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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
----------------------
DATED: OCTOBER 21, 1997
EMPLOYEE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
ARIZONA 0-22600 86-0676898
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
6225 N. 24TH STREET, PHOENIX, ARIZONA 85016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 955-5556
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ITEM 5. OTHER EVENTS
On October 21, 1997, Employee Solutions, Inc. (the "Company") completed
the sale of $85 million in 10% Senior Notes due 2004 in a private placement
transaction to institutional and other accredited investors. Of the
approximately $82 million in net proceeds of the offering, ESI used
approximately $50 million to repay its existing bank indebtedness; ESI intends
to use the balance for general corporate purposes. In a related transaction, ESI
has also entered into an amended and restated loan agreement providing for a $20
million revolving credit facility; there no borrowings outstanding at this time
under the amended credit facility.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
1. Exhibits. See exhibit index attached hereto.
2. Financial Statements. None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EMPLOYEE SOLUTIONS, INC.
By:/s/ Marvin D. Brody
-----------------------------------------------
Marvin D. Brody
Chief Executive Officer
Date: October 27, 1997
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EMPLOYEE SOLUTIONS, INC.
FORM 8-K
DATED OCTOBER 21, 1997
EXHIBIT INDEX
Exhibit No. Description Filed Herewith
- ----------- ----------- --------------
4.1 Indenture dated October 15, 1997 among the X
Company, the Guarantor Subsidiaries (as defined
therein) and The Huntington National Bank
4.2 Purchase Agreement dated October 16, 1997 among X
the Company, the Guarantor Subsidiaries and
First Chicago Capital Markets, Inc. ("FCCM")
4.3 Registration Rights Agreement dated October 21, X
1997 among the Company, the Guarantor
Subsidiaries and FCCM
4.4 Amended and Restated Loan Agreement dated X
October 21, 1997 between the Company and Bank
One Arizona, NA
4.5 Amended and Restated Secured X
Promissory Note dated October
21, 1997
EI-1
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Exhibit 4.1
EMPLOYEE SOLUTIONS, INC.
AND
THE GUARANTORS NAMED HEREIN
AND
THE HUNTINGTON NATIONAL BANK
AS TRUSTEE
----------------
INDENTURE
Dated as of October 15, 1997
----------------
$85,000,000
10% Senior Notes due 2004
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CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
- ------- -------
310(a)(1)...................................................... 7.10
(a)(2)...................................................... 7.10
(a)(3)...................................................... N.A.
(a)(4)...................................................... N.A.
(a)(5)...................................................... 7.10
(b) ...................................................... 7.8;
...................................................... 7.10;
.......................................................13.2
(c) ...................................................... N.A.
311(a) ...................................................... 7.11
(b) ...................................................... 7.11
(c) ...................................................... N.A.
312(a) ...................................................... 2.5
(b) ...................................................... 13.3
(c) ...................................................... 13.3
313(a) ...................................................... 7.6
(b)(1)...................................................... N.A.
(b)(2)...................................................... 7.6
(c) ...................................................... 7.6;
...................................................... 13.2
(d) ...................................................... 7.6
314(a) ...................................................... 4.7;
...................................................... 4.6
(b) .................................................... N.A.
(c)(1)...................................................... 2.2;
...................................................... 7.2;
...................................................... 13.4
(c)(2)...................................................... 7.2;
...................................................... 13.4
(c)(3)...................................................... N.A
(d) .......................................................N.A
(e) ...................................................... 13.5
(f) ...................................................... N.A.
315(a) ...................................................... 7.1(b)
(b) ...................................................... 7.5;
...................................................... 7.6;
...................................................... 13.2
(c) ...................................................... 7.1(a)
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TIA INDENTURE
SECTION SECTION
- ------- -------
(d) ...................................................... 7.2;
...................................................... 6.11;
...................................................... 7.1(c)
(e) ...................................................... 6.14
316(a)(last sentence).......................................... 2.9
(a)(1)(A) ................................................ 6.11
(a)(1)(B) .................................................. 6.12
(a)(2)...................................................... N.A.
(b) ...................................................... 6.12;
...................................................... 6.8
317(a)(1)...................................................... 6.3
(a)(2)...................................................... 6.4
(b) .......................................................2.4
318(a) ...................................................... 13.1
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE............ 1
Section 1.1 Definitions.............................................. 1
Section 1.2 Incorporation by Reference of TIA........................ 16
Section 1.3 Rules of Construction.................................... 17
ARTICLE II
THE SECURITIES.......................... 18
Section 2.1 Form and Dating.......................................... 18
Section 2.2 Execution and Authentication............................. 18
Section 2.3 Registrar and Paying Agent............................... 19
Section 2.4 Paying Agent to Hold Assets in Trust..................... 19
Section 2.5 Securityholder Lists..................................... 20
Section 2.6 Transfer and Exchange.................................... 20
Section 2.7 Replacement Securities................................... 26
Section 2.8 Outstanding Securities................................... 26
Section 2.9 Treasury Securities...................................... 27
Section 2.10 Temporary Securities..................................... 27
Section 2.11 Cancellation............................................. 27
Section 2.12 Defaulted Interest....................................... 28
Section 2.13 CUSIP Numbers............................................ 28
ARTICLE III
REDEMPTION............................ 28
Section 3.1 Right of Redemption...................................... 28
Section 3.2 Notices to Trustee....................................... 28
Section 3.3 Selection of Securities to Be Redeemed................... 29
Section 3.4 Notice of Redemption..................................... 29
Section 3.5 Effect of Notice of Redemption........................... 30
Section 3.6 Deposit of Redemption Price.............................. 31
Section 3.7 Securities Redeemed in Part.............................. 31
ARTICLE IV
COVENANTS............................ 31
Section 4.1 Payment of Securities.................................... 31
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Section 4.2 Maintenance of Office or Agency.......................... 32
Section 4.3 Limitation on Restricted Payments........................ 32
Section 4.4 Corporate Existence...................................... 33
Section 4.5 Payment of Taxes and Other Claims........................ 33
Section 4.6 Compliance Certificate; Notice of Default................ 34
Section 4.7 Reports.................................................. 34
Section 4.8 Waiver of Stay, Extension or Usury Laws.................. 35
Section 4.9 Limitation on Transactions with Affiliates............... 35
Section 4.10 Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock............................... 36
Section 4.11 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries................................... 36
Section 4.12 Limitation on Liens Securing Indebtedness................ 37
Section 4.13 Limitation on Sale of Assets and Subsidiary Stock........ 37
Section 4.14 Limitation on Lines of Business.......................... 41
Section 4.15 Limitation on Status as Investment Company............... 41
Section 4.16 Future Subsidiary Guarantors............................. 41
Section 4.17 Payment for Consent...................................... 41
Section 4.18 Limitation on Sale and Leaseback Transactions............ 42
Section 4.19 Limitations with respect to Subsidiaries that are not
Guarantors............................................... 42
ARTICLE V
SUCCESSOR CORPORATION...................... 42
Section 5.1 Limitation on Merger, Sale or Consolidation.............. 42
Section 5.2 Successor Corporation Substituted........................ 43
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES.................. 43
Section 6.1 Events of Default........................................ 43
Section 6.2 Acceleration of Maturity Date; Rescission and Annulment.. 45
Section 6.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.................................................. 47
Section 6.4 Trustee May File Proofs of Claim......................... 47
Section 6.5 Trustee May Enforce Claims Without Possession of
Securities............................................... 48
Section 6.6 Priorities............................................... 48
Section 6.7 Limitation on Suits...................................... 49
Section 6.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest..................................... 49
Section 6.9 Rights and Remedies Cumulative........................... 50
Section 6.10 Delay or Omission Not Waiver............................. 50
Section 6.11 Control by Holders....................................... 50
Section 6.12 Waiver of Past Default................................... 51
Section 6.13 Undertaking for Costs.................................... 51
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PAGE
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Section 6.14 Restoration of Rights and Remedies....................... 51
ARTICLE VII
TRUSTEE............................. 52
Section 7.1 Duties of Trustee........................................ 52
Section 7.2 Rights of Trustee........................................ 53
Section 7.3 Individual Rights of Trustee............................. 54
Section 7.4 Trustee's Disclaimer..................................... 54
Section 7.5 Notice of Default........................................ 54
Section 7.6 Reports by Trustee to Holders............................ 55
Section 7.7 Compensation and Indemnity............................... 55
Section 7.8 Replacement of Trustee................................... 56
Section 7.9 Successor Trustee by Merger, Etc......................... 57
Section 7.10 Eligibility; Disqualification............................ 57
Section 7.11 Preferential Collection of Claims against Company........ 57
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE............. 57
Section 8.1 Option to Effect Legal Defeasance or Covenant Defeasance. 57
Section 8.2 Legal Defeasance and Discharge........................... 58
Section 8.3 Covenant Defeasance...................................... 58
Section 8.4 Conditions to Legal or Covenant Defeasance............... 59
Section 8.5 Deposited Cash and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions................. 60
Section 8.6 Repayment to Company..................................... 60
Section 8.7 Reinstatement............................................ 61
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS............... 61
Section 9.1 Supplemental Indentures Without Consent of Holders....... 61
Section 9.2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders....................................... 62
Section 9.3 Compliance with TIA...................................... 64
Section 9.4 Revocation and Effect of Consents........................ 64
Section 9.5 Notation on or Exchange of Securities.................... 65
Section 9.6 Trustee to Sign Amendments, Etc.......................... 65
ARTICLE X
RIGHT TO REQUIRE REPURCHASE................... 65
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PAGE
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Section 10.1 Repurchase of Securities at Option of the Holder upon
Change of Control........................................ 65
ARTICLE XI
GUARANTEES............................ 68
Section 11.1 Guarantees............................................... 68
Section 11.2 Execution and Delivery of Guarantee...................... 69
Section 11.3 Certain Bankruptcy Events................................ 70
Section 11.4 Limitation on Merger, Consolidation, Etc. of Guarantors.. 70
Section 11.5 Future Guarantors........................................ 71
ARTICLE XII
MISCELLANEOUS.......................... 71
Section 12.1 TIA Controls............................................. 71
Section 12.2 Notices.................................................. 71
Section 12.3 Communications by Holders with Other Holders............. 72
Section 12.4 Certificate and Opinion as to Conditions Precedent....... 72
Section 12.5 Statements Required in Certificate or Opinion............ 73
Section 12.6 Rules by Trustee, Paying Agent, Registrar................ 73
Section 12.7 Legal Holidays........................................... 73
Section 12.8 Governing Law............................................ 73
Section 12.9 No Adverse Interpretation of Other Agreements............ 74
Section 12.10 No Recourse Against Others.............................. 74
Section 12.11 Successors.............................................. 74
Section 12.12 Duplicate Originals..................................... 74
Section 12.13 Severability............................................ 75
Section 12.14 Table of Contents, Headings, Etc........................ 75
iv
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EXHIBITS
Exhibit A - Form of Security
Exhibit B - Form of Guarantee
v
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INDENTURE, dated as of October 15, 1997, among Employee Solutions,
Inc., an Arizona corporation (the "Company"), the Guarantors referred to below
and The Huntington National Bank, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 10%
Senior Notes due 2004:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Acceleration Notice" shall have the meaning specified in Section
6.2.
"Acquired Indebtedness" means Indebtedness or Disqualified Capital
Stock of any person existing at the time such person becomes a Subsidiary of the
Company, including by designation, or is merged or consolidated into or with the
Company or one of its Subsidiaries.
"Acquisition" means the purchase or other acquisition of any person
or all or substantially all the assets of any person by any other person, or the
acquisition of assets that constitute all or substantially all of an operating
unit or business, whether by purchase, merger, consolidation, or other transfer,
and whether or not for consideration.
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, provided, that, with respect to ownership interest in the Company
and its Subsidiaries a Beneficial Owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.
"Affiliate Transaction" shall have the meaning specified in Section
4.9.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Amended Credit Facility" means the credit facility dated October
21, 1997 by and among the Company and Banc One Arizona N.A., providing for an
aggregate $20 million revolving credit facility, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, as such credit agreement and/or related documents may be
amended, restated, supplemented, renewed, replaced or otherwise modified from
time to time whether or not with the same agent, trustee, representative lenders
or holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions
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thereof. Without limiting the generality of the foregoing, the term "Amended
Credit Facility" shall include agreements in respect of Interest Swap and
Hedging Obligations with lenders party to the Amended Credit Facility and shall
also include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to the Amended Credit Facility and all
refundings, refinancings and replacements of the Amended Credit Facility,
including any agreement (i) extending the maturity of any Indebtedness incurred
thereunder or contemplated thereby, (ii) adding or deleting borrowers or
guarantors thereunder, so long as borrowers and issuers include one or more of
the Company and its Subsidiaries and their respective successors and assigns,
(iii) increasing the amount of Indebtedness incurred thereunder or available to
be borrowed thereunder, provided that on the date such Indebtedness is incurred
it would not be prohibited by paragraph (b) of the definition "Permitted
Indebtedness," or (iv) otherwise altering the terms and conditions thereof in a
manner not prohibited by the terms hereof.
"Asset Sale" shall have the meaning specified in Section 4.13.
"Asset Sale Offer" shall have the meaning specified in Section 4.13.
"Asset Sale Offer Amount" shall have the meaning specified in
Section 4.13.
"Asset Sale Offer Price" shall have the meaning specified in Section
4.13.
"Attributable Value" means, as to any particular lease under which
any person is at the time liable other than a Capitalized Lease Obligation, and
at any date as of which the amount thereof is to be determined, the total net
amount of rent required to be paid by such person under such lease during the
remaining term thereof (whether or not such lease is terminable at the option of
the lessee prior to the end of such term), including any period for which such
lease has been, or may, at the option of the lessor, be extended, discounted
from the last date of such term to the date of determination at a rate per annum
equal to the discount rate which would be applicable to a Capitalized Lease
Obligation with a like term in accordance with GAAP. The net amount of rent
required to be paid under any lease for any such period shall be the aggregate
amount of rent payable by the lessee with respect to such period after excluding
amounts required to be paid on account of insurance, taxes, assessments,
utility, operating and labor costs and similar charges. "Attributable Value"
means, as to a Capitalized Lease Obligation under which any person is at the
time liable and at any date as of which the amount thereof is to be determined,
the discounted present value of the rental obligations of such person, as
lessee, required to be capitalized on the balance sheet of such person in
conformity with GAAP.
"Average Life" means, as of the date of determination, with respect
to any security or instrument, the quotient obtained by dividing (i) the sum of
the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal (or redemption) payment of
such security or instrument and (b) the amount of each such respective principal
(or redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
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"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" has the meaning attributed
to it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue
Date), whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not itself otherwise capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.
"Capitalized Lease Obligation" means, as applied to any person, any
lease of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such person, as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such person.
"Cash" or "cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public or private debts.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) or (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500 million and (iii) commercial paper issued by others rated at
least A-1 or the equivalent thereof by Standard & Poor's Corporation or at least
P-1 or the equivalent thereof by Moody's Investors Service, Inc., and in the
case of each of (i), (ii) and (iii) maturing within one year after the date of
acquisition.
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"Change of Control" means (i) any merger or consolidation of the
Company with or into any person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of the
Company and its Subsidiaries, on a consolidated basis, in one transaction or a
series of related transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) is or
becomes the "beneficial owner," directly or indirectly, of more than 50% of the
total voting power in the aggregate normally entitled to vote in the election of
directors, managers, or trustees, as applicable, of the transferee(s) or
surviving entity or entities, (ii) any "person" or "group" (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable) is or becomes the "beneficial owner," directly or indirectly, of
more than 50% of the total voting power in the aggregate of all classes of
Capital Stock of the Company then outstanding normally entitled to vote in
elections of directors, or (iii) during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of the Company (together with any new
directors whose election by such Board or whose nomination for election by
shareholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office.
"Change of Control Offer" shall have the meaning specified in
Section 10.1.
"Change of Control Purchase Date" shall have the meaning specified
in Section 10.1.
"Change of Control Purchase Price" shall have the meaning specified
in Section 10.1.
"Company" means Employee Solutions, Inc. until a successor replaces
it pursuant to the Indenture and thereafter means such successor.
"Consolidated Coverage Ratio" of any person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of such person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; provided, that for purposes of
such calculation, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period, (ii)
transactions giving rise to the need to calculate the Consolidated Coverage
Ratio shall be assumed to have occurred on the first day of the Reference
Period, (iii) the incurrence of any Indebtedness or issuance of any Disqualified
Capital Stock during the Reference Period or
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subsequent to the Reference Period and on or prior to the Transaction Date (and
the application of the proceeds therefrom to the extent used to refinance or
retire other Indebtedness) shall be assumed to have occurred on the first day of
such Reference Period, and (iv) the Consolidated Fixed Charges of such person
attributable to interest on any Indebtedness or dividends on any Disqualified
Capital Stock bearing a floating interest (or dividend) rate shall be computed
on a pro forma basis as if the average rate in effect from the beginning of the
Reference Period to the Transaction Date had been the applicable rate for the
entire period, unless such person or any of its Subsidiaries is a party to an
Interest Swap or Hedging Obligation (which shall remain in effect for the
12-month period immediately following the Transaction Date) that has the effect
of fixing the interest rate on the date of computation, in which case such rate
(whether higher or lower) shall be used.
"Consolidated EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) consolidated
income tax expense, (ii) consolidated depreciation and amortization expense,
provided that consolidated depreciation and amortization of a Subsidiary that is
a less than wholly owned Subsidiary shall only be added to the extent of the
equity interest of such person in such Subsidiary, (iii) other non-cash charges
of the Company and its Subsidiaries reducing Consolidated Net Income for such
period and (iv) Consolidated Fixed Charges.
"Consolidated Fixed Charges" of any person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capitalized Lease Obligations) of such person
and its Consolidated Subsidiaries during such period, including (i) original
issue discount and non-cash interest payments or accruals on any Indebtedness,
(ii) the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or guaranteed) by such person or
any of its Consolidated Subsidiaries in respect of preferred stock (other than
by Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
in good faith by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains (but not losses)
which are either extraordinary (as determined in accordance with GAAP) or
nonrecurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
capital stock), (b) the net income, if positive, of any person, other than a
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wholly owned Consolidated Subsidiary, in which such person or any of its
Consolidated Subsidiaries has an interest, except to the extent of the amount of
any dividends or distributions actually paid in cash to such person or a wholly
owned Consolidated Subsidiary of such person during such period, but in any case
not in excess of such person's pro rata share of such person's net income for
such period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, (d)
the net income, if positive, of any of such person's Consolidated Subsidiaries
to the extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of its
charter or bylaws or any other agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation (other than any insurance statute, rule
or governmental regulation restricting dividends or similar distributions by an
Insurance Subsidiary, including capital and liquidity requirements) applicable
to such Consolidated Subsidiary.
"Consolidated Net Worth" of any person at any date means the
aggregate consolidated stockholders' equity of such person (plus amounts of
equity attributable to preferred stock) and its Consolidated Subsidiaries, as
would be shown on the consolidated balance sheet of such person prepared in
accordance with GAAP, adjusted to exclude (to the extent included in calculating
such equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such person or a Consolidated Subsidiary of such person
subsequent to the Issue Date, and (c) all investments in Subsidiaries that are
not Consolidated Subsidiaries and in persons that are not Subsidiaries.
"Consolidated Subsidiary" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such person in accordance with GAAP.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Debt Incurrence Ratio" shall have the meaning specified in Section
4.10.
"Default" means any event which is, or after notice or passage of
time or both would be an Event of Default.
"Definitive Securities" means Securities that are in the form of the
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 1 and 3 thereof.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.3
as the Depository with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
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"Disqualified Capital Stock" means (i) except as set forth in (ii),
with respect to any person, any Equity Interest of such person that, by its
terms or by the terms of any security into which it is convertible, exercisable
or exchangeable, is, or upon the happening of an event or the passage of time
would be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Securities and (ii) with respect to
any Subsidiary of such person (including with respect to any Subsidiary of the
Company), any Equity Interest other than any common equity with no preference,
privileges, or redemption or repayment provisions.
"Equity Interest" of any person means any shares, interests,
participations or other equivalents (however designated) in such person's
equity, and shall in any event include any Capital Stock issued by, or
partnership or membership interests in, such person.
"Event of Default" shall have the meaning specified in Section 6.1.
"Event of Loss" means, with respect to any property or asset, (i)
any loss, destruction or damage of such property or asset or (ii) any
condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, of such property or asset, or confiscation or requisition of the use
of such property or asset.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Exchange Offer" means the offer by the Company and the Guarantors
to exchange the Series B Securities and Guarantees thereof for the Original
Securities and Guarantees thereof made pursuant to the Registration Rights
Agreement.
"Exempted Affiliate Transaction" means (a) customary employee
compensation arrangements approved by a majority of independent (as to such
transactions) members of the Board of Directors of the Company, (b) dividends
permitted under Section 4.3 and payable, in form and amount, on a pro rata basis
to all holders of Common Stock of the Company, and (c) transactions solely
between the Company and any of its Subsidiaries or solely among Subsidiaries of
the Company.
"GAAP" means United States generally accepted accounting principles
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 in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the Issue Date.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 3
to the form of Security attached hereto as Exhibit A.
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"Guarantee" shall have the meaning provided in Section 11.1.
"Guarantors" means (i) those entities named as Guarantors on the
signature page hereof and (ii) certain future Subsidiaries as described in
Section 4.16.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"incur" shall have the meaning specified in Section 4.10.
"Incurrence Date" shall have the meaning specified in Section 4.10.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise (as set forth in subclauses
(i) through (vi)), of any such person, (i) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such person
or only to a portion thereof), (ii) evidenced by bonds, notes, debentures or
similar instruments, (iii) representing the balance deferred and unpaid of the
purchase price of any property or services, except those incurred in the
ordinary course of its business that would constitute ordinarily a trade payable
or other accrued current liability that is not more than 90 days past their
original due date and except those for which cash is held in escrow pending
payment of such deferred and unpaid purchase price, (iv) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (v) relating to
any Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit;
(b) all net obligations of such person under Interest Swap and Hedging
Obligations; (c) all liabilities and obligations of others of the kind described
in the preceding clause (a) or (b) that such person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or property of
such person; and (d) any and all deferrals, renewals, extensions, refinancing
and refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b) or (c), or this clause (d), whether or not between or among the
same parties; and (e) all Disqualified Capital Stock of such person (measured at
the greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends). Indebtedness shall not include obligations under
insurance policies or reinsurance contracts entered into in the ordinary course
of business. For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value to be determined in good faith by the
board of directors of the issuer (or managing general partner of the issuer) of
such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
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<PAGE> 17
"Initial Purchaser" means First Chicago Capital Markets, Inc.
"Insurance Subsidiary" means a wholly owned Subsidiary of the
Company engaged principally in the ownership or issuance of insurance policies
that have not expired or the ownership or operation of any other similar assets
of an insurer or any interest therein.
"Interest Payment Date" means the stated due date of an installment
of interest on the Securities.
"Interest Swap and Hedging Obligation" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Investment" by any person in any other person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other person; (b) the making by such person of any deposit with, or
advance, loan or other extension of credit to, such other person (including the
purchase of property from another person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
person) or any commitment to make any such advance, loan or extension (but
excluding accounts receivable or deposits arising in the ordinary course of
business); (c) other than guarantees of Indebtedness of the Company or any
Guarantor to the extent permitted by Section 4.10, the entering into by such
person of any guarantee of, or other credit support or contingent obligation
with respect to, Indebtedness or other liability of such other person; and (d)
the making of any capital contribution by such person to such other person.
Investments shall exclude insurance premiums and other receivables in the
ordinary course of collection.
"Issue Date" means the date of first issuance of the Securities
under the Indenture.
"Legal Holiday" shall have the meaning provided in Section 12.7.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"Liquidated Damages" shall have the meaning specified in the
Registration Rights Agreement.
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"Maturity Date," when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at Stated Maturity, a Change of Control Purchase
Date, a purchase date with respect to an Asset Sale Offer or by declaration of
acceleration, call for redemption or otherwise.
"Moody's" means Moody's Investor Services, Inc.
"Net Cash Proceeds" means the aggregate amount of Cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock and by the Company and its Subsidiaries in respect of an Asset Sale plus,
in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Company that were issued for cash on or
after the Issue Date, the amount of cash originally received by the Company upon
the issuance of such securities (including options, warrants, rights and
convertible or exchangeable debt) less, in each case, the sum of all payments,
fees, commissions and expenses (including, without limitation, the fees and
expenses of legal counsel and investment banking fees and expenses) incurred in
connection with such Asset Sale or sale of Qualified Capital Stock, and, in the
case of an Asset Sale only, less the amount (estimated reasonably and in good
faith by the Company) of income, franchise, sales and other applicable taxes
required to be paid by the Company or any of its respective Subsidiaries in
connection with such Asset Sale.
"Offering Memorandum" means the Offering Memorandum of the Company
dated October 16, 1997 with respect to the Securities.
"Officer" means, with respect to the Company, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary or Assistant
Secretary.
"Officers' Certificate" means, with respect to the Company or any
Guarantor, a certificate signed by two Officers of the Company or such Guarantor
and otherwise complying with the requirements of Sections 12.4 and 12.5.
"Opinion of Counsel" means a written opinion from legal counsel to
the Company complying with the requirements of Sections 12.4 and 12.5. Unless
otherwise required by this Indenture, the counsel may be in-house counsel to the
Company.
"Original Securities" means the 10% Senior Notes due 2004, as
amended and supplemented from time to time in accordance with the terms hereof,
that are issued pursuant to this Indenture.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Permitted Indebtedness" means any of the following:
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(a) the Company and the Guarantors may incur Indebtedness
evidenced by the Securities and represented by the Indenture up to the amounts
specified therein as of the date thereof;
(b) Indebtedness incurred pursuant to the Amended Credit
Facility (including any Indebtedness issued to refinance, refund or replace such
Indebtedness) provided that the aggregate principal amount of Indebtedness
outstanding at any time does not exceed $20.0 million, plus accrued interest,
and such additional amounts as may be deemed to be outstanding in the form of
Interest Swap and Hedging Obligations with lenders party to the Amended Credit
Facility, minus the amount of any such Indebtedness retired with Net Cash
Proceeds from any Asset Sale or assumed by a transferee in an Asset Sale;
(c) the Company and its Subsidiaries, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clause (b) of this definition,
incurred under the Debt Incurrence Ratio test under Section 4.10 or which is
outstanding on the Issue Date so long as such Refinancing Indebtedness is
secured only by the assets that secured the Indebtedness so refinanced;
(d) the Company and its Subsidiaries may incur Indebtedness in
an aggregate amount outstanding at any time (including any Indebtedness issued
to refinance, replace, or refund such Indebtedness) of up to $2.0 million, minus
the amount of any such Indebtedness retired with Net Cash Proceeds from any
Asset Sale or assumed by a transferee in an Asset Sale;
(e) the Company may incur Indebtedness to any wholly owned
Subsidiary, and any wholly owned Subsidiary may incur Indebtedness to any other
wholly owned Subsidiary or to the Company; provided that, in the case of
Indebtedness of the Company (except Indebtedness to an Insurance Subsidiary),
such obligations shall be unsecured and subordinated in all respects to the
Company's obligations pursuant to the Securities and the date of any event that
causes a Subsidiary to no longer be a wholly owned Subsidiary shall be an
Incurrence Date;
(f) Indebtedness incurred in respect of reimbursement-type
obligation regarding workers' compensation claims;
(g) Indebtedness of the Company or its Subsidiaries in
connection with performance bonds, surety bonds, insurance obligations or bonds
and other similar bonds or obligations incurred in the ordinary course of
business; and
(h) Earn-out agreements in connection with acquisitions of
businesses by the Company or its Subsidiaries, provided that at the time such
agreement is entered into the Company may incur $1.00 of additional Indebtedness
under the Debt Incurrence Ratio and any Indebtedness incurred to fund payments
made pursuant to any such earn-out agreements shall not be Permitted
Indebtedness.
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<PAGE> 20
"Permitted Investment" means (a) any Investment in any of the
Securities; (b) any Investment in Cash Equivalents; (c) any Investment in
intercompany obligations to the extent permitted under clause (e) of the
definition of "Permitted Indebtedness"; (d) any Investment in a person in a
Related Business which, after such Investment, becomes a wholly-owned Subsidiary
of the Company and a Guarantor of the Securities; and (e) other Investments not
to exceed $2.0 million.
"Permitted Lien" means any of the following: (a) any Lien incurred
in connection with the Amended Credit Facility if such Indebtedness is permitted
by clause (b) under the definition of Permitted Indebtedness and additional
Liens in an amount not to exceed $20.0 million in the aggregate incurred in
connection with the Amended Credit Facility, as such facility may be increased
or amended from time to time, provided that at the time such Lien is incurred,
the Company is able to incur at least $1.00 of additional Indebtedness pursuant
to the Debt Incurrence Ratio; (b) Liens existing on the Issue Date; (c) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (d) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days, or (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (e) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(f) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property subject thereto (as such
property is used by the Company or any of its Subsidiaries) or interfere with
the ordinary conduct of the business of the Company or any of its Subsidiaries;
(g) Liens arising by operation of law in connection with judgments, only to the
extent, for an amount and for a period not resulting in
an Event of Default with respect thereto; (h) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation; (i) Liens
securing the Securities; (j) Liens securing Indebtedness of a person existing at
the time such person becomes a Subsidiary or is merged with or into the Company
or a Subsidiary or Liens securing Indebtedness incurred in connection with an
Acquisition, provided that such Liens were in existence prior to the date of
such acquisition, merger or consolidation, were not incurred in anticipation
thereof, and do not extend to any assets other than those acquired; (k) leases
or subleases granted to other persons in the ordinary course of business not
materially interfering with the conduct of the business of the Company or any of
its Subsidiaries or materially detracting from the value of the relative assets
of the Company or any Subsidiary; (l) Liens arising from precautionary Uniform
Commercial Code financing statement filings regarding operating leases entered
into by the Company or any of its Subsidiaries in the ordinary course of
business; (m) Liens securing Refinancing Indebtedness incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders of the Securities than the terms of the Liens securing such refinanced
Indebtedness provided that the Indebtedness secured is not increased and the
Lien is not
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<PAGE> 21
extended to any additional assets or property; and (n) restrictions on funds
held by or on behalf of the Insurance Subsidiaries for the payment of claims.
"person" means any individual, limited liability company,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
"principal" of any Indebtedness (including the Securities) means the
principal of such Indebtedness plus any applicable premium, if any, on such
Indebtedness.
"Property" or "property" means any right or interest in or to
property or assets of any kind whatsoever, whether real, personal or mixed and
whether tangible, intangible, contingent, indirect or direct.
"Qualified Capital Stock" means any Capital Stock of the Company
that is not Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Indebtedness of
the Company issued on or after the Issue Date with the Net Cash Proceeds
received by the Company from the substantially concurrent sale of Qualified
Capital Stock or any exchange of Qualified Capital Stock for any Capital Stock
or Indebtedness of the Company issued on or after the Issue Date.
"Rating Agencies" means S&P and Moody's or any successor to the
respective rating agency businesses thereof.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemption set forth in Paragraph
5 in the form of Security, which shall include in each case accrued and unpaid
interest with respect to such Security to the applicable Redemption Date.
"Reference Period" with regard to any person means the four full
fiscal quarters ended immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Securities or the
Indenture.
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"Refinancing Indebtedness" means Indebtedness or Disqualified
Capital Stock (a) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in part,
or (b) constituting an amendment, modification or supplement to, or a deferral
or renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, that (A) such Refinancing Indebtedness of any Subsidiary of the
Company shall only be used to refinance outstanding Indebtedness or Disqualified
Capital Stock of such Subsidiary, (B) such Refinancing Indebtedness shall (x)
not have an Average Life shorter than the Indebtedness or Disqualified Capital
Stock to be so refinanced at the time of such Refinancing and (y) in all
respects, be no less subordinated or junior, if applicable, to the rights of
Holders of the Securities than was the Indebtedness or Disqualified Capital
Stock to be refinanced and (C) such Refinancing Indebtedness shall have a final
stated maturity or redemption date, as applicable, no earlier than the final
stated maturity or redemption date, as applicable, of the Indebtedness or
Disqualified Capital Stock to be so refinanced.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company, the Guarantors and the Initial Purchaser,
dated as of the Issue Date.
"Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
"Restricted Payment" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such person or any parent or Subsidiary of such person,
(b) any payment on account of the purchase, redemption or other acquisition or
retirement for value of Equity Interests of such person or any Subsidiary or
parent of such person, (c) other than with the proceeds from the substantially
concurrent sale of, or in exchange for, Refinancing Indebtedness, any purchase,
redemption, or other acquisition or retirement for value of, any payment in
respect of any amendment of the terms of or any defeasance of, any Subordinated
Indebtedness, directly or indirectly, by such person or a parent or Subsidiary
of such person prior to the scheduled maturity, any scheduled repayment of
principal, or scheduled sinking fund payment, as the case may be, of such
Indebtedness and (d) any Investment by such person, other than a Permitted
Investment; provided, however, that the term "Restricted Payment" does not
include (i) any dividend, distribution or other payment on or with respect to
Equity Interests of an issuer to the extent payable solely in shares of
Qualified Capital Stock of such issuer; or (ii) any dividend,
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<PAGE> 23
distribution or other payment to the Company, or to any of its wholly owned
Subsidiaries, by the Company or any of its Subsidiaries.
