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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _________________
Commission file number: 0-28493
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1659062
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1900 Gulf Street, Lamar, Missouri 64759-1899
(Address of principal executive offices) (ZIP Code)
(417) 682-3322
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _________
---
As of February 10, 2000, 1,368,000 shares of Common Stock of O'Sullivan
Industries Holdings, Inc, par value $0.01 per share were outstanding.
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The Index to Exhibits is on page 20.
Page 1 of 482
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PART I
ITEM 1. FINANCIAL STATEMENTS.
O'SULLIVAN INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
<TABLE>
<CAPTION>
December 31, June 30,
Assets: 1999 1999
------ ------------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,633 $ 3,740
Trade receivables, net of allowance for doubtful accounts
of $2,659 and $2,416, respectively 69,622 63,268
Inventories, net 54,524 56,134
Prepaid expenses and other current assets 5,823 3,810
--------- ---------
Total current assets 145,602 126,952
Property, plant and equipment, net 95,819 96,684
Other assets 15,200 1,909
Goodwill, net of accumulated amortization 40,588 41,422
--------- ---------
Total assets $ 297,209 $ 266,967
========= =========
Liabilities and Stockholders' Equity (Deficit):
Current liabilities:
Accounts payable $ 15,614 $ 11,416
Current portion of long-term debt 6,000 4,000
Accrued liabilities 30,620 24,695
Income taxes payable 1,106 1,579
--------- ---------
Total current liabilities 53,340 41,690
Long-term debt, less current portion 249,082 22,000
Other liabilities 1,909 1,909
Deferred income taxes 17,257 16,232
--------- ---------
Total liabilities 321,588 81,831
Commitments and contingencies (Note 11)
Mandatorily redeemable senior preferred stock; $0.01 par value, $24,893
liquidation value including accumulated dividends, 17,000,000 shares
authorized, 16,431,050 issued 11,681 --
Stockholders' equity (deficit):
Junior preferred stock, Series A; $0.01 par value,
100,000 shares authorized, none issued -- --
Junior preferred stock, Series B; $0.01 par value, at liquidation value including
accumulated dividends; 1,000,000 shares authorized, 515,681.33 issued 52,170 --
Common stock; $0.01 par value, 2,000,000 shares authorized, 1,368,000 issued 14 --
Common stock; $1.00 par value, 100,000,000 shares authorized, 16,819,950 issued -- 16,820
Additional paid-in capital 14,385 87,549
Retained earnings (deficit) (102,757) 89,470
Accumulated other comprehensive gain (loss) 128 (43)
Less common stock in treasury at cost, 0 and 770,962 shares respectively -- (8,660)
--------- ---------
Total stockholders' equity (deficit) (36,060) 185,136
--------- ---------
Total liabilities and stockholders' equity (deficit) $ 297,209 $ 266,967
========= =========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE> 3
O'SULLIVAN INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
------------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 111,023 $ 97,786 $ 213,015 $ 185,459
Costs and expenses:
Cost of sales 77,217 69,687 149,448 132,467
Selling, marketing and administrative 22,540 19,521 43,086 37,707
Merger related expenses 7,162 -- 7,792 --
Transaction fee to related party 3,062 -- 3,062 --
Compensation expense associated with stock options 10,697 187 10,697 374
Loss on settlement of interest rate swap 408 -- 408 --
--------- --------- --------- ---------
Total costs and expenses 121,086 89,395 214,493 170,548
--------- --------- --------- ---------
Operating income (loss) (10,063) 8,391 (1,478) 14,911
Interest expense (3,003) (1,053) (3,497) (1,858)
Interest income 168 57 240 147
--------- --------- --------- ---------
Income (loss) before income tax provision (benefit)
and extraordinary item (12,898) 7,395 (4,735) 13,200
Income tax provision (benefit) (1,100) 2,662 1,835 4,753
--------- --------- --------- ---------
Income (loss) before extraordinary item (11,798) 4,733 (6,570) 8,447
Extraordinary loss from early extinguishment
of debt, net of income tax benefit of $171 (305) -- (305) --
--------- --------- --------- ---------
Net income (loss) (12,103) 4,733 (6,875) 8,447
Dividends and accretion on preferred stock (782) -- (782) --
--------- --------- --------- ---------
Net income (loss) attributable to common
stockholders $ (12,885) $ 4,733 $ (7,657) $ 8,447
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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O'SULLIVAN INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Six months ended
December 31,
---------------------------
1999 1998
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (6,875) $ 8,447
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 7,364 6,720
Bad debt expense 546 193
Loss on disposal of assets 77 35
Deferred income taxes 1,025 --
Employee option amortization 70 374
Compensation expense associated with stock options 4,764 --
Changes in current assets and liabilities:
Trade receivables (6,900) (6,270)
Inventories 1,610 (551)
Other assets (2,153) 28
Accounts payable, accrued liabilities and
income taxes payable 12,005 3,617
--------- ---------
Net cash provided by operating activities 11,533 12,593
--------- ---------
Cash flows used for investing activities:
Capital expenditures (5,742) (11,296)
--------- ---------
Net cash used for investing activities (5,742) (11,296)
--------- ---------
Cash flows provided (used) by financing activities:
Issuance of stock, net of expenses 45,884 --
Redemption and cancellation of stock (263,251) --
Employee loan (260) --
Proceeds from borrowings, including issuance of warrants 252,054 27,000
Repayment of borrowings (16,000) (25,000)
Debt issuance costs (12,720) --
Purchase of common stock -- (2,811)
Exercise of stock options 395 52
Sale of common stock to employee benefit plans -- 1,791
--------- ---------
Net cash provided by financing activities 6,102 1,032
--------- ---------
Net increase in cash and cash equivalents 11,893 2,329
Cash and cash equivalents, beginning of period 3,740 1,810
--------- ---------
Cash and cash equivalents, end of period $ 15,633 $ 4,139
========= ==========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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O'SULLIVAN INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For the six months ended December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Preferred Stock
---------------------------------------------------------
Senior Junior, Series B Common Stock
------------------------- ------------------------- ------------------------
Shares Dollars Shares Dollars Shares Dollars
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1999 -- $ -- -- $ -- 16,820 $ 16,820
Net loss
Other comprehensive income
Exercise of stock options,
net of tax benefit
Compensation expense
associated with stock options
Redemption and cancellation
of common stock (16,820) (16,820)
Issuance of warrants
Issuance of preferred stock 16,431 11,500 516 51,568
Issuance of common stock 1,368 14
Dividends and accretion on
preferred stock 181 602
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1999 16,431 $ 11,681 516 $ 52,170 1,368 $ 14
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Total
Accumulated Stock- Com-
Additional Retained Treasury Stock other holders' prehensive
paid-in earnings ----------------------- comprehensive equity income
capital (deficit) Shares Dollars Income (loss) (deficit) (loss)
--------- --------- --------- --------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1999 $ 87,549 $ 89,470 (771) $ (8,660) $ (43) $ 185,136
Net loss (6,875) (6,875) (6,875)
Other comprehensive income 171 171 171
Exercise of stock options,
net of tax benefit (138) 43 533 395
Compensation expense
associated with stock options 12,982 12,982
Redemption and cancellation
of common stock (93,008) (184,569) 728 8,127 (286,270)
Issuance of warrants 7,000 7,000
Issuance of preferred stock 63,068
Issuance of common stock 14
Dividends and accretion on
preferred stock (783) --
--------- --------- --------- --------- --------- --------- ---------
Balance, December 31, 1999 $ 14,385 $(102,757) -- -- $ 128 $ (24,379) $ (6,704)
========= ========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE> 6
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1--BASIS OF PRESENTATION
The unaudited consolidated financial statements of O'Sullivan
Industries Holdings, Inc. and subsidiaries ("O'Sullivan") included herein have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-Q and Article 10
of Regulation S-X. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The financial statements should be read in conjunction with the
audited financial statements and notes thereto included in O'Sullivan's Annual
Report on Form 10-K for the fiscal year ended June 30, 1999. The interim results
are not necessarily indicative of the results that may be expected for a full
year.
NOTE 2--MERGER
On March 24, 1999, O'Sullivan announced that members of its senior
management team, in conjunction with a financial buyer, had made a proposal to
O'Sullivan's Board of Directors to acquire O'Sullivan, subject to requisite
financing. On May 18, 1999, O'Sullivan announced that it had entered into a
definitive merger agreement with OSI Acquisition, Inc. Investors in OSI
Acquisition, Inc. included members of O'Sullivan's senior management and
Bruckmann, Rosser, Sherrill & Co., II, L.P. ("BRS"). The merger agreement was
amended and restated on October 18, 1999.
On November 30, 1999, OSI Acquisition, Inc. was merged into O'Sullivan
in a recapitalization transaction approved by O'Sullivan's stockholders on
November 22, 1999. As a result of the merger, all of O'Sullivan's outstanding
common stock is held by members of O'Sullivan's senior management and BRS and
its affiliates. The management participants in the buyout own a total of 27.1%
of the outstanding common stock of O'Sullivan. BRS and its affiliates own the
balance.
Each share of common stock of O'Sullivan outstanding before the merger
was exchanged for $16.75 in cash and one share of senior preferred stock with an
initial liquidation value of $1.50 per share. Unpaid dividends accrue at the
rate of 12.0% per annum and, if not paid, will be accumulated and compounded at
the same rate during the period that the senior preferred stock is outstanding.
The mandatorily redeemable preferred stock was recorded at fair value of $0.70
per share and is being accreted to its full liquidation value. Some of the
shares of O'Sullivan common stock and options held by the management
participants in the buyout were exchanged for common stock, junior preferred
stock and options to acquire junior preferred stock of O'Sullivan.
O'Sullivan's Series B junior preferred stock was issued to BRS, its
affiliates and the management participants in the buyout in exchange for cash or
shares of O'Sullivan common stock. The liquidation value of the Series B junior
preferred stock is $100.00 per share. Dividends accrue at the rate of 14.0% per
annum and, if not paid, will be accumulated and compounded at the same rate
during the period the Series B junior preferred stock is outstanding.
In the merger, O'Sullivan issued options to purchase its Series A
preferred stock in exchange for certain options held by management participants
in the buyout. The agreements for the options to purchase O'Sullivan's Series A
junior preferred stock provide for a special accrual at the rate of 14% per
annum on the difference between the liquidation value of the stock ($150.00) and
the exercise price of the option ($50.00). The special accrual accrues at the
same time and in the same manner as would issued and outstanding Series A junior
preferred stock. No amount is payable until the exercise of the option, and
payment is further subject to the terms of any debt agreement of O'Sullivan.
When made, payment of the special accrual may be made in cash or by a reduction
in the exercise price of the option, at O'Sullivan's discretion. The special
accruals are reflected as compensation expense in the accompanying consolidated
statement of operations.
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O'Sullivan required approximately $357.0 million to complete the merger
and pay related fees and expenses of which approximately $264.0 million was
funded via debt proceeds.
NOTE 3--DERIVATIVE FINANCIAL INSTRUMENTS
Effective October 1, 1998, O'Sullivan had a forward starting interest
rate swap agreement with a notional principal amount of $10.0 million, which was
to terminate on October 1, 2008. Pursuant to the agreement, O'Sullivan paid a
fixed rate of 7.13% and received a floating interest rate during the duration of
the swap agreement. On November 30, 1999, O'Sullivan terminated the swap as
required by the counter-party due to the merger and recapitalization, incurring
a loss of $408,000.
O'Sullivan called its existing $10.0 million of 8.25% industrial
development revenue bonds on October 1, 1998 at a redemption price of 103%. The
$300,000 premium on the early retirement of the bonds was recognized as a loss
in O'Sullivan's second quarter of fiscal 1999 and was included in interest
expense. The Company refinanced these bonds with new, ten-year industrial
revenue bonds with a tax-exempt variable interest rate, which is reset weekly.
Interest on the bonds is paid monthly. The bonds mature on October 1, 2008.
NOTE 4--NEW ACCOUNTING STANDARDS
In June 1999, the FASB issued SFAS No. 138, which delayed the effective
date of SFAS No. 133, Accounting For Derivative Instruments And Hedging
Activities. Accordingly, O'Sullivan will adopt SFAS No 133 effective July 1,
2000. This new accounting standard will require that derivative instruments be
measured at fair value and recognized in the balance sheet as either assets or
liabilities, as the case may be. The treatment of changes in the fair value of a
derivative (i.e., gains and losses) will depend on its use and designation.
O'Sullivan will initially report gains and losses on derivatives designated as
hedges against the cash flow effect of a forecasted transaction as a component
of other comprehensive income and, subsequently, reclassify the gains and losses
into earnings when the forecasted transaction affects earnings. If SFAS 133 had
been adopted on July 1, 1999 the net change in the interest swap would reduce
other accumulated comprehensive income by $261,000 (a current period increase to
comprehensive income of $75,000 offset by an accumulated loss at the beginning
of the period of $336,000).
NOTE 5--MERGER RELATED EXPENSES
O'Sullivan expensed certain merger related costs as incurred in
connection with the recently completed merger mentioned above. For the quarter
ended December 31, 1999, O'Sullivan recognized certain merger related expenses
of approximately $10.2 million incurred for investment banking, legal,
accounting, printing, and other services. Included in these costs was a payment
to BRS of $3.1 million. For the six months ended December 31, 1999, merger
related expenses were $10.9 million. The merger related expenses and the fee
paid BRS have been included as separate line items in the accompanying
consolidated statement of operations.
NOTE 6--COMPENSATION EXPENSE ASSOCIATED WITH OPTIONS
O'Sullivan incurred approximately $10.7 million in compensation expense
associated with stock options as part of the merger. Of this amount, $6.0
million was exchanged for options to purchase 60,319 shares of Series A junior
preferred stock, $5.9 million in cash was paid and $1.1 million in liquidation
value of senior preferred stock was distributed to the option holders.
O'Sullivan had previously incurred approximately $2.3 million in compensation
expense prior to the merger. The compensation expense on the options has been
included as a separate line item in the accompanying consolidated statement of
operations.
During the quarter ended December 31, 1999, O'Sullivan incurred
compensation expense of approximately $70,000 related to the special accruals on
the options to purchase Series A junior preferred stock.
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NOTE 7--EXTRAORDINARY ITEM
O'Sullivan repaid private placement notes held with a principal amount
of $16.0 million for $16.5 million on November 30, 1999. The $476,000 prepayment
fee has been recognized as a $305,000 extraordinary loss, net of related tax
benefit.
NOTE 8--INVENTORY
Inventory consists of the following:
<TABLE>
<CAPTION>
December 31,
------------------------
(in thousands) 1999 1998
------- -------
<S> <C> <C>
Finished goods $36,415 $39,623
Work in process 5,869 6,263
Raw materials 12,240 10,248
------- -------
$54,524 $56,134
======= =======
</TABLE>
NOTE 9--LONG-TERM DEBT AND OTHER BORROWING ARRANGEMENTS
Long-term debt consisted of the following at December 31, 1999 and June 30,
1999:
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
------------ ---------
(in thousands)
<S> <C> <C>
Senior term notes, tranche A 35,000 --
Senior term notes, tranche B 100,000 --
Senior notes -- $ 12,000
Revolving credit agreement 4,000 4,000
Industrial revenue bonds 10,000 10,000
Senior subordinated notes--face value of $100.0 million
discounted at 98.06% and net of $3.5 million original issue discount
arising from issuance of warrants to buy common and
Series B junior preferred stock $ 94,569 --
Senior note--face value of $15.0 million, net
of $3.5 million original issue discount arising from issuance of warrants to
buy common and Series B junior preferred
stock 11,513 --
--------- ---------
Total debt 255,082 26,000
Less current maturities (6,000) (4,000)
--------- ---------
$ 249,082 $ 22,000
========= =========
</TABLE>
O'Sullivan Industries, Inc., O'Sullivan's operating subsidiary, is the
obligor under a senior secured credit facility totaling $175.0 million and
senior subordinated notes. O'Sullivan Industries - Virginia, Inc., a subsidiary
of O'Sullivan Industries, Inc., is the obligor for $10.0 million of variable
rate industrial revenue bonds. O'Sullivan Industries Holdings, Inc. is the
obligor for a $15.0 million senior note.
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The senior secured credit facility is comprised of the following:
o a $35.0 million term loan facility payable in 24
quarterly installments beginning March 31, 2000;
o a $100.0 million term loan facility repayable in 26
quarterly installments beginning March 31, 2001; and
o a $40.0 million revolving credit facility due
November 30, 2005, which includes a $15.0 million
letter of credit subfacility and a $5.0 million swing
line subfacility. At December 31, 1999 the Company
had $4.0 million outstanding on the credit facility
and approximately $12.8 million of letters of credit
outstanding.
O'Sullivan's obligations under the senior secured facility are secured
by first priority liens and security interest in the stock of O'Sullivan
Industries, Inc. and O'Sullivan Industries - Virginia, Inc. and substantially
all of the assets of O'Sullivan Industries, Inc. and O'Sullivan Industries -
Virginia, Inc.
At O'Sullivan's option, borrowings under the senior secured credit
facility accrue interest at varying rates based on (a) a Eurodollar rate plus an
applicable margin or (b) an applicable margin plus the highest of a bank's prime
rate, the federal funds effective rate plus 0.5% or three-month certificates of
deposit secondary market rates as adjusted for statutory reserves plus 1.0%.
Until June 30, 2000, the applicable margins for the $35.0 million term loan and
the revolving credit facility are fixed at 3.25% for Eurodollar loans and 2.25%
for base rate loans. After June 30, 2000, the applicable margins vary based upon
O'Sullivan Industries, Inc.'s leverage ratio. The applicable margins for the
$100.0 million term loan are 3.75% for Eurodollar loans and 2.75% for base rate
loans for the life of the loan. O'Sullivan also pays a quarterly fee equal to
0.5% of the unused commitment under the senior secured credit facility. The
weighted average interest rate at December 31, 1999 was approximately 9.8%.
O'Sullivan is subject to various covenants associated with the $175.0
million senior secured credit facility such as leverage and coverage ratios and
other customary covenants. In addition, O'Sullivan has certain restrictions on
its ability to incur additional debt, make capital expenditures, pay dividends,
sell its assets, issue securities, engage in acquisitions, and other
restrictions. At December 31, 1999, O'Sullivan was in compliance with all debt
covenants.
The senior subordinated notes totaling $100.0 million bear interest at
the rate of 13.375% per annum and are due in 2009. Interest is payable
semiannually on April 15 and October 15. The senior subordinated notes contain
various covenants including restrictions on additional indebtedness based upon
EBITDA coverage. In connection with these notes, O'Sullivan issued warrants to
purchase 93,273 shares of O'Sullivan common stock at an exercise price of $0.01
per shares and 39,273 shares of O'Sullivan's Series B junior preferred stock at
an exercise price of $0.01 per share. The warrants were recorded at their fair
value of $3.5 million.
The $15.0 million senior note bears interest at the rate of 12.0% per
annum and is due in 2009. In connection with this note, O'Sullivan issued
warrants to purchase 93,273 shares of O'Sullivan's common stock at an exercise
price of $0.01 per share and 39,273 shares of O'Sullivan's Series B junior
preferred stock at an exercise price of $0.01 per share. O'Sullivan assigned a
value of $3.5 million to the warrants.
The original issues discount and the warrants are amortized over the
life of the notes using the effective interest rate method.
Expenses related to the issuance of the debt financing were
approximately $12.7 million and have been capitalized as other assets. Of this
amount, $1.0 million was paid to BRS.
NOTE 10 - RELATED PARTY TRANSACTIONS
BRS provided various advisory services to O'Sullivan related to the
merger. These services included arranging and negotiating the financing of the
merger, arranging and structuring the transaction, planning O'Sullivan's capital
structure and related services. BRS received a transaction fee of $4.0 million
and expenses of
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$62,000 for these services. Of the $4.0 million transaction fee, $3.0 million
was recognized as a merger related expense and $1.0 million was capitalized into
loan fees.
BRS also provided $15.0 million in financing pursuant to a securities
purchase agreement with O'Sullivan. BRS received a transaction fee of $300,000
in connection with this financing. BRS later sold this note and the related
warrants to an unrelated third party.
O'Sullivan entered into a management services agreement with BRS for
strategic and financial advisory services on November 30, 1999. The annual fee
for such services are the greater of (a) 1% of O'Sullivan's consolidated
earnings before interest, taxes, depreciation, and amortization or (b) $300,000.
Under the management services agreement, BRS can also receive reimbursement for
expenses which are limited to $50,000 a year under the senior credit facility
agreement. The accrued management fee for the period ended December 31, 1999 was
$50,000 and is included in accounts payable.
The senior credit facilities and the management services agreement both
contain certain restrictions on the payment of the management fee. The
management services agreement provides that no cash payment for the management
fee can be made unless the fixed charge coverage ratio for our most recently
ended four full fiscal quarters would have been at least 2.0 to 1.0. All fees
and expenses under the management services agreement are subordinated to the
senior subordinated notes.
At December 31, 1999, O'Sullivan held a note receivable with a balance
of approximately $260,000 from an officer of O'Sullivan. O'Sullivan loaned the
officer money to purchase common stock and series B junior preferred stock of
O'Sullivan in the merger. The note bears interest at the rate of 9% per annum
and matures on November 30, 2009, or earlier if there is a change of control.
The receivable is recorded on the balance sheet in other assets.
NOTE 11--COMMITMENTS AND CONTINGENCIES
TANDY LITIGATION
On June 29, 1999, Tandy Corporation filed a complaint against
O'Sullivan in the District Court of Texas in Tarrant County. The complaint
relates to a potential reduction in O'Sullivan's tax benefit payments to Tandy
that would result from increased interest expense after the completion of the
merger. Tandy claims that this reduction would violate the tax sharing and tax
reimbursement agreement. The complaint sought a court order compelling
O'Sullivan to submit to a dispute resolution process. Alternatively, the
complaint sought a declaratory judgment that after the merger O'Sullivan must
continue to make tax-sharing payments to Tandy as if the merger had not
occurred.
On September 9, 1999, Tandy filed a motion for summary judgment in its
lawsuit against O'Sullivan. The motion argued that Tandy was entitled to a court
order requiring O'Sullivan to commence dispute resolution procedures under the
tax sharing agreement. Because O'Sullivan has made all payments required under
the tax sharing agreement and because no merger had occurred, O'Sullivan
believed that Tandy's lawsuit was premature since there could not be a dispute
under the tax sharing agreement with respect to the increased interest resulting
from the merger before the merger was completed. Alternatively, Tandy argued
that it was entitled to a court order preventing O'Sullivan from deducting the
interest expense related to the merger from the Company's tax-sharing payments
to Tandy.
On October 8, 1999, the District Court ruled on Tandy's motion for
summary judgment. It found that the dispute resolution provision of the tax
sharing agreement was triggered, and ordered that O'Sullivan begin the dispute
resolution process according to the terms of the tax sharing agreement. The
District Court denied all other relief sought by Tandy. Pursuant to the dispute
resolution provisions, Tandy and O'Sullivan representatives have discussed the
issues in the dispute but did not reach a resolution. Accordingly Tandy and
O'Sullivan are in the process of selecting the law firms or accounting firms to
act as arbitrators in the dispute.
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For the six months ended December 31, 1999, O'Sullivan paid Tandy $2.5
million under the agreement. If the arbitration ruling is in Tandy's favor,
O'Sullivan's payments would be substantially higher; the amount would depend on
O'Sullivan's taxable income. O'Sullivan believes that Tandy's position is
without merit and intends to defend itself vigorously.
LITIGATION CHALLENGING THE MERGER
On May 18, 1999, five lawsuits were filed as class actions by
stockholders in the Delaware Court of Chancery seeking to enjoin the merger or,
in the alternative, to rescind the merger and recover monetary damages. The
complaints name as defendants O'Sullivan, all of its directors and, in some
cases, BRS. The complaints allege that our directors breached their fiduciary
duties by approving the merger. The complaints also allege that the price terms
of the merger were inadequate and unfair to O'Sullivan stockholders. In
addition, the complaints allege that the management participants in the buyout
have conflicts of interest that have prevented them from acting in the best
interests of O'Sullivan stockholders and that make it inherently unfair for BRS
and the management participants in the buyout to acquire 100% of the O'Sullivan
stock. In the cases naming BRS as a defendant, BRS is alleged to have aided and
abetted the alleged breaches of fiduciary duties. The defendants do not have to
respond to the lawsuits until after the plaintiffs have combined their
complaints into one complaint. A consolidation order was signed on July 22, 1999
by the court. This order requires the plaintiffs to combine their complaints
into one complaint. However, no date has been set by which the defendants must
move or answer in response to the combined complaint. O'Sullivan believes that
the claims are without merit and intends to defend the lawsuits vigorously.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
We are a leading designer, manufacturer and distributor of
ready-to-assemble furniture products, with over 45 years of experience. We sell
primarily to the rapidly growing home office and home entertainment markets. We
manufacture approximately 450 stock keeping units of ready-to-assemble furniture
at retail price points from $20 to $999. Our product offerings include
ready-to-assemble desks, computer workcenters, home entertainment centers, audio
equipment racks, pantries and microwave oven carts. We also manufacture a
variety of other ready-to-assemble furniture for home office, home entertainment
and other home uses. We design our products to provide high quality, value and
ease of assembly by the consumer using straightforward, diagrammed instructions.
On March 24, 1999, O'Sullivan announced that members of its senior
management team, in conjunction with a financial buyer, had made a proposal to
O'Sullivan's Board of Directors to acquire O'Sullivan, subject to requisite
financing. On May 18, 1999, O'Sullivan announced that it had entered into a
definitive merger agreement with OSI Acquisition, Inc. Investors in OSI
Acquisition, Inc. included members of O'Sullivan's senior management and
Bruckmann, Rosser, Sherrill & Co., II, L.P. ("BRS"). The merger agreement was
amended and restated on October 18, 1999.
On November 30, 1999, OSI Acquisition, Inc. was merged into O'Sullivan
in a recapitalization transaction approved by O'Sullivan's stockholders on
November 22, 1999. As a result of the merger, all of O'Sullivan's outstanding
common stock is held by members of O'Sullivan's senior management and BRS and
its affiliates. The management participants in the buyout own a total of 27.1%
of the outstanding common stock of O'Sullivan. BRS and its affiliates own the
balance.
Each share of our outstanding common stock was exchanged for $16.75 in
cash and one share of our senior preferred stock with an initial liquidation
value of $1.50 per share. Unpaid dividends accrue at the stated rate of 12.0%
per annum and will be accumulated and compounded at the same rate during the
period that the senior preferred stock is outstanding. Some of the shares of our
common stock and options held by the management participants in the buyout were
exchanged for common stock, junior preferred stock and options to acquire junior
preferred stock of O'Sullivan.
We required approximately $357.0 million to complete the merger and pay
related fees and expenses of which approximately $264.0 million was funded via
debt proceeds.
RESULTS OF OPERATIONS
Net Sales. Net sales for the quarter ended December 31, 1999 increased
by $13.2 million, or 13.5%, to $111.0 million, up from $97.8 million for the
quarter ended December 31, 1998. For the six-month period ended December 31,
1999, sales increased $27.5 million, or 14.8%, to $213.0 million from $185.5
million. Strong increases in the office superstore, home improvement and
specialty retailer channels accounted for nearly all of the sales increase for
the quarter. For the six-month period, these channels and the discount mass
merchant channel accounted for the sales increase. For both the quarter and the
six-month period ended December 31, 1999, sales increased principally due to
higher unit volume, while the average sales price increased slightly.
In March 1999, Service Merchandise Co., one of our largest customers,
filed for bankruptcy protection under Chapter 11. We are currently shipping to
Service Merchandise while it operates under Chapter 11 bankruptcy protection,
which gives certain priority claims to vendors in the event of liquidation.
There can be no assurance that Service Merchandise will be able to continue its
business, or, if it does so, at what level it will continue its purchases from
us.
12
<PAGE> 13
Gross Profit. Gross profit increased to $33.8 million, or 30.4% of
sales, for the three month period ended December 31, 1999, from $28.1 million,
or 28.7% of sales, for the comparable prior year quarter. For the six months
ended December 31, 1999 gross profit increased to $63.6 million, or 29.8% of
sales, from $53.0 million, or 28.6% of sales. The higher gross margin was due to
the higher sales levels as well as increased productivity in our manufacturing
operations as compared to the second quarter of fiscal 1999. In the prior year
we incurred higher labor and overhead costs associated with the implementation
of new manufacturing equipment and related adaptation of manufacturing
processes.
In the fourth quarter of fiscal 1999, certain key commodity suppliers
announced price increases. We were able to minimize the effect of initial
increases during the first quarter of fiscal 2000 through our value analysis
program and productivity gains in manufacturing. Additional price increases
became effective during the second quarter of fiscal 2000. We were able to
partially offset the effect of these price increases through the programs
mentioned above combined with increased operating leverage from higher sales
levels. We currently estimate these increases will reduce our gross margin by
approximately $2.2 million during the last six months of fiscal 2000. We believe
that we can continue to partially offset the effect of such increases through
the programs mentioned above and through the eventual inclusion of the higher
costs in the selling price of our products. However, there can be no assurance
that we will be successful in offsetting these potential price increases.
Selling, Marketing and Administrative Expenses. Selling, marketing and
administrative expenses increased to $22.5 million or 20.3% of sales, for the
three month period ended December 31, 1999, from $19.7 million, or 20.2% of
sales, for quarter ended December 31, 1998. For the six-month period ended
December 31, 1999, selling, marketing and administrative expenses increased $5.0
million, to $43.1 million from $38.1 million in fiscal 1999. The majority of the
dollar increase in selling, marketing and administrative expenses for both the
quarter and the six-month period was due to increased sales levels. Advertising
and out-bound freight expense increased due to a change in customer mix combined
with the increase in sales activity.
Merger Related and Other Special Charges. O'Sullivan expensed merger
related costs as incurred in connection with the recently completed merger.
Merger related costs, consisting of investment banking, legal, accounting,
printing and other services, totaled $10.2 million during the three months ended
December 31, 1999 and $10.9 million for the six-month period ended December 31,
1999. The merger related expenses have been included as a separate line item in
the accompanying consolidated statement of operations. Additionally, during the
second quarter of fiscal 2000, O'Sullivan incurred compensation expense of $10.7
million in connection with stock options related to the merger and a $408,000
charge for the settlement of an interest rate swap agreement entered into in
fiscal 1997. Both the compensation expense from stock options and the loss on
the settlement of the interest rate swap have been included as separate line
items in the accompanying consolidated statement of operations. In total, the
merger related and other special charges were $21.3 million for the second
quarter of fiscal 2000 and $22.0 million for the six months ended December 31,
1999.
Depreciation and Amortization. Depreciation and amortization expenses
increased $150,000 to $3.7 million in the quarter ended December 31, 1999, from
$3.5 million in the three months ended December 31, 1998. For the six months
ended December 31, 1999, depreciation and amortization expenses increased
$644,000, or 19.4%, to $7.4 million from $6.7 million. The year-to-date increase
in depreciation and amortization expense was due primarily to the $18.0 million
expansion of our South Boston, Virginia manufacturing facility, which was
completed during the second quarter of fiscal 1999.
Operating Income. Operating income, including merger related and other
special charges, decreased by $18.5 million in the three months ended December
31, 1999, compared to the same period in the prior year. For the six month
period ended December 31, 1999 operating income, including merger related and
other special charges, decreased $16.4 million. The decrease for both the
quarter and the six-month period was due to the merger related and other special
charges incurred which totaled $21.3 million during the second quarter and $22.0
million during the first half of fiscal 2000.
Excluding merger related and other special charges, operating income
increased by $2.9 million, or 34.5%, to $11.3 million in the second quarter of
fiscal 2000 from $8.4 million in the second quarter of fiscal 1999. For the six
month period ended December 31, 1999 operating income, excluding merger related
and other
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<PAGE> 14
special charges, increased $5.6 million or 37.6% to $20.5 million from $14.9
million in the comparable prior year period.
Net Interest Expense. Net interest expense of $2.8 million for the
quarter ended December 31, 1999 increased 180.0% compared to $1.0 million
incurred during the quarter ended December 31, 1998. Interest expense increased
due to the higher level of borrowings associated with the financing of the
merger. Because of these borrowings, our future interest expense will increase
substantially. The merger closed on November 30, 1999, so only one month of
increased interest expense is reflected in the quarter ended December 31, 1999.
Extraordinary Item. O'Sullivan repaid private placement notes held with
a principal amount of $16.0 million for $16.5 million on November 30, 1999. The
$476,000 prepayment fee has been recognized an extraordinary loss of $305,000,
net of the related tax benefit.
EBITDA. For the quarter ended December 31, 1999, EBITDA decreased by
$18.3 million to a loss of $6.4 million from $11.9 million for the prior year
quarter. For the six months ended December 31, 1999, EBITDA decreased $15.7
million to $5.9 million from $21.6 million for the comparable period a year ago.
EBITDA decreased primarily due to the merger related costs, compensation
expenses associated with stock options and the loss on the termination of the
interest rate swap incurred due to the merger.
EBITDA is presented to provide additional information about our
operations. This item should be considered in addition to, but not as a
substitute for or superior to, operating income, net income, operating cash flow
and other measures of financial performance prepared in accordance with
generally accepted accounting principles. EBITDA may differ in the method of
calculation from similarly titled measures used by other companies.
Adjusted EBITDA. Our adjusted EBITDA, which excludes the merger related
expenses, compensation expense associated with stock options and the loss on the
termination of the interest rate swap, increased by $2.9 million, or 23%, to
$15.0 million for the quarter ended December 31, 1999, compared to $12.1 million
in the prior year quarter. For the six-month period ended December 31, 1999, our
adjusted EBITDA increased $5.8 million to $27.9 million, from $22.0 million for
the six months ended December 31, 1998. The increase in adjusted EBITDA for the
quarter and the six month period was driven by increased sales volumes,
increased productivity in manufacturing operations and the reduction of high
labor and overhead costs associated with the implementation of new manufacturing
equipment and related adaptation of manufacturing processes during the first six
months of fiscal 1999. These gains were partially offset by increased costs
associated with higher sales volume, primarily advertising and outbound freight
expense.
LIQUIDITY AND CAPITAL RESOURCES
Prior to November 30, 1999, our primary sources of liquidity were cash
flows from operations and borrowings under our old credit facility. Our current
sources of liquidity are cash flows from operations and borrowings under our
senior secured credit facility, which is discussed below. Our primary liquidity
requirements will be to pay our debt, including interest expense under the
senior credit facilities and the notes, payments to Tandy and to provide for
working capital and capital expenditures.
Working Capital. As of December 31, 1999, we had cash and cash
equivalents of $15.6 million. Net working capital was $92.3 million at December
31, 1999 compared to $77.8 million at December 31, 1998. The increase in working
capital is primarily attributable to the increased cash balance and higher
inventory levels over the prior year.
Operating Activities. Net cash provided by operating activities for the
six months ended December 31, 1999, was $11.5 million compared to $12.6 million
for the six months ended December 31, 1998. The decrease of $1.1 million in cash
flows from operations was due to merger-related expenses, compensation expense
related to stock options and the loss on the termination of the interest rate
swap. Partially offsetting these items was our
14
<PAGE> 15
increased operating income and increases in our accounts payable, accrued
liabilities and income taxes payable over the prior year amounts. If the
merger-related expenses, compensation expense related to stock options and the
loss on the interest rate swap were excluded, our cash flow would have been
$28.7 million, an increase of $16.1 million from the prior year period.
Investing Activities. We invested $5.7 million for capital expenditures
for the six months ended December 31, 1999 compared to $11.3 million for the
prior year six-month period. We currently estimate that the total capital
expenditure requirements for the remainder of the fiscal year will be
approximately $6.0 million, which we expect to fund from cash flow from
operations or borrowings under our line of credit. Our ability to make future
capital expenditures is subject to certain restrictions under our senior credit
facilities.
Financing Activities. On November 30, 1999 we completed our merger and
recapitalization. Our consolidated indebtedness at December 31, 1999 was $264.0
million, consisting of:
o $100.0 million in 13-3/8% senior subordinated notes due 2009
issued with warrants to purchase 6.0% of our common and Series
B junior preferred stock on a fully diluted basis. These
warrants were assigned a value of $3.5 million. These notes
were issued at a price of 98.06% providing $98.1 million in
cash proceeds before expenses related to the issuance.
o $139.0 million in senior secured credit facilities consisting
of a six year $35.0 million term loan, a seven and one-half
year $100.0 million term loan and $4.0 million in borrowings
under a $40.0 million revolving line of credit. The revolving
line of credit has a $15.0 million sub-limit for letters of
credit, of which we are currently utilizing approximately
$12.8 million.
o $10.0 million in variable rate industrial revenue bonds, and
o $15.0 million in a senior note issued with warrants to
purchase 6.0% of our common and Series B junior preferred
stock on a fully diluted basis. These warrants were assigned a
value of $3.5 million.
Expenses related to the issuance of debt financing were approximately
$12.7 million. The credit facilities and notes are subject to certain financial
and operational covenants and other restrictions, including among others, a
requirement to maintain certain financial ratios and restrictions on our ability
to incur additional indebtedness. In addition, the agreements effectively
prohibit the payment of dividends on our stock.
From time to time we may use derivative financial instruments to reduce
interest rate risks. We do not hold or issue derivative financial instruments
for trading purposes. During fiscal 1997, we entered into a forward starting
interest rate swap agreement with a notional principal amount of $10.0 million.
