuant to its terms, Common Stock) representing more than ten percent (10%) of
the shares of Series A Preferred Stock (or, if converted pursuant to its terms,
Common Stock) then held by the HMC Group (a "Significant Drag Sale"), the HMC
Group shall have the right to require each non-selling Holder (each, a
"Co-Seller") to Transfer a portion of his or its Common Stock and, if requested
by HMTF as provided below, Class A Common Stock, which represents the same
percentage of the Fully-Diluted Common Stock held by such Co-Seller as the
shares being disposed of by the HMC Group represent of the Fully-Diluted Common
Stock held by the HMC Group. (For example, if the HMC Group is selling eleven
percent (11%) of its Fully-Diluted Common Stock position, each Co-Seller shall
be required to sell eleven percent (11%) of his or its Fully-Diluted Common
Stock position.) All Common Stock and Class A Common Stock Transferred by
Holders pursuant to this Section 4.2 shall be sold at the same price (on a
Common Stock equivalent basis) and otherwise treated identically with the Series
A Preferred Stock (or, if converted pursuant to its terms, Common Stock) being
sold by the HMC Group in all respects; provided, that the Co-Seller shall not be
required to make any representations or warranties in connection with such
Transfer other than representations and warranties as to (i) such Co-Seller's
ownership of his or its Common Stock and/or Class A Common Stock to be
Transferred free and clear of all liens, claims and encumbrances, (ii) such
Co-Seller's power and authority to effect such Transfer, and (iii) such matters
pertaining to compliance with securities laws as the transferee may reasonably
require except that the transferee may not require that each Transferring
Co-Seller be an Accredited Investor.
4.2.2 Notice of Significant Drag Sale. HMTF, on behalf of the
HMC Group, shall give each Co-Seller at least thirty (30) days' prior written
notice of any proposed Significant Drag Sale as to which the HMC Group intends
to exercise its rights under Section 4.2. If the HMC Group elects to exercise
its rights under Section 4.2, the Co-Sellers shall take such actions as may be
reasonably required and otherwise cooperate in good faith with the HMC Group in
connection with consummating the Significant Drag Sale (including, without
limitation, the voting of any Common Stock or other voting capital stock of the
Company to approve such Significant Drag Sale). At the closing of such
Significant Drag Sale, each Co-Seller shall deliver certificates for all shares
of Common Stock (or, if applicable, Class A Common Stock) to be sold by such
Co-Seller, duly endorsed for transfer, with the signature guaranteed, to the
purchaser against payment of the appropriate purchase price.
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SECTION 4.3 TAG ALONG RIGHTS.
4.3.1 Applicability. In the event the HMC Group desires to
effect a sale of shares of Series A Preferred Stock (or, if converted pursuant
to its terms, Common Stock) representing more than ten percent (10%) of the
shares of Series A Preferred Stock (or, if converted pursuant to its terms,
Common Stock) then held by the HMC Group (a "Significant Tag Sale"), and it does
not elect to exercise its rights (if any) under Section 4.2 hereof, then at
least thirty (30) days prior to the closing of such Significant Tag Sale, the
HMC Group shall make an offer (the "Participation Offer") to each Co-Seller to
include in the proposed Significant Tag Sale a portion of his or its Common
Stock and, if consented to by the transferee as provided below, Class A Common
Stock, which represents the same percentage of such Co-Seller's Fully-Diluted
Common Stock as the shares being sold by the HMC Group represent of its
Fully-Diluted Common Stock; provided, that, if the consideration to be received
by the HMC Group includes any securities, only Co-Sellers who have certified to
the reasonable satisfaction of HMTF that they are Accredited Investors shall be
entitled to participate in such transfer, unless the transferee consents
otherwise; and provided, further, that if the transferee in the Significant Tag
Sale consents, any Holder may elect to dispose of Class A Common Stock (on a
Common Stock equivalent basis) in lieu of Common Stock.
4.3.2 Terms of Participation Offer. The Participation Offer
shall describe the terms and conditions of the proposed Significant Tag Sale and
shall be conditioned upon (i) the consummation of the transactions contemplated
in the Participation Offer with the transferee named therein, and (ii) each
Co-Seller's execution and delivery of all agreements and other documents as the
members of the HMC Group are required to execute and deliver in connection with
such Significant Tag Sale (provided that the Co-Seller shall not be required to
make any representations or warranties in connection with such sale or transfer
other than representations and warranties as to (A) such Co-Seller's ownership
of his or its Common Stock and/or Class A Common Stock to be sold or Transferred
free and clear of all liens, claims, and encumbrances, (B) such Co-Seller's
power and authority to effect such Transfer and (C) such matters pertaining to
compliance with securities laws as the transferee may reasonably require). If
any Co-Seller shall accept the Participation Offer, the HMC Group shall reduce,
to the extent necessary, the number of shares of Series A Preferred Stock (or,
if converted pursuant to its terms, Common Stock) it otherwise would have sold
in the proposed Transfer so as to permit those Co-Sellers who have accepted the
Participation Offer to sell the number of shares of Common Stock or, if
applicable, Class A Common Stock that they are entitled to sell under this
Section 4.3, and the HMC Group and such Co-Sellers shall Transfer the number of
shares of Series A Preferred Stock (or, if converted pursuant to its terms,
Common Stock) and Common Stock, respectively, and, if applicable, Class A Common
Stock specified in the Participation Offer to the proposed transferee in
accordance with the terms of such Transfer as set forth in the Participation
Offer.
SECTION 4.4 CERTAIN EVENTS NOT DEEMED TRANSFERS. Sections 4.2 and 4.3
hereof shall not apply to any transfer, sale, or disposition of shares of Series
A Preferred Stock (or,
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if converted pursuant to its terms, Common Stock) solely among members of the
HMC Group.
SECTION 4.5 TRANSFER AND EXCHANGE. When Securities are presented to
the Company with a request to register the transfer of such Securities or to
exchange such Securities for Securities of other authorized denominations, the
Company shall register the transfer or make the exchange as requested if the
requirements of this Shareholders Agreement for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company, duly executed by the Holder thereof or its
attorney and duly authorized in writing. No service charge shall be made for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith.
SECTION 4.6 REPLACEMENT SECURITIES. If a mutilated certificate
representing a Security is surrendered to the Company or if the Holder of a
Security claims and submits an affidavit or other evidence, satisfactory to the
Company, to the effect that the certificate representing a Security has been
lost, destroyed or wrongfully taken, the Company shall issue a replacement
certificate if the Company's requirements are met. If required by the Company,
such securityholder must provide an indemnity bond, or other form of indemnity,
sufficient in the judgment of the Company to protect the Company against any
loss which may be suffered. The Company may charge such securityholder for its
reasonable out-of-pocket expenses in replacing a certificate representing a
Security which has been mutilated, lost, destroyed, or wrongfully taken.
ARTICLE 5
LIMITATION ON TRANSFERS
SECTION 5.1 RESTRICTIONS ON TRANSFER. No Security shall be Transferred
or otherwise conveyed, assigned or hypothecated before satisfaction of (i) the
conditions specified in Section 5.1, Section 5.2, and Section 5.3, which
conditions are intended to ensure compliance with the provisions of the
Securities Act with respect to the Transfer of any Security and (ii) if
applicable, Article 4 hereof. Any purported Transfer in violation of this
Article 5 and/or, if applicable, Article 4 hereof shall be void ab initio and of
no force or effect. Other than Transfers subject to Section 4.2 or 4.3 hereof
and other than Transfers to the public pursuant to an effective registration
statement or sales to the public pursuant to Rule 144 under the Securities Act
otherwise permitted hereunder, each Holder will cause any proposed transferee of
any Security or any interest therein held by it to agree to take and hold such
Securities subject to the provisions and upon the conditions specified in this
Shareholders Agreement.
SECTION 5.2 RESTRICTIVE LEGENDS.
5.2.1 Securities Act Legend. Except as otherwise provided in
Section 5.4 hereof, each certificate evidencing a Security held by a Holder, and
each certificate
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evidencing a Security issued to any subsequent transferee of such Security,
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT
TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 UNDER SUCH ACT, OR (iii) ANY OTHER
EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
5.2.2 Other Legends. Except as otherwise permitted by the last
sentence of Section 5.1, each certificate evidencing a Security issued to each
Holder or a subsequent transferee shall include a legend in substantially the
following form:
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING
AND OTHER TERMS AND CONDITIONS SET FORTH IN THE SHAREHOLDERS AGREEMENT DATED AS
OF ___________, 1999, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICES.
SECTION 5.3 NOTICE OF PROPOSED TRANSFERS. Prior to any Transfer or
attempted Transfer of any Security, the Holder of such Security shall (i) give
ten (10) days' prior written notice (a "Transfer Notice") to the Company of such
Holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and (ii) either (A) provide to the
Company an opinion reasonably satisfactory to the Company from counsel who shall
be reasonably satisfactory to the Company (or supply such other evidence
reasonably satisfactory to the Company) that the proposed Transfer of such
Security may be effected without registration under the Securities Act, or (B)
certify to the Company that the Holder reasonably believes the sale meets all of
the conditions specified in Rule 144 promulgated under the Securities Act (and
any successor rules and regulations thereto) required in order to effect a
Transfer under Rule 144. After receipt of the Transfer Notice and opinion (if
required), the Company shall, within five (5) days thereof, so notify the Holder
of such Security and such Holder shall thereupon be entitled to Transfer such
Security in accordance with the terms of the Transfer Notice. Each certificate
evidencing a Security issued upon such Transfer shall bear the restrictive
legend set forth in Section 5.2.1, unless in the opinion of such counsel such
legend is not required in order to ensure compliance with the Securities Act,
and Section 5.2.2, if applicable. The Holder of the Security giving the Transfer
Notice shall not be entitled to Transfer such Security until receipt of the
notice from the Company under this Section 5.3.
SECTION 5.4 TERMINATION OF CERTAIN RESTRICTIONS. Notwithstanding the
foregoing provisions of this Section 5, the restrictions imposed by Section 5.1
upon the transferability of the Securities and the legend requirements of
Sections 5.2.1 and 5.2.2 shall terminate as to any Security (i) when and so long
as such Security shall have been
29
<PAGE> 34
effectively registered under the Securities Act and disposed of pursuant thereto
and (ii) the legend requirements of Section 5.2.1 shall terminate when the
Company shall have received an opinion of counsel reasonably satisfactory to it
that such Security may be transferred without registration thereof under the
Securities Act and that such legend may be removed. Whenever the restrictions
imposed by Sections 5.2.1 and/or 5.2.2 shall terminate as to any Security, the
Holder thereof shall be entitled to receive from the Company, at the Company's
expense, a new certificate representing such Security not bearing the
restrictive legend set forth in Section 5.2.1 and/or 5.2.2.
ARTICLE 6
TERMINATION
SECTION 6.1 TERMINATION. The provisions of this Shareholders Agreement
shall terminate on July 30, 2009; provided, however, that Sections 4.1, 4.2,
4.3, Article 5 (other than Sections 5.2 and 5.4) and Section 7.8 of this
Shareholders Agreement shall terminate upon the consummation prior to the
expiration of such ten (10) year period of a Qualified IPO. Notwithstanding the
foregoing, the provisions of Section 3.7 hereof shall survive the termination of
this Shareholders Agreement indefinitely.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1 NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows (or at such
other address as may be substituted by notice given as herein provided):
If to the Company:
Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
Attention: David M. Sindelar
Facsimile No.: (314) 746-2299
With copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Jack D. Furst
Lawrence D. Stuart, Jr.
Facsimile No.: (214) 740-7313
and (which shall not constitute notice):
30
<PAGE> 35
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen, Esq.
Facsimile No.: (214) 746-7777
If to any Holder, at its address listed on the signature pages
hereof.
In the case of the Kreiseder Shareholders or the Sommers
Shareholders, with a copy to (which shall not constitute
notice):
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
Attention: David R. Shevitz, Esq.
Stuart Grass, Esq.
Any notice or communication hereunder shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
answered back if telexed; when receipt is acknowledged if telecopied; and five
(5) calendar days after mailing if sent by registered or certified mail (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 7.2 LEGAL HOLIDAYS. A "Legal Holiday" used with respect to a
particular place of payment is a Saturday, a Sunday or a day on which banking
institutions at such place are not required to be open. If a payment date is a
Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest on the amount of
such payment shall accrue for the intervening period.
SECTION 7.3 GOVERNING LAW. SUBJECT TO SECTION 7.7.3, THIS SHAREHOLDERS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 7.4 SUCCESSORS AND ASSIGNS. Whether or not an express
assignment has been made pursuant to the provisions of this Shareholders
Agreement, provisions of this Shareholders Agreement that are for the Holders'
benefit as the holders of any Securities are also for the benefit of, and
enforceable by, all subsequent holders of Securities, except as otherwise
expressly provided herein. This Shareholders Agreement shall be binding upon the
Company, each Holder, and their respective successors and assigns.
31
<PAGE> 36
SECTION 7.5 DUPLICATE ORIGINALS. All parties may sign any number of
copies of this Shareholders Agreement. Each signed copy shall be an original,
but all of them together shall represent the same agreement.
SECTION 7.6 SEVERABILITY. In case any provision in this Shareholders
Agreement shall be held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 7.7 NO WAIVERS; AMENDMENTS.
7.7.1 No failure or delay on the part of the Company or any
Holder in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or any Holder at law or in equity or otherwise.
7.7.2 Any provision of this Shareholders Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Company and the Required Holders; provided, that no such amendment
or waiver shall, (i) unless signed by all of the Holders, amend the provisions
of Section 2.1 or any definition used therein or Section 2.2, (ii) unless signed
by all of the Holders affected, (A) amend the provisions of this Section 7.7.2
or (B) change the number of Holders which shall be required for the Holders or
any of them to take any action under this Section 7.7.2 or any other provision
of this Shareholders Agreement, and (iii) unless signed by a majority of the
Holders who are not members of the HMC Group, amend Article 3, Section 4.1,
Section 4.2, Section 4.3, Section 4.4, or Article 5, or grant a waiver
thereunder, so as to (A) impose additional obligations on Holders who are not
members of the HMC Group that are not imposed on Holders who are members of the
HMC Group or (B) adversely affect the rights granted to the Holders who are not
members of the HMC Group where such amendment or waiver does not apply to the
same extent to the rights granted thereunder to the Holders who are members of
the HMC Group.
7.7.3 Notwithstanding anything to the contrary contained
herein, Section 7.3 may be amended by the Company, in its sole discretion, to
provide that this Shareholders Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to principles
of conflicts of law thereof), upon the reincorporation of the Company to the
State of Delaware.
SECTION 7.8 FURNISHING INFORMATION; CONFIDENTIALITY.
7.8.1 The Company hereby agrees to furnish to each Holder (i)
within thirty (30) days after the end of each month, such monthly financial
statements of the Company as are furnished to the Company's senior bank lenders,
(ii) within forty-five (45) days after the end of each fiscal quarter of the
Company, such quarterly financial statements of the Company as are furnished to
the Company's senior bank lenders, and (iii) within one
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<PAGE> 37
hundred twenty (120) days after the end of each fiscal year of the Company, such
annual financial statements and budgets of the Company as are furnished to the
Company's senior bank lenders (collectively with any other non-public
information, data and materials relating to the Company and its operations,
businesses and activities, the "Information"). The Company's obligation under
this Section 7.8.1 shall not obligate the Company to furnish any Information
that it does not possess. In addition, no Holder shall have the right to receive
any such Information following the time at which such Holder owns less than one
percent (1%) of the Fully-Diluted Common Stock.
7.8.2 No Holder (other than the members of the HMC Group)
shall, in any manner, either directly or indirectly, divulge, disclose, or
communicate to any Person or entity (other than the members of the HMC Group)
any Information, provided that the foregoing confidentiality obligation shall
not apply to any Information that has previously become available to and known
by the public for a period of at least forty-eight (48) hours (other than as a
result of a wrongful disclosure hereunder). The foregoing provisions of this
Section 7.8.2 shall not prohibit the disclosure of Information by any Holder to
the extent required by, and pursuant to a valid demand under, applicable freedom
of information acts. Any Holder receiving such a demand for disclosure shall
give written notice thereof to the Company as promptly as is reasonably
practicable after such Holder learns of any such demand.
SECTION 7.9 ADDITIONAL PARTIES. Upon exercise of a Warrant in
accordance with the terms thereof, the shareholder of Common Stock issued upon
such exercise shall have the option to join this Shareholders Agreement, thereby
being bound by its terms and conditions and entitled to its benefits, upon the
execution by such shareholder of a separate signature page to such effect and
without obtaining the consent of the Holders of a majority of the Fully-Diluted
Common Stock. Additional future shareholders of the Company may be added as
parties to this Shareholders Agreement, thereby being bound by its terms and
conditions and entitled to its benefits, upon the execution by such future
shareholders of a separate signature page to such effect and upon obtaining the
consent of the Holders of a majority of the Fully-Diluted Common Stock.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE> 38
SIGNATURES TO SHAREHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this
Shareholders Agreement to be duly executed as of the date first written above.
LLS CORP.
By: /s/ WESLEY D. DEHAVEN
--------------------------------
Name: Wesley D. DeHaven
------------------------------
Title: Vice President - Finance
-----------------------------
<PAGE> 39
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
HMTF/CC INVESTMENTS, LLC
By: /s/ PATRICK K. MCGEE
--------------------------------------
Name: Patrick K. McGee
------------------------------------
Title: Partner
-----------------------------------
Address:
c/o Hicks, Muse Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
<PAGE> 40
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
WALTER J. KREISEDER TRUST
/s/ WALTER J. KREISEDER
-----------------------------------------
Walter J. Kreiseder, not individually,
but solely as Trustee of the Walter J.
Kreiseder Trust
Address:
Walter J. Kreiseder
21650 Sylvander Drive
Barrington, Illinois 60010
<PAGE> 41
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
GERALD J. SOMMERS TRUST
/s/ GERALD J. SOMMERS
-----------------------------------------
Gerald J. Sommers, not individually, but
solely as Trustee of the Gerald J.
Sommers Trust
Address:
Gerald J. Sommers
513 Claire Lane
Prospect Heights, Illinois 60070
<PAGE> 42
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAMES OF HOLDERS:
WALTER J. KREISEDER GIFT TRUST FOR DAVID
WALTER J. KREISEDER GIFT TRUST FOR JOHN
WALTER J. KREISEDER 1997 GIFT TRUST FOR DAVID
WALTER J. KREISEDER 1997 GIFT TRUST FOR JOHN
/s/ DONALD B. LEVINE
---------------------------------------------
Donald B. Levine, not individually, but
solely as Trustee of the Walter J. Kreiseder
Gift Trust for David, the Walter J. Kreiseder
Gift Trust for John, the Walter J. Kreiseder
1997 Gift Trust for David and the Walter J.
Kreiseder 1997 Gift Trust for John.
Address:
Donald B. Levine
Levin & Ginsburg, Ltd.
180 N. LaSalle Street
22nd Floor
Chicago, Illinois 60601-2794
<PAGE> 43
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAMES OF HOLDERS:
GERALD J. SOMMERS GIFT TRUST FOR JANET
GERALD J. SOMMERS GIFT TRUST FOR JAMES
GERALD J. SOMMERS 1997 GIFT TRUST FOR JANET
GERALD J. SOMMERS 1997 GIFT TRUST FOR JAMES
/s/ JANET A. KRITEK
----------------------------------------------
Janet A. Kritek, not individually, but solely
as Trustee of the Gerald J. Sommers Gift Trust
for Janet, the Gerald J. Sommers Gift Trust
for James, the Gerald J. Sommers 1997 Gift
Trust for Janet and the Gerald J. Sommers 1997
Gift Trust for James.