"S&P" means Standard and Poor's Ratings Group, a division of the
McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"Securities" means, prior to the Exchange Offer, the Original
Securities, and after the Exchange Offer, the Original Securities (if any) and
the Series B Securities, in each case as amended or modified from time to time
in accordance with the terms hereof, issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with respect
to the Securities in global form, or any successor entity thereto.
"Securityholder" See "Holder."
"Series B Securities" means the Series B 10% Senior Notes due 2004,
in substantially the form set forth on the Form of Security set forth as Exhibit
A hereto, to be issued pursuant to this Indenture in connection with the
Exchange Offer.
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X under the Securities Act, as in effect on the Issue Date.
"Stated Maturity," when used with respect to any Security, means
October 15, 2004.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor that is subordinated in right of payment to the Securities or such
Guarantee, as applicable, in any respect or has a stated maturity on or after
the Stated Maturity.
"Subsidiary," with respect to any person, means (i) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by such person and one or more Subsidiaries of such person or by
one or more Subsidiaries of such person, (ii) any other person (other than a
corporation) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such person or a Subsidiary of such person is,
at the time, a general partner. Unless the context requires otherwise,
Subsidiary means each direct and indirect Subsidiary of the Company.
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<PAGE> 24
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of the execution of this
Indenture, except as permitted in Section 9.3.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.6.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group) of the Trustee including any vice president,
assistant vice president, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer of
the corporate trust department (or any successor group) of the Trustee to whom
such trust matter is referred because of his knowledge of and familiarity with
the particular subject.
"U.S. Government Obligations" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"wholly owned Subsidiary" means a Subsidiary all the Equity
Interests of which are owned by the Company or one or more wholly owned
Subsidiaries of the Company.
Section 1.2 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture noteholder" means a Holder or 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 Securities.
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All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
Section 1.3 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words
in the plural include the singular;
(v) provisions apply to successive events and
transactions;
(vi) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(vii) references to Sections or Articles means reference
to such Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating.
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto which
Exhibit is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained in the form of
Security attached as Exhibit A hereto shall be delivered in writing to the
Trustee. Each Security shall be dated the date of its authentication.
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The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 2.2 Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security, but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Original Securities for original
issue in the aggregate principal amount of up to $85,000,000 and shall
authenticate Series B Securities for original issue in the aggregate principal
amount of up to $85,000,000, in each case upon a written order of the Company in
the form of an Officers' Certificate; provided that such Series B Securities
shall be issuable only upon the valid surrender for cancellation of Original
Securities of a like aggregate principal amount in accordance with the
Registration Rights Agreement. The Officers' Certificate shall specify the
amount of Securities to be authenticated and the date on which the Securities
are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $85,000,000, except as provided in
Section 2.7. Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an 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. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
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Section 2.3 Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
in the Borough of Manhattan, The City of New York where Securities may be
presented for payment ("Paying Agent") and an office or agency where notices and
demands to or upon the Company in respect of the Securities may be served. The
Company may act as Registrar or Paying Agent, except that, for the purposes of
Articles III, VIII, X and Section 4.13 neither Company nor any Affiliate thereof
shall act as 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 hereby initially appoints the
Trustee as Registrar and Paying Agent, and the Trustee hereby initially agrees
so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
Section 2.4 Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold in trust for the benefit
of Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest (and Liquidated Damages, if any) on, the Securities
(whether such assets have been distributed to it by the Company or any other
obligor on the Securities), and shall notify the Trustee in writing of any
Default by the Company (or any other obligor on the Securities) in making any
such payment. If the Company or any Subsidiary thereof acts as Paying Agent, it
shall segregate such assets and hold them as a separate trust fund for the
benefit of the Holders or the Trustee. The Company at any time may require a
Paying Agent to distribute all assets held by it to the Trustee and account for
any assets disbursed and the Trustee may at any time during the continuance of
any payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Company to the Paying Agent, the Paying Agent (if
other than the Company) shall have no further liability for such assets.
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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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding 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 reasonably may require of the names and
addresses of Holders.
Section 2.6 Transfer and Exchange.
(a) When Definitive Securities are presented 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 the Definitive Securities surrendered for transfer or
exchange:
(i) 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 the Holder thereof or his
attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that
are Definitive Securities, shall 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 substantially the form set forth on
the reverse of the Security); or
(B) if such Transfer Restricted Security is
being transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule 144A
under the Securities Act, a certification to that effect (in the
form set forth on the reverse of the Security); or
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(C) if such Transfer Restricted Security is
being transferred (i) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities Act,
(ii) pursuant to an effective registration statement under the
Securities Act, (iii) 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 $100,000, not with a view
to or for offer or sale in connection with any distribution in
violation of the Securities Act or (iv) in reliance on another
exemption from the registration requirements of the Securities Act,
a certification to that effect (in the form set forth on the reverse
of the Security) and in the case of (iii) above a transferee letter
of representation in substantially the form set forth in the
Offering Memorandum and in the case of (i), (iii) and (iv) above, if
the Company or the Registrar so requests, an Opinion of Counsel
reasonably acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the Securities Act.
(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 inter est in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Registrar, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, a certification, substantially in the form set forth on the
reverse of the Security, that such Definitive Security is being
transferred to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Definitive Security is a
Transfer Restricted Security, written instructions directing the Registrar
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 Registrar 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 Depository 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
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Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture (including
the restrictions on transfer set forth herein) and the procedures of the
Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Security for
a Definitive Security.
(i) Any person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security. Upon receipt by the Trustee of written instructions
or such other form of instructions as is customary for the Depository from
the Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Security and upon receipt by the Trustee of a written
order or such other form of instructions as is customary for the
Depository or the Person designated by the Depository as having such a
beneficial interest in a Transfer Restricted Security only, 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 Depository as being the
beneficial owner, a certification from such person to that effect
(in substantially the form set forth on the reverse of the
Security); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under
the Securities Act, a certification to that effect from the
transferor (in the form set forth on the reverse of the Security);
or
(C) if such beneficial interest is being
transferred (i) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities Act,
(ii) pursuant to an effective registration statement under the
Securities Act (iii) 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 $100,000, not with a view
to or for offer or sale in connection with distribution in violation
of the Securities Act or (iv) in reliance on another exemption from
the registration requirements of
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the Securities Act, a certification to that effect from the
transferee or transferor (in the form set forth on the reverse of
the Security) and in the case of (iii) above a transferee letter of
representation in substantially the form set forth in the Offering
Memorandum and in the case of (i), (iii) and (iv) above, if the
Company or the Registrar so requests, an Opinion of Counsel
reasonably acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the Securities Act,
then the Registrar or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depository and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and the Trustee will authenticate and deliver to the
transferee a Definitive Security in the appropriate principal amount.
(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 authorized denominations as
the Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Registrar shall
deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depository to a nominee
of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in Absence of
Depository. If at any time:
(i) the Depository for the Securities notifies the
Company that the Depository is unwilling or unable to continue as
Depository for the Global Securities and a successor Depository for the
Global Securities is not appointed by the Company within 90 days after
delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Securities under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and make available for
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delivery Definitive Securities, in an aggregate principal amount equal to the
principal amount of the Global Securities, in exchange for such Global
Securities.
(g) Legends. Each Security certificate evidencing the Global
Securities and the Definitive Securities (and all Securities (other than the
Series B Securities) issued in exchange therefor or substitution thereof) shall
bear a legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOR
EIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT, (d) 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 ONE OR MORE OTHER INSTITUTIONAL
ACCREDITED INVESTORS, IN EACH CASE, HAVING A MINIMUM PURCHASE PRICE
OF AT LEAST $100,000, 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 (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(IN THE CASE OF (d) UPON DELIVERY OF A TRANSFEREE LETTER OF
REPRESENTATION AND IN THE CASE OF (b), (c), (d) OR (e), UPON AN
OPINION OF COUNSEL IF THE COMPANY OR THE TRUSTEE SO REQUESTS), (2)
TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGIS-
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TRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE.
(h) Cancellation and/or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or cancelled, such Global
Security shall be returned to or retained and cancelled 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 cancelled, 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 Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) Obligations with respect to Transfers and Exchanges of
Definitive Securities.
(i) To permit registrations of transfers and exchanges,
the Company shall 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 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, assessments, or similar governmental charge payable upon
exchanges or transfers pursuant to Section 2.2, 2.10, 3.6, 4.13, 9.5 or
10.1).
(iii) The Registrar or co-Registrar shall not be
required to register the transfer of or exchange of (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, or (b) any Security for a period beginning 15 days
before the mailing of a notice of an offer to repurchase pursuant to
Article X or Section 4.13 hereof or a notice of redemption of Securities
pursuant to Article III hereof and ending at the close of business on the
day of such mailing.
(iv) 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 other than to require
delivery of such certificates and other documenta-
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tion or evidence as 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 7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee, to the Trustee to the effect that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
are met. If required by the Trustee or the Company, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Security is replaced. The Company or
the Trustee may charge such Holder for their reasonable, out-of-pocket expenses
in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
Section 8 Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security, except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds cash sufficient to pay
all of the principal and interest (and Liquidated Damages, if any) due on the
Securities payable on that date and payment of the Securities called for
redemption is not otherwise prohibited, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
Section 9 Treasury Securities.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company, any Guarantor and Affiliates of the
Company or of any Guarantor shall be disregarded,
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except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, amendment, supplement, waiver or
consent, only Securities that a Trust Officer of the Trustee actually knows are
so owned shall be disregarded.
Section 10 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare, the Guarantors shall endorse 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 reasonably and in
good faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare, the Guarantors shall endorse and the Trustee
shall authenticate definitive Securities in exchange for temporary Securities.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as permanent Securities authenticated
and delivered hereunder.
Section 11 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 transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel and, at the written direction of the Company, shall dispose of all
Securities surrendered for transfer, exchange, payment or cancellation in
accordance with its customary procedures. Subject to Section 2.7, the Company
may not issue new Securities to replace Securities it has paid or delivered to
the Trustee for cancellation. No Securities shall be authenticated in lieu of or
in exchange for any Securities cancelled as provided in this Section 2.11,
except as expressly permitted in the form of Securities and as permitted by this
Indenture.
Section 12 Defaulted Interest.
If the Company defaults in a payment of interest (and Liquidated
Damages, if any) on the Securities, the Company shall pay the defaulted interest
(and Liquidated Damages, if any), plus (to the extent lawful) interest on the
defaulted interest (and Liquidated Damages, if any), to the persons who are
Holders on a Record Date (or at the Company's option a subsequent special record
date) which date shall be the fifteenth day next preceding the date fixed by the
Company for the payment of defaulted interest, whether or not such day is a
Business Day, unless the Trustee fixes another record date. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder with a copy to the Trustee a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest (and
Liquidated Damages, if any), and interest payable on such defaulted interest
(and Liquidated Damages), if any, to be paid.
Section 13 CUSIP Numbers.
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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 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 1 Right of Redemption.
Redemption of Securities shall be made only in accordance with this
Article III. At its election, the Company may redeem the Securities in whole or
in part, at any time or from time to time on or after October 15, 2001, at the
Redemption Prices specified under the caption "Redemption," in the Form of Note
attached as Exhibit A hereto, plus accrued but unpaid inter est (and Liquidated
Damages, if any) to the Redemption Date. Except as provided in this paragraph
and Paragraph 5 of the Note, the Securities may not otherwise be redeemed at the
option of the Company.
Section 2 Notices to Trustee.
If the Company elects to redeem Securities pursuant to this Article
III, it shall notify the Trustee in writing of the date on which the Securities
are to be redeemed ("Redemption Date") and the principal amount of Securities to
be redeemed and whether it wants the Trustee to give notice of redemption to the
Holders in the name of and at the expense of the Company.
If the Company elects to reduce the principal amount of Securities
to be redeemed pursuant to Paragraph 5 of the Securities by crediting against
any such redemption Securities it has not previously delivered to the Trustee
for cancellation, it shall so notify the Trustee of the amount of the reduction
and deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for in
this Section 3.2 at least 45 days (unless a shorter period is acceptable to the
Trustee) before the Redemption Date.
Section 3 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select from among such Securities to be
redeemed pro rata or by lot or by such other method as the Trustee shall
determine to be fair and appropriate and in such manner as complies with any
applicable legal and stock exchange requirements.
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The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
Section 4 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed. At the Company's
request, the Trustee shall give the notice of redemption in the Company's name
and at the Company's expense. Each notice for redemption shall identify the
Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of
accrued but unpaid interest (and Liquidated Damages, if any) to be paid
upon such redemption;
(3) the name, address and telephone number of the
Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such notice to
collect the Redemption Price;
(5) that, unless (a) the Company defaults in its
obligation to deposit cash with the Paying Agent in accordance with
Section 3.6 hereof, interest on Securities called for redemption ceases to
accrue on and after the Redemption Date and the only remaining right of
the Holders of such Securities is to receive payment of the Redemption
Price, including accrued but unpaid interest (and Liquidated Damages, if
any), upon surrender to the Paying Agent of the Securities called for
redemption and to be redeemed;
(6) if any Security is being redeemed in part, the
portion of the principal amount, equal to $1,000 or any integral multiple
thereof, of such Security to be redeemed and that, after the Redemption
Date, and upon surrender of such Security, a new Security or Securities in
aggregate principal amount equal to the unredeemed portion thereof will be
issued;
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(7) if less than all the Securities are to be
redeemed, the identification of the particular Securities (or portion
thereof) to be redeemed, as well as the aggregate principal amount of such
Securities to be redeemed and the aggregate principal amount of Securities
to be outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be
redeemed; and
(9) that the notice is being sent pursuant to this
Section 3.4 and pursuant to the optional redemption provisions of
Paragraph 5 of the Securities.
Section 5 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued but unpaid interest (and
Liquidated Damages, if any). Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption Price,
including interest (and Liquidated Damages, if any), if any, accrued to and
unpaid on the Redemption Date; provided that if the Redemption Date is after a
regular Record Date and on or prior to the Interest Payment Date, the accrued
interest (and Liquidated Damages, if any) shall be payable to the Holder of the
redeemed Securities registered on the relevant Record Date; and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
Section 6 Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) cash
sufficient to pay the Redemption Price of, including accrued but unpaid interest
on (and Liquidated Damages, if any), all Securities to be redeemed on such
Redemption Date (other than Securities or portions thereof called for redemption
on that date that have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the Company any cash so
deposited which is not required for that purpose upon the written request of the
Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not otherwise prohibited, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so
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paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph and the other provisions of this Article
III, interest shall continue to accrue and be paid from the Redemption Date
until such payment is made on the unpaid principal, and, to the extent lawful,
on any interest not paid on such unpaid principal, in each case at the rate and
in the manner provided in Section 4.1 hereof and the Securities.
Section 7 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
Section 1 Payment of Securities.
The Company shall pay the principal of and interest (and Liquidated
Damages, if any) on the Securities on the dates and in the manner provided in
the Securities and this Indenture. An installment of principal of or interest
(and Liquidated Damages, if any) on the Securities shall be considered paid on
the date it is due if the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds for the benefit of the Holders, on or before
10:00 a.m. New York City time on that date, cash deposited and designated for
and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest (and Liquidated Damages, if any) at the rate specified
in the Securities compounded semi-annually, to the extent lawful.
Section 2 Maintenance of Office or Agency.
The Company and the Guarantors shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantors in respect of the Securities and this Indenture
may be served. The Company and the Guarantors 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 and the Guarantors 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 address of the Trustee set forth in Section 12.2.
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The Company and the Guarantors may also from time to time designate
one or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company and the Guarantors of their obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York,
for such purposes. The Company and the Guarantors shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. The Company and the Guarantors
hereby initially designate the principal corporate trust office of the Trustee
as such office.
Section 3 Limitation on Restricted Payments.
The Company and its Subsidiaries shall not, and shall not permit any
of their Subsidiaries to, directly or indirectly, make any Restricted Payment
if, after giving effect to such Restricted Payment on a pro forma basis, (i) a
Default or an Event of Default shall have occurred and be continuing, (ii) the
Company is not permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio contained in Section 4.10, or (iii) the
aggregate amount of all Restricted Payments made by the Company and its
Subsidiaries, including after giving effect to such proposed Restricted Payment,
from and after the Issue Date, would exceed the sum of (a) $5.0 million, plus
(b) 50% of the aggregate Consolidated Net Income of the Company and its
Consolidated Subsidiaries for the period (taken as one accounting period)
commencing on the first day of the first full fiscal quarter commencing after
the Issue Date, to and including the last day of the fiscal quarter ended
immediately prior to the date of each such calculation (or, in the event
Consolidated Net Income for such period is a deficit, then minus 100% of such
deficit) plus (c) the aggregate Net Cash Proceeds received by the Company from
the sale of its Qualified Capital Stock (other than (i) to a Subsidiary of the
Company and (ii) to the extent applied in connection with a Qualified Exchange)
after the Issue Date.
The immediately preceding paragraph, however, will not prohibit (y)
a Qualified Exchange or (z) the payment of any dividend on Qualified Capital
Stock within 60 days after the date of its declaration if such dividend could
have been made on the date of such declaration in compliance with the foregoing
provisions. The full amount of any Restricted Payment made pursuant to clause
(z) (but not pursuant to clause (y)) of the immediately preceding sentence,
however, will be deducted in the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause (iii) of the
immediately preceding paragraph.
Section 4 Corporate Existence.
Subject to Article V and, with respect to the Guarantors, Section
11.4, the Company and the Guarantors shall do or cause to be done all things
necessary to preserve and keep in full force and effect their corporate
existence and the corporate or other existence of each of their Subsidiaries in
accordance with the respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the Company and the
Guarantors and each of their Subsid-
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iaries; provided, however, that neither the Company nor any of the Guarantors
shall be required to preserve, with respect to itself, any right or franchise,
and with respect to any of their Subsidiaries, any such existence, right or
franchise, if (a) the Board of Directors of the Company shall determine
reasonably and in good faith that the preservation thereof is no longer
desirable in the conduct of the business of the Company and (b) the loss thereof
is not disadvantageous in any material respect to the Holders.
Section 5 Payment of Taxes and Other Claims.
The Company and the Guarantors shall, and shall cause each of their
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon the Company, any Guarantor or any of their
Subsidiaries or properties and assets of the Company, any Guarantor or any of
their Subsidiaries and (ii) all lawful claims, whether for labor, materials,
supplies, services or anything else, which have become due and payable and which
by law have or may become a Lien upon the property and assets of the Company,
any Guarantor or any of their Subsidiaries; provided, however, that neither the
Company nor any Guarantor shall be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which disputed amounts adequate reserves have been
established in accordance with GAAP.
Section 6 Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within 120 days
after the end of its fiscal year an Officers' Certificate, one of the signers of
which shall be the principal executive, financial or accounting officer of the
Company, complying (whether or not required) with Section 314(a)(4) of the TIA
and stating that a review of their activities and the activities of their
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations (without
regard to notice requirements or grace periods) under this Indenture and further
stating, as to each such Officer signing such certificate, whether or not the
signer knows of any failure by the Company, any Guarantor or any Subsidiary of
the Company or any Guarantor to comply with any conditions or covenants in this
Indenture and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant fiscal year end on
any date other than the current fiscal year end date.
(b) So long as not contrary to the then current recommendation
of the American Institute of Certified Public Accountants, the Company shall
deliver to the Trustee within 120 days after the end of its fiscal year a
written report of a firm of independent certified public accountants with an
established national reputation stating that in conducting their audit for such
fiscal year, nothing has come to their attention that caused them to believe
that the Company or any
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Subsidiary of the Company were not in compliance with the provisions set forth
in Section 4.3, 4.10 or 4.13 or Article X of this Indenture.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, immediately upon becoming aware of any
Default or Event of Default under this Indenture, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto. The Trustee shall not be deemed
to have knowledge of a Default or an Event of Default unless one of its Trust
Officers receives notice of the Default giving rise thereto from the Company or
any of the Holders.
Section 7 Reports.
Whether or not the Company is subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder within 15 days after it is or would have been (if it
were subject to such reporting obligations) required to furnish such with the
SEC, annual and quarterly financial statements substantially equivalent to
financial statements that would have been included in reports filed with the
SEC, if the Company were subject to the requirements of Section 13 or 15(d) of
the Exchange Act, including, in each case, a management's discussion and
analysis of financial condition and results of operations and, with respect to
annual information only, a report thereon by the Company's certified independent
public accountants and, to the extent permitted by the Exchange Act or the SEC,
file with the SEC the annual, quarterly and other reports which it is or would
have (if it were subject to such reporting obligations) been required to file
with the SEC. Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of their covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates). From and after the time
the Company files a registration statement with the SEC with respect to the
Securities, the Company will file such reports with the SEC provided the SEC
will accept such filings.
Section 8 Waiver of Stay, Extension or Usury Laws.
Each of the Company and each Guarantor covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law wherever enacted which would
prohibit or forgive the Company or any Guarantor from paying all or any portion
of the principal of or interest (and Liquidated Damages, if any) on the
Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent that they may lawfully do so) each of the Company
and each Guarantor hereby expressly waives all benefit or advantage of any such
law insofar as such law applies to the Securities, and covenant that it shall
not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
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Section 9 Limitation on Transactions with Affiliates.
None of the Company or any of its Subsidiaries will be permitted on
or after the Issue Date to enter into or suffer to exist any contract,
agreement, arrangement or transaction with any Affiliate (an "Affiliate
Transaction"), or any series of related Affiliate Transactions (other than
Exempted Affiliate Transactions) (i) unless it is determined that the terms of
such Affiliate Transaction are fair and reasonable to the Company, and no less
favorable to the Company than could have been obtained in an arm's-length
transaction with a non-Affiliate and (ii) if involving consideration to either
party in excess of $1.0 million, unless such Affiliate Transaction(s) is
evidenced by an Officers' Certificate addressed and delivered to the Trustee
certifying that such Affiliate Transaction(s) has been approved by a majority of
the members of the Board of Directors that are disinterested in such transaction
and (iii) if involving consideration to either party in excess of $3.0 million,
unless in addition to the foregoing, the Company, prior to the consummation
thereof, obtains a written favorable opinion as to the fairness of such
transaction to the Company from a financial point of view from an independent
investment banking firm of national reputation.
Section 10 Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock.
Except as set forth below in this covenant, the Company and its
Subsidiaries will not, and will not permit any of their Subsidiaries to,
directly or indirectly, issue, assume, guaranty, incur, become directly or
indirectly liable with respect to (including as a result of an Acquisition), or
otherwise become responsible for, contingently or otherwise (individually and
collectively, to "incur" or, as appropriate, an "incurrence"), any Indebtedness
or any Disqualified Capital Stock (including Acquired Indebtedness), other than
Permitted Indebtedness. Not withstanding the foregoing, if (i) no Default or
Event of Default shall have occurred and be continuing at the time of, or would
occur after giving effect on a pro forma basis to, such incurrence of
Indebtedness or Disqualified Capital Stock and (ii) on the date of such
incurrence (the "Incurrence Date"), the Consolidated Coverage Ratio of the
Company for the Reference Period immediately preceding the Incurrence Date,
after giving effect on a pro forma basis to such incurrence of such Indebtedness
or Disqualified Capital Stock and, to the extent set forth in the definition of
Consolidated Coverage Ratio, the use of proceeds thereof, would be at least 2.25
to l (the "Debt Incurrence Ratio"), then the Company may incur such Indebtedness
or Disqualified Capital Stock and its Subsidiaries may incur such Indebtedness.
Indebtedness or Disqualified Capital Stock of any person which is
outstanding at the time such person becomes a Subsidiary of the Company
(including upon designation of any Subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with the Company or a Subsidiary of
the Company shall be deemed to have been Incurred at the time such person
becomes a Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Subsidiary of the Company, as applicable.
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Section 11 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
The Company and its Subsidiaries will not, and will not permit any
of their Subsidiaries to, directly or indirectly, create, assume or suffer to
exist any consensual restriction on the ability of any Subsidiary of the Company
to pay dividends or make other distributions to or on behalf of, or to pay any
obligation to or on behalf of, or otherwise to transfer assets or property to or
on behalf of, or make or pay loans or advances to or on behalf of, the Company
or any Subsidiary of the Company except (a) restrictions imposed by the
Securities or the Indenture, (b) restrictions imposed by applicable laws and
regulations, including laws and regulations establishing capital and liquidity
requirement for Insurance Subsidiaries, (c) existing restrictions under the
Amended Credit Facility, (d) restrictions under any Acquired Indebtedness not
incurred in violation of the Indenture or any agreement relating to any
property, asset, or business acquired by the Company or any of its Subsidiaries,
which restrictions in each case existed at the time of acquisition, were not put
in place in connection with or in anticipation of such acquisition and are not
applicable to any person, other than the person acquired, or to any property,
asset or business, other than the property, assets and business so acquired, (e)
any such restriction or requirement imposed by Indebtedness incurred under
paragraph (b) of the definition of "Permitted Indebtedness," provided such
restriction or requirement is no more restrictive than that imposed by the
Amended Credit Facility as of the Issue Date, (f) restrictions with respect
solely to a Subsidiary of the Company imposed pursuant to a binding agreement
which has been entered into for the sale or disposition of all or substantially
all of the Equity Interests or assets of such Subsidiary, provided such
restrictions apply solely to the Equity Interests or assets of such Subsidiary
which are being sold, (g) restrictions arising out of "fronting" arrangements or
reinsurance agreements with third party insurers in existence on the Issue Date
pursuant to which the Insurance Subsidiary is required to meet certain cash
collateral requirements, (h) in connection with and pursuant to permitted
Refinancings, replacements of restrictions imposed pursuant to clauses (a), (c)
or (d) of this paragraph that are not more restrictive than those being replaced
and do not apply to any other person or assets than those that would have been
covered by the restrictions in the Indebtedness so refinanced, and (i) any
agreement that extends, renews or replaces any agreement described in clause (g)
or any similar agreement, provided that the terms and conditions of any such
restrictions are not materially less favorable to the Holders than those under
or pursuant to such agreements as in effect on the Issue Date. Notwithstanding
the foregoing, neither (a) customary provisions restricting subletting or
assignment of any lease entered into in the ordinary course of business,
consistent with industry practice, nor (b) Liens permitted under the terms of
the Indenture on assets securing the Indebtedness under the Amended Credit
Facility shall in and of themselves be considered a restriction on the ability
of the applicable Subsidiary to transfer such agreement or assets, as the case
may be.
Section 12 Limitation on Liens Securing Indebtedness.
The Company and its Subsidiaries will not, and will not permit any
of their Subsidiaries to, create, incur, assume or suffer to exist any Lien of
any kind, other than Permitted Liens, upon any of their respective assets now
owned or acquired on or after the date of the Indenture or upon
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any income or profits therefrom, unless the Company provides and causes its
Subsidiaries to provide, concurrently therewith, that the Securities are equally
and ratably so secured, provided that, if such Indebtedness is Subordinated
Indebtedness, the Lien securing such Subordinated Indebtedness shall be
subordinate and junior to the Lien securing the Securities with the same
relative priority as such Subordinated Indebtedness shall have with respect to
the Securities.
Section 13 Limitation on Sale of Assets and Subsidiary Stock.
The Company and its Subsidiaries will not, and will not permit any
of their Subsidiaries to, in one or a series of related transactions, convey,
sell, transfer, assign or otherwise dispose of, directly or indirectly, any of
its property, business or assets, including by merger or consolidation (in the
case of a Subsidiary of the Company), and including any sale or other transfer
or issuance of any Equity Interests of any Subsidiary of the Company, whether by
the Company or a Subsidiary or through the issuance, sale or transfer of Equity
Interests by a Subsidiary of the Company, and including any sale and leaseback
transaction (any of the foregoing, an "Asset Sale"), unless (i)(a) within 210
days after the date of such Asset Sale, the Net Cash Proceeds therefrom (the
"Asset Sale Offer Amount") are applied to the optional redemption of the
Securities in accordance with the terms of the Indenture or to the repurchase of
the Securities pursuant to an irrevocable, unconditional cash offer (the "Asset
Sale Offer") to repurchase Securities at a purchase price of 100% of principal
amount (the "Asset Sale Offer Price") together with accrued and unpaid interest
and Liquidated Damages, if any, to the date of payment, made within 180 days of
such Asset Sale or (b) within 180 days following such Asset Sale, the Asset Sale
Offer Amount is (1) invested (or committed, pursuant to a binding commitment
subject only to reasonable, customary closing conditions, to be invested, and in
fact is so invested, within an additional 90 days) in assets and property (other
than notes, bonds, obligation and securities except in connection with the
acquisition of a wholly owned Subsidiary) which in the good faith reasonable
judgment of the Board will immediately constitute or be a part of a Related
Business of the Company or such Subsidiary (if it continues to be a Subsidiary)
immediately following such transaction or (2) used to permanently reduce
Indebtedness permitted pursuant to paragraph (b) of the definition "Permitted
Indebtedness" (provided that in the case of a revolver or similar arrangement
that makes credit available, such commitment is also permanently reduced by such
amount), (ii) at least 85% of the total consideration received for such Asset
Sale or series of related Asset Sales consists of Cash or Cash Equivalents,
(iii) no Default or Event of Default shall have occurred and be continuing at
the time of, or would occur after giving effect, on a pro forma basis, to, such
Asset Sale, and (iv) the Board of Directors of the Company determines in good
faith that the Company or such Subsidiary, as applicable, receives fair market
value for such Asset Sale (as evidenced by a resolution of the Board of
Directors).
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Company and its Subsidiaries may, in the ordinary
course of business, convey, sell, transfer, assign or otherwise dispose of
property or assets in the ordinary course of business;
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(ii) the Company and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with Article V;
(iii) the Company and its Subsidiaries may sell or dispose of
damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Subsidiary, as applicable;
and
(iv) the Company and the Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets to the Company or any of
its wholly owned Subsidiaries.
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds from Asset Sales not applied to the uses set forth in (i) above (the
"Excess Proceeds") exceeds $2.0 million. Each Asset Sale Offer shall remain open
for 20 Business Days following its commencement (the "Asset Sale Offer Period").
Upon expiration of the Asset Sale Offer Period, the Company shall apply the
Asset Sale Offer Amount plus an amount equal to accrued and unpaid interest and
Liquidated Damages, if any, to the purchase of all Securities properly tendered
(on a pro rata basis if the Asset Sale Offer Amount is insufficient to purchase
all Securities so tendered) at the Asset Sale Offer Price (together with accrued
and unpaid interest and Liquidated Damages, if any). To the extent that the
aggregate amount of Securities tendered pursuant to an Asset Sale Offer is less
than the Asset Sale Offer Amount, the Company may use any remaining Net Cash
Proceeds for general corporate purposes as otherwise permitted by the Indenture
and following each Asset Sale Offer the Excess Proceeds amount shall be reset to
zero. For purposes of (ii) above, total consideration received means the total
consideration received for such Asset Sales minus the amount of (a) Indebtedness
which is not Subordinated Indebtedness assumed by a transferee which assumption
permanently reduces the amount of Indebtedness outstanding on the Issue Date or
permitted pursuant to paragraph (b) or (d) of the definition "Permitted
Indebtedness" (including that in the case of a revolver or similar arrangement
that makes credit available, such commitment is so reduced by such amount) and
(b) property that within 30 days of such Asset Sale is converted into Cash or
Cash Equivalents.
Notice of an Asset Sale Offer shall be sent, on or prior to the
commencement of the Asset Sale Offer, by first-class mail, by the Companies to
each Holder at its registered address, with a copy to the Trustee. The Asset
Sale Offer shall remain open for at least 20 Business Days following its
commencement. The notice to the Holders shall contain all information,
instructions and materials required by applicable law or otherwise material to
such Holders' decision to tender Securities pursuant to the Asset Sale Offer.
The notice, which (to the extent consistent with this Indenture) shall govern
the terms of an Asset Sale Offer, shall state:
(1) that the Asset Sale Offer is being made
pursuant to such notice and this Section 4.13;
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(2) the Asset Sale Offer Amount, the Asset Sale
Offer Price (including the amount of accrued but unpaid interest (and
Liquidated Damages, if any)), and the date of purchase;
(3) that any Security or portion thereof not
tendered or accepted for payment will continue to accrue interest if
interest is then accruing;
(4) that, unless the Company defaults in depositing
cash with the Paying Agent (which may not for purposes of this Section
4.13, notwithstanding anything in this Indenture to the contrary, be the
Company or any Affiliate of the Company) in accordance with the last
paragraph of this clause (b), any Security, or portion thereof, accepted
for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Asset Sale Purchase Date;
(5) that Holders electing to have a Security, or
portion thereof, purchased pursuant to an Asset Sale Offer will be
required to surrender their Security, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Security completed, to the
Paying Agent (which may not for purposes of this Section 4.13,
notwithstanding any other provision of this Indenture, be the Company or
any Affiliate of the Company) at the address specified in the notice;
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent receives, prior to the
expiration of the Asset Sale Offer, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
Securities the Holder is withdrawing and a statement containing a
facsimile signature and stating that such Holder is withdrawing his
election to have such principal amount of Securities purchased;
(7) that if Securities in a principal amount in
excess of the principal amount of Securities to be acquired pursuant to
the Asset Sale Offer are tendered and not withdrawn, the Company shall
purchase Securities on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Securities in denominations
of $1,000 or integral multiples of $1,000 shall be acquired);
(8) that Holders whose Securities were purchased
only in part will be issued new Securities equal in principal amount to
the unpurchased portion of the Securities surrendered; and
(9) the circumstances and relevant facts regarding
such Asset Sales.