The effective date of the agreement was October 1, 1998, and the termination
date is October 1, 2008. We contracted to pay a fixed rate of 7.13% and receive
a floating interest rate during the duration of the swap agreement. On November
30, 1999, we terminated this swap, incurring a loss of $408,000, as part of the
merger and recapitalization.
Under the senior credit facilities we are required to hedge at least
one-half of our term loans under the facility for three years by February 28,
2000.
We repaid our private placement notes with a principal amount of $16.0
million for $16.5 million on November 30, 1999. The $476,000 prepayment fee is
recorded as a $305,000 extraordinary item, net of taxes.
Tax Sharing Agreement. For the six months ended December 31, 1999,
O'Sullivan paid Tandy Corporation $2.5 million pursuant to the Tax Sharing and
Tax Reimbursement Agreement between us. The effect of the merger upon our
payments to Tandy under this agreement is the subject of an arbitration
proceeding. See Note 11 to the financial statements included in this report. If
the ruling in the arbitration proceeding is in Tandy's
15
<PAGE> 16
favor, our payments under the tax sharing agreement would be substantially
higher; the amount would depend on our taxable income.
YEAR 2000 COMPLIANCE
O'Sullivan computers and computerized equipment experienced only two
minor problems at the start of calendar 2000. We discovered the problems testing
our systems on January 1, 2000. Both problems were fixed in less than one day
and caused no interruption of production, sales or shipments. Further, we know
of no supplier or customer whose ability to sell us raw materials or to purchase
finished goods has been materially affected by Year 2000 compliance problems.
We spent approximately $110,000 in connection with our Year 2000
program.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our market risk is impacted by changes in interest rates, foreign
currency exchange rates and certain commodity prices. Pursuant to our policies,
we may use natural hedging techniques and derivative financial instruments to
reduce the impact of adverse changes in market prices. We do not hold or issue
derivative instruments for trading purposes, and we have no material sensitivity
to changes in market rates and prices on our derivative financial instrument
positions.
We have market risk in interest rate exposure, primarily in the United
States. We manage interest rate exposure through our mix of fixed and floating
rate debt. Interest rate swaps may be used to adjust interest rate exposures
when appropriate based on market conditions. For qualifying hedges, the interest
differential of swaps is included in interest expense. We believe that our
foreign exchange risk is not material.
Due to the nature of our product lines, O'Sullivan has material
sensitivity to some commodities. We manage commodity price exposures primarily
through the duration and terms of our vendor contracts. A one percent change in
these commodity prices, assuming none of the increase could be passed on to
customers, would affect the after-tax earnings of O'Sullivan by approximately
$700,000 annually.
As noted above, in fiscal 2000 we have encountered price increases in
certain commodities, which increases are expected to reduce our gross margin by
about $2.2 million during the last six months of fiscal 2000. We cannot
guarantee that there will not be further price increases in these or other
commodities.
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<PAGE> 17
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
A special meeting of stockholders of O'Sullivan was held on November
22, 1999 to consider and vote on a proposal to approve and adopt the Amended and
Restated Agreement and Plan of Merger, dated as of October 18, 1999, between
O'Sullivan and OSI Acquisition, Inc., and approve the related merger, pursuant
to which (a) OSI was merged with and into O'Sullivan, (b) O'Sullivan was the
surviving corporation in the merger and (c) each share of common stock of
O'Sullivan issued and outstanding immediately prior to the merger (other than
shares held in O'Sullivan's treasury or by any of its subsidiaries and some of
the shares held by management participants in the buyout) were converted into
the right to receive (i) $16.75 in cash, without interest, and (ii) one share of
12% Senior Preferred Stock of O'Sullivan with a liquidation preference of $1.50
per share.
The votes for, against and abstaining on the proposal were as follows:
<TABLE>
FOR AGAINST ABSTAIN
<S> <C> <C>
11,173,607 276,754 15,898
</TABLE>
We received no broker non-votes for the special meeting.
ITEM 5. OTHER INFORMATION.
FORWARD LOOKING STATEMENTS.
Cautionary Statement Regarding Forward Looking Information.
Certain portions of this Report, and particularly the Notes to the
Consolidated Financial Statements and the Management's Discussion and Analysis
of Financial Condition and Results of Operation report, contain forward-looking
statements. These statements can be identified by the use of future tense or
dates or terms such as "believe,""would," "expect," "anticipate" or "plan."
These forward-looking statements involve risks and uncertainties. Actual results
may differ materially from those predicted by the forward-looking statements.
Factors and possible events which could cause results to differ include:
o significant indebtedness that may limit our financial and
operational flexibility;
o changes from anticipated levels of sales, whether due to
future national or regional economic and competitive
conditions, customer acceptance of existing and new products,
or otherwise;
o pricing pressures due to excess capacity in the
ready-to-assemble furniture industry, as occurred in 1995, or
customer demand in excess of our ability to supply product;
o raw material cost increases, particularly in particleboard
and fiberboard, as occurred in 1994 and 1995;
o transportation cost increases;
o loss of or reduced sales to significant customers as a result
of a merger, acquisition, bankruptcy, liquidation or any
other reason, as occurred with the liquidation of Best
Products in 1996 and could occur with Service Merchandise
Co., Inc.;
o actions of current or new competitors that increase
competition with our products or prices;
o the consolidation of manufacturers in the ready-to-assemble
furniture industry;
o increased advertising costs associated with promotional
efforts;
o increased interest rates;
o failure by or a major supplier or vendor to identify and
remedy all critical year 2000 compliance issues;
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<PAGE> 18
o pending or new litigation or governmental regulations such as
the pending litigation involving Tandy;
o other uncertainties which are difficult to predict or beyond
our control; and
o the risk that we incorrectly analyze these risks and forces,
or that the strategies we develop to address them could be
unsuccessful.
Because these forward-looking statements involve risks and
uncertainties, actual results may differ significantly from those predicted in
these forward-looking statements. You should not place a lot of weight on these
statements. These statements speak only as of the date of this document or, in
the case of any document incorporated by reference, the date of that document.
All subsequent written and oral forward-looking statements attributable
to O'Sullivan or any person acting on our behalf are qualified by the cautionary
statements in this section. We will have no obligation to revise these
forward-looking statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
A list of exhibits required to be filed as part of this Report is set
forth in the Index to Exhibits, which immediately precedes such exhibits, and is
incorporated herein by reference.
(b) Reports on Form 8-K:
None
18
<PAGE> 19
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.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
Date: February 11, 2000 By: /s/ Richard D. Davidson
----------------------------------
Richard D. Davidson
President and
Chief Executive Officer
Date: February 11, 2000 By: /s/ Phillip J. Pacey
----------------------------------
Phillip J. Pacey
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
19
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INDEX TO EXHIBITS
Exhibit No. Description Page
2.1 Amended and Restated Agreement and Plan of Merger, dated
as of October 18, 1999, between O'Sullivan Industries
Holdings, Inc. and OSI Acquisition, Inc. (incorporated by
reference from Appendix A Proxy Statement/Prospectus
included in Registration Statement on Form S-4 (File No.
333-81631))
3.1 & 4.1 Amended and Restated Certificate of Incorporation of
O'Sullivan (incorporated by reference from Exhibit 2.4(a)
to Registration Statement on Form S-4 (File No.
333-81631))
3.2 & 4.2 Bylaws of O'Sullivan (incorporated by reference from
Exhibit 3.2 to Registration Statement on Form S-1 (File
No. 33-72120))
4.3 Specimen Senior Preferred Stock Certificate of O'Sullivan
(incorporated by reference from Exhibit 3 to Registration
Statement on Form 8-A (File No. 0-28493))
4.4 Indenture dated as of November 30, 1999, by O'Sullivan
Industries, Inc., as Issuer, O'Sullivan Industries -
Virginia, Inc., as Guarantor, and Norwest Bank Minnesota,
National Association, as Trustee, relating to O'Sullivan
Industries, Inc.'s $100,000,000 principal amount of
13.375% senior subordinated notes .......................... 22
4.5 Warrant Agreement dated as of November 30, 1999 between
O'Sullivan Industries Holdings, Inc. and Norwest Bank
Minnesota, National Association, as Warrant Agent,
relating to warrants to purchase 39,273 shares of
O'Sullivan Industries Holdings, Inc. series B junior
preferred stock, including form of warrant certificate...... 107
4.6 Warrant Agreement dated as of November 30, 1999 between
O'Sullivan Industries Holdings, Inc. and Norwest Bank
Minnesota, National Association, as Warrant Agent,
relating to warrants to purchase 93,273 shares of
O'Sullivan Industries Holdings, Inc. common stock,
including form of warrant certificate....................... 143
4.7 Amended and Restated Warrant Agreement dated as of January
31, 2000 between O'Sullivan Industries Holdings, Inc. and
the holder thereof relating to warrants to purchase 39,273
shares of O'Sullivan Industries Holdings, Inc. series B
junior preferred stock, including form of warrant
certificate................................................. 188
4.8 Amended and Restated Warrant Agreement dated as of January
31, 2000 between O'Sullivan Industries Holdings, Inc. and
the holder thereof relating to warrants to purchase 93,273
shares of O'Sullivan Industries Holdings, Inc. common
stock, including form of warrant certificate................ 212
10.1 Credit Agreement among O'Sullivan Industries, Inc., as
Borrower, O'Sullivan Industries Holdings, Inc., the
several lenders from time to time parties thereto, Lehman
Brothers, Inc., as lead arranger and book manager,
Wachovia Bank, N.A., as syndication agent, Lehman
Commercial Paper Inc., as administrative agent and General
Electric Capital Corporation, as documentation agent,
dated as of November 30, 1999............................... 242
10.2 Management Services Agreement dated as of November 30,
1999 between O'Sullivan Industries Holdings, Inc. and
Bruckmann, Rosser, Sherrill & Co., Inc...................... 362
10.3 O'Sullivan Industries Holdings, Inc. 1999 Preferred Stock
Option Plan................................................. 368
10.4 Form of Preferred Stock Option Agreement.................... 373
10.5 Stockholders Agreement dated as of November 30, 1999 among
O'Sullivan Industries Holdings, Inc., Bruckmann, Rosser,
Sherrill & Co. II, L.P. and the individuals executing
signature pages to the agreement............................ 396
10.6 Registration Rights Agreement dated as of November 30,
1999 among O'Sullivan Industries Holdings, Inc.,
Bruckmann, Rosser, Sherrill & Co. II, L.P., persons
executing signature pages to the agreement and warrant
holders executing signature pages to the agreement.......... 419
10.7 Management Stock Agreement dated as of November 30, 1999
among O'Sullivan Industries Holdings, Inc., the persons
executing signature pages to the agreement and Bruckmann,
Rosser, Sherrill & Co. II, L.P.............................. 444
10.8 Management Subscription Agreement dated as of November 30,
1999 among OSI Acquisition, Inc. and the individuals
executing signature pages to the agreement.................. 468
27 Financial Data Schedule..................................... 482
20
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Pursuant to Item 601(b)(4)(iii) of Regulation S-K, O'Sullivan has not
filed agreements relating to certain long-term debt of O'Sullivan aggregating
$10 million. O'Sullivan agrees to furnish the Securities and Exchange Commission
a copy of such agreements upon request.
21
<PAGE> 1
EXHIBIT 4.4
EXECUTION COPY
================================================================================
O'SULLIVAN INDUSTRIES, INC.
Issuer
O'SULLIVAN INDUSTRIES - VIRGINIA, INC.
Guarantor
13-3/8% SENIOR SUBORDINATED NOTES DUE 2009
INDENTURE
Dated as of November 30, 1999
Norwest Bank Minnesota, National Association
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310(a)(1)........................................................... 7.10
(a)(2)............................................................. 7.10
(a)(3)............................................................. N.A.
(a)(4)............................................................. N.A.
(a)(5)............................................................. 7.10
(b)................................................................ 7.10
(c)................................................................ N.A.
311(a).............................................................. 7.11
(b)................................................................ 7.11
(c)................................................................ N.A.
312(a).............................................................. 2.05
(b)................................................................ 13.03
(c)................................................................ 13.03
313(a).............................................................. 7.06
(b)(1)............................................................. 10.03
(b)(2)............................................................. 7.07
(c)................................................................ 7.06;13.02
(d)................................................................ 7.06
314(a).............................................................. 4.03;13.02
(b)................................................................ 10.02
(c)(1)............................................................. 13.04
(c)(2)............................................................. 13.04
(c)(3)............................................................. N.A.
(d)................................................................ N.A.
(e)................................................................ 13.05
(f)................................................................ N.A.
315(a).............................................................. 7.01
(b)................................................................ 7.05,13.02
(c)................................................................ 7.01
(d)................................................................ 7.01
(e)................................................................ 6.11
316(a) (last sentence).............................................. 2.09
(a)(1)(A).......................................................... 6.05
(a)(1)(B).......................................................... 6.04
(a)(2)............................................................. N.A.
(b)................................................................ 6.07
(c)................................................................ 2.12
317(a)(1)........................................................... 6.08
(a)(2)............................................................. 6.09
(b)................................................................ 2.04
318(a).............................................................. 13.01
(b)................................................................ N.A.
(c)................................................................ 13.01
</TABLE>
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
F-2
<PAGE> 3
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
<TABLE>
<S> <C> <C>
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions. . . . . . . . . . . . . . . . . . . . . . . 20
Section 1.03. Incorporation by Reference of Trust Indenture Act. . . . . . . 20
Section 1.04. Rules of Construction. . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
ARTICLE 2.
THE NOTES
<TABLE>
<S> <C> <C>
Section 2.01. Form and Dating. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.02. Execution and Authentication.. . . . . . . . . . . . . . . . . 22
Section 2.03. Registrar and Paying Agent.. . . . . . . . . . . . . . . . . . 23
Section 2.04. Paying Agent to Hold Money in Trust. . . . . . . . . . . . . . 23
Section 2.05. Holder Lists.. . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.06. Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . 24
Section 2.07. Replacement Notes. . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.08. Outstanding Notes. . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.09. Treasury Notes.. . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.10. Temporary Notes. . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.11. Cancellation.. . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
ARTICLE 3.
REDEMPTION AND PREPAYMENT
<TABLE>
<S> <C> <C>
Section 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.02. Selection of Notes to Be Redeemed.. . . . . . . . . . . . . . . 37
Section 3.03. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . 37
Section 3.04. Effect of Notice of Redemption. . . . . . . . . . . . . . . . . 38
Section 3.05. Deposit of Redemption Price.. . . . . . . . . . . . . . . . . . 38
Section 3.06. Notes Redeemed in Part. . . . . . . . . . . . . . . . . . . . . 38
Section 3.07. Optional Redemption.. . . . . . . . . . . . . . . . . . . . . . 38
Section 3.08. Mandatory Redemption. . . . . . . . . . . . . . . . . . . . . . 39
Section 3.09. Offer to Purchase by Application of Excess Proceeds.. . . . . . 39
</TABLE>
ARTICLE 4.
COVENANTS
<TABLE>
<S> <C> <C>
Section 4.01. Payment of Notes.. . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.02. Maintenance of Office or Agency. . . . . . . . . . . . . . . . 41
Section 4.03. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.04. Compliance Certificate.. . . . . . . . . . . . . . . . . . . . 42
Section 4.05. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.06. Stay, Extension and Usury Laws.. . . . . . . . . . . . . . . . 43
Section 4.07. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 43
Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.. . 46
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 4.10. Asset Sales................................................. 48
Section 4.11. Transactions with Affiliates................................ 49
Section 4.12. Liens....................................................... 50
Section 4.13. Business Activities......................................... 50
Section 4.14. Corporate Existence......................................... 50
Section 4.15. Offer to Repurchase Upon Change of Control.................. 50
Section 4.16. Anti-Layering............................................... 51
Section 4.17. Sale and Leaseback Transactions............................. 51
Section 4.18. Additional Guarantees....................................... 52
Section 4.19. Designation of Restricted and Unrestricted Subsidiaries..... 52
</TABLE>
ARTICLE 5.
SUCCESSORS
<TABLE>
<S> <C> <C>
Section 5.01. Merger, Consolidation, or Sale of Assets.................... 52
Section 5.02. Successor Corporation Substituted........................... 53
</TABLE>
ARTICLE 6.
DEFAULTS AND REMEDIES
<TABLE>
<S> <C> <C>
Section 6.01. Events of Default.......................................... 53
Section 6.02. Acceleration............................................... 55
Section 6.03. Other Remedies............................................. 55
Section 6.04. Waiver of Past Defaults.................................... 56
Section 6.05. Control by Majority........................................ 56
Section 6.06. Limitation on Suits........................................ 56
Section 6.07. Rights of Holders of Notes to Receive Payment.............. 56
Section 6.08. Collection Suit by Trustee................................. 57
Section 6.09. Trustee May File Proofs of Claim........................... 57
Section 6.10. Priorities................................................. 57
Section 6.11. Undertaking for Costs...................................... 58
</TABLE>
ARTICLE 7.
TRUSTEE
<TABLE>
<S> <C> <C>
Section 7.01. Duties of Trustee.......................................... 58
Section 7.02. Rights of Trustee.......................................... 59
Section 7.03. Individual Rights of Trustee............................... 59
Section 7.04. Trustee's Disclaimer....................................... 59
Section 7.05. Notice of Defaults......................................... 60
Section 7.06. Reports by Trustee to Holders of the Notes................. 60
Section 7.07. Compensation and Indemnity................................. 60
Section 7.08. Replacement of Trustee..................................... 61
Section 7.09. Successor Trustee by Merger, etc........................... 62
Section 7.10. Eligibility; Disqualification.............................. 62
Section 7.11. Preferential Collection of Claims Against Company.......... 62
</TABLE>
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
<TABLE>
<S> <C> <C>
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance... 62
Section 8.02. Legal Defeasance and Discharge............................. 62
Section 8.03. Covenant Defeasance........................................ 63
Section 8.04. Conditions to Legal or Covenant Defeasance................. 63
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions................................ 64
Section 8.06. Repayment to Company.......................................... 65
Section 8.07. Reinstatement................................................. 65
</TABLE>
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
<TABLE>
<S> <C> <C>
Section 9.01. Without Consent of Holders of Notes........................... 65
Section 9.02. With Consent of Holders of Notes.............................. 66
Section 9.03. Compliance with Trust Indenture Act........................... 67
Section 9.04. Revocation and Effect of Consents............................. 67
Section 9.05. Notation on or Exchange of Notes.............................. 68
Section 9.06. Trustee to Sign Amendments, etc............................... 68
</TABLE>
ARTICLE 10.
SUBORDINATION
<TABLE>
<S> <C> <C>
Section 10.01. Agreement to Subordinate...................................... 68
Section 10.02. Liquidation; Dissolution; Bankruptcy.......................... 68
Section 10.03. Default on Designated Senior Debt............................. 69
Section 10.04. Acceleration of Securities.................................... 69
Section 10.05. When Distribution Must Be Paid Over........................... 69
Section 10.06. Notice by Company............................................. 70
Section 10.07. Subrogation................................................... 70
Section 10.08. Relative Rights............................................... 70
Section 10.09. Subordination May Not Be Impaired by Company.................. 71
Section 10.10. Distribution or Notice to Representative...................... 71
Section 10.11. Rights of Trustee and Paying Agent............................ 71
Section 10.12. Authorization to Effect Subordination......................... 71
Section 10.13. Amendments.................................................... 71
</TABLE>
ARTICLE 11.
SUBSIDIARY GUARANTEES
<TABLE>
<S> <C> <C>
Section 11.01. Guarantee..................................................... 72
Section 11.02. Subordination of Subsidiary Guarantee......................... 73
Section 11.03. Limitation on Guarantor Liability............................. 73
Section 11.04. Execution and Delivery of Subsidiary Guarantee................ 73
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms............ 74
Section 11.06. Releases Following Sale of Assets............................. 74
</TABLE>
ARTICLE 12.
SATISFACTION AND DISCHARGE
<TABLE>
<S> <C> <C>
Section 12.01. Satisfaction and Discharge.................................... 75
Section 12.02. Application of Trust Money.................................... 75
</TABLE>
ARTICLE 13.
MISCELLANEOUS
<TABLE>
<S> <C> <C>
Section 13.01. Trust Indenture Act Controls.................................. 76
Section 13.02. Notices....................................................... 76
Section 13.03. Communication by Holders of Notes with Other Holders of Notes. 77
Section 13.04. Certificate and Opinion as to Conditions Precedent............ 77
Section 13.05. Statements Required in Certificate or Opinion................. 78
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C> <C>
Section 13.06. Rules by Trustee and Agents. . . . . . . . . . . . . . . . . . 78
Section 13.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.. . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 13.08. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 13.09. No Adverse Interpretation of Other Agreements. . . . . . . . . 78
Section 13.10. Successors.. . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 13.11. Severability.. . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 13.12. Counterpart Originals. . . . . . . . . . . . . . . . . . . . . 79
Section 13.13. Table of Contents, Headings, etc.. . . . . . . . . . . . . . . 79
</TABLE>
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A1 FORM OF NOTE
Exhibit A2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
Exhibit E FORM OF SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
</TABLE>
iv
<PAGE> 7
INDENTURE, dated as of November 30, 1999, among O'Sullivan Industries,
Inc., a Delaware corporation (the "Company"), O'Sullivan Industries -- Virginia,
Inc. (the "Guarantor") and Norwest Bank Minnesota, National Association, as
trustee (the "Trustee").
The Company, the Guarantor and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 13 3/8% Senior Subordinated Notes due 2009 (the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note in the form of Exhibit A1 hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee that will be issued in a denomination equal to the outstanding
principal amount of Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person
is merged with or into or became a Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of such specified Person, and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Additional Notes" means up to $100 million in aggregate principal amount
of Notes (other than the Initial Notes) issued under this Indenture in
accordance with Sections 2.02 and 4.09 hereof, as part of the same series as
the Initial Notes.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" shall have
correlative meanings.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Premium" means, with respect to any Note on any date (the
"Calculation Date"), the greater of:
(1) 1.0% of the principal amount of such Note; or
(2) the excess of:
(A) the present value at such Calculation Date of:
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<PAGE> 8
(1) the redemption price of such Note at October 15, 2004 (such
redemption price being set forth in the table in Section 3.07
hereof) plus
(2) all required interest payments due on such Note through October
15, 2004 (excluding accrued but unpaid interest)
computed using a discount rate equal to the Treasury Rate plus 50 basis
points over
(B) the principal amount of such Note, if greater.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedelbank that apply to such transfer or exchange.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or rights
(including, without limitation, by way of a sale and leaseback) (provided
that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by Section 4.15 and/or
Section 5.01 hereof and not by Sections 3.09 and 4.10 hereof); and
(2) the issue or sale by the Company or any of its Restricted Subsidiaries of
Equity Interests of any of the Company's Restricted Subsidiaries, in the
case of either clause (1) or (2), whether in a single transaction or a
series of related transactions:
(a) that have a fair market value in excess of $5.0 million, or
(b) for net proceeds in excess of $5.0 million.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) a disposition of assets by the Company to a Restricted Subsidiary or by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary;
(2) an issuance of Equity Interests by a Restricted Subsidiary to the Company
or to another Restricted Subsidiary;
(3) a Restricted Payment that is permitted by Section 4.07 hereof;
(4) a disposition in the ordinary course of business;
(5) the sale and leaseback of any assets within 90 days of the acquisition
thereof;
(6) foreclosures on assets; and
(7) the licensing of intellectual property.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for
2
<PAGE> 9
which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance
with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have a
corresponding meaning.
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"Broker-Dealer" means any broker or dealer registered under the Exchange
Act.
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.L.C., a Delaware limited
liability company.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets
of, the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) Government Securities having maturities of not more than six months from
the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each
case with any lender party to the Senior Credit Facilities or with any
domestic commercial bank having capital and surplus in excess of $500
million and a Thompson Bank Watch Rating of "B" or better;
3
<PAGE> 10
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the rating of "P-2" (or higher) from Moody's
Investors Service, Inc. or "A-3" (or higher) from Standard & Poor's
Corporation and in each case maturing within six months after the date of
acquisition; and
(6) any fund investing exclusively in investments of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"Cedelbank" means Cedelbank, a limited liability company (a societe
anonyme) organized under Luxembourg law.
"Change of Control" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than a Principal or a Related
Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of the
Company;
(3) the consummation of any transaction the result of which is that any
"person" (as such term is defined in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Principals or their Related Parties
or a Permitted Group becomes the Beneficial Owner, directly or indirectly,
of more than 50% of the Voting Stock of O'Sullivan Holdings, provided that
the Principals and Related Parties Beneficially Own, directly or
indirectly, in the aggregate a lesser percentage of the total voting power
of the Voting Stock of O'Sullivan Holdings than such other person and do
not have the right or ability by voting power, contract or otherwise, to
elect or designate for election a majority of the Board of Directors of
O'Sullivan Holdings;
(4) the first day on which a majority of the members of the Board of
Directors of O'Sullivan Holdings are not Continuing Directors; or
(5) the first day on which the Company ceases to be a Wholly Owned Restricted
Subsidiary of O'Sullivan Holdings.
"Company" means O'Sullivan Industries, Inc., and any and all successors
thereto.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period, plus:
(1) an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale, to the extent such losses were deducted in
computing such Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes
was deducted in computing such Consolidated Net Income; plus
4
<PAGE> 11
(3) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized
(including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net payments, if any,
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income; plus
(4) depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash charges (excluding any such
non-cash charge to the extent that it represents an accrual of or reserve
for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income; plus
(5) expenses and charges of the Company related to the Recapitalization which
are incurred within 90 days of the consummation of the Recapitalization,
plus
(6) any extraordinary charges, as defined by GAAP, for such period to the
extent that such charges were deducted in computing such Consolidated Net
Income, plus
(7) amounts accrued pursuant to the Management Services Agreement to the
extent such amounts were deducted in computing Consolidated Net Income but
were not paid in cash, minus
(8) the amount of any cash payments made pursuant to the Management Services
Agreement whether or not such amount was deducted in computing
Consolidated Net Income, minus
(9) any tax payments to Tandy Corporation or any of its Affiliates in respect
of such period to the extent such payments exceed the provision for taxes
for such period.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication:
(1) the interest expense of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP
(including amortization of original issue discount, non-cash interest
payments, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net payments, if
any, pursuant to Hedging Obligations; provided that in no event shall any
amortization of deferred financing costs be included in Consolidated
Interest Expense); plus
(2) the consolidated capitalized interest of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued.
Notwithstanding the preceding, the Consolidated Interest Expense with respect
to any Restricted Subsidiary that is not a Wholly Owned Restricted Subsidiary
shall be included only to the extent (and in the same proportion) that the net
income of such Restricted Subsidiary was included in calculating Consolidated
Net Income.
5
<PAGE> 12
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted
Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(4) the cumulative effect of a change in accounting principles shall be
excluded; and
(5) the Net Income of any Unrestricted Subsidiary shall be excluded, whether
or not distributed to the Company or one of its Restricted Subsidiaries,
for purposes of Section 4.09 hereof and shall be included for purposes of
Section 4.07 hereof only to the extent of the amount of dividends or
distributions paid in cash to the Company or one of its Restricted
Subsidiaries.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the date of this Indenture;
(2) was nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election; or
(3) was nominated by the Principals pursuant to the Stockholders Agreement.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agent" means Lehman Commercial Paper Inc., in its capacity as
Administrative Agent for the lenders party to the Senior Credit Facilities, or
any successor thereto or any Person otherwise appointed.
"Credit Facilities" means, the Senior Credit Facilities and/or one or more
debt facilities or commercial paper facilities, in each case with banks or
other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced, restructured or refinanced in
whole or in part from time to time.
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<PAGE> 13
"Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, substantially
in the form of Exhibit A1 hereto except that such Note shall not bear the
Global Note Legend and shall not have the "Schedule of Exchanges of Interests
in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Debt" means:
(1) any Indebtedness outstanding under the Senior Credit Facilities; and
(2) after payment in full of all Obligations under the Senior Credit
Facilities, any other Senior Debt permitted under the indenture the
principal amount of which is $25.0 million or more and that has been
designated by the Company as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date on which the Notes mature. Notwithstanding
the preceding sentence, any Capital Stock that would not qualify as
Disqualified Stock but for change of control or asset sale provisions shall not
constitute Disqualified Stock if the provisions are not more favorable to the
Holders of such Capital Stock than the provisions described in Sections 3.09,
4.10 and 4.15 hereof.
"Domestic Restricted Subsidiary" means, with respect to the Company, any
Wholly Owned Subsidiary of the Company that was formed under the laws of the
United States of America.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means an offering of the Equity Interests (other than
Disqualified Stock) of the Company or O'Sullivan Holdings that results in net
proceeds to the Company, or a contribution to the common equity capital of the
Company, of at least $25,000,000.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Excess Tandy Payments" means the aggregate amount of all payments made to
Tandy Corporation after the date of this Indenture in excess of the amount that
would have been payable to Tandy Corporation had the increase in interest
expense resulting from the recapitalization and merger been taken into account
in determining the Company's annual payments to Tandy Corporation.
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<PAGE> 14
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Credit Facilities) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of:
(1) the Consolidated Interest Expense of such Person for such period;
(2) any interest expense on Indebtedness of another Person that is Guaranteed
by such Person or one of its Restricted Subsidiaries or secured by a Lien
on assets of such Person or one of its Restricted Subsidiaries, whether or
not such Guarantee or Lien is called upon;
(3) the product of (a) all dividend payments, whether or not in cash, on any
series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable
solely in Equity Interests of the Company (other than Disqualified Stock)
and other than accruals of dividends on Equity Interests that are not
Disqualified Stock that are added to the liquidation preference of such
Equity Interests and are not required to be paid in cash, times (b) a
fraction, the numerator of which is one and the denominator of which is
one minus the then current combined federal, state and local statutory tax
rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues
preferred stock subsequent to the commencement of the period for which the
Fixed Charge Coverage Ratio is being calculated but prior to the date on which
the event for which the calculation of the Fixed Charge Coverage Ratio is made
(the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including
any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the
Calculation Date shall be calculated to include the Consolidated Cash Flow
of the acquired entities on a pro forma basis (to be calculated in
accordance with Article 11-02 of Regulation S-X, as in effect on the date
of this Indenture) after giving effect to cost savings resulting from
employee terminations, facilities consolidations and closings,
standardization of employee benefits and compensation policies,
consolidation of property, casualty and other insurance coverage and
policies, standardization of sales and distribution methods, reductions in
taxes other than income taxes and
8
<PAGE> 15
other cost savings reasonably expected to be realized from such
acquisition, shall be deemed to have occurred on the first day of the
four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (3)
of the proviso set forth in the definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded; and
(3) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to
the Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of
the specified Person or any of its Restricted Subsidiaries following the
Calculation Date.
"Foreign Subsidiary" means any Subsidiary of the Company that is not
organized under the laws of a state or territory of the United States or the
District of Columbia.
"GAAP" means 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 have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture, except that
calculations made for purposes of determining compliance with the terms of the
covenants and with other provisions of this Indenture shall be made without
giving effect to depreciation, amortization or other expenses recorded as a
result of the application of purchase accounting in accordance with Accounting
Principles Board Opinion Nos. 16 and 17.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes in the form of
Exhibit A1 or A2 hereto, issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, letters of credit and
reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.
"Guarantors" means each of:
(1) O'Sullivan Industries - Virginia, Inc.; and
(2) any other Subsidiary of the Company that executes a Subsidiary Guarantee
in accordance with the provisions of this Indenture, and their respective
successors and assigns.
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<PAGE> 16
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency exchange rates or commodity
prices.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note in the form of Exhibit A1 hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(3) bankers' acceptances;
(4) representing Capital Lease Obligations; or
(5) the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of
the specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person; provided that
Indebtedness shall not include the pledge by the Company of the Capital Stock
of an Unrestricted Subsidiary of the Company to secure Non-Recourse Debt of
such Unrestricted Subsidiary.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness that does not
require current payments of interest; and
(2) the principal amount thereof, together with any interest thereon that is
more than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
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<PAGE> 17
"Initial Notes" means the first $100 million in aggregate principal amount
of Notes issued under this Indenture on the date hereof.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Company ,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Management Services Agreement" means the Management Services Agreement,
dated as of the date of this Indenture, between the Company and BRS as in
effect on the date of this Indenture.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision for taxes on
such gain (but not loss), realized in connection with:
(a) any Asset Sale; or (b) the disposition of any securities by such
Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries; and
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<PAGE> 18
(2) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain
(but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), the amounts required to be applied to the payment of
Indebtedness (other than Indebtedness incurred pursuant to the Senior Credit
Facilities) secured by a Lien on the asset or assets that were the subject of
the Asset Sale, and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"New Notes" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f) hereof.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted Subsidiaries:
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is
directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the Holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any Holder of
any other Indebtedness (other than the Notes) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and
(3) as to which the lenders have been notified in writing that they will not
have any recourse to the stock (other than stock of an Unrestricted
Subsidiary pledged by the Company to secure debt of such Unrestricted
Subsidiary) or assets of the Company or any of its Restricted
Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to it in the preamble to this Indenture.
The Initial Notes and the Additional Notes shall be treated as a single class
for all purposes under this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities and obligations
payable under the documentation governing any Indebtedness, including, without
limitation, interest after the commencement of any bankruptcy proceeding at the
rate specified in the applicable instrument governing or evidencing Senior
Debt.
"Offering" means the offering of the Units by the Company.
"Offering Memorandum" means the offering memorandum, dated November 23,
1999, relating to the Offering.
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<PAGE> 19
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 13.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"O'Sullivan Holdings" means O'Sullivan Industries Holdings, Inc., the
Company's parent holding company.
"Participant" means, with respect to the Depositary, Euroclear or
Cedelbank, a Person who has an account with the Depositary, Euroclear or
Cedelbank, respectively (and, with respect to DTC, shall include Euroclear and
Cedelbank).
"Permitted Business" means any business in which the Company and its
Restricted Subsidiaries are engaged on the date of this Indenture or any
business reasonably related, incidental or ancillary thereto.
"Permitted Group" means any group of investors that is deemed to be a
"person" (as that term is used in Section 13(d)(3) of the Exchange Act) at any
time prior to the Company's initial public offering of common stock, by virtue
of the Stockholders Agreement, as the same may be amended, modified or
supplemented from time to time, provided that no single Person (other than the
Principals and their Related Parties) Beneficially Owns (together with its
Affiliates) more of the Voting Stock of the Company that is Beneficially Owned
by such group of investors than is then collectively Beneficially Owned by the
Principals and their Related Parties in the aggregate.
"Permitted Investments" means:
(1) any Investment in the Company or in a Restricted Subsidiary of the
Company;
(2) any Investment in Cash Equivalents;
(3) any Investment by the Company or any Restricted Subsidiary of the Company
in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the Company;
or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or
is liquidated into, the Company or a Restricted Subsidiary of the
Company;
(4) Hedging Obligations;
(5) any Restricted Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Sections 3.09 and 4.10 hereof;
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<PAGE> 20
(6) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company; and
(7) other Investments made after the date of this Indenture in any Person
engaged in a Permitted Business having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (7) since the date of this
Indenture, not to exceed $7.5 million.
"Permitted Junior Securities" means:
(1) common Equity Interests in the Company or any Guarantor; or
(2) debt or preferred equity securities of the Company or any Guarantor
issued pursuant to a plan of reorganization consented to by each class of
Senior Debt; provided that any such debt securities are subordinated to
all Senior Debt and any debt securities issued in exchange for Senior Debt
to substantially the same extent as, or to a greater extent than, the
Notes and the Subsidiary Guarantees are subordinated to Senior Debt under
this Indenture.
"Permitted Liens" means:
(1) Liens securing Senior Debt (including, without limitation, Indebtedness
under the Senior Credit Facilities) permitted by the terms of this
Indenture to be incurred under clause (i) of Section 4.09 hereof;
(2) Liens in favor of the Company or any Restricted Subsidiary;
(3) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(4) Liens existing on the date of this Indenture;
(5) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (iv) of the second paragraph of Section 4.09 hereof;
(6) Liens securing Permitted Refinancing Indebtedness where the Liens
securing the Indebtedness being refinanced were permitted under the
indenture;
(7) Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do
not exceed $7.5 million at any one time outstanding and that: (a) are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the
value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary; and
(8) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
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<PAGE> 21
(9) Liens on property of a Person existing at the time such Person is merged
into or consolidated with the Company or any Restricted Subsidiary of the
Company, provided that such Liens were not incurred in contemplation of
such merger or consolidation and do not extend to any assets other than
those of the Person merged into or consolidated with the Company or any
Restricted Subsidiary;
(10) Liens on property existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary of the Company, provided such Liens
were not incurred in contemplation of such acquisition; and
(11) Liens secured Hedging Obligations which Hedging Obligations relate to
Indebtedness that is otherwise permitted under this Indenture.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that:
(1) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses incurred in connection therewith) except, in
the case of the Senior Credit Facilities, the principal amount of such
Permitted Refinancing Indebtedness does not exceed the greater of (i) the
principal amount of Indebtedness permitted (whether or not borrowed) under
clause (i) of the second paragraph of Section 4.09 hereof or (ii) the
amount actually borrowed under the Senior Credit Facilities;
(2) such Permitted Refinancing Indebtedness has a final maturity date no
earlier than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders of Notes as
those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Principals" means BRS and its affiliates.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
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<PAGE> 22
"Recapitalization" means the transactions described in the Offering
Memorandum under the caption "The Recapitalization Transactions" or related
thereto.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date hereof, by and among the Company and the other parties
named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time and, with respect to any Additional
Notes, one or more registration rights agreements between the Company and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in the
form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in the
form of Exhibit A2 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" with respect to any Principal means:
(1) any controlling stockholder or partner, 80% (or more) owned Subsidiary,
or spouse or immediate family member (in the case of an individual) of
such Principal; or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding a 51% or
more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (1).