Address:
Janet A. Kritek
1611 Rose Tree Lane
Mt. Prospect, Illinois 60057
<PAGE> 44
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
JAMES N. MILLS
/s/ JAMES N. MILLS
--------------------------------------------
Signature
Address:
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: James N. Mills
<PAGE> 45
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
DAVID M. SINDELAR
/s/ DAVID M. SINDELAR
--------------------------------------------
Signature
Address:
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite
St. Louis, Missouri 63105
Attention: David M. Sindelar
<PAGE> 46
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
W. THOMAS McGHEE
/s/ W. THOMAS McGHEE
--------------------------------------------
Signature
Address:
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: W. Thomas McGhee
<PAGE> 47
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
LARRY S. BACON
/s/ LARRY S. BACON
--------------------------------------------
Signature
Address:
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: Larry S. Bacon
<PAGE> 48
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
JUDY A. ROWDEN
/s/ JUDY A. ROWDEN
--------------------------------------------
Signature
Address:
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: Judy A. Rowden
<PAGE> 49
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
TIMOTHY L. CONLON
/s/ TIMOTHY L. CONLON
--------------------------------------------
Signature
Address:
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: Timothy L. Conlon
<PAGE> 50
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
DAVID J. WEBSTER
/s/ DAVID J. WEBSTER
--------------------------------------------
Signature
Address:
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: David J. Webster
<PAGE> 51
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
JOSEPH M. FIAMINGO
/s/ JOSEPH M. FIAMINGO
--------------------------------------------
Signature
Address:
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: Joseph M. Fiamingo
<PAGE> 52
SIGNATURES TO SHAREHOLDERS AGREEMENT
NAME OF HOLDER:
KELLY E. WETZLER
/s/ KELLY E. WETZLER
--------------------------------------------
Signature
Address:
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: Kelly E. Wetzler
<PAGE> 53
EXHIBIT A
James N. Mills
David M. Sindelar
David J. Webster
Larry S. Bacon
W. Thomas McGhee
Timothy L. Conlon
Joseph M. Fiamingo
Kelly E. Wetzler
Judy A. Rowden
<PAGE> 1
EXHIBIT 10.5
MONITORING AND OVERSIGHT AGREEMENT
THIS MONITORING AND OVERSIGHT AGREEMENT (this "Agreement") is made and
entered into effective as of July 30, 1999, among LLS Corp., an Illinois
corporation (together with its successors, "Holdings"), Courtesy Corporation, an
Illinois corporation (together with its successors, "Courtesy"), Creative
Packaging Corp., an Illinois corporation (together with its successors,
"Creative"), and Courtesy Sales Corp., an Illinois corporation (together with
its successors, "Courtesy Sales" and, together with Holdings, Courtesy and
Creative, the "Clients"), and Hicks, Muse & Co. Partners, L.P., a Texas limited
partnership (together with its successors, "HMCo").
1. Retention. The Clients hereby acknowledge that they have retained
HMCo to, and HMCo acknowledges that, subject to reasonable advance notice in
order to accommodate scheduling, HMCo will, provide financial oversight and
monitoring services to the Clients as requested by the board of directors of
Holdings during the term of this Agreement.
2. Term. The term of this Agreement shall continue until the earlier to
occur of (i) the tenth anniversary of the date hereof or (ii) the date on which
Hicks, Muse, Tate & Furst Incorporated ("HMTF") or its successors and their
respective affiliates (including, without limitation, any equity fund sponsored
by HMTF or its successors) shall cease to own beneficially, directly or
indirectly, any securities of any of the Clients or their respective successors.
3. Compensation.
(a) As compensation for HMCo's services to the Clients under
this Agreement, the Clients hereby irrevocably agree, jointly and severally, to
pay to HMCo an annual fee (the "Monitoring Fee") of Five Hundred Thousand and
No/100 Dollars ($500,000.00) (the "Base Fee"), subject to adjustment pursuant to
paragraphs (b) and (c) below and prorated on a daily basis for any partial
calendar year during the term of this Agreement. The Monitoring Fee shall be
payable in equal quarterly installments on each January 1, April 1, July 1 and
October 1 during the term of this Agreement (each a "Payment Date"), beginning
with the first Payment Date following the date hereof. All payments shall be
made by wire transfer of immediately available funds to the account described on
Exhibit A hereto, or such other account as HMCo may hereafter designate in
writing.
NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT CONTAINS INDEMNIFICATION
PROVISIONS IN SECTION 5 THAT APPLY TO CLAIMS, LIABILITIES, LOSSES,
DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE
RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT
ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED PERSON IDENTIFIED
THEREIN.
<PAGE> 2
(b) On January 1 of each calendar year during the term of this
Agreement, the Monitoring Fee shall be adjusted to an amount equal to (i) the
budgeted consolidated annual net sales of Holdings and its subsidiaries for the
then-current fiscal year, multiplied by (ii) 0.2% (the "Percentage"); provided,
however, that in no event shall the annual Monitoring Fee be less than the Base
Fee.
(c) On each occasion that Holdings or any of its subsidiaries
shall acquire another entity or business during the term of this Agreement, the
annual Monitoring Fee for the calendar year in which such acquisition occurs
shall be adjusted prospectively (i.e., for periods subsequent to such
acquisition until the next adjustment pursuant to clause (b) above), as of the
closing of such acquisition, to an annual amount equal to (i) the pro forma
budgeted consolidated annual net sales of Holdings and its subsidiaries for the
entire then-current fiscal year of Holdings (including the budgeted consolidated
annual net sales of the acquired entity or business for such entire fiscal year,
on a pro forma basis), multiplied by (ii) the Percentage; provided, however,
that in no event shall the annual Monitoring Fee be less than the Base Fee.
(d) All past due payments in respect of the Monitoring Fee
shall bear interest at the lesser of the highest rate of interest which may be
charged under applicable law or the prime commercial lending rate per annum of
The Chase Manhattan Bank or its successors (which rate is a reference rate and
is not necessarily its lowest or best rate of interest actually charged to any
customer) (the "Prime Rate") as in effect from time to time, plus five percent
(5.0%), from the due date of such payment to and including the date on which
payment is made to HMCo in full, including such interest accrued thereon.
4. Reimbursement of Expenses. In addition to the compensation to be
paid pursuant to Section 3 hereof, the Clients agree, jointly and severally, to
pay or reimburse HMCo for all "Reimbursable Expenses," which shall consist of
(i) all reasonable disbursements and out-of-pocket expenses (including, without
limitation, costs of travel, postage, deliveries, communications, etc.) incurred
by HMCo or its affiliates for the account of any Client or in connection with
the performance by HMCo of the services contemplated by Section 1 hereof and
(ii) the Clients' Pro Rata Share of Allocable Expenditures (as defined in
Exhibit B hereto). Promptly (but not more than 10 days) after request by or
notice from HMCo, the applicable Client shall pay HMCo, by wire transfer of
immediately available funds to the account described on Exhibit A hereto, or
such other account as HMCo may hereafter designate in writing, the Reimbursable
Expenses for which HMCo has provided such Client invoices or reasonably detailed
descriptions. All past due payments in respect of the Reimbursable Expenses
shall bear interest at the lesser of the highest rate of interest which may be
charged under applicable law or the Prime Rate plus 5.0% from the Payment Date
to and including the date on which such Reimbursable Expenses plus accrued
interest thereon are fully paid to HMCo.
5. Indemnification. The Clients jointly and severally shall indemnify
and hold harmless each of HMCo, its affiliates, and their respective directors,
officers, controlling persons (within the meaning of Section 15 of the
Securities Act of 1933, as amended, or Section 20(a) of the Securities Exchange
Act of 1934, as amended), if any,
2
<PAGE> 3
agents and employees (HMCo, its affiliates, and such other specified persons
being collectively referred to as "Indemnified Persons," and individually as an
"Indemnified Person") from and against any and all claims, liabilities, losses,
damages and expenses incurred by any Indemnified Person (including those arising
out of an Indemnified Person's negligence and reasonable fees and disbursements
of the respective Indemnified Person's counsel) which (A) are related to or
arise out of (i) actions taken or omitted to be taken (including, without
limitation, any untrue statements made or any statements omitted to be made) by
any of the Clients or (ii) actions taken or omitted to be taken by an
Indemnified Person with any Client's consent or in conformity with any Client's
instructions or any Client's actions or omissions or (B) are otherwise related
to or arise out of HMCo's engagement, and will reimburse each Indemnified Person
for all costs and expenses, including, without limitation, fees and
disbursements of any Indemnified Person's counsel, as they are incurred, in
connection with investigating, preparing for, defending or appealing any action,
formal or informal claim, investigation, inquiry or other proceeding, whether or
not in connection with pending or threatened litigation, caused by or arising
out of or in connection with HMCo's acting pursuant to HMCo's engagement,
whether or not any Indemnified Person is named as a party thereto and whether or
not any liability results therefrom. None of the Clients will, however, be
responsible for any claims, liabilities, losses, damages or expenses pursuant to
clause (B) of the preceding sentence that have resulted primarily from HMCo's
bad faith, gross negligence or willful misconduct. The Clients also agree that
neither HMCo nor any other Indemnified Person shall have any liability to any
Client for or in connection with such engagement except for any such liability
for claims, liabilities, losses, damages or expenses incurred by any Client that
have resulted primarily from HMCo's bad faith, gross negligence or willful
misconduct. The Clients further agree that none of them will, without the prior
written consent of HMCo, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not any
Indemnified Person is an actual or potential party to such claim, action, suit
or proceeding) unless such settlement, compromise or consent includes an
unconditional release of HMCo and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceeding. EACH CLIENT
HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ANY
CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE
ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR
CONCURRENT ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition to any rights
that HMCo and/or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. Each Client hereby consents to personal
jurisdiction and to service and venue in any court in which any claim which is
subject to this Agreement is brought against HMCo or any other Indemnified
Person.
It is understood that, in connection with HMCo's engagement, HMCo may
also be engaged to act for a Client or Clients in one or more additional
capacities, and
3
<PAGE> 4
that the terms of this engagement or any such additional engagement(s) may be
embodied in one or more separate written agreements. This indemnification shall
apply to the engagement specified in Section 1 hereof as well as to any such
additional engagement(s) (whether written or oral) and any modification of said
engagement or such additional engagement(s) and shall remain in full force and
effect following the completion or termination of said engagement or such
additional engagement(s).
Each of the Clients further understands and agrees that if HMCo is
asked to furnish any Client a financial opinion letter or act for any Client in
any other formal capacity, such further action may be subject to a separate
agreement containing provisions and terms to be mutually agreed upon.
6. Confidential Information. In connection with the performance of the
services hereunder, HMCo agrees not to divulge any confidential information,
secret processes or trade secrets disclosed by any Client or any of its
subsidiaries to it solely in its capacity as a financial advisor, unless such
Client consents to the divulging thereof or such information, secret processes
or trade secrets are publicly available or otherwise available to HMCo without
restriction or breach of any confidentiality agreement or unless required by any
governmental authority or in response to any valid legal process.
7. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Texas, excluding any
choice-of-law provisions thereof. Each of the parties hereby (a) irrevocably
submits to the exclusive jurisdiction of the United States Federal District
Court for the Northern District of Texas, sitting in Dallas County, Texas, the
United States of America, in the event such court has jurisdiction or, if such
court does not have jurisdiction, to any district court sitting in Dallas
County, Texas, the United States of America, for the purpose of any suit,
action, or proceeding arising out of or relating to this Agreement, including
any claims by any Indemnified Persons for indemnity pursuant to Section 5
hereof, (b) waives, and agrees not to assert in any such suit, action, or
proceeding, any claim that (i) it is not personally subject to the jurisdiction
of such court or of any other court to which proceedings in such court may be
appealed, (ii) such suit, action or proceeding is brought in an inconvenient
forum, or (iii) the venue of such suit, action, or proceeding is improper and
(c) expressly waives any requirement for the posting of a bond by the party
bringing such suit, action, or proceeding. Each of the parties consents to
process being served in any such suit, action, or proceeding by mailing,
certified mail, return receipt requested, a copy thereof to such party at the
address in effect for notices hereunder, and agrees that such services shall
constitute good and sufficient service of process and notice thereof. Nothing in
this Section 7 shall affect or limit any right to serve process in any other
manner permitted by law.
8. Notices. Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, by telex, by telecopier or registered or certified mail, postage
prepaid, return receipt requested, addressed as follows (or at such other
address as may be substituted by notice given as herein provided):
4
<PAGE> 5
If to any of the Clients:
LLS Corp.
101 South Hanley Road
St. Louis, Missouri 63105
Attention: Chief Executive Officer
With copies to (which shall not constitute notice):
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen, Esq.
If to HMCo:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
With a copy to (which shall not constitute notice):
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen, Esq.
Any notice or communication hereunder shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
answered back if telexed; when receipt is acknowledged if telecopied; and five
(5) calendar days after mailing if sent by registered or certified mail, except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee.
9. Assignment. This Agreement and all provisions contained herein shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (other than with respect to the rights and obligations of HMCo, which
may be assigned to any one or more of its principals or affiliates) by any of
the parties without the prior written consent of the other parties.
5
<PAGE> 6
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
11. Other Understandings. All discussions, understandings and
agreements heretofore made between any of the parties hereto with respect to the
subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the agreement of the parties hereto. All calculations of
the Monitoring Fee and Reimbursable Expenses shall be made by HMCo and, in the
absence of mathematical error, shall be final and conclusive.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
HICKS, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC.,
its General Partner
By: /s/ MICHAEL D. SALIM
-----------------------
Name: Michael D. Salim
---------------------
Title: General Counsel
--------------------
LLS CORP.
By: /s/ WALTER J. KREISEDER
--------------------------------
Name: Walter J. Kreiseder
------------------------------
Title: Chairman and CEO
-----------------------------
COURTESY CORPORATION
By: /s/ WALTER J. KREISEDER
--------------------------------
Name: Walter J. Kreiseder
------------------------------
Title: Chairman and CEO
-----------------------------
CREATIVE PACKAGING CORP.
By: /s/ WALTER J. KREISEDER
--------------------------------
Name: Walter J. Kreiseder
------------------------------
Title: Vice President
-----------------------------
COURTESY SALES CORP.
By: /s/ WALTER J. KREISEDER
--------------------------------
Name: Walter J. Kreiseder
------------------------------
Title: Chairman and CEO
-----------------------------
7
<PAGE> 8
EXHIBIT A
Wire Transfer Instructions
Texas Commerce Bank
ABA #: 113000609
Account E: 08805113824
Credit: Hicks, Muse & Co. Partners
Reference: Payment of Monitoring Fees or Expenses by LLS
Corp., Courtesy Corporation, Creative Packaging
Corp. and Courtesy Sales Corp.
<PAGE> 9
EXHIBIT B
Pro Rata Share of Allocable Expenditures and Related Definitions
Pro Rata Share of Allocable Expenditures shall equal the product
obtained by multiplying (i) the sum of all Allocable Expenditures that have not
previously been paid or reimbursed to HMCo by the Clients and other
Participating Acquired Companies, by (ii) a fraction, the numerator of which
shall equal the total amount of Invested Capital (as from time to time
outstanding) that any Fund has invested in the Clients' respective securities or
instruments and the denominator of which shall equal the total amount of
Invested Capital (as from time to time outstanding) that any Fund has invested
in the securities or instruments of any and all Participating Acquired
Companies.
The capitalized terms used in the foregoing definitions have the
meanings set forth below:
Allocable Expenditures shall mean all variable, fixed, and other costs,
expenses, expenditures, charges or obligations (including, without limitation,
letters of credit, deposits, etc.) that are related to assets utilized, services
provided, or programs administered by HMCo or its affiliates in connection with
the performance by HMCo of financial oversight and monitoring services on behalf
of the Clients and other Participating Acquired Companies, including, without
limitation, corporate airplanes, charitable contributions, retainers for
lobbyists and other professionals, and premiums and finance charges for director
and officer insurance maintained for representatives of HMCo or its affiliates.
Fund shall mean any one or more of the equity funds now or hereafter
sponsored by Hicks, Muse, Tate & Furst Incorporated or its successors, including
any LP Investment Entity (as defined in the limited partnership agreement for
any such equity fund) formed under or with respect to any such equity fund.
Invested Capital shall mean the total amount of partner capital that a
Fund from time to time invests in the purchase of securities or instruments of a
Participating Acquired Company, less the total cash distributions that
constitute a return of such partner capital with proceeds from the disposition
of all or any part of such securities or instruments. For each period for which
the Pro Rata Share of Allocable Expenditures is being made, the applicable
Invested Capital shall equal the amount outstanding as of the end of the
respective period.
Participating Acquired Company shall mean any partnership, corporation,
trust, limited liability company, or other entity that is, for the period for
which the Pro Rata Share of Allocable Expenditures is being determined, a party
to a monitoring agreement or similar contract with HMCo or its affiliates and
is, as of the end of such period, designated by HMCo to bear a portion of such
allocable expenditures. HMCo may, in its sole and absolute discretion, determine
not to designate an entity as a Participating Acquired Company with respect to
such period. HMCo may make such determination of non-designation for no reason
or for any reason, including, without
<PAGE> 10
limitation, the respective entity's bankruptcy or other temporary or permanent
inability to pay fees or expenses to HMCo or its affiliates.
B-2
<PAGE> 1
EXHIBIT 10.6
FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (this "Agreement") is made
and entered into effective as of July 30, 1999 among LLS Corp., an Illinois
corporation (together with its successors, "Holdings"), Courtesy Corporation, an
Illinois corporation (together with its successors, "Courtesy"), Creative
Packaging Corp., an Illinois corporation (together with its successors,
"Creative"), and Courtesy Sales Corp., an Illinois corporation (together with
its successors, "Courtesy Sales" and, together with Holdings, Courtesy and
Creative, the "Clients"), and Hicks, Muse & Co. Partners, L.P., a Texas limited
partnership (together with its successors, "HMCo").
WHEREAS, pursuant to a Recapitalization Agreement, dated as of
July 13, 1999 (the "Recapitalization Agreement"), among Holdings, Creative,
Courtesy Sales, each of their respective shareholders and HMTF/CC Investments,
LLC, a Delaware limited liability company, successor by merger to HMTF/CC
Investments, L.P., a Texas limited partnership, Holdings is being recapitalized
(the "Recapitalization");
WHEREAS, the Clients have requested that HMCo render, and HMCo
has rendered, financial advisory services to them in connection with the
negotiation of the Recapitalization and the debt and equity financing
transactions and certain other transactions related thereto (collectively with
the Recapitalization, the "Transaction"); and
WHEREAS, the Clients have requested that HMCo render financial
advisory, investment banking, and other similar services to them with respect to
future proposals for a tender offer, acquisition, sale, merger, exchange offer,
recapitalization, restructuring, or other similar transaction directly or
indirectly involving any of the Clients or any of their respective subsidiaries
and any other person or entity (collectively, "Subsequent Transactions");
NOW, THEREFORE, in consideration of the services rendered and
to be rendered by HMCo to the Clients, and to evidence the obligations of the
Clients to HMCo and the mutual covenants herein contained, the Clients hereby
jointly and severally agree with HMCo as follows:
NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT CONTAINS INDEMNIFICATION
PROVISIONS IN SECTION 5 THAT APPLY TO CLAIMS, LIABILITIES, LOSSES,
DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE
RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT
ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED PERSON IDENTIFIED
THEREIN.
<PAGE> 2
1. Retention.
(a) The Clients hereby acknowledge that they have retained
HMCo, and HMCo acknowledges that it has acted, as financial advisor to the
Clients in connection with the Transaction.
(b) Each of the Clients acknowledges that it has retained HMCo
as its exclusive financial advisor in connection with any Subsequent
Transactions that may be consummated during the term of this Agreement, and that
none of the Clients will retain any other person or entity to provide such
services in connection with any such Subsequent Transaction without the prior
written consent of HMCo. HMCo agrees that it shall provide such financial
advisory, investment banking and other similar services in connection with any
such Subsequent Transaction as may be requested from time to time by the board
of directors of the applicable Client.
2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the
date on which Hicks, Muse, Tate & Furst Incorporated ("HMTF") or its successors
and their respective affiliates (including, without limitation, any equity fund
sponsored by HMTF or its successors) shall cease to own beneficially, directly
or indirectly, any securities of any of the Clients or their respective
successors.
3. Compensation.
(a) As compensation for HMCo's services as financial advisor
to the Clients in connection with the Transaction, the Clients hereby
irrevocably agree, jointly and severally, to pay to HMCo a cash fee equal to
1.5% of the combined enterprise value (which shall include all equity, assumed
debt, if not otherwise refinanced, and all additional debt incurred or
refinanced in connection with the Transaction) of Holdings to be paid at the
closing of the Recapitalization, which will occur substantially simultaneously
with the execution of this Agreement. The parties hereto agree that the
compensation due pursuant to this Section 3(a) shall be allocated among the
segments of the financing for the Transaction in proportion to the dollar amount
of each such segment.