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The Company agrees that any Asset Sale Offer shall be made in
compliance with all applicable laws, rules, and regulations, including, if
applicable, Regulation 14E of the Exchange Act and the rules and regulations
thereunder and all other applicable Federal and state securities laws, and any
provisions of this Indenture which conflict with such laws shall be deemed to be
superseded by the provisions of such laws.
On or before the date of purchase, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the Asset
Sale Offer (on a pro rata basis if required pursuant to paragraph (7) above),
(ii) deposit with the Paying Agent cash sufficient to pay the Asset Sale Offer
Price for all Securities or portions thereof so accepted and (iii) deliver to
the Trustee Securities so accepted together with an Officers' Certificate
setting forth the Securities or portions thereof being purchased by the Company.
The Paying Agent shall promptly mail or deliver to Holders of Securities so
accepted payment in an amount equal to the Asset Sale Offer Price for such
Securities, and the Trustee shall promptly authenticate and mail or deliver to
such Holders a new Security equal in principal amount to any unpurchased portion
of the Security surrendered. Any Securities not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof.
All Net Cash Proceeds from an Event of Loss shall be invested, used
for prepayment of Indebtedness, or used to repurchase Securities, all within the
period and as otherwise provided above in clauses (i)(a) or (i)(b) of the first
paragraph of this covenant.
In addition to the foregoing, the Company will not, and will not
permit any Subsidiary to, directly or indirectly make any Asset Sale of any of
the Equity Interests of any Subsidiary except pursuant to an Asset Sale of all
the Equity Interests of such Subsidiary.
Section 14 Limitation on Lines of Business.
Neither of the Company nor any of its Subsidiaries shall directly or
indirectly engage to any substantial extent in any line or lines of business
activity other than that which, in the reasonable good faith judgment of the
Board of Directors of the Company, is a Related Business.
Section 15 Limitation on Status as Investment Company.
None of the Company or any of its Subsidiaries shall become required
to be registered as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or otherwise become subject to
regulation under the Investment Company Act.
Section 16 Future Subsidiary Guarantors.
The Company covenants and agrees that, except as set forth in the
following sentence, it shall cause each person that becomes a Subsidiary of it
to execute a Guarantee in the form of Exhibit B hereto and shall cause such
Subsidiary to enter into a supplemental indenture for the
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purpose of jointly and severally guaranteeing, irrevocably and unconditionally,
on a senior subordinated basis, the Company's obligations to pay principal,
premium, and interest (and Liquidated Damages, if any) on the Securities.
Notwithstanding the foregoing, the Securities will not be guaranteed by (i)
future Insurance Subsidiaries and (ii) other future Subsidiaries designated by
the Company, provided that the Company complies with the restrictions with
respect to the aggregate total revenues and aggregate Consolidated Net Worth of
Subsidiaries which are not Guarantors as set forth in Section 4.19.
Section 17 Payments for Consent.
None of the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture, the Securities or the Guarantees unless such consideration is
offered to be paid or agreed to be paid to all Holders of the Securities which
so consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
Section 18 Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, enter into any sale and leaseback transaction unless (a)
immediately after giving pro forma effect to such sale and leaseback transaction
(the Attributable Value of such sale and leaseback transaction being deemed to
be Indebtedness of the Company, if not otherwise treated so pursuant to the
definition of Indebtedness), the Company could incur at least $1.00 of
additional Indebtedness pursuant to the Debt Incurrence Ratio and (b) such sale
and leaseback transaction complies with Section 4.13.
Section 19 Limitations with respect to Subsidiaries that are not
Guarantors.
The aggregate total revenues and the aggregate Consolidated Net
Worth of the Subsidiaries which are not Guarantors (other than the Insurance
Subsidiaries) will not exceed 7.5% of total revenues or Consolidated Net Worth,
respectively, of the Company and its Subsidiaries on a consolidated basis. The
Company will not retain any funds or assets in any Insurance Subsidiary except
funds that are held in trust accounts for claim reserves or otherwise held to
pay claims and funds for current operations or as required by insurance laws and
regulations applicable to such Insurance Subsidiary, including capital and
liquidity requirements.
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ARTICLE V
SUCCESSOR CORPORATION
Section 1 Limitation on Merger, Sale or Consolidation.
The Company will not, directly or indirectly, consolidate with or
merge with or into another person or sell, lease, convey or transfer all or
substantially all of its assets (computed, together with its Subsidiaries, on a
consolidated basis), whether in a single transaction or a series of related
transactions, to another person or group of affiliated persons or adopt a Plan
of Liquidation, unless (i) either (a) the Company is the continuing entity (the
"Successor Company") or (b) the Successor Company or, in the case of a Plan of
Liquidation, the entity which receives the greatest value from such Plan of
Liquidation is a corporation organized under the laws of the United States, any
state thereof or the District of Columbia and expressly assumes by supplemental
indenture all of the obligations of the Company in connection with the
Securities and the Indenture; (ii) no Default or Event of Default shall exist or
shall occur immediately after giving effect on a pro forma basis to such
transaction; (iii) immediately after giving effect to such transaction on a pro
forma basis, the Consolidated Net Worth of the Successor Company or, in the case
of a Plan of Liquidation, the entity which receives the greatest value from such
Plan of Liquidation is at least equal to the Consolidated Net Worth of the
Company immediately prior to such transaction; and (iv) immediately after giving
effect to such transaction on a pro forma basis, the Successor Company or, in
the case of a Plan of Liquidation, the entity which receives the greatest value
from such Plan of Liquidation would immediately thereafter be permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio.
On or prior to the consummation of the proposed transaction, the
Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture executed in connection therewith comply with this Indenture. The
Trustee shall be entitled to conclusively rely upon such Officers' Certificate
and Opinion of Counsel.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of all or substantially all of the properties and assets of
one or more Subsidiaries, the Company's interest in which constitutes all or
substantially all of the properties and assets of the Company shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
Section 2 Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or consummation of a Plan of
Liquidation in accordance with the foregoing, the successor corporation formed
by such consolidation or into which the Company is merged or to which such
transfer is made or, in the case of a Plan of Liquidation, the entity which
receives the greatest value from such Plan of Liquidation shall succeed to, and
be substituted for, and may
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exercise every right and power of, the Company, under the Indenture with the
same effect as if such successor corporation had been named therein as the
Company, and the Company shall be released from the obligations under the
Securities and the Indenture except with respect to any obligations that arise
from, or are related to, such transaction.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the failure by the Company to pay any installment of
interest or Liquidated Damages, if any, on the Securities as and when the
same becomes due and payable and the continuance of any such failure for
30 days,
(ii) the failure by the Company to pay all or any part
of the principal, or premium, if any, on the Securities when and as the
same becomes due and payable at maturity, redemption, by acceleration or
otherwise, including, without limitation, payment of the Change of Control
Purchase Price or the Asset Sale Offer Price, or otherwise,
(iii) the failure by either of the Company or any of its
Subsidiaries otherwise to comply with Section 4.13 and Articles V and X;
(iv) the failure by the Company or any Subsidiary to
observe or perform any covenant or agreement contained in the Securities
or the Indenture except as provided in clauses (i), (ii) and (iii) above,
and the continuance of such failure for a period of 30 days after written
notice is given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of
the Securities outstanding;
(v) decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating the Company or any of
its Significant Subsidiaries as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization of the Company or any of
its Significant Subsidiaries under any bankruptcy or similar law, and
such decree or order shall have continued undischarged and unstayed for a
period of 60 consecutive days; or a decree or order of a
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court of competent jurisdiction, judgment appointing a receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency for the
Company, any of its Significant Subsidiaries, or any substantial part of
the property of any such person, or for the winding up or liquidation of
the affairs of any such person, shall have been entered, and such decree,
judgment, or order shall have remained in force undischarged and unstayed
for a period of 60 days;
(vi) the Company or any of its Significant Subsidiaries
shall institute proceedings to be adjudicated a voluntary bankrupt, or
shall consent to the filing of a bankruptcy proceeding against it, or
shall file a petition or answer or consent seeking reorganization under
any bankruptcy or similar law or similar statute, or shall consent to the
filing of any such petition, or shall consent to the appointment of a
Custodian, receiver, liquidator, trustee, or assignee in bankruptcy or
insolvency of it or any substantial part of its assets or property, or
shall make a general assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts as they become due;
(vii) a default in Indebtedness of the Company or any of
its Subsidiaries with an aggregate principal amount in excess of $5
million resulting from the failure to pay principal or interest as a
result of which the maturity of such Indebtedness has been accelerated
prior to its stated maturity; and
(viii) final unsatisfied judgments not covered by
insurance aggregating in excess of $5 million, at any one time rendered
against the Company or any of its Subsidiaries and not stayed, bonded or
discharged within 60 days.
(ix) any Guarantee shall for any reason cease to be, or
be asserted in writing by any Significant Subsidiary or the Company not to
be, in full force and effect, enforceable in accordance with its terms,
except to the extent contemplated by the Indenture.
Section 2 Acceleration of Maturity Date; Rescission and Annulment.
If an Event of Default occurs and is continuing (other than an Event
of Default specified in clauses (v) and (vi), above, relating to the Company or
any of its Significant Subsidiaries,) then in every such case, unless the
principal of all of the Securities shall have already become due and payable,
either the Trustee or the Holders of 25% in aggregate principal amount of the
Securities then outstanding, by notice in writing to the Company (and to the
Trustee if given by Holders) (an "Acceleration Notice"), may declare all
principal determined as set forth below, and accrued interest thereon to be due
and payable immediately. If an Event of Default specified in clauses (v) and
(vi) above relating to the Company or any of its Significant Subsidiaries
occurs, all principal and accrued interest thereon will be immediately due and
payable on all outstanding Securities without any declaration or other act on
the part of Trustee or the Holders.
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In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Securities
pursuant to the optional redemption provisions of the Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Securities.
If an Event of Default occurs prior October 15, 2001 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Issuers with the principal intention of avoiding the prohibition on redemption
of the Securities prior to October 15, 2001, then the premium below (expressed
as percentage principal amount) for each of the years beginning on October 15,
2001, shall also become immediately due and payable to the extent permitted by
law upon the acceleration of the Securities.
Year Percentage
---- ----------
1997 115.0%
1998 112.5%
1999 110.0%
2000 107.5%
At any time after such a declaration of acceleration being made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of a
majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest (and Liquidated
Damages, if any) on all Securities,
(B) the principal of (and premium, if any,
applicable to) any Securities which would become due otherwise than
by such declaration of acceleration, and interest thereon at the
rate borne by the Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue interest (and Liquidated
Damages, if any) at the rate borne by the Securities,
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(D) all sums paid or advanced by the Trustee
hereunder and the compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and
(2) all Events of Default, other than the
non-payment of amounts which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.12.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective for any Event of Default or event which with notice or lapse of time
or both would be an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Security, unless all such affected Holders agree, in writing, to
waive such Event of Default or other event. No such waiver shall cure or waive
any subsequent default or impair any right consequent thereon.
Section 3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if an Event of Default in payment of
principal, premium, or interest (and Liquidated Damages, if any) specified in
Section 6.1(i) or (ii) occurs and is continuing, the Company shall, upon demand
of the Trustee, pay to it, for the benefit of the Holders of such Securities,
the whole amount then due and payable on such Securities for principal, premium
(if any) and interest (and Liquidated Damages, if any), and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest (and Liquidated
Damages, if any), at the rate borne by the Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to, and expenses, disbursements and advances
of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
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Section 4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise to take any and
all actions under the TIA, including
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest (and Liquidated Damages, if
any) owing and unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agent and counsel) and of the Holders allowed in such judicial proceeding,
and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 5 Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of compensation to,
and expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
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Section 6 Priorities.
Subject to Article XII, any money collected by the Trustee pursuant
to this Article VI shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal, premium (if any) or interest (and Liquidated Damages, if any),
upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest (and Liquidated Damages, if any)
on, the Securities in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal,
premium (if any) and interest (and Liquidated Damages, if any), respectively;
and
THIRD: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
Section 7 Limitation on Suits.
No Holder of any Security shall have any right to order or direct
the Trustee to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(A) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in
principal amount of then outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect
of such Event of Default in its own name as Trustee hereunder;
(C) such Holder or Holders have offered to
the Trustee reasonable security or indemnity against the costs,
expenses and liabilities to be incurred or reasonably probable to be
incurred in compliance with such request;
(D) the Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has failed to
institute any such proceeding; and
(E) no direction inconsistent with such
written request has been given to the Trustee during such 60-day
peri-
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od by the Holders of a majority in principal amount of the
outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 8 Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any) and interest (and
Liquidated Damages, if any) on, such Security on the Maturity Dates or Interest
Payment Dates, as applicable, of such payments as expressed in such
Security (in the case of redemption, the Redemption Price on the Redemption
Date; in the case of a Change of Control, the Change of Control Purchase Price,
on the Change of Control Purchase Date; and in the case of an Asset Sale, the
Asset Sale Offer Price on the relevant purchase date); and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
Section 9 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 10 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VI or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
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Section 11 Control by Holders.
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, provided, that
(1) such direction shall not be in conflict with
any rule of law or with this Indenture,
(2) the Trustee shall not determine that the action
so directed would be unjustly prejudicial to the Holders not taking part
in such direction, and
(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction.
Section 12 Waiver of Past Default.
Subject to Section 6.8, the Holder or Holders of not less than a
majority in aggregate principal amount of the outstanding Securities may, by
written notice to the Trustee on behalf of all Holders, prior to the declaration
of the maturity of the Securities, waive any past default hereunder and its
consequences, except a default
(A) in the payment of the principal of,
premium, if any, or interest (and Liquidated Damages, if any) on,
any Security as specified in clauses (i) and (ii) of Section 6.1, or
(B) in respect of a covenant or provision
hereof which, under Article IX, cannot be modified or amended
without the consent of the Holder of each outstanding Security
affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
Section 13 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for
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any action taken, suffered or omitted to be taken by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section 6.13
shall not apply to any suit instituted by the Company, to any suit instituted by
the Trustee, to any suit instituted by any Holder, or group of Holders, holding
in the aggregate more than 10% in aggregate principal amount of the outstanding
Securities, or to any suit instituted by any Holder for enforcement of the
payment of principal of, or premium (if any) or interest (and Liquidated
Damages, if any) on, any Security on or after the Maturity Date of such
Security.
Section 14 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
Section 1 Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as
are specifically set forth in this Indenture and no others, and no
covenants or obligations shall be implied in or read into this Indenture
which are adverse to the Trustee.
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(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 such 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 willful
misconduct, except that:
(i) This paragraph does not limit the effect of
subsection (b) of this Section 7.1.
(ii) 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 grossly negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.12.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or at the request, order or direction of the Holders
or in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates
to the Trustee is subject to subsections (a), (b), (c) and (d) of this Section
7.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
Section 2 Rights of Trustee.
Subject to Section 7.1:
(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.
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(b) Before the Trustee acts or refrains from acting, it may
consult with counsel of its selection and may require an Officers' Certificate
or an Opinion of Counsel, which shall conform to Sections 12.4 and 12.5. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and 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.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Except with respect to Section 4.1, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in Article
IV hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.1(i), 6.1(ii) and 4.1, or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained actual
knowledge.
Section 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, any
Guarantor, any of their respective Subsidiaries, or their respective Affiliates
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
Section 4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the
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Securities, and it shall not be responsible for any statement in the Securities
(other than the Trustee's certificate of authentication) or for the use or
application of any funds received by a Paying Agent other than the Trustee.
Section 5 Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
it is actually known to the Trustee, the Trustee shall mail to each
Securityholder notice of the uncured Default or Event of Default within 90 days
after such Default or Event of Default occurs. Except in the case of a Default
or an Event of Default in payment of principal (or premium, if any) of, or
interest (and Liquidated Damages, if any) on, any Security (including the
payment of the Change of Control Purchase Price on the Change of Control
Purchase Date, the Redemption Price on the Redemption Date, and the Asset Sale
Offer Price on the relevant purchase date), the Trustee may withhold the notice
if and so long as a Trust Officer in good faith determines that with holding the
notice is in the interest of the Securityholders.
Section 6 Reports by Trustee to Holders.
If required by law, within 60 days after each January 31 beginning
with the January 31 following the date of this Indenture, the Trustee shall mail
to each Securityholder a brief report dated as of such January 31 that complies
with TIA Section 313(a). If required by law, the Trustee also shall comply with
TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
Section 7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company and the Trustee
for its services. 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 disbursements, expenses and advances
incurred or made by it. Such expenses shall include the reasonable compensation,
disbursements, fees and expenses of the Trustee's agents, accountants, experts
and counsel.
The Company shall indemnify the Trustee (in its capacity as Trustee,
Registrar and Paying Agent) and each of its officers, directors,
attorneys-in-fact and agents for, and hold it harmless against, any claims,
loss, damage, demand, fee, expense (including but not limited to reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel),
loss or
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liability incurred by them without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of this trust and
their rights or duties hereunder including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. The Company shall defend the claim and the Trustee
shall provide reasonable cooperation at the Company's expense in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel; provided, that the Company will not be
required to pay such fees and expenses if they assume the Trustee's defense and
there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for any settlement made
without its written consent. The Company need not reimburse any expense or
indemnify against any loss or liability to the extent incurred by the Trustee
through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest (and Liquidated
Damages, if any) on particular Securities.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article VIII of this
Indenture and any rejection or termination of this Indenture under any
Bankruptcy Law.
Section 8 Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may 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, Custodian, or other public officer
takes charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7.7 have
been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 7.7,
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding
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 replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
Section 9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
Section 10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA
Section 310(a)(1) and TIA Section 310(a)(5). The Trustee shall have a combined
capital and surplus of at least $25,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b).
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Section 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
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 1 Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at its option at any time, elect to have Section
8.2 or Section 8.3 applied to all outstanding Securities upon compliance with
the conditions set forth below in this Article VIII.
Section 2 Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.2, the Company and the Guarantors shall be deemed
to have been discharged from their respective obligations with respect to all
outstanding Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of Section 8.5 and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all their other obligations under such Securities and this Indenture
(and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of out standing Securities to receive solely from the trust fund
described in Section 9.4, and as more fully set forth in such section, payments
in respect of the principal of, premium, if any, and interest (and Liquidated
Damages, if any) on such Securities when such payments are due, (b) the
Company's obligations with respect to such Securities under Sections 2.4, 2.6,
2.7, 2.10 and 4.2, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith and (d)
this Article VIII. Subject to compliance with this Article VIII, the Company may
exercise its option under this Section 8.2 notwithstanding the prior exercise
of its option under Section 8.3 with respect to the Securities.
Section 3 Covenant Defeasance.
Upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.3, the Company shall be released from its
obligations under the covenants contained in Sections 4.3, 4.6, 4.7, 4.9, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.18 and 4.19, Article V and
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Article X with respect to the outstanding Securities on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Securities shall thereafter be deemed not "outstanding" for the purposes
of any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities, the Company need not comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document, but, except as specified above,
the remainder of this Indenture and such Securities shall be unaffected thereby.
In addition, upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.3, Sections 6.1(iii) through 6.1(ix) shall not
constitute Events of Default.
Section 4 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article VIII
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to the benefit of the Holders of such Securities, (a) cash in an amount, or (b)
U.S. Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, cash in an amount, or (c)
a combination thereof, in such amounts, as in each case will be sufficient, in
the opinion of a nationally recognized firm of independent public accounts
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge the principal of, premium, if any, and interest (and Liquidated
Damages, if any) on the outstanding Securities on the stated maturity or on the
applicable redemption date, as the case may be, of such principal or installment
of principal, premium, if any, or interest (and Liquidated Damages, if any);
provided that the Trustee shall have been irrevocably instructed to apply such
cash and the proceeds of such U.S. Government Obligations to said payments with
respect to the Securities.
(b) In the case of an election under Section 8.2, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably satisfactory to Trustee confirming that (A) Company has received
from, or there has been published by the Internal Revenue Service, a ruling or
(B) since the date hereof, 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 Holders of the outstanding Securities
will not recognize income, gain or loss for Federal income tax purposes as a
result of such Legal Defeasance and will be subject to Federal
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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;
(c) In the case of an election under Section 8.3, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee to the effect that the Holders of the
outstanding Securities 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 in the same amount, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such deposit or,
in so far as Section 6(v) and Section 6(vi) concerned, at any time in the period
ending on the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period);
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) In the case of an election under either Section 8.2 or
8.3, the Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of such Securities over any other creditors of the
Company or with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Company or others; and
(g) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that the
conditions precedent provided for, in the case of the Officers' Certificate,
clauses (a) through (f) of this Section 8.4 and, in the case of the Opinion of
Counsel, clauses (a) (with respect to the validity and perfection of the
security interest), (b), (c) and (e) of this Section have been complied with.
Section 5 Deposited Cash and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions.
Subject to Section 8.6, all cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant
to Section 8.4 in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through any Paying Agent
as the Trustee may determine, to the Holders of such Securities of all sums due
and to become due thereon in respect of principal, premium, if any, and interest
(and Liquidated Damages, if any), but such money need not be segregated from
other funds except to the extent required by law.
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The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Securities.
Section 6 Repayment to Company.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any cash or U.S. Government Obligations held by it as provided in
Section 8.4 which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereto delivered to the
Trustee (which may be the opinion delivered under Section 8.4(a)), are in excess
of the amount thereof which would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest (and Liquidated Damages, if any) on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
(and Liquidated Damages, if any) has become due and payable shall be paid to the
Company on its request; and the Holder of such Security shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 7 Reinstatement.
If the Trustee or Paying Agent is unable to apply any cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3
until such time as the Trustee or Paying Agent is permitted to apply such money
in accordance with Section 8.2 and 8.3, as the case may be; provided, however,
that, if the Company makes any payment of principal of, premium, if any, or
interest (and Liquidated Damages, if any) on any Security following 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 Cash held by
the Trustee or Paying Agent.
ARTICLE IX
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AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Company or any Guarantor,
when authorized by Board Resolutions, and the Trustee, at any time and from time
to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or
inconsistency, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture, provided such action pursuant to
this clause (1) shall not adversely affect the interests of any Holder in
any respect;
(2) 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 or to make any other change that does not
adversely affect the rights of any Holder; provided, that the Company has
delivered to the Trustee an Opinion of Counsel stating that such change
does not adversely affect the rights of any Holder;
(3) to provide for additional Guarantors of the
Securities;
(4) to evidence the succession of another person to
the Company, and the assumption by any such successor of the obligations
of such Company, herein and in the Securities in accordance with Article
V; or
(5) to comply with the TIA.
Section 2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders.
Subject to Section 6.8 and the last sentence of this paragraph, with
the consent of the Holders of not less than a majority in aggregate principal
amount of then outstanding Securities, by written act of said Holders delivered
to the Company and the Trustee, the Company and any Guarantor, when authorized
by Board Resolutions, and the Trustee may amend or supplement this Indenture or
the Securities or enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or the Securities or of modifying in any
manner the rights of the Holders under the this Indenture or the Securities;
provided that no such modification may without the consent of Holders of at
least 66-2/3% in aggregate principal amount of Securities at the time
outstanding
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modify the provisions (including the defined terms used therein) of Sections
4.13 and 10.1 in a manner adverse to the Holders. Subject to Section 6.8 and the
last sentence of this paragraph, the Holder or Holders of a majority, in
principal amount of then outstanding Securities may waive compliance by the
Company or any Guarantor with any provision of this Indenture or the Securities.
Notwithstanding the foregoing provisions of this Section 9.2, without the
consent of each Holder affected thereby, no such amendment, supplemental
indenture or waiver shall:
(1) reduce the percentage of principal amount of
Securities whose Holders must consent to an amendment, supplement or
waiver of any provision of this Indenture or the Securities;
(2) reduce the rate or extend the time for payment
of interest (and Liquidated Damages, if any) on any Security;
(3) reduce the principal amount of any Security, or
reduce the Change of Control Purchase Price or the Asset Sale Offer Price;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of Article III
in a manner adverse to any Holder;
(6) make any changes in the provisions concerning
waivers of Defaults or Events of Default by Holders of the Securities
(except to increase any percentage of Securities required to consent to a
waiver or to provide that certain other provisions of the Indenture cannot
be modified or waived without the consent of the Holder of each
outstanding Security affected thereby) or the rights of Holders to recover
the principal or premium of, interest (and Liquidated Damages, if any) on,
or redemption payment with respect to, any Security;
(7) make any changes in Section 6.8, 6.12 or this
third sentence of this Section 9.2; or
(8) make the principal of, or the interest (and
Liquidated Damages, if any) on, any Security payable with anything or at
anywhere other than as provided for in this Indenture and the Securities
as in effect on the date hereof; or
(9) make the Securities or Guarantees further
subordinated in right of payment to any extent or under any circumstances
to any other indebtedness.
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It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
After an amendment, supplement or waiver under this Section 9.2 or
9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
Section 3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by written notice to
the Company or the person designated by the Company as the person to whom
consents should be sent if such revocation is received by the Company or such
person before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those persons who were Holders at such record date, and only those persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
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After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (9) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest (and Liquidated Damages, if any) on a
Security, on or after the respective dates set for such amounts to become due
and payable expressed in such Security, or to bring suit for the enforcement of
any such payment on or after such respective dates.
Section 5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security about
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,
the Guarantors shall endorse and the Trustee shall authenticate a new Security
that reflects the changed terms. Any failure to make the appropriate notation or
to issue a new Security shall not affect the validity of such amendment,
supplement or waiver.
Section 6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX, provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officers' Certificate and Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article IX is authorized or permitted by this Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
Section 1 Repurchase of Securities at Option of the Holder upon
Change of Control.
(a) In the event that a Change of Control occurs, each Holder
of Securities shall have the right, at such Holder's option, pursuant to an
irrevocable and unconditional offer by the Company (the "Change of Control
Offer"), to require the Company to repurchase all or any part of such Holder's
Securities (provided, that the principal amount of such Securities must be
$1,000 or an integral multiple thereof) on the date that (the "Change of Control
Purchase Date") is no later
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than 35 Business Days after the occurrence of such Change of Control, at a cash
price equal to 101% of the principal amount thereof (the "Change of Control
Purchase Price"), together with accrued and unpaid interest and Liquidated
Damages, if any, to the Change of Control Purchase Date.
(b) In the event that, pursuant to this Section 10.1, the
Company shall be required to commence a Change of Control Offer, the Company
shall follow the procedures set forth in this Section 10.1 as follows:
(1) the Change of Control Offer shall commence
within 10 Business Days following the Change of Control;
(2) the Change of Control Offer shall remain open
for 20 Business Days following its commencement (the "Change of Control
Offer Period");
(3) within 5 Business Days following the expiration
of the Change of Control Offer Period, the Company shall purchase all
property tendered Securities at the Change of Control Purchase Price, plus
accrued interest (and Liquidated Damages, if any);
(4) if the Change of Control Purchase Date is on or
after an interest payment record date and on or before the related
interest payment date, any accrued interest (and Liquidated Damages, if
any) will be paid to the Person in whose name a Security is registered at
the close of business on such record date, and no additional interest will
be payable to Securityholders who tender Securities pursuant to the Change
of Control Offer;
(5) the Company shall use its best efforts to
provide the Trustee with notice of the Change of Control Offer at least 5
Business Days before the commencement of any Change of Control Offer; and
(6) on or before the commencement of any Change of
Control Offer, the Company or the Trustee (upon the request and at the
expense of the Company) shall send, by first-class mail, a notice to each
of the Securityholders, which (to the extent consistent with this
Indenture) shall govern the terms of the Change of Control Offer and shall
state:
(i) that the Change of Control Offer is being made
pursuant to this Section 10.1 and that all Securities, or portions
thereof, tendered will be accepted for payment;
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(ii) the Change of Control Purchase Price
(including the amount of accrued but unpaid interest (and Liquidated
Damages, if any)) and the Change of Control Purchase Date;
(iii) that any Security, or portion thereof, not
tendered or accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in
depositing cash with the Paying Agent in accordance with the last
paragraph of this subsection (b), or such payment is prevented for
any reason, any Security, or portion thereof, accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date;
(v) that Holders electing to have a Security, or
portion thereof, purchased pursuant to a Change of Control Offer
will be required to surrender the Security, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Security
completed, to the Paying Agent (which may not for purposes of this
Section 10.1, notwithstanding anything in this Indenture to the
contrary, be the Company or any Affiliate of the Company) at the
address specified in the notice prior to the expiration of the
Change of Control Offer;
(vi) that Holders will be entitled to withdraw
their election, in whole or in part, if the Paying Agent receives,
prior to the expiration of the Change of Control Offer, a facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder is withdrawing and a
statement containing a facsimile signature and stating that such
Holder is withdrawing his election to have such principal amount of
Securities purchased; and
(vii) a brief description of the events resulting
in such Change of Control.
On or before the Change of Control Purchase Date, the Company shall
(i) accept for payment Securities or portions thereof properly tendered pursuant
to the Change of Control Offer prior to the expiration of the Change of Control
Offer, (ii) deposit with the Paying Agent cash sufficient to pay the Change of
Control Purchase Price (together with accrued and unpaid interest and Liquidated
Damages, if any) of all Securities so tendered and (iii) deliver to the Trustee
Securities so accepted together with an Officers' Certificate listing the
Securities or portions thereof being purchased by the Company. The Paying Agent
shall promptly pay the Holders of Securities so accepted an amount equal to the
Change of Control Purchase Price (together with accrued and unpaid interest and
Liquidated Damages, if any), and the Trustee shall promptly authenticate and
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the
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Security surrendered. Any Securities not so accepted shall promptly be delivered
by the Company to the Holder thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
Any Change of Control Offer shall be made in compliance with all
applicable laws, rules and regulations, including, if applicable, Regulation 14E
under the Exchange Act and the rules thereunder and all other applicable Federal
and state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the terms hereof, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the Indenture or the Securities by virtue
thereof.
ARTICLE XI
GUARANTEES
Section 1 Guarantees.
(a) In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the Guarantors
hereby irrevocably and unconditionally guarantees, jointly and severally, on a
senior subordinated basis (the "Guarantee") to each Holder of a Security
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Securities or the obligations of the Company under this Indenture or the
Securities, that: (w) the principal and premium (if any) of and interest (and
Liquidated Damages, if any) on the Securities will be paid in full when due,
whether at the maturity or interest payment date, by acceleration, call for
redemption, upon an Change of Control Offer, an Asset Sale Offer or otherwise;
(x) all other obligations of the Company to the Holders or the Trustee under
this Indenture or the Securities will be promptly paid in full or performed, all
in accordance with the terms of this Indenture and the Securities; and (y) in
case of any extension of time of payment or renewal of any Securities or any of
such other obligations, they will be paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration, call for redemption, upon an Offer to Purchase or otherwise.
Failing payment when due of any amount so guaranteed for whatever reason, each
Guarantor shall be obligated to pay the same before failure so to pay becomes an
Event of Default.
(b) Each Guarantor hereby agrees that its obligations with
regard to this Guarantee shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this Indenture, the absence of
any action to enforce the same, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstances that might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
the any right to require a proceeding first against the Company or right to
require the prior disposition of the assets of the Company to meet its
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<PAGE> 76
obligations, protest, notice and all demands whatsoever and covenants that this
Guarantee will not be discharged except by complete performance of the
obligations contained in the Securities and this Indenture.
(c) If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or any Guarantor, or any Custodian,
Trustee, or similar official acting in relation to either the Company or such
Guarantor, any amount paid by either the Company or such Guarantor to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor agrees that it will
not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Guarantor further agrees that, as between
such Guarantor, on the one hand, and the Holders and the Trustee, on the other
hand, (i) the maturity of the obligations guaranteed hereby may be accelerated
as provided in Section 6.2 for the purposes of this Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration as to the
Company of the obligations guaranteed hereby, and (ii) in the event of any
declaration of acceleration of those obligations as provided in Section 6.2,
those obligations (whether or not due and payable) will forthwith become due and
payable by each of the Guarantors for the purpose of this Guarantee.
(d) Each Guarantor and by its acceptance of a Security issued
hereunder each Holder hereby confirms that it is the intention of all such
parties that the guarantee by such Guarantor set forth in Section 11.1(a) not
constitute a fraudulent transfer or conveyance for purpose of any Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law. To effectuate the foregoing intention, the
Holders and such Guarantor hereby irrevocably agree that the obligations of such
Guarantor under its guarantee set forth in Section 11.1(a) shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to the
following paragraph of this Section 11.1(d), result in the obligations of such
Guarantor under such guarantee not constituting such a fraudulent transfer or
conveyance.
Each Guarantor that makes any payment or distribution under Section
11.1(a) shall be entitled to a contribution from each other Guarantor equal to
its Pro Rata amount of such payment or distribution so long as the exercise of
such right does not impair the rights of the Holders under the Guarantees. For
purposes of the foregoing, the "Pro Rata amount" of any Guarantor means the
percentage of the net assets of all Guarantors held by such Guarantor,
determined in accordance with GAAP.
Section 2 Execution and Delivery of Guarantee.