"Representative" means the trustee, agent or representative for any Senior
Debt.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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<PAGE> 23
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facilities" means the Credit Agreement dated as of or
around the date of the indenture among the Company, O'Sullivan Holdings, Lehman
Commercial Paper Inc., as Arranger, syndication agent and administrative agent,
and the other entities from time to time parties thereto providing for
revolving credit borrowings and term loans, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
restructured, replaced or refinanced from time to time including increases in
principal amount (whether the same are provided by the original Credit Agent
and lenders under such Senior Credit Facilities or a successor agent or other
lenders).
"Senior Debt" means:
(1) all Indebtedness of the Company, O'Sullivan Holdings or any Guarantor
outstanding under Credit Facilities and all Hedging Obligations with
respect thereto;
(2) any other Indebtedness of the Company or any Guarantor permitted to be
incurred under the terms of the indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is on a
parity with or subordinated in right of payment to the notes or any
Subsidiary Guarantee; and
(3) all Obligations with respect to the items listed in the preceding clauses
(1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt
will not include:
(1) any liability for federal, state, local or other taxes owed or owing by
the Company;
(2) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation of this
Indenture; provided that Indebtedness under a Credit Facility will not
cease to be Senior Debt under this clause (4) if the lenders obtained a
certificate from an executive officer of the Company as of the date of the
incurrence of such Indebtedness to the effect that such Indebtedness was
permitted to be incurred by this Indenture.
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<PAGE> 24
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stockholders Agreement" means that certain Stockholders Agreement, dated
as of November 30, 1999, by and among O'Sullivan Holdings, BRS and the other
signatories party thereto, as in effect on the date of this Indenture.
"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership or limited liability company (a) the sole general partner
or the managing general partner or managing member of which is such Person
or a Subsidiary of such Person or (b) the only general partners of which
are such Person or one or more Subsidiaries of such Person (or any
combination thereof).
"Subsidiary Guarantee" means the Guarantee by each Guarantor of the
Company's payment obligations under this Indenture and on the Notes, executed
pursuant to the provisions of this Indenture.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement, dated as
of November 30, 1999, by and between the Company and O'Sullivan Holdings.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section S
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Total Assets" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as set forth on the Company's most recent consolidated
balance sheet.
"Treasury Rate" means, as of any calculation date, the yield to maturity
as of such calculation date of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the calculation date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data))
most nearly equal to the period from the calculation date to October 15, 2004;
provided, however, that if the period from the calculation date to October 15,
2004 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
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<PAGE> 25
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Units" means the units, each consisting of $1,000 principal amount of
Notes, one warrant to purchase initially 0.9327 shares of O'Sullivan Holdings'
common stock and one warrant to purchase initially 0.3927 shares of O'Sullivan
Holdings' series B junior preferred stock, in each case, with a par value of
$0.01 per share.
"Unrestricted Global Note" means a permanent global Note substantially in
the form of Exhibit A1 attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a board
resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the
terms of any such agreement, contract, arrangement or understanding are no
less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of
the Company;
(3) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the board resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof. If, at any
time, any Unrestricted Subsidiary would fail to meet the preceding requirements
as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such Section. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall be permitted only if: (1)
such Indebtedness is permitted under Section 4.09 hereof, and (2) no Default or
Event of Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
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<PAGE> 26
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying: (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment, by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any specified Person means any
Wholly Owned Subsidiary of such Person which at the time of determination is a
Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person and/or by one or more Wholly Owned Subsidiaries of such Person.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
- - ---- ----------
<S> <C>
"Affiliate Transaction"......... 4.11
"Asset Sale".................... 4.10
"Asset Sale Offer".............. 3.09
"Authentication Order".......... 2.02
"Change of Control Offer"....... 4.15
"Change of Control Payment"..... 4.15
"Change of Control Payment Date" 4.15
"Covenant Defeasance"........... 8.03
"Event of Default".............. 6.01
"Excess Proceeds"............... 4.10
"incur"......................... 4.09
"Legal Defeasance".............. 8.02
"Offer Amount".................. 3.09
"Offer Period".................. 3.09
"Paying Agent".................. 2.03
"Payment Default"............... 6.01
"Permitted Debt"................ 4.09
"Purchase Date"................. 3.09
"Redemption Date"............... 3.07
"Registrar"..................... 2.03
"Restricted Payments"........... 4.07
</TABLE>
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Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the 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:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Guarantors
and the Trustee, by their execution and delivery
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<PAGE> 28
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby. However, to the extent any provision of any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibits A1 or A2 attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Notes issued in definitive form shall be substantially in
the form of Exhibit A1 attached hereto (but without the Global Note Legend
thereon and without the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S
Temporary Global Note, which shall be deposited on behalf of the purchasers of
the Notes represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of the Depositary or the nominee of the
Depositary for the accounts of designated agents holding on behalf of Euroclear
or Cedelbank, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The Restricted Period shall be terminated upon the
receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedelbank certifying
that they have received certification of non-United States beneficial ownership
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Note (except to the extent of any Beneficial Owners thereof who acquired an
interest therein during the Restricted Period pursuant to another exemption
from registration under the Securities Act and who will take delivery of a
beneficial ownership interest in a 144A Global Note or an IAI Global Note
bearing a Private Placement Legend, all as contemplated by Section 2.06(a)(ii)
hereof), and (ii) an Officers' Certificate from the Company. Following the
termination of the Restricted Period, beneficial interests in the Regulation S
Temporary Global Note shall be exchanged for beneficial interests in Regulation
S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously
with the authentication of Regulation S Permanent Global Notes, the Trustee
shall cancel the Regulation S Temporary Global Note. The aggregate principal
amount of the Regulation S Temporary Global Note and the Regulation S Permanent
Global Notes may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depositary or its nominee, as the
case may be, in connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedelbank Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedelbank"
and "Customer Handbook" of Cedelbank shall be applicable to transfers of
beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedelbank.
Section 2.02. Execution and Authentication.
One Officer shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
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<PAGE> 29
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by one
Officer (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with Holders or an Affiliate of the
Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder 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
all Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days
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<PAGE> 30
before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of the Holders of Notes and the
Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes shall be exchanged
by the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by
the Company within 120 days after the date of such notice from the Depositary
or (ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in
lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for
another Note other than as provided in this Section 2.06(a), however,
beneficial interests in a Global Note may be transferred and exchanged as
provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well
as one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided,
however, that prior to the expiration of the Restricted Period, transfers
of beneficial interests in the Temporary Regulation S Global Note may not
be made to a U.S. Person or for the account or benefit of a U.S. Person
(other than the Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above,
the transferor of such beneficial interest must deliver to the Registrar
either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be
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<PAGE> 31
credited a beneficial interest in another Global Note in an amount equal
to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited
with such increase or (B) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to
the Registrar containing information regarding the Person in whose name
such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903 under the Securities
Act. Upon consummation of an Exchange Offer by the Company in accordance
with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii)
shall be deemed to have been satisfied upon receipt by the Registrar of
the instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or
the Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications and certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note
or transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a broker-dealer,
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<PAGE> 32
(2) a Person participating in the distribution of the New Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note,
a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a
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<PAGE> 33
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section
2.06(c)(i) shall bear the Private Placement Legend and shall be subject
to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note to
Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof,
a beneficial interest in the Regulation S Temporary Global Note may not
be exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
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<PAGE> 34
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted
Global Note may exchange such beneficial interest for an Unrestricted
Definitive Note or may transfer such beneficial interest to a Person who
takes delivery thereof in the form of an Unrestricted Definitive Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies
in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of
the New Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item
(1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct
the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in
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exchange for a beneficial interest pursuant to this Section 2.06(c)(iv)
shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted
Global Note, a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to
an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case of
clause (B) above, the 144A Global Note, in the case of clause (C) above,
the Regulation S Global Note, and in all other cases, the IAI Global
Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an
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Unrestricted Global Note or transfer such Restricted Definitive Note to a
Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the New Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications in
item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes
and increase or cause to be increased the aggregate principal amount of
the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note at any time. Upon receipt of a request for such an exchange
or transfer, the Trustee shall cancel the applicable Unrestricted
Definitive Note and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B),
(ii)(D) or (iii) above at a time when an Unrestricted Global Note has not
yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee
shall authenticate one or more
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Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer
or exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting
Holder shall provide any additional certifications, documents and information,
as applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
Any Restricted Definitive Note may be exchanged by the Holder thereof for
an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the New Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof;
or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant
to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons
that certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the
Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the
Company, and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF
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SUCH EVIDENCE, IF ANY REQUIRED UNDER [THE INDENTURE] [WARRANT AGREEMENT]
PURSUANT TO WHICH THIS SECURITY IS ISSUED) AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. 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 OR ANOTHER
EXEMPTION UNDER THE SECURITIES ACT. 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 FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR
(D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), AS LONG AS THE REGISTRAR RECEIVES A CERTIFICATION OF THE TRANSFEROR
AND AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (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 RESTRICTION SET FORTH IN
(A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(iii),
(c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this
Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
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<PAGE> 40
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE
ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(iv) Original Issue Discount Legend. Each Note shall bear a legend
in substantially the following form:
"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE
DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE
ALLOCATED TO THE NOTE IS $945.46, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS
$54.54, THE ISSUE DATE IS NOVEMBER 30, 1999 AND THE YIELD TO MATURITY IS 14.42%
PER ANNUM."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to
or retained and canceled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer
taxes or similar governmental charge payable upon exchange or transfer
pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of
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<PAGE> 41
business on the day of selection, (B) to register the transfer of or to
exchange any Note so selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part or (C) to
register the transfer of or to exchange a Note between a record date and
the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06
to effect a registration of transfer or exchange may be submitted by
facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
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Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the
form of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be
delivered to the Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or,
upon the written request of the Company, the Trustee in the name and at the
expense of the Company) shall mail or cause to be mailed to Holders a notice
that states the special record date, the related payment date and the amount of
such interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which
the redemption
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shall occur, (ii) the redemption date, (iii) the principal amount of Notes to
be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an offer
to purchase at any time, the Trustee shall select the Notes to be redeemed or
purchased among the Holders of the Notes in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate.
In the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
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<PAGE> 44
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess
of the amounts necessary to pay the redemption price of, and accrued interest
on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clauses (b) and (c) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to October 15, 2004. On and after October 15, 2004, the Company may
redeem all or a part of the Notes, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if
any, thereon, to the applicable redemption date, if redeemed during the
twelve-month period beginning on October 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
- - ---- ----------
<S> <C>
2004............... 106.6875%
2005............... 105.0156%
2006............... 103.3438%
2007............... 101.6719%
2008 and thereafter 100.0000%
</TABLE>
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<PAGE> 45
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to October 15, 2002, the Company may on any one or more occasions
redeem up to 25% of the aggregate principal amount of Notes issued under this
Indenture at a redemption price of 113.375% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Equity Offerings by
the Company or a contribution to the common equity capital of the Company made
with the net cash proceeds of a concurrent Equity Offering by the Company's
direct parent; provided that at least $75.0 million in aggregate principal
amount of Notes issued under this Indenture remains outstanding immediately
after the occurrence of such redemption (excluding Notes held by the Company
and its Subsidiaries) and the redemption occurs within 90 days of the date of
the closing of such Equity Offering.
(c) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to October 15, 2004, the Company may also redeem all or a part
of the Notes upon the occurrence of a Change of Control, upon not less than 30
nor more than 60 days' prior notice (but in no event may any such redemption
occur more than 90 days after the occurrence of such Change of Control) mailed
by first-class mail to each Holder's registered address, at a redemption price
equal to 100% of the principal amount thereof plus the Applicable Premium as
of, and accrued and unpaid interest and Liquidated Damages, if any, to, the
date of redemption (the "Redemption Date").
(d) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption or sinking
fund payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same
manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
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<PAGE> 46
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may elect to have Notes purchased in integral multiples of $1,000
only;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes
or portions thereof were accepted for payment by the Company in accordance with
the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a
new Note, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not
so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale
Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
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<PAGE> 47
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on
the date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due. The Company shall
pay all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an agent of
the Trustee or an affiliate or agent of the Trustee, Registrar or co-registrar)
where Notes may be surrendered for registration of transfer or for exchange and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company 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 hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03
hereof.
Section 4.03. Reports.
(a) Whether or not required by the SEC, so long as any Notes are
outstanding, the Company shall furnish to the Holders of Notes (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report on the annual financial statements by the
Company's certified independent accountants and (ii) all current reports that
would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports, in each case, within the time periods specified
in the SEC's rules and regulations. In addition, following
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<PAGE> 48
consummation of the Exchange Offer, whether or not required by the SEC, the
Company shall file a copy of all the information and reports referred to in
clauses (i) and (ii) above with the SEC for public availability within the time
periods specified in the SEC's rules and regulations (unless the SEC will not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request. The Company shall at all
times comply with TIA Section 314(a).
(b) For so long as any Notes remain outstanding, the Company shall furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor is
so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its 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 under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained
in this Indenture and is not in default in the performance or observance of any
of the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by
a written statement of the Company's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default
or Event of Default and what action the Company is taking or proposes to take
with respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
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<PAGE> 49
Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been
enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's or any of
its Restricted Subsidiaries' Equity Interests (including, without limitation,
any payment on such Equity Interests in connection with any merger or
consolidation involving the Company) or to the direct or indirect Holders of
the Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company); (ii) purchase,
redeem or otherwise acquire or retire for value (including, without limitation,
in connection with any merger or consolidation involving the Company) any
Equity Interests of the Company or any direct or indirect parent of the Company
(other than any such Equity Interests owned by the Company or any Restricted
Subsidiary of the Company); (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes or the Subsidiary Guarantees,
except for (A) scheduled payments of interest or principal at Stated Maturity
thereof or (B) in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of
the date of purchase, redemption, acquisition or retirement; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) the Company would, after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii), (vi), (viii), (x) and (xi) of the next succeeding
paragraph and without duplication), is less than the sum, without duplication,
of (i) 50% of the Consolidated Net Income of the Company for the period (taken
as one accounting period) from the beginning of the first full fiscal quarter
commencing after the date of this Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available to management at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds (plus the fair
market value of any Permitted Business contributed to the common or preferred
equity (other than Disqualified Stock) capital of the Company with such fair
market value being determined as described below) received by the Company as a
contribution to the Company's capital or received by the Company from the issue
or
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<PAGE> 50
sale since the date of this Indenture of Equity Interests of the Company (other
than Disqualified Stock) or of Disqualified Stock or debt securities of the
Company that have been converted into such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a Restricted
Subsidiary of the Company and other than Disqualified Stock or convertible debt
securities that have been converted into Disqualified Stock), provided that the
Company shall only be entitled to use up to one-third of the net cash proceeds
from any Equity Offering in any twelve-month period to make Restricted
Payments, plus (iii) to the extent that any Restricted Investment that was made
after the date of this Indenture is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment, plus (iv) if any Unrestricted
Subsidiary (A) is properly redesignated as a Restricted Subsidiary, the fair
market value of such redesignated Subsidiary (as determined in good faith by
the Board of Directors) as of the date of its redesignation or (B) pays any
cash dividends or cash distributions to the Company or any of its Restricted
Subsidiaries, 100% of any such cash dividends or cash distributions made after
the date of this Indenture, minus (v) 100% of any Excess Tandy Payments.
The preceding provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
or any Restricted Subsidiary in exchange for, or out of the net cash proceeds
of the substantially concurrent sale or issuance (other than to a Restricted
Subsidiary of the Company) of, other Equity Interests of the Company (other
than Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (c)(ii) of the
preceding paragraph; (iii) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness of the Company or any Restricted
Subsidiary with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness; (iv) the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of its Equity Interests on a pro rata
basis; (v) the payment of dividends by the Company to O'Sullivan Holdings for
the purpose of permitting the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of O'Sullivan Holdings held by any
member or former member of the Company's (or any of their Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement, stockholders agreement or stock option agreement or other similar
agreements; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests pursuant to this clause (v)
shall not exceed $2.5 million in any calendar year (with unused amounts in any
calendar year being carried over to succeeding calendar years subject to a
maximum (without giving effect to the following proviso) of $5.0 million in any
calendar year); provided further that such amount in any calendar year may be
increased by an amount not to exceed the aggregate cash proceeds received by
the Company from any issuance or reissuance of Equity Interests to members of
management of the Company and its Restricted Subsidiaries and the proceeds to
the Company of any "key man" life insurance policies; provided further that the
cancellation of Indebtedness owing to the Company from members of management of
the Company or any Restricted Subsidiary in connection with such repurchase of
Equity Interests will not be deemed to be a Restricted Payment; (vi) the
payment by the Company of dividends to O'Sullivan Holdings for the purpose of
(A) permitting O'Sullivan Holdings to satisfy tax obligations that are actually
due and owing, in accordance with the Tax Sharing Agreement as in effect on the
date of this Indenture; provided that such amounts do not exceed the amounts
that, without recognizing any tax loss carryforwards or carrybacks or other tax
attributes, such as alternative minimum tax carryforwards, would otherwise be
due and owing if the Company and its Restricted Subsidiaries were an
independent, individual taxpayer and (B) permitting O'Sullivan Holdings to pay
the necessary fees and expenses to maintain its corporate existence and good
standing and other general and administrative expenses (which amount shall not
exceed $500,000 per annum); (vii) so long as no Default or Event of Default
shall have occurred and be continuing, the declaration and payment of dividends
on Disqualified Stock, the incurrence of which satisfied Section 4.09 hereof;
(viii) repurchases of Equity Interests deemed to occur upon the exercise of
stock options if such
44
<PAGE> 51
Equity Interests represent a portion of the exercise price thereof; (ix) cash
payments to O'Sullivan Holdings from and after the fifth anniversary of the
date of this Indenture to enable O'Sullivan Holdings to make interest payments
on the senior notes of O'Sullivan Holdings in amounts not to exceed 12% per
annum on the senior notes of O'Sullivan Holdings issued on the date of this
Indenture plus interest at the same rate on senior notes issued to pay interest
thereon; provided that, in each case, such cash payments are used within 30
days of such payment to make interest payments on such senior notes; provided
further that such payments will only be permitted if (A) no Default or Event of
Default shall have occurred and be continuing and (B) the Company would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof; (x) other Restricted Payments in an aggregate amount not to exceed
$2.5 million; and (xi) distributions to fund the Recapitalization.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors whose resolution with respect thereto shall be
delivered to the Trustee. The Board of Directors' determination shall be based
upon an opinion or appraisal issued by an accounting, appraisal or investment
banking firm of national standing if such fair market value exceeds $15.0
million. The fair market value of any Permitted Business contributed to the
common or preferred equity (other than Disqualified Stock) capital of the
Company shall be determined in good faith by the Board of Directors whose
resolution with respect thereto shall be delivered to the trustee if such fair
market value is in excess of $2.0 million; provided that such determination
shall be based upon an opinion or appraisal issued by an accounting, appraisal
or investment banking firm of national standing if such fair market value
exceeds $10.0 million.
Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (a)(i) pay dividends or make any other distributions to the
Company or any of its Restricted Subsidiaries (A) on its Capital Stock or (B)
with respect to any other interest or participation in, or measured by, its
profits or (ii) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (b) make loans or advances to the Company or any of
its Restricted Subsidiaries or (c) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (i) Existing Indebtedness as in
effect on the date of this Indenture, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, restructurings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
restructurings, replacements or refinancings are no more restrictive, taken as
a whole (as determined in the good faith judgment of the Company 's Board of
Directors), with respect to such dividend and other payment restrictions than
those contained in such Existing Indebtedness as in effect on the date of this
Indenture, (ii) the Credit Facilities as in effect as of the date of this
Indenture, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, restructurings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, restructurings,
replacements or refinancings are no more restrictive, taken as a whole (as
determined in the good faith judgment of the Company's Board of Directors),
with respect to such dividend and other payment restrictions than those
contained in the Credit Facilities as in effect on the date of this Indenture,
(iii) this Indenture, the Notes and the Subsidiary Guarantees, (iv) any
applicable law, rule, regulation or order, (v) any instrument of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent incurred in connection with
or in contemplation of such
45
<PAGE> 52
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred, (vi) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices; (vii)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions on the property so acquired of the nature
described in clause (c) above, (viii) Permitted Refinancing Indebtedness,
provided that the material restrictions contained in the agreements governing
such Permitted Refinancing Indebtedness are no more restrictive, in the good
faith judgment of the Company's Board of Directors, taken as a whole, to the
Holders of Notes than those contained in the agreements governing the
Indebtedness being refinanced; (ix) contracts for the sale of assets,
including, without limitation, customary restrictions with respect to a
Subsidiary pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary and (x) restrictions on cash or other deposits or net worth imposed
by customers under contracts entered into in the ordinary course of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and the Company shall not issue any Disqualified Stock and shall
not permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company or any of the Guarantors may incur
Indebtedness (including Acquired Debt) or issue Disqualified Stock or preferred
stock if the Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
to management immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is
issued would have been at least 2.0 to 1 if the incurrence or issuance occurs
on or before the second anniversary of the date of this Indenture and at least
2.25 to 1 if the incurrence or issuance occurs at any time thereafter, in each
case determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred,
or the Disqualified Stock had been issued, as the case may be, at the beginning
of such four-quarter period.
The provisions of the first paragraph of this Section 4.09 shall not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company of Indebtedness and letters of
credit pursuant to Credit Facilities; provided that the aggregate amount
of all Indebtedness then classified as having been incurred in reliance
upon this clause (i) that remains outstanding under Credit Facilities
after giving effect to such incurrence does not exceed an amount equal to
$175.0 million less the aggregate amount of all Net Proceeds of Asset
Sales that have been applied by the Company or any of its Restricted
Subsidiaries since the date of this Indenture to repay any Indebtedness
under a Credit Facility (and to reduce commitments with respect thereto
in the case of any such Indebtedness that is revolving credit
Indebtedness) pursuant to Sections 3.09 and 4.10 hereof;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of Existing Indebtedness;
(iii) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes and the Subsidiary Guarantees to be
issued on the date of this Indenture and the New Notes and the related
Subsidiary Guarantees to be issued pursuant to the Registration Rights
Agreement;
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(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary (whether through
the direct purchase of assets or the Capital Stock of any Person owning
such Assets), in an aggregate principal amount or accreted value, as
applicable, including all Permitted Refinancing Indebtedness issued to
refund, replace or refinance any Indebtedness incurred pursuant to this
clause (iv), not to exceed 5.0% of the Company's Total Assets;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness that was permitted by this Indenture to be incurred under
the first paragraph of this Section 4.09 or clauses (ii), (iii), (iv) and
(xii) of this paragraph;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Restricted Subsidiaries; provided, however, that (A) if
the Company or any Guarantor is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Notes, in the case of the
Company, or the Subsidiary Guarantee of such Guarantor, in the case of a
Guarantor and (B)(1) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Company or a Restricted Subsidiary and (2) any sale or
other transfer of any such Indebtedness to a Person that is not either
the Company or a Restricted Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(vii) the incurrence by the Company or its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging (A) interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding, (B) commodities risk relating to commodities agreements,
entered into in the ordinary course of business, for the purchase of raw
material used by the Company and its Restricted Subsidiaries or (C)
exchange rate risk with respect to any agreement or Indebtedness of such
Person payable in a currency other than U.S. dollars;
(viii) the Guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of
this Section 4.09;
(ix) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt; provided, however, that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event
shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company;
(x) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including,
without limitation, to letters of credit in respect to workers'
compensation claims or self-insurance, or other Indebtedness with respect
to reimbursement type obligations regarding workers' compensation claims;
provided, however, that upon the drawing of such letters of credit or the
incurrence of such Indebtedness, such obligations are reimbursed within
30 days following such drawing or incurrence;
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(xi) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business; and
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
other Indebtedness incurred pursuant to this clause (xii), not to exceed
$25.0 million.
For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (xii)
above or is entitled to be incurred pursuant to the first paragraph of this
Section 4.09, the Company shall be permitted to classify such item of
Indebtedness on the date of its incurrence in any manner that complies with
this Section 4.09. In addition, the Company may, at any time, change the
classification of an item of Indebtedness (or any portion thereof) to any other
clause or to the first paragraph of this Section 4.09 provided that the Company
would be permitted to incur such item of Indebtedness (or portion thereof)
pursuant to such other clause or the first paragraph of this Section 4.09, as
the case may be, at such time of reclassification. Accrual of interest,
accretion or amortization of original issue discount and the accretion of
accreted value shall not be deemed to be an incurrence of Indebtedness for
purposes of this Section 4.09.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time
of such Asset Sale at least equal to the fair market value of the assets or
Equity Interests issued or sold or otherwise disposed of, (ii) such fair market
value is determined by the Company's Board of Directors and evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee and (iii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided, however, that the amount of (A) any liabilities (as
shown on the Company's or the Restricted Subsidiary's most recent balance
sheet) of the Company or any Restricted Subsidiary that are assumed by the
transferee of any such assets pursuant to a customary novation agreement that
releases the Company or such Restricted Subsidiary from further liability
(except liabilities that are by their terms subordinated to the Notes), (B) any
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are converted by the Company or
such Restricted Subsidiary into cash or Cash Equivalents within 90 days after
the closing of such Asset Sale (to the extent of the cash or Cash Equivalents
received in that conversion) and (C) any long-term assets that are to be used
in a Permitted Business, shall be deemed to be cash for purposes of this
provision.
The 75% limitation referred to in clause (iii) above shall not apply to
any Asset Sale in which the cash or Cash Equivalents portion of the
consideration received therefrom, determined in accordance with the preceding
proviso, is equal to or greater than what the after-tax proceeds would have
been had such Asset Sale complied with the aforementioned 75% limitation.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or any such Restricted Subsidiary may apply such Net Proceeds, at
its option, (a) to repay or repurchase Senior Debt of the Company or any
Restricted Subsidiary and to correspondingly permanently reduce the commitments
with respect thereto, (b) to acquire a controlling interest in another
Permitted Business, (c) to make capital expenditures in a Permitted Business or
(d) to acquire other long-term assets that are to be used in a Permitted
Business. Pending the final application of any such Net Proceeds, the Company
may temporarily reduce revolving Indebtedness under Credit Facilities or
otherwise invest such Net Proceeds in
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any manner that is not prohibited by this Indenture. Any Net Proceeds from
such Asset Sale that are not applied or invested as provided in the first
sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company
shall make an offer to all Holders of Notes and to all holders of other
Indebtedness that ranks equally with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds from sales of assets (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes and such other pari passu Indebtedness that
may be purchased out of the Excess Proceeds at an offer price in an amount
equal to 100% of principal amount plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase, which shall be payable in
cash., in accordance with the procedures set forth in Section 3.09 hereof. If
any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for general corporate purposes or any
other purpose not prohibited by this Indenture. If the aggregate principal
amount of Notes and such other pari passu Indebtedness tendered into such Asset
Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other pari passu Indebtedness to be purchased on a pro rata
basis based on the principal amount of Notes and such other pari passu
Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless (a) such Affiliate
Transaction is on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (2) the Company delivers to the Trustee (i) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $2.0 million, a resolution of
the Board of Directors set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (a) above and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (ii) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $10.0 million, an opinion as to the fairness to the
Holders of such Affiliate Transaction from a financial point of view issued by
an accounting, appraisal or investment banking firm of national standing;
provided, however, that (i) customary directors' fees, indemnification or
similar arrangements or any employment agreement or other compensation plan or
arrangement entered into by the Company or any of its Restricted Subsidiaries
in the ordinary course of business and consistent with the past practice of the
Company or such Restricted Subsidiary, (ii) transactions between or among the
Company and/or its Restricted Subsidiaries, (iii) Restricted Payments that are
permitted by Section 4.07 hereof, (iv) customary loans, advances, fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any of its Restricted Subsidiaries,
(v) transactions pursuant to any contract or agreement in effect on the date of
this Indenture as the same may be amended, modified or replaced from time to
time so long as any such amendment, modification or replacement is no less
favorable to the Company and its Restricted Subsidiaries than the contract or
agreement as in effect on the date of this Indenture, (vi) management or
similar fees payable to BRS or an Affiliate thereof pursuant to the Management
Services Agreement as in effect on the date of this Indenture, all as described
in the section of the Offering Memorandum entitled "Certain Relationships and
Related Transactions" and (vii) payments in connection with the
Recapitalization (including the payment of fees and expenses with respect
thereto), shall not be deemed Affiliate Transactions.
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Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind securing trade payables or Indebtedness
that does not constitute Senior Debt (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired unless (a) in the
case of Liens securing Indebtedness that is expressly subordinated or junior in
right of payment to the Notes, the Notes are secured on a senior basis to the
obligations so secured until such time as such obligations are no longer
secured by a Lien and (b) in all other cases, the Notes are secured on an equal
and ratable basis with the obligations so secured until such time as such
obligations are no longer secured by a Lien.
Section 4.13. Business Activities.
The Company shall not, and shall not permit any Restricted Subsidiary to,
engage in any business other than a Permitted Business, except to such extent
as would not be material to the Company and its Restricted Subsidiaries, taken
as a whole.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes
at a purchase price equal to 101% of the aggregate principal amount of Notes
repurchased plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase (the "Change of Control Payment"). Within 60
days following any Change of Control, the Company shall mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and stating: (1) that the Change of Control Offer is being made
pursuant to this Section 4.15 and that all Notes tendered will be accepted for
payment; (2) the purchase price and the purchase date, which shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"); (3) that any Note not tendered
will continue to accrue interest; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest after
the Change of Control Payment Date; (5) that Holders electing to have any Notes
purchased pursuant to a Change of Control Offer will be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (6) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal
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amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and (7) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable to the repurchase of
Notes as a result of a Change of Control. To the extent that any securities
law or regulation conflicts with the provisions of this Indenture relating such
Change of Control Offer, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Indenture by virtue thereof.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided, that each such new Note shall be in a
principal amount of $1,000 or an integral multiple 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 Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.09 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
Section 4.16. Anti-Layering.
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable
for any Indebtedness that is both subordinate or junior in right of payment to
any Senior Debt and senior in any respect in right of payment to the Notes, and
(ii) no Guarantor shall incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is both subordinate or junior in right
of payment to any Senior Debt of such Guarantor and senior in any respect in
right of payment to the Subsidiary Guarantees.
Section 4.17. Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if (i) the Company or such Restricted Subsidiary could have (a)
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction pursuant to Section 4.09 hereof and (b)
incurred a Lien to secure such Indebtedness pursuant to Section 4.12 hereof,
(ii) the gross cash proceeds of such sale and leaseback transaction are at
least equal to the fair market value (as determined in good faith by the Board
of Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the
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transfer of assets in such sale and leaseback transaction is permitted by, and
the Company or such Restricted Subsidiary applies the proceeds of such
transaction in compliance with, Sections 3.09 and 4.10 hereof.
Section 4.18. Additional Guarantees.
If the Company shall acquire or create a Domestic Restricted Subsidiary
after the date of this Indenture, or if any Subsidiary of the Company becomes a
Domestic Restricted Subsidiary of the Company after the date of this Indenture,
then such newly acquired or created Domestic Restricted Subsidiary shall become
a Guarantor and execute a supplemental indenture to this Indenture in form
attached as Exhibit F hereto and deliver an opinion of counsel, in accordance
with the terms of this Indenture. Such newly acquired or created Domestic
Restricted Subsidiary shall also deliver a Guarantee, the form of which is
attached as Exhibit E hereto.
Section 4.19. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Restricted Subsidiary that is not
a Significant Subsidiary to be an Unrestricted Subsidiary if that designation
would not cause a Default. If a Restricted Subsidiary is designated as an
Unrestricted Subsidiary, all outstanding Investments owned by the Company and
its Restricted Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated shall be deemed to be Restricted Payments at the time
of such designation (to the extent not designated a Permitted Investment) and
shall reduce the amount available for Restricted Payments under the first
paragraph of Section 4.07 hereof. All such outstanding Investments shall be
valued at their fair market value at the time of such designation, as
determined in good faith by the Board of Directors. That designation shall only
be permitted if such Restricted Payment would be permitted at that time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not consolidate or merge with or into another Person
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to another Person
unless (i) either (A) the Company is the surviving corporation or (B) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia,
(ii) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
assumes all the obligations of the Company under the Notes and this Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee, (iii) immediately after such transaction no Default or Event of
Default exists and (iv) except in the case of a merger entered into solely for
the purpose of reincorporating the Company in another jurisdiction, the Company
or the entity or Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made (A) shall, after giving
pro forma effect thereto as if such transaction had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof or (B) would (together with
its Restricted Subsidiaries) have a higher Fixed Charge Coverage Ratio
immediately after such transaction (after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable four-quarter
period) than the Fixed Charge
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Coverage Ratio of the Company and its subsidiaries immediately prior to the
transaction. The preceding clause (iv) shall not prohibit a merger between the
Company and a Wholly Owned Subsidiary so long as the amount of Indebtedness of
the Company and its Restricted Subsidiaries is not increased thereby.
In addition, the Company shall not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. The provisions of this Section 5.01 shall
not be applicable to a sale, assignment, transfer, conveyance or other
disposition of assets between or among the Company and any of its Wholly Owned
Restricted Subsidiaries.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale, assignment, transfer, conveyance or other disposition of all of the
Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes whether or not prohibited by the
subordination provisions of this Indenture and such default continues for a
period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes, whether or not prohibited by the subordination
provisions of this Indenture, when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to purchase)
or otherwise;
(c) the Company fails to comply with any of the provisions of Section 4.15
or 5.01 hereof;
(d) the Company fails to comply with Section 3.09, 4.07, 4.09 or 4.10
hereof or with any of its other agreements in this Indenture or the Notes for
60 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes (including Additional Notes, if
any) then outstanding voting as a single class;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries), whether such Indebtedness or Guarantee now
exists, or is created after
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the date of this Indenture, which default is caused by a failure to pay
principal on such Indebtedness at final maturity (a "Payment Default") or
results in the acceleration of such Indebtedness prior to its express maturity
and, in each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$7.5 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $7.5 million;
(g) except as permitted by this Indenture, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor shall deny
or disaffirm its obligations under its Subsidiary Guarantee;
(h) the Company or any of its Restricted Subsidiaries that are Significant
Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary or for all or substantially all of the property of the Company
or any of its Restricted Subsidiaries that are Significant Subsidiaries
or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
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Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof with respect to the Company, any
Restricted Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least
25% in principal amount of the then outstanding Notes may declare all the Notes
to be due and payable immediately; provided, that so long as any Obligations
pursuant to the Senior Credit Facilities shall be outstanding or the
commitments thereunder shall not have expired or been terminated, such
acceleration shall not be effective until the earlier of (a) an acceleration
under any such other Indebtedness under the Senior Credit Facilities or (b)
five Business Days after receipt by the Company and the Credit Agent of written
notice of such acceleration. Upon any such declaration, the Notes shall become
due and payable immediately. Notwithstanding the foregoing, if an Event of
Default specified in clause (h) or (i) of Section 6.01 hereof occurs with
respect to the Company, any of its Restricted Subsidiaries that are Significant
Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable immediately without further action or notice. In the event of a
declaration of acceleration of the Notes because an Event of Default has
occurred and is continuing as a result of the acceleration of any Indebtedness
described in clause (e) of Section 6.01 hereof, the declaration of acceleration
of the Notes shall be automatically annulled if the holders of any Indebtedness
described in clause (e) of Section 6.01 hereof have rescinded the declaration
of acceleration in respect of such Indebtedness within 30 days of the date of
such declaration and if the annulment of the acceleration of Notes would not
conflict with any judgment or decree of a court of competent jurisdiction and
if all existing Events of Default (except nonpayment of principal or interest
or other amounts on the Notes that have become due solely because of the
acceleration of the Notes) have been cured or waived. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium or Liquidated Damages, if any, that has become
due solely because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after October 15, 2004 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 Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to October 15,
2004 by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, the Applicable Premium shall also become and be immediately due and
payable to the extent permitted by law.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or
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constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive any existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal
amount of the then outstanding Notes may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). 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 any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or
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to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own
name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect, receive and distribute any
money or other property payable or deliverable on any such claims and any
custodian 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 to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. 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 Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and
Liquidated Damages, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If 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 its exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(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 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section 7.01.
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(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon 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.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(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 that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(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 or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate of
the Company with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any
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Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest or Liquidated Damages, if any, on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determines that withholding the notice is in the interests of the
Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange
on which the Notes are listed in accordance with TIA Section 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. 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 promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
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To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
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 Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
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 Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder
for at least six months, fails to comply with Section 7.10 hereof, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it
as Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.07
hereof.
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Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section
310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, , the Company and the Guarantors, if any,
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be deemed to have been discharged from their respective obligations
with respect all Notes and Subsidiary Guarantees then outstanding on the date
the conditions set forth below are satisfied (hereinafter, "Legal Defeasance").