(b) In connection with any Subsequent Transaction consummated
during the term of this Agreement, the applicable Client shall, and the other
Clients shall cause such Client to, pay to HMCo, at the closing of any such
Subsequent Transaction, a cash fee equal to 1.5% of the Transaction Value of
such Subsequent Transaction. As used herein, the term "Transaction Value" means
the total value of the Subsequent Transaction, including, without limitation,
the aggregate amount of the funds required to complete the Subsequent
Transaction (excluding any fees payable pursuant to this Section 3(b)),
including, without limitation, the amount of any indebtedness, preferred stock
or similar items assumed (or remaining outstanding).
4. Reimbursement of Expenses. In addition to the compensation
to be paid pursuant to Section 3 hereof, the Clients agree, jointly and
severally, to reimburse
2
<PAGE> 3
HMCo, promptly following demand therefor, together with invoices or reasonably
detailed descriptions thereof, for all reasonable disbursements and
out-of-pocket expenses (including, without limitation, fees and disbursements of
counsel) incurred by HMCo (i) as financial advisor to the Clients in connection
with the Transaction or (ii) in connection with the performance by it of the
services contemplated by Section 1(b) hereof.
5. Indemnification. The Clients jointly and severally shall
indemnify and hold harmless each of HMCo, its affiliates and their respective
directors, officers, controlling persons (within the meaning of Section 15 of
the Securities Act of 1933, as amended, or Section 20(a) of the Securities
Exchange Act of 1934, as amended), if any, agents and employees (HMCo, its
affiliates and such other specified persons being collectively referred to as
"Indemnified Persons" and individually as an "Indemnified Person") from and
against any and all claims, liabilities, losses, damages and expenses incurred
by an Indemnified Person (including, without limitation, those arising out of an
Indemnified Person's negligence and reasonable fees and disbursements of the
respective Indemnified Person's counsel) which (A) are related to or arise out
of (i) actions taken or omitted to be taken (including, without limitation, any
untrue statements made or any statements omitted to be made) by any of the
Clients or (ii) actions taken or omitted to be taken by an Indemnified Person
with any Client's consent or in conformity with any Client's instructions or any
Client's actions or omissions or (B) are otherwise related to or arise out of
HMCo's engagement, and will reimburse each Indemnified Person for all costs and
expenses, including, without limitation, fees and disbursements of any
Indemnified Person's counsel, as they are incurred, in connection with
investigating, preparing for, defending or appealing any action, formal or
informal claim, investigation, inquiry or other proceeding, whether or not in
connection with pending or threatened litigation, caused by or arising out of or
in connection with HMCo's acting pursuant to HMCo's engagement, whether or not
any Indemnified Person is named as a party thereto and whether or not any
liability results therefrom. None of the Clients will, however, be responsible
for any claims, liabilities, losses, damages or expenses pursuant to clause (B)
of the preceding sentence that have resulted primarily from HMCo's bad faith,
gross negligence or willful misconduct. The Clients also agree that neither HMCo
nor any other Indemnified Person shall have any liability to any Client for or
in connection with such engagement except for any such liability for claims,
liabilities, losses, damages or expenses incurred by any Client that have
resulted primarily from HMCo's bad faith, gross negligence or willful
misconduct. The Clients further agree that none of them will, without the prior
written consent of HMCo, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not any
Indemnified Person is an actual or potential party to such claim, action, suit
or proceeding) unless such settlement, compromise or consent includes an
unconditional release of HMCo and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceeding. EACH CLIENT
HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ALL
CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE
ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR
3
<PAGE> 4
PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF HMCO OR ANY
OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition to any
rights that HMCo and/or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. Each Client hereby consents to personal
jurisdiction and to service and venue in any court in which any claim which is
subject to this Agreement is brought against HMCo or any other Indemnified
Person.
It is understood that, in connection with HMCo's engagement,
HMCo may also be engaged to act for a Client or Clients in one or more
additional capacities, and that the terms of this engagement or any such
additional engagements may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in
Section 1 hereof as well as to any such additional engagement(s) (whether
written or oral) and any modification of said engagement or such additional
engagement(s) and shall remain in full force and effect following the completion
or termination of said engagement or such additional engagement(s).
Each of the Clients further understands and agrees that if
HMCo is asked to furnish any Client a financial opinion letter or act for any
Client in any other formal capacity, such further action may be subject to a
separate agreement containing provisions and terms to be mutually agreed upon.
6. Confidential Information. In connection with the
performance of the services hereunder, HMCo agrees not to divulge any
confidential information, secret processes or trade secrets disclosed by any
Client or any of its subsidiaries to it solely in its capacity as a financial
advisor, unless such Client consents to the divulging thereof or such
information, secret processes or trade secrets are publicly available or
otherwise available to HMCo without restriction or breach of any confidentiality
agreement or unless required by any governmental authority or in response to any
valid legal process.
7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of Texas,
excluding any choice-of-law provisions thereof. Each of the parties hereby (a)
irrevocably submits to the exclusive jurisdiction of the United States Federal
District Court for the Northern District of Texas, sitting in Dallas County,
Texas, the United States of America, in the event such court has jurisdiction
or, if such court does not have jurisdiction, to any district court sitting in
Dallas County, Texas, the United States of America, for the purpose of any suit,
action, or proceeding arising out of or relating to this Agreement, including
any claims by any Indemnified Persons for indemnity pursuant to Section 5
hereof, (b) waives, and agrees not to assert in any such suit, action, or
proceeding, any claim that (i) it is not personally subject to the jurisdiction
of such court or of any other court to which proceedings in such court may be
appealed, (ii) such suit, action or proceeding is brought in an inconvenient
forum, or (iii) the venue of such suit, action, or proceeding is improper and
(c) expressly waives any requirement for the posting of a bond by the party
bringing such suit, action, or proceeding. Each of the parties consents to
process being served in
4
<PAGE> 5
any such suit, action, or proceeding by mailing, certified mail, return receipt
requested, a copy thereof to such party at the address in effect for notices
hereunder, and agrees that such services shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 7 shall affect or
limit any right to serve process in any other manner permitted by law.
8. Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows (or at such
other address as may be substituted by notice given as herein provided):
If to any of the Clients:
LLS Corp.
101 South Hanley Road
St. Louis, Missouri 63105
Attention: Chief Executive Officer
With copies to (which shall not constitute notice):
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen, Esq.
If to HMCo:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
With a copy to (which shall not constitute notice):
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen, Esq.
5
<PAGE> 6
Any notice or communication hereunder shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
answered back if telexed; when receipt is acknowledged if telecopied; and five
(5) calendar days after mailing if sent by registered or certified mail (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
9. Assignment. This Agreement and all provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns; provided, however, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned (other than with respect to the rights and obligations of HMCo,
which may be assigned to any one or more of its principals or affiliates) by any
of the parties without the prior written consent of the other parties.
10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
11. Other Understandings. All discussions, understandings and
agreements heretofore made between any of the parties hereto with respect to the
subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the agreement of the parties hereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
HICKS, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC.,
its General Partner
By: /s/ MICHAEL D. SALIM
--------------------------
Name: Michael D. Salim
------------------------
Title: General Counsel
------------------------
LLS CORP.
By: /s/ WALTER J. KREISEDER
------------------------------------
Name: Walter J. Kreiseder
---------------------------------
Title: Chairman and CEO
---------------------------------
COURTESY CORPORATION
By: /s/ WALTER J. KREISEDER
------------------------------------
Name: Walter J. Kreiseder
---------------------------------
Title: Chairman and CEO
---------------------------------
CREATIVE PACKAGING CORP.
By: /s/ WALTER J. KREISEDER
------------------------------------
Name: Walter J. Kreiseder
---------------------------------
Title: Vice President
---------------------------------
7
<PAGE> 8
COURTESY SALES CORP.
By: /s/ WALTER J. KREISEDER
------------------------------------
Name: Walter J. Kreiseder
---------------------------------
Title: Chairman and CEO
---------------------------------
8
<PAGE> 1
EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of July 30, 1999 by and between LLS Corp., an Illinois
corporation (the "Company"), and James N. Mills ("Employee").
W I T N E S S E T H :
WHEREAS, the Company desires to retain the services of
Employee as an employee of the Company upon the terms set forth herein; and
WHEREAS, Employee desires to be employed by the Company and to
appropriately memorialize the terms and conditions of such employment.
NOW, THEREFORE, Employee and the Company, in consideration of
the agreements, covenants and conditions herein contained, hereby agree as
follows:
SECTION 1. EMPLOYMENT PROVISIONS.
(a) Employment and Term. The Company hereby agrees to employ
Employee (hereinafter referred to as the "Employment") as the Chairman of the
Board of Directors and Chief Executive Officer of the Company (the "Position"),
and Employee agrees to be employed by the Company in such Position, for a period
ending on July 30, 2004, unless terminated earlier as provided herein (the
"Employment Period"). In the event that termination (as hereinafter provided)
has not occurred prior to the last day of the Employment Period, unless either
party shall have given written notice to the contrary at least one hundred
eighty (180) days prior to the end of the Employment Period, the Employment
Period shall annually renew for one (1) year periods until terminated.
(b) Duties. Employee in the Position shall be subject to the
direction and supervision of the Board of Directors of the Company (the "Board")
and shall have those duties and responsibilities which are assigned to Employee
during the Employment Period by the Board consistent with the Position, provided
that the Board shall not assign any greater duties or responsibilities to the
Employee than are necessary to the Employee's faithful and adequate supervision
of the overall executive management of the Company and its subsidiaries, both
direct and indirect. Subject to the Employee's faithful and adequate supervision
of the overall executive management of the Company, the Employee shall be free
to participate in other endeavors.
SECTION 2. COMPENSATION.
(a) Salary. The Company shall pay to Employee during the
Employment Period a salary as basic compensation for the services to be rendered
by Employee hereunder. The initial amount of such salary shall be Five Hundred
Thousand Dollars ($500,000) per annum. Such salary shall be reviewed by the
Board and may be increased in the Board's sole discretion, but may not be
reduced. Such salary shall accrue and be payable in accordance with
<PAGE> 2
the payroll practices of the Company in effect from time to time. All such
payments shall be subject to deduction and withholding authorized or required by
applicable law.
(b) Bonus. During the Employment Period, Employee shall be
eligible to receive an annual bonus, payable by the Company, in an amount to be
determined by the Board.
(c) Benefits. During the Employment Period, Employee shall be
entitled to such other benefits as are customarily accorded the executives of
the Company, including without limitation, group life, hospitalization and other
insurance and vacations.
(d) Medical Benefits. During the lifetime of Employee and/or
Employee's spouse, whether or not the Employment Period has terminated for any
reason, the Company shall provide health coverage to Employee and/or Employee's
spouse at least equal to the health coverage granted to the Employee during the
Employment Period at no cost to Employee and/or Employee's spouse.
(e) Directors and Officers Insurance. The Company will obtain
and maintain a policy of insurance on directors and officers of the Company in
amounts to be determined by the Company, in its reasonable judgement based upon
companies similarly situated.
SECTION 3. TERMINATION.
(a) Death or Disability. This Agreement shall terminate
automatically upon the death or total disability of Employee. For purposes of
this Agreement, "total disability" shall be deemed to have occurred if Employee
shall have been unable to perform the Employee's duties of employment due to
mental or physical incapacity for a period of six (6) consecutive months or for
any one hundred (100) working days out of a twelve (12) consecutive month
period.
(b) Cause. The Company may terminate the employment of
Employee under this Agreement for Cause. For purposes of this Agreement, "Cause"
shall be deemed to be fraud, dishonesty, competition with the Company,
unauthorized use of any of the Company's trade secrets or confidential
information or continued gross neglect by Employee of the duties assigned to
Employee by the Board (if such neglect continues for thirty (30) days after
written notice, which notice shall define the duties being neglected by
Employee).
(c) Without Cause. The Company may terminate the employment of
Employee under this Agreement without Cause, subject to the continuing rights of
Employee pursuant to Section 4(c) below.
SECTION 4. COMPENSATION UPON TERMINATION.
(a) Death or Disability. If the Employment Period is
terminated pursuant to the provisions of Section 3(a) above, this Agreement
shall terminate, and no further compensation shall be payable to Employee except
that Employee or Employee's estate, heirs or beneficiaries, as applicable, shall
be entitled, in addition to any other benefits specifically
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<PAGE> 3
provided to them or Employee under any benefit plan, to receive Employee's then
current salary for a period of eighteen (18) months from the date the Employment
Period terminates and Employee shall continue to receive the medical benefits
provided in Section 2(d) above during Employee's lifetime.
(b) Termination for Cause or Voluntary Termination by
Employee. If the employment of Employee under this Agreement is terminated for
Cause or if Employee voluntarily terminates his employment, no further
compensation shall be paid to Employee after the date of termination, but
Employee shall be entitled medical benefits provided in Section 2(d) above.
(c) Termination Without Cause. If the employment of Employee
under this Agreement is terminated pursuant to Section 3(c) above, Employee
shall be entitled to continue to receive from the Company Employee's then
current salary hereunder which shall not be less than the amount specified in
the second sentence of Section 2(a) above for the remainder of the Employment
Period or for one (1) year, whichever is longer, such amount to continue to be
paid in accordance with the payroll practices of the Company through the
Employment Period, and shall further be entitled to continue to receive the
benefits to which Employee would otherwise be entitled pursuant to Sections 2(c)
and 2(d) above and reimbursement for expenses incurred by Employee to own and
maintain an automobile as contemplated by Section 5 below.
SECTION 5. EXPENSE REIMBURSEMENT. Upon submission of properly
documented expense account reports, the Company shall reimburse Employee for all
reasonable travel and entertainment expenses incurred by Employee in the course
of his employment with the Company. During the term hereof, Employee will be
reimbursed by the Company for expenses incurred by Employee to own and maintain
an automobile.
SECTION 6. ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto except that this Agreement and all of the provisions
hereof may be assigned by the Company to any successor to all or substantially
all of its assets, by merger or otherwise, and may otherwise be assigned upon
the prior written consent of Employee.
SECTION 7. NO VIOLATION. Employee hereby represents and warrants to
the Company that the execution, delivery and performance of this Agreement or
the passage of time, or both, will not conflict with, result in a default, right
to accelerate or loss of rights under any provision of any agreement or
understanding to which the Employee or, to the best knowledge of Employee, any
of Employee's affiliates are a party or by which Employee, or to the best
knowledge of Employee, Employee's affiliates may be bound or affected.
SECTION 8. CAPTIONS. The captions, headings and arrangements used in
this Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
3
<PAGE> 4
SECTION 9. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be deemed delivered, whether or not actually
received, two days after deposited in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, addressed to the party
to whom notice is being given at the specified address or at such other address
as such party may designate by notice:
Employer: LLS Corp.
101 South Hanley Road
St. Louis, Missouri 63105
Attn: Board of Directors
Employee: James N. Mills
151 North Bemiston
St. Louis, Missouri 63105
SECTION 10. INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance of this Agreement. In
lieu of each such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 11. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. This Agreement may be amended in whole or in part only by
an instrument in writing setting forth the particulars of such amendment and
duly executed by an officer of the Company expressly authorized by the Board to
do so and by Employee.
SECTION 12. WAIVER. No delay or omission by any party hereto to
exercise any right or power hereunder shall impair such right or power to be
construed as a waiver thereof. A waiver by any of the parties hereto of any of
the covenants to be performed by any other party or any breach thereof shall not
be construed to be a waiver of any succeeding breach thereof or of any other
covenant herein contained. Except as otherwise expressly set forth herein, all
remedies provided for in this Agreement shall be cumulative and in addition to
and not in lieu of any other remedies available to any party at law, in equity
or otherwise.
SECTION 13. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same agreement.
SECTION 14. GOVERNING LAW. This Agreement shall be construed and
enforced according to the laws of the State of Missouri.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
EMPLOYEE:
/s/ JAMES N. MILLS
--------------------------------------------
James N. Mills
EMPLOYER:
LLS CORP., an Illinois corporation
By: /s/ DAVID M. SINDELAR
-----------------------------------------
Name: David M. Sindelar
--------------------------------------
Title: Senior Vice President and CFO
--------------------------------------
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EXHIBIT 10.8
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of July 30, 1999 by and between LLS Corp., an Illinois
corporation (the "Company"), and David M. Sindelar ("Employee").
W I T N E S S E T H :
WHEREAS, the Company desires to retain the services of
Employee as an employee of the Company upon the terms set forth herein; and
WHEREAS, Employee desires to be employed by the Company and to
appropriately memorialize the terms and conditions of such employment.
NOW, THEREFORE, Employee and the Company, in consideration of
the agreements, covenants and conditions herein contained, hereby agree as
follows:
SECTION 1. EMPLOYMENT PROVISIONS.
(a) Employment and Term. The Company hereby agrees to employ
Employee (hereinafter referred to as the "Employment") as Senior Vice President
and Chief Financial Officer of the Company (the "Position"), and Employee agrees
to be employed by the Company in such Position, for a period ending on July 30,
2004, unless terminated earlier as provided herein (the "Employment Period"). In
the event that termination (as hereinafter provided) has not occurred prior to
the last day of the Employment Period, unless either party shall have given
written notice to the contrary at least one hundred eighty (180) days prior to
the end of the Employment Period, the Employment Period shall annually renew for
one (1) year periods until terminated.
(b) Duties. Employee in the Position shall be subject to the
direction and supervision of the Board of Directors of the Company (the "Board")
and shall have those duties and responsibilities which are assigned to Employee
during the Employment Period by the Board consistent with the Position, provided
that the Board shall not assign any greater duties or responsibilities to the
Employee than are necessary to the Employee's faithful and adequate supervision
of the overall executive management of the Company and its subsidiaries, both
direct and indirect. Subject to the Employee's faithful and adequate supervision
of the overall executive management of the Company, the Employee shall be free
to participate in other endeavors.
SECTION 2. COMPENSATION.
(a) Salary. The Company shall pay to Employee during the
Employment Period a salary as basic compensation for the services to be rendered
by Employee hereunder. The initial amount of such salary shall be One Hundred
Fifty Thousand Dollars ($150,000) per annum. Such salary shall be reviewed by
the Board and may be increased in the Board's sole discretion, but may not be
reduced. Such salary shall accrue and be payable in accordance with
<PAGE> 2
the payroll practices of the Company in effect from time to time. All such
payments shall be subject to deduction and withholding authorized or required by
applicable law.
(b) Bonus. During the Employment Period, Employee shall be
eligible to receive an annual bonus, payable by the Company, in an amount to be
determined by the Board.
(c) Benefits. During the Employment Period, Employee shall be
entitled to such other benefits as are customarily accorded the executives of
the Company, including without limitation, group life, hospitalization and other
insurance and vacations.
(d) Medical Benefits. During the lifetime of Employee and/or
Employee's spouse, whether or not the Employment Period has terminated for any
reason, the Company shall provide health coverage to Employee and/or Employee's
spouse at least equal to the health coverage granted to the Employee during the
Employment Period at no cost to Employee and/or Employee's spouse.
(e) Directors and Officers Insurance. The Company will obtain
and maintain a policy of insurance on directors and officers of the Company in
amounts to be determined by the Company, in its reasonable judgement based upon
companies similarly situated.
SECTION 3. TERMINATION.
(a) Death or Disability. This Agreement shall terminate
automatically upon the death or total disability of Employee. For purposes of
this Agreement, "total disability" shall be deemed to have occurred if Employee
shall have been unable to perform the Employee's duties of employment due to
mental or physical incapacity for a period of six (6) consecutive months or for
any one hundred (100) working days out of a twelve (12) consecutive month
period.
(b) Cause. The Company may terminate the employment of
Employee under this Agreement for Cause. For purposes of this Agreement, "Cause"
shall be deemed to be fraud, dishonesty, competition with the Company,
unauthorized use of any of the Company's trade secrets or confidential
information or continued gross neglect by Employee of the duties assigned to
Employee by the Board (if such neglect continues for thirty (30) days after
written notice, which notice shall define the duties being neglected by
Employee).