To evidence its Guarantee set forth in Section 11.1, each Guarantor
agrees that a notation of such Guarantee substantially in the form annexed
hereto as Exhibit B shall be endorsed
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<PAGE> 77
on each Security authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of such Guarantor by two Officers or an
Officer and an Assistant Secretary by manual or facsimile signature.
Each Guarantor agrees that its Guarantee set forth in Section 11.1
shall remain in full force and effect and apply to all the Securities
notwithstanding any failure to endorse on each Security a notation of such
Guarantee.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security on which a Guarantee
is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of each Guarantor.
Section 3 Certain Bankruptcy Events.
Each Guarantor hereby covenants and agrees that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Guarantor shall not file (or join in any filing of), or otherwise
seek to participate in the filing of, any motion or request seeking to stay or
to prohibit (even temporarily) execution on the Guarantee and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or otherwise.
Section 4 Limitation on Merger, Consolidation, Etc. of Guarantors.
No Guarantor shall consolidate or merge with or into (whether or not
such Guarantor is the surviving person) another person unless (i) subject to the
provisions of the following paragraph, the person formed by or surviving any
such consolidation or merger (if other than such Guarantor, another Guarantor or
the Company) assumes all the obligations of such Guarantor pursuant to a
supplemental indenture in form reasonably satisfactory to the Trustee, pursuant
to which such person shall unconditionally guarantee, on a senior basis, all of
such Guarantor's obligations under such Guarantor's guarantee and the Indenture
on the terms set forth in the Indenture; and (ii) immediately before and
immediately after giving effect to such transaction on a pro forma basis, no
Default or Event of Default shall have occurred or be continuing.
Notwithstanding the foregoing, upon the sale or disposition (whether
by merger, stock purchase, asset sale or otherwise) by a Guarantor of all or
substantially all of its assets to an entity which is not a Guarantor, which
transaction is otherwise in compliance with the Indenture (including, without
limitation, the provisions of Section 4.13), such Guarantor will be deemed
released from its obligations under its Guarantee of the Securities; provided,
however, that any such termination shall occur only to the extent that all
obligations of such Guarantor under all of its guarantees of, and
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<PAGE> 78
under all of its pledges of assets or other security interests which secure, any
Indebtedness of either Company or any of their Subsidiaries shall also terminate
upon such release, sale or transfer.
Section 5 Future Guarantors.
Upon the acquisition by the Company or any Guarantor of the Capital
Stock of any person, if, as a result of such acquisition, such Person becomes a
Subsidiary, such Subsidiary shall fully and unconditionally guarantee on a
senior subordinated basis the obligations of the Company with respect to payment
and performance of the Securities and the other obligations of the Company
under this Indenture to the same extent that such obligations are guaranteed by
the other Guarantors pursuant to Section 11.1; and, within 60 days of the date
of such occurrence, such Subsidiary shall execute and deliver to the Trustee a
supplemental indenture making such Subsidiary a party to this Indenture.
Notwithstanding the foregoing, such Subsidiary shall not be required to
guarantee the Securities if such Guarantee is not required pursuant to Section
4.16.
ARTICLE XII
MISCELLANEOUS
Section 1 TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
Section 2 Notices.
Any notices or other communications to the Company, the Guarantors
or the Trustee required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Company or any Guarantor:
Employee Solutions, Inc.
6225 N. 24th Street
Phoenix, Arizona 85016
Attention: Paul M. Gales, General Counsel
Telephone: (602) 955-5556
Telecopy: (602) 955-1235
with a copy to:
70
<PAGE> 79
Kenneth V. Hallett
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Telephone: (414) 277-5345
Telecopy: (414) 271-3552
if to the Trustee:
The Huntington National Bank
41 S. High Street - HC 1112
Columbus, Ohio 43215
Attention: Corporate Trust
Telephone: (614) 480-4897
Telecopy: (614) 480-5223
The Company, the Guarantors or the Trustee by notice to each other
party may designate additional or different addresses as shall be furnished in
writing by such party. Any notice or communication to the Company, the
Guarantors or the Trustee shall be deemed to have been given or made as of the
date so delivered, if personally delivered; when receipt is acknowledged, if
telecopied; and 5 Business Days after mailing if sent by registered or certified
mail, postage prepaid (except that a notice of change of address shall not be
deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him 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 3 Communications 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 Guarantors, the Trustee, the Registrar and any
other person shall have the protection of TIA Section 312(c).
Section 4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
71
<PAGE> 80
(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 5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such
person, 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
(4) a statement as to whether or not, in the
opinion of each such person, such condition or covenant has been complied
with; provided, however, that with respect to matters of fact an Opinion
of Counsel may rely on an Officers' Certificate or certificates of public
officials.
Section 6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting
of Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
Section 7 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 in New York, New
York are not required to be open. If a payment date is a Legal Holiday in New
York, New York, payment may be made at such place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
72
<PAGE> 81
Section 8 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY AND EACH GUARANTOR HEREBY
IRREVOCABLY SUBMIT 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 INDENTURE AND THE SECURITIES,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AND EACH
GUARANTOR IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH THEY 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. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY OR ANY GUARANTOR IN ANY OTHER
JURISDICTION.
Section 9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of any of the Company, the Guarantors or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 10 No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such,
of the Company or the Guarantors shall not have any liability for any
obligations of the Company or the Guarantors under the Securities or this
Indenture. Each Securityholder by accepting a Security waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
Section 11 Successors.
All agreements of the Company and the Guarantors in this Indenture
and the Securities shall bind their successors. All agreements of the Trustee in
this Indenture shall bind its successor.
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<PAGE> 82
Section 12 Duplicate Originals.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
Section 13 Severability.
In case any one or more of the provisions in this Indenture or in
the Securities 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 of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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<PAGE> 83
SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
EMPLOYEE SOLUTIONS, INC.
By: /s/
----------------------------------------
Name:
Title:
THE HUNTINGTON NATIONAL BANK,
as Trustee
By: /s/
----------------------------------------
Name:
Title:
GUARANTORS:
EMPLOYEE SOLUTIONS-EAST, INC.
By: /s/
----------------------------------------
Name:
Title:
EMPLOYEE SOLUTIONS-SOUTHEAST, INC.
By: /s/
----------------------------------------
Name:
Title:
<PAGE> 84
LOGISTICS PERSONNEL CORP.
By: /s/
----------------------------------------
Name:
Title:
TALENT, ENTERTAINMENT AND MEDIA
SERVICES, INC. dba ESI TEAM SERVICES
By: /s/
----------------------------------------
Name:
Title:
EMPLOYEE SOLUTIONS OF TEXAS, INC.
By: /s/
----------------------------------------
Name:
Title:
EMPLOYEE SOLUTIONS-MIDWEST, INC.
By: /s/
----------------------------------------
Name:
Title:
EMPLOYEE SOLUTIONS-OHIO, INC.
By: /s/
----------------------------------------
Name:
Title:
<PAGE> 85
ESI-MIDWEST, INC.
By: /s/
----------------------------------------
Name:
Title:
ESI RISK MANAGEMENT AGENCY, INC.
By: /s/
----------------------------------------
Name:
Title:
GCK ENTERTAINMENT SERVICES, INC. dba
ESI TEAM SERVICES
By: /s/
----------------------------------------
Name:
Title:
ESI AMERICA, INC.
By: /s/
----------------------------------------
Name:
Title:
PHOENIX CAPITAL MANAGEMENT, INC.
By: /s/
----------------------------------------
Name:
Title:
<PAGE> 86
EMPLOYEE RESOURCES CORPORATION
By: /s/
----------------------------------------
Name:
Title:
ERC OF INDIANA, INC.
By: /s/
----------------------------------------
Name:
Title:
ERC OF MINN, INC.
By:/s/
----------------------------------------
Name:
Title:
ERC OF OHIO, INC.
By: /s/
----------------------------------------
Name:
Title:
<PAGE> 87
EXHIBIT A
[FORM OF SECURITY]
EMPLOYEE SOLUTIONS, INC.
10% SENIOR NOTES DUE 2004
Unless and until it is exchanged in whole or in part for Securities
in definitive form, this Security may not be transferred except as a whole by
the Depository to a nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.(1)
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF
THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
- --------
(1) This paragraph should only be added if the Note is issued in global form.
A-1
<PAGE> 88
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) 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 ONE OR MORE OTHER INSTITUTIONAL ACCREDITED
INVESTORS, IN EACH CASE, HAVING A MINIMUM PURCHASE PRICE OF AT
LEAST $100,000, 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 (e) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED IN THE CASE OF (d) UPON DELIVERY OF
A TRANSFEREE LETTER OF REPRESENTATION AND IN THE CASE OF (b),
(c), (d) OR (e), UPON AN OPINION OF COUNSEL IF THE COMPANY OR
TRUSTEE SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
A-2
<PAGE> 89
CUSIP NO.______
No. $
Employee Solutions, Inc., an Arizona corporation (the "Company"),
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises, to pay to _____, or
registered assigns, the principal sum of _____ Dollars, on October 15, 2004.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
EMPLOYEE SOLUTIONS, INC.
By:_________________________________________
Name:
Title:
Attest: _______________
A-3
<PAGE> 90
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
__________________________________,
as Trustee
By:______________________________
Authorized Signatory
A-4
<PAGE> 91
EMPLOYEE SOLUTIONS, INC.
10% SENIOR NOTES DUE 2004
1. Interest.
Employee Solutions, Inc., an Arizona corporation (the "Company"),
promises to pay interest on the principal amount of this Security at a rate of
10% per annum. To the extent it is lawful, the Company promises to pay interest
on any interest payment due but unpaid on such principal amount at a rate of 10%
per annum compounded semi-annually.
The Company will pay interest semi-annually on April 15 and October
15 of each year (each, an "Interest Payment Date"), commencing April 15, 1998.
Interest on the Securities will accrue from the most recent date to which
interest has been paid on the Securities pursuant to the Indenture or, if no
interest has been paid, from October 21, 1997. Interest will be computed on the
basis of a 360-day year consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest (and Liquidated Damages, if any) on
the Securities (except defaulted interest) to the persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. Except as provided below, the Company shall pay
principal and interest (and Liquidated Damages, if any) in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for payment of public and private debts ("Cash"). The Securities will be payable
as to principal, premium and interest (and Liquidated Damages, if any) at the
office or agency of the Securities maintained for such purpose within the City
and State of New York or, at the option of the Company, payment of principal,
premium and interest (and Liquidated Damages, if any) may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest (and Liquidated Damages,
if any) and premium on all Global Securities and all other Securities the
Holders of which shall have provided written wire transfer instructions to the
Company and the Paying Agent.
3. Paying Agent and Registrar.
Initially, The Huntington National Bank (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or Co-regis-
A-5
<PAGE> 92
trar without notice to the Holders. The Company or any of its Subsidiaries may,
subject to certain exceptions, act as Paying Agent, Registrar or Co-registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated October
15, 1997 (the "Indenture"), among the Company, the Guarantors named therein and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. 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, as in effect on the date of the Indenture. The Securities
are subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are general
unsecured obligations of the Company limited in aggregate principal amount to
$85,000,000.
5. Redemption.
Except as provided in this Paragraph 5, the Company shall not have
the right to redeem any Securities. The Securities are redeemable in whole or
from time to time in part at any time on or after October 15, 2001, at the
option of the Company, at the Redemption Price (expressed as a percentage of
principal amount) set forth below, if redeemed during the 12-month period
commencing October 15 of each of the years indicated below, in each case
(subject to the right of Holders of record on the Record Date to receive
interest due on an Interest Payment Date that is on or prior to such Redemption
Date), plus any accrued but unpaid interest (and Liquidated Damages, if any) to
the Redemption Date.
Year Redemption Price
---- ----------------
2001......................................... 105.0%
2002......................................... 102.5%
2003 and thereafter.......................... 100.0%
Any redemption of the Securities shall comply with Article III of
the Indenture.
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part.
A-6
<PAGE> 93
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price, plus any accrued but unpaid interest (and Liquidated Damages, if any) to
the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of
it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee
and such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposits into an irrevocable trust with
the Trustee Cash or U.S. Government Obligations sufficient to pay the principal
of and interest (and Liquidated Damages, if any) on the Securities to redemption
or maturity and comply with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Securities (including the financial covenants, but excluding its
obligation to pay the principal of and interest (and Liquidated Damages, if any)
on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the written consent of the Holders of a majority
in aggre-
A-7
<PAGE> 94
gate principal amount of the Securities then outstanding, and any existing
Default or Event of Default or compliance with any provision may be waived with
the consent of the Holders of a majority in aggregate principal amount of the
Securities then out standing. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Securities to,
among other things, cure any ambiguity, defect or inconsistency, comply with the
TIA or make any other change that does not adversely affect the rights of any
Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its respective Subsidiaries to, among other things, incur additional
Indebtedness and Disqualified Capital Stock, make payments in respect of its
Capital Stock, enter into transactions with Affiliates, incur Liens, merge or
consolidate with any other person and sell, lease, transfer or otherwise dispose
of substantially all of its properties or assets. The limitations are subject to
a number of important qualifications and exceptions. The Company must annually
report to the Trustee on compliance with such limitations.
13. Change of Control.
In the event there shall occur any Change of Control, each Holder of
Securities shall have the right, at such Holder's option but subject to the
limitations and conditions set forth in the Indenture, to require the Company to
purchase on the Change of Control Purchase Date in the manner specified in the
Indenture, all or any part (in integral multiples of $1,000) of such Holder's
Securities at a cash price equal to 101% of the principal amount thereof,
together with accrued but unpaid interest (and Liquidated Damages, if any) to
the Change of Control Purchase Date.
14. Certain Asset Sales.
The Indenture imposes certain limitations on the ability of the
Company to sell assets. In the event the proceeds from a permitted Asset Sale
exceed certain amounts, as specified in the Indenture, the Company generally
will be required either to reinvest the proceeds of such Asset Sale in its
business, use such proceeds to retire debt, or to make an asset sale offer to
purchase a certain amount of each Holder's Securities at 100% of the principal
amount thereof, plus accrued interest, if any, to the purchase date, as more
fully set forth in the Indenture.
15. Successors.
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be released from
those obligations.
A-8
<PAGE> 95
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its respective Affiliates, and may otherwise deal with the Company or
its Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No direct or indirect stockholder, director, officer or employee, as
such, past, present or future of the Company or any successor corporation shall
have any personal liability in respect of the obligations of the Company or the
Guarantors under the Securities or the Indenture by reason of his status as such
stockholder, director, officer or employee. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
A-9
<PAGE> 96
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Governing Law.
The Indenture and the Securities shall be governed by and construed
in accordance with the internal laws of the State of New York.
A-10
<PAGE> 97
[FORM OF ASSIGNMENT]
I or we assign this Security to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security Number or other identifying number of
assignee________________________________________________________________________
and irrevocably appoint ___________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Dated: __________ Signed:______________________________________________________
_____________________________________________
(Sign exactly as your name appears on the other side of
this Security)
Signature guarantee:________________________________
A-11
<PAGE> 98
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.13 or Article X of the Indenture, check the appropriate
box:
/ / Section 4.13
/ / Article X
If you want to elect to have only part of this Security purchased by
the Company pursuant to the Indenture, state the principal amount you want to
have purchased: $________
Date: ________________ Signature:______________________________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature guarantee:__________________________
A-12
<PAGE> 99
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(2)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Signature of
Amount of Amount of Principal Amount authorized
decrease in increase in of this Global signatory of
Principal Amount Principal Amount Security following Trustee or
of this Global of this Global such decrease (or Securities
Date of Exchange Security Security increase) Custodian
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
(2) This schedule should only be added if the Note is issued in global form.
A-13
<PAGE> 100
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
NOTES(3)
Re: 10% SENIOR NOTES DUE 2004 OF EMPLOYEE SOLUTIONS, INC.
This Certificate relates to $______ principal amount of Securities held in / /
(4) book-entry or / / definitive form by _______ (the "Transferor").
The Transferor:
/ /
has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depository a Security or
Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
/ /
has requested the Trustee by written order to exchange or register the transfer
of a Security or Securities.
In connection with such request and in respect of each such Security, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above-captioned Securities and as provided in Section 2.6 of
such Indenture, the transfer of this Security does not require registration
under the Securities Act (as defined below) because:(5)
/ /
Such Security is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of
the Indenture).
- --------
3 The following should be included only for Original Notes.
4 Check applicable box.
A-14
<PAGE> 101
/ /
Such Security is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.6(a)(ii)(B) or Section 2.6(d)(i)(B) of the Indenture).
/ /
Such Security is being transferred in accordance with (i) Rule 144 or
Regulation S under the Securities Act, (ii) pursuant to an effective
registration statement under the Securities Act, (iii) 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 $100,000, not with a view to or for offer or sale in
connection with any distribution in violation of the Securities Act or (iv) in
reliance on another exemption from registration under the Securities Act (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
To effect such transfer, the Registrar or the Company may require delivery of an
Opinion of Counsel and, in case of a transfer pursuant to clause (iii) above,
will require a transferee letter of representation.
____________________________________________
[INSERT NAME OF TRANSFEROR]
By:_________________________________________
Dated:___________________
A-15
<PAGE> 102
EXHIBIT B
FORM OF GUARANTEE
For value received, each of the undersigned hereby irrevocably,
unconditionally guarantees on a senior unsecured basis to the Holder of the
Security upon which this Guarantee is endorsed the due and punctual payment, as
set forth in the Indenture pursuant to which such Security and this Guarantee
were issued, of the principal of, premium (if any) and interest (and Liquidated
Damages, if any) on such Security when and as the same shall become due and
payable for any reason according to the terms of such Security and Article XI of
the Indenture. The Guarantee of the Security upon which this Guarantee is
endorsed will not become effective until the Trustee signs the certificate of
authentication on such Security.
______________________________________
By:___________________________________
Attest:_______________________________
B-1
<PAGE> 1
EXHIBIT 4.2
$85,000,000
10% SENIOR NOTES DUE 2004
PURCHASE AGREEMENT
October 16, 1997
First Chicago Capital Markets, Inc.
One First National Plaza, Suite 0595
Chicago, IL 60670
Ladies and Gentlemen:
Employee Solutions, Inc., an Arizona corporation (the
"Company"), proposes, upon the terms and conditions set forth herein, to issue
and sell to you, as the initial purchaser (the "Initial Purchaser"), $85,000,000
aggregate principal amount of its 10% Senior Notes due 2004 (the "Notes"). The
Notes are to be issued pursuant to the provisions of an Indenture, to be dated
as of October 15, 1997 (the "Indenture"), between the Company and The Huntington
National Bank, as Trustee (the "Trustee"). The Notes are to be unconditionally
guaranteed (the "Guarantees") by each of the guarantors signatory hereto
(collectively, the "Guarantors"). Unless the context requires otherwise, all
references herein to the Notes shall be deemed to include the Guarantees.
The Company wishes to confirm as follows its agreement with
the Initial Purchaser in connection with the purchase and resale of the Notes.
1. Preliminary Offering Memorandum and Offering Memorandum.
The Notes will be offered and sold to the Initial Purchaser without registration
under the Securities Act of 1933, as amended (the "Act"), in reliance on an
exemption pursuant to Section 4(2) under the Act. The Company has prepared a
preliminary offering memorandum, dated September 30, 1997 (the "Preliminary
Offering Memorandum"), and an offering memorandum, dated October 16, 1997 (the
"Offering Memorandum"), setting forth information regarding the Company and the
Notes. Any references herein to the Preliminary Offering Memorandum shall be
deemed to include all amendments and supplements thereto. Any references herein
to the Offering Memorandum shall refer to the Offering Memorandum in the form
first furnished to the Initial Purchaser for use in connection with the offering
of the Notes. Any reference in this Agreement to the Offering Memorandum and
Preliminary Offering Memorandum shall be deemed to refer to and include the
documents incorporated by reference therein as of the date of the Offering
Memorandum and Preliminary Offering Memorandum, as the case may be, and any
reference to any amendment or supplement to the Offering Memorandum and
Preliminary Offering Memorandum shall be deemed to refer to and include any
documents filed after such date under the Securities Exchange Act of 1934,
<PAGE> 2
as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein. As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference in the Offering
Memorandum and Preliminary Offering Memorandum, or any amendment or supplement
thereto. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Notes by the Initial Purchaser.
The Initial Purchaser has advised the Company that it proposes
to make offers and sales (the "Exempt Resales") of the Notes purchased by it
hereunder only on the terms and in the manner set forth in the Offering
Memorandum and Section 2 hereof, as soon as it deems advisable after this
Agreement has been executed and delivered, (i) to persons in the United States
whom the Initial Purchaser reasonably believes to be qualified institutional
buyers ("Qualified Institutional Buyers") as defined in Rule 144A under the Act,
as such rule may be amended from time to time ("Rule 144A"), in transactions
under Rule 144A and (ii) to a limited number of other institutional "accredited
investors" (as defined in Rule 501 (a) (1), (2), (3) and (7) under Regulation D
of the Act) ("Accredited Investors") in private sales exempt from registration
under the Act (such persons specified in clauses (i) and (ii) being referred to
herein as the "Eligible Purchasers").
It is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Act, the Notes shall bear a legend substantially
to the effect set forth below:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN
INSTITUTIONAL
2
<PAGE> 3
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF ONE OR MORE OTHER INSTITUTIONAL
ACCREDITED INVESTORS, IN EACH CASE, HAVING A MINIMUM PURCHASE PRICE OF
AT LEAST $100,000, 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 (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IN THE CASE OF (d)
UPON DELIVERY OF A TRANSFEREE LETTER OF REPRESENTATION AND IN THE CASE
OF (b), (c), (d) OR (e), UPON AN OPINION OF COUNSEL IF THE COMPANY OR
TRUSTEE SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
It is also understood and acknowledged that holders (including
subsequent transferees) of the Notes will have the registration rights set forth
in the registration rights agreement (the "Registration Rights Agreement") in
substantially the form of Exhibit A hereto, to be dated as of the Closing Date
(as defined).
2. Agreements to Sell, Purchase and Resell. (a) The Company
hereby agrees, subject to all the terms and conditions set forth herein, to
issue and sell to the Initial Purchaser and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Initial Purchaser
agrees to purchase the Notes from the Company, at a purchase price of 96.875% of
the principal amount thereof.
(b) The Initial Purchaser has advised the Company that it
proposes to offer the Notes for sale upon the terms and conditions set forth in
this Agreement and in the Offering Memorandum. The Initial Purchaser hereby
represents and warrants to, and agrees with, the Company that it (i) is a
Qualified Institutional Buyer, with such knowledge and experience in financial
and business matters as are necessary in order to evaluate the merits and risks
in an investment in the Notes and is purchasing the Notes pursuant to a private
sale exempt from registration under the Act, (ii) has not and will not solicit
offers for, or offer or sell, the Notes by means of any form of general
solicitation or general advertising or in any manner involving a public offering
within the meaning of Section 4(2) of the Act provided, however, that such
limitation shall not preclude the Initial Purchaser from placing any tombstone
announcement consistent with the rules and regulations of the Securities and
3
<PAGE> 4
Exchange Commission with respect to the resale by it of the Notes, (iii) will
solicit offers for the Notes only from, and will offer, sell or deliver the
Notes as part of its initial offering, only to (A) persons in the United States
whom it reasonably believes to be Qualified Institutional Buyers, or if any such
person is buying for one or more institutional accounts for which such person is
acting as fiduciary or agent, only when such person has represented to the
Initial Purchaser that each such account is a Qualified Institutional Buyer, to
whom notice has been given that such sale or delivery is being made in reliance
on Rule 144A, in each case, in transactions under Rule 144A or (B) to a limited
number of Accredited Investors that make the representations to and agreements
with the Company specified in Annex A to the Offering Memorandum in private
sales exempt from registration under the Act and (iv) will, during its initial
distribution of the Notes, unless prohibited by applicable law, furnish to each
person to whom it sells any Notes a copy of the Offering Memorandum. The Initial
Purchaser has advised the Company that it will offer the Notes to Eligible
Purchasers at a price and upon terms set forth in the Offering Memorandum. Such
price and terms may be changed by the Initial Purchaser at any time thereafter
without notice.
The Initial Purchaser understands that the Company and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 7 hereof, counsel to the Company and counsel to the Initial Purchaser,
will rely upon the accuracy and truth of the foregoing representations and
agreements and the Initial Purchaser hereby consents to such reliance.
3. Delivery of the Notes and Payment Therefor. Delivery to the
Initial Purchaser of and payment for the Notes shall be made at the office of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, NY 10022,
at 10:00 A.M., New York City time, on October 21, 1997 (the "Closing Date"). The
place of closing for the Notes and the Closing Date may be varied by agreement
between the Initial Purchaser and the Company.
The Notes which the Initial Purchaser may elect to purchase
will be delivered to the Initial Purchaser against payment of the purchase price
therefor in immediately available funds wired in accordance with the
instructions of the Company. The Notes will be evidence by a single global
security in definitive form (the "Global Note") and/or by additional definitive
securities, and will be registered, in the case of the Global Note, in the name
of Cede & Co. as nominee of The Depository Trust Company ("DTC"), and in the
other cases, in such names and in such denominations as the Initial Purchaser
shall request prior to 9:30 A.M., New York City time, on the second business day
preceding the Closing Date. The Notes to be delivered to the Initial Purchaser
shall be made available to the Initial Purchaser in New York City for inspection
and packaging not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date.
4
<PAGE> 5
4. Agreements of the Company and the Guarantors. Each of the
Company and the Guarantors agrees with the Initial Purchaser as follows:
(a) The Company will advise the Initial Purchaser promptly
and, if requested by it, will confirm such advice in writing, within the period
of time referred to in the first sentence of subsection (e) below, of any change
in the Company's condition (financial or other), business, prospects,
properties, net worth or results of operations, or of the happening of any event
which makes any material statement made in the Offering Memorandum (as then
amended or supplemented) untrue or which requires the making of any additions to
or changes in the Offering Memorandum (as then amended or supplemented) in order
to make the statements therein, in the light of the circumstances in which they
were made, not misleading, or of the necessity to amend or supplement the
Offering Memorandum (as then amended or supplemented) to comply with any law.
(b) The Company will furnish to the Initial Purchaser, without
charge, as of the date of the Offering Memorandum, such number of copies of the
Offering Memorandum as it may then be amended or supplemented (including
documents incorporated by reference therein) as they may reasonably request.
(c) The Company will not make any amendment or supplement to
the Preliminary Offering Memorandum or to the Offering Memorandum (including the
filing of any document which, upon filing, becomes an Incorporated Document) of
which the Initial Purchaser shall not previously have been advised or to which
it shall reasonably object after being so advised and no such amendment or
supplement when it is made, shall contain an untrue statement of a material fact
or will omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances in
which they were made, not misleading.
(d) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to the Initial Purchaser, without charge,
in such quantities as it shall have requested or may hereafter reasonably
request, copies of the Preliminary Offering Memorandum. The Company consents to
the use, in accordance with the securities or Blue Sky laws of the jurisdictions
in which the Notes are offered by the Initial Purchaser and by dealers, prior to
the date of the Offering Memorandum, of each Preliminary Offering Memorandum so
furnished by the Company. The Company consents to the use of the Offering
Memorandum (and of any amendment or supplement thereto) in accordance with the
securities or Blue Sky laws of the jurisdictions in which the Notes are offered
by the Initial Purchaser in connection with the offering and sale of the Notes.
(e) If, at any time prior to completion of the distribution of
the Notes by the Initial Purchaser to Eligible Purchasers, any event shall occur
that in the judgment of the Company or in the opinion of the Initial Purchaser's
counsel should be set forth in the Offering Memorandum (as then amended or
supplemented) in order to make the statements
5
<PAGE> 6
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Offering Memorandum
in order to comply with any law, the Company will forthwith prepare an
appropriate supplement or amendment thereto, and will expeditiously furnish to
the Initial Purchaser a reasonable number of copies thereof.
(f) The Company will cooperate with the Initial Purchaser and
with its counsel in connection with the qualification of the Notes for offering
and sale by the Initial Purchaser and by dealers under the securities or Blue
Sky laws of such jurisdictions as the Initial Purchaser may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such qualification; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Notes, in any jurisdiction where it is not now so subject.
(g) So long as any of the Notes are outstanding, the Company
will furnish to the Initial Purchaser upon its request (i) as soon as available,
a copy of each report of the Company mailed to stockholders or filed with the
Securities and Exchange Commission and (ii) from time to time such other
information concerning the Company as the Initial Purchaser may reasonably
request.
(h) If this Agreement shall terminate or shall be terminated
after execution and delivery pursuant to any provisions hereof (otherwise than
by notice given by the Initial Purchaser terminating this Agreement pursuant to
Section 9 hereof) or if this Agreement shall be terminated by the Initial
Purchaser because of any failure or refusal on the part of the Company to comply
with the terms or fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the Initial Purchaser for all out-of-pocket expenses
(including fees and expenses of its counsel) reasonably incurred by it in
connection herewith, but without further obligation on the part of the Company
for loss of profits or otherwise.
(i) The Company will apply the net proceeds from the sale of
the Notes to be sold by it hereunder substantially in accordance with the
description set forth in the Offering Memorandum under the caption "Use of
Proceeds".
(j) Except as otherwise provided in this Agreement and the
Registration Rights Agreement, without the prior consent of the Initial
Purchaser, prior to the expiration of 90 days after the date of the Offering
Memorandum the Company will not offer, sell, contract to sell or otherwise
dispose of any debt securities of the Company.
(k) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, neither the Company nor any of the
Subsidiaries has taken, nor will it take, directly or indirectly, any action
designed to or that might
6
<PAGE> 7
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Notes to facilitate the sale or resale of the Notes. Except as
permitted by the Act, neither the Company nor any of the Subsidiaries will
distribute any offering material in connection with the Exempt Resales.
(l) The Company will use its reasonable best efforts to cause
the Notes to be eligible for trading on the PORTAL Market.
(m) From and after the Closing Date, so long as any of the
Notes are outstanding and during any period in which the Company is not subject
to Section 13 or 15(d) of the Exchange Act, the Company will make available to
holders of the Notes and prospective purchasers of Notes designated by such
holders, upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A (d) (4) under the Act
to permit compliance with Rule 144A in connection with resale of the Notes.
(n) Each of the Company and the Guarantors agrees that it will
not and will cause its affiliates not to sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Notes in a manner that would
require the registration under the Act of the sale to the Initial Purchaser or
the Eligible Purchasers of the Notes.
(o) None of the Company and its affiliates will solicit any
offer to buy or offer or sell the Notes by means of any form of general
solicitation or general advertising.
(p) During the period from the Closing Date to two years after
the Closing Date, the Company and the Guarantors will not, and will not permit
any "affiliate" (as defined in Rule 144 under the Act) of the Company or the
Guarantors to, resell any of the Notes that have been reacquired by them, except
for Notes purchased by the Company, the Guarantors or any of their affiliates
and resold in a transaction registered under the Act or under Rule 144 or
otherwise exempt from registration under the Act.
(q) The Company agrees to comply with all the terms and
conditions of the Registration Rights Agreement and all agreements set forth in
the representation letter of the Company to DTC relating to the approval of the
Notes by DTC for "book entry" transfer.
(r) The Company agrees that in connection with the
registration of the Notes pursuant to the Registration Rights Agreement, or at
such earlier time as may be required, the Indenture shall be qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act") and any necessary
supplemental indentures will be entered into in connection therewith.
7
<PAGE> 8
(s) Prior to the Closing Date, the Company will furnish to the
Initial Purchaser, as soon as they have been prepared, a copy of any unaudited
interim consolidated financial statements of the Company for any period
subsequent to the period covered by the most recent consolidated financial
statements of the Company appearing in the Offering Memorandum.
(t) The Company and the Guarantors will not claim the benefit
of any usury laws against the holders of the Notes.
5. Representations and Warranties of the Company and the
Guarantors. Each of the Company and the Guarantors represents and warrants to
the Initial Purchaser that:
(a) The Preliminary Offering Memorandum and Offering
Memorandum with respect to the Notes have been prepared by the Company for use
by the Initial Purchaser in connection with the Exempt Resales. No order or
decree preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum or any amendment or supplement thereto, or any order asserting that
the transactions contemplated by this Agreement are subject to the registration
requirements of the Act has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering
Memorandum as of their respective dates do not, and the Offering Memorandum as
of the Closing Date will not, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that this representation and warranty does not
apply to statements in or omissions from the Preliminary Offering Memorandum and
the Offering Memorandum made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in writing by or on
behalf of the Initial Purchaser expressly for use therein.
(c) The Indenture has been duly and validly authorized by the
Company and, upon its execution and delivery by the Company and assuming due
authorization, execution, delivery and performance by the Trustee, will be a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' right generally and limits imposed by
equitable principles, and conforms in all material respects to the description
thereof in the Offering Memorandum; no qualification of the Indenture under the
1939 Act is required in connection with the offer and sale of the Notes
contemplated hereby or in connection with the Exempt Resales.
8
<PAGE> 9
(d) The Notes and the Guarantees have been duly authorized by
the Company and the Guarantors, respectively, and when the Guarantees are
executed by the appropriate Guarantor and the Notes are executed by the Company
and authenticated by the Trustee in accordance with the Indenture and the Notes
are delivered to the Initial Purchaser against payment therefor in accordance
with the terms hereof, the Notes and the Guarantees will have been validly
issued and delivered, and will constitute valid and binding obligations of the
Company and the Guarantors, respectively, entitled to the benefits of the
Indenture and enforceable in accordance with their terms, except as enforcement
thereof may be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally and limits imposed by equitable
principles, and the Notes will conform in all material respects to the
description thereof in the Offering Memorandum.