For this purpose, Legal Defeasance means that the Company and any Guarantor
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Notes and Subsidiary Guarantees, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the
other Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes, Subsidiary Guarantees 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 provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to
receive solely from the trust fund described in Section 8.04 hereof, and as
more fully set forth in such Section, payments in respect of the principal of,
premium and Liquidated Damages, if any, and interest on such
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Notes when such payments are due, (b) the Company's obligations with respect to
such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof and
clause (iv) of Section 5.01 hereof with respect to the outstanding Notes and
Subsidiary Guarantees on and after the date the conditions set forth in Section
8.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
and the Subsidiary Guarantees, if any, 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 (it being understood that such Notes and Subsidiary Guarantees, if
any, shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes
and Subsidiary Guarantees, if any, the Company and any Guarantor may omit to
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 and such omission to comply shall not constitute a Default or an
Event of Default under Section 6.01 hereof, but, except as specified above, the
remainder of this Indenture and such Notes and Subsidiary Guarantees, if any,
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium and Liquidated
Damages, if any, and interest on the outstanding Notes on the stated maturity
or on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, subject to customary
assumptions and exclusions, the Holders of the outstanding Notes will not
recognize
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income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit);
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) 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) 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 Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which opinion may be subject to
customary assumptions and exclusions, each stating that all conditions
precedent relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes 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.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof 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 the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee
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(which may be the opinion delivered under Section 8.04(a) hereof), are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
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 or
Liquidated Damages, if any, or interest on any Note and remaining unclaimed for
two years after such principal, and premium or Liquidated Damages, if any, or
interest has become due and payable shall be paid to the Company on its request
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Note 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, and all liability of the Company as trustee thereof, 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 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, 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
Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the
Company makes any payment of principal of, premium or Liquidated Damages, if
any, or interest on any Note following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 hereof, the Company, the Guarantors and the
Trustee may amend or supplement this Indenture, the Subsidiary Guarantees or
the Notes without the consent of any Holder of Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including
the related definitions) in a manner that does not materially adversely affect
any Holder;
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of the Notes by a successor to the Company pursuant
to Article 5 or Article 10 hereof;
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(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
(f) to provide for the issuance of Additional Notes in accordance with the
limitations set forth in this Indenture as of the date hereof; or
(g) to allow any Guarantor to execute a supplemental indenture and/or a
Subsidiary Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company and the Guarantors
in the execution of any amended or supplemental Indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee
shall not be obligated to enter into such amended or supplemental Indenture
that affects its own rights, duties or immunities under this Indenture or
otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including Sections 3.09, 4.10 and 4.15
hereof), the Subsidiary Guarantees and the Notes with the consent of the
Holders of at least a majority in principal amount of the Notes (including
Additional Notes, if any) then outstanding voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest or Liquidated
Damages, if any, on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture, the Subsidiary Guarantees or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then
outstanding Notes (including Additional Notes, if any) voting as a single class
(including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes).
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt
by the Trustee of the documents described in Section 7.02 hereof, the Trustee
shall join with the Company in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture directly affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise,
in which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment 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 of Notes 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
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any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of
a majority in aggregate principal amount of the Notes (including Additional
Notes, if any) then outstanding voting as a single class may waive compliance
in a particular instance by the Company with any provision of this Indenture or
the Notes. However, without the consent of each Holder affected, an amendment
or waiver under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal
amount of the then outstanding Notes (including Additional Notes, if any) and a
waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of, or interest or premium, or Liquidated Damages, if any, on the
Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants described in Sections 3.09, 4.10 and
4.15 hereof);
(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions; or
(i) release any Guarantor from any of its obligations under its Subsidiary
Guarantee or this Indenture, except in accordance with the terms of this
Indenture.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental Indenture that complies with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment
becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
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Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall
be fully protected in relying upon, in addition to the documents required by
Section 13.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Notes is subordinated in right of payment, to the
extent and in the manner provided in this Article 10, to the prior payment in
full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for
the benefit of the holders of Senior Debt.
Section 10.02. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive payment in
full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt) and all outstanding letters of
credit under Credit Facilities shall have either been terminated or cash
collateralized in accordance with the terms thereof before Holders of the
Notes shall be entitled to receive any payment on, or distribution with
respect to, the Notes (except that Holders may receive (A) Permitted
Junior Securities and (B) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof); and
(ii) until all Obligations with respect to Senior Debt (as provided
in clause (i) above) are paid in full, any distribution to which Holders
would be entitled but for this Article 10 shall be made to holders of
Senior Debt (except that Holders of Notes may receive (A) Permitted
Junior
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Securities and (B) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof), as their
interests may appear.
Section 10.03. Default on Designated Senior Debt.
(a) The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (A) Permitted Junior Securities and (B) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof) until
all principal and other Obligations with respect to the Senior Debt have been
paid in full if:
(i) a default in the payment of any principal or other Obligations
with respect to Designated Senior Debt occurs and is continuing beyond
any applicable grace period in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated Senior
Debt occurs and is continuing that then permits holders of the Designated
Senior Debt to accelerate its maturity and the Trustee receives a notice
of the default (a "Payment Blockage Notice") from a Person who may give
it pursuant to Section 10.11 hereof. If the Trustee receives any such
Payment Blockage Notice, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section unless and until at least 360 days
shall have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been cured or waived for a period
of not less than 90 days.
(b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(i) the date upon which the default is cured or waived, or
(ii) in the case of a default referred to in clause (ii) of Section
10.03(a) hereof, 179 days pass after notice is received if the maturity
of such Designated Senior Debt has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
Section 10.04. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
Section 10.05. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Section 10.03 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their Representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may
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appear, for application to the payment of all Obligations with respect to
Senior Debt remaining unpaid to the extent necessary to pay such Obligations in
full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall
be entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
Section 10.06. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
Section 10.07. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to
the payment of Senior Debt. A distribution made under this Article 10 to
holders of Senior Debt that otherwise would have been made to Holders of Notes
is not, as between the Company and Holders, a payment by the Company on the
Notes.
Section 10.08. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior
Debt; or
(iii) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
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Section 10.09. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture.
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon
any certificate of such Representative or of the liquidating trustee or agent
or other Person making any distribution to the Trustee or to the Holders of
Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
10.
Section 10.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Credit Agent may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
Section 10.12. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Credit Agents are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
Section 10.13. Amendments.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Debt.
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ARTICLE 11.
SUBSIDIARY GUARANTEES
Section 11.01. Guarantee.
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note 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 Notes or
the obligations of the Company hereunder or thereunder, that: (a) the
principal of and interest on the Notes will be promptly paid in full when due,
whether at maturity, by acceleration, redemption or otherwise, and interest on
the overdue principal of and interest on the Notes, if any, if lawful, and all
other obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors shall be jointly
and severally obligated to pay the same immediately. Each Guarantor agrees
that this is a guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which 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, any right to
require a proceeding first against the Company, protest, notice and all demands
whatsoever and covenant that this Subsidiary Guarantee shall not be discharged
except by complete performance of the obligations contained in the Notes and
this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
Each Guarantor agrees that it shall 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 the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
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Section 11.02. Subordination of Subsidiary Guarantee.
The Obligations of each Guarantor under its Subsidiary Guarantee pursuant
to this Article 11 shall be junior and subordinated to the Senior Debt of such
Guarantor on the same basis as the Notes are junior and subordinated to Senior
Debt of the Company. For the purposes of the foregoing sentence, the Trustee
and the Holders shall have the right to receive and/or retain payments by any
of the Guarantors only at such times as they may receive and/or retain payments
in respect of the Notes pursuant to this Indenture, including Article 10
hereof.
Section 11.03. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of such Guarantor
that are relevant under such laws, and after giving effect to any collections
from, rights to receive contribution from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
this Article 11, result in the obligations of such Guarantor under its
Subsidiary Guarantee not constituting a fraudulent transfer or conveyance.
Section 11.04. Execution and Delivery of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee set forth in Section 11.01 hereof,
each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President or one of its Vice Presidents.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 11.01 hereof shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee
shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.18 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Subsidiary Guarantees in accordance with Section 4.18 hereof
and this Article 11, to the extent applicable.
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Section 11.05. Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 11.05 hereof, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:
(a) subject to Section 11.05 hereof, the Person formed by or surviving any
such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Subsidiary Guarantee on the
terms set forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
Section 11.06. Releases Following Sale of Assets.
In the event of a sale or other disposition of all or substantially all of
the assets of any Guarantor, by way of merger, consolidation or otherwise, or a
sale or other disposition of all of the capital stock of any Guarantor, in each
case to a Person that is not (either before or after giving effect to such
transactions) a Subsidiary of the Company, then such Guarantor (in the event of
a sale or other disposition, by way of merger, consolidation or otherwise, of
all of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation, Section 4.10
hereof. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including, without limitation, Section 4.10 hereof, the Trustee
shall execute any documents reasonably required in order to evidence the
release of any Guarantor from its obligations under its Subsidiary Guarantee.
Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this
Indenture as provided in this Article 11.
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<PAGE> 81
ARTICLE 12.
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge.
This Indenture shall be discharged and shall cease to be of further effect
as to all Notes issued hereunder, when:
(1) either:
(a) all Notes that have been authenticated (except lost, stolen
or destroyed Notes that have been replaced or paid and Notes for
whose payment money has theretofore been deposited in trust and
thereafter repaid to the Company) have been delivered to the Trustee
for cancellation; or
(b) all Notes that have not been delivered to the Trustee for
cancellation have become due and payable by reason of the making of
a notice of redemption or otherwise or will become due and payable
within one year and the Company or any Guarantor has irrevocably
deposited or caused to be deposited with the Trustee as trust funds
in trust solely for the benefit of the Holders, cash in U.S.
dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent accountants, without
consideration of any reinvestment of interest, to pay and discharge
the entire indebtedness on the Notes not delivered to the Trustee
for cancellation for principal, premium and Liquidated Damages, if
any, and accrued interest to the date of maturity or redemption;
(2) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which the Company or any Guarantor
is a party or by which the Company or any Guarantor is bound;
(3) the Company or any Guarantor has paid or caused to be paid all sums
payable by it under this Indenture; and
(4) the Company has delivered irrevocable instructions to the Trustee under
this Indenture to apply the deposited money toward the payment of the
Notes at maturity or the redemption date, as the case may be.
In addition, the Company must deliver an Officers' Certificate and an Opinion
of Counsel to the Trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if money
shall have been deposited with the Trustee pursuant to subclause (b) of clause
(1) of this Section 12.01, the provisions of Section 12.02 and Section 8.06
hereof shall survive.
Section 12.02. Application of Trust Money.
Subject to the provisions of Section 8.06 hereof, all money deposited with
the Trustee pursuant to Section 12.01 hereof shall be held in trust and applied
by it, in accordance with the provisions of the Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto,
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<PAGE> 82
of the principal (and premium, if any) and interest for whose payment such
money has been deposited with the Trustee; but such money need not be
segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 12.01 hereof by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and any Guarantor's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 12.01 hereof; provided that if the Company has made any payment of
principal of, premium or Liquidated Damages, if any, or interest on any Notes
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or Government Securities held by the Trustee or Paying Agent.
ARTICLE 13.
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 13.02. Notices.
Any notice or communication by the Company, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company and/or any Guarantor:
O'Sullivan Industries, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Telecopier No.: (417) 682-8113
Attention: Rowland H. Geddie, III, Esq.
With a copy to:
Kirkland & Ellis
International Financial Centre
Old Broad Street
London EC2N 1HQ, UK
Telecopier No.: 44 171 816-8800
Attention: M. Gilbey Strub, Esq.
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<PAGE> 83
If to the Trustee:
Norwest Bank Minnesota, National Association
N9303-120
Sixth & Marquette
Minneapolis, Minnesota
Telecopier No.: (612) 667-9825
Attention: Corporate Trust Services
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives
it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
Section 13.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
Section 13.04. 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:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
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Section 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(c) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(d) 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;
(e) a statement that, in the opinion of such Person, he or she 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
satisfied; and
(f) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 13.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 13.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or such Guarantor under the Notes, the
Subsidiary Guarantees or this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
Section 13.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 13.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 13.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors. All agreements of each Guarantor in this Indenture shall bind its
successors, except as otherwise provided in Section 11.05 hereof.
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<PAGE> 85
Section 13.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 13.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 13.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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<PAGE> 86
SIGNATURES
Dated as of November 30, 1999
O'SULLIVAN INDUSTRIES, INC.
By: /s/ Richard D. Davidson
----------------------------------------------
Name:
Title:
O'SULLIVAN INDUSTRIES - VIRGINIA, INC.
By: /s/ Richard D. Davidson
----------------------------------------------
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Timothy P. Mowdy
----------------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.5
EXECUTION COPY
================================================================================
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
Warrants to Purchase
39,273 Shares of Series B Junior Preferred Stock
WARRANT AGREEMENT
Dated as of November 30, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Warrant Agent
================================================================================
<PAGE> 2
WARRANT AGREEMENT, dated as of November 30, 1999, between O'Sullivan
Industries Holdings Inc., a Delaware corporation (the "COMPANY"), and Norwest
Bank Minnesota, National Association, as warrant agent (the "WARRANT AGENT").
WHEREAS, the Company proposes to issue warrants (the "WARRANTS") to
initially purchase up to an aggregate of 39,273 shares of series B junior
preferred stock, par value $0.01 per share (the "PREFERRED STOCK"), of the
Company (the Preferred Stock issuable on exercise of the Warrants being
referred to herein as the "WARRANT SHARES"), in connection with the offering
(the "OFFERING") by the Company and O'Sullivan Industries, Inc. ("INDUSTRIES")
of 100,000 Units (the "UNITS"), each consisting of $1,000 principal amount at
maturity of Industries' 133/8% Senior Subordinated Notes due 2009 (the
"NOTES"), one Warrant, each Warrant initially representing the right to
purchase 0.3927 Warrant Shares and one warrant to purchase shares of the
Company's common stock, each such warrant initially representing the right to
purchase 0.9327 shares of the Company's common stock.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act in connection with the
issuance of Warrant Certificates (as defined) and other matters as provided
herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
"144A GLOBAL WARRANT" means a global Warrant substantially in the form of
Exhibit A hereto bearing the Global Warrant Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as used with respect to any Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such specified Person, whether
through the ownership of voting securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"APPLICABLE PROCEDURES" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Warrant, the rules and procedures of
the Depositary, Euroclear and Cedelbank that apply to such transfer or
exchange.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CEDELBANK" means Cedelbank, a limited liability company (a societe
anonyme) organized under Luxembourg law.
"CLOSING DATE" means the date hereof.
<PAGE> 3
"COMMISSION" means the Securities and Exchange Commission.
"DEPOSITARY" means, with respect to the Warrants issuable or issued in
whole or in part in global form, the Person specified in Section 3.3 hereof as
the Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of the Indenture.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GLOBAL WARRANTS" means, individually and collectively, each of the
Restricted Global Warrants and the Unrestricted Global Warrants, substantially,
in the form of Exhibit A hereto issued in accordance with Section 3.1(b) and
3.5 hereof.
"GLOBAL WARRANT LEGEND" means the legend set forth in Section 3.5(g)(ii),
which is required to be placed on all Global Warrants issued under this Warrant
Agreement.
"HOLDER" means a person who owns Registrable Securities.
"INDENTURE" means the indenture, dated the date hereof, among the Company,
the Guarantors set forth therein and Norwest Bank Minnesota, National
Association, as trustee relating to the Notes.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest in a
Global Warrant through a Participant.
"INITIAL PURCHASER" means Lehman Brothers Inc.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, which is not also a QIB.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
on such payment for the intervening period.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"OFFICER" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"OPINION OF COUNSEL" means an opinion from legal counsel who is reasonably
acceptable to the Warrant Agent in form and substance reasonably acceptable to
the Warrant Agent. The counsel may be an employee of or counsel to the
Company, any subsidiary of the Company or the Warrant Agent.
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<PAGE> 4
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedelbank, a Person who has an account with the Depositary, Euroclear or
Cedelbank, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Cedelbank).
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section 3.5(g)(i)
to be placed on all Warrants issued under this Warrant Agreement except where
otherwise permitted by the provisions of this Warrant Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"REGISTRABLE SECURITIES" shall mean the Warrants, the Warrant Shares and
any other securities issued or issuable with respect to the Warrants or the
Warrant Shares by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization; provided that a security ceases to be a Registrable Security
when it is no longer a Transfer Restricted Security. The Registrable
Securities are entitled to the benefits of the Warrant Registration Rights
Agreement.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"REGULATION S GLOBAL WARRANT" means a global Warrant in the form of
Exhibit A hereto bearing the Global Warrant Legend, the Private Placement
Legend and the Regulation S Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee.
"REGULATION S LEGEND" means the legend set forth in Section 3.5(g)(iv) to
be placed on all Registrable Securities issued pursuant to Regulation S.
"RESTRICTED DEFINITIVE WARRANT" means a Definitive Warrant bearing the
Private Placement Legend.
"RESTRICTED GLOBAL WARRANT" means a Global Warrant bearing the Private
Placement Legend.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEPARATION DATE" means the earliest of (i) 180 days after the closing of
the Offering, (ii) the date on which an exchange offer registration statement
for the Notes is declared effective under
3
<PAGE> 5
the Securities Act, (iii) the date on which a shelf registration statement for
the Notes is declared effective under the Securities Act, (iv) such date as
Lehman Brothers Inc., in its sole discretion, shall determine and (v) in the
event the Company is required to make an offer to purchase Notes pursuant to
the terms of the Indenture, the date the Company mails notice of such offer to
the holders of the Notes.
"TRANSFER RESTRICTED SECURITIES" shall mean each Warrant and Warrant
Share until the earlier to occur of (i) the date on which such Warrant or
Warrant Share has been effectively registered under the Securities Act and
disposed of in accordance with a Registration Statement covering it (and the
purchasers thereof have been issued a registered freely tradable security) and
(ii) the date on which such Warrant or Warrant Share is distributed to the
public pursuant to Rule 144 under the Securities Act.
"UNRESTRICTED GLOBAL WARRANT" means a global Warrant substantially in the
form of Exhibit A attached hereto that bears the Global Warrant Legend and that
has the "Schedule of Exchanges of Interests in the Global Warrant" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Warrants that do not bear the
Private Placement Legend.
"UNRESTRICTED DEFINITIVE WARRANT" means one or more Definitive Warrants
that do not bear and are not required to bear the Private Placement Legend.
"U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"WARRANT REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated as of November 30, 1999, by and among the Company, the Initial
Purchaser and the other parties thereto relating to the Warrants and the
Warrant Shares.
SECTION 2. APPOINTMENT OF WARRANT AGENT.
The Company hereby appoints the Warrant Agent to act as agent for the
Company in accordance with the instructions set forth hereinafter in this
Agreement and the Warrant Agent hereby accepts such appointment.
SECTION 3. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.
3.1. FORM AND DATING.
(a) General.
The Warrants shall be substantially in the form of Exhibit A hereto (the
"WARRANT CERTIFICATES"). The Warrants may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Warrant shall
be dated the date of the countersignature.
The terms and provisions contained in the Warrants shall constitute, and
are hereby expressly made, a part of this Warrant Agreement. The Company and
the Warrant Agent, by their execution and delivery of this Warrant Agreement,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Warrant conflicts with the express
provisions of this Warrant Agreement, the provisions of this Warrant Agreement
shall govern and be controlling.
4
<PAGE> 6
(b) Global Warrants.
Warrants issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Warrant Legend thereon and the
"Schedule of Exchanges of Interests in the Global Warrant" attached thereto).
Warrants issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Warrant Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Warrant" attached
thereto). Each Global Warrant shall represent such of the outstanding Warrants
as shall be specified therein and each shall provide that it shall represent
the number of outstanding Warrants from time to time endorsed thereon and that
the number of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Warrant to reflect the amount of any increase or
decrease in the number of outstanding Warrants represented thereby shall be
made by the Warrant Agent in accordance with instructions given by the Holder
thereof as required by Section 3.5 hereof.
(c) Euroclear and Cedelbank Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedelbank" and "Customer Handbook" of Cedelbank shall be
applicable to transfers of beneficial interests in the Regulation S Global
Warrant that are held by Participants through Euroclear or Cedelbank.
3.2. EXECUTION.
An Officer shall sign the Warrants for the Company by manual or facsimile
signature.
If the Officer whose signature is on a Warrant no longer holds that office
at the time a Warrant is countersigned, the Warrant shall nevertheless be
valid.
A Warrant shall not be valid until countersigned by the manual signature
of the Warrant Agent. The signature shall be conclusive evidence that the
Warrant has been properly issued under this Warrant Agreement.
The Warrant Agent shall, upon a written order of the Company signed by an
Officer (a "WARRANT COUNTERSIGNATURE ORDER"), countersign Warrants for original
issue up to the number stated in the preamble hereto.
The Warrant Agent may appoint an agent acceptable to the Company to
countersign Warrants. Such an agent may countersign Warrants whenever the
Warrant Agent may do so. Each reference in this Warrant Agreement to a
countersignature by the Warrant Agent includes a countersignature by such
agent. Such an agent has the same rights as the Warrant Agent to deal with the
Company or an Affiliate of the Company.
3.3. WARRANT REGISTRAR.
The Company shall maintain an office or agency where Warrants may be
presented for registration of transfer or for exchange ("WARRANT REGISTRAR").
The Warrant Registrar shall keep a register of the Warrants and of their
transfer and exchange. The Company may appoint one or more co-Warrant
Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar.
The Company
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<PAGE> 7
may change any Warrant Registrar without notice to any holder. The Company
shall notify the Warrant Agent in writing of the name and address of any agent
not a party to this Warrant Agreement. If the Company fails to appoint or
maintain another entity as Warrant Registrar, the Warrant Agent shall act as
such. The Company or any of its subsidiaries may act as Warrant Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Warrants.
The Company initially appoints the Warrant Agent to act as the Warrant
Registrar with respect to the Global Warrants.
3.4. HOLDER LISTS.
The Warrant Agent shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders. If the Warrant Agent is not the Warrant Registrar, the Company
shall promptly furnish to the Warrant Agent at such times as the Warrant Agent
may request in writing, a list in such form and as of such date as the Warrant
Agent may reasonably require of the names and addresses of the Holders.
3.5. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Warrants.
A Global Warrant may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to
the Depositary or to another nominee of the Depositary, or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Warrants will be exchanged by the Company for
Definitive Warrants if (i) the Company delivers to the Warrant Agent notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by
the Company within 120 days after the date of such notice from the Depositary
or (ii) the Company in its sole discretion determines that the Global Warrants
(in whole but not in part) should be exchanged for Definitive Warrants and
delivers a written notice to such effect to the Warrant Agent. Upon the
occurrence of either of the preceding events in (i) or (ii) above, Definitive
Warrants shall be issued in such names as the Depositary shall instruct the
Warrant Agent. Global Warrants also may be exchanged or replaced, in whole or
in part, as provided in Sections 3.6 and 3.7 hereof. A Global Warrant may not
be exchanged for another Warrant other than as provided in this Section 3.5(a),
however, beneficial interests in a Global Warrant may be transferred and
exchanged as provided in Section 3.5(b), (c) or (f) hereof.
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<PAGE> 8
(b) Transfer and Exchange of Beneficial Interests in the Global Warrants.
The transfer and exchange of beneficial interests in the Global Warrants
shall be effected through the Depositary, in accordance with the provisions of
this Warrant Agreement and the Applicable Procedures. Beneficial interests in
the Restricted Global Warrants shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Warrants also shall
require compliance with either subparagraph (i) or (ii) below, as applicable,
as well as one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Warrant.
Beneficial interests in any Restricted Global Warrant may be transferred
to Persons who take delivery thereof in the form of a beneficial interest
in the same Restricted Global Warrant in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Warrant may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Warrant. No written orders or instructions shall
be required to be delivered to the Warrant Registrar to effect the
transfers described in this Section 3.5(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Warrants. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 3.5(b)(i) above, the
transferor of such beneficial interest must deliver to the Warrant
Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Warrant in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited
with such increase or (B) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Warrant in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to
the Warrant Registrar containing information regarding the Person in
whose name such Definitive Warrant shall be registered. Upon
effectiveness of the Registration Statement (as defined in the Warrant
Registration Rights Agreement) by the Company in accordance with Section
3.5(f) hereof, the requirements of this Section 3.5(b)(ii) shall be
deemed to have been satisfied upon receipt by the Warrant Registrar of a
certification required by the Company in connection with such
Registration Statement delivered by the Holder of such beneficial
interests in the Restricted Global Warrants. Upon satisfaction of all of
the requirements for transfer or exchange of beneficial interests in
Global Warrants contained in this Agreement and the Warrants or otherwise
applicable under the Securities Act, the Warrant Agent shall adjust the
principal amount of the relevant Global Warrant(s) pursuant to Section
3.5(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Warrant. A beneficial interest in any Restricted Global Warrant may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Warrant if the transfer
complies with the requirements of Section 3.5(b)(ii) above and the
Warrant Registrar receives the following:
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<PAGE> 9
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Warrant, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Warrant, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Warrant for Beneficial Interests in the Unrestricted Global
Warrant. A beneficial interest in any Restricted Global Warrant may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Warrant or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Warrant if the exchange or transfer complies with the requirements of
Section 3.5(b)(ii) above and:
(A) such transfer is effected pursuant to the Registration
Statement in accordance with the Warrant Registration Rights
Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Warrant, a certificate from such holder
in the form of Exhibit C hereto, including the certifications
in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Warrant, a certificate from such holder
in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the Warrant
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Warrant Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) above at a
time when an Unrestricted Global Warrant has not yet been issued, the Company
shall issue and, upon receipt of an Warrant Countersignature Order in
accordance with Section 3.2 hereof, the Warrant Agent shall countersign one or
more Unrestricted Global Warrants in the number equal to the number of
beneficial interests transferred pursuant to subparagraph (B) above.
(c) Transfer and Exchange of Beneficial Interests for Definitive Warrants.
(i) Beneficial Interests in Restricted Global Warrants to Restricted
Definitive Warrants. If any holder of a beneficial interest in a
Restricted Global Warrant proposes to exchange such beneficial interest
for a Restricted Definitive Warrant or to transfer such
8
<PAGE> 10
beneficial interest to a Person who takes delivery thereof in the form of
a Restricted Definitive Warrant, then, upon receipt by the Warrant
Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Warrant proposes to exchange such beneficial interest for a
Restricted Definitive Warrant, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Warrant Agent shall cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be reduced by the number of
Warrants to be represented by the Definitive Warrant pursuant to Section 3.5(h)
hereof, and the Company shall execute and the Warrant Agent shall countersign
and deliver to the Person designated in the instructions a Definitive Warrant
in the appropriate amount. Any Definitive Warrant issued in exchange for a
beneficial interest in a Restricted Global Warrant pursuant to this Section
3.5(c) shall be registered in such name or names as the holder of such
beneficial interest shall instruct the Warrant Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The Warrant
Agent shall deliver such Definitive Warrants to the Persons in whose names such
Warrants are so registered. Any Definitive Warrant issued in exchange for a
beneficial interest in a Restricted Global Warrant pursuant to this Section
3.5(c)(i) shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
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<PAGE> 11
(ii) Beneficial Interests in Restricted Global Warrants to
Unrestricted Definitive Warrants. A holder of a beneficial interest in a
Restricted Global Warrant may exchange such beneficial interest for an
Unrestricted Definitive Warrant or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Warrant only if:
(A) such transfer is effected pursuant to the Registration
Statement in accordance with the Warrant Registration Rights
Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such
beneficial interest for a Definitive Warrant that does not
bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a Definitive Warrant that does not
bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is
in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
(iii) Beneficial Interests in Unrestricted Global Warrants to
Unrestricted Definitive Warrants. If any holder of a beneficial interest
in an Unrestricted Global Warrant proposes to exchange such beneficial
interest for a Definitive Warrant or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Warrant, then, upon satisfaction of the conditions set forth in Section
3.5(b)(ii) hereof, the Warrant Agent shall cause the amount of the
applicable Global Warrant to be reduced accordingly pursuant to Section
3.5(h) hereof, and the Company shall execute and the Warrant Agent shall
countersign and deliver to the Person designated in the instructions a
Definitive Warrant in the appropriate principal amount. Any Definitive
Warrant issued in exchange for a beneficial interest pursuant to this
Section 3.5(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Warrant Registrar through instructions from
the Depositary and the Participant or Indirect Participant. The Warrant
Agent shall deliver such Definitive Warrants to the Persons in whose
names such Warrants are so registered. Any Definitive Warrant issued in
exchange for a beneficial interest pursuant to this Section 3.5(c)(iii)
shall not bear the Private Placement Legend.
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<PAGE> 12
(d) Transfer and Exchange of Definitive Warrants for Beneficial Interests.
(i) Restricted Definitive Warrants to Beneficial Interests in
Restricted Global Warrants. If any Holder of a Restricted Definitive
Warrant proposes to exchange such Warrant for a beneficial interest in a
Restricted Global Warrant or to transfer such Restricted Definitive
Warrants to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Warrant, then, upon receipt by
the Warrant Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Warrant
proposes to exchange such Warrant for a beneficial interest in a
Restricted Global Warrant, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Warrant is being transferred
to a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such Restricted Definitive Warrant is being transferred
to a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such Restricted Definitive Warrant is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Warrant is being transferred
to an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(F) if such Restricted Definitive Warrant is being transferred
to the Company or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (3)(b) thereof; or
(G) if such Restricted Definitive Warrant is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof,
the Warrant Agent shall cancel the Restricted Definitive Warrant,
increase or cause to be increased the amount of, in the case of clause
(A) above, the appropriate Restricted Global Warrant, in the case of
clause (B) above, the 144A Global Warrant, in the case of clause (C)
above, the Regulation S Global Warrant.
(ii) Restricted Definitive Warrants to Beneficial Interests in
Unrestricted Global Warrants. A Holder of a Restricted Definitive
Warrant may exchange such Warrant for a
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<PAGE> 13
beneficial interest in an Unrestricted Global Warrant or transfer such
Restricted Definitive Warrant to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Warrant only
if:
(A) such transfer is effected pursuant to the Registration
Statement in accordance with the Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Definitive Warrants proposes
to exchange such Warrants for a beneficial interest in the
Unrestricted Global Warrant, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications
in item (1)(c) thereof; or
(2) if the Holder of such Definitive Warrants proposes
to transfer such Warrants to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Warrant, a certificate from such Holder
in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is
in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 3.5(d)(ii), the Warrant Agent shall cancel the Definitive
Warrants and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Warrant.
(iii) Unrestricted Definitive Warrants to Beneficial Interests in
Unrestricted Global Warrants. A Holder of an Unrestricted Definitive
Warrant may exchange such Warrant for a beneficial interest in an
Unrestricted Global Warrant or transfer such Definitive Warrants to a
Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Warrant at any time. Upon receipt of a request
for such an exchange or transfer, the Warrant Agent shall cancel the
applicable Unrestricted Definitive Warrant and increase or cause to be
increased the amount of one of the Unrestricted Global Warrants.
If any such exchange or transfer from a Definitive Warrant to a
beneficial interest is effected pursuant to subparagraphs (ii)(B) or
(iii) above at a time when an Unrestricted Global Warrant has not yet
been issued, the Company shall issue and, upon receipt of an Warrant
Countersignature Order in accordance with Section 3.2 hereof, the Warrant
Agent shall countersign one or more Unrestricted Global Warrants in the
number equal to the number of beneficial interests of Definitive Warrants
so transferred.
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(e) Transfer and Exchange of Definitive Warrants for Definitive Warrants.
Upon request by a Holder of Definitive Warrants and such Holder's
compliance with the provisions of this Section 3.5(e), the Warrant Registrar
shall register the transfer or exchange of Definitive Warrants. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Warrant Registrar the Definitive Warrants duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Warrant Registrar duly executed by such Holder or by its attorney, duly
authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable, required
pursuant to the following provisions of this Section 3.5(e).
(i) Restricted Definitive Warrants to Restricted Definitive
Warrants. Any Restricted Definitive Warrant may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Warrant if the Warrant Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
or
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Warrants to Unrestricted Definitive
Warrants. Any Restricted Definitive Warrant may be exchanged by the
Holder thereof for an Unrestricted Definitive Warrant or transferred to a
Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Warrant if:
(A) any such transfer is effected pursuant to the Registration
Statement in accordance with the Warrant Registration Rights
Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Restricted Definitive Warrants
proposes to exchange such Warrants for an Unrestricted
Definitive Warrant, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in
item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Warrants
proposes to transfer such Warrants to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Warrant, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4)
thereof;
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and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests, an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such
exchange or transfer is in compliance with the Securities Act and
that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Warrants to Unrestricted Definitive
Warrants. A Holder of Unrestricted Definitive Warrants may transfer such
Warrants to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Warrant. Upon receipt of a request to register
such a transfer, the Warrant Registrar shall register the Unrestricted
Definitive Warrants pursuant to the instructions from the Holder thereof.
(f) Registration Statement.
Upon the effectiveness of the Registration Statement and sales of Warrants
in connection therewith in accordance with the Warrant Registration Rights
Agreement, the Company shall issue and, upon receipt of a Warrant
Countersignature Order in accordance with Section 3.2, the Warrant Agent shall
countersign (i) one or more Unrestricted Global Warrants in an amount equal to
the amount of the beneficial interests in the Restricted Global Warrants sold
under such Registration Statement and (ii) Definitive Warrants in an amount
equal to the amount of the beneficial interests of the Restricted Definitive
Warrants sold under such Registration Statement. Concurrently with the
issuance of such Warrants, the Warrant Agent shall cause the amount of the
applicable Restricted Global Warrants to be reduced accordingly, and the
Company shall execute and the Warrant Agent shall countersign and deliver to
the Persons designated by the Holders of Definitive Warrants so accepted
Definitive Warrants in the appropriate amount.
(g) Legends.
The following legends shall appear on the face of all Global Warrants and
Definitive Warrants issued under this Warrant Agreement unless specifically
stated otherwise in the applicable provisions of this Warrant Agreement.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Warrant and each Definitive Warrant (and all Warrants issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY,
REQUIRED UNDER THE WARRANT AGREEMENT PURSUANT TO WHICH THIS SECURITY IS ISSUED)
AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE
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<PAGE> 16
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. 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 FOREIGN
PURCHASER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY 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."
(B) Each Global Warrant and each Definitive Warrant (and all
Warrants issued in exchange therefor or substitution thereof) shall
bear the legend (the "Transfer Restriction Legend") in the
following form:
"THIS WARRANT AND THE WARRANT SHARES UNDERLYING THIS WARRANT ARE
ALSO SUBJECT TO CERTAIN TRANSFER AND OTHER RESTRICTIONS CONTAINED IN A
STOCKHOLDERS AGREEMENT AND A REGISTRATION RIGHTS AGREEMENT, EACH DATED
NOVEMBER 30, 1999. COPIES OF THE STOCKHOLDERS AGREEMENT AND THE
REGISTRATION RIGHTS AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF UPON
WRITTEN REQUEST TO THE COMPANY OR THE WARRANT AGENT."
(C) Notwithstanding the foregoing, any Global Warrant or
Definitive Warrant issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to
this Section 3.5 (and all Warrants issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Warrant Legend. Each Global Warrant shall bear a legend
in substantially the following form:
"THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR
THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.5 OF
THE WARRANT AGREEMENT, (II) THIS GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE
BUT NOT IN PART PURSUANT TO SECTION 3.5(A) OF THE WARRANT AGREEMENT,
(III) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR
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<PAGE> 17
CANCELLATION PURSUANT TO SECTION 3.8 OF THE WARRANT AGREEMENT AND (IV)
THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Unit Legend. Each Warrant issued prior to the Separation Date
shall bear a legend in substantially the following form:
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS
PART OF AN ISSUANCE OF UNITS (THE "UNITS"), EACH OF WHICH CONSISTS OF
$1,000 PRINCIPAL AMOUNT OF THE 13 3/8% SENIOR SUBORDINATED NOTES DUE 2009
OF O'SULLIVAN INDUSTRIES, INC. (THE "NOTES"), ONE WARRANT (THE "COMMON
WARRANTS") INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE 0.9327
SHARES OF COMMON STOCK AND ONE WARRANT (THE "PREFERRED WARRANTS")
INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE 0.3927 SHARES OF
SERIES B JUNIOR PREFERRED STOCK, IN EACH CASE WITH A PAR VALUE OF $0.01
PER SHARE, OF O'SULLIVAN INDUSTRIES HOLDINGS, INC.
PRIOR TO THE EARLIEST TO OCCUR OF (I) 180 DAYS AFTER THE CLOSING OF
THE OFFERING OF THE UNITS, (II) THE DATE ON WHICH AN EXCHANGE OFFER
REGISTRATION STATEMENT FOR THE NOTES IS DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (III) THE DATE ON WHICH A SHELF REGISTRATION STATEMENT
FOR THE NOTES IS DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (IV) SUCH
DATE AS LEHMAN BROTHERS INC., IN ITS SOLE DISCRETION, SHALL DETERMINE AND
(V) IN THE EVENT THE COMPANY IS REQUIRED TO PURCHASE NOTES PURSUANT TO
THE TERMS OF THE INDENTURE GOVERNING THE NOTES, THE DATE THE COMPANY
MAILS NOTICE OF SUCH OFFER TO THE HOLDERS OF THE NOTES. THE WARRANTS
EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH,
THE NOTES."