(c) Without Cause. The Company may terminate the employment of
Employee under this Agreement without Cause, subject to the continuing rights of
Employee pursuant to Section 4(c) below.
SECTION 4. COMPENSATION UPON TERMINATION.
(a) Death or Disability. If the Employment Period is
terminated pursuant to the provisions of Section 3(a) above, this Agreement
shall terminate, and no further compensation shall be payable to Employee except
that Employee or Employee's estate, heirs or beneficiaries, as applicable, shall
be entitled, in addition to any other benefits specifically
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<PAGE> 3
provided to them or Employee under any benefit plan, to receive Employee's then
current salary for a period of eighteen (18) months from the date the Employment
Period terminates and Employee shall continue to receive the medical benefits
provided in Section 2(d) above during Employee's lifetime.
(b) Termination for Cause or Voluntary Termination by
Employee. If the employment of Employee under this Agreement is terminated for
Cause or if Employee voluntarily terminates his employment, no further
compensation shall be paid to Employee after the date of termination, but
Employee shall be entitled medical benefits provided in Section 2(d) above.
(c) Termination Without Cause. If the employment of Employee
under this Agreement is terminated pursuant to Section 3(c) above, Employee
shall be entitled to continue to receive from the Company Employee's then
current salary hereunder which shall not be less than the amount specified in
the second sentence of Section 2(a) above for the remainder of the Employment
Period or for one (1) year, whichever is longer, such amount to continue to be
paid in accordance with the payroll practices of the Company through the
Employment Period, and shall further be entitled to continue to receive the
benefits to which Employee would otherwise be entitled pursuant to Sections 2(c)
and 2(d) above and reimbursement for expenses incurred by Employee to own and
maintain an automobile as contemplated by Section 5 below.
SECTION 5. EXPENSE REIMBURSEMENT. Upon submission of properly
documented expense account reports, the Company shall reimburse Employee for all
reasonable travel and entertainment expenses incurred by Employee in the course
of his employment with the Company. During the term hereof, Employee will be
reimbursed by the Company for expenses incurred by Employee to own and maintain
an automobile.
SECTION 6. ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto except that this Agreement and all of the provisions
hereof may be assigned by the Company to any successor to all or substantially
all of its assets, by merger or otherwise, and may otherwise be assigned upon
the prior written consent of Employee.
SECTION 7. NO VIOLATION. Employee hereby represents and warrants to
the Company that the execution, delivery and performance of this Agreement or
the passage of time, or both, will not conflict with, result in a default, right
to accelerate or loss of rights under any provision of any agreement or
understanding to which the Employee or, to the best knowledge of Employee, any
of Employee's affiliates are a party or by which Employee, or to the best
knowledge of Employee, Employee's affiliates may be bound or affected.
SECTION 8. CAPTIONS. The captions, headings and arrangements used in
this Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
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SECTION 9. NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed delivered, whether or not
actually received, two days after deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the party to whom notice is being given at the specified address or at such
other address as such party may designate by notice:
Employer: LLS Corp.
101 South Hanley Road
St. Louis, Missouri 63105
Attn: Board of Directors
Employee: David M. Sindelar
10630 Ballantrae Drive
St. Louis, Missouri 63131
SECTION 10. INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance of this Agreement. In
lieu of each such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 11. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. This Agreement may be amended in whole or in part only by
an instrument in writing setting forth the particulars of such amendment and
duly executed by an officer of the Company expressly authorized by the Board to
do so and by Employee.
SECTION 12. WAIVER. No delay or omission by any party hereto to
exercise any right or power hereunder shall impair such right or power to be
construed as a waiver thereof. A waiver by any of the parties hereto of any of
the covenants to be performed by any other party or any breach thereof shall not
be construed to be a waiver of any succeeding breach thereof or of any other
covenant herein contained. Except as otherwise expressly set forth herein, all
remedies provided for in this Agreement shall be cumulative and in addition to
and not in lieu of any other remedies available to any party at law, in equity
or otherwise.
SECTION 13. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same agreement.
SECTION 14. GOVERNING LAW. This Agreement shall be construed and
enforced according to the laws of the State of Missouri.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
EMPLOYEE:
/s/ DAVID M. SINDELAR
--------------------------------------------
David M. Sindelar
EMPLOYER:
LLS CORP, an Illinois corporation
By: /s/ JAMES N. MILLS
----------------------------------------
James N. Mills,
Chief Executive Officer
5
<PAGE> 1
EXHIBIT 10.9
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and
entered into as of July 30, 1999, by and between Courtesy Corporation, an
Illinois corporation and wholly owned subsidiary of LLS Corp. (hereinafter,
together with its successors, referred to as the "COMPANY"), on the one hand,
and Walter J. Kreiseder (hereinafter referred to as the "EXECUTIVE"), on the
other hand.
W I T N E S S E T H :
WHEREAS, the Executive is currently employed by LLS Corp., an Illinois
corporation ("LLS");
WHEREAS, LLS is party to a Recapitalization Agreement (the
"RECAPITALIZATION AGREEMENT"), dated as of July 13, 1999, among LLS, Creative
Packaging Corp., an Illinois corporation, Courtesy Sales Corp., an Illinois
corporation, each of their respective shareholders and HMTF/CC Investments, LLC,
a Delaware limited liability company, successor by merger to HMTF/CC
Investments, L.P., a Texas limited partnership;
WHEREAS, upon the consummation of the Recapitalization, LLS desires to
employ the Executive in an executive capacity with the Company, and the
Executive desires to be employed by the Company in said capacity on the terms
and conditions specified herein; and
WHEREAS, the parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. DEFINITIONS.
"ACCRUED BENEFITS" means (i) all salary earned or accrued
through the date the Executive's employment is terminated, (ii)
reimbursement for any and all monies advanced in connection with the
Executive's employment for reasonable and necessary expenses incurred
by the Executive through the date the Executive's employment is
terminated and (iii) all other payments and benefits to which the
Executive may be entitled under the terms of any applicable
compensation arrangement or benefit plan or program of the Company,
including any earned and accrued, but unused vacation pay.
"ACT" shall mean the Securities Exchange Act of 1934, as
amended.
<PAGE> 2
"BOARD" shall mean the board of directors of the Company.
"CAUSE" shall mean (i) the Executive's conviction of any
criminal violation involving fraud or dishonesty or constituting a
felony, (ii) the Executive's material breach of his obligations under
this Agreement, (iii) the Executive's fraud or dishonesty in connection
with his employment hereunder, (iv) the Executive's refusal to perform
his duties as an employee of the Company for a reason other than mental
or physical disability or (v) the Executive's gross negligence or
willful misconduct injurious to the Company or its Subsidiaries.
Notwithstanding the above, the occurrence of the events specified in
clauses (ii) and (iv) above shall not constitute Cause unless the
Company gives the Executive written notice that such event constitutes
Cause, and the Executive thereafter fails to cure such event within
thirty (30) days after receipt of such notice.
"EMPLOYMENT PERIOD" shall mean the period during which the
Executive is employed by the Company.
"GOOD REASON" shall mean any material breach by the Company of
this Agreement or the assignment of duties materially inconsistent with
Executive's present position, duties, responsibilities and status with
the Company (other than such reductions therein as contemplated by the
terms of this Agreement) or the relocation of Executive's place of
employment. Notwithstanding the above, the occurrence of the events
described above (other than a breach resulting from the failure of the
Company to pay any amount or provide any benefit under Sections 4 or 5
of this Agreement) will not constitute Good Reason unless the Executive
gives the Company written notice within 30 days after the occurrence of
such event that such event constitutes Good Reason, and the Company
thereafter fails to cure such event within 30 days after receipt of
such notice.
"PERSON" shall mean any "person", within the meaning of
Sections 13(d) and 14(d) of the Act, including a "group" as therein
defined.
"SUBSIDIARY" shall mean, with respect to any Person, any other
Person of which such first Person owns the majority of the economic
interest in such Person or owns or has the power to vote, directly or
indirectly, securities representing a majority of the votes ordinarily
entitled to be cast for the election of directors or other governing
Persons.
SECTION 2. TERM OF EMPLOYMENT. Unless earlier terminated in accordance
with the terms of this Agreement, the Executive's Employment Period shall
commence on the date hereof (the "EMPLOYMENT DATE") and shall end on July 30,
2004.
SECTION 3. DUTIES. From the date hereof through the second anniversary
thereof, the Executive (i) shall serve as Chief Executive Officer of the Company
and Chief Executive Officer of each of the Subsidiaries of the Company, (ii)
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shall execute all duties attendant to his office and shall report directly to
the Board, (iii) shall, subject to and in accordance with the authority and
direction of the Board, have such authority and perform in a diligent and
competent manner such duties as may be assigned to him from time to time by the
Board and (iv) shall devote his best efforts and business time, attention,
knowledge and skill to the operation of the business and affairs of the Company
and its Subsidiaries, except for vacation, absences made necessary because of
illness, authorized leaves of absence and holidays. Notwithstanding anything to
the contrary contained in this Agreement, the Executive shall not be precluded
from participating in the affairs of any governmental, educational or other
charitable institution, engaging in professional speaking and writing
activities, serving as a member of the board of directors of publicly-held
corporations and investing his personal funds so long as such activities do not
conflict with Section 6 of this Agreement and the Board, in good faith, does not
determine that such activities unreasonably interfere with the Company's
business or diminish Executive's obligations under this Agreement, and Executive
shall be entitled to retain all fees, royalties and other compensation derived
from such activities in addition to the compensation and other benefits payable
to him under this Agreement. Prior to the second anniversary of this Agreement
and each subsequent anniversary thereof during the Employment Period, the
Company and the Executive shall establish, by good faith negotiation, reduced
time commitments and levels of responsibility on the part of the Executive
applicable to each such one-year period and a proportionate reduction in the
Base Salary commensurate with such reduced time commitments and levels of
responsibility.
SECTION 4. COMPENSATION. During the Employment Period, the Executive
shall be compensated as follows:
(a) the Executive shall receive, at such intervals and in accordance
with such Company policies as may be in effect from time to time, an annual
salary (pro rata for any partial year) no less than Five Hundred Thousand
and No/100 Dollars ($500,000.00) ("BASE SALARY"); provided, however, that
the Base Salary shall be subject to adjustment in accordance with Section 3
hereof;
(b) the Executive shall be reimbursed, at such intervals and in
accordance with such Company policies as may be in effect from time to
time, for any and all reasonable and necessary business expenses incurred
by him;
(c) the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other executives of the Company as determined by the Board
from time to time, as initially set forth on Exhibit A hereto;
(d) the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the
Company to similarly-situated executives of the Company on a historical
basis (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death
and travel accident insurance plans and
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programs) to the extent applicable generally to other executives of the
Company; and
(e) the Executive shall be entitled to receive (in addition to the
benefits described above) such perquisites and fringe benefits appertaining
to his position in accordance with any practice established by the Board,
as initially set forth on Exhibit A hereto.
SECTION 5. TERMINATION OF EMPLOYMENT.
(a) All Accrued Benefits to which the Executive (or his estate or
beneficiary) is entitled shall be payable in cash promptly upon termination
of his Employment Period, except as otherwise specifically provided herein,
or under the terms of any applicable policy, plan or program.
(b) Any termination by the Company, or by the Executive, of the
Employment Period shall be communicated by written notice of such
termination to the Executive, if such notice is delivered by the Company,
and to the Company, if such notice is delivered by the Executive, each in
compliance with the requirements of Section 13 hereinbelow.
(c) If prior to the expiration of the Employment Period, the
Employment Period is terminated by the Executive for Good Reason or by the
Company for any reason other than Cause or the Executive's death, permanent
disability (as defined in the Company's disability plan or policy, as in
effect from time to time) or retirement (as defined in the Company's
Board-approved retirement plan or policy, as in effect from time to time),
then, as his exclusive right and remedy in respect of such termination:
(i) the Executive shall be entitled to receive from the Company
his Accrued Benefits, except that, for this purpose, Accrued Benefits
shall not include any entitlement to severance under any Company
severance policy generally applicable to the Company's salaried
employees;
(ii) (a) in the event such termination occurs on or prior to the
second anniversary of this Agreement (the "INITIAL PERIOD"), the
Executive shall receive from the Company, as long as the Executive
does not violate the provisions of Section 6 hereof, severance pay
equal to the Executive's then current monthly Base Salary, payable in
accordance with the Company's regular pay schedule, for the greater of
(1) twelve (12) months from the date of termination of employment and
(2) the remainder of the Initial Period;
(b) in the event such termination occurs after the Initial
Period, the Executive shall receive from the Company, as long as the
Executive does not violate the provisions of Section 6 hereof,
severance pay equal to the Executive's then current monthly Base
Salary, payable in accordance
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<PAGE> 5
with the Company's regular pay schedule,for twelve (12) months from
the date of termination of employment; and
(iii) the Executive and his spouse shall continue to be covered,
upon the same terms and conditions as described in Section 4(d)
hereinabove, by the same or equivalent medical, dental, and life
insurance coverages as in effect for the Executive immediately prior
to the termination of his employment, until age 65 or, if Executive
dies prior to age 65, until Executive's spouse reaches age 65;
provided however, that if participation in any one of such plans or
arrangements is not possible under the terms thereof, the Company will
provide substantially identical benefits.
(d) Any amounts payable to the Executive in installments pursuant to
this Section 5 may, at the option of the Company, be paid in a lump sum
rather than in installments as provided above. In any event, all such
amounts (whether paid in installments or in a lump sum) shall be considered
severance payments and be in full and complete satisfaction of the
obligations of the Company to the Executive in connection with the
termination of the Executive.
(e) Notwithstanding anything else contained herein, if the Executive
voluntarily terminates his employment without Good Reason, or the Company
terminates the Executive for Cause or the Executive is terminated by reason
of death or permanent disability, all of his rights to severance from the
Company (including pursuant to any plan or policy of the Company) shall
terminate immediately, and the Executive's entitlement hereunder shall be
limited to his right to payment for Accrued Benefits (other than severance)
in respect of periods prior to such termination, his right to coverage
under Section 5(c)(iii), and his right to disability, if any, under the
Company's disability plan, provided that Executive shall reimburse the
Company for the cost of such coverage.
SECTION 6. FURTHER OBLIGATIONS OF THE EXECUTIVE.
(a) During and following the Executive's employment by the
Company, the Executive shall hold in confidence and not directly or indirectly
disclose or use or copy or make lists of any confidential information or
proprietary data of the Company or any of its Subsidiaries, except to the extent
authorized in writing by the Board or required by any court or administrative
agency, other than to an employee of the Company or any of its Subsidiaries, or
a Person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Executive of his duties as an executive of the
Company. Confidential information shall not include any information known
generally to the public. All records, files, documents and materials, or copies
thereof, relating to the Company's or any of its Subsidiaries' business which
the Executive shall prepare, or use, or come into contact with, shall be and
remain the sole property of the Company or such Subsidiary, as the case may be,
and shall be
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promptly returned by the Executive to the Company or such Subsidiary (as
applicable) upon termination of the Executive's employment with the Company.
(b) Except with the Board's prior written approval, during the Employment
Period and for two (2) years after the termination of the Employment Period, the
Executive shall not, directly or indirectly:
(i) solicit, entice, persuade or induce any employee of the Company or
any of its Subsidiaries to terminate his employment by the Company or any
of its Subsidiaries or to become employed by any Person other than the
Company or any of its Subsidiaries; or
(ii) approach any such employee for any of the foregoing purposes; or
(iii) authorize, solicit or assist in the taking of such actions by
any third party.
However, this Agreement shall not prohibit soliciting the employment
of, or employing, any such employee who has been terminated by the Company
or its Subsidiaries.
(c) During the Employment Period and for two (2) years after the
termination of the Employment Period, the Executive shall not, directly or
indirectly, engage, participate, make any financial investment in, or become
employed by or render advisory or other services to or for any Person or other
business enterprise (other than the Company and its Subsidiaries) engaged in (a)
the design, manufacture and sale of custom-made molds for the plastics industry
or (b) the design, manufacture and sale of injection molded plastic parts, in
each case throughout the United States and its territories (any of the foregoing
activities being referred to herein as "COMPETITIVE ACTIVITIES"). The foregoing
covenant respecting Competitive Activities shall not be construed to preclude
the Executive from making any investments in the securities of any company,
whether or not engaged in competition with the Company or any of its
Subsidiaries, to the extent that such securities are actively traded on a
national securities exchange or in the over-the-counter market in the United
States or any foreign securities exchange and such investment does not exceed
five percent (5%) of the issued and outstanding shares of such company or give
the Executive the right or power to control or participate directly in making
the policy decisions of such company.
(d) If any court determines that any portion of this Section 6 is invalid
or unenforceable, the remainder of this Section 6 shall not thereby be affected
and shall be given full effect without regard to the invalid provision. If any
court construes any of the provisions of this Section 6, or any part thereof, to
be unreasonable because of the duration or scope of such provision, such court
shall
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have the power to reduce the duration or scope of such provision and
to enforce such provision as so reduced.
(e) The Executive hereby acknowledges and agrees that damages
will not be an adequate remedy for the Executive's breach of any of
his covenants contained in this Section 6, and further agrees that the
Company shall be entitled to obtain appropriate injunctive and/or
other equitable relief for any such breach, without the posting of any
bond or other security.
SECTION 7. SUCCESSORS. The Company may assign its rights under this
Agreement to any successor to all or substantially all the assets of the
Company, by merger or otherwise, and may assign or encumber this Agreement and
its rights hereunder as security for indebtedness of the Company. Any such
assignment by the Company shall remain subject to the Executive's rights under
Section 5 hereof. The rights of the Executive under this Agreement may not be
assigned or encumbered by the Executive, voluntarily or involuntarily, during
his lifetime, and any such purported assignment shall be void ab initio.
However, all rights of the Executive under this Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, estates, executors, administrators, heirs and beneficiaries.
All amounts payable to the Executive hereunder shall be paid, in the event of
the Executive's death, to the Executive's estate, heirs or representatives.
SECTION 8. THIRD PARTIES. Except for the rights granted to the Company
and its Subsidiaries pursuant hereto (including, without limitation, pursuant to
Section 6 hereof) and except as expressly set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give any person other than the parties hereto and their successors and
permitted assigns any rights or remedies under or by reason of this Agreement.
SECTION 9. ENFORCEMENT. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part thereof is
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remainder of such provisions or parts hereof
and the applicability thereof shall not be affected thereby.
SECTION 10. AMENDMENT. This Agreement may not be amended or modified at
any time except by a written instrument approved by the Board, and executed by
the Company and the Executive; provided, however, that any attempted amendment
or modification without such approval and execution shall be null and void ab
initio and of no effect.
SECTION 11. WITHHOLDING. The Company shall be entitled to withhold from
any amounts to be paid to the Executive hereunder any federal, state, local, or
foreign withholding or other taxes or charges which it is from time to time
required to withhold. The Company shall be entitled to rely on an opinion of
counsel if any question as to the amount or requirement of any such withholding
shall arise.
7
<PAGE> 8
SECTION 12. GOVERNING LAW. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Illinois, without regard to principles of conflicts of law
of Illinois or any other jurisdiction.
SECTION 13. NOTICE. Any notice, request, demand or other communication
given by any party under this Agreement (each a "notice") shall be in writing,
may be given by a party or its legal counsel, and shall be deemed to be duly
given (i) when personally delivered, or (ii) upon delivery by United States
Express Mail or similar overnight courier service which provides evidence of
delivery, or (iii) when five days have elapsed after its transmittal by
registered or certified mail, postage prepaid, return receipt requested,
addressed to the party to whom directed at that party's address as it appears
below or another address of which that party has given written notice to the
other parties hereto, or (iv) when transmitted by telex (or equivalent service),
the sender having received the answer back of the addressee, or (v) when
delivered by facsimile transmission, the sender having received machine
confirmation thereof.
If to the Company:
Courtesy Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: David M. Sindelar
Facsimile No.: (314) 746-2299
With copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attention: Jack D. Furst
Lawrence D. Stuart, Jr.