(e) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such document was filed,
when such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder, and
any further Incorporated Documents so filed will, when they are filed, conform
in all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder; no such document when it was filed (or, if an
amendment with respect to any such document was filed, when such amendment was
filed), contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and no such further document, when it is filed, will contain an
untrue statement of a material fact or will omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(f) All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable.
(g) The Company is a corporation duly organized, validly
existing and in good standing under the laws of Arizona with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have, individually or in the aggregate, a material
adverse effect on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse
Effect").
(h) All the Company's subsidiaries (as defined in the Act) are
referred to herein individually as a "Subsidiary" and collectively as the
"Subsidiaries." Each Subsidiary is a corporation duly organized, validly
existing and in good standing in the jurisdiction of
9
<PAGE> 10
its incorporation or organization, as the case may be, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify or be in good standing does not, individually or in the
aggregate, have a Material Adverse Effect. All the outstanding shares of capital
stock or other equity securities of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and are wholly
owned by the Company directly or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity or other encumbrance.
(i) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened, against the Company or any of the
Subsidiaries or to which the Company or any of the Subsidiaries or to which any
of their respective properties, is subject, that are not disclosed in the
Offering Memorandum and which, if adversely decided, are reasonably likely to
cause a Material Adverse Effect or to materially affect the issuance of the
Notes or the consummation of the transactions contemplated by this Agreement.
There are no material agreements, contracts, indentures, leases or other
instruments that are not described in the Offering Memorandum or any
Incorporated Document. Neither the Company nor any Subsidiary is involved in any
strike, job action or labor dispute with any group of employees, and, to the
Company's knowledge, no such action or dispute is threatened.
(j) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation, or bylaws or other
organizational documents, or, in any material respect, of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company or
any of the Subsidiaries or of any decree of any court or governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries or in
default in any material respect in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound.
(k) None of the issuance, offer, sale or delivery of the
Notes, the execution, delivery or performance of this Agreement, the Indenture
or the Registration Rights Agreement by the Company and the Guarantors or the
consummation by the Company and the Guarantors of the transactions contemplated
hereby or thereby (i) requires any consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body (including, without limitation,
any insurance regulatory agency or body), agency or official (except such as may
be required in connection with the registration under the Act of the Notes and
qualification of the Indenture
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<PAGE> 11
under the 1939 Act in accordance with the Registration Rights Agreement and
compliance with the securities or Blue Sky laws of various jurisdictions), or
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, the certificate or articles of incorporation, bylaws or
other organizational documents, of the Company or any of the Subsidiaries or
(ii) conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under, any material agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or
violates or will violate in any material respect any statute, law, regulation or
filing or judgment, injunction, order or decree applicable to the Company or any
of the Subsidiaries or any of their respective properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any material
property or assets of the Company or any of the Subsidiaries pursuant to the
terms of any agreement or instrument to which any of them is a party or by which
any of them may be bound or to which any of the material property or assets of
any of them is subject.
(l) The accountants, Arthur Andersen LLP and Deloitte & Touche
LLP who have certified or shall certify the financial statements included as
part of the Offering Memorandum (or any amendment or supplement thereto), each
are independent certified public accountants with respect to the Company and its
Subsidiaries within the meaning of Regulation S-X under the Act.
(m) The financial statements (historical and pro forma),
together with related schedules and notes included or incorporated by reference
in the Offering Memorandum, present fairly in all material respects the
consolidated financial position, results of operations and changes in
stockholders' equity and cash flows of the Company and the Subsidiaries at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; the pro forma financial
statements and other pro forma information included in the Offering Memorandum
present fairly the information shown therein, have been prepared in accordance
with Regulation S-X and have been properly compiled on the pro forma bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein; and the other financial
and statistical information and data included or incorporated by reference in
the Offering Memorandum (and any amendment or supplement thereto) is accurately
presented and, to the extent such information and data is derived from the
financial books and records of the Company, is prepared on a basis consistent
with such financial statements and the books and records of the Company and the
Subsidiaries.
(n) Each of the Company and the Guarantors has all requisite
power and authority to execute, deliver and perform its obligations under this
Agreement and the Registration Rights Agreement; the execution and delivery of,
and the performance by the
11
<PAGE> 12
Company and the Guarantors of their obligations under, this Agreement and the
Registration Rights Agreement have been duly and validly authorized by the
Company and the Guarantors, respectively, and this Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Company and the Guarantors and constitute the valid and legally binding
agreements of the Company and the Guarantors, respectively, enforceable against
the Company and the Guarantors, respectively, in accordance with their terms,
except as the enforcement hereof and thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement or creditors' rights
generally and subject to the applicability of general principles of equity, and
except as rights to indemnity and contribution hereunder and thereunder may be
limited by Federal or state securities laws or principles of public policy.
(o) Except as disclosed in the Offering Memorandum, subsequent
to the date as of which such information is given in the Offering Memorandum (as
amended or supplemented on the date hereof), neither the Company nor any of the
Subsidiaries has incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Company and the Subsidiaries taken as a whole, and there has not
been any material change in the capital stock, or material increase in the
short-term or long-term debt, of the Company or any of the Subsidiaries or any
material adverse change, or any development involving or which could reasonably
be expected to involve a prospective material adverse change, in the condition
(financial or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries taken as a whole.
(p) Each of the Company and the Subsidiaries has good and
marketable title to all property (real and personal) described in the Offering
Memorandum as being owned by it, free and clear of all material liens, claims,
security interests or other encumbrances except such as are described in the
Offering Memorandum and all the property described in the Offering Memorandum as
being held under lease by each of the Company and the Subsidiaries is held by it
under valid, subsisting and enforceable leases, with only such exceptions as in
the aggregate are not materially burdensome and do not interfere in any material
respect with the conduct of the business of the Company and the Subsidiaries
taken as a whole.
(q) Each of the Company and the Subsidiaries have such
permits, licenses, franchises, and other approvals or authorizations of
governmental or regulatory authorities ("Permits") as are necessary to own their
respective properties and to conduct their respective businesses in the manner
described in the Offering Memorandum (including, without limitation, all
permits, licenses, franchises and other approvals or authorizations from
governmental authorities as are necessary for qualification as an insurer in
each jurisdiction in which the regular conduct of its business requires such
qualification); the Company and each of the Subsidiaries have fulfilled and
performed all their respective material obligations with respect to the Permits,
and no event has occurred which allows, or after notice or lapse
12
<PAGE> 13
of time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit, subject in
each case to such qualification as may be set forth in the Offering Memorandum;
and, except as described in the Offering Memorandum, none of the Permits
contains any restriction that is materially burdensome to the Company and the
Subsidiaries, taken as a whole.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s) Neither the Company nor any of the Subsidiaries nor, to
the Company's knowledge, any employee or agent of the Company or any Subsidiary
has made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which violation
would have a Material Adverse Effect.
(t) The Company and each of the Subsidiaries have filed all
federal, state and local income tax returns required to be filed, which returns
are true and correct in all material respects, and has paid all taxes due, and
no tax deficiency has been determined adversely to the Company or any of the
Subsidiaries which has had (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of the
Subsidiaries, might have) a Material Adverse Effect.
(u) Except as disclosed in the Offering Memorandum, no
insurance regulatory agency or body has issued any order or decree impairing,
restricting or prohibiting (i) a payment of dividends of Camelback Insurance
Ltd. ("Camelback") to the Company or (ii) the continuation of the business of
Camelback as presently conducted.
(v) Except as disclosed in the Offering Memorandum, no change
in any insurance laws, regulations or administrative practices or National
Association of Insurance Commissioners ("NAIC") recommendations, guidelines or
model laws or regulations is pending with a reasonable possibility of adoption
that, if adopted, is reasonably expected to have, individually or in the
aggregate with all such changes, a Material Adverse Effect.
(w) No holder of any security of the Company, other than the
Notes, has any right to request or demand registration of such security because
of the consummation of the transactions contemplated by this Agreement or the
Registration Rights Agreement.
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<PAGE> 14
(x) The Company and each of the Subsidiaries own or possess
all patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Offering Memorandum as being owned by any of them or
necessary for the conduct of their respective businesses, and the Company is not
aware of any claim to the contrary or any challenge by any other person to the
rights of the Company and the Subsidiaries with respect to the foregoing.
(y) The Company is not and, upon sale of the Notes to be
issued and sold thereby in accordance herewith and the application of the net
proceeds to the Company of such sale as described in the Offering Memorandum
under the caption "Use of Proceeds," will not be an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(z) The Company has not distributed and, prior to the later to
occur of the Closing Date and completion of the distribution of the Notes, will
not distribute any offering material in connection with the offering and sale of
the Notes other than the Preliminary Offering Memorandum and Offering
Memorandum.
(aa) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning of Rule
144A (d) (3) under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated interdealer quotation system.
(ab) Neither the Company nor any affiliate (as defined in Rule
501 (b) of Regulation D ("Regulation D") under the Act) of the Company has
directly, or through any agent (provided that no representation is made as to
the Initial Purchaser or any person acting on its behalf), (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Act) which is or will be integrated with the
offering and sale of the Notes in a manner that would require the registration
of the Notes under the Act, or (ii) engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with
the offering of the Notes.
(ac) The Company is not required to deliver the information
specified in Rule 144A (d) (4) in connection with the offering and resale of the
Notes by the Initial Purchaser.
(ad) Assuming (i) that the representations and warranties in
Section 2 hereof are true, (ii) that the Initial Purchaser complies with the
covenants set forth in Section 2 hereof, and (iii) that each person to whom the
Initial Purchaser offers, sells or delivers the Notes is a Qualified
Institutional Buyer or an Accredited Investor, the purchase and sale of the
Notes pursuant hereto (including the Initial Purchaser's proposed offering of
the Notes
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<PAGE> 15
on the terms and in the manner set forth in the Offering Memorandum and Section
2 hereof) is exempt from the registration requirements of the Act and the
Indenture is not required to be qualified under the 1939 Act.
(ae) Each of the Company and the Subsidiaries is in compliance
in all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred for which the Company or any of the
Subsidiaries would have any liability; neither the Company nor any of the
Subsidiaries has incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Section 412 or 4971 of the Internal Revenue Code (the "Code"); and
each "pension plan" for which the Company or any of the Subsidiaries would have
any liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
The execution and delivery of this Agreement, the Registration Rights Agreement
and Indenture and the sale of the Notes to the Initial Purchaser or by the
Initial Purchaser to Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code. The representation made by the Company in the preceding sentence is made
in reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible Purchasers as
set forth in the Offering Memorandum under the section entitled "Notice to
Investors."
(af) The Company and its Subsidiaries are not in violation of
any Environmental Law or order, notice, or demand issued pursuant to any
Environmental Laws, in each case applicable to the assets of the Company or any
of its Subsidiaries except for such violations which would not, individually or
in the aggregate, have a Material Adverse Effect.
"Environmental Laws" shall mean all federal, state or local
laws, statutes, rules, regulations, or ordinances relating to public health,
safety, or the environment including those relating (a) to releases, discharges,
emissions, or disposals into air, water, land, or groundwater, (b) to the
withdrawal or use of groundwater, (c) to the use, handling, or disposal of
polychlorinated biphenyls or asbestos, (d) to the disposal, treatment, storage,
or management of hazardous or solid waste, or Hazardous Substances or crude oil,
fractious petroleum derivatives, or by-products thereof, (e) to exposure to
toxic or hazardous materials or (f) to the handling, transportation, discharge,
or release of gaseous or liquid Hazardous Substances.
"Hazardous Substance" shall mean any hazardous or toxic
material, substance, or waste pollutant or contaminant which is regulated as
such under any statute, law, ordinance, rule, or regulation of any federal,
state, local, or regional authority having
15
<PAGE> 16
jurisdiction over assets of the Company or any of its Subsidiaries or its use,
including any material, substance, or waste which is: (a) defined as a hazardous
substance under Section 311 of the Federal Water Pollution Control Act (33
U.S.C. Section 1317), as amended; (b) regulated as a hazardous waste under
Section 1004 of the Federal Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), as amended; (c) defined as a hazardous substance under
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601, et seq.), as amended; or (d) defined or
regulated as a hazardous substance or hazardous waste under any rules or
regulations promulgated under any of the foregoing statutes.
(ag) Neither the Company nor any of its Subsidiaries have
violated any federal, state or local law relating to discrimination in the
hiring, promotion or pay of employees or any applicable wage or hour laws, or
any provisions of ERISA or the rules and regulations promulgated thereunder nor
has the Company or any of its Subsidiaries engaged in any unfair labor practice,
which, in each case might result singly or in the aggregate in a Material
Adverse Effect.
6. Indemnification and Contribution. (a) Each of the Company
and the Guarantors, jointly and severally, agrees to indemnify and hold harmless
the Initial Purchaser and each person, if any, who controls the Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the agents, employees, officers and directors of the Initial
Purchaser, from and against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum or Offering Memorandum or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to the Initial
Purchaser or the plan of distribution furnished in writing to the Company by or
on behalf of the Initial Purchaser expressly for use in connection therewith;
provided,however, that the indemnification contained in this paragraph (a) with
respect to the Preliminary Offering Memorandum shall not inure to the benefit of
the Initial Purchaser (or to the benefit of any person controlling the Initial
Purchaser) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Notes by the Initial Purchaser to any person if the
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact contained in the Preliminary Offering Memorandum was corrected
in the Offering Memorandum and the Initial Purchaser sold Notes to that person
without sending or giving at or prior to the written confirmation of such sale,
a copy of the Offering Memorandum (as then amended or supplemented) if the
Company has previously furnished sufficient copies thereof to the Initial
Purchaser on a timely basis to permit such sending or giving. The foregoing
indemnity
16
<PAGE> 17
agreement shall be in addition to any liability which the Company or
the Guarantors may otherwise have.
(b) If any action, suit or proceeding shall be brought against
the Initial Purchaser or any person controlling the Initial Purchaser in respect
of which indemnity may be sought against the Company or the Guarantors, the
Initial Purchaser or such controlling person shall promptly notify the parties
against whom indemnification is being sought (the "indemnifying parties"), and
such indemnifying parties shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. The Initial
Purchaser or any such controlling person shall have the right to employ separate
counsel in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Initial Purchaser or such controlling person unless (i) the indemnifying
parties have agreed in writing to pay such fees and expenses, (ii) the
indemnifying parties have failed to assume the defense and employ counsel, or
(iii) the named parties to any such action, suit or proceeding (including any
impleaded parties) include both the Initial Purchaser or such controlling person
and the indemnifying parties and the Initial Purchaser or such controlling
person shall have been advised by its counsel that representation of such
indemnified party and any indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying party
shall not have the right to assume the defense of such action, suit or
proceeding on behalf of the Initial Purchaser or such controlling person). It is
understood, however, that the indemnifying parties shall, in connection with any
one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for the Initial Purchaser and controlling persons not
having actual or potential differing interests with the Initial Purchaser or
among themselves, which firm shall be designated in writing by the Initial
Purchaser, and that all such fees and expenses shall be reimbursed on a monthly
basis as provided in paragraph (a) hereof. The indemnifying parties shall not be
liable for any settlement of any such action, suit or proceeding effected
without their written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the indemnifying parties agree to indemnify and hold harmless the
Initial Purchaser and any such controlling person, to the extent provided in
paragraph (a), from and against any loss, claim, damage, liability or expense by
reason of such settlement or judgment.
(c) The Initial Purchaser agrees to indemnify and hold
harmless the Company, the Guarantors and their directors and officers, and any
person who controls the Company or the Guarantors within the meaning of Section
15 of the Act or Section 20 of the Exchange Act to the same extent as the
indemnity from the Company and the Guarantors to the Initial Purchaser set forth
in paragraph (a) hereof, but only with respect to information
17
<PAGE> 18
relating to the Initial Purchaser or the plan of distribution furnished in
writing by or on behalf of the Initial Purchaser expressly for use in the
Preliminary Offering Memorandum or Offering Memorandum or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Company, the Guarantors, their directors or officers, or any such
controlling person based on the Preliminary Offering Memorandum or Offering
Memorandum, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against the Initial Purchaser pursuant to this paragraph
(c), the Initial Purchaser shall have the rights and duties given to the Company
and the Guarantors by paragraph (b) above (except that if the Company and the
Guarantors shall have assumed the defense thereof the Initial Purchaser shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the Initial Purchaser's expense), and the Company, the Guarantors,
their directors and officers, and any such controlling person shall have the
rights and duties given to the Initial Purchaser by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which the
Initial Purchaser may otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors on the one hand and the Initial Purchaser 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 Company and the Guarantors on the one
hand and the Initial Purchaser on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchaser on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total discount received by the Initial Purchaser, in
each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of the Company and the Guarantors on the one hand
and the Initial Purchaser on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the Company and the Guarantors on the one hand or by the Initial Purchaser on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) Each of the Company, the Guarantors and the Initial
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 6 were determined
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<PAGE> 19
by a pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitation set forth above, any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 6, the Initial Purchaser shall
not be required to contribute any amount in excess of the amount by which the
total discount received by it with respect to the Notes exceeds the amount of
any damages which the Initial Purchaser 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 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 6 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company and the Guarantors set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of the Initial Purchaser or any
persons controlling the Initial Purchaser, the Company, the Guarantors, their
directors or officers or any person controlling the Company or the Guarantors,
(ii) acceptance of any Notes and payment therefore hereunder, and (iii) any
termination of this Agreement. A successor to the Initial Purchaser, its
officers or directors or any person controlling the Initial Purchaser, or to the
Company or the Guarantors, their directors or officers or any person controlling
the Company or the Guarantors, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
6.
(g) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
7. Conditions of the Initial Purchaser's Obligation. The
obligation of the Initial Purchaser to purchase the Notes is subject to the
following conditions:
(a) At the time of execution of this Agreement and on the
Closing Date, no order or decree preventing the use of the Offering Memorandum
or any amendment or supplement thereto, or any order asserting that the
transactions contemplated by the Agreement are subject to the registration
requirements of the Act shall have been issued and
19
<PAGE> 20
no proceedings for that purpose shall have been commenced or shall be pending
or, to the knowledge of the Company, be contemplated. No stop order suspending
the sale of the Notes in any jurisdiction designated by the Initial Purchaser
shall have been issued and no proceedings for that purpose shall have been
commenced or shall be pending or, to the knowledge of the Company, shall be
contemplated.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated by the Offering Memorandum, which in the opinion
of the Initial Purchaser, would materially adversely affect the market for the
Notes, or (ii) any event or development relating to or involving the Company or
any officer or director of the Company which makes any material statement made
in the Offering Memorandum untrue or which, in the opinion of the Company and
its counsel or the Initial Purchaser and its counsel, requires the making of any
addition to or change in the Offering Memorandum in order to state a material
fact required by any law to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, if amending or supplementing the Offering Memorandum to reflect
such event or development would, in the opinion of the Initial Purchaser,
materially adversely affect the market for the Notes.
(c) The Initial Purchaser shall have received on the Closing
Date an opinion of Quarles & Brady, counsel for the Company dated the Closing
Date and addressed to the Initial Purchaser, to the effect that:
(i) The Company is a corporation validly existing in good
standing under the laws of Arizona with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Offering Memorandum (and any amendment or supplement thereto);
(ii) Each of the Company and the Guarantors has the
corporate power and authority to enter into this Agreement and the Registration
Rights Agreement and, in the case of the Company, to issue, sell and deliver the
Notes to be sold by it to the Initial Purchaser as provided herein, and this
Agreement and the Registration Rights Agreement have been duly authorized,
executed and delivered by the Company and the Guarantors and are the valid,
legal and binding agreements of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with their terms, except
(A) as enforcement of rights to indemnity and contribution hereunder and
thereunder may be limited by Federal or state securities laws or principles of
public policy, (B) that a court may not give effect to the choice of law or
forum selection clauses of such agreements and (C) subject to the qualification
that the enforceability of the Company's and the Guarantors' obligations
hereunder and thereunder may be limited by bankruptcy, fraudulent conveyance and
transfer,
20
<PAGE> 21
insolvency, reorganization, moratorium, and other similar laws affecting
creditors' rights generally, by general equitable principles and by usury laws;
(iii) The Indenture has been duly and validly authorized,
executed and delivered by the Company and the Guarantors and, assuming due
authorization, execution and delivery by the Trustee, is a valid and binding
agreement of the Company and the Guarantors, enforceable in accordance with its
terms, subject to the qualification that (A) the enforceability of the Company's
and the Guarantors' obligations thereunder may be limited by bankruptcy,
fraudulent conveyance and transfer, insolvency, reorganization, moratorium, and
other similar laws affecting creditors' rights generally, by general equitable
principles and (B) that a court may not give effect to the choice of law or
forum selection clauses of the Indenture; no qualification of the Indenture
under the 1939 Act is required in connection with the offer and sale of the
Notes contemplated hereby or in connection with the Exempt Resales;
(iv) The Notes have been duly and validly authorized by
the Company and when executed by the Company in accordance with the Indenture
and, assuming due authentication of the Notes by the Trustee, upon delivery to
the Initial Purchaser against payment therefor in accordance with the terms
hereof, will have been validly issued and delivered, and will constitute valid
and binding obligations of the Company enforceable in accordance with their
terms and entitled to the benefits of the Indenture, subject to the
qualification that the enforceability of the Company's obligations thereunder
may be limited by bankruptcy, fraudulent conveyance and transfer, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally, by general equitable principles and by usury laws;
(v) Neither the offer, sale or delivery of the Notes, the
execution, delivery or performance by the Company or the Guarantors of this
Agreement, the Registration Rights Agreement or the Indenture, compliance by the
Company and the Guarantors with the provisions hereof or thereof nor
consummation by the Company and the Guarantors of the transactions contemplated
hereby or thereby conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws of the Company or any of the Subsidiaries or any
agreement, indenture, lease or other instrument which the Company has filed as
an exhibit to its periodic reports under the Exchange Act, or has identified to
such counsel as requiring filing thereunder, results or will result in the
creation or imposition of any lien, charge or encumbrance upon any material
property or assets of the Company or any of the Subsidiaries, nor will any such
action result in any violation in any material respect of any existing law, of
any regulation, ruling (assuming compliance with all applicable state securities
and Blue Sky laws), judgment, injunction, order or decree known to such counsel,
applicable to the Company, the Subsidiaries or any of their respective
properties;
21
<PAGE> 22
(vi) Each of the Guarantees has been duly and validly
authorized by the appropriate Guarantor and when executed by each such Guarantor
in accordance with the Indenture and, assuming due authentication of the Notes
by the Trustee, upon delivery to the Initial Purchaser against payment therefor
in accordance with the terms hereof, will have been validly issued and
delivered, and will constitute valid and binding obligations of the appropriate
Guarantor enforceable in accordance with its terms and entitled to the benefits
of the Indenture, subject to the qualification that the enforceability of each
of the Guarantors' obligations thereunder may be limited by bankruptcy,
fraudulent conveyance and transfer, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally, by general
equitable principles and by usury laws;
(vii) No consent, approval, authorization or other order
of, or registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official is required on the part of
the Company for the valid issuance and sale of the Notes to the Initial
Purchaser as contemplated by this Agreement and the Indenture (except such as
may be required under securities or Blue Sky laws of various jurisdictions);
(viii) Each Subsidiary is a corporation validly existing
and in good standing under the laws of the jurisdiction of its organization,
with full corporate power and authority, as the case may be, to own, lease, and
operate its properties and to conduct its business as described in the Offering
Memorandum (and any amendment or supplement thereto); and all the outstanding
shares of capital stock or other equity securities of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable,
and are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any security interest, lien, adverse claim,
equity or other encumbrance;
(ix) To the knowledge of such counsel after reasonable
inquiry, (A) other than as described in the Offering Memorandum (or any
supplement thereto), there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries or to which the
Company or any of the Subsidiaries or any of their properties, are subject,
which are not disclosed in the Offering Memorandum or the Incorporated Documents
which would be required to be disclosed pursuant to Item 103 of Regulation S-K
under the Act and (B) there are no material agreements, contracts, indentures,
leases or other instruments, which the Company has filed as an exhibit to its
periodic reports under the Exchange Act, or has identified to us as requiring
filing thereunder that are not described in the Offering Memorandum (or any
amendment or supplement thereto) or described or incorporated by reference in
the Incorporated Documents to the extent that such description is required to be
included to avoid a material omission or misstatement in such documents;
22
<PAGE> 23
(x) The statements contained or incorporated by reference
in the Offering Memorandum, insofar as they are descriptions of specified
written contracts, agreements or other legal documents, or refer to statements
of law or legal conclusions, are accurate in all material respects and present
fairly the information required to be shown and each of the Incorporated
Documents (except for the financial statements and the notes thereto and the
schedules and other financial and statistical data included therein or omitted
therefrom, as to which counsel need not express any opinion) complied as to form
in all material respects with the Exchange Act and the rules and regulations of
the Commission thereunder;
(xi) Except as described in the Offering Memorandum, such
counsel does not know of any person who has the right, contractual or otherwise,
to cause the Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, any of the Notes or the right, as a result of the
consummation of the transactions contemplated by this Agreement and the
Registration Rights Agreement, to require registration under the Act of any
shares of Common Stock or other securities of the Company;
(xii) When the Notes are issued and delivered pursuant to
this Agreement, such Notes will not be of the same class (within the meaning of
Rule 144A(d) (3) under the Act) as any security of the Company that is listed on
a national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated interdealer quotation system;
(xiii) No registration of the Notes under the Act or
qualification of the Indenture under the 1939 Act is required for the sale of
the Notes to the Initial Purchaser or for the Exempt Resales in the manner
contemplated by the Purchase Agreement and the Offering Memorandum;
(xiv) The Company is not required to obtain stockholder
consent for the issuance of offering of the Notes; and
(xv) Although such counsel has not undertaken, except as
otherwise indicated in their opinion, to determine independently, and does not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained or incorporated by reference in the Offering Memorandum,
such counsel has participated in the preparation of the Offering Memorandum,
including review and discussion of the contents thereof (including a review and
discussion of the contents of all Incorporated Documents), and nothing has come
to the attention of such counsel that has caused them to believe that the
Offering Memorandum (including the Incorporated Documents), as of its date and
as of the Closing Date (except to the extent that information disclosed in an
Incorporated Document may be superseded by information contained in subsequently
filed Incorporated Documents), contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the
23
<PAGE> 24
circumstances under which they were made, not misleading or that any amendment
or supplement to the Offering Memorandum, as of its respective date, and as of
the Closing Date, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
opinion with respect to the financial statements and the notes thereto and the
schedules and other financial and statistical data included or incorporated by
reference in, or omitted from, the Offering Memorandum).
The opinion of such counsel may be limited to the laws of the
United States and the States of Arizona, Florida and Wisconsin and the corporate
law of Delaware and Nevada; with respect to other jurisdictions counsel may rely
upon an opinion or opinions, each dated the Closing Date, of other counsel
retained by them or the Company as to the laws of any such other jurisdictions,
provided that (1) each such other counsel is acceptable to the Initial
Purchaser, (2) such reliance is expressly authorized by each opinion so relied
upon and a copy of each such opinion is delivered to the Initial Purchaser and
is, in form and substance, reasonably satisfactory to the Initial Purchaser and
its counsel, and (3) counsel shall state in their opinion that they have no
reason to believe that they and the Initial Purchaser are not justified in
relying thereon.
(d) The Initial Purchaser shall have received on the Closing
Date an opinion of Paul M. Gales, Esq., general counsel of the Company, dated
the Closing Date and addressed to the Initial Purchaser to the effect that:
(i) The Company is duly registered and qualified to
conduct its business and is in good standing as a foreign corporation in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify or to be in good standing does not have, individually
or in the aggregate, a Material Adverse Effect;
(ii) Each Subsidiary is duly registered and qualified to
conduct its business and is in good standing as a foreign corporation in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify or to be in good standing does not have, individually
or in the aggregate, a Material Adverse Effect;
(iii) Neither the Company nor any of the Subsidiaries is
in violation of its respective certificate or articles of incorporation, or
bylaws, or other organizational documents, or to the best knowledge of such
counsel after reasonable inquiry, is in default in the performance of any
material obligation, agreement or condition contained in any bond, debenture,
note or other evidence of indebtedness or in any material agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by
24
<PAGE> 25
which any of them or any of their respective properties may be bound, except as
disclosed in the Offering Memorandum;
(iv) Neither the Company nor any of the Subsidiaries is
in material violation of any law, ordinance, administrative or governmental rule
or regulation applicable to the Company or any of the Subsidiaries or of any
decree of any court or governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries;
(v) The Company and each of its Subsidiaries have full
corporate power and authority to own their respective properties and to conduct
their respective businesses as now being conducted as described in the Offering
Memorandum and have all Permits that are required to own their respective
properties and to conduct their respective businesses as now being conducted as
described in the Offering Memorandum except where the failure to have any such
Permits would not, individually or in the aggregate, have a Material Adverse
Effect;
(vi) To our knowledge, except as disclosed in the
Offering Memorandum, no change in any insurance laws, regulations or
administrative practices or NAIC recommendations, guidelines or model laws or
regulations is pending with a reasonable possibility of adoption that, if
adopted, is reasonably expected to have, individually or in the aggregate with
all such changes, a Material Adverse Effect; and
(vii) Neither the offer, sale or delivery of the Notes,
the execution, delivery or performance by the Company of this Agreement, the
Registration Rights Agreement or the Indenture, compliance by the Company with
the provisions hereof or thereof nor consummation by the Company of the
transactions contemplated hereby or thereby conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate
or articles of incorporation, or bylaws or other organizational documents of any
of the Company's Subsidiaries or any material agreement, indenture, lease or
other instrument to which any of the Subsidiaries is a party or by which any of
them or any of their respective material properties is bound, results or will
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of any of the Subsidiaries pursuant to the terms of any
material agreement or instrument to which any of them is a party or by which any
of them may be bound or to which any of the material property or assets of any
of them is subject, nor will any such action result in any violation in any
material respect of any existing law, or any regulation, ruling (assuming
compliance with all applicable state securities and Blue Sky laws), judgment,
injunction, order or decree known to such counsel, applicable to the
Subsidiaries or any of their respective properties.
(e) The Initial Purchaser shall have received on the Closing
Date an opinion of Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel for
the Initial Purchaser, dated the Closing Date, and addressed to the Initial
Purchaser, with respect to such matters as the Initial Purchaser may reasonably
request.
25
<PAGE> 26
(f) The Initial Purchaser shall have received letters
addressed to the Initial Purchaser, and dated the date hereof and the Closing
Date from Arthur Andersen LLP, independent certified public accountants,
substantially in the forms heretofore approved by the Initial Purchaser.
(g) (i) There shall not have been any change in the capital
stock of the Company nor any material increase in the short-term or long-term
debt of the Company (other than in the ordinary course of business) from that
set forth in the Offering Memorandum; (ii) there shall not have been, since the
respective dates as of which information is given in the Offering Memorandum,
except as may otherwise be stated therein, any material adverse change in the
condition (financial or other), business, prospects, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a whole;
(iii) the Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Offering Memorandum; and (iv) all the
representations and warranties of the Company and the Guarantors contained in
this Agreement shall be true and correct in all material respects on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date, and the Initial Purchaser shall have received a certificate, dated
the Closing Date and signed by the chief executive officer and the chief
financial officer of the Company and each of the Guarantors (or such other
officers as are acceptable to the Initial Purchaser), to the effect set forth in
this Section 7(g) and in Section 7(h) hereof.
(h) The Company and the Guarantors shall not have failed at or
prior to the Closing Date to have performed or complied with any of their
agreements herein contained and required to be performed or complied with by
them hereunder at or prior to the Closing Date.
(i) After the date hereof and at or prior to the Closing Date
there shall not have been any announcement by any "nationally recognized
statistical rating organization," as defined for purposes of Rule 436 (g) under
the Act, that (i) it is downgrading its rating assigned to any class of
securities of the Company, or (ii) it is reviewing its ratings assigned to any
class of securities of the Company with a view to possible downgrading, or with
negative implications, or direction not determined.
(j) The Notes shall have been approved for trading on PORTAL.
(k) On or prior to the Closing, the Company shall have entered
into the Amended Credit Facility (as defined in the Preliminary Offering
Memorandum).
26
<PAGE> 27
(l) The Company shall have furnished or caused to be furnished
to the Initial Purchaser such further certificates and documents as the Initial
Purchaser shall have reasonably requested.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchaser and counsel for the
Initial Purchaser.
Any certificate or document signed by any officer of the
Company or the Guarantors and delivered at Closing to the Initial Purchaser, or
to counsel for the Initial Purchaser, shall be deemed a representation and
warranty by the Company or such Guarantor to the Initial Purchaser as to the
statements made therein.