(iv) Regulation S. Legend. Each Warrant that is a Registrable
Security and issued pursuant to Regulation S shall bear the following
legend on the fact thereof:
"THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND THE WARRANT MAY NOT BE
EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. IN ORDER TO EXERCISE THIS
WARRANT, THE HOLDER MUST FURNISH TO THE COMPANY AND THE WARRANT AGENT
EITHER (A) A WRITTEN CERTIFICATION THAT IT IS NOT A U.S. PERSON AND THE
WARRANT IS NOT BEING EXERCISED ON BEHALF OF A U.S. PERSON OR (B) A
WRITTEN OPINION OF COUNSEL TO THE EFFECT THAT THE SECURITIES DELIVERED
UPON EXERCISE OF THE WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OR THAT THE DELIVERY OF SUCH SECURITIES IS EXEMPT FROM THE
REGISTRATION
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REQUIREMENTS OF THE SECURITIES ACT. TERMS IN THIS LEGEND HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
(h) Cancellation and/or Adjustment of Global Warrants.
At such time as all beneficial interests in a particular Global Warrant
have been exercised or exchanged for Definitive Warrants or a particular Global
Warrant has been exercised, redeemed, repurchased or canceled in whole and not
in part, each such Global Warrant shall be returned to or retained and canceled
by the Warrant Agent in accordance with Section 3.8 hereof. At any time prior
to such cancellation, if any beneficial interest in a Global Warrant is
exercised or exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Warrant or for
Definitive Warrants, the amount of Warrants represented by such Global Warrant
shall be reduced accordingly and an endorsement shall be made on such Global
Warrant by the Warrant Agent or by the Depositary at the direction of the
Warrant Agent to reflect such reduction; and if the beneficial interest is
being exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Warrant, such other
Global Warrant shall be increased accordingly and an endorsement shall be made
on such Global Warrant by the Warrant Agent or by the Depositary at the
direction of the Warrant Agent to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Warrant Agent shall countersign Global Warrants and
Definitive Warrants upon the Company's order or at the Warrant
Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Warrant or to a holder of a Definitive Warrant for
any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith.
(iii) All Global Warrants and Definitive Warrants issued upon any
registration of transfer or exchange of Global Warrants or Definitive
Warrants shall be the duly authorized, executed and issued warrants for
Preferred Stock of the Company, not subject to any preemptive rights, and
entitled to the same benefits under this Warrant Agreement, as the Global
Warrants or Definitive Warrants surrendered upon such registration of
transfer or exchange.
(iv) Prior to due presentment for the registration of a transfer of
any Warrant, the Warrant Agent, and the Company may deem and treat the
Person in whose name any Warrant is registered as the absolute owner of
such Warrant for all purposes and none of the Warrant Agent, or the
Company shall be affected by notice to the contrary.
(v) The Warrant Agent shall countersign Global Warrants and
Definitive Warrants in accordance with the provisions of Section 3.2
hereof.
(j) Facsimile Submissions to Warrant Agent.
All certifications, certificates and Opinions of Counsel required to be
submitted to the Warrant Registrar pursuant to this Section 3.5 to effect a
registration of transfer or exchange may be submitted by facsimile.
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Notwithstanding anything herein to the contrary, as to any certificates
and/or certifications delivered to the Warrant Registrar pursuant to this
Section 3.5, the Warrant Registrar's duties shall be limited to confirming that
any such certifications and certificates delivered to it are in the form of
Exhibits B and C attached hereto. The Warrant Registrar shall not be
responsible for confirming the truth or accuracy of representations made in any
such certifications or certificates. As to any Opinions of Counsel delivered
pursuant to this Section 3.5, the Warrant Registrar may rely upon, and be fully
protected in relying upon, such opinions.
3.6. REPLACEMENT WARRANTS.
If any mutilated Warrant is surrendered to the Warrant Agent or the
Company and the Warrant Agent receives evidence to its satisfaction of the
destruction, loss or theft of any Warrant, the Company shall issue and the
Warrant Agent, upon receipt of a Warrant Countersignature Order, shall
countersign a replacement Warrant if the Warrant Agent's requirements are met.
If required by the Warrant Agent or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Warrant Agent
and the Company to protect the Company, the Warrant Agent, any Agent and any
agent for purposes of the countersignature from any loss that any of them may
suffer if a Warrant is replaced. The Company may charge for its expenses in
replacing a Warrant.
Every replacement Warrant is an additional warrant of the Company and
shall be entitled to all of the benefits of this Warrant Agreement equally and
proportionately with all other Warrants duly issued hereunder.
3.7. TEMPORARY WARRANTS.
Until certificates representing Warrants are ready for delivery, the
Company may prepare and the Warrant Agent, upon receipt of a Warrant
Countersignature Order, shall issue temporary Warrants. Temporary Warrants
shall be substantially in the form of certificated Warrants but may have
variations that the Company considers appropriate for temporary Warrants and as
shall be reasonably acceptable to the Warrant Agent. Without unreasonable
delay, the Company shall prepare and the Warrant Agent shall countersign
definitive Warrants in exchange for temporary Warrants.
Holders of temporary Warrants shall be entitled to all of the benefits of this
Warrant Agreement.
3.8. CANCELLATION.
Subject to Section 3.5(h) hereof, the Company at any time may deliver
Warrants to the Warrant Agent for cancellation. The Warrant Registrar and
Warrant Paying Agent shall forward to the Warrant Agent any Warrants
surrendered to them for registration of transfer, exchange or exercise. The
Warrant Agent and no one else shall cancel all Warrants surrendered for
registration of transfer, exchange, exercise, replacement or cancellation and
shall destroy canceled Warrants (subject to the record retention requirement of
the Exchange Act). Certification of the destruction of all canceled Warrants
shall be delivered to the Company. The Company may not issue new Warrants to
replace Warrants that have been exercised or that have been delivered to the
Warrant Agent for cancellation.
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SECTION 4. SEPARATION OF WARRANTS; TERMS OF WARRANTS; EXERCISE OF WARRANTS.
(a) The Notes and Warrants will not be separately transferable until the
Separation Date. Subject to the terms of this Agreement, each Warrant holder
shall have the right, which may be exercised during the period commencing at
the opening of business on the Separation Date and until 5:00 p.m., New York
City time on October 15, 2009 (the "EXERCISE PERIOD"), to receive from the
Company the number of fully paid and nonassessable Warrant Shares which the
holder may at the time be entitled to receive on exercise of such Warrants and
payment of the exercise price (the "EXERCISE PRICE") (i) by tendering Notes
having an aggregate principal amount at maturity, plus accrued and unpaid
interest, if any, thereon to the date of exercise equal to the Exercise Price
then in effect for such Warrant Shares or (ii) by tendering Warrants as set
forth below or (iii) any combination of Notes and Warrants; provided that
holders shall be able to exercise their Warrants only if a registration
statement relating to the Warrant Shares is then in effect, or the exercise of
such Warrants is exempt from the registration requirements of the Securities
Act, and such securities are qualified for sale or exempt from qualification
under the applicable securities laws of the states in which the various holders
of the Warrants or other persons to whom it is proposed that the Warrant Shares
be issued on exercise of the Warrants reside. Each holder may exercise its
right, during the Exercise Period, to receive Warrant Shares on a net basis,
such that, without the exchange of any funds, the holder will receive such
number of Warrant Shares equal to the product of (A) the number of Warrant
Shares for which such Warrant is exercisable as of the date of exercise (if the
Exercise Price were being paid in cash) and (B) the Cashless Exercise Ratio.
The Cashless Exercise Ratio shall equal a fraction the numerator of which is
the Market Value (as defined below) per share of Preferred Stock minus the
Exercise Price per share as of the date of exercise and the denominator of
which is the Market Value per share on the date of exercise. Each Warrant not
exercised prior to 5:00 p.m., New York City time, on October 15, 2009 (the
"EXPIRATION DATE") shall become void and all rights thereunder and all rights
in respect thereof under this agreement shall cease as of such time. No
adjustments as to dividends will be made upon exercise of the Warrants.
The "MARKET VALUE" per share of Preferred Stock as of any date shall equal
(i) if Preferred Stock is primarily traded on a securities exchange, the last
sale price on such securities exchange on the trading day immediately prior to
the date of determination, or if no sale occurred on such day, the mean between
the closing "bid" and "asked" prices on such day, (ii) if the principal market
for Preferred Stock is in the over-the-counter market, the closing sale price
on the trading day immediately prior to the date of the determination, as
published by the National Association of Securities Dealers Automated quotation
System or similar organization, or if such price is not so published on such
day, the mean between the closing "bid" and "asked" prices, if available, on
such day, which prices may be obtained from any reputable pricing service,
broker or dealer, and (iii) if neither clause (i) nor clause (ii) is
applicable, the fair market value on the date of determination of Preferred
Stock as determined in good faith by the Board of Directors of the Company.
(b) In order to exercise all or any of the Warrants represented by a
Warrant Certificate, (i) in the case of Definitive Warrants, the holder thereof
must surrender for exercise the Warrant Certificate to the Company at the
office of the Warrant Agent at its corporate trust office set forth in Section
15 hereof, (ii) in the case of a book-entry interest in a Global Warrant, the
exercising Participant whose name appears on a securities position listing of
the Depositary as the holder of such book-entry interest must comply with the
Depositary's procedures relating to the exercise of such book-entry interest in
such Global Warrant and (iii) in the case of both Global Warrants and Definitive
Warrants, the holder thereof or the Participant, as applicable, must deliver to
the Company at the office
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of the Warrant Agent the form of election to purchase on the reverse thereof
duly filled in and signed, which signature shall be medallion guaranteed by an
institution which is a member of a Securities Transfer Association recognized
signature guarantee program, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price, which is set forth in the form of
Warrant Certificate attached hereto as Exhibit A, as adjusted as herein
provided, for the number of Warrant Shares in respect of which such Warrants
are then exercised. Payment of the aggregate Exercise Price shall be made (i)
by tendering Notes in the manner provided in Section 4(a) hereof, (ii) by
tendering Warrants in the manner provided in Section 4(a) hereof or (iii) a
combination of (i) and (ii).
(c) Subject to the provisions of Section 5 hereof, upon compliance with
clause (b) above, the Warrant Agent shall deliver or cause to be delivered with
all reasonable dispatch, to or upon the written order of the holder and in such
name or names as the Warrant holder may designate, a certificate or
certificates for the number of whole Warrant Shares issuable upon the exercise
of such Warrants or other securities or property to which such holder is
entitled hereunder, together with cash as provided in Section 9 hereof;
provided that if any consolidation, merger or lease or sale of assets is
proposed to be effected by the Company as described in Section 8(f) hereof, or
a tender offer or an exchange offer for shares of Preferred Stock shall be
made, upon such surrender of Warrants and payment of the Exercise Price as
aforesaid, the Warrant Agent shall, as soon as possible, but in any event not
later than two business days thereafter, deliver or cause to be delivered the
full number of Warrant Shares issuable upon the exercise of such Warrants in
the manner described in this sentence or other securities or property to which
such holder is entitled hereunder, together with cash as provided in Section 9
hereof. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of record of such Warrant Shares as of the date of the surrender of
such Warrants and payment of the Exercise Price.
(d) The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part. If less than all the
Warrants represented by a Warrant Certificate are exercised, such Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same
tenor and for the number of Warrants which were not exercised shall be executed
by the Company and delivered to the Warrant Agent and the Warrant Agent shall
countersign the new Warrant Certificate, registered in such name or names as
may be directed in writing by the holder, and shall deliver the new Warrant
Certificate to the Person or Persons entitled to receive the same.
(e) All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall
then be disposed of by the Warrant Agent in accordance with its standard
practices. The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay to the Company all monies
received by the Warrant Agent for the purchase of the Warrant Shares through
the exercise of such Warrants.
(f) The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the holders during
normal business hours at its office. The Company shall supply the Warrant
Agent from time to time with such numbers of copies of this Agreement as the
Warrant Agent may request.
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SECTION 5. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes attributable to the
initial issuance of Warrant Shares upon the exercise of Warrants; provided that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issue of any Warrant Certificates or
any certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the person or persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid.
SECTION 6. RESERVATION OF WARRANT SHARES.
(a) The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued
Preferred Stock or its authorized and issued Preferred Stock held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon exercise of Warrants, the maximum number of shares of
Preferred Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
(b) The Company or, if appointed, the transfer agent for the Preferred
Stock (the "TRANSFER AGENT") and every subsequent transfer agent for any shares
of the Company's capital stock issuable upon the exercise of any of the rights
of purchase aforesaid will be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Warrant Agent is hereby irrevocably
authorized to requisition from time to time from such Transfer Agent the stock
certificates required to honor outstanding Warrants upon exercise thereof in
accordance with the terms of this Agreement. The Company will supply such
Transfer Agent with duly executed certificates for such purposes and will
provide or otherwise make available any cash which may be payable as provided
in Section 9 hereof. The Company will furnish such Transfer Agent a copy of
all notices of adjustments, and certificates related thereto, transmitted to
each holder pursuant to Section 10 hereof.
(c) Before taking any action which would cause an adjustment pursuant to
Section 8 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares at the Exercise Price as so adjusted.
(d) The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issuance thereof.
SECTION 7. OBTAINING STOCK EXCHANGE LISTINGS.
The Company will from time to time take all action which may be necessary
so that the Warrant Shares, immediately upon their issuance upon the exercise
of Warrants, will be listed on the
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principal securities exchanges, automated quotation systems or other markets
within the United States of America, if any, on which other shares of Preferred
Stock are then listed, if any.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.
The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 8.
(a) Adjustment for Change in Capital Stock.
If the Company (i) pays a dividend or makes a distribution on its
Preferred Stock in shares of its Preferred Stock, (ii) subdivides its
outstanding shares of Preferred Stock into a greater number of shares, (iii)
combines its outstanding shares of Preferred Stock into a smaller number of
shares, (iv) makes a distribution on its Preferred Stock in shares of its
capital stock other than Preferred Stock or (v) issues by reclassification of
its Preferred Stock any shares of its capital stock, then the Exercise Price in
effect immediately prior to such action shall be proportionately adjusted so
that the holder of any Warrant thereafter exercised may receive the aggregate
number and kind of shares of capital stock of the Company which he would have
owned immediately following such action if such Warrant had been exercised
immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification. If, after an
adjustment, a holder of a Warrant upon exercise of it may receive shares of two
or more classes of capital stock of the Company, the Company shall determine,
in good faith, the allocation of the adjusted Exercise Price between the
classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject
to adjustment on terms comparable to those applicable to Preferred Stock in
this Section 8.
If the Company distributes to all holders of its Preferred Stock any of
its assets (including cash), debt securities, preferred stock or any rights or
warrants to purchase debt securities, preferred stock, assets (including cash)
or other securities of the Company, the assets, securities, rights, or warrants
to which the holder of any Warrant would have been entitled immediately
following such distribution if such Warrant had been exercised immediately
prior to such distribution, shall be placed in escrow prior to such
distribution, in an account to be established with the Warrant Agent. Such
assets, securities, rights, or warrants are to be released to the holder of
such Warrant upon exercise of such Warrant pursuant to the terms of this
Warrant Agreement.
Such adjustment, or deposit into escrow, shall be made successively
whenever any event listed above shall occur.
(b) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price.
Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 8
shall be made to the nearest one-one thousandth of a cent or to the nearest
one-one thousandth
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of a share, as the case may be, it being understood that no such rounding shall
be made under subsection (j).
(c) When No Adjustment Required.
No adjustment need be made for a transaction referred to Section 8(a)
hereof, if Warrant holders are to participate (without being required to
exercise their Warrants) in the transaction on a basis and with notice that the
Board of Directors determines to be fair and appropriate in light of the basis
and notice on which holders of Preferred Stock participate in the transaction.
No adjustment need be made for (i) rights to purchase Preferred Stock pursuant
to a Company plan for reinvestment of dividends or interest or (ii) a change in
the par value or no par value of the Preferred Stock. To the extent the
Warrants become convertible into cash, no adjustment need be made thereafter as
to the cash. Interest will not accrue on the cash.
(d) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Section 10 hereof.
(e) Notice of Certain Transactions.
If (i) the Company takes any action that would require an adjustment in
the Exercise Price pursuant to Section 8(a) hereof and if the Company does not
arrange for Warrant holders to participate pursuant to Section 8(c) hereof,
(ii) the Company takes any action that would require a supplemental Warrant
Agreement pursuant to Section 8(f) hereof or (iii) there is a liquidation or
dissolution of the Company, then the Company shall mail to Warrant holders a
notice stating the proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The
Company shall mail the notice at least 15 days before such date. Failure to
mail the notice or any defect in it shall not affect the validity of the
transaction.
(f) Reorganization of Company.
Immediately after the date hereof, if the Company consolidates or merges
with or into, or transfers or leases all or substantially all its assets to,
any person, upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of securities, cash or
other assets which the holder of a Warrant would have owned immediately after
the consolidation, merger, transfer or lease if the holder had exercised the
Warrant immediately before the effective date of the transaction. Concurrently
with the consummation of such transaction, the corporation formed by or
surviving any such consolidation or merger if other than the Company, or the
person to which such sale or conveyance shall have been made, shall enter into
(i) a supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 8(f) and (ii) a supplement to the
Warrant Registration Rights Agreement providing for the assumption of the
Company's obligations thereunder. The successor Company shall mail to Warrant
holders a notice describing the supplemental Warrant Agreement and Warrant
Registration Rights Agreement. If the issuer of securities deliverable upon
exercise of Warrants under the supplemental Warrant Agreement is an affiliate
of the formed, surviving, transferee or lessee
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corporation, that issuer shall join in the supplemental Warrant Agreement and
Warrant Registration Rights Agreement. If this Section 8(f) applies, Section
8(a) hereof does not apply.
(g) Company Determination Final.
Any determination that the Company or the Board of Directors must make
pursuant to Section 8(a), (b) or (c) hereof is conclusive.
(h) Warrant Agent's Disclaimer.
The Warrant Agent has no duty to determine when an adjustment under this
Section 8 should be made, how it should be made or what it should be. The
Warrant Agent has no duty to determine whether any provisions of a supplemental
Warrant Agreement under Section 8(f) hereof are correct. The Warrant Agent
makes no representation as to the validity or value of any securities or assets
issued upon exercise of Warrants. The Warrant Agent shall not be responsible
for the Company's failure to comply with this Section 8.
(i) When Issuance or Payment May Be Deferred.
In any case in which this Section 8 shall require that an adjustment in
the Exercise Price be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event (i) issuing
to the holder of any Warrant exercised after such record date the Warrant
Shares and other capital stock of the Company, if any, issuable upon such
exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
and (ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 9 hereof; provided that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares, other capital stock and cash
upon the occurrence of the event requiring such adjustment.
(j) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this Section 8,
each Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Preferred Stock (calculated to
the nearest hundredth) obtained from the following formula:
N' = N x E
--
E'
where:
N' = the adjusted number of Warrant Shares issuable
upon exercise of a Warrant by payment of the adjusted Exercise
Price.
N = the number or Warrant Shares previously
issuable upon exercise of a Warrant by payment of the Exercise
Price prior to adjustment.
E' = the adjusted Exercise Price.
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<PAGE> 26
E = the Exercise Price prior to adjustment.
(k) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 9. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant Shares on
the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the number of full
Warrant Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of the Warrants so presented. If any fraction of a Warrant Share
would, except for the provisions of this Section 9, be issuable on the exercise
of any Warrants (or specified portion thereof), the Company shall pay an amount
in cash equal to the Fair Value (as defined in that certain Warrant Agreement,
dated as of the date hereof, between the parties hereto, regarding warrants to
purchase common stock of the Company) per Warrant Share, as determined on the
day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction, computed to the nearest whole U.S. cent.
SECTION 10. NOTICES TO WARRANT HOLDERS.
(a) Upon any adjustment of the Exercise Price pursuant to Section 8
hereof, the Company shall promptly thereafter (i) cause to be filed with the
Warrant Agent a certificate of a firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company (who may
be the regular auditors of the Company) setting forth the Exercise Price after
such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and setting
forth the number of Warrant Shares (or portion thereof) issuable after such
adjustment in the Exercise Price, upon exercise of a Warrant and payment of the
adjusted Exercise Price, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein, and (ii) cause to be given to
each of the registered holders of Warrants at the address appearing on the
Warrant register for each such registered holder written notice of such
adjustments by first-class mail, postage prepaid. Where appropriate, such
notice may be given in advance and included as a part of the notice required to
be mailed under the other provisions of this Section 10.
(b) In case:
(i) the Company shall authorize the issuance to all holders of
shares of Preferred Stock of rights, options or warrants to subscribe for
or purchase shares of Preferred Stock or of any other subscription rights
or warrants;
(ii) the Company shall authorize the distribution to all holders of
shares of Preferred Stock of evidences of its indebtedness or assets
(other than dividends or cash distributions paid out of consolidated
current or retained earnings as shown on the books of the Company
prepared in accordance with generally accepted accounting principles or
dividends payable in shares of Preferred Stock or distributions referred
to in Section 10(a) hereof);
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(iii) of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of
Preferred Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or a
tender offer or exchange offer for shares of Preferred Stock;
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(v) the Company proposes to take any action (other than actions of
the character described in Section 8(a) hereof) which would require an
adjustment of the Exercise Price pursuant to Section 8 hereof;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered holders of Warrants at his address
appearing on the Warrant register, at least 20 days (or 10 days in any case
specified in clauses (i) or (ii) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (x)
the date as of which the holders of record of shares of Preferred Stock to be
entitled to receive any such rights, options, warrants or distribution are to
be determined, (y) the initial expiration date set forth in any tender offer or
exchange offer for shares of Preferred Stock, or (z) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Preferred Stock shall
be entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the
notice required by this Section 10 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up, or the vote upon any action.
(c) Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders of Warrants the
right to vote or to consent or to receive notice as stockholders in respect of
the meetings of stockholders or the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the Company.
SECTION 11. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
(a) Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 13 hereof. In case at the time such successor
to the Warrant Agent shall succeed to the agency created by this Agreement, and
in case at that time any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor to the Warrant Agent may
adopt the countersignature of the original Warrant Agent; and in case at that
time any of the Warrant Certificates shall not have been countersigned, any
successor to the
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<PAGE> 28
Warrant Agent may countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor to the Warrant
Agent; and in all such cases such Warrant Certificates shall have the full
force and effect provided in the Warrant Certificates and in this Agreement.
(b) In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its
changed name, and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement.
SECTION 12. WARRANT AGENT.
The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Warrants, by their acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates shall
be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel satisfactory to
it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant
Certificate in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable compensation
for all services rendered by the Warrant Agent in the execution of this
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement. The Company shall indemnify
the Warrant Agent against any and all losses, liabilities or expenses incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Warrant Agreement, including the costs and expenses of
enforcing this Warrant Agreement against the Company and defending itself
against any claim (whether asserted by the Company or any Holder or any other
person) or liability in
27
<PAGE> 29
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Warrant Agent shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Warrant Agent to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Warrant
Agent shall cooperate in the defense. The Warrant Agent may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrants shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrant Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent and any recovery of judgment shall be for
the ratable benefit of the registered holders of the Warrants, as their
respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or employee
of it, may buy, sell or deal in any of the Warrants or other securities of the
Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under
this Agreement. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the Company,
and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own negligence or bad
faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or
with respect to the method employed in making the same. The Warrant Agent
shall not be accountable with respect to the validity or value or the kind or
amount of any Warrant Shares or of any securities or property which may at any
time be issued or delivered upon the exercise of any Warrant or with respect to
whether any such Warrant Shares or other securities will when issued be validly
issued and fully paid and nonassessable, and makes no representation with
respect thereto.
SECTION 13. CHANGE OF WARRANT AGENT.
The Warrant Agent may resign at any time by so notifying the Company. If
the Warrant Agent shall resign or become incapable of acting as Warrant Agent,
the Company shall appoint a
28
<PAGE> 30
successor to such Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in writing of
such incapacity by the Warrant Agent or by the registered holder of a Warrant
Certificate, then the registered holder of any Warrant may apply to any court
of competent jurisdiction for the appointment of a successor to the Warrant
Agent. Pending appointment of a successor to such Warrant Agent, either by the
Company or by such a court, the duties of the Warrant Agent shall be carried
out by the Company. The holders of a majority of the unexercised Warrants
shall be entitled at any time to remove the Warrant Agent and appoint a
successor to such Warrant Agent. Such successor to the Warrant Agent need not
be approved by the Company or the former Warrant Agent. After appointment the
successor to the Warrant Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Warrant Agent
without further act or deed; provided that the former Warrant Agent shall
deliver and transfer to the successor to the Warrant Agent any property at the
time held by it hereunder and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to give any notice
provided for in this Section 13, however, or any defect therein, shall not
affect the legality or validity of the appointment of a successor to the
Warrant Agent.
SECTION 14. REPORTS.
(a) The Company agrees with each holder, for so long as any Warrants or
Warrant Shares remain outstanding and during any period in which the Company
(i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Warrants or Warrant Shares in connection with any sale thereof and any
prospective purchaser of such Warrants or Warrant Shares designated by such
Holder or beneficial owner, the information required by Rule 144(A)(d)(4) under
the Securities Act in order to permit resales of such Warrants or Warrant
Shares pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Warrants or Warrant Shares pursuant to Rule 144A.
(b) The Company shall provide the Warrant Agent with a sufficient number
of copies of all such reports that the Warrant Agent may be required to deliver
to the holders of the Warrants and the Warrant Shares under this Section 14.
SECTION 15. NOTICES TO COMPANY AND WARRANT AGENT.
Any notice or demand authorized by this Agreement to be given or made by
the Warrant Agent or by the registered holder of any Warrant to or on the
Company shall be sufficiently given or made when received if deposited in the
mail, first class or registered, postage prepaid, addressed (until another
address is filed in writing by the Company with the Warrant Agent) as follows:
29
<PAGE> 31
O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Telecopier No.: (417) 682-8113
Attention: Rowland H. Geddie, III, Esq.
With a copy to:
Kirkland & Ellis
International Financial Centre
Old Broad Street
London EC2N 1HQ, UK
Telecopier No.: 44 171 816-8800
Attention: M. Gilbey Strub, Esq.
In case the Company shall fail to maintain such office or agency or shall
fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder(s) of any Warrant to the Warrant Agent shall be sufficiently
given when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) to the Warrant Agent as follows:
Norwest Bank Minnesota, National Association
N9303-120
Sixth & Marquette
Minneapolis, MN 55479
Telecopier No.: (613) 667-9825
Attention: Corporate Trust Services
SECTION 16. FURTHER AGREEMENTS.
(a) Stock Issuances and Offerings.
The Company agrees that it shall not issue any shares of its preferred
stock to any of its Affiliates without first receiving an opinion from an
investment bank of nationally recognized standing that the terms of such
issuance are fair; provided that the Company may issue such shares with the
prior consent of a majority of the outstanding warrants to purchase shares of
Preferred Stock. The Company shall not permit any of its subsidiaries to
publicly offer any shares of capital stock.
(b) Investment Company.
The Company agrees that it shall not, and shall not permit any of its
subsidiaries, to take any action that would subject it to the requirements of
the Investment Company Act of 1940.
30
<PAGE> 32
SECTION 17. SUPPLEMENTS AND AMENDMENTS.
The Company and the Warrant Agent may from time to time supplement or
amend this Agreement without the approval of any holders of Warrants in order
to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company and the Warrant Agent may deem necessary or
desirable and which shall not, as evidenced by an opinion of counsel delivered
to the Warrant Agent, in any way adversely affect the interests of the holders
of Warrants. Any amendment or supplement to this Agreement that has an adverse
effect on the interests of the holders of Warrants shall require the written
consent of the holders of a majority of the then outstanding Warrants
(excluding Warrants held by the Company or any of its affiliates). The Warrant
Agent shall be entitled to receive and, subject to Section 12, shall be fully
protected in relying upon an Officers' Certificate and Opinion of Counsel as
conclusive evidence that any such amendment or supplement is authorized or
permitted hereunder, that it is not inconsistent herewith, and that it will be
valid and binding upon the Company in accordance with its terms. The Company
may not sign any amendment or supplement until the Company's Board of Directors
approves it. The consent of each holder of Warrants affected shall be required
for any amendment pursuant to which the Exercise Price would be increased or
the number of Warrant Shares purchasable upon exercise of Warrants would be
decreased (other than pursuant to adjustments provided in this Agreement).
SECTION 18. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Warrant Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
SECTION 19. TERMINATION.
This Agreement shall terminate at 5:00 p.m., New York City time on
October 15, 2009. Notwithstanding the foregoing, this Agreement will terminate
on any earlier date if all Warrants have been exercised. The provisions of
Section 12 shall survive such termination.
SECTION 20. GOVERNING LAW.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for
all purposes shall be construed in accordance with the internal laws of said
State.
SECTION 21. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Warrant Agent and the registered
holders of Warrants any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrant Agent and the registered holders of Warrants.
31
<PAGE> 33
SECTION 22. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
[Signature Page Follows]
32
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Richard D. Davidson
-----------------------
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Warrant Agent
By: /s/ Timothy P. Mowdy
------------------------
Name:
Title:
33
<PAGE> 35
EXHIBIT A
[Form of Warrant Certificate]
[Face]
Unit Legend. Each Warrant issued prior to the Separation Date shall bear
the Unit Legend on the face thereof on the face thereof.
Private Placement Legend: Each Warrant issued pursuant to an exemption
from the registration requirements of the Securities Act shall bear the Private
Placement Legend on the face thereof.
Transfer Restriction Legend: Each Warrant issued should bear the Transfer
Restriction Legend on the face thereof.
No. ___________ ___Warrants
CUSIP No. ________
Warrant Certificate
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
This Warrant Certificate certifies that Cede & Co., or its registered
assigns, is the registered holder of Warrants expiring October 15, 2009 (the
"Warrants") to purchase series B junior preferred stock, par value $0.01 (the
"Preferred Stock"), of O'Sullivan Industries Holdings, Inc., a Delaware
corporation (the "Company"). Each Warrant entitles the registered holder upon
exercise at any time from 9:00 a.m. on the Separation Date referred to below
(the "Exercise Date") until 5:00 p.m. New York City Time on October 15, 2009
to receive from the Company 0.3927 fully paid and nonassessable shares of
Preferred Stock (the "Warrant Shares") at the initial exercise price (the
"Exercise Price") of $0.01 per share payable upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office or agency of the
Warrant Agent, but only subject to the conditions set forth herein and in the
Warrant Agreement referred to on the reverse hereof. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
No Warrant may be exercised after 5:00 p.m., New York City Time on
October 15, 2009, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
A-1
<PAGE> 36
This Warrant Certificate shall be governed by and construed in accordance
with the internal laws of the State of New York.
A-2
<PAGE> 37
IN WITNESS WHEREOF, O'Sullivan Industries Holdings, Inc. has caused this
Warrant Certificate to be signed below.
DATED: November 30, 1999
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
Countersigned:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Warrant Agent
By:
-------------------------------------
Name:
Title:
A-3
<PAGE> 38
[Reverse of Warrant Certificate]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m. New York City time on
October 15, 2009 entitling the holder on exercise to receive shares of
Preferred Stock, and are issued or to be issued pursuant to a Warrant Agreement
dated as of November 30, 1999 (the "Warrant Agreement"), duly executed and
delivered by the Company to Norwest Bank Minnesota, National Association, as
warrant agent (the "Warrant Agent"), which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Warrant Agent, the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. A copy of the Warrant Agreement may be
obtained by the holder hereof upon written request to the Company.
Warrants may be exercised at any time on or after the Separation Date and
on or before 5:00 p.m. New York City time on October 15, 2009; provided that
holders shall be able to exercise their Warrants only if a registration
statement relating to the Warrants Shares is then in effect, or the exercise of
such Warrants is exempt from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and such securities are
qualified for sale or exempt from qualification under the applicable securities
laws of the states in which the various holders of the Warrants or other
persons to whom it is proposed that the Warrant Shares be issued on exercise of
the Warrants reside. In order to exercise all or any of the Warrants
represented by this Warrant Certificate, the holder must deliver to the Warrant
Agent at its corporate trust office set forth in Section 15 of the Warrant
Agreement this Warrant Certificate and the form of election to purchase on the
reverse hereof duly filled in and signed, which signature shall be medallion
guaranteed by an institution which is a member of a Securities Transfer
Association recognized signature guarantee program, and upon payment to the
Warrant Agent for the account of the Company of the Exercise Price, as adjusted
as provided in the Warrant Agreement, for the number of Warrant Shares in
respect of which such Warrants are then exercised. No adjustment shall be made
for any dividends on any Preferred Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Preferred Stock issuable upon
the exercise of each Warrant shall be adjusted. No fractions of a share of
Preferred Stock will be issued upon the exercise of any Warrant, but the
Company will pay the cash value thereof determined as provided in the Warrant
Agreement.
The Company has agreed pursuant to a Warrant Registration Rights Agreement
dated as of November 30, 1999 (the "Warrant Registration Rights Agreement") to
provide the holders of the Warrants with certain demand and piggy-back
registration rights with respect to the Preferred Stock purchasable upon
exercise of such Warrants, as set forth in the Warrant Registration Rights
Agreement. A copy of the Warrant Registration Rights Agreement may be obtained
by the holder hereof upon written request to the Company or the Warrant Agent.
The Warrants and the shares of Preferred Stock underlying the Warrants are
subject to certain restrictions on transfer and other restrictions set forth in
a Registration Rights Agreement and a Stockholders Agreement, each dated
November 30, 1999. Copies of the Registration Rights Agreement
A-4
<PAGE> 39
and the Stockholders Agreement may be obtained by the holder hereof upon
written request to the Company or the Warrant Agent.
Warrant Certificates, when surrendered at the office of the Warrant Agent
by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-5
<PAGE> 40
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____________ shares of
Preferred Stock and herewith tenders payment for such shares to the order of
O'SULLIVAN INDUSTRIES HOLDINGS, INC., in the amount of [Warrants] [Notes] equal
in [fair market value] [principal amount] to $__________ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of _______________, whose address is __________________
and that such shares be delivered to ___________, whose address is
____________________________. If said number of shares is less than all of the
shares of Preferred Stock purchasable hereunder, the undersigned requests that
a new Warrant Certificate representing the remaining balance of such shares be
registered in the name of ______________________, whose address is
____________________, and that such Warrant Certificate be delivered to whose
address is ____________________.
-----------------------------------------
Signature
Date:
----------------------------------------
Signature Guaranteed
Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Warrant Agent, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Warrant
Agent in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-7
<PAGE> 41
SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS
The following exchanges of a part of this Global Warrant have been made:
<TABLE>
<CAPTION>
Number of Warrants
Amount of decrease Amount of increase in this Global
in Number of in Number of Warrant following Signature of
warrants in this Warrants in this such decrease or authorized officer
Date of Exchange Global Warrant Global Warrant increase of Warrant Agent
<S> <C> <C> <C> <C>
</TABLE>
A-7
<PAGE> 1
EXHIBIT 4.6
EXECUTION COPY
================================================================================
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
Warrants to Purchase
93,273 Shares of Common Stock
WARRANT AGREEMENT
Dated as of November 30, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Warrant Agent
================================================================================
<PAGE> 2
WARRANT AGREEMENT, dated as of November 30, 1999, between O'Sullivan
Industries Holdings Inc., a Delaware corporation (the "COMPANY"), and Norwest
Bank Minnesota, National Association, as warrant agent (the "WARRANT AGENT").
WHEREAS, the Company proposes to issue warrants (the "WARRANTS") to
initially purchase up to an aggregate of 93,273 shares of Common Stock, par
value $0.01 per share (the "COMMON STOCK"), of the Company (the Common Stock
issuable on exercise of the Warrants being referred to herein as the "WARRANT
SHARES"), in connection with the offering (the "OFFERING") by the Company and
O'Sullivan Industries, Inc. ("INDUSTRIES") of 100,000 Units (the "UNITS"), each
consisting of $1,000 principal amount at maturity of Industries' 13 3/8% Senior
Subordinated Notes due 2009 (the "NOTES"), one Warrant, each Warrant initially
representing the right to purchase 0.9327 Warrant Shares and one warrant to
purchase shares of the Company's series B junior preferred stock, each such
warrant initially representing the right to purchase 0.3927 shares of the
Company's series B junior preferred stock.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act in connection with the
issuance of Warrant Certificates (as defined) and other matters as provided
herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
"144A GLOBAL WARRANT" means a global Warrant substantially in the form of
Exhibit A hereto bearing the Global Warrant Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such specified Person, whether through the ownership
of voting securities, by agreement or otherwise; provided that beneficial
ownership of 10% or more of the voting securities of a Person shall be deemed to
be control.
"APPLICABLE PROCEDURES" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Warrant, the rules and procedures of
the Depositary, Euroclear and Cedelbank that apply to such transfer or exchange.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CEDELBANK" means Cedelbank, a limited liability company (a societe
anonyme) organized under Luxembourg law.
"CLOSING DATE" means the date hereof.
<PAGE> 3
"COMMISSION" means the Securities and Exchange Commission.
"DEPOSITARY" means, with respect to the Warrants issuable or issued in
whole or in part in global form, the Person specified in Section 3.3 hereof as
the Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of the Indenture.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GLOBAL WARRANTS" means, individually and collectively, each of the
Restricted Global Warrants and the Unrestricted Global Warrants, substantially,
in the form of Exhibit A hereto issued in accordance with Section 3.1(b) and 3.5
hereof.
"GLOBAL WARRANT LEGEND" means the legend set forth in Section 3.5(g)(ii),
which is required to be placed on all Global Warrants issued under this Warrant
Agreement.
"HOLDER" means a person who owns Registrable Securities.