Facsimile No.: (214) 740-7313
and (which shall not constitute notice):
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Facsimile No.: (214) 746-7777
8
<PAGE> 9
If to the Executive:
Walter J. Kreiseder
800 Corporate Grove Dr,
Buffalo Grove, Illinois 60089-4552
With copies to:
Katten Muchin & Zavis
525 West Monroe Street
Chicago, Illinois 60661-8768
Attention: David R. Shevitz
Stuart Grass
SECTION 14. NO WAIVER. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or provision of
this Agreement to be performed by the other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at any time.
SECTION 15. HEADINGS. The headings contained herein are for reference
only and shall not affect the meaning or interpretation of any provision of this
Agreement.
SECTION 16. ATTORNEYS' FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover in such action its reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to which
it may be entitled.
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9
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement in one or
more counterparts, each of which shall be deemed one and the same instrument, as
of the day and year first written above.
COURTESY CORPORATION
By: /s/ GERALD J. SOMMERS
-----------------------
Name: GERALD J. SOMMERS
---------------------
Title: President and COO
--------------------
EXECUTIVE:
/s/ WALTER T. KREISEDER
--------------------------
Walter J. Kreiseder
<PAGE> 11
EXHIBIT A
Benefits Amount/Coverage
1. Profit Sharing Contribution $30,000 per year
2. Automobile Lease $1,600 per month; gas
card for Executive
and spouse
3. Automobile Insurance Coverage for
Executive and spouse
4. Vacation Four months
<PAGE> 1
EXHIBIT 10.10
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and
entered into as of July 30, 1999, by and between Courtesy Corporation, an
Illinois corporation and wholly owned subsidiary of LLS Corp. (hereinafter,
together with its successors, referred to as the "COMPANY"), on the one hand,
and Gerald J. Sommers (hereinafter referred to as the "EXECUTIVE"), on the
other hand.
W I T N E S S E T H :
WHEREAS, the Executive is currently employed by LLS Corp.,
an Illinois corporation ("LLS");
WHEREAS, LLS is party to a Recapitalization Agreement (the
"RECAPITALIZATION AGREEMENT"), dated as of July 13, 1999, among LLS, Creative
Packaging Corp., an Illinois corporation, Courtesy Sales Corp., an Illinois
corporation, each of their respective shareholders and HMTF/CC Investments,
LLC, a Delaware limited liability company, successor by merger to HMTF/CC
Investments, L.P., a Texas limited partnership;
WHEREAS, upon the consummation of the Recapitalization, LLS
desires to employ the Executive in an executive capacity with the Company, and
the Executive desires to be employed by the Company in said capacity on the
terms and conditions specified herein; and
WHEREAS, the parties hereto desire to set forth in writing
the terms and conditions of their understandings and agreements.
NOW THEREFORE, in consideration of the foregoing, of the
mutual promises contained herein and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
"ACCRUED BENEFITS" means (i) all salary earned or
accrued through the date the Executive's employment is
terminated, (ii) reimbursement for any and all monies
advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive
through the date the Executive's employment is terminated and
(iii) all other payments and benefits to which the Executive
may be entitled under the terms of any applicable
compensation arrangement or benefit plan or program of the
Company, including any earned and accrued, but unused
vacation pay.
"ACT" shall mean the Securities Exchange Act of
1934, as amended.
<PAGE> 2
"BOARD" shall mean the board of directors of the
Company.
"CAUSE" shall mean (i) the Executive's conviction of
any criminal violation involving fraud or dishonesty or
constituting a felony, (ii) the Executive's material breach
of his obligations under this Agreement, (iii) the
Executive's fraud or dishonesty in connection with his
employment hereunder, (iv) the Executive's refusal to perform
his duties as an employee of the Company for a reason other
than mental or physical disability or (v) the Executive's
gross negligence or willful misconduct injurious to the
Company or its Subsidiaries. Notwithstanding the above, the
occurrence of the events specified in clauses (ii) and (iv)
above shall not constitute Cause unless the Company gives the
Executive written notice that such event constitutes Cause,
and the Executive thereafter fails to cure such event within
thirty (30) days after receipt of such notice.
"EMPLOYMENT PERIOD" shall mean the period during
which the Executive is employed by the Company.
"GOOD REASON" shall mean any material breach by the
Company of this Agreement or the assignment of duties
materially inconsistent with Executive's present position,
duties, responsibilities and status with the Company (other
than such reductions therein as contemplated by the terms of
this Agreement) or the relocation of Executive's place of
employment. Notwithstanding the above, the occurrence of the
events described above (other than a breach resulting from
the failure of the Company to pay any amount or provide any
benefit under Sections 4 or 5 of this Agreement) will not
constitute Good Reason unless the Executive gives the Company
written notice within 30 days after the occurrence of such
event that such event constitutes Good Reason, and the
Company thereafter fails to cure such event within 30 days
after receipt of such notice.
"PERSON" shall mean any "person", within the meaning
of Sections 13(d) and 14(d) of the Act, including a "group"
as therein defined.
"SUBSIDIARY" shall mean, with respect to any Person,
any other Person of which such first Person owns the majority
of the economic interest in such Person or owns or has the
power to vote, directly or indirectly, securities
representing a majority of the votes ordinarily entitled to
be cast for the election of directors or other governing
Persons.
SECTION 2. TERM OF EMPLOYMENT. Unless earlier terminated in
accordance with the terms of this Agreement, the Executive's Employment Period
shall commence on the date hereof (the "EMPLOYMENT DATE") and shall end on July
30, 2004.
SECTION 3. DUTIES. From the date hereof through the second
anniversary thereof, the Executive (i) shall serve as President and Chief
Operating Officer of the Company and President and Chief Operating Officer of
each of the
2
<PAGE> 3
Subsidiaries of the Company, (ii) shall execute all duties attendant to his
office and shall report directly to the Board, (iii) shall, subject to and in
accordance with the authority and direction of the Board, have such authority
and perform in a diligent and competent manner such duties as may be assigned
to him from time to time by the Board and (iv) shall devote his best efforts
and business time, attention, knowledge and skill to the operation of the
business and affairs of the Company and its Subsidiaries, except for vacation,
absences made necessary because of illness, authorized leaves of absence and
holidays. Notwithstanding anything to the contrary contained in this Agreement,
the Executive shall not be precluded from participating in the affairs of any
governmental, educational or other charitable institution, engaging in
professional speaking and writing activities, serving as a member of the board
of directors of publicly-held corporations and investing his personal funds so
long as such activities do not conflict with Section 6 of this Agreement and
the Board, in good faith, does not determine that such activities unreasonably
interfere with the Company's business or diminish Executive's obligations under
this Agreement, and Executive shall be entitled to retain all fees, royalties
and other compensation derived from such activities in addition to the
compensation and other benefits payable to him under this Agreement. Prior to
the second anniversary of this Agreement and each subsequent anniversary
thereof during the Employment Period, the Company and the Executive shall
establish, by good faith negotiation, reduced time commitments and levels of
responsibility on the part of the Executive applicable to each such one-year
period and a proportionate reduction in the Base Salary commensurate with such
reduced time commitments and levels of responsibility.
SECTION 4. COMPENSATION. During the Employment Period, the
Executive shall be compensated as follows:
(a) the Executive shall receive, at such intervals and in
accordance with such Company policies as may be in effect from time to
time, an annual salary (pro rata for any partial year) no less than
Five Hundred Thousand and No/100 Dollars ($500,000.00) ("BASE
SALARY"); provided, however, that the Base Salary shall be subject to
adjustment in accordance with Section 3 hereof;
(b) the Executive shall be reimbursed, at such intervals and
in accordance with such Company policies as may be in effect from time
to time, for any and all reasonable and necessary business expenses
incurred by him;
(c) the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and
programs applicable generally to other executives of the Company as
determined by the Board from time to time, as initially set forth on
Exhibit A hereto;
(d) the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs
provided by the Company to similarly-situated executives of the
Company on a historical basis (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life,
group life, accidental death and travel accident insurance plans and
4
<PAGE> 4
programs) to the extent applicable generally to other executives of
the Company; and
(e) the Executive shall be entitled to receive (in addition
to the benefits described above) such perquisites and fringe benefits
appertaining to his position in accordance with any practice
established by the Board, as initially set forth on Exhibit A hereto.
SECTION 5. TERMINATION OF EMPLOYMENT.
(a) All Accrued Benefits to which the Executive (or his
estate or beneficiary) is entitled shall be payable in cash promptly
upon termination of his Employment Period, except as otherwise
specifically provided herein, or under the terms of any applicable
policy, plan or program.
(b) Any termination by the Company, or by the Executive, of
the Employment Period shall be communicated by written notice of such
termination to the Executive, if such notice is delivered by the
Company, and to the Company, if such notice is delivered by the
Executive, each in compliance with the requirements of Section 13
hereinbelow.
(c) If prior to the expiration of the Employment Period, the
Employment Period is terminated by the Executive for Good Reason or by
the Company for any reason other than Cause or the Executive's death,
permanent disability (as defined in the Company's disability plan or
policy, as in effect from time to time) or retirement (as defined in
the Company's Board-approved retirement plan or policy, as in effect
from time to time), then, as his exclusive right and remedy in respect
of such termination:
(i) the Executive shall be entitled to receive from
the Company his Accrued Benefits, except that, for this
purpose, Accrued Benefits shall not include any entitlement
to severance under any Company severance policy generally
applicable to the Company's salaried employees;
(ii) (a) in the event such termination occurs on or
prior to the second anniversary of this Agreement (the
"INITIAL PERIOD"), the Executive shall receive from the
Company, as long as the Executive does not violate the
provisions of Section 6 hereof, severance pay equal to the
Executive's then current monthly Base Salary, payable in
accordance with the Company's regular pay schedule, for the
greater of (1) twelve (12) months from the date of
termination of employment and (2) the remainder of the
Initial Period;
(b) in the event such termination occurs after
the Initial Period, the Executive shall receive from the
Company, as long as the Executive does not violate the
provisions of Section 6 hereof, severance pay equal to the
Executive's then current monthly Base Salary, payable in
accordance
4
<PAGE> 5
with the Company's regular pay schedule, for twelve (12)
months from the date of termination of employment; and
(iii) the Executive and his spouse shall continue to
be covered, upon the same terms and conditions as described
in Section 4(d) hereinabove, by the same or equivalent
medical, dental, and life insurance coverages as in effect
for the Executive immediately prior to the termination of his
employment, until age 65 or, if Executive dies prior to age
65, until Executive's spouse reaches age 65; provided
however, that if participation in any one of such plans or
arrangements is not possible under the terms thereof, the
Company will provide substantially identical benefits.
(d) Any amounts payable to the Executive in installments
pursuant to this Section 5 may, at the option of the Company, be paid
in a lump sum rather than in installments as provided above. In any
event, all such amounts (whether paid in installments or in a lump
sum) shall be considered severance payments and be in full and
complete satisfaction of the obligations of the Company to the
Executive in connection with the termination of the Executive.
(e) Notwithstanding anything else contained herein, if the
Executive voluntarily terminates his employment without Good Reason,
or the Company terminates the Executive for Cause or the Executive is
terminated by reason of death or permanent disability, all of his
rights to severance from the Company (including pursuant to any plan
or policy of the Company) shall terminate immediately, and the
Executive's entitlement hereunder shall be limited to his right to
payment for Accrued Benefits (other than severance) in respect of
periods prior to such termination, his right to coverage under Section
5(c)(iii), and his right to disability, if any, under the Company's
disability plan, provided that Executive shall reimburse the Company
for the cost of such coverage.
SECTION 6. FURTHER OBLIGATIONS OF THE EXECUTIVE.
(a) During and following the Executive's employment by the
Company, the Executive shall hold in confidence and not directly or
indirectly disclose or use or copy or make lists of any confidential
information or proprietary data of the Company or any of its
Subsidiaries, except to the extent authorized in writing by the Board
or required by any court or administrative agency, other than to an
employee of the Company or any of its Subsidiaries, or a Person to
whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Executive of his duties as an executive of
the Company. Confidential information shall not include any
information known generally to the public. All records, files,
documents and materials, or copies thereof, relating to the Company's
or any of its Subsidiaries' business which the Executive shall
prepare, or use, or come into contact with, shall be and remain the
sole property of the Company or such Subsidiary, as the case may be,
and shall be
5
<PAGE> 6
promptly returned by the Executive to the Company or such
Subsidiary (as applicable) upon termination of the Executive's
employment with the Company.
(b) Except with the Board's prior written approval, during
the Employment Period and for two (2) years after the termination of
the Employment Period, the Executive shall not, directly or
indirectly:
(i) solicit, entice, persuade or induce any employee
of the Company or any of its Subsidiaries to terminate his
employment by the Company or any of its Subsidiaries or to
become employed by any Person other than the Company or any
of its Subsidiaries; or
(ii) approach any such employee for any of the
foregoing purposes; or
(iii) authorize, solicit or assist in the taking of
such actions by any third party.
However, this Agreement shall not prohibit
soliciting the employment of, or employing, any such employee who has
been terminated by the Company or its Subsidiaries.
(c) During the Employment Period and for two (2) years after
the termination of the Employment Period, the Executive shall not,
directly or indirectly, engage, participate, make any financial
investment in, or become employed by or render advisory or other
services to or for any Person or other business enterprise (other than
the Company and its Subsidiaries) engaged in (a) the design,
manufacture and sale of custom-made molds for the plastics industry or
(b) the design, manufacture and sale of injection molded plastic
parts, in each case throughout the United States and its territories
(any of the foregoing activities being referred to herein as
"COMPETITIVE ACTIVITIES"). The foregoing covenant respecting
Competitive Activities shall not be construed to preclude the
Executive from making any investments in the securities of any
company, whether or not engaged in competition with the Company or any
of its Subsidiaries, to the extent that such securities are actively
traded on a national securities exchange or in the over-the-counter
market in the United States or any foreign securities exchange and
such investment does not exceed five percent (5%) of the issued and
outstanding shares of such company or give the Executive the right or
power to control or participate directly in making the policy
decisions of such company.
(d) If any court determines that any portion of this Section
6 is invalid or unenforceable, the remainder of this Section 6 shall
not thereby be affected and shall be given full effect without regard
to the invalid provision. If any court construes any of the provisions
of this Section 6, or any part thereof, to be unreasonable because of
the duration or scope of such provision, such court shall
6
<PAGE> 7
have the power to reduce the duration or scope of such provision and to
enforce such provision as so reduced.
(e) The Executive hereby acknowledges and agrees that damages
will not be an adequate remedy for the Executive's breach of any of
his covenants contained in this Section 6, and further agrees that the
Company shall be entitled to obtain appropriate injunctive and/or
other equitable relief for any such breach, without the posting of any
bond or other security.
SECTION 7. SUCCESSORS. The Company may assign its rights
under this Agreement to any successor to all or substantially all the assets of
the Company, by merger or otherwise, and may assign or encumber this Agreement
and its rights hereunder as security for indebtedness of the Company. Any such
assignment by the Company shall remain subject to the Executive's rights under
Section 5 hereof. The rights of the Executive under this Agreement may not be
assigned or encumbered by the Executive, voluntarily or involuntarily, during
his lifetime, and any such purported assignment shall be void ab initio.
However, all rights of the Executive under this Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, estates, executors, administrators, heirs and beneficiaries.
All amounts payable to the Executive hereunder shall be paid, in the event of
the Executive's death, to the Executive's estate, heirs or representatives.
SECTION 8. THIRD PARTIES. Except for the rights granted to
the Company and its Subsidiaries pursuant hereto (including, without
limitation, pursuant to Section 6 hereof) and except as expressly set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person other than the parties hereto and
their successors and permitted assigns any rights or remedies under or by
reason of this Agreement.
SECTION 9. ENFORCEMENT. The provisions of this Agreement
shall be regarded as divisible, and if any of said provisions or any part
thereof is declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of such
provisions or parts hereof and the applicability thereof shall not be affected
thereby.
SECTION 10. AMENDMENT. This Agreement may not be amended or
modified at any time except by a written instrument approved by the Board, and
executed by the Company and the Executive; provided, however, that any
attempted amendment or modification without such approval and execution shall
be null and void ab initio and of no effect.
SECTION 11. WITHHOLDING. The Company shall be entitled to
withhold from any amounts to be paid to the Executive hereunder any federal,
state, local, or foreign withholding or other taxes or charges which it is from
time to time required to withhold. The Company shall be entitled to rely on an
opinion of counsel if any question as to the amount or requirement of any such
withholding shall arise.
7
<PAGE> 8
SECTION 12. GOVERNING LAW. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Illinois, without regard to principles of conflicts of law
of Illinois or any other jurisdiction.
SECTION 13. NOTICE. Any notice, request, demand or other
communication given by any party under this Agreement (each a "notice") shall
be in writing, may be given by a party or its legal counsel, and shall be
deemed to be duly given (i) when personally delivered, or (ii) upon delivery by
United States Express Mail or similar overnight courier service which provides
evidence of delivery, or (iii) when five days have elapsed after its
transmittal by registered or certified mail, postage prepaid, return receipt
requested, addressed to the party to whom directed at that party's address as
it appears below or another address of which that party has given written
notice to the other parties hereto, or (iv) when transmitted by telex (or
equivalent service), the sender having received the answer back of the
addressee, or (v) when delivered by facsimile transmission, the sender having
received machine confirmation thereof.
If to the Company:
Courtesy Corporation
101 South Hanley Road
St. Louis, Missouri 63105
Attention: David M. Sindelar
Facsimile No.: (314) 746-2299
With copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attention: Jack D. Furst
Lawrence D. Stuart, Jr.
Facsimile No: (214) 740-7313
and (which shall not constitute notice):
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Facsimile No.: (214) 746-7777
8
<PAGE> 9
If to the Executive:
Gerald J. Sommers
800 Corporate Grove Dr.
Buffalo Grove, Illinois 60089-4552
With copies to:
Katten Muchin & Zavis
525 West Monroe Street
Chicago, Illinois 60661-8768
Attention: David R. Shevitz
Stuart Grass
SECTION 14. NO WAIVER. No waiver by either party at any time
of any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at any time.
SECTION 15. HEADINGS. The headings contained herein are for
reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.
SECTION 16. ATTORNEYS' FEES. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to recover in such action its reasonable
attorneys' fees, costs and necessary disbursements in addition to any other
relief to which it may be entitled.
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9
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement
in one or more counterparts, each of which shall be deemed one and the same
instrument, as of the day and year first written above.
COURTESY CORPORATION
By: /s/ WALTER T. KREISELER
-----------------------
Name: Walter T. Kreiseler
---------------------
Title: Chairman and CEO
--------------------
EXECUTIVE:
/s/ GERALD J. SOMMERS
---------------------------
Gerald J. Sommers
<PAGE> 11
EXHIBIT A
<TABLE>
<CAPTION>
Benefits Amount/Coverage
- -------- ---------------
<S> <C>
1. Profit Sharing Contribution $30,000 per year
2. Automobile Lease $1,600 per month; gas
card for Executive and
spouse
3. Automobile Insurance Coverage for
Executive and spouse
4. Vacation Four months
</TABLE>
<PAGE> 1
EXHIBIT 10.11
COURTESY GROUP
1999 STOCK OPTION PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. PURPOSE........................................................................................1
2. ADMINISTRATION.................................................................................1
3. SHARES AVAILABLE; MAXIMUM INDIVIDUAL GRANTS....................................................2
4. ELIGIBILITY AND BASES OF PARTICIPATION.........................................................2
5. AUTHORITY OF THE COMMITTEE.....................................................................3
6. STOCK OPTION GRANTS TO KEY EMPLOYEES...........................................................5
7. STOCK OPTION GRANTS TO ELIGIBLE NON-EMPLOYEES..................................................7
8. CHANGE OF CONTROL..............................................................................9
9. PURCHASE OPTION...............................................................................10
10. ADJUSTMENT OF SHARES..........................................................................11
11. ASSIGNMENT OR TRANSFER........................................................................12
12. COMPLIANCE WITH SECURITIES LAWS...............................................................12
13. WITHHOLDING TAXES.............................................................................13
14. COSTS AND EXPENSES............................................................................13
15. FUNDING OF PLAN...............................................................................13
16. OTHER INCENTIVE PLANS.........................................................................13
17. EFFECT ON EMPLOYMENT..........................................................................13
18. DEFINITIONS...................................................................................14
19. AMENDMENT AND TERMINATION.....................................................................16
20. EFFECTIVE DATE................................................................................16
</TABLE>
i
<PAGE> 3
COURTESY GROUP
1999 STOCK OPTION PLAN
1. PURPOSE.
This 1999 Stock Option Plan (the "PLAN") is being adopted by
the direct parent corporation (an Illinois corporation formerly known as
Courtesy Corporation and hereinafter referred to as "PARENT") holding all of
the outstanding capital stock of Courtesy Corporation, an Illinois corporation,
Creative Packaging Corp., an Illinois corporation, and Courtesy Sales Corp., an
Illinois corporation (collectively, the "OPERATING Companies"), and is intended
to provide certain key employees and other persons performing services for the
Parent, the Operating Companies and any subsidiary corporation thereof now
existing or hereafter formed or acquired (collectively, the "COURTESY GROUP")
with an opportunity to acquire a proprietary interest in the Parent, and thus
to create in such persons an increased interest in and a greater concern for
the success of the Courtesy Group.