8. Expenses. (a) Whether or not the purchase and sale of the
Notes hereunder is consummated or this Agreement is terminated pursuant to
Section 9, the Company agrees to pay the following costs and expenses and all
other costs and expenses incident to the performance by it of its obligations
hereunder: (i) the preparation, printing or reproduction of the Preliminary
Offering Memorandum, Offering Memorandum (including financial statements
thereto), and each amendment or supplement to any of them; (ii) the delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Offering Memorandum, the Preliminary Offering Memorandum,
and all amendments or supplements to any of them as may be reasonably requested
for use in connection with the offering and sale of the Notes; (iii) the
preparation, printing, authentication, issuance and delivery of certificates for
the Notes, including any stamp taxes in connection with the original issuance
and sale of the Notes; (iv) the printing (or reproduction) and delivery of this
Agreement, and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Notes; (v) the application for
quotation of the Notes on the PORTAL market; (vi) the qualification of the Notes
for offer and sale under the securities or Blue Sky laws of the several states
as provided in Section 4(f) hereof; (vii) the performance by the Company of its
obligations under the Registration Rights Agreement; (viii) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; (ix) the fees and
expenses of the Trustee, including the fees and disbursements of counsel for the
Trustee in connection with the Indenture and the Notes; and (x) any fees payable
in connection with the rating of the Notes.
(b) If the purchase and sale of the Notes hereunder is not
consummated because any condition to the obligations of the Initial Purchaser
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated pursuant to Section 9 hereof or because of any failure, refusal or
inability on the part of the Company to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder other than by
reason of a default by the Initial Purchaser in payment for the Notes on the
Closing Date, the Company shall reimburse the Initial Purchaser promptly upon
demand for all out-of-pocket
27
<PAGE> 28
expenses (including fees and disbursements of counsel) that shall have been
incurred by it in connection with the proposed purchase and sale of the Notes
and the other transactions contemplated hereby.
9. Termination of Agreement. This Agreement shall be subject
to termination in the absolute discretion of the Initial Purchaser, without
liability on the part of the Initial Purchaser to the Company, by notice to the
Company, if prior to the Closing Date, (i) trading in securities generally, or
any securities of the Company, on the New York Stock Exchange, the American
Stock Exchange or the NASDAQ National Market shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking activities
in New York or Chicago shall have been declared, or (iii) there shall have
occurred any outbreak or escalation of hostilities or other U.S. or
international calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Initial Purchaser, impracticable or
inadvisable to commence or continue the offering of the Notes on the terms set
forth on the cover page of the Offering Memorandum or to enforce contracts for
the resale of the Notes by the Initial Purchaser. Notice of such termination may
be given to the Company by telegram, telecopy or telephone and shall be
subsequently confirmed by letter.
10. Information Furnished by the Initial Purchaser. The
statements set forth in the stabilization legend on the inside front cover, the
last paragraph on the cover page and the statements in the first, third and
penultimate paragraphs and the first, second and final sentence of the final
paragraph under the caption "Plan of Distribution" in the Preliminary Offering
Memorandum and Offering Memorandum, constitute the only information furnished in
writing by or on behalf of the Initial Purchaser as such information is referred
to in Sections 5 (b) and 6 hereof.
11. Miscellaneous. Except as otherwise provided in Sections 4
and 9 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company, at the office of the
Company at 6225 N. 24th Street, Phoenix, Arizona 85016, Attention: Paul M.
Gales, Senior Vice President, General Counsel and Secretary, with a copy to
Kenneth V. Hallett, Esq., Quarles & Brady, 411 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202 or (ii) if to the Initial Purchaser, care of First Chicago
Capital Markets Inc., One First National Plaza, Suite 0595, Chicago IL, 60670,
Attention: Corporate Securities Structuring with a copy to Skadden, Arps, Slate,
Meagher & Flom (Illinois), 333 West Wacker Drive, Suite 2100, Chicago, Illinois
60606, Attn: William R. Kunkel.
This Agreement has been and is made solely for the benefit of
the Initial Purchaser, the Company, its directors, its officers and the
controlling persons referred to in Section 6 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
28
<PAGE> 29
shall include a purchaser from the Initial Purchaser of any of the Notes in his
status as such purchaser.
12. Applicable Law: Governing Law; Consent to Jurisdiction;
Waiver of Immunity and of Right to Jury Trial; Counterparts. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed within the State of
New York and without regard to the conflicts of law principles thereof. Each of
the Company and the Guarantors agrees that any action or proceeding based
hereon, or arising out of the transactions contemplated hereunder, shall be
brought and maintained in the courts of the State of New York located in the
city and county of New York or in the United States District Court for the
Southern District of New York. Each of the Company and the Guarantors hereby
irrevocably submits to the exclusive jurisdiction of the courts of the State of
New York located in the city and county of New York and the United States
District Court for the Southern District of New York for the purpose of any such
action or proceeding as set forth above and irrevocably agrees to be bound by
any judgment rendered thereby in connection with such action or proceeding. Each
of the Company and the Guarantors hereby irrevocably appoints Lawdock, Inc., One
East Camelback Road, Suite 400, Phoenix, Arizona 85012 as their authorized agent
upon which process may be served in any action arising out of based upon this
Agreement. Each of the Company and the Guarantors hereby expressly and
irrevocably waives to the fullest extent permitted by law any immunity from
jurisdiction of any such court and any objection, claim or defense in any such
action or proceeding which they may have, or hereafter may have, based on a
claim of improper venue, forum non conveniens or any similar basis to which the
Company or the Guarantors might otherwise be entitled in any such action or
proceeding.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
29
<PAGE> 30
Please confirm that the foregoing correctly sets forth the
agreement between the Company, the Guarantors and the Initial Purchaser.
Very truly yours,
EMPLOYEE SOLUTIONS, INC.
By: /s/
---------------------------------
Name:
Title:
EMPLOYEE SOLUTIONS-EAST, INC.
By: /s/
---------------------------------
Name:
Title:
EMPLOYEE SOLUTIONS-SOUTHEAST, INC.
By: /s/
---------------------------------
Name:
Title:
LOGISTICS PERSONNEL CORP.
By: /s/
---------------------------------
Name:
Title:
30
<PAGE> 31
TALENT, ENTERTAINMENT AND MEDIA
SERVICES, INC. dba ESI TEAM SERVICES
By: /s/
---------------------------------
Name:
Title:
EMPLOYEE SOLUTIONS OF TEXAS, INC.
By: /s/
---------------------------------
Name:
Title:
EMPLOYEE SOLUTIONS-MIDWEST, INC.
By: /s/
---------------------------------
Name:
Title:
EMPLOYEE SOLUTIONS-OHIO, INC.
By: /s/
---------------------------------
Name:
Title:
ESI-MIDWEST, INC.
By: /s/
---------------------------------
Name:
Title:
31
<PAGE> 32
ESI RISK MANAGEMENT AGENCY, INC.
By: /s/
---------------------------------
Name:
Title:
GCK ENTERTAINMENT SERVICES, INC.
dba ESI TEAM SERVICES
By: /s/
---------------------------------
Name:
Title:
ESI AMERICA, INC.
By: /s/
---------------------------------
Name:
Title:
PHOENIX CAPITAL MANAGEMENT, INC.
By: /s/
---------------------------------
Name:
Title:
EMPLOYEE RESOURCES CORPORATION
By: /s/
---------------------------------
Name:
Title:
32
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ERC OF INDIANA, INC.
By: /s/
---------------------------------
Name:
Title:
ERC OF MINN, INC.
By: /s/
---------------------------------
Name:
Title:
ERC OF OHIO, INC.
By: /s/
---------------------------------
Name:
Title:
Confirmed as of the date
first above mentioned.
FIRST CHICAGO CAPITAL MARKETS, INC.
By: /s/
---------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.3
EMPLOYEE SOLUTIONS, INC.
$85,000,000 10% Senior Notes Due 2004
REGISTRATION RIGHTS AGREEMENT
October 21, 1997
First Chicago Capital Markets, Inc.
One First National Plaza, Suite 0595
Chicago, Illinois 60670
Ladies and Gentlemen:
EMPLOYEE SOLUTIONS, INC., an Arizona corporation (the
"Company"), is issuing and selling to First Chicago Capital Markets, Inc. (the
"Initial Purchaser"), upon the terms set forth in a Purchase Agreement, dated as
of October 16, 1997 (the "Purchase Agreement"), $85,000,000 aggregate principal
amount of its 10% Senior Notes due 2004, including the guarantee endorsed
thereon, (the "Notes"). As an inducement to the Initial Purchaser to enter into
the Purchase Agreement, the Company and the guarantors (the "Guarantors") named
in the Purchase Agreement agree with the Initial Purchaser, for the benefit of
the holders of the Securities (defined below) (including, without limitation,
the Initial 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 6(s).
Agreement: This Registration Rights Agreement.
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Applicable Period: See Section 2(f).
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: October 21, 1997.
Effectiveness Date: The 120th day following the Closing Date.
Effectiveness Period: See Section 3(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: 10% Senior Notes due 2004 of the Company,
including a like guarantee endorsed thereon, identical in all respects to the
Notes, except for references to series and restrictive legends.
Filing Date: The 45th day following the Closing Date.
Holder: Each holder of Registrable Securities.
Indenture: The Indenture, dated as of October 15, 1997, among
the Company, the Guarantors named therein and The Huntington National Bank,, 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).
Liquidated Damages Amount: See Section 4(a).
Losses: See Section 8(a).
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NASD: The National Association of Securities Dealers, Inc.
Participating Broker-Dealer: See Section 2(f).
Person: An individual, trustee, corporation, limited liability
company, partnership, 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.
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.
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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.
2. Exchange Offer
(a) The Company and the Guarantors 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 their best efforts to cause the Exchange Offer
Registration Statement to become effective
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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 their best efforts to issue, on or
prior to 30 business 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, regulation or order
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 and the
Guarantors 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 transmittal that is an exhibit thereto and related documents;
(ii) keep the Exchange Offer open for not less than 30
days after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) utilize the services of a depository 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 and the Guarantors shall:
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(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 from time
to time during such period.
(f) The Company and the Guarantors 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 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; provided that such period shall not exceed 180 days after
consummation of the Exchange Offer (as such period may be extended pursuant to
the last paragraph of Section 6 hereof (the "Applicable Period")).
(g) If, prior to consummation of the Exchange Offer, the
Initial Purchaser holds any Notes acquired by it and having the status as an
unsold allotment in the initial distribution, the Company shall, upon the
request of the Initial Pur-
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chaser, simultaneously with the delivery of the Exchange Securities in the
Initial Exchange Offer, issue (pursuant to the same indenture as the Exchange
Securities) and deliver to the Initial Purchaser, in exchange for the Securities
held by the Initial 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 Private Exchange Securities shall 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 and (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
Securities, and (v) if such Holder is an affiliate, 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 in its or their reasonable judgment that (A)
the Exchange Securities would not, upon receipt, be tradeable by the Holders
thereof without restriction under the Securities Act (other than prospectus
delivery requirements) and the Exchange Act and without material restrictions
under applicable Blue Sky or state securities laws, or (B) the interests of the
Holders under this Agreement, taken as a whole, would be materially adversely
affected by the consummation of the Exchange Offer, (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 but within one year of the Closing Date,
the Initial Purchaser so requests, (iv) the Exchange Offer is not consummated
within 150 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
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<PAGE> 8
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 six months 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 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 and the Guarantors
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 and
the Guarantors have not yet filed an Exchange Offer, the Company and the
Guarantors shall file with the SEC the Initial Shelf Registration on or prior to
the Filing Date. Otherwise, the Company and the Guarantors shall use their best
efforts to file the Initial Shelf Registration within 30 days of the delivery of
the Shelf Notice or as promptly as possible following the request of the Initial
Purchaser. The Initial Shelf Registration shall be on Form S-3 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). The Company and the
Guarantors shall (i) not permit any securities other than the Registrable
Securities to be included in any Shelf Registration, and (ii) use their 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 from the Effectiveness Date (subject to
extension pursuant to the last paragraph of Section 6 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.
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(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 securities registered
thereunder), the Company and the Guarantors shall use their 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 and the Guarantors shall use their 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 and the Guarantors acknowledge and agree that
the holders of Registrable Securities will suffer damages, and that it would not
be feasible to ascertain the extent of such damages with precision, if the
Company and the Guarantors fail to fulfill their obligations hereunder.
Accordingly, in the event of such failure, the Company and the Guarantors
jointly and severally agree to pay liquidated damages to each Holder to whom the
Company has an obligation hereunder which has not been fulfilled 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 30 days after the date on which an Exchange Offer Registration Statement
is declared effective by the SEC; or
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(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 a "Registration Default," and the date on which the
Registration Default occurs being referred to herein as an "Event Date").
Upon the occurrence of any Registration Default, the Company
shall pay, or cause to be paid (and the Guarantors hereby guarantee the payment
of), in addition to amounts otherwise due under the Indenture and the
Registrable Securities, as liquidated damages, and not as a penalty, to each
such holder of a Registrable Security, an additional amount (the "Liquidated
Damages Amount") equal to one-half of one percent (0.5%) per annum of the
principal amount of the Registrable Securities held by such Holder during the
first 90-day period immediately following such Event Date, increasing by an
additional one-half of one percent (0.5%) per annum of the principal amount of
such Registrable Securities during each subsequent 90-day period up to a maximum
Liquidated Damages Amount equal to two percent (2.0%) per annum of the principal
amount of the Registrable Securities; provided that such liquidated damages
will, in each case, cease to accrue (subject to the occurrence of another
Registration Default) on the date on which all Registration Defaults have been
cured. A Registration Default 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; a Registration Default 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; a
Registration Default 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 a
Registration Default 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,
(B) a new Subsequent Shelf Registration is declared effective or (C) the
expiration of the Effectiveness Period.
(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
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the record holder of Registrable Securities entitled to receive the interest
payment to be made on such date as set forth in the Indenture.
5. Hold-Back Agreements
The Company and the Guarantors agree (i) without the prior
written consent of the Holders of a majority of the aggregate principal amount
of the then outstanding Securities, not to effect any public or private sale or
distribution (including a sale pursuant to Regulation D under the Securities
Act) of any securities the same as or similar to those covered by a Registration
Statement filed pursuant to Section 3 hereof, or any securities convertible into
or exchangeable or exercisable for such securities, during the 10 days prior to,
and during the 90-day period beginning on, (A) the effective date of any
Registration Statement filed pursuant to Section 3 hereof unless the Holders of
a majority in aggregate principal amount of Registrable Securities to be
included in such Registration Statement consent or (B) the commencement of an
underwritten public distribution of Registrable Securities, where the managing
underwriter so requests; and (ii) to cause each holder of such securities that
are the same as or similar to Registrable Securities issued at any time after
the date of this Agreement (other than securities purchased in a registered
public offering) to agree not to effect any public sale or distribution of any
such securities during such periods, including a sale pursuant to Rule 144 or
Rule 144A.
6. Registration Procedures
In connection with the registration of any Securities pursuant
to Sections 2 or 3 hereof, the Company and the Guarantors 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 and the Guarantors 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 their 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 and the Guarantors shall, if requested, furnish to
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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 the Guarantors, and cause
the officers, directors and employees of the Company and the Guarantors, Company
counsel and independent certified public accountants of the Company, to respond
to such inquiries, as shall be necessary, in the opinion of 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
information (other than to an Affiliate or prospective purchaser who agrees to
respect the confidentiality provisions of this Section 6(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). Neither the
Company nor the Guarantors shall 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.
(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 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
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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 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 and the Guarantors hereby
consent 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
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with sales of the Registrable Securities, the representations and warranties of
the Company or the Guarantors contained in any agreement (including any
underwriting agreement) contemplated by Section 6(n) below cease to be true and
correct in any material respect, (iv) of the receipt by the Company or the
Guarantors 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 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 6(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 none
of the Company nor the Guarantors shall be required to (i) qualify generally to
do business in any jurisdiction where it is not then so qualified, (ii) to take
action that would subject it to general service of process in any jurisdiction
where it is not so subject or (iii) subject it to taxation in excess of a
nominal dollar amount in any such jurisdiction where it is not then subject.
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(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 included therein 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 reasonably 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
6(e)(v) or 6(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
<PAGE> 16
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 their 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, and if such Securities are not already so rated.
(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) Use their best efforts to cause all Securities covered by
such Registration Statement to be listed on each securities exchange, if any, on
which similar debt securities issued by the Company are then listed.
(n) If a Shelf Registration is filed pursuant to Section 3,
enter into such agreements (including 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 the 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 principal amount of the Registrable Securities being sold), addressed to each
selling Holder and each of
16
<PAGE> 17
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.
(o) 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.
(p) 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 Initial 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 and the Guarantors have 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 and the
Guarantors, enforceable against the Company and the Guarantors in accordance
with their respective terms, except as such enforcement may be subject
17
<PAGE> 18
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).
(q) 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; in no event
shall such Registrable Securities be marked as paid or otherwise satisfied.
(r) 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.
(s) Use their 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 6(e)(ii),
6(e)(iv), 6(e)(v) or 6(e)(vi), such Holder will forthwith discontinue
disposition (in the jurisdictions specified in a notice of a 6(e)(iv) event, and
elsewhere in a notice of a 6(e)(ii), 6(e)(v) or 6(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
18
<PAGE> 19
contemplated by Section 6(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 6(j) or (y) the Advice.
7. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company and the Guarantors shall be borne
by the Company and the Guarantors whether or not the Exchange Offer or a Shelf
Registration is filed or becomes effective, including, without limitation:
(i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made
with the NASD 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 6(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);
19
<PAGE> 20
(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 6(m)(iii)
(including, without limitation, the expenses of any special audit
and "cold comfort" letters required by or incident to such
performance);
(vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an
offering pursuant to the rules and regulation of the NASD, but
only where the need for such a "qualified independent underwriter"
arises due to a relationship with the Company;
(vii) Securities Act liability insurance, if the
Company so desires such insurance;
(viii) fees and expenses of all other Persons
retained by the Company; internal expenses of the Company
(including, without limitation, all salaries and expenses of
officers and employees of the Company performing legal or
accounting duties); and the expense of any annual audit; and
(ix) rating agency fees and the fees and expenses
incurred in connection with the listing of the Securities to be
registered on any securities exchange.
(b) The Company and the Guarantors shall reimburse the Holders
for the reasonable fees (not to exceed $20,000) 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 (excluding any underwriting fees,
discounts and commissions).
8. Indemnification
20
<PAGE> 21
(a) Indemnification by the Company. The Company and the
Guarantors, jointly and severally, shall, without limitation as to time,
indemnify and hold harmless each Holder and each Participating Broker-Dealer
selling Exchange Securities during the Applicable Period, 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, reasonable costs of preparation and reasonable attorneys'
fees) and expenses (including, without limitation, reasonable 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 (or reviewed and approved in writing) by
such Holder or Participating Broker-Dealer expressly for use therein; provided,
however, that neither the Company nor the Guarantors shall be liable to any
indemnified party to the extent that any such losses arise solely out of an
untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if (i) such indemnified party or related
Holder of a Registrable Security failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the sale by
such Indemnified Party or the related holder of a Registrable Security to the
person asserting the claim from which such Losses arise, (ii) the Prospectus
would have corrected such untrue statement or alleged untrue statement or
omission or alleged omission, and (iii) the Company and the Guarantors have
complied with their obligations under Section 6(e) hereof. The Company and the
Guarantors shall also indemnify underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in the distribution,
their officers, directors, agents and employees and each Person who controls
such Persons (within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act) to the same extent as provided above with respect to
the indemnification of the Holders or the Participating Broker-Dealer.
21
<PAGE> 22
(b) Indemnification by Holder 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 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, 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 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 indemnity hereunder
(an "indemnified party"), such indemnified party shall promptly notify the party
or parties from which such indemnity 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
22
<PAGE> 23
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 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 8 is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of which this Section 8
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 8), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the
23
<PAGE> 24
amount paid or payable by such indemnified party as a result of such Losses, in
such proportion as is appropriate to reflect 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, 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 8(a) or 8(b) was available to such
party.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(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 8(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 indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that the indemnifying parties may
have to the indemnified parties.
9. Rule 144 and Rule 144A
Each of the Company and the Guarantors 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 re-
24
<PAGE> 25
quired 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. Upon the request
of any Holder, the Company and the Guarantors shall deliver to such Holder a
written statement as to whether they have complied with such information and
requirements.
10. 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 of Registrable Securities 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, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
11. Miscellaneous
(a) Remedies. In the event of a breach by the Company or the
Guarantors of any of their respective 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 Initial 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 and the
Guarantors agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees 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
25
<PAGE> 26
granted to the holders of Registrable Securities 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
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 4, 6(a) and 8 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 11(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 (Illinois), 333 W. Wacker Drive, Chicago,
Illinois 60606, telecopy number (312) 407-0411, Attention: William
R. Kunkel; and
(ii) if to the Company, initially Employee
Solutions, Inc., 6225 N. 24th Street, Phoenix, AZ 85016; telecopy
number (602) 955-1235, Attention: Paul M. Gales, Esq., General
Counsel, with a copy to Kenneth V. Hallett, Esq., Quarles & Brady,
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, and
thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 11(d).
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<PAGE> 27
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.
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, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE COMPANY AND THE GUARANTORS 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. EACH OF THE COMPANY AND
THE GUARANTORS 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
27
<PAGE> 28
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE COMPANY AND THE GUARANTORS IRREVOCABLY CONSENTS,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE
SERVICE OF 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 OR THE GUARANTORS 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, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. 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) Securities Held by the Company or its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities 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
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<PAGE> 29
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.
29
<PAGE> 30
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
EMPLOYEE SOLUTIONS, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
EMPLOYEE SOLUTIONS-EAST, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
EMPLOYEE SOLUTIONS-SOUTHEAST, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
LOGISTICS PERSONNEL CORP.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
30
<PAGE> 31
TALENT, ENTERTAINMENT AND MEDIA
SERVICES, INC. dba ESI TEAM SERVICES
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
EMPLOYEE SOLUTIONS OF TEXAS, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
EMPLOYEE SOLUTIONS-MIDWEST, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
EMPLOYEE SOLUTIONS-OHIO, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
31
<PAGE> 32
ESI-MIDWEST, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
ESI RISK MANAGEMENT AGENCY, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
GCK ENTERTAINMENT SERVICES, INC.
dba ESI TEAM SERVICES
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
ESI AMERICA, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
32
<PAGE> 33
PHOENIX CAPITAL MANAGEMENT, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
EMPLOYEE RESOURCES CORPORATION
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
ERC OF INDIANA, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
ERC OF MINN, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
ERC OF OHIO, INC.
By: /s/
________________________________________
Name: ______________________________________
Title: _____________________________________
33
<PAGE> 34
ACCEPTED AND AGREED TO:
FIRST CHICAGO CAPITAL MARKETS, INC.
By: /s/
__________________________
Name: ________________________
Title: _______________________
34
<PAGE> 1
EXHIBIT 4.4
AMENDED AND RESTATED
LOAN AGREEMENT
DATE: October 21, 1997
PARTIES: BORROWER: EMPLOYEE SOLUTIONS, INC., an Arizona
corporation
BORROWER ADDRESS: 6225 North 24th Street
Phoenix, Arizona 85016
BANK: BANK ONE, ARIZONA, NA, a national banking
association
BANK ADDRESS: P.O. Box 71
Phoenix, Arizona 85001
Attention: Mary Kennedy Martuscelli (AZ1-1178)
AGREEMENT: For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Bank agree as follows:
1. SCHEDULE OF TERMS.
2. Commitment Amount: $20,000,000.00.
3.1 Scheduled Commitment Expiration Date: August 1, 1999.
3.1 and 5.1.6 Purpose of Advances: To provide financing for
acquisitions, working capital, general corporate purposes and to issue letters
of credit.
3.2 Each of the following Persons acting alone is authorized to request
Advances:
<TABLE>
<S> <C>
Roy Flegenheimer ________________________________
Typed Name and Title (if any) Sample Signature
Morris Aaron ________________________________
Typed Name and Title (if any) Sample Signature
John Prince ________________________________
Typed Name and Title (if any) Sample Signature
3.3.1 Modification Fee: $25,000.00.
</TABLE>
<PAGE> 2
3.3.2 Non-utilization fee rate: .25%.
3.3.3 Cash Secured Letters of Credit Fee: .75%.
3.3.4 Performance Letters of Credit Fee: 1.00%.
3.3.5 Financial Letters of Credit Fee: 1.75%.
5.1.5, 6.2, 6.3.1, and 6.3.2. Financial statements and accounting
system requirements: Accrual Basis and GAAP.
5.1.5 Fiscal year of Borrower: From January 1 to December 31.
6.3.1 Financial statements due within 45 days after the end of each
fiscal quarter of Borrower.
Certification requirements: Borrower prepared financial
statements.
Person(s) to sign financial statements on behalf of Borrower:
Morris Aaron, Chief Financial Officer.
6.3.2 Financial statements due within 120 days after the end of each
fiscal year of Borrower.
Certification requirements: Independent certified public
accountant satisfactory to Bank to audit financial statements
and deliver an unqualified opinion on the financial statements
Person(s) to sign financial statements on behalf of Borrower:
Morris Aaron, Chief Financial Officer.
6.3.4 Covenant Compliance Certificate within 55 days after the end of
each of the first three fiscal quarters of Borrower, and within 130 days after
the end of the last fiscal quarter of Borrower.
2. DEFINITIONS. In this Agreement, the following terms shall have the following
meanings:
"ADVANCE" means an advance by Bank to Borrower hereunder.
"AGREEMENT" means this Amended and Restated Loan Agreement as it may be amended,
modified, extended, renewed, restated, or supplemented from time to time.
2
<PAGE> 3
"APPROVALS AND PERMITS" means each and all approvals, authorizations, bonds,
consents, certificates, franchises, licenses, permits, registrations,
qualifications, and other actions and rights granted by or filings with any
Persons necessary, appropriate, or desirable for ownership or lease by Borrower
of its assets and property or for the conduct of the business and operations of
Borrower.
"BANK" means Bank One, Arizona, NA, a national banking association.
"BORROWER LOAN DOCUMENTS" means the Loan Documents executed or delivered by
Borrower from time to time.
"COLLATERAL" means the property, interests in property, and rights to property
securing any or all Obligations from time to time.
"COMMITMENT" means the agreement of Bank in SECTION 3.1 to make Advances and
issue letters of credit pursuant to the terms and conditions herein.
"COMMITMENT AMOUNT" means the amount specified in SECTION 1.
"ERISA" means the Employee Retirement Income Security Act of 1974 and the
regulations and published interpretations thereunder, as in effect from time to
time.
"EVENT OF DEFAULT" has the meaning specified in the Note and the other Loan
Documents.
"GAAP" means generally accepted accounting principles consistently applied.
"GOVERNMENTAL AUTHORITY" means any government, any court, and any agency,
authority, body, bureau, department, or instrumentality of any government.
"LIEN OR ENCUMBRANCE" and "LIENS AND ENCUMBRANCES" mean, respectively, each and
all of the following: (i) any lease or other right to use; (ii) any assignment
as security, conditional sale, grant in trust, lien, mortgage, pledge, security
interest, title retention arrangement, other encumbrance, or other interest or
right securing the payment of money or the performance of any other liability or
obligation, whether voluntarily or involuntarily created and whether arising by
agreement, document, or instrument, under any law, ordinance, regulation, or
rule (federal, state, or local), or otherwise; and (iii) any option, right of
first refusal, other right to acquire, or other interest or right.
"LOAN DOCUMENTS" means this Agreement, the Note, and any other agreements,
documents, or instruments from time to time evidencing, guarantying, securing,
or otherwise relating to the Note, as they may be amended, modified, extended,
renewed, or supplemented from time to time.
3
<PAGE> 4
"LOAN PARTY" means Borrower and each other Person that from time to time is or
becomes obligated to Bank under any Loan Document or grants any Collateral.
"MATERIAL ADVERSE CHANGE" means any material change in the assets, business,
financial condition, operations, prospects, or results of operations of any Loan
Party or any other material event or condition that in the reasonable opinion of
Bank (i) could materially affect the likelihood of performance by any Loan Party
of any of the Obligations, (ii) could materially affect the ability of any Loan
Party to perform any of the Obligations, (iii) could materially affect the
legality, validity, or binding nature of any of the Obligations or any Lien or
Encumbrance securing any of the Obligations, or (iv) could materially affect the
priority of any Lien or Encumbrance securing any of the Obligations.
"NOTE" means the Amended and Restated Secured Promissory Note, dated of even
date herewith, of Borrower payable to Bank, as it may be amended, modified,
extended, renewed, restated, or supplemented from time to time.
"OBLIGATIONS" means the obligations of the Loan Parties under the Loan
Documents.
"PERMITTED EXCEPTIONS" means Liens and Encumbrances in favor of Bank, leases of
Inventory to customers for fair consideration in the ordinary course of
Borrower's business, Liens and Encumbrances shown on financial statements of
Borrower delivered to Bank prior to the date of this Agreement, Liens and
Encumbrances otherwise disclosed to Bank in writing prior to the date of this
Agreement, and other Liens and Encumbrances consented to by Bank in writing from
time to time in its absolute and sole discretion.
"PERSON" means a natural person, a partnership, a joint venture, an
unincorporated association, a limited liability company, a corporation, a trust,
any other legal entity, or any Governmental Authority.
"UNMATURED EVENT OF DEFAULT" means any condition or event that with notice,
passage of time, or both would be an Event of Default.
3. LOAN FACILITY.
3.1 LOAN FACILITY. Subject to the terms and conditions of this
Agreement, Bank agrees to make Advances to and issue letters of credit for
Borrower from time to time on or before the Scheduled Commitment Expiration Date
specified in SECTION 1, provided that the aggregate amount of Advances
outstanding at any one time, together with the face amount of letters of credit
shall not exceed the Commitment Amount. Advances shall be on a revolving basis.
Advances prepaid may be re-borrowed subject to the terms and the conditions
herein. Proceeds of Advances may be used only for the purposes described in
SECTION 1. Although the outstanding principal of the Note may be zero from time
to time, the Loan Documents shall remain in full force and effect until the
Commitment terminates
4
<PAGE> 5
and all Obligations are paid and performed in full. Upon occurrence of an Event
of Default or an Unmatured Event of Default, Bank, in its absolute and sole
discretion and without notice, may suspend the commitment to make Advances or
issue letters of credit. In addition, upon occurrence of an Event of Default,
Bank, in its absolute and sole discretion and without notice, may terminate the
commitment to make Advances and issue letters of credit. The obligation of
Borrower to repay Advances is evidenced by the Note.
3.2 REQUEST FOR THE ADVANCES. Advances may be made by Bank at the oral
or written request of the Person or Persons designated in SECTION 1. Such Person
or Persons are hereby authorized by Borrower to request Advances and to direct
disposition of the proceeds of Advances until written notice of the revocation
of such authority is received from Borrower by Bank and Bank has had a
reasonable time to act upon such notice. Bank shall have no duty to monitor for
Borrower or to report to Borrower the use of proceeds of Advances. Advances
shall be disbursed by Bank into an account of Borrower with Bank.
3.3 FEES. As additional consideration for the Commitment, Borrower
agrees to pay to Bank the following fees, which shall be earned by Bank on the
date due under the Loan Documents and shall be non-refundable to Borrower:
3.3.1 MODIFICATION FEE. A modification fee in the amount set
forth in SECTION 1, payable on or before the date hereof.
3.3.2 NON-UTILIZATION FEE. A non-utilization fee computed at
the rate per annum (based on a 360-day year) set forth in SECTION 1 on the
unused portion of the Commitment Amount, calculated from the date hereof and
payable quarterly in arrears. The phrase, "unused portion of the Commitment
Amount", means the average difference between (i) the Commitment Amount and (ii)
the amount of Advances outstanding on each day during the respective quarter
(including any portion of the Commitment Amount that is set aside for an issued
letter of credit).
3.3.3 CASH SECURED LETTERS OF CREDIT FEE. A fee computed at
the rate per annum (based on a 360-day year) set forth in SECTION 1 on the face
amount of all cash secured letters of credit issued by Bank, calculated from the
issuance date until the expiration date thereof and payable quarterly in
arrears.
3.3.4 PERFORMANCE LETTERS OF CREDIT FEE. A fee computed at the
rate per annum (based on a 360-day year) set forth in SECTION 1 on the face
amount of all performance letters of credit issued by Bank, calculated from the
issuance date until the expiration date thereof and payable quarterly in
arrears.
3.3.5 FINANCIAL LETTERS OF CREDIT FEE. A fee computed at the
rate per annum (based on a 360-day year) set forth in SECTION 1 on the face
amount of all financial
5
<PAGE> 6
letters of credit issued by Bank, calculated from the issuance date until the
expiration date thereof and payable quarterly in arrears.
3.3.6 ATTORNEYS' COSTS, EXPENSES, AND FEES. Reasonable
attorneys' costs, expenses, and fees for Bank's counsel, payable on or before
the date hereof.
3.4 TERMINATION. Notwithstanding anything contained herein or in the
Loan Documents to the contrary, Bank and Borrower agree that Borrower, at any
time, may fully repay all sums due and owing to Bank and terminate this credit
facility, provided, however, Borrower shall (a) be subject to any prepayment
penalty set forth in the Note, and (b) shall remain obligated to pay the
non-utilization fee described in Section 3.3.2 for the remaining quarterly
period after any such termination, and (c) shall not be entitled to a refund of
any fees previously paid to Bank.