"INDENTURE" means the indenture, dated the date hereof, among the Company,
the Guarantors set forth therein and Norwest Bank Minnesota, National
Association, as trustee relating to the Notes.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest in a
Global Warrant through a Participant.
"INITIAL PURCHASER" means Lehman Brothers Inc.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, which is not also a QIB.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"OFFICER" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"OPINION OF COUNSEL" means an opinion from legal counsel who is reasonably
acceptable to the Warrant Agent in form and substance reasonably acceptable to
the Warrant Agent. The counsel may be an employee of or counsel to the Company,
any subsidiary of the Company or the Warrant Agent.
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"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedelbank, a Person who has an account with the Depositary, Euroclear or
Cedelbank, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Cedelbank).
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section 3.5(g)(i)
to be placed on all Warrants issued under this Warrant Agreement except where
otherwise permitted by the provisions of this Warrant Agreement.
"PUBLIC EQUITY OFFERING" means an underwritten offering of Common Stock
pursuant to a registration statement that has been declared effective by the
Commission pursuant to the Securities Act (other than a registration statement
on Form S-8 or otherwise relating to equity securities issuable under any
employee benefit plan of the Company).
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"REGISTRABLE SECURITIES" shall mean the Warrants, the Warrant Shares and
any other securities issued or issuable with respect to the Warrants or the
Warrant Shares by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization; provided that a security ceases to be a Registrable Security
when it is no longer a Transfer Restricted Security. The Registrable Securities
are entitled to the benefits of the Warrant Registration Rights Agreement.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"REGULATION S GLOBAL WARRANT" means a global Warrant in the form of
Exhibit A hereto bearing the Global Warrant Legend, the Private Placement Legend
and the Regulation S Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee.
"REGULATION S LEGEND" means the legend set forth in Section 3.5(g)(iv) to
be placed on all Registrable Securities issued pursuant to Regulation S.
"RESTRICTED DEFINITIVE WARRANT" means a Definitive Warrant bearing the
Private Placement Legend.
"RESTRICTED GLOBAL WARRANT" means a Global Warrant bearing the Private
Placement Legend.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEPARATION DATE" means the earliest of (i) 180 days after the closing of
the Offering, (ii) the date on which an exchange offer registration statement
for the Notes is declared effective under the Securities Act, (iii) the date on
which a shelf registration statement for the Notes is declared effective under
the Securities Act, (iv) such date as Lehman Brothers Inc., in its sole
discretion, shall determine and (v) in the event the Company is required to make
an offer to purchase Notes pursuant to the terms of the Indenture, the date the
Company mails notice of such offer to the holders of the Notes.
"TRANSFER RESTRICTED SECURITIES" shall mean each Warrant and Warrant Share
until the earlier to occur of (i) the date on which such Warrant or Warrant
Share has been effectively registered under the Securities Act and disposed of
in accordance with a Registration Statement covering it (and the purchasers
thereof have been issued a registered freely tradable security) and (ii) the
date on which such Warrant or Warrant Share is distributed to the public
pursuant to Rule 144 under the Securities Act.
"UNRESTRICTED GLOBAL WARRANT" means a global Warrant substantially in the
form of Exhibit A attached hereto that bears the Global Warrant Legend and that
has the "Schedule of Exchanges of Interests in the Global Warrant" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Warrants that do not bear the
Private Placement Legend.
"UNRESTRICTED DEFINITIVE WARRANT" means one or more Definitive Warrants
that do not bear and are not required to bear the Private Placement Legend.
"U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"WARRANT REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated as of November 30, 1999, by and among the Company, the Initial
Purchaser and the other parties thereto relating to the Warrants and the Warrant
Shares.
SECTION 2. APPOINTMENT OF WARRANT AGENT.
The Company hereby appoints the Warrant Agent to act as agent for the
Company in accordance with the instructions set forth hereinafter in this
Agreement and the Warrant Agent hereby accepts such appointment.
SECTION 3. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.
3.1. FORM AND DATING.
(a) General.
The Warrants shall be substantially in the form of Exhibit A hereto (the
"WARRANT CERTIFICATES"). The Warrants may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Warrant shall
be dated the date of the countersignature.
The terms and provisions contained in the Warrants shall constitute, and
are hereby expressly made, a part of this Warrant Agreement. The Company and the
Warrant Agent, by their execution and delivery of this Warrant Agreement,
expressly agree to such terms and provisions and to
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be bound thereby. However, to the extent any provision of any Warrant conflicts
with the express provisions of this Warrant Agreement, the provisions of this
Warrant Agreement shall govern and be controlling.
(b) Global Warrants.
Warrants issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Warrant Legend thereon and the
"Schedule of Exchanges of Interests in the Global Warrant" attached thereto).
Warrants issued in definitive form shall be substantially in the form of Exhibit
A attached hereto (but without the Global Warrant Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Warrant" attached thereto).
Each Global Warrant shall represent such of the outstanding Warrants as shall be
specified therein and each shall provide that it shall represent the number of
outstanding Warrants from time to time endorsed thereon and that the number of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any endorsement
of a Global Warrant to reflect the amount of any increase or decrease in the
number of outstanding Warrants represented thereby shall be made by the Warrant
Agent in accordance with instructions given by the Holder thereof as required by
Section 3.5 hereof.
(c) Euroclear and Cedelbank Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedelbank" and "Customer Handbook" of Cedelbank shall be
applicable to transfers of beneficial interests in the Regulation S Global
Warrant that are held by Participants through Euroclear or Cedelbank.
3.2. EXECUTION.
An Officer shall sign the Warrants for the Company by manual or facsimile
signature.
If the Officer whose signature is on a Warrant no longer holds that office
at the time a Warrant is countersigned, the Warrant shall nevertheless be valid.
A Warrant shall not be valid until countersigned by the manual signature of
the Warrant Agent. The signature shall be conclusive evidence that the Warrant
has been properly issued under this Warrant Agreement.
The Warrant Agent shall, upon a written order of the Company signed by an
Officer (a "WARRANT COUNTERSIGNATURE ORDER"), countersign Warrants for original
issue up to the number stated in the preamble hereto.
The Warrant Agent may appoint an agent acceptable to the Company to
countersign Warrants. Such an agent may countersign Warrants whenever the
Warrant Agent may do so. Each reference in this Warrant Agreement to a
countersignature by the Warrant Agent includes a countersignature by such agent.
Such an agent has the same rights as the Warrant Agent to deal with the Company
or an Affiliate of the Company.
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3.3. WARRANT REGISTRAR.
The Company shall maintain an office or agency where Warrants may be
presented for registration of transfer or for exchange ("WARRANT REGISTRAR").
The Warrant Registrar shall keep a register of the Warrants and of their
transfer and exchange. The Company may appoint one or more co-Warrant
Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar. The
Company may change any Warrant Registrar without notice to any holder. The
Company shall notify the Warrant Agent in writing of the name and address of any
agent not a party to this Warrant Agreement. If the Company fails to appoint or
maintain another entity as Warrant Registrar, the Warrant Agent shall act as
such. The Company or any of its subsidiaries may act as Warrant Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Warrants.
The Company initially appoints the Warrant Agent to act as the Warrant
Registrar with respect to the Global Warrants.
3.4. HOLDER LISTS.
The Warrant Agent shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders. If the Warrant Agent is not the Warrant Registrar, the Company
shall promptly furnish to the Warrant Agent at such times as the Warrant Agent
may request in writing, a list in such form and as of such date as the Warrant
Agent may reasonably require of the names and addresses of the Holders.
3.5. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Warrants.
A Global Warrant may not be transferred as a whole except by the Depositary
to a nominee of the Depositary, by a nominee of the Depositary to the Depositary
or to another nominee of the Depositary, or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary. All
Global Warrants will be exchanged by the Company for Definitive Warrants if (i)
the Company delivers to the Warrant Agent notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Warrants (in whole but not in part) should
be exchanged for Definitive Warrants and delivers a written notice to such
effect to the Warrant Agent. Upon the occurrence of either of the preceding
events in (i) or (ii) above, Definitive Warrants shall be issued in such names
as the Depositary shall instruct the Warrant Agent. Global Warrants also may be
exchanged or replaced, in whole or in part, as provided in Sections 3.6 and 3.7
hereof. A Global Warrant may not be exchanged for another Warrant other than as
provided in this Section 3.5(a), however, beneficial interests in a Global
Warrant may be transferred and exchanged as provided in Section 3.5(b), (c) or
(f) hereof.
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(b) Transfer and Exchange of Beneficial Interests in the Global Warrants.
The transfer and exchange of beneficial interests in the Global Warrants
shall be effected through the Depositary, in accordance with the provisions of
this Warrant Agreement and the Applicable Procedures. Beneficial interests in
the Restricted Global Warrants shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Warrants also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Warrant.
Beneficial interests in any Restricted Global Warrant may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Warrant in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Warrant may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Warrant. No written orders or instructions shall be
required to be delivered to the Warrant Registrar to effect the transfers
described in this Section 3.5(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Warrants. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 3.5(b)(i) above, the
transferor of such beneficial interest must deliver to the Warrant
Registrar either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Warrant in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B)
(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Warrant in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Warrant Registrar containing information
regarding the Person in whose name such Definitive Warrant shall be
registered. Upon effectiveness of the Registration Statement (as defined in
the Warrant Registration Rights Agreement) by the Company in accordance
with Section 3.5(f) hereof, the requirements of this Section 3.5(b)(ii)
shall be deemed to have been satisfied upon receipt by the Warrant
Registrar of a certification required by the Company in connection with
such Registration Statement delivered by the Holder of such beneficial
interests in the Restricted Global Warrants. Upon satisfaction of all of
the requirements for transfer or exchange of beneficial interests in Global
Warrants contained in this Agreement and the Warrants or otherwise
applicable under the Securities Act, the Warrant Agent shall adjust the
principal amount of the relevant Global Warrant(s) pursuant to Section
3.5(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Warrant. A beneficial interest in any Restricted Global Warrant may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Warrant if the transfer
complies with the requirements of Section 3.5(b)(ii) above and the Warrant
Registrar receives the following:
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(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Warrant, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Warrant, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Warrant for Beneficial Interests in the Unrestricted Global Warrant.
A beneficial interest in any Restricted Global Warrant may be exchanged by
any holder thereof for a beneficial interest in an Unrestricted Global
Warrant or transferred to a Person who takes delivery thereof in the form
of a beneficial interest in an Unrestricted Global Warrant if the exchange
or transfer complies with the requirements of Section 3.5(b)(ii) above and:
(A) such transfer is effected pursuant to the Registration
Statement in accordance with the Warrant Registration Rights
Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Warrant, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Warrant, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the Warrant
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Warrant Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) above at a
time when an Unrestricted Global Warrant has not yet been issued, the Company
shall issue and, upon receipt of an Warrant Countersignature Order in accordance
with Section 3.2 hereof, the Warrant Agent shall countersign one or more
Unrestricted Global Warrants in the number equal to the number of beneficial
interests transferred pursuant to subparagraph (B) above.
(c) Transfer and Exchange of Beneficial Interests for Definitive Warrants.
(i) Beneficial Interests in Restricted Global Warrants to Restricted
Definitive Warrants. If any holder of a beneficial interest in a Restricted
Global Warrant proposes to exchange such beneficial interest for a Restricted
Definitive Warrant or to transfer such
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beneficial interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Warrant, then, upon receipt by the Warrant Registrar
of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Warrant proposes to exchange such beneficial interest for a
Restricted Definitive Warrant, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Warrant Agent shall cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be reduced by the number of
Warrants to be represented by the Definitive Warrant pursuant to Section 3.5(h)
hereof, and the Company shall execute and the Warrant Agent shall countersign
and deliver to the Person designated in the instructions a Definitive Warrant in
the appropriate amount. Any Definitive Warrant issued in exchange for a
beneficial interest in a Restricted Global Warrant pursuant to this Section
3.5(c) shall be registered in such name or names as the holder of such
beneficial interest shall instruct the Warrant Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The Warrant
Agent shall deliver such Definitive Warrants to the Persons in whose names such
Warrants are so registered. Any Definitive Warrant issued in exchange for a
beneficial interest in a Restricted Global Warrant pursuant to this Section
3.5(c)(i) shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
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(ii) Beneficial Interests in Restricted Global Warrants to Unrestricted
Definitive Warrants. A holder of a beneficial interest in a Restricted Global
Warrant may exchange such beneficial interest for an Unrestricted Definitive
Warrant or may transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Warrant only if:
(A) such transfer is effected pursuant to the Registration Statement
in accordance with the Warrant Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Warrant proposes to exchange such beneficial interest for a
Definitive Warrant that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Warrant proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a Definitive
Warrant that does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the Warrant
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Warrant Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Warrants to Unrestricted
Definitive Warrants. If any holder of a beneficial interest in an Unrestricted
Global Warrant proposes to exchange such beneficial interest for a Definitive
Warrant or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Warrant, then, upon satisfaction of the
conditions set forth in Section 3.5(b)(ii) hereof, the Warrant Agent shall cause
the amount of the applicable Global Warrant to be reduced accordingly pursuant
to Section 3.5(h) hereof, and the Company shall execute and the Warrant Agent
shall countersign and deliver to the Person designated in the instructions a
Definitive Warrant in the appropriate principal amount. Any Definitive Warrant
issued in exchange for a beneficial interest pursuant to this Section
3.5(c)(iii) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest shall
instruct the Warrant Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Warrant Agent shall deliver such
Definitive Warrants to the Persons in whose names such Warrants are so
registered. Any Definitive Warrant issued in exchange for a beneficial interest
pursuant to this Section 3.5(c)(iii) shall not bear the Private Placement
Legend.
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(d) Transfer and Exchange of Definitive Warrants for Beneficial Interests.
(i) Restricted Definitive Warrants to Beneficial Interests in Restricted
Global Warrants. If any Holder of a Restricted Definitive Warrant proposes to
exchange such Warrant for a beneficial interest in a Restricted Global Warrant
or to transfer such Restricted Definitive Warrants to a Person who takes
delivery thereof in the form of a beneficial interest in a Restricted Global
Warrant, then, upon receipt by the Warrant Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Warrant proposes to
exchange such Warrant for a beneficial interest in a Restricted Global
Warrant, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Warrant is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such Restricted Definitive Warrant is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Warrant is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Warrant is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Warrant is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
(G) if such Restricted Definitive Warrant is being transferred
pursuant to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Warrant Agent shall cancel the Restricted Definitive Warrant, increase or
cause to be increased the amount of, in the case of clause (A) above, the
appropriate Restricted Global Warrant, in the case of clause (B) above, the 144A
Global Warrant, in the case of clause (C) above, the Regulation S Global
Warrant.
(ii) Restricted Definitive Warrants to Beneficial Interests in Unrestricted
Global Warrants. A Holder of a Restricted Definitive Warrant may exchange such
Warrant for a
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beneficial interest in an Unrestricted Global Warrant or transfer such
Restricted Definitive Warrant to a Person who takes delivery thereof in the form
of a beneficial interest in an Unrestricted Global Warrant only if:
(A) such transfer is effected pursuant to the Registration Statement
in accordance with the Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Definitive Warrants proposes to
exchange such Warrants for a beneficial interest in the Unrestricted
Global Warrant, a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Warrants proposes to
transfer such Warrants to a Person who shall take delivery thereof in
the form of a beneficial interest in the Unrestricted Global Warrant,
a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Warrant
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Warrant Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section
3.5(d)(ii), the Warrant Agent shall cancel the Definitive Warrants and increase
or cause to be increased the aggregate principal amount of the Unrestricted
Global Warrant.
(iii) Unrestricted Definitive Warrants to Beneficial Interests in
Unrestricted Global Warrants. A Holder of an Unrestricted Definitive Warrant may
exchange such Warrant for a beneficial interest in an Unrestricted Global
Warrant or transfer such Definitive Warrants to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Warrant
at any time. Upon receipt of a request for such an exchange or transfer, the
Warrant Agent shall cancel the applicable Unrestricted Definitive Warrant and
increase or cause to be increased the amount of one of the Unrestricted Global
Warrants.
If any such exchange or transfer from a Definitive Warrant to a beneficial
interest is effected pursuant to subparagraphs (ii)(B) or (iii) above at a time
when an Unrestricted Global Warrant has not yet been issued, the Company shall
issue and, upon receipt of an Warrant Countersignature Order in accordance with
Section 3.2 hereof, the Warrant Agent shall countersign one or more Unrestricted
Global Warrants in the number equal to the number of beneficial interests of
Definitive Warrants so transferred.
(e) Transfer and Exchange of Definitive Warrants for Definitive Warrants.
Upon request by a Holder of Definitive Warrants and such Holder's
compliance with the provisions of this Section 3.5(e), the Warrant Registrar
shall register the transfer or exchange of
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Definitive Warrants. Prior to such registration of transfer or exchange, the
requesting Holder shall present or surrender to the Warrant Registrar the
Definitive Warrants duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Warrant Registrar duly executed by such
Holder or by its attorney, duly authorized in writing. In addition, the
requesting Holder shall provide any additional certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 3.5(e).
(i) Restricted Definitive Warrants to Restricted Definitive Warrants.
Any Restricted Definitive Warrant may be transferred to and registered in
the name of Persons who take delivery thereof in the form of a Restricted
Definitive Warrant if the Warrant Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof; or
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Warrants to Unrestricted Definitive
Warrants. Any Restricted Definitive Warrant may be exchanged by the Holder
thereof for an Unrestricted Definitive Warrant or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Warrant if:
(A) any such transfer is effected pursuant to the Registration
Statement in accordance with the Warrant Registration Rights
Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Restricted Definitive Warrants
proposes to exchange such Warrants for an Unrestricted Definitive
Warrant, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Warrants
proposes to transfer such Warrants to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Warrant, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests, an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such exchange
or transfer is in compliance with the Securities Act and that the
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restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
(iii) Unrestricted Definitive Warrants to Unrestricted Definitive Warrants.
A Holder of Unrestricted Definitive Warrants may transfer such Warrants to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Warrant. Upon receipt of a request to register such a transfer, the Warrant
Registrar shall register the Unrestricted Definitive Warrants pursuant to the
instructions from the Holder thereof.
(f) Registration Statement.
Upon the effectiveness of the Registration Statement and sales of Warrants
in connection therewith in accordance with the Warrant Registration Rights
Agreement, the Company shall issue and, upon receipt of a Warrant
Countersignature Order in accordance with Section 3.2, the Warrant Agent shall
countersign (i) one or more Unrestricted Global Warrants in an amount equal to
the amount of the beneficial interests in the Restricted Global Warrants sold
under such Registration Statement and (ii) Definitive Warrants in an amount
equal to the amount of the beneficial interests of the Restricted Definitive
Warrants sold under such Registration Statement. Concurrently with the issuance
of such Warrants, the Warrant Agent shall cause the amount of the applicable
Restricted Global Warrants to be reduced accordingly, and the Company shall
execute and the Warrant Agent shall countersign and deliver to the Persons
designated by the Holders of Definitive Warrants so accepted Definitive Warrants
in the appropriate amount.
(g) Legends.
The following legends shall appear on the face of all Global Warrants and
Definitive Warrants issued under this Warrant Agreement unless specifically
stated otherwise in the applicable provisions of this Warrant Agreement.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Warrant
and each Definitive Warrant (and all Warrants issued in exchange therefor
or substitution thereof) shall bear the legend in substantially the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED
UNDER THE WARRANT AGREEMENT PURSUANT TO WHICH THIS SECURITY IS ISSUED) AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER JURISDICTION. 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
OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
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<PAGE> 16
(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 FOREIGN PURCHASER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY 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."
(B) Each Global Warrant and each Definitive Warrant (and all Warrants
issued in exchange therefor or substitution thereof) shall bear the legend
(the "Transfer Restriction Legend") in the following form:
"THIS WARRANT AND THE WARRANT SHARES UNDERLYING THIS WARRANT ARE ALSO
SUBJECT TO CERTAIN TRANSFER AND OTHER RESTRICTIONS CONTAINED IN A
STOCKHOLDERS AGREEMENT AND A REGISTRATION RIGHTS AGREEMENT, EACH DATED
NOVEMBER 30, 1999. COPIES OF THE STOCKHOLDERS AGREEMENT AND THE
REGISTRATION RIGHTS AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF UPON
WRITTEN REQUEST TO THE COMPANY OR THE WARRANT AGENT."
(C) Notwithstanding the foregoing, any Global Warrant or Definitive
Warrant issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 3.5 (and all
Warrants issued in exchange therefor or substitution thereof) shall not
bear the Private Placement Legend.
(ii) Global Warrant Legend. Each Global Warrant shall bear a legend in
substantially the following form:
"THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE WARRANT
AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (II) THIS
GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
3.5(a) OF THE WARRANT AGREEMENT, (III) THIS GLOBAL WARRANT MAY BE DELIVERED TO
THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 3.8 OF THE WARRANT
AGREEMENT AND (IV) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
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(iii) Unit Legend. Each Warrant issued prior to the Separation Date shall
bear a legend in substantially the following form:
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF
AN ISSUANCE OF UNITS (THE "UNITS"), EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL
AMOUNT OF THE 13 3/8% SENIOR SUBORDINATED NOTES DUE 2009 OF O'SULLIVAN
INDUSTRIES, INC. (THE "NOTES"), ONE WARRANT (THE "COMMON WARRANTS") INITIALLY
ENTITLING THE HOLDER THEREOF TO PURCHASE 0.9327 SHARES OF COMMON STOCK AND ONE
WARRANT (THE "PREFERRED WARRANTS") INITIALLY ENTITLING THE HOLDER THEREOF TO
PURCHASE 0.3927 SHARES OF SERIES B JUNIOR PREFERRED STOCK, IN EACH CASE WITH A
PAR VALUE OF $0.01 PER SHARE, OF O'SULLIVAN INDUSTRIES HOLDINGS, INC.
PRIOR TO THE EARLIEST TO OCCUR OF (I) 180 DAYS AFTER THE CLOSING OF THE
OFFERING OF THE UNITS, (ii) THE DATE ON WHICH An exchange offer REGISTRATION
STATEMENT FOR THE NOTES IS DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (Iii)
THE DATE ON WHICH A SHELF REGISTRATION STATEMENT for THE NOTES IS DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (iV) SUCH DATE AS lehman brothers inc., IN
ITS SOLE DISCRETION, SHALL DETERMINE AND (V) IN THE EVENT THE COMPANY IS
REQUIRED TO PURCHASE NOTES PURSUANT TO the terms OF THE INDENTURE GOVERNING THE
NOTES, THE DATE THE COMPANY MAILS NOTICE OF SUCH OFFER TO THE HOLDERS OF THE
NOTES. THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE NOTES."
(iv) Regulation S. Legend. Each Warrant that is a Registrable Security and
issued pursuant to Regulation S shall bear the following legend on the fact
thereof:
"THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT AND THE WARRANT MAY NOT BE EXERCISED BY
OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. IN ORDER TO EXERCISE THIS WARRANT, THE HOLDER MUST
FURNISH TO THE COMPANY AND THE WARRANT AGENT EITHER (A) A WRITTEN CERTIFICATION
THAT IT IS NOT A U.S. PERSON AND THE WARRANT IS NOT BEING EXERCISED ON BEHALF OF
A U.S. PERSON OR (B) A WRITTEN OPINION OF COUNSEL TO THE EFFECT THAT THE
SECURITIES DELIVERED UPON EXERCISE OF THE WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OR THAT THE DELIVERY OF SUCH SECURITIES IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. TERMS IN THIS LEGEND HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
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(h) Cancellation and/or Adjustment of Global Warrants.
At such time as all beneficial interests in a particular Global Warrant
have been exercised or exchanged for Definitive Warrants or a particular Global
Warrant has been exercised, redeemed, repurchased or canceled in whole and not
in part, each such Global Warrant shall be returned to or retained and canceled
by the Warrant Agent in accordance with Section 3.8 hereof. At any time prior to
such cancellation, if any beneficial interest in a Global Warrant is exercised
or exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Warrant or for Definitive
Warrants, the amount of Warrants represented by such Global Warrant shall be
reduced accordingly and an endorsement shall be made on such Global Warrant by
the Warrant Agent or by the Depositary at the direction of the Warrant Agent to
reflect such reduction; and if the beneficial interest is being exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Warrant, such other Global Warrant shall
be increased accordingly and an endorsement shall be made on such Global Warrant
by the Warrant Agent or by the Depositary at the direction of the Warrant Agent
to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Warrant Agent shall countersign Global Warrants and
Definitive Warrants upon the Company's order or at the Warrant Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Warrant or to a holder of a Definitive Warrant for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith.
(iii) All Global Warrants and Definitive Warrants issued upon any
registration of transfer or exchange of Global Warrants or Definitive
Warrants shall be the duly authorized, executed and issued warrants for
Common Stock of the Company, not subject to any preemptive rights, and
entitled to the same benefits under this Warrant Agreement, as the Global
Warrants or Definitive Warrants surrendered upon such registration of
transfer or exchange.
(iv) Prior to due presentment for the registration of a transfer of
any Warrant, the Warrant Agent, and the Company may deem and treat the
Person in whose name any Warrant is registered as the absolute owner of
such Warrant for all purposes and none of the Warrant Agent, or the Company
shall be affected by notice to the contrary.
(v) The Warrant Agent shall countersign Global Warrants and Definitive
Warrants in accordance with the provisions of Section 3.2 hereof.
(j) Facsimile Submissions to Warrant Agent.
All certifications, certificates and Opinions of Counsel required to be
submitted to the Warrant Registrar pursuant to this Section 3.5 to effect a
registration of transfer or exchange may be submitted by facsimile.
Notwithstanding anything herein to the contrary, as to any certificates
and/or certifications delivered to the Warrant Registrar pursuant to this
Section 3.5, the Warrant Registrar's
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duties shall be limited to confirming that any such certifications and
certificates delivered to it are in the form of Exhibits B and C attached
hereto. The Warrant Registrar shall not be responsible for confirming the truth
or accuracy of representations made in any such certifications or certificates.
As to any Opinions of Counsel delivered pursuant to this Section 3.5, the
Warrant Registrar may rely upon, and be fully protected in relying upon, such
opinions.
3.6. REPLACEMENT WARRANTS.
If any mutilated Warrant is surrendered to the Warrant Agent or the Company
and the Warrant Agent receives evidence to its satisfaction of the destruction,
loss or theft of any Warrant, the Company shall issue and the Warrant Agent,
upon receipt of a Warrant Countersignature Order, shall countersign a
replacement Warrant if the Warrant Agent's requirements are met. If required by
the Warrant Agent or the Company, an indemnity bond must be supplied by the
Holder that is sufficient in the judgment of the Warrant Agent and the Company
to protect the Company, the Warrant Agent, any Agent and any agent for purposes
of the countersignature from any loss that any of them may suffer if a Warrant
is replaced. The Company may charge for its expenses in replacing a Warrant.
Every replacement Warrant is an additional warrant of the Company and shall
be entitled to all of the benefits of this Warrant Agreement equally and
proportionately with all other Warrants duly issued hereunder.
3.7. TEMPORARY WARRANTS.
Until certificates representing Warrants are ready for delivery, the
Company may prepare and the Warrant Agent, upon receipt of a Warrant
Countersignature Order, shall issue temporary Warrants. Temporary Warrants shall
be substantially in the form of certificated Warrants but may have variations
that the Company considers appropriate for temporary Warrants and as shall be
reasonably acceptable to the Warrant Agent. Without unreasonable delay, the
Company shall prepare and the Warrant Agent shall countersign definitive
Warrants in exchange for temporary Warrants.
Holders of temporary Warrants shall be entitled to all of the benefits of
this Warrant Agreement.
3.8. CANCELLATION.
Subject to Section 3.5(h) hereof, the Company at any time may deliver
Warrants to the Warrant Agent for cancellation. The Warrant Registrar and
Warrant Paying Agent shall forward to the Warrant Agent any Warrants surrendered
to them for registration of transfer, exchange or exercise. The Warrant Agent
and no one else shall cancel all Warrants surrendered for registration of
transfer, exchange, exercise, replacement or cancellation and shall destroy
canceled Warrants (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Warrants shall be
delivered to the Company. The Company may not issue new Warrants to replace
Warrants that have been exercised or that have been delivered to the Warrant
Agent for cancellation.
SECTION 4. SEPARATION OF WARRANTS; TERMS OF WARRANTS; EXERCISE OF WARRANTS.
(a) The Notes and Warrants will not be separately transferable until the
Separation Date. Subject to the terms of this Agreement, each Warrant holder
shall have the right, which may be
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exercised during the period commencing at the opening of business on the
Separation Date and until 5:00 p.m., New York City time on October 15, 2009 (the
"EXERCISE PERIOD"), to receive from the Company the number of fully paid and
nonassessable Warrant Shares which the holder may at the time be entitled to
receive on exercise of such Warrants and payment of the exercise price (the
"EXERCISE PRICE") (i) by tendering Notes having an aggregate principal amount at
maturity, plus accrued and unpaid interest, if any, thereon to the date of
exercise equal to the Exercise Price then in effect for such Warrant Shares or
(ii) by tendering Warrants as set forth below or (iii) any combination of Notes
and Warrants; provided that holders shall be able to exercise their Warrants
only if a registration statement relating to the Warrant Shares is then in
effect, or the exercise of such Warrants is exempt from the registration
requirements of the Securities Act, and such securities are qualified for sale
or exempt from qualification under the applicable securities laws of the states
in which the various holders of the Warrants or other persons to whom it is
proposed that the Warrant Shares be issued on exercise of the Warrants reside.
Each holder may exercise its right, during the Exercise Period, to receive
Warrant Shares on a net basis, such that, without the exchange of any funds, the
holder will receive such number of Warrant Shares equal to the product of (A)
the number of Warrant Shares for which such Warrant is exercisable as of the
date of exercise (if the Exercise Price were being paid in cash) and (B) the
Cashless Exercise Ratio. The Cashless Exercise Ratio shall equal a fraction the
numerator of which is the Market Value (as defined below) per share of Common
Stock minus the Exercise Price per share as of the date of exercise and the
denominator of which is the Market Value per share on the date of exercise. Each
Warrant not exercised prior to 5:00 p.m., New York City time, on October 15,
2009 (the "EXPIRATION DATE") shall become void and all rights thereunder and all
rights in respect thereof under this agreement shall cease as of such time. No
adjustments as to dividends will be made upon exercise of the Warrants.
The "MARKET VALUE" per share of Common Stock as of any date shall equal (i)
if Common Stock is primarily traded on a securities exchange, the last sale
price on such securities exchange on the trading day immediately prior to the
date of determination, or if no sale occurred on such day, the mean between the
closing "bid" and "asked" prices on such day, (ii) if the principal market for
Common Stock is in the over-the-counter market, the closing sale price on the
trading day immediately prior to the date of the determination, as published by
the National Association of Securities Dealers Automated quotation System or
similar organization, or if such price is not so published on such day, the mean
between the closing "bid" and "asked" prices, if available, on such day, which
prices may be obtained from any reputable pricing service, broker or dealer, and
(iii) if neither clause (i) nor clause (ii) is applicable, the fair market value
on the date of determination of Common Stock as determined in good faith by the
Board of Directors of the Company.
(b) In order to exercise all or any of the Warrants represented by a
Warrant Certificate, (i) in the case of Definitive Warrants, the holder thereof
must surrender for exercise the Warrant Certificate to the Company at the office
of the Warrant Agent at its corporate trust office set forth in Section 15
hereof, (ii) in the case of a book-entry interest in a Global Warrant, the
exercising Participant whose name appears on a securities position listing of
the Depositary as the holder of such book-entry interest must comply with the
Depositary's procedures relating to the exercise of such book-entry interest in
such Global Warrant and (iii) in the case of both Global Warrants and Definitive
Warrants, the holder thereof or the Participant, as applicable, must deliver to
the Company at the office of the Warrant Agent the form of election to purchase
on the reverse thereof duly filled in and signed, which signature shall be
medallion guaranteed by an institution which is a member of a Securities
Transfer Association recognized signature guarantee program, and upon payment to
the Warrant Agent for the account of the Company of the Exercise Price, which is
set forth in the form of Warrant Certificate attached hereto as Exhibit A, as
adjusted as herein provided, for the number of Warrant
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Shares in respect of which such Warrants are then exercised. Payment of the
aggregate Exercise Price shall be made (i) by tendering Notes in the manner
provided in Section 4(a) hereof, (ii) by tendering Warrants in the manner
provided in Section 4(a) hereof or (iii) a combination of (i) and (ii).
(c) Subject to the provisions of Section 5 hereof, upon compliance with
clause (b) above, the Warrant Agent shall deliver or cause to be delivered with
all reasonable dispatch, to or upon the written order of the holder and in such
name or names as the Warrant holder may designate, a certificate or certificates
for the number of whole Warrant Shares issuable upon the exercise of such
Warrants or other securities or property to which such holder is entitled
hereunder, together with cash as provided in Section 9 hereof; provided that if
any consolidation, merger or lease or sale of assets is proposed to be effected
by the Company as described in Section 8(l) hereof, or a tender offer or an
exchange offer for shares of Common Stock shall be made, upon such surrender of
Warrants and payment of the Exercise Price as aforesaid, the Warrant Agent
shall, as soon as possible, but in any event not later than two business days
thereafter, deliver or cause to be delivered the full number of Warrant Shares
issuable upon the exercise of such Warrants in the manner described in this
sentence or other securities or property to which such holder is entitled
hereunder, together with cash as provided in Section 9 hereof. Such certificate
or certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price.
(d) The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part. If less than all the
Warrants represented by a Warrant Certificate are exercised, such Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same tenor
and for the number of Warrants which were not exercised shall be executed by the
Company and delivered to the Warrant Agent and the Warrant Agent shall
countersign the new Warrant Certificate, registered in such name or names as may
be directed in writing by the holder, and shall deliver the new Warrant
Certificate to the Person or Persons entitled to receive the same.
(e) All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall then
be disposed of by the Warrant Agent in accordance with its standard practices.
The Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of the Warrant Shares through the exercise of such
Warrants.
(f) The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the holders during
normal business hours at its office. The Company shall supply the Warrant Agent
from time to time with such numbers of copies of this Agreement as the Warrant
Agent may request.
SECTION 5. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes attributable to the
initial issuance of Warrant Shares upon the exercise of Warrants; provided that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issue of any Warrant Certificates or
any certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the person or persons requesting the issuance
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thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
SECTION 6. RESERVATION OF WARRANT SHARES.
(a) The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued Common
Stock or its authorized and issued Common Stock held in its treasury, for the
purpose of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise of Warrants, the maximum number of shares of Common Stock which may
then be deliverable upon the exercise of all outstanding Warrants.
(b) The Company or, if appointed, the transfer agent for the Common Stock
(the "TRANSFER AGENT") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of this
Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 9 hereof. The Company will
furnish such Transfer Agent a copy of all notices of adjustments, and
certificates related thereto, transmitted to each holder pursuant to Section 10
hereof.
(c) Before taking any action which would cause an adjustment pursuant to
Section 8 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
(d) The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issuance thereof.
SECTION 7. OBTAINING STOCK EXCHANGE LISTINGS.
The Company will from time to time take all action which may be necessary
so that the Warrant Shares, immediately upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchanges, automated
quotation systems or other markets within the United States of America, if any,
on which other shares of Common Stock are then listed, if any.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.
The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 8. For purposes of this
Section 8, "COMMON STOCK" means shares now or hereafter authorized of
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<PAGE> 23
any class of common stock of the Company and any other stock of the Company,
however designated, that has the right (subject to any prior rights of any class
or series of preferred stock) to participate in any distribution of the assets
or earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company (i) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock, (ii) subdivides its outstanding shares of
Common Stock into a greater number of shares, (iii) combines its outstanding
shares of Common Stock into a smaller number of shares, (iv) makes a
distribution on its Common Stock in shares of its capital stock other than
Common Stock or (v) issues by reclassification of its Common Stock any shares of
its capital stock, then the Exercise Price in effect immediately prior to such
action shall be proportionately adjusted so that the holder of any Warrant
thereafter exercised may receive the aggregate number and kind of shares of
capital stock of the Company which he would have owned immediately following
such action if such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification. If, after an
adjustment, a holder of a Warrant upon exercise of it may receive shares of two
or more classes of capital stock of the Company, the Company shall determine, in
good faith, the allocation of the adjusted Exercise Price between the classes of
capital stock. After such allocation, the exercise privilege and the Exercise
Price of each class of capital stock shall thereafter be subject to adjustment
on terms comparable to those applicable to Common Stock in this Section 8. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all holders
of its Common Stock entitling them for a period expiring within 45 days after
the record date mentioned below to purchase shares of Common Stock at a price
per share less than the Fair Value (as defined herein) per share on that record
date, the Exercise Price shall be adjusted in accordance with the formula:
O + N x P
---------
E' = E x M
-------------------------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on
the record date.
N = the number of additional shares of Common
Stock issued pursuant to such rights,
options or warrants.
22
<PAGE> 24
P = the aggregate price per share of the additional
shares.
M = the Fair Value per share of Common Stock on the
record date.
The adjustment shall be made successively whenever any such rights, options
or warrants are issued and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights,
options or warrants. If at the end of the period during which such rights,
options or warrants are exercisable, not all rights, options or warrants shall
have been exercised, the Exercise Price shall be immediately readjusted to what
it would have been if "N" in the above formula had been the number of shares
actually issued.