2. ADMINISTRATION.
a. Establishment of the Committee. The Plan shall be
administered by the Compensation Committee of the Board of Directors of the
Parent or by any other committee appointed by the Board of Directors of the
Parent (in either case, the "COMMITTEE"); provided, the entire Board of
Directors of the Parent (the "BOARD OF DIRECTORS") may act as the Committee if
it chooses to do so.
b. Members of the Committee. (i) The number and selection of
members of the Committee shall be determined from time to time by a majority of
all the members of the Board of Directors of the Parent. The Chairman of the
Board of Directors of the Parent shall be a member of the Committee at all
times. The members of the Committee shall serve at the pleasure of the Board of
Directors of the Parent, which shall have the power to remove members (with or
without cause) from or fill vacancies (however caused) on the Committee. Any
member of the Committee may resign by written notice to the Board of Directors
of the Parent.
(ii) Whenever the Parent shall have any class of equity
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), the Committee shall be composed solely
of two or more members who are (A) "Non-Employee Directors" or shall meet such
other conditions as required by Rule 16b-3, as amended ("RULE 16B-3"), or other
applicable rules under Section 16(b) of the Exchange Act and (B) "outside
directors" within the meaning of Treasury Regulation Section 1.162-27(e)(3)
under Section 162(m) of the Code (as defined in Section 18). The Board of
Directors of the Parent shall promptly fill any vacancies on the Committee and
the Committee shall administer the Plan so as to comply at all times with the
Exchange Act or any successor or analogous rules.
c. Acts of the Committee. A majority of the Committee shall
constitute a quorum (or, if the Committee consists of less than three members,
all such members shall
<PAGE> 4
constitute a quorum). Subject to Section 5, the acts of a majority of the
members present at any meeting at which a quorum is present, or acts approved
in writing by all the members of the Committee, shall be the acts of the
Committee.
3. SHARES AVAILABLE; MAXIMUM INDIVIDUAL GRANTS.
a. Shares Available. Subject to the adjustments provided in
Section 10, the maximum aggregate number of shares of common stock, par value
$.01 per share, of the Parent ("COMMON STOCK") in respect of which stock
options may be granted in accordance with Sections 6 and 7 under the Plan (the
"OPTIONS") shall be 7,017,543 shares. Except as provided in Section 3(b), if,
for any reason, any shares of Common Stock as to which Options have been
granted cease to be subject to purchase thereunder (including the expiration of
such Option, the termination of such Option prior to exercise, or the
forfeiture of such Option), such shares shall thereafter be available for
grants under the Plan. Options granted under the Plan may be fulfilled with (i)
authorized and unissued shares of Common Stock, (ii) issued shares of Common
Stock held in the Parent's treasury, or (iii) issued shares of Common Stock
reacquired by the Parent, in each situation as the Board of Directors of the
Parent or the Committee in its discretion may determine from time to time.
b. Maximum Individual Grants. Subject to the adjustments
provided in Section 10, the maximum aggregate number of shares of Common Stock
underlying all Options that may be granted to any single Key Employee (as
defined), including any Options that may have been granted to such Key Employee
as an Eligible Non-Employee (as defined), during the term of the Plan shall be
1,000,000 shares. For purposes of the preceding sentence, such Options that are
cancelled or repriced shall continue to be counted in determining such maximum
aggregate number of shares of Common Stock underlying all Options that may be
granted to any single Key Employee, including any Options that may have been
granted to such Key Employee as an Eligible Non-Employee, during the term of
the Plan.
4. ELIGIBILITY AND BASES OF PARTICIPATION.
a. Key Employees. Subject to and in accordance with Section
6, grants of Incentive Options (as defined in Section 18) and Non-Qualified
Options (as defined in Section 18) may be made under the Plan to any Key
Employee. For the purposes of this Plan, "KEY EMPLOYEE" shall mean any employee
of the Parent or any other member of the Courtesy Group, including officers and
directors who are also employees of any member of the Courtesy Group, who are
regularly employed on a salaried basis and who are so employed on the date of
such grant, whom the Committee identifies as having a direct and significant
effect on the performance of the Courtesy Group.
b. Eligible Non-Employees. Subject to and in accordance with
Section 7, grants of Non-Qualified Options may be made under the Plan to any
Eligible Non-Employee. For the purposes of this Plan, "ELIGIBLE NON-EMPLOYEE"
shall mean any person or entity of any nature whatsoever, including an
individual, a firm, a company, a corporation, a partnership, a trust, or other
entity (collectively, a "PERSON"), that the
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Committee designates as eligible for a grant of Non-Qualified Options pursuant
to the Plan because such Person performs bona fide consulting, advisory, or
other services for any member of the Courtesy Group (other than services in
connection with the offer or sale of securities in a capital-raising
transaction) and the Board of Directors of the Parent or the Committee
determines that the Person has a direct and significant effect on the financial
development of any member of the Courtesy Group.
c. No Right to Option Grants. The adoption of the Plan shall
not be deemed to give any Person a right to be granted any Options.
5. AUTHORITY OF THE COMMITTEE.
The Committee shall have plenary authority in its sole
discretion, but subject to the provisions of the Plan and, if applicable, Rule
16b-3, to:
a. determine the Key Employees and Eligible Non-Employees to
whom Options shall be granted, the time when such Options shall be granted, the
number of Options, the exercise price of each Option, the period(s) during
which such Options shall be exercisable (whether in whole or in part, including
whether such Options shall become immediately exercisable upon the consummation
of a Change of Control (as defined in Section 18)), the terms of vesting of
Options, the restrictions to be applicable to Options, and all other terms and
provisions thereof (which need not be identical from Option to Option);
b. require, as a condition to the grant of any Option, that
the optionee receiving such Option agree not to sell or otherwise dispose of
such Option, any Common Stock acquired pursuant to such Option, or any other
"derivative security" (as defined by Rule 16a-1(c) under the Exchange Act) for
a period of six months (or such other period as the Committee may determine)
following the later of (i) the date of the grant of such Option, or (ii) the
date when the exercise price of such Option is fixed if such exercise price is
not fixed at the date of grant of such Option;
c. provide arrangements through registered broker-dealers
whereby temporary financing may be made available to an optionee by the
broker-dealer, under the rules and regulations of the Board of Governors of the
Federal Reserve, for the purpose of assisting the optionee in the exercise of
an Option, such authority to include the payment by the Parent of the
commissions of the broker-dealer; provided, however, that the Committee shall
not be obligated to provide any such arrangements;
d. establish procedures for an optionee (i) to have withheld
from the total number of shares of Common Stock to be acquired upon the
exercise of an Option (other than an Incentive Option) that number of shares
(A) having a Fair Market Value (as defined in Section 18) which, together with
such cash as shall be paid in respect of fractional shares, shall equal the
aggregate exercise price under such Option for the number of shares then being
acquired (including the shares to be so withheld), or (B) meeting the
obligation of withholding for income, social security and other taxes incurred
by an optionee upon such exercise or required to be withheld by the Parent or
any other
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<PAGE> 6
member of the Courtesy Group in connection with such exercise, and (ii) to
exercise a portion of an Option by delivering that number of shares of Common
Stock already owned by such optionee having an aggregate Fair Market Value
which shall equal the partial Option exercise price and to deliver the shares
thus acquired by such optionee in payment of shares to be received pursuant to
the exercise of additional portions of such Option, the effect of which shall
be that such optionee can in sequence utilize such newly acquired shares in
payment of the exercise price of the entire Option, together with such cash as
shall be paid in respect of fractional shares; provided, however, that in the
case of an Incentive Option, no shares shall be used to pay the exercise price
unless (i) such shares were not acquired through the exercise of an Incentive
Option, or (ii) if so acquired, (A) such shares have been held for more than
two years since the grant of such Incentive Option and for more than one year
since the exercise of such Incentive Option (the "HOLDING PERIOD"), or (B) if
such shares do not meet the Holding Period, the optionee elects in writing to
use such shares to pay the exercise price under this paragraph; and provided,
further, that no such procedures shall be available if, in the Committee's
discretion, such procedures are not permitted by applicable law or could
reasonably be expected to result in a charge to earnings for financial
reporting purposes with respect to the Parent or any other member of the
Courtesy Group that otherwise would not have occurred; and provided, further,
that the Committee shall not be obligated to establish any such procedures;
e. make a determination on any dispute arising under the Plan
or any Option, and any such determination shall be binding on all parties; and
f. make all other determinations, perform all acts, exercise
all powers and establish any rules or procedures which the Committee determines
to be necessary, appropriate or advisable in administering the Plan or for the
conduct of the Committee's business, including to interpret any provision in
the Plan or Option in the Committee's sole discretion.
The Committee may delegate to one or more of its members, or
to one or more agents, such administrative duties as it may deem advisable, and
the Committee or any such delegate may employ one or more Persons to render
advice with respect to any responsibility the Committee or such delegate may
have under the Plan; provided, however, that whenever the Parent shall have any
class of equity securities registered under Section 12 of the Exchange Act, the
Committee may not delegate any duties to a member of the Board of Directors of
the Parent who, if elected to serve on the Committee, would not qualify as (i)
a "Non-Employee Director" to administer the Plan as contemplated by Rule 16b-3
or other applicable rules under the Exchange Act and (ii) an "outside" director
within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section
162(m) of the Code. The Committee may employ attorneys, consultants,
accountants, or other Persons and the Committee, the Parent, and its officers
and directors shall be entitled to rely upon the advice, opinions or valuations
of any such Persons. Expenses incurred by the Committee in the engagement of
such counsel, consultant or agent shall be paid by the Parent or any other
member of the Courtesy Group whose employees have benefited from the Plan, as
determined by the Committee. No member or agent of the Committee shall be
personally liable for any action, determination or
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<PAGE> 7
interpretation made in good faith with respect to the Plan and all members and
agents of the Committee shall be fully protected by the Parent in respect of
any such action, determination or interpretation.
6. STOCK OPTION GRANTS TO KEY EMPLOYEES.
Subject to the provisions of the Plan, the Committee shall
have the authority to grant Incentive Options, to grant Non-Qualified Options,
and to grant both types of Options to Key Employees, and any Option granted
under the Plan shall be evidenced by and shall not be effective without a Stock
Option Agreement signed by the Committee and the Key Employee. No Incentive
Option may be granted to a Key Employee in tandem with a Non-Qualified Option.
No Incentive Option shall be granted pursuant to the Plan after the earlier of
ten years from the date of adoption of the Plan or ten years from the date of
approval of the Plan by the shareholders of the Parent. Incentive Options may
be granted only to Key Employees. The terms and conditions of the Options
granted under this Section 6 shall be determined from time to time by the
Committee; provided, however, that the Options granted under this Section 6
shall be subject to all provisions of the Plan (other than Section 7),
including the following:
a. Exercise Price. The Committee shall establish the Option
purchase price per share of Common Stock upon exercise of such Option (i.e.,
the exercise price) at the time any Option is granted to a Key Employee at such
amount as the Committee shall determine; provided, however, that, in the case
of an Incentive Option, such price shall not be less than the Fair Market Value
per share of Common Stock on the date the Option is granted; and provided,
further, that in the case of an Incentive Option granted to a Key Employee who,
at the time such Incentive Option is granted, owns stock of the Parent or any
other member of the Courtesy Group possessing more than 10% of the total
combined voting power of all classes of stock of the Parent or any other member
of the Courtesy Group, taking into account the attribution rules contained in
Section 424(d) of the Code, the Option exercise price shall not be less than
110% of the Fair Market Value per share of Common Stock on the date the Option
is granted. The Option exercise price shall be subject to the adjustments
provided in Section 10.
b. Term of Option. No Option by its terms shall have a term
or be exercisable after the tenth anniversary of the date of grant and all
Options shall terminate at such earlier times and upon such conditions or
circumstances as the Committee shall in its discretion set forth in the Stock
Option Agreement at the date of grant; provided, however, that no Incentive
Option granted to a Key Employee who, at the time such Option is granted, owns
stock of the Parent or any other member of the Courtesy Group possessing more
than 10% of the total combined voting power of all classes of stock of the
Parent or any other member of the Courtesy Group, taking into account the
attribution rules contained in Section 424(d) of the Code, shall have a term or
be exercisable after the expiration of five years from the date of grant of the
Incentive Option.
c. Payment. The exercise price upon exercise of any Option by
a Key Employee shall be payable at the time of such exercise by cash or by any
other means acceptable to the Committee. The Committee may in its discretion
establish procedures
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<PAGE> 8
by which shares of Common Stock are delivered to or withheld by the Parent in
payment of the Option exercise price, and the shares subject to such Option
shall be valued at the Fair Market Value of the Common Stock on the day
preceding the date of exercise of the Option.
d. Exercisability of Option. Unless otherwise determined by
the Committee at the time of grant and subject to the other provisions of the
Plan (other than Section 7), one-tenth of the shares of Common Stock underlying
the Option granted to a Key Employee shall vest and become exercisable on each
anniversary of the date of grant and remain exercisable until the Option
expires; provided, that the optionee remains employed by the Parent or any
other member of the Courtesy Group on such anniversary date. Any portion of an
Option that is not vested upon the date of termination of employment shall be
forfeited and cancelled, except as otherwise expressly provided in any Stock
Option Agreement or unless expressly waived in writing by the Committee.
e. Death. If an optionee's employment with the Parent or any
other member of the Courtesy Group terminates due to the death of such optionee
or within three months before the death of such optionee, the estate of such
optionee, or a Person who acquired the right to exercise such Option by bequest
or inheritance or by reason of the death of such optionee, shall have the right
to exercise the vested portion of such Option in accordance with its terms at
any time and from time to time within 180 days after the date of such death
unless a longer or shorter period is expressly provided in the Stock Option
Agreement or established by the Committee pursuant to Section 8 (but in no
event after the expiration date of such Option), and thereafter such Option
shall lapse and no longer be exercisable.
f. Disability. If an optionee's employment with the Parent or
any other member of the Courtesy Group terminates due to the Disability (as
defined in Section 18) of such optionee, the optionee or his or her legal
representative shall have the right to exercise the vested portion of such
Option in accordance with its terms at any time and from time to time within
180 days after the date of such termination unless a longer or shorter period
is expressly provided in the Stock Option Agreement or established by the
Committee pursuant to Section 8 (but in no event after the expiration date of
such Option), and thereafter such Option shall lapse and no longer be
exercisable; provided, however, that in the case of an Incentive Option, an
optionee or his or her legal representative shall be required to exercise the
vested portion of such Incentive Option within one year after the termination
of the optionee's employment due to his or her Disability.
g. Termination for Good Cause; Resignation. Except as
otherwise expressly provided in any Stock Option Agreement or unless expressly
waived in writing by the Committee, an optionee shall immediately forfeit all
rights under his or her Option (whether vested or nonvested), except as to the
shares of Common Stock already purchased thereunder, if (i) the Parent or any
other member of the Courtesy Group terminates the optionee's employment for
Good Cause (as defined in Section 18), or (ii) the optionee resigns employment
with the Parent or any other member of the Courtesy Group without the consent
of the Parent or such member of the Courtesy Group. The
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<PAGE> 9
determination that there exists Good Cause for termination shall be made by the
Committee (unless otherwise agreed to in writing by the Parent or any other
member of the Courtesy Group and the optionee), and any decision in respect
thereof by the Committee shall be binding on all Persons.
h. Other Termination of Employment. If an optionee's
employment with the Parent or any other member of the Courtesy Group terminates
for any reason other than those specified in Sections 6(e), (f) or (g) above,
the optionee shall have the right to exercise his or her Option in accordance
with its terms within thirty days after the date of such termination, unless a
longer or shorter period is expressly provided in the Stock Option Agreement or
established by the Committee pursuant to Section 8 (but in no event after the
expiration date of such Option), and thereafter such Option shall lapse and no
longer be exercisable; provided, however, that no Incentive Option shall be
exercisable more than three months after the date of such termination; and
provided, further, that the Committee may, in its discretion, extend the
exercise date of any Option upon termination of an optionee's employment under
this paragraph for a period not to exceed six months plus one day (but in no
event after the expiration date of such Option) if the Committee determines
that the stated exercise date will have an inequitable result under Section
16(b) of the Exchange Act.
i. Maximum Exercise. To the extent that the aggregate Fair
Market Value of Common Stock (determined at the time of the grant of the
Option) with respect to which Options are exercisable for the first time by an
optionee during any calendar year under all plans of the Parent or any member
of the Courtesy Group exceeds $100,000, any Incentive Options in respect of
such shares of Common Stock shall be treated as Non-Qualified Options.
j. Continuation of Employment. Each Incentive Option shall
require the optionee to remain in the continuous employ of any member of the
Courtesy Group from the date of grant of the Incentive Option until no more
than three months prior to the date of exercise of the Incentive Option.
k. Recharacterization of Incentive Option. In the event that
the exercise of any Incentive Option, or method of exercise or payment
therefor, would not be in compliance with this Section 6 and would consequently
result in a violation of the requirements of Section 422 of the Code governing
the treatment of Incentive Options, the Committee, in its discretion, may
recharacterize the Option as a Non-Qualified Option.
7. STOCK OPTION GRANTS TO ELIGIBLE NON-EMPLOYEES.
Subject to the provisions of the Plan, the Committee shall
have the authority to grant Non-Qualified Options (and not Incentive Options)
to Eligible Non-Employees, and any Option granted under the Plan shall be
evidenced by and shall not be effective without a Stock Option Agreement signed
by the Committee and the Eligible Non-Employee; provided, however, that
whenever the Parent shall have any class of equity securities registered
pursuant to Section 12 of the Exchange Act, no Eligible Non-
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<PAGE> 10
Employee then serving on the Committee (or such other committee then
administering the Plan) shall be granted Options hereunder if the grant of such
Options would cause such Eligible Non-Employee to no longer be a (i)
"Non-Employee Director" or (ii) an "outside director" as set forth in Section
2. The terms and conditions of the Options granted under this Section 7 shall
be determined from time to time by the Committee; provided, however, that the
Options granted under this Section 7 shall be subject to all provisions of the
Plan (other than Section 6), including the following:
a. Exercise Price. The Committee shall establish the Option
exercise price at the time any Non-Qualified Option is granted to an Eligible
Non-Employee at such amount as the Committee shall determine. The Option
exercise price shall be subject to the adjustments provided in Section 10.
b. Term of Option. No Non-Qualified Option shall have a term
or be exercisable after the tenth anniversary of the date of grant of the
Option, unless otherwise expressly provided in any Stock Option Agreement.
c. Payment. The exercise price upon exercise of any
Non-Qualified Option by an Eligible Non-Employee shall be payable at the time
of such exercise by cash or by any other means acceptable to the Committee. The
Committee may in its discretion establish procedures by which shares of Common
Stock are delivered to or withheld by the Parent in payment of the Option
exercise price, and the shares subject to such Option shall be valued at the
Fair Market Value of the Common Stock on the day preceding the date of exercise
of the Option.
d. Exercisability of Option. Unless otherwise determined by
the Committee at the time of grant and subject to the other provisions of the
Plan (other than Section 6), one-tenth of the shares of Common Stock underlying
the Option granted to an Eligible Non-Employee shall vest and become
exercisable on each anniversary of the date of grant and remain exercisable
until the Option expires; provided, that the services of the optionee are
retained by the Parent or any other member of the Courtesy Group on such
anniversary date. Any portion of an Option that is not vested upon the date of
termination of retention shall be forfeited and cancelled, except as otherwise
expressly provided in any Stock Option Agreement or unless expressly waived in
writing by the Committee.
e. Death. If the retention by the Parent or any other member
of the Courtesy Group of the services of an optionee that is a natural person
terminates due to the death of such optionee, the estate of such optionee, or a
Person who acquired the right to exercise such Option by bequest or inheritance
or by reason of the death of such optionee, shall have the right to exercise
the vested portion of such Option in accordance with its terms, at any time and
from time to time within 180 days after the date of death unless a longer or
shorter period is expressly provided in the Stock Option Agreement or
established by the Committee pursuant to Section 8 (but in no event after the
expiration date of such Option), and thereafter such Option shall lapse and no
longer be exercisable.