3.5 LETTERS OF CREDIT. As a subfeature under the Commitment, Bank
agrees from time to time during the term thereof to issue letters of credit for
the account of Borrower (each, a "Letter of Credit" and collectively, "Letters
of Credit"); provided, however, that the form and substance of each Letter of
Credit shall be subject to approval by Bank, in its sole discretion. Each Letter
of Credit shall be issued for a term as designated by Borrower; provided,
however, that no Letter of Credit shall have an expiration date subsequent to
the maturity date of the Commitment. The undrawn amount of all Letters of Credit
shall be reserved under the Commitment and shall not be available for borrowings
thereunder. Each Letter of Credit shall be subject to the additional terms and
conditions of the Letter of Credit Agreement and related documents, if any,
required by Bank in connection with the issuance thereof (each, a "Letter of
Credit Agreement" and collectively, "Letter of Credit Agreements"). Each draft
paid by Bank under a Letter of Credit shall be deemed an Advance under the
Commitment and shall be repaid by Borrower in accordance with the terms and
conditions of the Loan Documents applicable to such advances; provided however,
that if advances under the Commitment are not available, for any reason, at the
time any draft is paid by Bank, then Borrower shall immediately pay to Bank the
full amount of such draft, together with interest thereon from the date such
amount is paid by Bank to the date such amount is fully repaid by Borrower, at
the rate of interest applicable to advances under the Commitment. In such event
Borrower agrees that Bank, in its sole discretion, with prior notice to
Borrower, may debit any demand deposit account maintained by Borrower with Bank
for the amount of any such draft. Borrower shall pay to Bank the fees set forth
in Sections 3.3.3, 3.3.4, and 3.3.5 upon the issuance of each Letter of Credit.
Borrower shall also pay to Bank any other fees upon the payment or negotiation
by Bank of each draft under any Letter of Credit and upon the occurrence of any
other activity with respect to any Letter of Credit (including, without
limitation, the transfer, amendment or cancellation of any Letter of Credit)
determined in accordance with Bank's standard fees and charges then in effect
for such activity. Bank and Borrower hereby acknowledge and agree that all
obligations of Borrower to repay draws under any Letter of Credit shall be
secured by the Amended and Restated Security Agreement and shall constitute
secured obligations
6
<PAGE> 7
under the Loan Documents. Notwithstanding anything to the contrary contained
herein, in no event shall the aggregate of the face amount of all letters of
credit issued hereunder and all Advances outstanding exceed the Commitment
Amount.
4. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT, TO EFFECTIVENESS OF
THE COMMITMENT, AND TO EACH ADVANCE. This Agreement and the Commitment shall
become effective only upon satisfaction of the following conditions precedent
and Bank shall be obligated to make an Advance when requested by Borrower only
if the following conditions precedent are satisfied, as determined by Bank in
its absolute and sole discretion.
4.1 REPRESENTATIONS AND WARRANTIES ACCURATE. The representations and
warranties by each Loan Party in the Loan Documents are correct on and as of the
date of this Agreement and on and as of the date of each Advance, before and
after giving effect to such Advance and to the application of the proceeds
thereof, as though made on and as of such date.
4.2 DOCUMENTS. Bank has received on the date of this Agreement the Loan
Documents, which shall include all agreements, documents, and instruments
specified by Bank. In addition, Bank has received a recent audit performed by
Arthur Andersen to Bank's satisfaction.
4.3 PAY DOWN. All outstanding Advances as of the date hereof shall be
repaid in full and the outstanding principal balance of the Note as of the date
hereof shall be reduced to zero.
4.4 PARTICIPATION. Bank has entered into an amended and restated
participation agreement with The First National Bank of Chicago, whereby Bank
agrees to sell, and The First National Bank of Chicago agrees to purchase an
undivided 50% in this credit facility.
Borrower hereby authorizes Bank, and Bank reserves the right in its absolute and
sole discretion, to verify any documents and information submitted to Bank in
connection with this Agreement. Bank may elect, in its absolute and sole
discretion, to waive any of the foregoing conditions precedent. Any such waiver
shall be effective only if (i) it is in writing executed by Bank, (ii) it
specifically identifies the condition precedent, and (iii) it states whether the
condition precedent is waived as a requirement of the effectiveness of this
Agreement, the effectiveness of the Commitment, and/or as a requirement for a
particular Advance. Any such waiver shall be limited to the condition(s)
precedent specifically described therein and the requirements therein. Delay or
failure by Bank to insist on satisfaction of any condition of an Advance shall
not be a waiver of such condition precedent or any other condition precedent. If
Borrower is unable to satisfy any condition precedent of an Advance, the making
of such Advance shall not preclude Bank
7
<PAGE> 8
from thereafter declaring the condition or event causing such inability to be an
Event of Default.
5. BORROWER REPRESENTATIONS AND WARRANTIES.
5.1 CLOSING REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Bank as of the date of this Agreement:
5.1.1 CORPORATE, LIMITED LIABILITY COMPANY, OR PARTNERSHIP
EXISTENCE AND AUTHORIZATION. If Borrower is a corporation, a limited liability
company, or a partnership, Borrower is validly existing, and in the case of a
corporation or limited liability company is in good standing, under the laws of
the jurisdiction of its formation or organization and has the requisite power
and authority to execute, deliver, and perform the Borrower Loan Documents. The
execution, delivery, and performance by Borrower of the Borrower Loan Documents
have been duly authorized by all requisite action by or on behalf of Borrower
and will not conflict with, or result in a violation of or a default under, the
certificate of incorporation and bylaws, the limited liability company operating
agreement, or the partnership agreement of Borrower, as the case may be. If
Borrower is not formed or organized under the law of the State of Arizona,
Borrower is qualified to do business as a foreign corporation, limited liability
company, or partnership, as the case may be, and in the case of a corporation or
limited liability company is in good standing, under the law of the State of
Arizona.
5.1.2 NO APPROVALS. No approval, authorization, bond, consent,
certificate, franchise, license, permit, registration, qualification, or other
action or grant by or filing with any Person is required in connection with the
execution, delivery, or performance by Borrower of the Borrower Loan Documents.
5.1.3 NO CONFLICTS. The execution, delivery, and performance
by Borrower of the Borrower Loan Documents will not conflict with, or result in
a violation of or a default under: any applicable law, ordinance, regulation, or
rule (federal, state, or local); any judgment, order, or decree of any
arbitrator, other private adjudicator, or Governmental Authority to which
Borrower is a party or by which Borrower or any of the assets or property of
Borrower is bound; any of the Approvals or Permits; or any agreement, document,
or instrument to which Borrower is a party or by which Borrower or any of the
assets or property of Borrower is bound.
5.1.4 EXECUTION AND DELIVERY AND BINDING NATURE OF BORROWER
LOAN DOCUMENTS. The Borrower Loan Documents have been duly executed and
delivered by or on behalf of Borrower. The Borrower Loan Documents are legal,
valid, and binding obligations of Borrower, enforceable in accordance with their
terms against Borrower, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization, or similar laws and by
equitable principles of general application.
8
<PAGE> 9
5.1.5 ACCURATE INFORMATION. All information in any loan
application, financial statement, certificate, or other document and all other
information delivered by or on behalf of Borrower to Bank in obtaining the
Commitment is correct and complete, and there are no omissions therefrom that
result in any such information being incomplete, incorrect, or misleading as of
the date thereof. There has been no Material Adverse Change as to Borrower since
the date of such information. All financial statements heretofore delivered to
Bank by Borrower were prepared in accordance with the requirements set forth in
SECTION 1 and accurately present the financial condition and results of
operations of Borrower as at the dates thereof and for the periods covered
thereby. The fiscal year of Borrower is as set forth in SECTION 1.
5.1.6 PURPOSE OF ADVANCES. The purpose of the Advances is as
set forth in SECTION 1.
5.1.7 LEGAL PROCEEDINGS; HEARINGS, INQUIRIES, AND
INVESTIGATIONS. Except as disclosed to Bank in writing prior to the date of this
Agreement, (i) no legal proceeding is pending or, to best knowledge of Borrower,
threatened before any arbitrator, other private adjudicator, or Governmental
Authority to which Borrower is a party or by which Borrower or any assets or
property of Borrower may be bound or affected that if resolved adversely to
Borrower could result in a Material Adverse Change, and to the best knowledge of
Borrower, there exist no facts that would form any basis for any of the
foregoing, and (ii) no hearing, inquiry, or investigation relating to Borrower
or any assets or property of Borrower is pending or, to the best knowledge of
Borrower, threatened by any Governmental Authority.
5.1.8 NO EVENT OF DEFAULT OR UNMATURED EVENT OF DEFAULT. No
Event of Default and no Unmatured Event of Default has occurred and is
continuing.
5.1.9 APPROVALS AND PERMITS; ASSETS AND PROPERTY. Borrower has
obtained and there are in full force and effect all material Approvals and
Permits. Borrower owns or leases all assets and property necessary for conduct
of the business and operations of Borrower. Such assets and property are not
subject to any Liens and Encumbrances, other than Permitted Exceptions.
5.1.10 TAXES. Borrower has filed or caused to be filed all tax
returns (federal, state, and local) required to be filed by Borrower and has
paid all taxes and other amounts shown thereon to be due (including, without
limitation, any interest and penalties).
5.1.11 ERISA. Borrower is in compliance with ERISA in all
material respects. No Reportable Event or Prohibited Transaction (as defined in
ERISA) or termination of any plan has occurred and no notice of termination has
been filed with respect to any plan established or maintained by Borrower and
subject to ERISA. Borrower has not incurred any material funding deficiency
within the meaning of ERISA or any
9
<PAGE> 10
material liability to the Pension Benefit Guaranty Corporation in connection
with any such plan established or maintained by Borrower. Borrower is not a
party to any Multiemployer Plan (as defined in ERISA).
5.1.12 ENVIRONMENTAL MATTERS. The information in any
environmental questionnaire delivered to Bank is accurate and complete with no
material omissions therefrom as of the date thereof. To the best knowledge of
Borrower after due investigation, Borrower is in compliance in all material
respects with all environmental, all health, and all safety laws, ordinances,
regulations, and rules (federal, state, and local) applicable to Borrower, the
assets or property of Borrower, the business or operations of Borrower, or the
products or services of Borrower. Borrower does not have any material existing
or contingent liability in connection with any disposal, generation,
manufacture, processing, production, release, storage, transportation,
treatment, or use of any hazardous or toxic substance or waste.
5.1.13 INVESTMENT COMPANY ACT. Borrower is not an "investment
company" or a company controlled by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended. Borrower is not a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
5.1.14 MARGIN SECURITIES. Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of Advances will be used to
purchase or carry any margin stock or extend credit to others for the purpose of
purchasing or carrying margin stock or for any purpose that violates or is
inconsistent with Regulation X of the Board of Governors.
5.2 REPRESENTATIONS AND WARRANTIES UPON REQUESTS FOR ADVANCES. Each
request for an Advance shall be a representation and warranty by Borrower to
Bank that the representations and warranties in this SECTION 5 are correct and
complete as of the date of the Advance and that the conditions precedent in
SECTION 4 are satisfied as of the date of the Advance.
5.3 REPRESENTATIONS AND WARRANTIES UPON DELIVERY OF FINANCIAL
STATEMENTS, DOCUMENTS, AND OTHER INFORMATION. Each delivery by Borrower to Bank
of financial statements, other documents, or information after the date of this
Agreement (including, without limitation, any documents and information
delivered in obtaining an Advance) shall be a representation and warranty that
such financial statements, other documents, or information is correct and
complete, that there are no omissions therefrom that result in such financial
statements, other documents, or information being incomplete, incorrect, or
misleading as of the date thereof, and that such financial statements accurately
present the financial condition and results of operations of Borrower as at the
dates thereof and for the periods covered thereby.
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<PAGE> 11
6. BORROWER AFFIRMATIVE COVENANTS. Until the Commitment terminates
in full and until the Obligations are paid and performed in full, Borrower
agrees that, unless Bank otherwise agrees in writing in Bank's absolute and sole
discretion:
6.1 CORPORATE, LIMITED LIABILITY COMPANY, OR PARTNERSHIP EXISTENCE. If
Borrower is a corporation, a limited liability company, or a partnership,
Borrower shall continue to be validly existing, and in the case of a corporation
or a limited liability company in good standing, under the law of the
jurisdiction of its organization or formation. If Borrower is not formed or
organized under the laws of the State of Arizona, Borrower shall continue to be
qualified to do business as a foreign corporation, limited liability company, or
partnership, as the case may be, and in the case of a corporation or limited
liability company to be in good standing, under the law of the State of Arizona.
6.2 BOOKS AND RECORDS; ACCESS BY BANK. Borrower will maintain a single,
standard, modern system of accounting, in accordance with the requirements in
SECTION 1 (including, without limitation, a single, complete, and accurate set
of books and records of its assets, business, financial condition, operations,
property, prospects, and results of operations) in accordance with good
accounting practices. During business hours Borrower will give representatives
of Bank access to all assets, property, books, records, and documents of
Borrower and will permit such representatives to inspect such assets and
property and to audit, copy, examine, and make excerpts from such books,
records, and documents.
6.3 INFORMATION AND STATEMENTS. Borrower shall furnish to Bank:
6.3.1 FISCAL PERIOD FINANCIAL STATEMENTS. As soon as available
and in any event within the number of days set forth in SECTION 1 after the end
of each fiscal period of Borrower set forth in SECTION 1, except the last period
in each fiscal year of Borrower, copies of the balance sheet of Borrower and
each subsidiary of Borrower as of the end of such fiscal period and statements
of income and retained earnings and a statement of cash flow of Borrower for
such fiscal period and for the portion of the fiscal year of Borrower ending
with such fiscal period, on a consolidated basis in consolidating form for
Borrower and each subsidiary of Borrower, in each case setting forth in
comparative form the figures for the corresponding period for the preceding
fiscal year, all in reasonable detail, prepared in accordance with the
requirements in SECTION 1, containing the certifications specified in SECTION 1,
and signed on behalf of Borrower by the person(s) named in SECTION 1.
6.3.2 ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event within the number of days set forth in SECTION 1 after the end of each
fiscal year of Borrower, copies of the balance sheet of Borrower as of the end
of such fiscal year and statements of income and retained earnings and a
statement of cash flow of Borrower for such fiscal year, on a consolidated basis
in consolidating form for Borrower and any subsidiary of Borrower, in each case
setting forth in comparative form the figures for the
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<PAGE> 12
preceding fiscal year of Borrower, all in reasonable detail and prepared in
accordance with the requirements in SECTION 1, containing the certifications
specified in SECTION 1, and signed on behalf of by the person(s) named in
SECTION 1.
6.3.3 SEC FILINGS. Promptly upon their becoming available,
copies of all registration statements and regular periodic reports, if any,
which Borrower shall have filed with the Securities and Exchange Commission (or
any governmental agency substituted therefor) or any national securities
exchange.
6.3.4 COVENANT COMPLIANCE CERTIFICATE. Within the number of
days set forth in SECTION 1 after the end of each fiscal quarter of Borrower, a
covenant compliance certificate prepared by Borrower and reviewed by a CPA
acceptable to Bank according to procedures agreed to by Bank, certifying
Borrower's compliance with all financial covenants set forth herein, in form and
substance reasonably acceptable to the Bank.
6.3.5 INSURANCE SUBSIDIARIES. Promptly upon their becoming
available, copies of all statutory statements for any insurance subsidiary on an
annual basis, together with any actuarial opinions provided to Borrower for
regulatory purposes on any insurance subsidiary.
6.3.6 WORKERS' COMPENSATION RESERVE REPORT. As soon as
available, and in any event within ninety (90) days after the end of the second
and fourth fiscal quarter of Borrower, the Workers' Compensation Report for
Borrower prepared by an actuary acceptable to Bank.
6.3.7 OTHER INFORMATION. Such other information concerning
Borrower and the assets, business, financial condition, operations, property,
prospects, and results of operations of Borrower as Bank reasonably requests
from time to time.
6.4 LAW; JUDGMENTS; MATERIAL AGREEMENTS; APPROVALS AND PERMITS.
Borrower shall comply in all material respects with all laws, ordinances,
regulations, and rules (federal, state, and local) and all judgments, orders,
and decrees of any arbitrator, other private adjudicator, or Government
Authority relating to Borrower or the assets, business, operations, or property
of Borrower. Borrower shall comply in all material respects with all material
agreements, documents, and instruments to which Borrower is a party or by which
Borrower or any of the assets or property of Borrower is bound or affected.
Borrower shall obtain and maintain in full force and effect all Approvals and
Permits and shall comply with all conditions and requirements of all material
Approvals and Permits.
6.5 TAXES AND OTHER INDEBTEDNESS. Borrower will pay and discharge (i)
before delinquency all taxes, assessments, and governmental charges or levies
("Impositions") imposed upon it, upon its income or profits, or upon any of its
assets or property, (ii) when due all lawful claims (including, without
limitation, claims for labor, materials, and
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<PAGE> 13
supplies), that, if unpaid, might become a Lien or Encumbrance upon any of its
assets or property, and (iii) when due all its other indebtedness, provided,
however, Borrower shall have the right before any delinquency occurs to contest
or object to the amount or validity of any Imposition by appropriate
proceedings, but this shall not be deemed or construed in any way as relieving,
modifying, or extending Borrower's covenant to pay any such Imposition, unless
Borrower has given prior written notice to Bank of Borrower's intent to so
contest or object to an Imposition, and unless, in Bank's absolute and sole
discretion, (i) Borrower shall demonstrate to Bank's satisfaction that the
proceedings to be initiated by Borrower shall conclusively operate to prevent
the sale of the Collateral or any part thereof or interest therein to satisfy
such Imposition. Notwithstanding the preceding, Borrower shall not be required
to notify Bank, and Bank shall not have any review rights with respect to any
Imposition involving an amount in controversy of $500,000.00 or less.
6.6 ASSETS AND PROPERTY. Borrower will maintain, keep, and preserve all
of its assets and property (tangible and intangible) necessary or useful in the
proper conduct of its business and operations in good working order and
condition, ordinary wear and tear excepted.
6.7 INSURANCE. In addition to any insurance required under any of the
other Loan Documents, Borrower shall maintain workmen's compensation insurance,
general liability insurance, insurance on its assets and property now or
hereafter owned, and such other forms of insurance as is customary in the
industry of Borrower, against such casualties, risks, and contingencies, in such
amounts, and with such insurance companies as are satisfactory to Bank, in its
reasonable discretion. Borrower shall deliver to Bank from time to time as Bank
may request, schedules setting forth all insurance then in effect and copies of
the policies.
6.8 ENVIRONMENTAL LAWS. Without limiting the generality of SECTION 6.4,
Borrower shall comply with all environmental, all health, and all safety laws,
ordinances, regulations, and rules (federal, state, local, and foreign)
applicable to Borrower, the business or operations of Borrower, the assets or
property of Borrower, or the products or services of Borrower. Borrower may use
and store for its own use hazardous or toxic substances. Borrower shall not
dispose of, generate, manufacture, process, produce, release, transport, or
treat or otherwise store or use any hazardous or toxic substances or wastes.
Borrower shall notify Bank immediately of any environmental inquiry or claim
from any Governmental Authority or other Person relating to Borrower or any
assets, property, business, operations, product, or service of Borrower.
6.9 ERISA. Borrower will fund each Defined Benefit Plan and Defined
Contribution Plan (as such terms are defined in ERISA) so that there is never an
Accumulated Funding Deficiency (as defined in SECTION 412 of the Internal
Revenue Code of 1986, as amended).
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<PAGE> 14
6.10 FURTHER ASSURANCES. Borrower shall promptly execute, acknowledge,
and deliver and, as appropriate, cause to be duly filed and recorded such
additional agreements, documents, and instruments and do or cause to be done
such other acts as Bank may reasonably request from time to time to better
assure, perfect, preserve, and protect the interest of Bank in the Collateral
and the rights and remedies of Bank under the Loan Documents.
6.11 COSTS AND EXPENSES OF BORROWER'S PERFORMANCE OF COVENANTS AND
SATISFACTION OF CONDITIONS. Borrower will perform all of its obligations and
satisfy all conditions under the Loan Documents at its sole cost and expense.
6.12 FINANCIAL COVENANTS. Except as otherwise noted, all capitalized
terms in this SECTION 6.12 not defined in this Agreement shall have the meanings
determined in accordance with GAAP. On a consolidated basis, Borrower shall
maintain:
6.12.1 CURRENT RATIO. A minimum current ratio, calculated by
dividing Borrower's current assets by Borrower's current liabilities, of 1.30 to
1.00. For purposes of this calculation, this credit facility will be considered
a current liability except the portion which was used for cash acquisitions.
6.12.2 MINIMUM NET WORTH. Minimum Net Worth of the amounts
indicated for the end of each period specified below:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Fiscal quarter ending
June 30, 1997 $45,000,000.00
Each and every fiscal $45,000,000.00 increasing by 75%
quarter thereafter of Net Income for the quarter plus
100% of any additional net equity
amounts raised by Borrower.
</TABLE>
"Net Worth" is defined according to GAAP.
6.12.3 TOTAL DEBT TO EBITDA. Total Debt divided by EBITDA not
at any time greater than 4.00 to 1.00, with "Total Debt" defined as the sum of
Total Funded Debt, letters of credit, and $7,000,000.00 minus unrestricted cash
and investments on the balance sheet. "EBITDA" is defined as net profit before
tax plus interest expense (net of capitalized interest expense), depreciation
expense and amortization expense. This covenant shall be tested as of the end of
each fiscal quarter, commencing for the fiscal quarter ending December 31, 1997,
for such fiscal quarter and the immediately preceding three (3) fiscal quarters
taken as a whole. In addition, pro forma EBITDA of all companies acquired by
14
<PAGE> 15
Borrower from time to time shall be included in the calculation of this
covenant, provided pro forma EBITDA shall be substantiated by audited financial
statements or other financial statements acceptable to Bank.
6.12.4 TOTAL SENIOR DEBT. Total Senior Debt divided by EBITDA
not at any time greater than 2.00 to 1.00, with "Total Senior Debt" defined as
the aggregate outstanding secured indebtedness of Borrower, including this
Commitment. This covenant shall be tested at the end of each fiscal quarter,
commencing for the first fiscal quarter ending December 31, 1997, for such
fiscal quarter and the immediately preceding three (3) fiscal quarters taken as
a whole. In addition, pro forma EBITDA of all companies acquired by Borrower
from time to time shall be included in the calculation of this covenant,
provided proforma EBITDA shall be substantiated by audited financial statements
or other financial statements acceptable to Bank.
6.13 ADDITIONAL GUARANTORS. Borrower will take such action, and will
cause each of its subsidiaries, excluding Camelback Insurance Ltd. and any other
insurance subsidiaries approved by Bank from time to time, to take such action,
from time to time as shall be necessary to ensure that all subsidiaries of
Borrower are guarantors of this credit facility. Such additional guarantors
shall execute Bank's form of guaranty.
7. BORROWER NEGATIVE COVENANTS. Until the Commitment terminates in full and
until the Obligations are paid and performed in full, Borrower agrees that,
unless Bank otherwise agrees in Bank's absolute and sole discretion:
7.1 CORPORATE, LIMITED LIABILITY COMPANY, AND PARTNERSHIP RESTRICTIONS.
If Borrower is a corporation, a limited liability company, or a partnership,
Borrower shall not issue any capital stock or other securities of or any limited
liability company interest or partnership interest in Borrower or grant any
option, right-of-first-refusal, warrant, or other right to purchase any capital
stock or other securities of or any limited liability company interest or
partnership interest in Borrower without Bank's consent, excluding, however, (i)
stock option plans for Borrower, and (ii) the issuance of stock in connection
with an Acquisition described in SECTION 7.5 below. Borrower shall not be
dissolved or liquidated. Borrower shall not amend, modify, restate, supplement,
or terminate its certificate of incorporation or bylaws, its limited liability
company operating agreement, or its partnership agreement, as the case may be,
without Bank's consent. If a corporation, Borrower shall not reorganize itself
or consolidate with or merge into any other corporation or permit any other
corporation to be merged into Borrower. If a limited liability company, Borrower
shall not consolidate or merge with any corporation, any other limited liability
company, or any other legal entity.
7.2 CHANGE IN OR REACQUISITION OF OWNERSHIP INTERESTS IN BORROWER. In
addition to any requirement in any other Loan Document, if Borrower is a
corporation, a limited liability company, or a partnership, Borrower will not
repurchase any capital stock
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<PAGE> 16
of or any limited liability company interest or partnership interest in Borrower
or any option, right-of-first refusal, warrant or other right to purchase any
capital stock or other securities of or any limited liability company interest
or partnership interest in Borrower, excluding, however, the repurchase of
capital stock in connection with an Acquisition described in SECTION 7.5 below.
7.3 NAME, FISCAL YEAR, ACCOUNTING METHOD, AND LINES OF BUSINESS.
Borrower shall not change its name, fiscal year, or method of accounting.
Borrower shall not directly or indirectly, engage in any business other than the
line(s) of business in which Borrower is engaged on the date of this Agreement,
discontinue any existing line(s) of business, or substantially alter its method
of doing business.
7.4 LOANS, INVESTMENTS, GUARANTIES, SUBORDINATIONS. Without Bank's
consent, and except as provided herein, Borrower shall not directly or
indirectly (i) make any loan or advance to any other Person in excess of
$250,000.00, (ii) purchase or otherwise acquire any capital stock or other
securities of any other Person except as set forth in SECTION 7.5, any limited
liability company interest or partnership interest in any other Person, or any
warrants or other options or rights to acquire any capital stock or securities
of any other Person or any limited liability company interest or partnership
interest in any other Person, (iii) make any capital contribution to any other
Person, (iv) otherwise invest in or acquire any interest in any other Person,
(v) guaranty or otherwise become obligated in respect of any indebtedness of any
other Person, (vi) subordinate any claim against or obligation of any other
Person to Borrower to any other indebtedness of such Person, or (vii) create,
incur, assume or permit to exist any secured indebtedness or liabilities (except
for purchase money not in excess of $3,000,000.00 in the aggregate) resulting
from borrowings, loans or advances, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
and (b) any other liabilities of Borrower existing as of, and disclosed to Bank
as of the date hereof.
7.5 ACQUISITION OR DISPOSITION OF ALL OR SUBSTANTIALLY ALL ASSETS.
Borrower shall not acquire by purchase, lease, or otherwise all or substantially
all the assets of any other Person. Borrower shall not sell, transfer, lease, or
otherwise dispose of all or any substantial part of the assets, business,
operations, or property of Borrower. Notwithstanding the preceding, Borrower
shall have the right to acquire all or substantially all of the assets or stock
of any other Person (an "Acquisition") provided, however, (a) any individual
Acquisition shall not exceed $10,000,000.00 and shall not exceed five times
EBITDA, and (b) any Acquisition whereby Borrower will assume workers'
compensation liabilities of $1,000,000.00 or more shall require the prior
written consent of Bank.
7.6 NEGATIVE PLEDGE. Except for Permitted Exceptions, Borrower shall
not grant or suffer to exist any Lien or Encumbrance upon any assets or property
of Borrower.
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<PAGE> 17
7.7 DIVIDENDS AND OTHER DISTRIBUTIONS. Borrower will not, without the
prior written consent of Bank in its absolute and sole discretion, declare,
make, order, authorize, or pay, directly or indirectly: (a) any dividend or
other distribution on or on account of any shares of any class of capital stock
of Borrower now or hereafter outstanding; (b) any management fee to an officer
or director of Borrower; (c) any loans to shareholders of Borrower in excess of
$250,000.00; or (d) any purchase, redemption, retirement, or other acquisition
of any shares of any class of capital stock of Borrower now or hereafter
outstanding or of any warrants or rights to purchase any such stock or
partnership interest.
7.8 CAMELBACK INSURANCE LTD. Borrower will not retain any funds or
assets in Camelback Insurance Ltd. except: (a) funds that are held in trust
accounts for claim reserves or otherwise held to pay prior claims, (b) funds for
current operations not to exceed $500,000, and (c) as required by law and
regulation, including, without limitation, capital and liquidity requirements.
In addition, Borrower shall provide to Bank financial reporting information as
part of its compliance certificate reference in SECTION 6.3.4 of this Agreement
describing the funds and accounts maintained in Camelback Insurance Ltd.
8. BANK'S OBLIGATIONS TO BORROWER ONLY. The obligations of Bank under this
Agreement are for the benefit of Borrower only. No other Person shall have any
rights hereunder or be a third-party beneficiary hereof.
9. PROVISIONS IN THE NOTE GOVERN THIS AGREEMENT. This Agreement is subject to
certain terms and provisions in the Note, to which reference is made for a
statement of such terms and provisions.
10. COUNTERPART EXECUTION. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document. Signature pages may be
detached from the counterparts and attached to a single copy of this Agreement
to physically form one document.
11. OBLIGATIONS.
11.1 NATURE OF OBLIGATIONS. The action of Borrower and the requests,
notices, reports and other materials submitted by Borrower shall bind all of the
Borrower.
11.2 DIRECT OBLIGATIONS; WAIVERS. Borrower represents, warrants,
covenants and agrees as follows:
(a) Bank may enforce any Loan Document against any Collateral
without first having sought enforcement of any Loan Documents against Borrower
or any other Loan Party or any other Collateral.
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<PAGE> 18
(b) The Obligations shall not be affected by any of the
following: (i) the bankruptcy, disability, dissolution, incompetence,
insolvency, liquidation, or reorganization of any Loan Party; (ii) any defense
of any or all other Loan Parties to payment or performance of any or all
obligations or enforcement of any and all Liens and Encumbrances; (iii) the
discharge, modification of the terms of, reduction in the amount of, or stay of
enforcement of any or all Liens and Encumbrances or any or all Obligations in
any bankruptcy, insolvency, reorganization, or other legal proceeding or by law,
ordinance, regulation, or rule (federal, state, or local); (iv) the cessation of
liability of any or all other Loan Parties or any or all Obligations; (v) any
claim or dispute by any other Loan Party concerning the occurrence of an Event
of Default, performance of any Obligations, or any other matter.
(c) Bank may do the following acts or omissions from time to
time without notice to or consent of Borrower and without receiving payment or
other value, nor shall the following acts or omissions affect, delay or impair
any of the Obligations or any or all Liens and Encumbrances: (i) obtain
Collateral or additional Collateral; (ii) substitute for any or all Collateral
regardless of whether the same type or greater or lesser value; (iii) release
Borrower or any or all Collateral; (iv) compromise, delay enforcement, fail to
enforce, release, settle or waive any rights or remedies of Bank as to Borrower
or all Collateral; (v) sell or otherwise dispose of any Collateral in accordance
with the Loan Documents and in such manner or order as Bank determines; (vi)
fail to perfect, fail to protect the priority of, and fail to ensure any or all
Liens or Encumbrances; (vii) fail to inspect, insure, maintain, preserve or
protect any or all Collateral; (viii) obtain additional obligors for any or all
Obligations; (ix) increase or decrease any or all obligations or otherwise
change terms of any or all obligations; (x) release any Loan Party; (xi)
compromise, delay enforcement, fail to enforce, release, settle or waive any
obligations of any Loan Party with the agreement of that Loan Party; (xii) make
advances, or grant other financial accommodations for any Loan Party; (xiii)
fail to file or pursue a claim in any bankruptcy, insolvency, reorganization or
other proceeding as to any or all liens and encumbrances or any or all
obligations; (xiv) amend, modify, extend, renew, restate, supplement or
terminate in whole or in part the obligation of any Loan Party with the
agreement of that Loan Party; (xv) take or fail to take any other action with
respect to any Loan Document or Loan Party; and (xvi) do any other acts or make
any other omissions that result in the extinguishment of the obligation of any
Loan Party.
(d) Borrower waives any and all rights and benefits under
Arizona Revised Statutes Sections 12-1641, 12-1642, 12-1643, 12-1644, 44-142,
47-3606, 16 A.R.S. Rules of Civil Procedure Rule 17(f) and any other similar or
replacement statutes or rules now or hereafter in effect and any other statutes
or rules now or hereafter in effect that purport to confer specific rights upon
or make specific defenses or procedures available to Borrower. To the extent
that the laws of any other jurisdiction may be applicable to Borrower, Borrower
waives any and all such laws that may conflict with or limit the obligations of
Borrower under the Loan Documents.
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<PAGE> 19
(e) Borrower waives any rights that require Bank, and Bank
shall have no obligation to, provide to Borrower any information concerning the
performance of any other Borrower, the Obligations, or the ability of any other
Borrower to perform the Obligations or any other matter, regardless of what
information Bank may from time to time have.
(f) Borrower waives, and agrees not to claim or assert any and
all present and future claims, remedies and rights against any other Borrower or
any other Loan Party, the Collateral and any other property, interest in
property or rights to property of any other Loan Party (i) arising from any
performance hereunder, (ii) arising from any application of any Collateral, or
any other property, interest in property or rights to property of Borrower, or
(iii) otherwise arising in respect of the Loan Documents, regardless of whether
such claims, remedies and rights arise under any present or future agreement,
document or instrument or are provided by any law, ordinance, regulation or rule
(federal, state or local) (including, without limitation, any and all rights of
contribution, exoneration, indemnity, reimbursement, and subrogation and any and
all rights to participate in the rights and remedies of Bank, against any Loan
Party).
12. AMENDMENT AND RESTATEMENT. This Agreement amends and restates that certain
Loan Agreement dated August 1, 1996, by and between Bank and Borrower, as
modified pursuant to that certain Modification Agreement dated October 15, 1996,
as modified pursuant to that certain Second Modification Agreement dated
February 19, 1997, as further modified pursuant to that Third Modification
Agreement dated June 30, 1997.
DATED as of the date first above stated.