(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of its
assets (including cash), debt securities, preferred stock or any rights or
warrants to purchase debt securities, preferred stock, assets (including cash)
or other securities of the Company, the Exercise Price shall be adjusted in
accordance with the formula:
M - F
E' = E x -----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Fair Value per share of Common Stock on the record
date mentioned below.
F = the fair market value on the record date
of the debt securities, preferred stock,
assets, securities, rights or warrants to be
distributed in respect of one share of
Common Stock as determined in good faith by
the Board of Directors of the Company (the
"Board of Directors").
The adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
This Section 8(c) does not apply to cash dividends or cash distributions
paid out of consolidated current or retained earnings as shown on the books of
the Company prepared in accordance with generally accepted accounting
principles. Also, this Section 8(c) does not apply to rights, options or
warrants referred to in Section 8(b) hereof.
(d) Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a consideration per share
less than the Fair Value per share on the date the Company fixes the offering
price of such additional shares, the Exercise Price shall be adjusted in
accordance with the formula:
23
<PAGE> 25
P
-----
E' = E x O + M
---------------
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the Fair Value per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (a), (b) and (c)
of this Section 8,
(2) the exercise of Warrants, or the conversion or exchange of other
securities convertible or exchangeable for Common Stock the issuance of
which caused an adjustment to be made under Section 8(e),
(3) Common Stock issued to the Company's employees, directors or
consultants (or any of the foregoing of its subsidiaries) under bona fide
employee benefit plans adopted by the Board of Directors and approved by
the holders of Common Stock when required by law, if such Common Stock
would otherwise be covered by this subsection (d) (but only to the extent
that the aggregate number of shares excluded hereby and issued after the
date of this Warrant Agreement shall not exceed 10% of the Common Stock
outstanding at the time of the adoption of each such plan, exclusive of
anti-dilution adjustments thereunder),
(4) Common Stock issued to shareholders of any person which merges
into the Company, or with a subsidiary of the Company, in proportion to
their stock holdings of such person immediately prior to such merger, upon
such merger, provided that if such person is an Affiliate of the Company,
the Board of Directors shall have obtained a fairness opinion from a
nationally recognized investment banking, appraisal or valuation firm,
which is not an Affiliate
24
<PAGE> 26
of the Company, stating that the consideration received in such merger is
fair to the Company from a financial point of view,
(5) the issuance of shares of Common Stock pursuant to rights, options
or warrants which were originally issued in a Non-Affiliate Sale (as
defined below) together with one or more other securities as part of a unit
at a price per unit, or
(6) the issuance of shares of Common Stock issuable upon exercise of
the warrants issued pursuant to the Securities Purchase Agreement, dated
November 30, 1999, between the Company and Bruckmann, Rosser, Sherrill &
Co. II, L.P.
(e) Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or exchangeable for
Common Stock (other than securities issued in transactions described in
subsections (a), (b) and (c) of this Section 8) for a consideration per share of
Common Stock initially deliverable upon conversion or exchange of such
securities less than the Fair Value per share on the date of issuance of such
securities, the Exercise Price shall be adjusted in accordance with this
formula:
P
-----
O + M
E' = E x ----------------
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the Fair Value per share on the date of issuance of such
securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after
such issuance.
If all of the Common Stock deliverable upon conversion or exchange of such
securities have not been issued when such securities are no longer outstanding,
then the Exercise Price shall promptly be readjusted to the Exercise Price which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of the actual number of shares of Common Stock issued
upon conversion or exchange of such securities.
25
<PAGE> 27
This subsection (e) does not apply to convertible securities issued to
shareholders of any person which merges into the Company, or with a subsidiary
of the Company, in proportion to their stock holdings of such person immediately
prior to such merger, upon such merger, provided that if such person is an
Affiliate of the Company, the Board of Directors shall have obtained a fairness
opinion from a nationally recognized investment banking, appraisal or valuation
firm, which is not an Affiliate of the Company, stating that the consideration
received in such merger is fair to the Company from a financial point of view.
(f) Consideration Received.
For purposes of any computation respecting consideration received pursuant
to subsections (d), and (e) of this Section 8, the following shall apply:
(1) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as determined
in good faith by the Board of Directors (irrespective of the accounting
treatment thereof), whose determination shall be conclusive, and described
in a Board resolution which shall be filed with the Warrant Agent;
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection); and
(4) in the case of the issuance of shares of Common Stock pursuant to
rights, options or warrants which rights, options or warrants were
originally issued together with one or more other securities as part of a
unit at a price per unit, the consideration shall be deemed to be the fair
value of such rights, options or warrants at the time of issuance thereof
as determined in good faith by the Board of Directors whose determination
shall be conclusive and described in a Board resolution which shall be
filed with the Warrant Agent plus the additional minimum consideration, if
any, to be received by the Company upon the exercise, conversion or
exchange thereof (as determined in the same manner as provided in clauses
(1) and (2) of this subsection).
26
<PAGE> 28
(g) Fair Value.
In Sections 8 (b), (c), (d) and (e) and Section 9 hereof, the "FAIR VALUE"
per security at any date of determination shall be (1) in connection with a sale
by the Company to a party that is not an Affiliate of the Company in an
arm's-length transaction (a "NON-AFFILIATE SALE"), the price per security at
which such security is sold and (2) in connection with any sale by the Company
to an Affiliate of the Company, (a) the last price per security at which such
security was sold in a Non-Affiliate Sale within the three-month period
preceding such date of determination or (b) if clause (a) is not applicable, the
fair market value of such security determined in good faith by (i) a majority of
the Board of Directors, including a majority of the Disinterested Directors, and
approved in a Board resolution delivered to the Warrant Agent or (ii) a
nationally recognized investment banking, appraisal or valuation firm, which is
not an Affiliate of the Company, in each case, taking into account, among all
other factors deemed relevant by the Board of Directors or such investment
banking, appraisal or valuation firm, the trading price and volume of such
security on any national securities exchange or automated quotation system on
which such security is traded. Notwithstanding the foregoing, any sale to Lehman
Brothers Inc. (or any successor thereto) pursuant to an underwritten public
offering registered under the Securities Act shall be deemed to be and treated
as a Non-Affiliate Sale.
For purposes of this Section 8(g), "DISINTERESTED DIRECTOR" means, in
connection with any issuance of securities that gives rise to a determination of
the Fair Value thereof, each member of the Board of Directors who is not an
officer, employee, director or other Affiliate of the party to whom the Company
is proposing to issue the securities giving rise to such determination.
For purposes of this Section 8(g), "AFFILIATE" of any specified Person
means (A) any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person and (B)
any director, officer or employee of such specified person. For purposes of this
definition "CONTROL" (including, with correlative meanings, the terms
"CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 8 shall be made
to the nearest one-one thousandth of a cent or to the nearest one-one thousandth
of a share, as the case may be, it being understood that no such rounding shall
be made under subsection (p).
(i) When No Adjustment Required.
No adjustment need be made for a transaction referred to Section 8(a), (b),
(c), (d), (e) or (f) hereof, if Warrant holders are to participate (without
being required to exercise their Warrants) in the transaction on a basis and
with notice that the Board of Directors determines to be fair and appropriate in
light of the basis and notice on which holders of Common Stock participate in
the transaction. No adjustment need be made for (i) rights to purchase Common
Stock pursuant to a Company plan for reinvestment of dividends or interest or
(ii) a change in the par value or no par value of the Common
27
<PAGE> 29
Stock. To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
(j) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Section 10 hereof.
(k) Notice of Certain Transactions.
If (i) the Company takes any action that would require an adjustment in the
Exercise Price pursuant to Section 8(a), (b), (c), (d), (e) or (f) hereof and if
the Company does not arrange for Warrant holders to participate pursuant to
Section 8(i) hereof, (ii) the Company takes any action that would require a
supplemental Warrant Agreement pursuant to Section 8(l) hereof or (iii) there is
a liquidation or dissolution of the Company, then the Company shall mail to
Warrant holders a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, transfer, lease, liquidation or
dissolution. The Company shall mail the notice at least 15 days before such
date. Failure to mail the notice or any defect in it shall not affect the
validity of the transaction.
(l) Reorganization of Company.
Immediately after the date hereof, if the Company consolidates or merges
with or into, or transfers or leases all or substantially all its assets to, any
person, upon consummation of such transaction the Warrants shall automatically
become exercisable for the kind and amount of securities, cash or other assets
which the holder of a Warrant would have owned immediately after the
consolidation, merger, transfer or lease if the holder had exercised the Warrant
immediately before the effective date of the transaction. Concurrently with the
consummation of such transaction, the corporation formed by or surviving any
such consolidation or merger if other than the Company, or the person to which
such sale or conveyance shall have been made, shall enter into (i) a
supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 8(l) and (ii) a supplement to the
Warrant Registration Rights Agreement providing for the assumption of the
Company's obligations thereunder. The successor Company shall mail to Warrant
holders a notice describing the supplemental Warrant Agreement and Warrant
Registration Rights Agreement. If the issuer of securities deliverable upon
exercise of Warrants under the supplemental Warrant Agreement is an affiliate of
the formed, surviving, transferee or lessee corporation, that issuer shall join
in the supplemental Warrant Agreement and Warrant Registration Rights Agreement.
If this Section 8(l) applies, Sections 8(a), (b), (c), (d), (e) and (f) hereof
do not apply.
(m) Company Determination Final.
Any determination that the Company or the Board of Directors must make
pursuant to Section 8(a), (c), (d), (e), (f), (g), (h) or (i) hereof is
conclusive.
(n) Warrant Agent's Disclaimer.
The Warrant Agent has no duty to determine when an adjustment under this
Section 8 should be made, how it should be made or what it should be. The
Warrant Agent has no duty to determine whether any provisions of a supplemental
Warrant Agreement under Section 8(l) hereof are
28
<PAGE> 30
correct. The Warrant Agent makes no representation as to the validity or value
of any securities or assets issued upon exercise of Warrants. The Warrant Agent
shall not be responsible for the Company's failure to comply with this
Section 8.
(o) When Issuance or Payment May Be Deferred.
In any case in which this Section 8 shall require that an adjustment in the
Exercise Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event (i) issuing to the
holder of any Warrant exercised after such record date the Warrant Shares and
other capital stock of the Company, if any, issuable upon such exercise over and
above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price and (ii) paying
to such holder any amount in cash in lieu of a fractional share pursuant to
Section 9 hereof; provided that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to receive
such additional Warrant Shares, other capital stock and cash upon the occurrence
of the event requiring such adjustment.
(p) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this Section 8, each
Warrant outstanding prior to the making of the adjustment in the Exercise Price
shall thereafter evidence the right to receive upon payment of the adjusted
Exercise Price that number of shares of Common Stock (calculated to the nearest
hundredth) obtained from the following formula:
N' = N x E
---
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(q) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
SECTION 9. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant Shares on the
exercise of Warrants. If more than one Warrant shall be presented for exercise
in full at the same time by the same
29
<PAGE> 31
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 9,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Fair Value per Warrant Share,
as determined on the day immediately preceding the date the Warrant is presented
for exercise, multiplied by such fraction, computed to the nearest whole U.S.
cent.
SECTION 10. NOTICES TO WARRANT HOLDERS.
(a) Upon any adjustment of the Exercise Price pursuant to Section 8 hereof,
the Company shall promptly thereafter (i) cause to be filed with the Warrant
Agent a certificate of a firm of independent public accountants of recognized
standing selected by the Board of Directors of the Company (who may be the
regular auditors of the Company) setting forth the Exercise Price after such
adjustment and setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based and setting forth the number of
Warrant Shares (or portion thereof) issuable after such adjustment in the
Exercise Price, upon exercise of a Warrant and payment of the adjusted Exercise
Price, which certificate shall be conclusive evidence of the correctness of the
matters set forth therein, and (ii) cause to be given to each of the registered
holders of Warrants at the address appearing on the Warrant register for each
such registered holder written notice of such adjustments by first-class mail,
postage prepaid. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Section 10.
(b) In case:
(i) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants;
(ii) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other
than dividends or cash distributions paid out of consolidated current or
retained earnings as shown on the books of the Company prepared in
accordance with generally accepted accounting principles or dividends
payable in shares of Common Stock or distributions referred to in Section
10(a) hereof);
(iii) of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of
Common Stock issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or a tender offer
or exchange offer for shares of Common Stock;
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(v) the Company proposes to take any action (other than actions of the
character described in Section 8(a) hereof) which would require an
adjustment of the Exercise Price pursuant to Section 8 hereof;
30
<PAGE> 32
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered holders of Warrants at his address
appearing on the Warrant register, at least 20 days (or 10 days in any case
specified in clauses (i) or (ii) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (x)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, (y) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (z) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 10 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
(c) Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders of Warrants the
right to vote or to consent or to receive notice as stockholders in respect of
the meetings of stockholders or the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the Company.
SECTION 11. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
(a) Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 13 hereof. In case at the time such successor to the
Warrant Agent shall succeed to the agency created by this Agreement, and in case
at that time any of the Warrant Certificates shall have been countersigned but
not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent; and in case at that time any of
the Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor to the Warrant
Agent; and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
(b) In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
31
<PAGE> 33
SECTION 12. WARRANT AGENT.
The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Warrants, by their acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates shall
be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel satisfactory to
it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant
Certificate in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable compensation
for all services rendered by the Warrant Agent in the execution of this
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement. The Company shall indemnify
the Warrant Agent against any and all losses, liabilities or expenses incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Warrant Agreement, including the costs and expenses of
enforcing this Warrant Agreement against the Company and defending itself
against any claim (whether asserted by the Company or any Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense may be attributable to its negligence or bad faith. The Warrant Agent
shall notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Warrant Agent to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Warrant Agent shall cooperate in the defense. The Warrant Agent may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
(f) The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve expense
unless the Company or one or more registered holders of Warrants shall furnish
the Warrant Agent with reasonable security and indemnity for any costs and
expenses which may be incurred, but this provision shall not affect the power of
the
32
<PAGE> 34
Warrant Agent to take such action as it may consider proper, whether with or
without any such security or indemnity. All rights of action under this
Agreement or under any of the Warrants may be enforced by the Warrant Agent
without the possession of any of the Warrant Certificates or the production
thereof at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent and any recovery of judgment shall be for the ratable benefit
of the registered holders of the Warrants, as their respective rights or
interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or employee
of it, may buy, sell or deal in any of the Warrants or other securities of the
Company or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the Company,
and its duties shall be determined solely by the provisions hereof. The Warrant
Agent shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own negligence or bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether
any such Warrant Shares or other securities will when issued be validly issued
and fully paid and nonassessable, and makes no representation with respect
thereto.
SECTION 13. CHANGE OF WARRANT AGENT.
The Warrant Agent may resign at any time by so notifying the Company. If
the Warrant Agent shall resign or become incapable of acting as Warrant Agent,
the Company shall appoint a successor to such Warrant Agent. If the Company
shall fail to make such appointment within a period of 30 days after it has been
notified in writing of such incapacity by the Warrant Agent or by the registered
holder of a Warrant Certificate, then the registered holder of any Warrant may
apply to any court of competent jurisdiction for the appointment of a successor
to the Warrant Agent. Pending appointment of a successor to such Warrant Agent,
either by the Company or by such a court, the duties of the Warrant Agent shall
be carried out by the Company. The holders of a majority of the unexercised
Warrants shall be entitled at any time to remove the Warrant Agent and appoint a
successor to such Warrant Agent. Such successor to the Warrant Agent need not be
approved by the Company or the former Warrant Agent. After appointment the
successor to the Warrant Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Warrant Agent
without further act or deed; provided that the former Warrant Agent shall
deliver and transfer to the successor to the Warrant Agent any property at the
time held by it hereunder and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to give any notice
provided for in
33
<PAGE> 35
this Section 13, however, or any defect therein, shall not affect the legality
or validity of the appointment of a successor to the Warrant Agent.
SECTION 14. REPORTS
(a) The Company agrees with each holder, for so long as any Warrants or
Warrant Shares remain outstanding and during any period in which the Company (i)
is not subject to Section 13 or 15(d) of the Exchange Act, to make available,
upon request of any Holder, to such Holder or beneficial owner of Warrants or
Warrant Shares in connection with any sale thereof and any prospective purchaser
of such Warrants or Warrant Shares designated by such Holder or beneficial
owner, the information required by Rule 144(A)(d)(4) under the Securities Act in
order to permit resales of such Warrants or Warrant Shares pursuant to Rule
144A, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make
all filings required thereby in a timely manner in order to permit resales of
such Warrants or Warrant Shares pursuant to Rule 144A.
(b) The Company shall provide the Warrant Agent with a sufficient number of
copies of all such reports that the Warrant Agent may be required to deliver to
the holders of the Warrants and the Warrant Shares under this Section 14.
SECTION 15. NOTICES TO COMPANY AND WARRANT AGENT.
Any notice or demand authorized by this Agreement to be given or made by
the Warrant Agent or by the registered holder of any Warrant to or on the
Company shall be sufficiently given or made when received if deposited in the
mail, first class or registered, postage prepaid, addressed (until another
address is filed in writing by the Company with the Warrant Agent) as follows:
O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Telecopier No.: (417) 682-8113
Attention: Rowland H. Geddie, III, Esq.
With a copy to:
Kirkland & Ellis
International Financial Centre
Old Broad Street
London EC2N 1HQ, UK
Telecopier No.: 44 171 816-8800
Attention: M. Gilbey Strub, Esq.
In case the Company shall fail to maintain such office or agency or shall
fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder(s) of any Warrant to the Warrant Agent shall be sufficiently
given when and if deposited in the
34
<PAGE> 36
mail, first-class or registered, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) to the
Warrant Agent as follows:
Norwest Bank Minnesota, National Association
N9303-120
Sixth & Marquette
Minneapolis, MN 55479
Telecopier No.: (613) 667-9825
Attention: Corporate Trust Services
SECTION 16. FURTHER AGREEMENTS.
(a) Public Equity Offering.
The Company agrees that it shall not undertake any initial Public Equity
Offering of common stock of any class other than the class of Common Stock into
which the Warrants are exercisable, unless the Company provides Holders of the
Warrants and Registrable Securities the ability to convert their Warrant Shares
or to exercise their Warrants for common stock of the same class as is the
subject of the initial Public Equity Offering.
(b) Investment Company.
The Company agrees that it shall not, and shall not permit any of its
subsidiaries, to take any action that would subject it to the requirements of
the Investment Company Act of 1940.
SECTION 17. SUPPLEMENTS AND AMENDMENTS.
The Company and the Warrant Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Warrants in order to cure
any ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not, as evidenced by an opinion of counsel delivered to the Warrant Agent, in
any way adversely affect the interests of the holders of Warrants. Any amendment
or supplement to this Agreement that has an adverse effect on the interests of
the holders of Warrants shall require the written consent of the holders of a
majority of the then outstanding Warrants (excluding Warrants held by the
Company or any of its affiliates). The Warrant Agent shall be entitled to
receive and, subject to Section 12, shall be fully protected in relying upon an
Officers' Certificate and Opinion of Counsel as conclusive evidence that any
such amendment or supplement is authorized or permitted hereunder, that it is
not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms. The Company may not sign any amendment or
supplement until the Company's Board of Directors approves it. The consent of
each holder of Warrants affected shall be required for any amendment pursuant to
which the Exercise Price would be increased or the number of Warrant Shares
purchasable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided in this Agreement).
35
<PAGE> 37
SECTION 18. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 19. TERMINATION.
This Agreement shall terminate at 5:00 p.m., New York City time on October
15, 2009. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date if all Warrants have been exercised. The provisions of Section 12
shall survive such termination.
SECTION 20. GOVERNING LAW.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the internal laws of said State.
SECTION 21. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Warrant Agent and the registered holders
of Warrants any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the registered holders of Warrants.
SECTION 22. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
[Signature Page Follows]
36
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Richard D. Davidson
--------------------------------------------
Name: Richard D. Davidson
Title: President and Chief Operating Officer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Warrant Agent
By: /s/ Timothy P. Mowdy
--------------------------------------------
Name: Timothy P. Mowdy
Title: Vice President
<PAGE> 39
EXHIBIT A
[Form of Warrant Certificate]
[Face]
Unit Legend. Each Warrant issued prior to the Separation Date shall bear
the Unit Legend on the face thereof on the face thereof.
Private Placement Legend: Each Warrant issued pursuant to an exemption from
the registration requirements of the Securities Act shall bear the Private
Placement Legend on the face thereof.
Transfer Restriction Legend: Each Warrant issued should bear the Transfer
Restriction Legend on the face thereof.
No. ___________ ___Warrants
CUSIP No. ________
Warrant Certificate
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
This Warrant Certificate certifies that Cede & Co., or its registered
assigns, is the registered holder of Warrants expiring October 15, 2009 (the
"Warrants") to purchase Common Stock, par value $0.01 (the "Common Stock"), of
O'Sullivan Industries Holdings, Inc., a Delaware corporation (the "Company").
Each Warrant entitles the registered holder upon exercise at any time from 9:00
a.m. on the Separation Date referred to below (the "Exercise Date") until 5:00
p.m. New York City Time on October 15, 2009 to receive from the Company 0.9327
fully paid and nonassessable shares of Common Stock (the "Warrant Shares") at
the initial exercise price (the "Exercise Price") of $0.01 per share payable
upon surrender of this Warrant Certificate and payment of the Exercise Price at
the office or agency of the Warrant Agent, but only subject to the conditions
set forth herein and in the Warrant Agreement referred to on the reverse hereof.
The Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York City Time on October
15, and to the extent not exercised by such time such Warrants shall become
void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
A-1
<PAGE> 40
This Warrant Certificate shall be governed by and construed in accordance
with the internal laws of the State of New York.
A-2
<PAGE> 41
IN WITNESS WHEREOF, O'Sullivan Industries Holdings, Inc. has caused this
Warrant Certificate to be signed below.
DATED: November 30, 1999
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By:
-----------------------------------
Name:
Title:
Countersigned:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Warrant Agent
By:
---------------------------------
Name:
Title:
A-3
<PAGE> 42
[Reverse of Warrant Certificate]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m. New York City time on October
15, 2009 entitling the holder on exercise to receive shares of Common Stock, and
are issued or to be issued pursuant to a Warrant Agreement dated as of November
30, 1999 (the "Warrant Agreement"), duly executed and delivered by the Company
to Norwest Bank Minnesota, National Association, as warrant agent (the "Warrant
Agent"), which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Warrant Agent, the Company and the holders (the words "holders" or "holder"
meaning the registered holders or registered holder) of the Warrants. A copy of
the Warrant Agreement may be obtained by the holder hereof upon written request
to the Company.
Warrants may be exercised at any time on or after the Separation Date and
on or before 5:00 p.m. New York City time on October 15, 2009; provided that
holders shall be able to exercise their Warrants only if a registration
statement relating to the Warrants Shares is then in effect, or the exercise of
such Warrants is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and such securities are qualified
for sale or exempt from qualification under the applicable securities laws of
the states in which the various holders of the Warrants or other persons to whom
it is proposed that the Warrant Shares be issued on exercise of the Warrants
reside. In order to exercise all or any of the Warrants represented by this
Warrant Certificate, the holder must deliver to the Warrant Agent at its
corporate trust office set forth in Section 15 of the Warrant Agreement this
Warrant Certificate and the form of election to purchase on the reverse hereof
duly filled in and signed, which signature shall be medallion guaranteed by an
institution which is a member of a Securities Transfer Association recognized
signature guarantee program, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price, as adjusted as provided in the
Warrant Agreement, for the number of Warrant Shares in respect of which such
Warrants are then exercised. No adjustment shall be made for any dividends on
any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The Company has agreed pursuant to a Warrant Registration Rights Agreement
dated as of November 30, 1999 (the "Warrant Registration Rights Agreement") to
provide the holders of the Warrants with certain demand and piggy-back
registration rights with respect to the Common Stock purchasable upon exercise
of such Warrants, as set forth in the Warrant Registration Rights Agreement. A
copy of the Warrant Registration Rights Agreement may be obtained by the holder
hereof upon written request to the Company or the Warrant Agent.
The Warrants and the shares of Common Stock underlying the Warrants are
subject to certain restrictions on transfer and other restrictions set forth in
a Registration Rights Agreement and a Stockholders Agreement, each dated
November 30, 1999. Copies of the Registration Rights Agreement
A-4
<PAGE> 43
and the Stockholders Agreement may be obtained by the holder hereof upon written
request to the Company or the Warrant Agent.
Warrant Certificates, when surrendered at the office of the Warrant Agent
by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-5
<PAGE> 44
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____________ shares of
Common Stock and herewith tenders payment for such shares to the order of
O'SULLIVAN INDUSTRIES HOLDINGS, INC., in the amount of [Warrants] [Notes] equal
in [fair market value] [principal amount] to $__________ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of _______________, whose address is __________________
and that such shares be delivered to ___________, whose address is
____________________________. If said number of shares is less than all of the
shares of Common Stock purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of such shares be
registered in the name of ______________________, whose address is
____________________, and that such Warrant Certificate be delivered to whose
address is__________________.
----------------------------------------
Signature
Date:
----------------------------------------
Signature Guaranteed
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Warrant Agent, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Warrant Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-6
<PAGE> 45
SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS
The following exchanges of a part of this Global Warrant have been made:
<TABLE>
<CAPTION>
Number of Warrants
Amount of decrease in this Global
in Number of Amount of increase in Warrant following Signature of
warrants in this Number of Warrants in such decrease or authorized officer
Date of Exchange Global Warrant this Global Warrant increase of Warrant Agent
- - ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>
A-7
<PAGE> 1
EXHIBIT 4.7
- - --------------------------------------------------------------------------------
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
Class B Warrant to Purchase
39,273 Shares of Series B Junior Preferred Stock
Amended and Restated Class B Warrant Agreement
Dated as of November 30, 1999
Amended and Restated as of January 31, 2000
- - --------------------------------------------------------------------------------
<PAGE> 2
AMENDED AND RESTATED CLASS B WARRANT AGREEMENT (this
"AGREEMENT"), dated as of January 31, 2000 between O'Sullivan Industries
Holdings Inc., a Delaware corporation (the "COMPANY"), and BancBoston
Investments, Inc., a Massachusetts corporation ("HOLDER").
WHEREAS, on November 30, 1999, the Company issued a Class B
warrant (the "Original Warrant") to initially purchase an aggregate of 39,273
shares of Series B Junior Preferred Stock, par value $0.01 per share, of the
Company pursuant to a Warrant Agreement dated as of November 30, 1999 (the
"Original Warrant Agreement") between the Company and Bruckmann, Rosser,
Sherrill & Co., II, L.P. (the "Original Holder"), in connection with the
purchase by the Original Holder of $15,000,000 principal amount in 12% Senior
Notes due 2009 of the Company pursuant to the Securities Purchase Agreement
dated as of November 30, 1999 between the Company and the Original Holder;
WHEREAS, pursuant to an Assignment Agreement dated as of the
date hereof (the "Assignment Agreement") between the Original Holder and the
Holder, on the date hereof the Original Holder is selling to the Holder, and the
Holder is purchasing from the Original Holder, the Original Warrant;
WHEREAS, it is a condition to the closing of the Assignment
Agreement that the Company amend and restate the Original Agreement in the form
of this Agreement;
WHEREAS, the Company now desires to amend and restate the
Original Agreement in the form of this Agreement; and
WHEREAS, the Company will issue a Class B warrant (the
"WARRANT") to initially purchase an aggregate of 39,273 shares of Series B
Junior Preferred Stock, par value $0.01 per share (the "PREFERRED STOCK"), of
the Company (the Preferred Stock issuable on exercise of the Warrants being
referred to herein as the "WARRANT SHARES"), in connection with Holder's
purchase of $15,000,000 principal amount in 12% Senior Notes DUE 2009 (the
"SENIOR NOTES") of the Company pursuant to the Assignment Agreement and the
Amended and Restated Securities Purchase Agreement dated the date hereof between
the Company and Holder.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
SECTION 1 CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
"AFFILIATE" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as used with respect to any Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such specified Person, whether
through the ownership of voting securities, by agreement or otherwise;
<PAGE> 3
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
"BUSINESS DAY" means any day other than a Legal Holiday.
"COVERED HOLDER" means each holder of Warrants or Non-Public
Warrant Shares.
"DESIGNATED HOLDER" shall mean any Person or Persons holding
in the aggregate more than 50% of the aggregate Warrants and Warrant Shares then
outstanding.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"HOLDER" is defined in the recitals hereto.
"NONPUBLIC WARRANT SHARES" shall mean Warrant Shares that have
not been sold to the public (or pursuant to Rule 144, Rule 144A or Regulation S
under the Securities Act) and bear the legend set forth in Section 6 of the
Stockholders Agreement.
"ORIGINAL HOLDER" is defined in the recitals hereto.
"OWNERSHIP PERCENTAGE" for any Covered Holder means the
percentage calculated by dividing (i) the sum of (A) the number of shares of
Common Stock held by such holder plus (B) the number of shares of Common Stock
then issuable to such holder upon the exercise of all outstanding options and
warrants and the conversion of all outstanding convertible securities held by
such holder, by (ii) the total number of shares of Common Stock then outstanding
on a fully diluted basis.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business.
"PRIVATE PLACEMENT AND TRANSFER RESTRICTION LEGEND" means the
legend set forth in Section 2.2(b) to be placed on all Warrants issued under
this Warrant Agreement except where otherwise permitted by the provisions of
this Warrant Agreement.
"PUBLIC EQUITY OFFERING" shall mean an underwritten offering
of Common Stock pursuant to a registration statement that has been declared
effective by the Commission pursuant to the Securities Act (other than a
registration statement on Form S-8 or otherwise relating to equity securities
issuable under any employee benefit plan of the Company).
"PUT COMMENCEMENT DATE" shall mean each of the following dates
occurring prior to an IPO: the date on which the holders of the Warrants and
Nonpublic Warrant Shares receive the audited financial statements of the Company
and its Subsidiaries required to be delivered pursuant to the Amended and
Restated Securities Purchase Agreement dated the date hereof between the Company
and the Holder for the Company's fiscal year ended June 30, 2005 and for each of
the Company's fiscal years thereafter.
-2-
<PAGE> 4
"PUT PERIOD" shall mean, collectively, each period commencing
on a Put Commencement Date and ending on the earliest of (a) the date that is 60
days after such Put Commencement Date, (b) the Expiration Date and (c) the date
of the IPO.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated as of November 30, 1999, by and among the Company, the Original
Holder and the other parties thereto.
"RULE 144" means Rule 144 promulgated under the Securities
Act.
"RULE 144A" means Rule 144A promulgated under the Securities
Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR CREDIT AGREEMENT" means the Credit Agreement dated as
of November 30, 1999 among O'Sullivan Industries, Inc., the Company, Lehman
Commercial Paper Inc., as Arranger, syndication agent and administrative agent,
and the other entities from time to time parties thereto providing for revolving
credit borrowings and term loans, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded,
restructured, replaced or refinanced from time to time including increases in
principal amount (whether the same are provided by the original lenders under
such Senior Credit Agreement or a successor agent or other lenders).
"STOCKHOLDERS' AGREEMENT" means the stockholders' agreement,
dated as of November 30, 1999, by and among the Company, the Original Holder and
other parties thereto.
SECTION 2 ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.
2.1 FORM AND DATING.
The Warrant shall be substantially in the form of Exhibit A
hereto (the "WARRANT CERTIFICATE"). The Warrant may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Warrant shall be
dated the date hereof.
The terms and provisions contained in the Warrants shall
constitute, and are hereby expressly made, a part of this Warrant Agreement. The
Company and the Holder, by their execution and delivery of this Warrant
Agreement, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of the Warrant conflicts with the express
provisions of this Warrant Agreement, the provisions of this Warrant Agreement
shall govern and be controlling.
2.2 TRANSFER AND EXCHANGE.
(a) Subject to the transfer conditions referred to in the
legends endorsed on the Warrant, the Warrant and all rights thereunder are
transferable, in whole or in part, without charge to the registered holder, upon
surrender of the Warrant with a properly executed Assignment (in the form of
Exhibit B hereto) at the principal office of the Company.
-3-
<PAGE> 5
(b) Legend.
The following legend shall appear on the face of all the
Warrants issued under this Warrant Agreement unless specifically stated
otherwise in the applicable provisions of this Warrant Agreement.
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF
ANY, REQUIRED UNDER THE WARRANT AGREEMENT PURSUANT TO WHICH THIS SECURITY IS
ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER JURISDICTION. 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 OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. 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 FOREIGN
PURCHASER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY 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. THIS WARRANT AND THE WARRANT SHARES
UNDERLYING THIS WARRANT ARE ALSO SUBJECT TO CERTAIN TRANSFER AND OTHER
RESTRICTIONS CONTAINED IN A STOCKHOLDERS' AGREEMENT AND A REGISTRATION RIGHTS
AGREEMENT, EACH DATED NOVEMBER 30, 1999. COPIES OF THE STOCKHOLDERS AND
REGISTRATION RIGHTS AGREEMENTS MAY BE OBTAINED BY THE HOLDER HEREOF UPON WRITTEN
REQUEST TO THE COMPANY."
2.3 REPLACEMENT WARRANTS.
If a mutilated Warrant is surrendered to the Company and the
Company receives evidence to its satisfaction of the destruction, loss or theft
of the Warrant, the Company shall issue a replacement Warrant. If required by
the Company, an indemnity bond must be supplied by the Holder that is sufficient
in the reasonable judgment of the Company to protect the Company from any loss
that it may suffer if a Warrant is replaced. The Company may charge for its
expenses in replacing a Warrant.
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Every replacement Warrant is an additional warrant of the
Company and shall be entitled to all of the benefits of this Warrant Agreement
equally and proportionately with all other Warrants duly issued hereunder.
SECTION 3 TERMS OF THE WARRANT; EXERCISE OF THE WARRANT.
3.0.1 Subject to the terms of this Agreement, each Warrant
holder shall have the right, which may be exercised during the period commencing
the date hereof and until 5:00 p.m., New York City time on October 15, 2009 (the
"EXERCISE PERIOD"), to receive from the Company the number of fully paid and
nonassessable Warrant Shares which the holder may at the time be entitled to
receive on exercise of such Warrants and payment of the exercise price (the
"EXERCISE PRICE") either by (i) a bank or certified check payable to the Company
in an amount equal to the product of the Exercise Price multiplied by the number
of shares of Warrant Shares being purchased upon such exercise (the "AGGREGATE
EXERCISE PRICE"), (ii) the surrender to the Company of securities of the Company
or its subsidiaries having a "Market Value" equal to the Aggregate Exercise
Price of the Warrant Shares being purchased upon such exercise (provided that
the "MARKET VALUE" of any preferred stock shall be deemed to be equal to the
aggregate liquidation value thereof plus all accrued and unpaid dividends
thereon) or (iii) a written notice to the Company that the Holder is exercising
the Warrant (or a portion thereof) and authorizing the Company to withhold from
issuance a number of Warrant Shares issuable upon such exercise of the Warrant
which when multiplied by the Market Value of the Warrant Shares is equal to the
Aggregate Exercise Price (and such withheld shares shall no longer be issuable
under this Warrant). Each Warrant not exercised prior to 5:00 p.m., New York
City time, on October 15, 2009 (the "EXPIRATION DATE") shall become void and all
rights thereunder and all rights in respect thereof under this Agreement shall
cease as of such time. No adjustments as to dividends will be made upon exercise
of the Warrants.
3.0.2 In order to exercise all or any of the Warrants
represented by the Warrant Certificate, the Holder must surrender for exercise
the Warrant Certificate to the Company together with the form of election to
purchase on the reverse thereof duly filled in and signed, and upon payment to
the Company of the Exercise Price, which is set forth in the form of Warrant
Certificate attached hereto as Exhibit A, as adjusted as herein provided, for
the number of Warrant Shares in respect of which such Warrants are then
exercised.
3.0.3 Subject to the provisions of Section 5 hereof, upon
compliance with clause (b) above, the Company shall deliver or cause to be
delivered with all reasonable dispatch, to or upon the written order of the
Holder and in such name or names as the Holder may designate, a certificate or
certificates for the number of whole Warrant Shares issuable upon the exercise
of such Warrants or other securities or property to which such holder is
entitled hereunder, together with cash as provided in Section 9 hereof; provided
that if any consolidation, merger or lease or sale of assets is proposed to be
effected by the Company as described in Section 8(f) hereof, or a tender offer
or an exchange offer for shares of Common Stock shall be made, upon such
surrender of Warrants and payment of the Exercise Price as aforesaid, the
Company shall, as soon as possible, but in any event not later than two business
days thereafter, deliver or cause to be delivered the full number of Warrant
Shares issuable upon the exercise of such Warrants in the manner described in
this sentence or other securities or property to which such holder is entitled
hereunder, together with cash as provided in Section 9 hereof. Such certificate
or certificates shall be deemed to have been issued and any person so designated
to be named
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therein shall be deemed to have become a holder of record of such Warrant Shares
as of the date of the surrender of such Warrants and payment of the Exercise
Price.
3.0.4 The Warrants shall be exercisable, at the election of
the Holder, either in full or from time to time in part. If less than all the
Warrants represented by the Warrant Certificate are exercised, the Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same tenor
and for the number of Warrants which were not exercised shall be executed by the
Company, registered in such name or names as may be directed in writing by the
Holder, and the Company shall deliver the new Warrant Certificate to the Person
or Persons entitled to receive the same.
3.0.5 All Warrant Certificates surrendered upon exercise of
Warrants shall be canceled by the Company.