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f. Disability. If the retention by the Parent or any other
member of the Courtesy Group of the services of an optionee that is a natural
person terminates due to the Disability of such optionee, the optionee or his
or her legal representative shall have the right to exercise the vested portion
of such Option in accordance with its terms at any time and from time to time
within 180 days after the date of the optionee's termination unless a longer or
shorter period is expressly provided in the Stock Option Agreement or
established by the Committee pursuant to Section 8 (but not after the
expiration of the Option), and thereafter such Option shall lapse and no longer
be exercisable.
g. Termination for Good Cause; Resignation. Except as
otherwise expressly provided in any Stock Option Agreement or unless expressly
waived in writing by the Committee, an optionee shall immediately forfeit all
rights under his, her or its Option (whether vested or nonvested), except as to
the shares of Common Stock already purchased thereunder, if the retention by
the Parent or any other member of the Courtesy Group of the services of the
optionee is terminated (i) by the Parent or any other member of the Courtesy
Group for Good Cause, (ii) as a result of removal of the optionee from office
as a director of the Parent or any other member of the Courtesy Group for cause
by action of the shareholders of the Parent or any other member of the Courtesy
Group in accordance with the certificate of incorporation or the by-laws of the
Parent or such member of the Courtesy Group, as applicable, and the corporate
law of the jurisdiction of incorporation of the Parent or such member of the
Courtesy Group, or (iii) as a result of the resignation by the optionee of such
optionee's service with the Parent or any other member of the Courtesy Group
without the consent of the Parent or such member of the Courtesy Group. The
determination that there exists Good Cause for termination shall be made by the
Committee (unless otherwise agreed to in writing by the Parent or any other
member of the Courtesy Group and the optionee), and any decision in respect
thereof by the Committee shall be binding on all Persons.
h. Other Termination of Relationship. If the retention by the
Parent or any other member of the Courtesy Group of the services of an optionee
terminates for any reason other than those specified in Sections 7(e), (f) or
(g) above, the optionee shall have the right to exercise his, her or its Option
in accordance with its terms within thirty days after the date of such
termination, unless a longer or shorter period is expressly provided in the
Stock Option Agreement or established by the Committee pursuant to Section 8
(but in no event after the expiration date of such Option), and thereafter such
Option shall lapse or no longer be exercisable; provided, however, that the
Committee may, in its discretion, extend the exercise date of any Option upon
termination of retention of an optionee's services under this paragraph for a
period not to exceed six months plus one day (but in no event after the
expiration date of such Option) if the Committee determines that the stated
exercise date will have an inequitable result under Section 16(b) of the
Exchange Act.
8. CHANGE OF CONTROL.
If (i) a Change of Control shall occur, or (ii) the Parent
shall enter into an agreement providing for a Change of Control, then the
Committee may declare any or all Options outstanding under the Plan to be
exercisable in full at such time(s) as the
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<PAGE> 12
Committee shall determine, notwithstanding the express provisions of such
Options. Each Option accelerated by the Committee pursuant to the preceding
sentence shall terminate, notwithstanding any express provision thereof or any
other provision of the Plan, on such date (but not later than the stated
exercise date) as the Committee shall determine.
9. PURCHASE OPTION.
a. Purchase Option; Purchasable Shares. Except as otherwise
expressly provided in any Stock Option Agreement, if (i) any optionee's
employment (or, in the case of any Option granted under Section 7, the
optionee's relationship) with the Parent or another member of the Courtesy
Group terminates for any reason at any time or (ii) a Change of Control occurs,
the Parent and/or its designee(s) shall have the option (the "PURCHASE OPTION")
to purchase, and if the Purchase Option is exercised, the optionee (or the
optionee's executor or the administrator of the optionee's estate in the event
of the optionee's death, or the optionee's legal representative in the event of
the optionee's incapacity (hereinafter, collectively with such optionee, the
"GRANTOR")) shall sell to the Parent and/or its assignee(s), all or any portion
(at the option of the Parent or its designee) of the shares of Common Stock
and/or Options held by the Grantor (such shares of Common Stock and Options
collectively being referred to as the "PURCHASABLE SHARES").
b. Notice. The Parent shall give notice in writing to the
Grantor of the exercise of the Purchase Option within one year from the date of
(i) the termination of the optionee's employment or relationship or (ii) the
Change of Control. Such notice shall state the number of Purchasable Shares to
be purchased and the determination of the Board of Directors of the Fair Market
Value per share of such Purchasable Shares. If no notice is given within the
time limit specified above, the Purchase Option shall terminate.
c. Purchase Price; Closing. The purchase price to be paid for
the Purchasable Shares purchased pursuant to the Purchase Option shall be (i)
in the case of any Common Stock, the Fair Market Value per share as of the date
of the notice of exercise of the Purchase Option times the number of shares
being purchased, and (ii) in the case of any Option, the Fair Market Value per
share times the number of vested shares subject to such Option which are being
purchased, less the applicable per share Option exercise price. The purchase
price shall be paid in cash. The closing of such purchase shall take place at
the Parent's principal executive offices within ten days after the purchase
price has been determined. At such closing, the Grantor shall deliver to the
purchaser(s) the certificates or instruments evidencing the Purchasable Shares
being purchased, duly endorsed (or accompanied by duly executed stock powers)
and otherwise in good form for delivery, against payment of the purchase price
by check of the purchaser(s). In the event that, notwithstanding the foregoing,
the Grantor shall have failed to obtain the release of any pledge or other
encumbrance on any Purchasable Shares by the scheduled closing date, at the
option of the purchaser(s) the closing shall nevertheless occur on such
scheduled closing date, with the cash purchase price being reduced to the
extent of all unpaid indebtedness for which such Purchasable Shares are then
pledged or encumbered.
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d. Legend. To assure the enforceability of the Parent's
rights under this Section 9, each certificate or instrument representing Common
Stock or an Option held by the Grantor shall bear a conspicuous legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS INSTRUMENT ARE SUBJECT TO AN
OPTION TO REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE
COURTESY GROUP 1999 STOCK OPTION PLAN AND A STOCK OPTION
AGREEMENT ENTERED INTO PURSUANT THERETO. A COPY OF SUCH
OPTION PLAN AND OPTION AGREEMENT ARE AVAILABLE UPON WRITTEN
REQUEST TO THE PARENT AT ITS PRINCIPAL EXECUTIVE OFFICES."
e. Termination of Purchase Option. The Parent's rights under
this Section 9 shall terminate upon the consummation of a Qualifying Public
Offering. For the purposes of this Plan, "QUALIFYING PUBLIC OFFERING" shall
mean a firm commitment underwritten public offering of Common Stock pursuant to
a registration statement under the Securities Act of 1933, as amended (the
"SECURITIES ACT") where both (i) the proceeds (prior to deducting any
underwriter's discounts and commissions) equal or exceed Fifty Million Dollars
($50,000,000) and (ii) upon consummation of such offering, the Common Stock is
listed on the New York Stock Exchange or authorized to be quoted and/or listed
on the Nasdaq National Market.
10. ADJUSTMENT OF SHARES.
Except as otherwise contemplated in Section 8 and unless
otherwise expressly provided in any Stock Option Agreement, in the event that,
by reason of any merger, consolidation, combination, liquidation,
reorganization, recapitalization, stock dividend, stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares or other like
change in capital structure of the Parent (collectively, an "ADJUSTMENT
EVENT"), the Common Stock is substituted, combined, or changed into any cash,
property or other securities, or the shares of Common Stock are changed into a
greater or lesser number of shares of Common Stock, the number and/or kind of
shares and/or interests subject to an Option and the per share price or value
thereof shall be appropriately adjusted by the Committee to give appropriate
effect to such Adjustment Event. Any fractional shares or interests resulting
from such adjustment shall be eliminated. Notwithstanding the foregoing, (i)
each such adjustment with respect to an Incentive Option shall comply with the
rules of Section 424(a) of the Code to an Incentive Option, and (ii) in no
event shall any adjustment be made which would cause any Incentive Option
granted hereunder not to qualify as an "incentive stock option" for purposes of
Section 422 of the Code.
In the event the Parent is not the surviving entity of an
Adjustment Event and, following such Adjustment Event, any optionee will hold
Options issued pursuant to the Plan which have not been exercised, cancelled,
or terminated in connection therewith, the Parent shall cause such Options to
be assumed (or cancelled and replacement Options issued) by the surviving
entity or any member of the Courtesy Group.
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In the event of any perceived conflict between the provisions
of Section 8 and this Section 10, the Committee's determinations under Section
8 shall control.
11. ASSIGNMENT OR TRANSFER.
Except as otherwise expressly provided in any Stock Option
Agreement relating to a Non-Qualified Option, no Option granted under the Plan
or any rights or interests therein shall be assignable or transferable by an
optionee except by will or the laws of descent and distribution, and during the
lifetime of an optionee, Options granted to such optionee shall be exercisable
only by the optionee or, in the event that a legal representative has been
appointed in connection with the Disability of an optionee, such legal
representative.
12. COMPLIANCE WITH SECURITIES LAWS.
The Parent shall not in any event be obligated to file any
registration statement under the Securities Act or any applicable state
securities law to permit exercise of any Option or to issue any Common Stock in
violation of the Securities Act or any applicable state securities law. Each
optionee (or, in the event of his or her death or the appointment of a legal
representative in connection with his or her Disability, the Person exercising
the Option) shall, as a condition to his, her or its right to exercise any
Option, deliver to the Parent an agreement or certificate containing such
representations, warranties and covenants as the Parent may deem necessary or
appropriate to ensure that the issuance of shares of Common Stock pursuant to
such exercise is not required to be registered under the Securities Act or any
applicable state securities law.
Certificates for shares of Common Stock, when issued, will
have substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED
FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE
ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE
AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH
OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS."
12
<PAGE> 15
This legend shall not be required for shares of Common Stock
issued pursuant to an effective registration statement under the Securities Act
and in accordance with applicable state securities laws.
13. WITHHOLDING TAXES.
By acceptance of any Option granted hereunder to any Key
Employee, the optionee will be deemed to (i) agree to reimburse the Parent or
other member of the Courtesy Group by which the optionee is employed for any
federal, state, or local taxes required by any government to be withheld or
otherwise deducted by such corporation in respect of the optionee's exercise of
all or a portion of the Option; (ii) authorize any member of the Courtesy Group
by which the optionee is employed to withhold from any cash compensation paid
to the optionee or on the optionee's behalf, an amount sufficient to discharge
any federal, state, and local taxes imposed on the Parent, or such member of
the Courtesy Group by which the optionee is employed, and which otherwise has
not been reimbursed by the optionee, in respect of the optionee's exercise of
all or a portion of the Option; and (iii) agree that the Parent may, in its
discretion, hold the stock certificate to which the optionee is entitled upon
exercise of the Option as security for the payment of the aforementioned
withholding tax liability, until cash sufficient to pay that liability has been
accumulated, and may, in its discretion, effect such withholding by retaining
shares issuable upon the exercise of the Option having a Fair Market Value on
the date of exercise which is equal to the amount to be withheld.
14. COSTS AND EXPENSES.
The costs and expenses of administering the Plan shall be
borne by the Parent and shall not be charged against any Option or to any Key
Employee receiving an Option.
15. FUNDING OF PLAN.
The Plan shall be unfunded. The Parent shall not be required
to make any segregation of assets to assure the payment of any Option under the
Plan.
16. OTHER INCENTIVE PLANS.
The adoption of the Plan does not preclude the adoption by
appropriate means of any other incentive plan for employees of any member of
the Courtesy Group.
17. EFFECT ON EMPLOYMENT.
Nothing contained in the Plan or any agreement related hereto
or referred to herein shall affect, or be construed as affecting, the terms of
employment of any Key Employee except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall impose, or be construed as imposing, an
obligation on (i) any member of the Courtesy Group to continue the employment
of any Key Employee, and (ii) any Key Employee to remain in the employ of any
member of the Courtesy Group. The Options and the shares of
13
<PAGE> 16
Common Stock acquired pursuant to the exercise of such Options are a matter of
separate inducement.
18. DEFINITIONS.
In addition to the terms specifically defined elsewhere in
the Plan, the following terms as used in the Plan shall have the respective
meanings indicated:
"CHANGE OF CONTROL" shall mean the first to occur of the
following events with respect to the Parent: (i) any sale, lease,
exchange, or other transfer (in one transaction or series of related
transactions) of all or substantially all of the assets of the Parent
to any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act and the regulations and interpretations
thereunder (a "GROUP"); (ii) a majority of the Board of Directors of
the Parent shall consist of Persons who are not Continuing Directors;
or (iii) the acquisition by any Person or Group of the power, directly
or indirectly, to vote or direct the voting of securities having more
than 50% of the ordinary voting power for the election of directors of
the Parent.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"CONTINUING DIRECTOR" shall mean, as of the date of
determination, any Person who (i) was a member of the Board of
Directors of the Parent on the effective date of the Plan, or (ii) was
elected to the Board of Directors of the Parent pursuant to the terms
of that certain Shareholders Agreement dated July 30, 1999, between
the Parent and the other parties thereto, or (iii) elected to the
Board of Directors of the Parent with the affirmative approval of a
majority of the directors who are described in (i) or (ii) hereof and
were members of the Board of Directors of the Parent at the time of
such election or nomination for such election.
"DISABILITY" shall mean permanent disability as defined under
the appropriate provisions of the applicable long-term disability plan
maintained for the benefit of employees of any member of the Courtesy
Group who are regularly employed on a salaried basis unless another
meaning shall be agreed to in writing by the Committee and the
optionee; provided, however, that in the case of an Incentive Option,
"Disability" shall have the meaning specified in Section 22(e)(3) of
the Code.
"FAIR MARKET VALUE" shall, as it relates to the Common Stock,
mean the average of the high and low prices of such Common Stock as
reported on the principal national securities exchange on which the
shares of Common Stock are then listed on the date specified herein,
or if there were no sales on such date, on the next preceding day on
which there were sales, or if such Common Stock is not listed on a
national securities exchange, the last reported bid price in the
over-the-counter market, or if such shares are not traded in the
over-the-counter market, the per share cash price for which all of the
outstanding Common Stock could be sold
14
<PAGE> 17
to a willing purchaser in an arm's-length transaction (without regard
to minority discount, absence of liquidity, or transfer restrictions
imposed by any applicable law or agreement other than a restriction
which, by its terms, will never lapse) at the date of the event giving
rise to a need for a determination. Except as may be otherwise
expressly provided in a particular Option, Fair Market Value shall be
determined in good faith by the Committee.
"GOOD CAUSE," with respect to any Key Employee, shall mean
(unless another definition is agreed to in writing by the Parent or
other member of the Courtesy Group and the optionee) termination of
employment by action of the Board of Directors of the Parent or other
member of the Courtesy Group because of: (i) the optionee's conviction
of, or plea of nolo contendere to, a felony or a crime involving moral
turpitude; (ii) the optionee's personal dishonesty, incompetence,
willful misconduct, willful violation of any law, rule, or regulation
(other than minor traffic violations or similar offenses) or breach of
fiduciary duty which involves personal profit; (iii) the optionee's
willful commission of material mismanagement in the conduct of his or
her duties as assigned to him or her by the Board of Directors of the
Parent or other member of the Courtesy Group or the optionee's
supervising officer or officers of the Parent or other member of the
Courtesy Group; (iv) the optionee's willful failure to execute or
comply with the policies of the Parent or other member of the Courtesy
Group or his or her stated duties as established by the Board of
Directors of the Parent or the Courtesy Group or the optionee's
supervising officer or officers of the Parent or other member of the
Courtesy Group, or the optionee's intentional failure to perform the
optionee's stated duties; or (v) substance abuse or addiction on the
part of the optionee. "GOOD CAUSE," with respect to any Eligible
Non-Employee, shall mean (unless another definition is agreed to in
writing by the Parent or other member of the Courtesy Group and the
optionee) termination of relationship by action of the Board of
Directors of the Parent or other member of the Courtesy Group because
of: (i) the optionee's conviction of, or plea of nolo contendere to, a
felony or a crime involving moral turpitude; (ii) the optionee's
personal dishonesty, incompetence, willful misconduct, willful
violation of any law, rule, or regulation (other than minor traffic
violations or similar offenses) or breach of fiduciary duty which
involves personal profit; (iii) the optionee's willful commission of
material mismanagement in providing services to any member of the
Courtesy Group; (iv) the optionee's willful failure to comply with the
policies of the Parent or any other member of the Courtesy Group in
providing services to the Parent or any member of the Courtesy Group,
or the optionee's intentional failure to perform the services for
which the optionee has been engaged; (v) substance abuse or addiction
on the part of the optionee; or (vi) the optionee's willfully making
any material misrepresentation or willfully omitting to disclose any
material fact to the Board of Directors of any member of the Courtesy
Group with respect to the business of any member of the Courtesy
Group.
"INCENTIVE OPTIONS" shall mean incentive stock options which
qualify under Section 422 of the Code.
15
<PAGE> 18
The term "INCLUDING" when used herein shall mean "including,
but not limited to."
"NON-QUALIFIED OPTIONS" shall mean stock options which do not
qualify under Section 422 of the Code.
The term "SUBSIDIARY CORPORATION" as used in Section 1 shall
have the meaning contained in 424(f) of the Code.
The term "TREASURY REGULATIONS" shall mean the Treasury
Regulations promulgated in respect of the Code.
19. AMENDMENT AND TERMINATION.
The Board of Directors of the Parent shall have the right to
amend, modify, suspend or terminate the Plan at any time; provided, however,
that no amendment shall be made, unless such amendment is made by or with the
approval of the shareholders of the Parent, which shall (i) disqualify any
Incentive Options granted under the Plan, (ii) increase the total number of
shares of the Common Stock which may be issued and sold pursuant to Options
granted under the Plan, (iii)increase either of the maximum amounts which can
be paid to an individual participant under the Plan as set forth in Section 3
hereof, (iv) decrease the minimum Option exercise price in the case of an
Incentive Option, or (v) modify the provisions of the Plan relating to
eligibility with respect to Incentive Options. The Board of Directors of the
Parent shall be authorized to amend the Plan and the Options granted thereunder
(i) to qualify as "incentive stock options" within the meaning of Section 422
of the Code or (ii) to comply with Rule 16b-3 (or any successor rule) under the
Exchange Act (or any successor law) and the regulations (including any
temporary regulations) promulgated thereunder. No amendment, modification,
suspension or termination of the Plan shall alter or impair any Options
previously granted under the Plan without the consent of the holder thereof.
20. EFFECTIVE DATE.
The Plan shall be effective as of September 7, 1999 and shall
be void retroactively as to any Incentive Option if not approved by the
shareholders of the Parent within twelve months thereafter. The Plan shall
terminate on the tenth anniversary of the date of adoption of the Plan or the
date of approval of the Plan by the shareholders of the Parent, whichever is
earlier, unless sooner terminated by the Board of Directors of the Parent
pursuant to Section 19.
16
<PAGE> 1
EXHIBIT 12.1
LLS, CORP.