EMPLOYEE SOLUTIONS, INC., an Arizona
corporation
By: /s/
________________________________
Name: ______________________________
Title: _____________________________
"Borrower"
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/
________________________________
Name: ______________________________
Title: _____________________________
"Bank"
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<PAGE> 20
CONSENT AND AGREEMENT OF GUARANTOR(S)
With respect to the Amended and Restated Loan Agreement dated October
21, 1997 ("Agreement"), between Employee Solutions, Inc., an Arizona
corporation ("Borrower"), and Bank One, Arizona, NA, a national banking
association ("Bank"), the undersigned (individually and, if more than one,
collectively "Guarantor") agrees for the benefit of Bank as follows:
1. Guarantor acknowledges (i) receiving a copy of and reading the
Agreement, (ii) the accuracy of the Recitals in the Agreement, and (iii) the
effectiveness of (A) the Continuing Guaranty of Payment dated August 1, 1996, or
any later date ("Guaranty"), by the undersigned for the benefit of Bank, as
modified herein, and (B) any other agreements, documents, or instruments
securing or otherwise relating to the Guaranty (including, without limitation,
any arbitration resolution and any environmental certification and indemnity
agreement previously executed and delivered by the undersigned), as modified
herein. The Guaranty and such other agreements, documents, and instruments, as
modified herein, are referred to individually and collectively as the "Guarantor
Documents". All capitalized terms used herein and not otherwise defined shall
have the meaning given to such terms in the Agreement.
2. Guarantor consents to the modification of the Loan Documents and all
other matters in the Agreement.
3. Guarantor fully, finally, and forever releases and discharges Bank
and its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits of whatever kind or nature, in law
or equity, that Guarantor has or in the future may have, whether known or
unknown, arising from events occurring prior to the date hereof and in respect
of the Loan, the Loan Documents, the Guarantor Documents, or the actions or
omissions of Bank in respect of the Loan, the Loan Documents, or the Guarantor
Documents.
4. Guarantor agrees that all references, if any, to the Note, the
Credit Agreement, the Deed of Trust, the Security Documents, and the Loan
Documents in the Guarantor Documents shall be deemed to refer to such
agreements, documents, and instruments as modified by the Agreement.
5. Guarantor reaffirms the Guarantor Documents and agrees that the
Guarantor Documents continue in full force and effect and remain unchanged,
except as specifically modified by this Consent and Agreement of Guarantor(s).
Any property or rights to or
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<PAGE> 21
interests in property granted as security in the Guarantor Documents shall
remain as security for the Guaranty and the obligations of Guarantor in the
Guaranty.
6. Guarantor represents and warrants that the Loan Documents, as
modified by the Agreement, and the Guarantor Documents, as modified by this
Consent and Agreement of Guarantor(s), are the legal, valid, and binding
obligations of Borrower and the undersigned, respectively, enforceable in
accordance with their terms against Borrower and the undersigned, respectively.
7. Guarantor represents and warrants that Guarantor has no claims,
counterclaims, defenses, or off sets with respect to the enforcement against
Guarantor of the Guarantor Documents.
8. Guarantor represents and warrants that there has been no material
adverse change in the financial condition of any Guarantor from the most recent
financial statement received by Bank.
9. Guarantor agrees that this Consent and Agreement of Guarantor(s) may
be executed in one or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same document.
Signature and acknowledgment pages may be detached from the counterparts and
attached to a single copy of this Consent and Agreement of Guarantor(s) to
physically form one document.
DATED as of the date of the Agreement.
LOGISTICS PERSONNEL CORP., a Nevada
corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
EMPLOYEE SOLUTIONS OF TEXAS, INC., a Texas
corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
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<PAGE> 22
EMPLOYEE SOLUTIONS-EAST INC., a Georgia
corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
EMPLOYEE SOLUTIONS - MIDWEST, INC., a
Michigan corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
ESI AMERICA, INC., a Nevada corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
ESI-MIDWEST, INC., a Nevada corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
EMPLOYEE SOLUTIONS OF CALIFORNIA, INC., a
Nevada corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
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EMPLOYEE SOLUTIONS - OHIO, INC.,
an Indiana corporation, formerly
known as POKAGON OFFICE SERVICES,
INC.
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
ESI RISK MANAGEMENT AGENCY, INC., an
Arizona corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
EMPLOYEE SOLUTIONS OF ALABAMA, INC., an
Alabama corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
GCK ENTERTAINMENT SERVICES I, INC., a
Delaware corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
TALENT, ENTERTAINMENT AND MEDIA
SERVICES, INC., a Delaware corporation
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
23
<PAGE> 24
CONSENT TO AMENDED AND RESTATED LOAN AGREEMENT
With respect to the Commitment, as defined in the foregoing
Amended and Restated Loan Agreement dated October 21, 1997, Bank One, Arizona,
NA, a national banking association ("Bank") and THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association ("FNBC"), assignee of NBD Bank, a
Michigan banking corporation, have entered into that certain Participation
Agreement dated August 1, 1996 (the "FNBC Participation Agreement").
FNBC hereby consents to, and approves, the foregoing Amended and
Restated Loan Agreement to which this Consent to Amended and Restated Loan
Agreement is attached.
Dated: October 21, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
a national banking association
By: /s/
______________________________________
Name: ____________________________________
Title: ___________________________________
24
<PAGE> 1
EXHIBIT 4.5
Approved By: Officer: Name: ___________________ Number: ____________
Dept./Br.: Name: __________________________ No.: _________
CLN No.: ____________ Future No. _______ Current No. _______ Borrower Name:
__________________________________________________
Interest Rate: ___________________ Interest From: ___________ Renewal of Current
No.: _______ ABOVE INFORMATION IS FOR INTERNAL BANK USE ONLY AND IS NOT PART OF
THE PROMISSORY NOTE.
AMENDED AND RESTATED
SECURED PROMISSORY NOTE
Revolving Line of Credit
Principal Amount: $20,000,000.00 Date: October 21, 1997
Headquarters Phoenix Arizona
________________________________________________________________________________
(Office) (City)
PROMISE TO PAY AND INTEREST. For value received, the undersigned ("BORROWER"),
promises to pay to BANK ONE, ARIZONA, NA, a national banking association, or
order (the "BANK") at 241 N. Central Avenue, Phoenix, Arizona 85004, or at such
other place as Bank may designate in writing, in lawful money of the United
States of America, the aggregate principal sum of $20,000,000.00, or such lesser
amount as shall have been disbursed and is unpaid as shown on the records of
Bank which shall be conclusive as to such amount, with interest from time to
time on each advance ("ADVANCE") under the Amended and Restated Loan Agreement,
dated of even date herewith, between Borrower and Bank, as amended, modified,
extended, renewed, restated, and supplemented from time to time ("LOAN
AGREEMENT"), from the date advanced as follows:
(a) Except to the extent that an Advance bears interest at the Fixed
Rate, as defined herein, pursuant to this Note, interest shall accrue on the
unpaid principal of each Advance at the Variable Rate. Interest at the Variable
Rate shall be computed on the basis of a 360 day year and accrue on a daily
basis for the actual number of days elapsed.
(b) To the extent Borrower shall elect as provided in this Note,
interest shall accrue on the unpaid principal of an Advance at the Fixed Rate.
Interest at the Fixed Rate shall be computed on the basis of a 360 day year and
accrue on a daily basis for the actual number of days elapsed.
As used in this Note:
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in Phoenix, Arizona, and, with respect to a Fixed Rate
Advance, a day on which dealings are carried on in the London interbank market.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors to the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" for the Interest Period for each
Fixed Rate Advance means the reserve percentage applicable two (2) Business Days
before the first day of such Interest Period under regulations
1
<PAGE> 2
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement (including,
but not limited to, any emergency, supplemental, or other marginal reserve
requirement) for a member bank of the Federal Reserve System in San Francisco
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities which includes
deposits by reference to which the interest rate on Fixed Rate Advances is
determined) having a term equal to such Interest Period.
"FIXED RATE" means the rate per annum equal to the sum of (i) one and
three quarters percent (1.75%) per annum, and (ii) the rate per annum obtained
by dividing (A) the rate of interest determined by Bank, based on Telerate
System reports or such other source as may be selected by Bank, to be the
"London Interbank Offered Rate" at which deposits in United States dollars are
offered by major banks in London, England, one (1) Business Day before the first
day of the respective Interest Period by (B) a percentage equal to one hundred
percent (100%) minus the Eurodollar Rate Reserve Percentage for the period equal
to such Interest Period.
"FIXED RATE ADVANCE" means an Advance that bears or is requested to
bear interest at the Fixed Rate.
"INTEREST PERIOD" means, for each Fixed Rate Advance, the period
commencing on the date of such Fixed Rate Advance and ending on the last day of
the period selected by Borrower pursuant to the provisions herein and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
Borrower pursuant to the provisions herein. The duration of each Interest Period
shall be one (1) month, two (2) months, or three (3) months, as selected by
Borrower in the request for a Fixed Rate Advance, provided, however, that:
(i) Interest Periods commencing on the same date shall be of the
same duration;
(ii) Whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
provided that if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the last preceding Business
Day; and
(iii) No Interest Period with respect to any Advance shall extend
beyond the Maturity Date.
"REGULATORY CHANGE" means any change effective after the date of this
Note in United States federal, state, or foreign law, regulations, or rules or
the adoption or making after such date of any interpretation, directive, or
request applying to a class of banks including Bank, of or under any United
States federal, state, or foreign law, regulation, or rule (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"VARIABLE RATE" means the rate per annum most recently publicly
announced by Bank, or its successors, in Phoenix, Arizona, as its "prime rate",
as in effect from time to time. The Variable Rate will change on each day that
the "prime rate" changes. The "prime rate" is not necessarily the best or lowest
rate offered by Bank, and Bank may lend to its customers at rates that are at,
above, or below its "prime rate".
"VARIABLE RATE ADVANCE" means an Advance that bears or that is
requested to bear interest at the Variable Rate.
2
<PAGE> 3
Each request for an Advance under the Loan Agreement shall, in addition
to complying with the other requirements in the Loan Agreement, (i) specify the
date and amount of the requested Advance, (ii) specify whether the Advance shall
be an Advance that bears interest at the Variable Rate or shall be an Advance
that bears interest at the Fixed Rate, and (iii) if the Advance is to bear
interest at the Fixed Rate, (A) specify the Interest Period, (B) be delivered to
Bank at least three (3) Business Days prior to the date of the requested
Advance, and (C) be in a minimum amount of $1,000,000.00 with integral multiples
of $500,000.00 in excess thereof. Any Advance not complying with the foregoing
requirements for an Advance bearing interest at the Fixed Rate shall bear
interest at the Variable Rate.
Borrower may on any Business Day, upon written notice to and received
by Bank not later than 12:00 p.m. (Phoenix, Arizona local time) (i) on the third
Business Day, in the case of any conversion of a Variable Rate Advance into a
Fixed Rate Advance and (ii) on the first Business Day in the case of any
conversion of a Fixed Rate Advance into a Variable Rate Advance, prior to the
date of the proposed conversion, convert any Advance of one type into an Advance
of the other type, provided, however, that any conversion of a Fixed Rate
Advance shall only be made on the last day of the applicable Interest Period.
Each such notice of a conversion shall specify the date of such conversion and
the Advance(s) to be converted.
Notwithstanding any provision of the Loan Documents to the contrary,
Bank shall be entitled to fund and maintain its funding of all or any part of
any Advance in any manner it sees fit, provided, however, that for the purposes
of this Note, all determinations hereunder shall be made as if Bank had actually
funded and maintained each Fixed Rate Advance during the Interest Period
therefor through the purchase of deposits having a maturity corresponding to the
last day of the Interest Period and bearing an interest rate equal to the Fixed
Rate for such Interest Period.
If, due to any Regulatory Change, there shall be any increase in the
cost to Bank of agreeing to make or making, funding, or maintaining Fixed Rate
Advances (including, without limitation, any increase in any applicable reserve
requirement), then Borrower shall from time to time, upon demand by Bank, pay to
Bank such amounts as Bank may reasonably determine to be necessary to compensate
Bank for any additional costs that Bank reasonably determines are attributable
to such Regulatory Change and Bank will notify the Borrower of any Regulatory
Change that will entitle Bank to compensation pursuant to this paragraph as
promptly as practicable, but in any event within 90 days after Bank obtains
knowledge thereof, provided, however, that if Bank fails to give such notice
within 90 days after it obtains knowledge of such a Regulatory Change, Bank
shall, with respect to compensation payable in respect of any costs resulting
from such Regulatory Change, only be entitled to payment for costs incurred from
and after the date that Bank does give such notice. Bank will furnish to
Borrower a certificate setting forth in reasonable detail the basis for the
amount of each request by Bank for compensation under this paragraph.
Determinations by Bank of the amounts required to compensate Bank shall be
conclusive, absent manifest error. Bank shall be entitled to compensation in
connection with any Regulatory Change only for costs actually incurred by Bank.
Notwithstanding any provision of the Loan Documents, if Bank shall
notify Borrower that as a result of a Regulatory Change it is unlawful for Bank
to make Advances at the Fixed Rate, or to fund or maintain Fixed Rate Advances,
(i) the obligations of Bank to make Advances at the Fixed Rate and to convert
Advances to the Fixed Rate shall be suspended until Bank shall notify Borrower
that the circumstances causing such suspension no longer exist, and (ii) in the
event such Regulatory Change makes the maintenance of Advances at the Fixed Rate
unlawful, Borrower shall forthwith prepay in full all Fixed Rate Advances then
outstanding, together with interest accrued thereon and all amounts in
connection with such prepayment specified in the paragraph in this
3
<PAGE> 4
Note titled "PREPAYMENT", unless Borrower, within five (5) Business Days of
notice from Bank, converts all Fixed Rate Advances then outstanding into
Variable Rate Advances pursuant to the conversion procedures in this Note and
pays all amounts in connection with such prepayments or conversions specified in
the paragraph in this Note titled "PREPAYMENT".
Notwithstanding any other provision of the Loan Documents, if prior to
the commencement of any Interest Period, Bank shall determine (i) that United
States dollar deposits in the amount of any Fixed Rate Advance to be outstanding
during such Interest Period are not readily available to Bank in the London
interbank market, or (ii) by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for ascertaining
the Fixed Rate, then Bank shall promptly give notice thereof to Borrower and the
obligation of Bank to create, continue, or effect by conversion any Fixed Rate
Advance in such amount and for such Interest Period shall terminate until United
States dollar deposits in such amount and for the Interest Period shall again be
readily available in the London interbank market and adequate and reasonable
means exist for ascertaining the Fixed Rate.
Interest shall be due and payable commencing on November 1, 1997, and
continuing on the same day of each successive month thereafter until August 1,
1999 ("MATURITY DATE"). No payments of principal shall be due and payable until
the Maturity Date.
On the Maturity Date Borrower shall pay to Bank the unpaid principal,
all accrued and unpaid interest, and all other amounts ("OTHER AMOUNTS") payable
by Borrower to Bank under the Loan Documents. "LOAN DOCUMENTS" means this Note,
any related loan agreements, any related letter of credit agreements, and any
other agreements, documents, and instruments evidencing, guarantying, securing,
or otherwise relating to this Note, as they may be amended, modified, extended,
renewed, restated, or supplemented from time to time.
Principal shall bear interest at the Interest Rate from the date of
disbursement until the due date thereof, whether due by acceleration or
otherwise. Principal, interest, and Other Amounts not paid when due and any
judgment therefor shall bear interest from its due date or the judgment date, as
applicable, until paid at a rate ("DEFAULT RATE") equal to the sum of (i) four
percent (4%) per annum and (ii) the Interest Rate, and such interest shall be
immediately due and payable.
Borrower agrees to pay an effective rate of interest that is the sum of
(i) the interest rate provided herein and (ii) any additional rate of interest
resulting from any other charges or fees paid or to be paid in connection
herewith that are determined to be interest or in the nature of interest.
APPLICATION OF PAYMENTS. At the option of Bank, payments shall be applied to
principal, interest, and Other Amounts in such order as Bank shall determine.
PREPAYMENT. Except as to payments due under this paragraph with respect to
payment or conversion of a Fixed Rate Advance on a day other than the last
Business Day in the Interest Period for such Fixed Rate Advance, Borrower may,
upon at least three (3) Business Days' notice in the case of Fixed Rate Advances
and one (1) Business Day's notice in the case of Variable Rate Advances to Bank
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given Borrower shall, prepay the outstanding principal of
balance hereof in whole or in part at any time prior to the Maturity Date
without penalty or premium as stated in such notice by Borrower, provided that
such prepayment also includes accrued interest to the date of such prepayment on
the principal amount prepaid, and provided however, that if any payment of all
or any
4
<PAGE> 5
portion of a Fixed Rate Advance shall be made other than on the last day of the
Interest Period for such Fixed Rate Advance (such last day, the "TERMINATION
DATE"), or if Borrower shall convert a Fixed Rate Advance to a Variable Rate
Advance other than on the Termination Date for any reason (including, without
limitation, any optional or required prepayment under this Note and any
acceleration of the Maturity Date) then, anything in the Loan Documents to the
contrary notwithstanding, Borrower shall also pay a prepayment premium, if any,
equal to the product of (i) the Average Lost Monthly Interest Income and (ii)
the number of months from the date of prepayment to the Termination Date (with
any fraction of a month counted as a month), discounted to present value at the
Discount Rate over a period equal to one-half of the number of months in (ii)
above. As used in this paragraph:
"AVERAGE LOST MONTHLY INTEREST INCOME" means the amount determined by
dividing (i) the product of the Average Principal and the Lost Rate, by
(ii) 12, where:
"AVERAGE PRINCIPAL" means the amount equal to either (i) one-half the
sum of (A) the amount of principal being prepaid and (B) the amount of
principal that is scheduled to be subject to the Fixed Rate Advance in
question immediately before the Termination Date ("BALLOON AMOUNT"), or
(ii) the amount of principal being prepaid, if such amount is less than
the Balloon Amount; and
"LOST RATE" means the rate per annum equal to the percentage, if any,
by which (i) the yield to maturity of United States Treasury debt
obligations having a maturity date nearest to the Termination Date
("TREASURY OBLIGATIONS") determined as of the first day of the
respective Interest Period exceeds (ii) the yield to maturity of
Treasury Obligations determined on the date of prepayment.
"DISCOUNT RATE" means the rate per annum equal to the yield to maturity
of Treasury Obligations determined on the date of prepayment.
The maturity date and yield to maturity of Treasury Obligations shall
be determined by Lender, in its reasonable discretion, on the basis of
quotations published in THE WALL STREET JOURNAL or other comparable sources
generally used in the banking industry.
This Note evidences a revolving line of credit. Borrower shall be
entitled to reborrow any amounts prepaid pursuant to this Section.
LATE CHARGE. If any payment of interest is not received by Bank within fifteen
(15) days after its due date, then, in addition to the other rights and remedies
of Bank, a late charge of four percent (4%) of the amount due and unpaid will be
charged to Borrower without notice to Borrower. Such late charge shall be
immediately due and payable.
NO COUNTERCLAIMS, DEDUCTIONS, ETC. All payments and other obligations of
Borrower under the Loan Documents will be made and performed without
counterclaim, deduction, defense, deferment, reduction, or set-off.
SECURITY. This Note is secured by, inter alia, the Amended and Restated Security
Agreement, which Amended and Restated Security Agreement creates a lien on that
certain personal property described therein.
EVENTS OF DEFAULT. Each of the following shall be an event of default ("EVENT OF
DEFAULT"):
5
<PAGE> 6
1. Failure by any Loan Party to pay within five (5) days after the date
due (i) any amount payable by such Loan Party under any of the Loan Documents,
or (ii) any other indebtedness of such Loan Party to Bank. "LOAN PARTY" means
Borrower and any other person that from time to time is obligated to Bank under
any of the Loan Documents or grants any property, interests in property, or
rights to property to secure any or all obligations of any person under the Loan
Documents.
2. Failure by any Loan Party to perform any obligation not involving
the payment of money, or to comply with any other term or condition applicable
to such Loan Party, in any of the Loan Documents and the expiration of fifteen
(15) days after written notice of such failure by Bank to such Loan Party.
3. Any representation or warranty made by any Loan Party in any of the
Loan Documents or otherwise or any information delivered by any Loan Party to
Bank in obtaining or hereafter in connection with the credit evidenced by this
Note is materially incomplete, incorrect, or misleading as of the date made or
delivered.
4. Bank believes in good faith that a Material Adverse Change has
occurred after the date of the financial statements and other information
provided by any Loan Party in obtaining the credit evidenced by this Note.
"MATERIAL ADVERSE CHANGE" means any material change in the assets, business,
financial condition, operations, prospects, or results of operations of any Loan
Party or any other material event or condition that in the reasonable opinion of
Bank (i) could materially affect the likelihood of performance by any Loan Party
of any of the obligations in the Loan Documents, (ii) could materially affect
the ability of any Loan Party to perform any of the obligations in any of the
Loan Documents, (iii) could materially affect the legality, validity, or binding
nature of any of the obligations in the Loan Documents or any lien or
encumbrance securing any of the obligations under the Loan Documents, or (iv)
could materially affect the priority of any lien, security interest, or other
encumbrance securing any of the obligations in the Loan Documents.
5. Any Loan Party (i) is unable or admits in writing such Loan Party's
inability to pay such Loan Party's monetary obligations as they become due, (ii)
makes a general assignment for the benefit of creditors, or (iii) applies for,
consents to, or acquiesces in, appointment of a trustee, receiver, or other
custodian for such Loan Party or any or all of the property of such Loan Party,
or in the absence of such application, consent, or acquiescence by such Loan
Party a trustee, receiver, or other custodian is appointed for such Loan Party
or any or all of the property of such Loan Party.
6. Commencement of any case under the Bankruptcy Code (Title 11 of the
United States Code) or commencement of any other bankruptcy, arrangement,
reorganization, receivership, custodianship, or similar proceeding under any
federal, state, or foreign law by or against any Loan Party and with respect to
any such case or proceeding that is involuntary, such case or proceeding is not
dismissed within ninety (90) days of the filing thereof.
7. The death, incompetence, dissolution, or liquidation of any Loan
Party; the consolidation or merger of any Loan Party with any other Person; or
the taking of any action by any Loan Party toward a dissolution, liquidation,
consolidation, or merger.
8. Any Loan Party or any other person on behalf of any Loan Party
claims that any Loan Document is not legal, valid, binding, and enforceable
against any Loan Party, that any lien, security interest, or other encumbrance
securing any of the obligations under the Loan Documents is not legal, valid,
binding, and
6
<PAGE> 7
enforceable, or that the priority of any lien, security interest, or other
encumbrance securing any of the obligations in the Loan Documents is different
than the priority represented and warranted in the Loan Documents.
9. The occurrence of any condition or event that is a default or is
designated as a default, an event of default, or an Event of Default in any
other Loan Document or in any agreement, document, or instrument relating to any
other indebtedness of any Loan Party to Bank.
RIGHTS AND REMEDIES OF BANK. Upon occurrence of an Event of Default, Bank may,
at its option, in its absolute and sole discretion, and without demand or
notice, (i) declare the obligations in the Loan Documents to be immediately due
and payable, whereupon the obligations in the Loan Documents shall be
immediately due and payable, and (ii) exercise any or all other rights and
remedies of Bank concurrently or consecutively in such order as Bank elects. The
rights and remedies of Bank shall be cumulative and non-exclusive. Delay,
discontinuance, or failure to exercise any right or remedy of Bank shall not be
a waiver thereof, or of any other right or remedy of Bank, or of the time of the
essence provision. Exercise of any right or remedy of Bank shall not cure or
waive any Event of Default or invalidate any act done in response to any Event
of Default.
LIMIT OF LIABILITY OF BANK. In exercising rights and remedies, neither Bank nor
any stockholder, director, officer, employee, agent, or representative of Bank
shall have any liability for any injury to the assets, business, operations, or
property of Borrower or any other liability to Borrower, other than for its own
gross negligence or willful misconduct.
SURVIVAL. The representations, warranties, and covenants of the Loan Parties in
the Loan Documents shall survive the execution and delivery of the Loan
Documents and the making of advances to Borrower.
INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, WAIVER,
APPROVAL, CONSENT, ETC. The Loan Documents contain the complete understanding
and agreement of Borrower and Bank and supersede all prior representations,
warranties, agreements, arrangements, understandings, and negotiations. No
provision of the Loan Documents may be changed, discharged, supplemented,
terminated, or waived except in a writing signed by the parties thereto. Delay
or failure by Bank to insist on performance of any obligation when due or
compliance with any other term or condition in the Loan Documents shall not
operate as a waiver thereof or of any other obligation, term, or condition or of
the time of the essence provision. Acceptance of late payments shall not be a
waiver of the time of the essence provision, the right of Bank to require that
subsequent payments be made when due, or the right of Bank to declare an Event
of Default if subsequent payments are not made when due. Any approval, consent,
or statement that a matter is satisfactory by Bank under the Loan Documents must
be in writing executed by Bank and shall be construed to apply only to the
person(s) and facts specifically set forth in the writing.
BINDING EFFECT. The Loan Documents shall be binding upon and shall inure to the
benefit of Bank and the Loan Parties and their successors and assigns and the
executors, legal administrators, personal representatives, heirs, devisees, and
beneficiaries of the Loan Parties, provided, however, that the Loan Parties may
not assign any of their rights or delegate any of their obligations under the
Loan Documents and any purported assignment or delegation shall be void. Bank
may from time to time in its absolute and sole discretion assign it rights and
delegate its obligations under the Loan Documents, in whole or in part, without
notice to or consent by any Loan Party (including, without limitation,
participations). In addition to any greater or lesser limitation provided by
7
<PAGE> 8
law, no Loan Party shall assert against any assignee of Bank any claims or
defenses such Loan Party may have against Bank, except claims and defenses
arising under the Loan Documents.
COSTS, EXPENSES, AND FEES. Borrower agrees to pay on demand all external and
internal costs, expenses, and fees (including, without limitation, as
applicable, inside and outside attorneys, paralegals, document clerks and
specialists, appraisal, appraisal review, environmental assessment,
environmental testing, environmental cleanup, other inspection, processing,
title, filing, and recording costs, expenses, and fees) of Bank (i) in the
negotiation, execution, delivery, and modification of the Loan Documents, (ii)
in enforcement of the Loan Documents and exercise of the rights and remedies of
Bank, (iii) in defense of the legality, validity, binding nature, and
enforceability of the Loan Documents and the perfection and priority of the
liens and encumbrances granted in the Loan Documents, (iv) in gaining possession
of, holding, repairing, maintaining, preserving, and protecting the property
("COLLATERAL") securing the obligations in the Loan Documents, (v) in selling or
otherwise disposing of the Collateral, (vi) otherwise in relation to the Loan
Documents, the Collateral, or the rights and remedies of Bank under the Loan
Documents or relating to the Collateral, and (vii) in preparing for the
foregoing, whether or not any legal proceeding is brought or other action is
taken. Such costs, expenses, and fees shall include, without limitation, all
such costs, expenses, and fees incurred in connection with any bankruptcy,
receivership, replevin, or other court proceedings (whether at the trial or
appellate level). Borrower agrees to pay interest on such costs, expenses, and
fees at the Default Rate from the date incurred by Bank until paid in full.
SEVERABILITY. If any provision or any part of any provision of the Loan
Documents is unenforceable, the enforceability of the other provisions or the
other provisions and the remainder of the subject provision, respectively, shall
not be affected and they shall remain in full force and effect.
CHOICE OF LAW. The Loan Documents shall be governed by the laws of the State of
Arizona, without giving effect to conflict of laws principles.
TIME OF ESSENCE. Time is of the essence with regard to each provision of the
Loan Documents as to which time is a factor.
NOTICES AND DEMANDS. All demands or notices under the Loan Documents shall be in
writing (including, without limitation, telecopy, telegraphic, telex, or cable
communication) and mailed, telecopied, telegraphed, telexed, cabled, or
delivered to the respective party hereto at the address specified at the end of
this paragraph or such other address as shall have been specified in a written
notice. Any demand or notice mailed shall be mailed first-class mail,
postage-prepaid, return-receipt-requested and shall be effective upon the
earlier of (i) actual receipt by the addressee, and (ii) the date shown on the
return-receipt. Any demand or notice not mailed will be effective upon the
earlier of (i) actual receipt by the addressee, and (ii) the time the receipt of
the telecopy, telegram, telex, or cable is mechanically confirmed.
Address for Notices to Borrower: 6225 North 24th Street, Phoenix, Arizona 85016.
Address for Notices to Bank: Bank One, Arizona, NA, Commercial Banking Group,
Post Office Box 71, Phoenix, Arizona 85001, Attention: Mary Kennedy Martuscelli
(Dept. A-781).
BANK'S RIGHT OF SET-OFF. Borrower grants to Bank (i) the right at any time and
from time to time after the occurrence and continuation of an Event of Default,
in the absolute and sole discretion of Bank and without
8
<PAGE> 9
demand or notice to the Borrower, to set-off and apply deposits (whether
certificates of deposit, demand, general, savings, special, time, or other, and
whether provisional or final) held by Bank for Borrower and any other
liabilities or other obligations of Bank to Borrower ("DEPOSITS, LIABILITIES,
AND OBLIGATIONS") against or to the obligations of Borrower under the Loan
Documents, regardless of whether the Deposits, Liabilities, and Obligations are
contingent, matured, or unmatured, and (ii) a security interest in the Deposits,
Liabilities, and Obligations to secure the obligations of Borrower under the
Loan Documents. In addition, Borrower grants to Bank the right upon the
occurrence of an event that with notice, passage of time, or both would be an
Event of Default to segregate all Deposits, Liabilities, and Obligations into an
account or otherwise under the sole control of Bank. In addition, upon the
occurrence and continuation of any Unmatured Event of Default (as defined in the
Loan Agreement), Bank shall have the right to restrict transfers from any
Deposits, Liabilities, and Obligations, except for transfers relating to the
payment of (i) Borrower's payroll obligations, Borrower's accounts payable in
the ordinary course of Borrower's business, and (iii) Borrower's current tax
obligations.
INDEMNIFICATION OF BANK. Borrower agrees to indemnify, hold harmless, and on
demand defend Bank and its stockholders, directors, officers, employees, agents,
and representatives for, from, and against any and all damages, losses,
liabilities, costs, and expenses (including, without limitation, costs and
expenses of litigation and reasonable attorneys' fees) arising from any claim or
demand in respect of the Loan Documents, the Collateral, or the transaction
described in the Loan Documents and arising at any time, whether before or after
payment and performance of the Obligations in full, excepting any such matters
arising solely from the gross negligence or willful misconduct of Bank. The
obligations of Borrower and the rights of Bank under this paragraph shall
survive payment and performance of the Obligations in full and shall remain in
full force and effect without termination.
RESCISSION OR RETURN OF PAYMENTS. If at any time or from time to time, whether
before or after payment and performance of the obligations of the Loan Parties
under the Loan Documents in full, all or any part of any amount received by Bank
in payment of, or on account of, any obligation of the Loan Parties under the
Loan Documents is or must be, or is claimed to be, avoided, rescinded, or
returned by Bank to Borrower or any other Person for any reason whatsoever
(including, without limitation, bankruptcy, insolvency, or reorganization of
Borrower or any other Person), such obligation and any liens, security
interests, and other encumbrances that secured such obligations at the time such
avoided, rescinded, or returned payment was received by Bank shall be deemed to
have continued in existence or shall be reinstated, as the case may be, all as
though such payment had not been received.
HEADINGS. The headings at the beginning of each section of the Loan Documents
are solely for convenience and are not part of the Loan Documents.
NUMBER AND GENDER. In the Loan Documents the singular shall include the plural
and vice versa and each gender shall include the other genders.
MULTIPLE CREDIT ACCOMMODATIONS. If from time to time Borrower has more than one
loan or other credit accommodation with Bank, Borrower agrees that, unless
otherwise agreed by Bank and Borrower in writing, (i) the Loan Documents and the
agreements, documents, and instruments evidencing and relating to such other
loan(s) and credit accommodation(s) shall all remain in effect and neither shall
supersede the other, regardless of whether the Loan Documents and such other
agreements, documents, and instruments have differing terms, conditions, and
requirements, and (ii), regardless of any such differences, Borrower shall
comply with
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<PAGE> 10
all the terms, conditions, and requirements of the Loan Documents and of such
other agreements, documents, and instruments.
WAIVER OF STATUTE OF LIMITATIONS. Borrower waives, to the full extent permitted
by law, the right to plead any statutes of limitations as a defense to any or
all obligations under the Loan Documents.
WAIVERS BY BORROWER. Borrower (i) waives, to the full extent permitted by law,
presentment, notice of dishonor, protest, notice of protest, notice of intent to
accelerate, notice of acceleration, notice of dishonor, and all other notices or
demands of any kind (except notices specifically provided for in the Loan
Documents), and (ii) agrees that Bank may enforce this Note and any other Loan
Documents against any person included in Borrower without first having sought
enforcement against any other Loan Party or any Collateral.
AMENDMENT AND RESTATEMENT. This Note amends and restates that certain Secured
Promissory Note dated August 1, 1996, by and between Bank and Borrower, as
modified.
EMPLOYEE SOLUTIONS, INC., an Arizona
corporation
By: /s/
____________________________________
Its:__________________________________
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