Ratio of Earnings to Fixed Charges
Actual for all periods presented
(Dollars in thousands)
<TABLE>
<CAPTION>
Fiscal Years ended September 30, Nine months ended June 30,
-------------------------------- --------------------------
1996 1997 1998 1998 1999
------- ------- ------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Income before income
taxes 23,222 27,823 35,243 22,151 22,198
Plus fixed charges 1,792 2,062 1,952 1,316 2,380
------- ------- ------ ------ ------
Total 25,014 29,885 37,195 23,467 24,578
======= ======= ====== ====== ======
Fixed charges(1) 1,792 2,062 1,952 1,316 2,380
======= ======= ======= ======= =======
Ratio of earnings to
fixed charges 14.0x 14.5x 19.1x 17.8x 10.3x
======= ======= ======= ======= =======
</TABLE>
(1) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent earnings before income taxes plus fixed charges.
"Fixed Charges" consist of interest on all indebtedness and the portion,
approximately 1/3, of rental expense that management believes is
representative of the interest component of rent expense.
Ratio of Earnings to Fixed Charges
Pro forma for all periods presented
(Dollars in thousands)
<TABLE>
<CAPTION>
Fiscal Year ended Nine months
September 30, ended
1998 June 30,
----------------- 1999
-----------
<S> <C> <C>
Income before income
taxes 11,244 4,571
Plus fixed charges 27,538 20,068
------ ------
Total 38,782 24,639
====== ======
Fixed charges(2) 27,538 20,068
====== ======
Ratio of earnings to fixed
charges 1.4x 1.2x
===== =====
</TABLE>
(2) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent earnings before income taxes plus fixed charges.
"Fixed Charges" consist of interest on all indebtedness, amortization of
deferred financing fees and the portion, approximately 1/3, of rental
expense that management believes is representative of the interest
component of rent expense.
<PAGE> 1
EXHIBIT 21.1
Subsidiaries of LLS Corp.
Courtesy Corporation, an Illinois corporation
Creative Packaging Corp., an Illinois corporation
Courtesy Sales Corp., an Illinois corporation
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the use in this Prospectus constituting part of this
Registration Statement on Form S-4 of our report dated December 11, 1998,
relating to the combined financial statements of Courtesy Corporation and
Affiliates, which appears in such Prospectus. We also consent to the references
to us under the heading "Experts".
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
---------------------------------------
ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
September 28, 1999
<PAGE> 1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
----------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------
LLS Corp.
(Exact name of obligor as specified in its charter)
Illinois 36-2741439
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
LLS Corp.
101 South Hanley Road, Suite 400
St. Louis, Missouri 63105
(Address of principal executive offices) (Zip code)
----------
11-5/8% Senior Subordinated Notes due 2009
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
---------------------------------------------------------------------------
Name Address
---------------------------------------------------------------------------
Superintendent of Banks of the 2 Rector Street, New York,
State of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 8th day of September, 1999.
THE BANK OF NEW YORK
By: /s/ MICHAEL CULHANE
------------------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
<PAGE> 4
EXHIBIT 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS In Thousands
<S> <C>
Cash and balances due from
depository institutions:
Noninterest-bearing balances and currency and coin ......... $ 5,597,807
Interest-bearing balances .................................. 4,075,775
Securities:
Held-to-maturity securities ................................ 785,167
Available-for-sale securities .............................. 4,159,891
Federal funds sold and Securities purchased under
agreements to resell ....................................... 2,476,963
Loans and lease financing receivables:
Loans and leases, net of unearned
income...................................... 38,028,772
LESS: Allowance for loan and
lease losses................................ 568,617
LESS: Allocated transfer risk
reserve..................................... 16,352
Loans and leases, net of unearned income,
allowance, and reserve ................................... 37,443,803
Trading Assets ................................................ 1,563,671
Premises and fixed assets (including capitalized
leases) .................................................... 683,587
Other real estate owned ....................................... 10,995
Investments in unconsolidated subsidiaries and
associated companies ....................................... 184,661
Customers' liability to this bank on acceptances
outstanding ................................................ 812,015
Intangible assets ............................................. 1,135,572
Other assets .................................................. 5,607,019
------------
Total assets .................................................. $ 64,536,926
============
LIABILITIES
Deposits:
In domestic offices ........................................ $ 26,488,980
Noninterest-bearing........................... 10,626,811
Interest-bearing.............................. 15,862,169
In foreign offices, Edge and Agreement
subsidiaries, and IBFs.................................... 20,655,414
Noninterest-bearing........................... 156,471
Interest-bearing.............................. 20,498,943
Federal funds purchased and Securities sold under
agreements to repurchase ................................... 3,729,439
Demand notes issued to the U.S.Treasury ....................... 257,860
Trading liabilities ........................................... 1,987,450
Other borrowed money:
With remaining maturity of one year or less ................ 496,235
With remaining maturity of more than one year
through three years ...................................... 465
With remaining maturity of more than three years ........... 31,080
Bank's liability on acceptances executed and
outstanding ................................................ 822,455
Subordinated notes and debentures ............................. 1,308,000
Other liabilities ............................................. 2,846,649
------------
Total liabilities ............................................. 58,624,027
------------
EQUITY CAPITAL
Common stock .................................................. 1,135,284
Surplus ....................................................... 815,314
Undivided profits and capital reserves ........................ 4,001,767
Net unrealized holding gains (losses) on
available-for-sale securities .............................. (7,956)
Cumulative foreign currency translation adjustments............ (31,510)
------------
Total equity capital .......................................... 5,912,899
------------
Total liabilities and equity capital .......................... $ 64,536,926
============
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni )
Alan R. Griffith ) Directors
Gerald L. Hassell )
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 481,224
<SECURITIES> 0
<RECEIVABLES> 23,335,123
<ALLOWANCES> 27,500
<INVENTORY> 27,404,108
<CURRENT-ASSETS> 51,370,078
<PP&E> 86,495,066
<DEPRECIATION> 51,233,148
<TOTAL-ASSETS> 149,222,364
<CURRENT-LIABILITIES> 49,602,808
<BONDS> 29,238,334
0
0
<COMMON> 20,000
<OTHER-SE> 69,352,750
<TOTAL-LIABILITY-AND-EQUITY> 69,372,750
<SALES> 125,634,246
<TOTAL-REVENUES> 125,634,246
<CGS> 88,483,172
<TOTAL-COSTS> 88,483,172
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,813,723
<INCOME-PRETAX> 22,253,417
<INCOME-TAX> 180,000
<INCOME-CONTINUING> 21,902,555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,902,555
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,177,288
<SECURITIES> 0
<RECEIVABLES> 19,711,172
<ALLOWANCES> 27,500
<INVENTORY> 24,932,240
<CURRENT-ASSETS> 45,873,209
<PP&E> 120,886,298
<DEPRECIATION> 42,179,590
<TOTAL-ASSETS> 129,825,889
<CURRENT-LIABILITIES> 29,671,020
<BONDS> 26,536,666
0
0
<COMMON> 20,000
<OTHER-SE> 70,706,395
<TOTAL-LIABILITY-AND-EQUITY> 129,825,889
<SALES> 116,407,596
<TOTAL-REVENUES> 116,407,596
<CGS> 81,664,719
<TOTAL-COSTS> 81,664,719
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 831,942
<INCOME-PRETAX> 22,150,767
<INCOME-TAX> 135,000
<INCOME-CONTINUING> 21,069,199
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,069,199
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER
UNREGISTERED 11 5/8% SENIOR SUBORDINATED NOTES DUE 2009
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
LLS CORP.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1999 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE
OFFER IS EXTENDED BY THE COMPANY.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
Deliver to:
The Bank of New York, Exchange Agent
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
Attn: New York, New York 10286
Attn:
By Facsimile:
(Eligible Institutions Only)
(212) 815-6339
For Information or
Confirmation by Telephone:
(212) 815-3428
Originals of all documents sent by facsimile should be sent promptly by registered or
certified mail, by hand or by overnight delivery service.
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
IF YOU WISH TO EXCHANGE UNREGISTERED 11 5/8% SENIOR SUBORDINATED NOTES DUE
2009 (THE "OLD NOTES"), FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT OF REGISTERED
11 5/8% SENIOR SUBORDINATED NOTES DUE 2009 (THE "NEW NOTES"), PURSUANT TO THE
EXCHANGE OFFER, YOU MUST VALIDLY TENDER, AND NOT WITHDRAW, OLD NOTES TO THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
SIGNATURES MUST BE PROVIDED.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BEFORE
COMPLETING THIS LETTER OF TRANSMITTAL.
<PAGE> 2
This Letter of Transmittal is to be completed by holders of Old Notes
either if Old Notes are to be forwarded herewith or if tenders of Old Notes are
to be made by book-entry transfer to an account maintained by The Bank of New
York (the "Exchange Agent") at The Depository Trust Company pursuant to the
procedures set forth in the section entitled "The Exchange Offer -- Procedures
for Tendering" in the Prospectus (as defined).
Holders of Old Notes whose certificates for such Old Notes are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date or
who cannot complete the procedures for book-entry transfer on a timely basis,
must tender their Old Notes according to the guaranteed delivery procedures set
forth in the section entitled "The Exchange Offer -- Guaranteed Delivery
Procedures" in the Prospectus.
DESCRIPTION OF TENDERED OLD NOTES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) AGGREGATE
AS IT APPEARS ON THE 11 5/8% SENIOR SUBORDINATED NOTES DUE CERTIFICATE PRINCIPAL AMOUNT
2009 NUMBER(S) OF OLD NOTES
(PLEASE FILL IN, IF BLANK) OF OLD NOTES TENDERED
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------
------------------------------------
------------------------------------
------------------------------------
TOTAL PRINCIPAL
AMOUNT OF OLD
NOTES TENDERED
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
-----------------------------------------------
Account Number
--------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------
[ ] CHECK HERE AND ENCLOSE A COPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
------------------------------------------------
Window Ticket Number (if any)
-----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------
Name of Institution which Guaranteed Delivery
-------------------------------
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution
------------------------------------------------
Account Number
-----------------------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY ACCOUNT
NUMBER SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS OWN
ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-----------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------------
<PAGE> 4
LADIES AND GENTLEMEN:
1. The undersigned hereby tenders to LLS Corp., an Illinois corporation
(the "Company"), the Old Notes, described above pursuant to the Company's offer
of $1,000 principal amount of the New Notes, in exchange for each $1,000
principal amount of the Old Notes, upon the terms and subject to the conditions
contained in the Prospectus dated , 1999 (the "Prospectus"), receipt
of which is hereby acknowledged, and in this Letter of Transmittal (which
together constitute the "Exchange Offer").
2. The undersigned hereby represents and warrants that it has full
authority to tender the Old Notes described above. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Company to
be necessary or desirable to complete the tender of Old Notes.
3. The undersigned understands that the tender of the Old Notes pursuant to
the procedures set forth in the Prospectus will constitute an agreement between
the undersigned and the Company as to the terms and conditions set forth in the
Prospectus.
4. Unless the box under the heading "Special Registration Instructions" is
checked, the undersigned hereby represents and warrants that:
- the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the undersigned,
whether or not the undersigned is the holder;
- neither the undersigned nor any such other person is engaging in or
intends to engage in a distribution of such New Notes;
- neither the undersigned nor any such other person has an arrangement
or understanding with any person to participate in the distribution
of such New Notes; and
- neither the holder nor any such other person is an "affiliate," as
such term is defined under Rule 405 promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), of the Company.
5. The undersigned may, if, and only if, it is unable to make all of the
representations and warranties contained in Item 4 above, elect to have its Old
Notes registered in the shelf registration described in the Registration Rights
Agreement, dated as of July 30, 1999, between the Company and the Initial
Purchaser in the form filed as an exhibit to the Registration Statement (the
"Registration Agreement") (all terms used in this Item 5 with their initial
letters capitalized, unless otherwise defined herein, shall have the meanings
given them in the Registration Agreement). Such election may be made by checking
the box under "Special Registration Instructions" in this Letter of Transmittal.
By making such election, the undersigned agrees, jointly and severally, as a
holder of transfer restricted securities participating in a shelf registration,
to indemnify and hold harmless the Company, its directors and officers, agents
and employees, each Person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the directors, officers, agents or
employees of such controlling persons, to the fullest extent lawful, from and
against any and all losses, claims, damages and liabilities whatsoever
(including, without limitation, the reasonable legal and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) arising out of or based upon:
- any untrue or alleged untrue statement of any material fact
contained in the Registration Statement or the Prospectus or in any
amendment thereof or supplement thereto, or
- any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, in each case to the extent, but only to the extent,
that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with information relating to the undersigned furnished to
the Company in writing by or on behalf of the undersigned expressly
for use therein.
Any such indemnification shall be governed by the terms and subject to the
conditions set forth in the Registration Agreement, including, without
limitation, the provisions regarding notice, retention of counsel, contribution
and payment of expenses set forth therein. The above summary of the
indemnification provisions
<PAGE> 5
of the Registration Agreement is not intended to be exhaustive and is qualified
in its entirety by reference to the Registration Agreement.
6. If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and delivering a prospectus, the undersigned will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. If the undersigned is a broker-dealer and Old Notes held for its
own account were not acquired as a result of market-making or other trading
activities, such Old Notes cannot be exchanged pursuant to the Exchange Offer.
7. Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and legal
and personal representatives of the undersigned.
8. Unless otherwise indicated herein under "Special Delivery Instructions,"
the certificates for the New Notes will be issued in the name of the
undersigned.
<PAGE> 6
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 1)
To be completed ONLY IF the New Notes are to be issued or sent to someone
other than the undersigned or to the undersigned at an address other than that
provided above.
Mail [ ] Issue [ ] (check appropriate boxes) certificates to:
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
(See Item 5)
To be completed ONLY IF:
- the undersigned satisfies the conditions set forth in Item 5 above;
- the undersigned elects to register its Old Notes in the Shelf
Registration described in the Registration Agreement; and
- the undersigned agrees to indemnify certain entities and individuals
as set forth in the Registration Agreement and summarized in Item 5
above.
[ ] By checking this box the undersigned hereby:
- represents that it is unable to make all of the representations and
warranties set forth in Item 4 above;
- elects to have its Old Notes registered pursuant to the Shelf
Registration described in the Registration Agreement; and
- agrees to indemnify certain entities and individuals identified in,
and to the extent provided in, the Registration Agreement and
summarized in Item 5 above.
<PAGE> 7
SIGNATURE
To be completed by all exchanging noteholders. Must be signed by the
registered holder exactly as its name appears on the Old Notes. If signature is
by trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
please set forth full title. See Instruction 3.
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATURE
Dated:
- --------------------------------------------------------------------------------
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------
SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 1)
Certain Signatures Must be Guaranteed by an Eligible Institution
- --------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- --------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(PRINTED NAME)
- --------------------------------------------------------------------------------
(TITLE)
Dated:
- --------------------------------------------------------------------------------
PLEASE READ THE INSTRUCTIONS BELOW,
WHICH FORM A PART OF THIS LETTER OF TRANSMITTAL.
<PAGE> 8
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must
be guaranteed by an eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program, the New York Stock Exchange Medallion Signature
Program or by an "eligible guarantor institution" within the meaning of Rule
17Ad-15 promulgated under the Exchange Act (an "Eligible Institution"), unless
the box entitled "Special Registration Instructions" or "Special Delivery
Instructions" above has not been completed or the Old Notes described above are
tendered for the account of an Eligible Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND OLD NOTES. The Old Notes, together
with a properly completed and duly executed Letter of Transmittal, or copy
thereof, should be mailed or delivered to the Exchange Agent at the address set
forth above.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
3. SIGNATURE ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by a person other than a registered holder
of any Old Notes, such Old Notes must be endorsed or accompanied by appropriate
bond powers, signed by such registered holder exactly as such registered
holder's name appears on such Old Notes.
If this Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
4. MISCELLANEOUS. All questions as to the validity, form, eligibility,
including time of receipt, acceptance, and withdrawal of tendered Old Notes will
be determined by the Company in its sole discretion, which determination will be
final and binding on all parties. The Company reserves the absolute right to
reject any or all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities, or conditions of tender as to particular Old Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer,
including the instructions in this Letter of Transmittal, will be final and
binding. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine.
Neither the Company, the Exchange Agent, nor any other person shall be under any
duty to give notification of defects in such tenders or shall incur any
liability for failure to give such notification. Tenders of Old Notes will not
be deemed to have been made until such defects or irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holder thereof as
soon as practicable following the Expiration Date.
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
TO TENDER
UNREGISTERED 11 5/8% SENIOR SUBORDINATED NOTES DUE 2009
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
LLS CORP.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1999
As set forth in the Prospectus (as defined), this form or one substantially
equivalent hereto must be used to accept the Exchange Offer:
- if certificates for unregistered 11 5/8% Senior Subordinated Notes
due 2009 (the "Old Notes") of LLS Corp., an Illinois corporation
(the "Company"), are not immediately available,
- time will not permit a holder's Old Notes or other required
documents to reach the Exchange Agent on or prior to the Expiration
Date (as defined); or
- the procedure for book-entry transfer cannot be completed on a
timely basis.
This form may be delivered by facsimile transmission, registered or certified
mail, by hand or by overnight delivery service to the Exchange Agent. See the
section entitled "The Exchange Offer -- Procedures for Tendering" in the
Prospectus.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1999 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER
IS EXTENDED BY THE COMPANY.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
Deliver to:
The Bank of New York, Exchange Agent
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
Attn: New York, New York 10286
Attn:
</TABLE>
By Facsimile:
(Eligible Institutions Only)
(212) 815-6339
For Information or
Confirmation by Telephone:
(212) 815-3428
Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or by overnight delivery service.
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OR
TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus dated , 1999 (as
the same may be amended or supplemented from time to time, the "Prospectus"),
and the related Letter of Transmittal, receipt of which is hereby acknowledged,
the aggregate principal amount of Old Notes set forth below pursuant to the
guaranteed delivery procedures set forth in the Prospectus in the section
entitled "The Exchange Offer -- Guaranteed Delivery Procedures."
Name(s) of Registered Holder(s):
------------------------------------------------
Aggregate Principal
Amount Tendered: $
--------------------------------------------------------------
Certificate No.(s)
(if available):
-----------------------------------------------------------------
(Total Principal Amount Represented by
Old Notes Certificate(s)):
-----------------------------------------------------
$
-------------------------------------------------------------------------------
If Old Notes will be tendered by book-entry transfer, provide the following
information:
DTC Account Number:
-------------------------------------------------------------
Date:
---------------------------------------------------------------------------
- ---------------
* Must be in denominations of $1,000 and any integral multiple thereof.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
<PAGE> 3
PLEASE SIGN HERE
<TABLE>
<S> <C>
X
------------------------------------------------ ---------------------------------------
X
------------------------------------------------ ---------------------------------------
Signature(s) or Owner(s) Date
or Authorized Signatory
</TABLE>
Area Code and Telephone Number:
-------------------------------------------------
Must be signed by the holder(s) of the Old Notes as their name(s) appear(s)
on certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
-----------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED.
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of or participant in the Securities Transfer
Agents Medallion Program, the Stock Exchange Medallion Program, the New York
Stock Exchange Medallion Signature Program or a firm or other entity identified
in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, as an
"eligible guarantor institution," including (as such terms are defined therein)
a bank, a broker, dealer, municipal securities broker, municipal securities
dealer, government securities broker, government securities dealer, a credit
union, a national securities exchange, registered securities association or
learning agency, or a savings association that is a participant in a Securities
Transfer Association recognized program (each of the foregoing being referred to
as an "Eligible Institution"),
hereby guarantees to deliver to the Exchange Agent, at one of its addresses set
forth above, either the Old Notes tendered hereby in proper form for transfer,
or confirmation of the book-entry transfer of such Old Notes to the Exchange
Agent's account at The Depositary Trust Company, pursuant to the procedures for
book-entry transfer set forth in the Prospectus, within three New York Stock
Exchange, Inc. trading days after the date of execution of this Notice of
Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Old Notes tendered
hereby to the Exchange Agent within the time period set forth above and that
failure to do so could result in a financial loss to the undersigned.
<TABLE>
<S> <C>
- --------------------------------------------------- ---------------------------------------------------
Name of Firm Authorized Signature
- --------------------------------------------------- ---------------------------------------------------
Address Title
- --------------------------------------------------- ---------------------------------------------------
Zip Code (Please Type or Print)
Area Code and Telephone No.: Dated:
----------------------- ---------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM.