3.0.6 The Company shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the Holder
during normal business hours at its office.
SECTION 4 PUT.
4.0.1 Put Option. At the written request of any Designated
Holder which shall be irrevocable (each, a "Put Notice") made during any Put
Period requesting the Company to purchase all Warrants and/or Nonpublic Warrant
Shares held by such Designated Holder, the Company shall promptly give written
notice of such request to all other holders of Warrants and/or Nonpublic Warrant
Shares notifying such holders of the inclusion of all their Warrants and
Nonpublic Warrant Shares in such Put Notice and purchase all the Warrants and/or
Nonpublic Warrant Shares specified in such Put Notice and held by any other
holder of Warrants and/or Nonpublic Warrant Shares other than the Designated
Holder who gave such Put Notice (the "Put Option"). Except as set forth in
Section 4(e), the Put Option may be exercised on no more than one occasion. The
aggregate purchase price payable by the Company to all selling holders upon any
exercise of the Put Option shall be the product of (A) the aggregate number of
Warrants and Nonpublic Warrant Shares and (B) the Put Price (as defined below)
(such aggregate amount being the "Aggregate Put Amount"). The Aggregate Put
Amount shall be apportioned to each selling holder hereunder in accordance with
the aggregate number of the Warrants and Nonpublic Warrant Shares of such
holder. The portion of the Aggregate Put Amount payable to each holder shall be
reduced by an amount equal to the product of (1) the number of Warrants of such
holder and (2) the Exercise Price that would have been payable had each such
Warrant been exercised.
4.0.2 The Put Price shall be the liquidation value of each
Warrant Share being purchased and each Warrant Share issuable upon exercise of
each Warrant being purchased plus all accrued and unpaid dividends thereon.
4.0.3 The Company shall purchase the Warrants and Nonpublic
Warrant Shares to be sold by each selling holder on a date designated in writing
by the Company to each holder (the "PUT CLOSING DATE"). The Put Closing Date
shall be no later than 90 days after the determination of the Put Price in
connection with such exercise of the Put Option.
4.0.4 On the Put Closing Date, each selling holder shall
surrender its Warrants and Nonpublic Warrant Shares to the Company without any
representation or warranty (other than that such holder has (i) good and valid
title thereto free and clear of liens, claims, encumbrances and restrictions of
any kind created by such holder and (ii) the power and authority to surrender
such Warrants and
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<PAGE> 8
Nonpublic Warrant Shares), against payment therefor by (at the option of such
holder), (1) wire transfer to an account in a bank located in the United States
designated by such holder for such purpose or (2) a certified or official bank
check drawn on a member of the New York Clearing House payable to the order of
such holder.
4.0.5 In the event that the Company is prohibited by the terms
of the Senior Credit Agreement or the terms of the O'Sullivan Industries, Inc.
13 3/8% Senior Subordinated Notes due 2009 from repurchasing the Warrants or the
Nonpublic Warrant Shares for cash, the Company shall pay the Aggregate Put
Amount by issuing to the holders promissory notes in the initial aggregate
principal amount of the Aggregate Put Amount. Such notes shall bear interest at
the greater of (i) Fleet Boston's Base Rate plus 500 basis points and (ii) 12%
per annum, payable semi-annually in arrears in cash or in kind at the Company's
option. Such notes will rank pari pasu with, amortize at the same rate and times
as, and be entitled to all of the covenants, rights and benefits of, the Senior
Notes under the Amended and Restated Securities Purchase Agreement dated as of
the date hereof, between the Company and the Holder.
SECTION 5 PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes attributable
to the initial issuance of Warrant Shares upon the exercise of the Warrant;
provided that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the Person or Persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
SECTION 6 RESERVATION OF WARRANT SHARES.
6.0.1 The Company will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Preferred Stock or its authorized and issued Preferred Stock held
in its treasury, for the purpose of enabling it to satisfy any obligation to
issue Warrant Shares upon exercise of the Warrant, the maximum number of shares
of Preferred Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
6.0.2 The Company or, if appointed, the transfer agent for the
Preferred Stock (the "TRANSFER AGENT") and every subsequent transfer agent for
any shares of the Company's capital stock issuable upon the exercise of any of
the rights of purchase aforesaid will be irrevocably authorized and directed at
all times to reserve such number of authorized shares as shall be required for
such purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will supply such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 9 hereof. The
Company will furnish such Transfer Agent a copy of all notices of adjustments,
and certificates related thereto, transmitted to each holder pursuant to Section
10 hereof.
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<PAGE> 9
6.0.3 Before taking any action which would cause an adjustment
pursuant to Section 8 hereof to reduce the Exercise Price below the then par
value (if any) of the Warrant Shares, the Company will take any corporate action
which may, in the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
6.0.4 The Company covenants that all Warrant Shares which may
be issued upon exercise of Warrants will, upon issue, be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issuance thereof.
SECTION 7 OBTAINING STOCK EXCHANGE LISTINGS.
The Company will from time to time take all action which may
be necessary so that the Warrant Shares, immediately upon their issuance upon
the exercise of the Warrant, will be listed on the principal securities
exchanges, automated quotation systems or other markets within the United States
of America, if any, on which other shares of Preferred Stock are then listed, if
any.
SECTION 8 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE.
The Exercise Price and the number of Warrant Shares issuable
upon the exercise of the Warrant are subject to adjustment from time to time
upon the occurrence of the events enumerated in this Section 8.
8.0.1 Adjustment for Change in Capital Stock.
If the Company (i) pays a dividend or makes a distribution on
its Preferred Stock in shares of its Preferred Stock, (ii) subdivides its
outstanding shares of Preferred Stock into a greater number of shares, (iii)
combines its outstanding shares of Preferred Stock into a smaller number of
shares, (iv) makes a distribution on its Preferred Stock in shares of its
capital stock other than Preferred Stock or (v) issues by reclassification of
its Preferred Stock any shares of its capital stock, then the Exercise Price in
effect immediately prior to such action shall be proportionately adjusted so
that the holder of any Warrant thereafter exercised may receive the aggregate
number and kind of shares of capital stock of the Company which he would have
owned immediately following such action if such Warrant had been exercised
immediately prior to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, after an adjustment, a holder of a Warrant upon exercise of it may receive
shares of two or more classes of capital stock of the Company, the Company shall
determine, in good faith, the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Preferred Stock in this
Section 8. Such adjustment shall be made successively whenever any event listed
above shall occur.
If the Company distributes to all holders of its Preferred
Stock any of its assets (including cash), debt securities, preferred stock or
any rights or warrants to purchase debt securities, preferred stock, assets
(including cash) or other securities of the Company, the assets, securities,
rights, or warrants
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<PAGE> 10
to which the holder of any Warrant would have been entitled immediately
following such distribution if such Warrant had been exercised immediately prior
to such distribution, shall be placed in escrow prior to such distribution, in
an account to be established with an Agent for the holders of Warrants. Such
assets, securities, rights, or warrants are to be released to the holder of such
Warrant upon exercise of such Warrant pursuant to the terms of this Warrant.
Such adjustment, or deposit into escrow, shall be made
successively whenever any event listed above shall occur.
8.0.2 When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 8
shall be made to the nearest one-one thousandth of a cent or to the nearest
one-one thousandth of a share, as the case may be, it being understood that no
such rounding shall be made under subsection (j).
8.0.3 When No Adjustment Required.
No adjustment need be made for a transaction referred to
Section 8(a) or (f) hereof, if the Holder is to participate (without being
required to exercise its Warrants) in the transaction on a basis and with notice
that the Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of Preferred Stock participate in the
transaction. No adjustment need be made for (i) rights to purchase Preferred
Stock pursuant to a Company plan for reinvestment of dividends or interest or
(ii) a change in the par value or no par value of the Preferred Stock. To the
extent the Warrants become convertible into cash, no adjustment need be made
thereafter as to the cash. Interest will not accrue on the cash.
8.0.4 Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall
provide the notices required by Section 10 hereof.
8.0.5 Notice of Certain Transactions.
If (i) the Company takes any action that would require an
adjustment in the Exercise Price pursuant to Section 8(a) hereof and if the
Company does not arrange for the Holder to participate pursuant to Section 8(c)
hereof, (ii) the Company takes any action that would require a supplemental
Warrant Agreement pursuant to Section 8(f) hereof or (iii) there is a
liquidation or dissolution of the Company, then the Company shall mail to the
Holder a notice stating the proposed record date for a dividend or distribution
or the proposed effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The Company
shall mail the notice at least 15 days before such date. Failure to mail the
notice or any defect in it shall not affect the validity of the transaction.
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8.0.6 Reorganization of Company.
Immediately after the date hereof, if the Company consolidates
or merges with or into, or transfers or leases all or substantially all its
assets to, any person, upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of securities, cash or
other assets which the holder of a Warrant would have owned immediately after
the consolidation, merger, transfer or lease if the holder had exercised the
Warrant immediately before the effective date of the transaction. Concurrently
with the consummation of such transaction, the corporation formed by or
surviving any such consolidation or merger if other than the Company, or the
person to which such sale or conveyance shall have been made, shall enter into
(i) a supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 8(f) and (ii) a supplement to the
Registration Rights Agreement providing for the assumption of the Company's
obligations thereunder. The successor Company shall mail to Warrant holders a
notice describing the supplemental Warrant Agreement and Registration Rights
Agreement. If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an Affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement and Registration Rights Agreement. If this
Section 8(f) applies, Sections 8(a) does not apply.
8.0.7 Company Determination Final.
Any determination that the Company or the Board of Directors
must make pursuant to Section 8(a), (b) or (c) hereof is conclusive.
8.0.8 When Issuance or Payment May Be Deferred.
In any case in which this Section 8 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the Holder exercised after such record date the Warrant
Shares and other capital stock of the Company, if any, issuable upon such
exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
and (ii) paying to Holder any amount in cash in lieu of a fractional share
pursuant to Section 9 hereof; provided that the Company shall deliver to Holder
a due bill or other appropriate instrument evidencing Holder's right to receive
such additional Warrant Shares, other capital stock and cash upon the occurrence
of the event requiring such adjustment.
8.0.9 Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this
Section 8 each Warrant outstanding prior to the making of the adjustment in the
Exercise Price shall thereafter evidence the right to receive upon payment of
the adjusted Exercise Price that number of shares of Preferred Stock (calculated
to the nearest hundredth) obtained from the following formula:
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N' = N x E
----
E'
where:
N' = the adjusted number of Warrant Shares
issuable upon exercise of a Warrant by
payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously
issuable upon exercise of a Warrant by
payment of the Exercise Price prior to
adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
8.0.10 Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 9 FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant
Shares on the exercise of Warrants. If more than one Warrant shall be presented
for exercise in full at the same time by the same holder, the number of full
Warrant Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of the Warrants so presented. If any fraction of a Warrant Share would,
except for the provisions of this Section 9, be issuable on the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in cash
equal to the Fair Value per Warrant Share, as determined on the day immediately
preceding the date the Warrant is presented for exercise, multiplied by such
fraction, computed to the nearest whole U.S. cent.
SECTION 10 NOTICES TO WARRANT HOLDERS.
10.0.1 Upon any adjustment of the Exercise Price pursuant to
Section 8 hereof, the Company shall promptly thereafter (i) cause to be prepared
a certificate of a firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company (who may be the regular
auditors of the Company) setting forth the Exercise Price after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and setting forth the number of Warrant
Shares (or portion thereof) issuable after such adjustment in the Exercise
Price, upon exercise of a Warrant and payment of the adjusted Exercise Price,
which certificate shall be conclusive evidence of the correctness of the matters
set forth therein, and (ii) cause to be given to each of the holders of Warrants
at such holder's address as it appears in the records of the Company (unless
otherwise indicated by any such holder) written notice of such adjustments by
first-class mail,
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postage prepaid. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Section 10.
10.0.2 In case:
(a) the Company shall authorize the issuance to all
holders of shares of Preferred Stock of rights, options or warrants to
subscribe for or purchase shares of Preferred Stock or of any other
subscription rights or warrants;
(b) the Company shall authorize the distribution to
all holders of shares of Preferred Stock of evidences of its
indebtedness or assets (other than dividends or cash distributions paid
out of consolidated current or retained earnings as shown on the books
of the Company prepared in accordance with generally accepted
accounting principles or dividends payable in shares of Preferred Stock
or distributions referred to in Section 10(a) hereof);
(c) of any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the
Company is required, or of the conveyance or transfer of the properties
and assets of the Company substantially as an entirety, or of any
reclassification or change of Preferred Stock issuable upon exercise of
the Warrants (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for
shares of Preferred Stock;
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company proposes to take any action (other
than actions of the character described in Section 8(a) hereof) which
would require an adjustment of the Exercise Price pursuant to Section 8
hereof;
then the Company shall cause to be given to each of the registered holders of
Warrants at such holder's address as it appears in the records of the Company
(unless otherwise indicated by any such holder), at least 20 days (or 10 days in
any case specified in clauses (i) or (ii) above) prior to the applicable record
date hereinafter specified, or promptly in the case of events for which there is
no record date, by first-class mail, postage prepaid, a written notice stating
(x) the date as of which the holders of record of shares of Preferred Stock to
be entitled to receive any such rights, options, warrants or distribution are to
be determined, (y) the initial expiration date set forth in any tender offer or
exchange offer for shares of Preferred Stock, or (z) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Preferred Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the notice
required by this Section 10 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action; or
(f) Nothing contained in this Agreement or in any of
the Warrant Certificates shall be construed as conferring upon the holders of
Warrants the right to vote or to consent or to receive
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notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company.
SECTION 11 REPORTS.
(a) The Company agrees with Holder, for so long as any
Warrants or Warrant Shares remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of Holder, to such Holder or beneficial owner of
Warrants or Warrant Shares in connection with any sale thereof and any
prospective purchaser of such Warrants or Warrant Shares designated by such
Holder or beneficial owner, the information required by Rule 144(A)(d)(4) under
the Securities Act in order to permit resales of such Warrants or Warrant Shares
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Warrants or Warrant Shares pursuant to Rule 144A.
SECTION 12 NOTICES TO COMPANY.
Any notice or demand authorized by this Agreement to be given
or made by the registered holder of any Warrant to or on the Company shall be
sufficiently given or made when received if deposited in the mail, first class
or registered, postage prepaid, addressed (until another address is filed in
writing by the Company) as follows:
O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Telecopier No.: (417) 682-8113
Attention: Rowland H. Geddie, III, Esq.
With a copy to:
Kirkland & Ellis
International Financial Centre
Old Broad Street
London EC2N 1HQ UK
Telecopier No.: 44 171 816-8800
Attention: M. Gilbey Strub, Esq.
SECTION 13 FURTHER AGREEMENTS.
(a) Stock Issuances Offering.
The Company agrees that it shall not issue any shares of its
preferred stock to any of its Affiliates without first receiving an opinion from
an investment bank of nationally recognized standing that the terms of such
issuance are fair; provided that the Company may issue such shares with the
prior consent of a majority of the outstanding warrants to purchase shares of
Preferred Stock. The Company shall not permit any of its subsidiaries to
publicly offer any shares of capital stock.
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<PAGE> 15
(b) Investment Company.
The Company agrees that it shall not, and shall not permit any
of its subsidiaries, to take any action that would subject it to the
requirements of the Investment Company Act of 1940.
SECTION 14 SUPPLEMENTS AND AMENDMENTS.
The Company may from time to time supplement or amend this
Agreement without the approval of any holders of Warrants in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company may deem necessary or desirable and which shall not in any way adversely
affect the interests of the holders of Warrants. Any amendment or supplement to
this Agreement that has an adverse effect on the interests of the holders of
Warrants shall require the written consent of the holders of Warrants
exercisable into a majority of the Warrant Shares. The consent of each holder of
Warrants affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
upon exercise of Warrants would be decreased (other than pursuant to adjustments
provided in this Agreement) or which would affect any holder of Warrants in a
manner different from any other holder of Warrants.
SECTION 15 SUCCESSORS.
All the covenants and provisions of this Agreement by or for
the benefit of the Company or Holder shall bind and inure to the benefit of
their respective successors and assigns hereunder.
SECTION 16 TERMINATION.
This Agreement shall terminate at 5:00 p.m., New York City
time on October 15, 2009. Notwithstanding the foregoing, this Agreement will
terminate on any earlier date if all Warrants have been exercised.
SECTION 17 GOVERNING LAW.
This Agreement and the Warrant Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of New York
and for all purposes shall be construed in accordance with the internal laws of
said State.
SECTION 18 BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any
Person other than the Company and the registered holders of Warrants any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company and the registered
holders of Warrants.
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SECTION 19 COUNTERPARTS.
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 20 PREEMPTIVE RIGHTS.
(a) Except for the issuance of Common Stock (or securities
convertible into or containing options or rights to acquire shares of Common
Stock) (i) pursuant to a Public Equity Offering, (ii) as consideration for the
acquisition of assets or stock of another Person, (iii) pursuant to the exercise
of warrants to purchase capital stock of the Company outstanding as of November
30, 1999, (iv) pursuant to the terms of any capital stock or stock option issued
to an employee, director or consultant of the Company (or its subsidiaries), (v)
pursuant to a dividend or distribution made in respect of the Common Stock or
Preferred Stock, (vi) pursuant to the terms of any debt financing or (vii)
pursuant to which the Designated Holders have waived their rights to purchase
any securities pursuant to this Section 20, if the Company authorizes the
issuance and sale of any shares of any class of capital stock or any securities
convertible into or containing options or rights to acquire any shares of any
class of capital stock (such issuance and sale, a "Covered Offering" and the
securities proposed to be issued and sold thereunder, the "Offered Securities"),
the Company will first offer to sell to each Covered Holder a quantity of the
Offered Securities calculated by multiplying (x) the total number of Offered
Securities by (y) such holder's Ownership Percentage. Each Covered Holder will
be entitled to purchase such portion of the Offered Securities pursuant to the
terms and conditions set forth in paragraph (b) below.
(b) At least 20 days prior to the consummation of any Covered
Offering, the Company shall deliver a written notice (the "Sale Notice") to each
Covered Holder specifying in reasonable detail (i) the quantities and classes of
Offered Securities, (ii) the proposed offering price, (iii) the proposed date,
time and location of the closing of the Covered Offering, and (iv) such other
information necessary for such holder to calculate the number of Offered
Securities that it is entitled to purchase under this Section 20. The Covered
Holders may make an irrevocable election to purchase all or part of such
securities, upon the same terms and conditions and at the same time and place as
described in the Sale Notice, by delivering a written notice of such election to
the Company within 10 days after the Sale Notice has been delivered by the
Company. Any such election notice shall specify the quantity of Offered
Securities that the electing Covered Holder is entitled to purchase under this
Section 20. If any Covered Holder elects to purchase Offered Securities pursuant
to this Section 20 on the terms and conditions specified in the Sale Notice, the
sale of such securities shall be consummated, together with the sale of any
Offered Securities not elected to be purchased under this Section 20, at the
time and place of the closing of the Covered Offering specified in the Sale
Notice or at such other time (not later than 10 days after the time specified in
the Sale Notice) and place as the Company may decide and communicate to the
electing Covered Holders not less than 2 days prior to such closing. If no
Covered Holder elects to purchase Offered Securities pursuant to this Section
20, the Company shall be free to sell the Offered Securities within 90 days
after the expiration of the offering period described above on terms and
conditions no more favorable to the purchasers thereof, in the aggregate, than
set forth in the Sale Notice. Any Offered Securities offered or sold by the
Company after such 90 day period must be reoffered to the Covered Holders
pursuant to this Section 20.
-15-
<PAGE> 17
(c) Notwithstanding the foregoing provisions of this Section
20, in the event that, in connection with any issuance and sale of securities of
the Company, a Covered Holder elects to purchase securities of the Company
pursuant to the exercise of any rights of such Covered Holder under Section 20
of the Company's Amended and Restated Class B Warrant Agreement dated as of
November 30, 1999 relating to a Class B Warrant to purchase 93,273 shares of
Common Stock of the Company, such Covered Holder shall not be entitled to
purchase securities of the Company pursuant to Section 20 of this Agreement with
respect to such issuance and sale; provided, that the foregoing provisions of
this clause (c) shall not apply with respect to any other Covered Holder.
[Signature Page Follows]
-16-
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Phillip J. Pacey
-----------------------------------------------
Phillip J. Pacey, Senior Vice President
and Chief Financial Officer
BANCBOSTON INVESTMENTS, INC.
By: /s/ Theresa Nibi
-----------------------------------------------
Name: Theresa Nibi
Title: Director of BancBoston Investments, Inc.
-17-
<PAGE> 19
EXHIBIT A
[Form of Class B Warrant Certificate]
[Face]
Private Placement and Transfer Restriction Legend: Each
Warrant shall bear the Private Placement Legend and Transfer Restriction Legend
on the face thereof:
No. ___________ ___Warrants
Class B Warrant Certificate
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
This Class B Warrant Certificate certifies that BancBoston
Investments, Inc. is the registered holder of Warrants expiring October 15, 2009
(the "Warrants") to purchase series B junior preferred stock, par value $0.01
(the "Preferred Stock"), of O'Sullivan Industries Holdings, Inc., a Delaware
corporation (the "Company"). Each Class B Warrant entitles the registered holder
upon exercise at any time from 9:00 a.m. November 30, 1999 (the "Exercise Date")
until 5:00 p.m. New York City Time on October 15, 2009 to receive from the
Company 0.3927 fully paid and nonassessable shares of Preferred Stock (the
"Warrant Shares") at the initial exercise price (the "Exercise Price") of $0.01
per share payable upon surrender of this Warrant Certificate and payment of the
Exercise Price at the offices of the Company, but only subject to the conditions
set forth herein and in the Warrant Agreement referred to on the reverse hereof.
The Exercise Price and number of Warrant Shares issuable upon exercise of the
Class B Warrant are subject to adjustment upon the occurrence of certain events
set forth in the Warrant Agreement.
No Class B Warrant may be exercised after 5:00 p.m., New York
City Time on October 15, 2009, and to the extent not exercised by such time such
Warrants shall become void.
Reference is hereby made to the further provisions of this
Class B Warrant Certificate set forth on the reverse hereof and such further
provisions shall for all purposes have the same effect as though fully set forth
at this place.
This Warrant Certificate shall be governed by and construed in
accordance with the internal laws of the State of New York.
A-1
<PAGE> 20
IN WITNESS WHEREOF, O'Sullivan Industries Holdings, Inc. has
caused this Class B Warrant Certificate to be signed below.
DATED: January 31, 2000
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: --------------------------------
- - - Name:
Title:
A-2
<PAGE> 21
[Reverse of Class B Warrant Certificate]
The Class B Warrants evidenced by this Class B Warrant
Certificate are issued pursuant to an Amended and Restated Class B Warrant
Agreement dated as of January ___, 2000 (the "Class B Warrant Agreement"), duly
executed and delivered by the Company to BancBoston Investments, Inc. which
Class B Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Class B Warrant. A copy of the Class B
Warrant Agreement may be obtained by the holder hereof upon written request to
the Company.
Class B Warrants may be exercised at any time on or after
November 30, 1999 and on or before 5:00 p.m. New York City time on October 15,
2009; provided that holders shall be able to exercise their Class B Warrants
only if a registration statement relating to the Warrant Shares is then in
effect, or the exercise of such Class B Warrants is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and such securities are qualified for sale or exempt from qualification under
the applicable securities laws of the states in which the various holders of the
Class B Warrants or other persons to whom it is proposed that the Warrant Shares
be issued on exercise of the Class B Warrants reside. In order to exercise all
or any of the Class B Warrants represented by this Warrant Certificate, the
holder must deliver to the Company as its address set forth in Section 12 of the
Class B Warrant Agreement this Class B Warrant Certificate and the form of
election to purchase on the reverse hereof duly filled in and signed, and upon
payment to the Company of the Exercise Price, as adjusted as provided in the
Class B Warrant Agreement, for the number of Warrant Shares in respect of which
such Class B Warrants are then exercised. No adjustment shall be made for any
dividends on any Common Stock issuable upon exercise of this Class B Warrant.
The Class B Warrant Agreement provides that upon the
occurrence of certain events the Exercise Price set forth on the face hereof
may, subject to certain conditions, be adjusted. If the Exercise Price is
adjusted, the Class B Warrant Agreement provides that the number of shares of
Preferred Stock issuable upon the exercise of each Class B Warrant shall be
adjusted. No fractions of a share of Preferred Stock will be issued upon the
exercise of any Class B Warrant, but the Company will pay the cash value thereof
determined as provided in the Class B Warrant Agreement.
The Company has agreed pursuant to a Registration Rights
Agreement dated as of November 30, 1999 (the "Registration Rights Agreement") to
provide the holders of the Warrants with certain demand and piggy-back
registration rights with respect to the Preferred Stock purchasable upon
exercise of such Warrants, as set forth in the Registration Rights Agreement. A
copy of the Registration Rights Agreement may be obtained by the holder hereof
upon written request to the Company.
The Class B Warrants and the shares of Preferred Stock
underlying the Warrants are subject to certain restrictions or transfer and
other restrictions set forth in a Stockholders Agreement, dated November 30,
1999. Copies of the Stockholders Agreement may be obtained by the holder hereof,
upon written request to the Company.
Class B Warrant Certificates, when surrendered at the office
of the Company by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Class B Warrant Agreement,
A-3
<PAGE> 22
but without payment of any service charge, for another Class B Warrant
Certificate or Class B Warrant Certificates of like tenor evidencing in the
aggregate a like number of Class B Warrants.
Upon due presentation for registration of transfer of this
Class B Warrant Certificate at the office of the Company a new Class B Warrant
Certificate or Class B Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Class B Warrants shall be issued to the transferee(s)
in exchange for this Class B Warrant Certificate, subject to the limitations
provided in the Class B Warrant Agreement, without charge except for any tax or
other governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Class B Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, the Company shall not be affected
by any notice to the contrary. Neither the Class B Warrants nor this Class B
Warrant Certificate entitles any holder hereof to any rights of a stockholder of
the Company.
A-4
<PAGE> 23
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Class B Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Class B Warrant Certificate, to receive _____________
shares of Preferred Stock and herewith tenders payment for such shares to the
order of O'SULLIVAN INDUSTRIES HOLDINGS, INC., in the amount of the Aggregate
Exercise Price in accordance with the terms hereof. The undersigned requests
that a certificate for such shares be registered in the name of _______________,
whose address is __________________ and that such shares be delivered to
___________, whose address is ____________________________. If said number of
shares is less than all of the shares of Preferred Stock purchasable hereunder,
the undersigned requests that a new Warrant Certificate representing the
remaining balance of such shares be registered in the name of
______________________, whose address is ____________________, and that such
Warrant Certificate be delivered to whose address is ___________________.
----------------------------------------
Signature
Date:
B-1
<PAGE> 24
EXHIBIT B
ASSIGNMENT
FOR VALUE RECEIVED, _________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Class B Warrant (Certificate No. W______) with respect to the number of shares
of the Preferred Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
Dated: Signature _____________________
_____________________
Witness _____________________
C-1
<PAGE> 1
EXHIBIT 4.8
- - --------------------------------------------------------------------------------
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
Class B Warrant to Purchase
93,273 Shares of Common Stock
Amended and Restated Class B Warrant Agreement
Dated as of November 30, 1999
Amended and Restated as of January 31, 2000
- - --------------------------------------------------------------------------------
<PAGE> 2
AMENDED AND RESTATED CLASS B WARRANT AGREEMENT (this "AGREEMENT"), dated as
of January 31, 2000 between O'Sullivan Industries Holdings Inc., a Delaware
corporation (the "COMPANY"), and BancBoston Investments, Inc., a Massachusetts
corporation ("HOLDER").
WHEREAS, on November 30, 1999, the Company issued a Class B warrant (the
"Original Warrant") to initially purchase an aggregate of 93,273 shares of
Common Stock, par value $0.01 per share, of the Company pursuant to a Warrant
Agreement dated as of November 30, 1999 (the "Original Warrant Agreement")
between the Company and Bruckmann, Rosser, Sherrill & Co., II, L.P. (the
"Original Holder"), in connection with the purchase by the Original Holder of
$15,000,000 principal amount in 12% Senior Notes due 2009 of the Company
pursuant to the Securities Purchase Agreement dated as of November 30, 1999
between the Company and the Original Holder;
WHEREAS, pursuant to an Assignment Agreement dated as of the date hereof
(the "Assignment Agreement") between the Original Holder and the Holder, on the
date hereof the Original Holder is selling to the Holder, and the Holder is
purchasing from the Original Holder, the Original Warrant;
WHEREAS, it is a condition to the closing of the Assignment Agreement that
the Company amend and restate the Original Agreement in the form of this
Agreement;
WHEREAS, the Company now desires to amend and restate the Original
Agreement in the form of this Agreement; and
WHEREAS, the Company will issue a Class B warrant (the "WARRANT") to
initially purchase an aggregate of 93,273 shares of Common Stock, par value
$0.01 per share (the "COMMON STOCK"), of the Company (the Common Stock issuable
on exercise of the Warrants being referred to herein as the "WARRANT SHARES"),
in connection with Holder's purchase of $15,000,000 principal amount in 12%
Senior Notes due 2009 (the "SENIOR NOTES") of the Company pursuant to the
Assignment Agreement and the Amended and Restated Securities Purchase Agreement
dated the date hereof between the Company and Holder.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such specified Person, whether through the ownership
of voting securities, by agreement or otherwise;
<PAGE> 3
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
"BUSINESS DAY" means any day other than a Legal Holiday.
"COVERED HOLDER" means each holder of Warrants or Non-Public Warrant
Shares.
"DESIGNATED HOLDER" shall mean any Person or Persons holding in the
aggregate more than 50% of the aggregate Warrants and Warrant Shares then
outstanding.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"HOLDER" is defined in the recitals hereto.
"NONPUBLIC WARRANT SHARES" shall mean Warrant Shares that have not been
sold to the public (or pursuant to Rule 144, Rule 144A or Regulation S under the
Securities Act) and bear the legend set forth in Section 6 of the Stockholders
Agreement.
"ORIGINAL HOLDER" is defined in the recitals hereto.
"OWNERSHIP PERCENTAGE" for any Covered Holder means the percentage
calculated by dividing (i) the sum of (A) the number of shares of Common Stock
held by such holder plus (B) the number of shares of Common Stock then issuable
to such holder upon the exercise of all outstanding options and warrants and the
conversion of all outstanding convertible securities held by such holder, by
(ii) the total number of shares of Common Stock then outstanding on a fully
diluted basis.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business.
"PRIVATE PLACEMENT AND TRANSFER RESTRICTION LEGEND" means the legend set
forth in Section 2.2(b) to be placed on all Warrants issued under this Warrant
Agreement except where otherwise permitted by the provisions of this Warrant
Agreement.
"PUBLIC EQUITY OFFERING" shall mean an underwritten offering of Common
Stock pursuant to a registration statement that has been declared effective by
the Commission pursuant to the Securities Act (other than a registration
statement on Form S-8 or otherwise relating to equity securities issuable under
any employee benefit plan of the Company).
"PUT COMMENCEMENT DATE" shall mean each of the following dates occurring
prior to an IPO: the date on which the holders of the Warrants and Nonpublic
Warrant Shares receive the audited financial statements of the Company and its
subsidiaries required to be delivered pursuant to the Amended and Restated
Securities Purchase Agreement dated the date hereof between the Company and the
Holder for the Company's fiscal year ended June 30, 2005 and for each of the
Company's fiscal years thereafter.
-2-
<PAGE> 4
"PUT PERIOD" shall mean, collectively, each period commencing on a Put
Commencement Date and ending on the earliest of (a) the date that is 60 days
after such Put Commencement Date, (b) the Expiration Date and (c) the date of
the IPO.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights agreement,
dated as of November 30, 1999, by and among the Company, the Original Holder and
the other parties thereto.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR CREDIT AGREEMENT" means the Credit Agreement dated as of November
30, 1999 among O'Sullivan Industries, Inc., the Company, Lehman Commercial Paper
Inc., as Arranger, syndication agent and administrative agent, and the other
entities from time to time parties thereto providing for revolving credit
borrowings and term loans, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, restructured, replaced or
refinanced from time to time including increases in principal amount (whether
the same are provided by the original lenders under such Senior Credit Agreement
or a successor agent or other lenders).
"STOCKHOLDERS' AGREEMENT" means the stockholders' agreement, dated as of
November 30, 1999, by and among the Company, the Original Holder and other
parties thereto.
SECTION 2. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.
2.1. FORM AND DATING.
The Warrant shall be substantially in the form of Exhibit A hereto (the
"WARRANT CERTIFICATE"). The Warrant may have notations, legends or endorsements
required by law, stock exchange rule or usage. The Warrant shall be dated the
date hereof.
The terms and provisions contained in the Warrants shall constitute, and
are hereby expressly made, a part of this Warrant Agreement. The Company and the
Holder, by their execution and delivery of this Warrant Agreement, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of the Warrant conflicts with the express provisions of
this Warrant Agreement, the provisions of this Warrant Agreement shall govern
and be controlling.
2.2. TRANSFER AND EXCHANGE.
(a) Subject to the transfer conditions referred to in the legends endorsed
on the Warrant, the Warrant and all rights thereunder are transferable in whole
or in part, without charge to the registered holder, upon surrender of the
Warrant with a properly executed Assignment (in the form of Exhibit B hereto) at
the principal office of the Company.
-3-
<PAGE> 5
(b) Legend.
The following legend shall appear on the face of all the Warrants issued
under this Warrant Agreement unless specifically stated otherwise in the
applicable provisions of this Warrant Agreement.
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED
UNDER THE WARRANT AGREEMENT PURSUANT TO WHICH THIS SECURITY IS ISSUED) AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER JURISDICTION. 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
OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. 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 FOREIGN PURCHASER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY 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. THIS WARRANT AND THE WARRANT SHARES UNDERLYING THIS WARRANT ARE ALSO
SUBJECT TO CERTAIN TRANSFER AND OTHER RESTRICTIONS CONTAINED IN A STOCKHOLDERS'
AGREEMENT AND A REGISTRATION RIGHTS AGREEMENT, EACH DATED NOVEMBER 30, 1999.
COPIES OF THE STOCKHOLDERS AND REGISTRATION RIGHTS AGREEMENTS MAY BE OBTAINED BY
THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE COMPANY."
2.3. REPLACEMENT WARRANTS.
If a mutilated Warrant is surrendered to the Company and the Company
receives evidence to its satisfaction of the destruction, loss or theft of the
Warrant, the Company shall issue a replacement Warrant. If required by the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the reasonable judgment of the Company to protect the Company from any loss that
it may suffer if a Warrant is replaced. The Company may charge for its expenses
in replacing a Warrant.
-4-
<PAGE> 6
Every replacement Warrant is an additional warrant of the Company and shall
be entitled to all of the benefits of this Warrant Agreement equally and
proportionately with all other Warrants duly issued hereunder.
SECTION 3. TERMS OF THE WARRANT; EXERCISE OF THE WARRANT.
3.1. Subject to the terms of this Agreement, each Warrant holder shall have
the right, which may be exercised during the period commencing the date hereof
and until 5:00 p.m., New York City time on October 15, 2009 (the "EXERCISE
PERIOD"), to receive from the Company the number of fully paid and nonassessable
Warrant Shares which the holder may at the time be entitled to receive on
exercise of such Warrants and payment of the exercise price (the "EXERCISE
PRICE") either by (i) a bank or certified check payable to the Company in an
amount equal to the product of the Exercise Price multiplied by the number of
shares of Warrant Shares being purchased upon such exercise (the "AGGREGATE
EXERCISE PRICE"), (ii) the surrender to the Company of securities of the Company
or its subsidiaries having a Market Value equal to the Aggregate Exercise Price
of the Warrant Shares being purchased upon such exercise (provided that for
purposes of this subparagraph, and notwithstanding the definition of Market
Value set forth below, the Market Value of any note or other debt security or
any preferred stock shall be deemed to be equal to the aggregate outstanding
principal amount or liquidation value thereof plus all accrued and unpaid
interest thereon or accrued and unpaid dividends thereon) or (iii) a written
notice to the Company that the Holder is exercising the Warrant (or a portion
thereof) and authorizing the Company to withhold from issuance a number of
Warrant Shares issuable upon such exercise of the Warrant which when multiplied
by the Market Value of the Warrant Shares is equal to the Aggregate Exercise
Price (and such withheld shares shall no longer be issuable under this Warrant).
Each Warrant not exercised prior to 5:00 p.m., New York City time, on October
15, 2009 (the "EXPIRATION DATE") shall become void and all rights thereunder and
all rights in respect thereof under this Agreement shall cease as of such time.
No adjustments as to dividends will be made upon exercise of the Warrants.
The "MARKET VALUE" per share of Common Stock as of any date shall equal (i)
if Common Stock is primarily traded on a securities exchange, the last sale
price on such securities exchange on the trading day immediately prior to the
date of determination, or if no sale occurred on such day, the mean between the
closing "bid" and "asked" prices on such day, (ii) if the principal market for
Common Stock is in the over-the-counter market, the closing sale price on the
trading day immediately prior to the date of the determination, as published by
the National Association of Securities Dealers Automated Quotation System or
similar organization, or if such price is not so published on such day, the mean
between the closing "bid" and "asked" prices, if available, on such day, which
prices may be obtained from any reputable pricing service, broker or dealer, and
(iii) if neither clause (i) nor clause (ii) is applicable, the fair market value
on the date of determination of Common Stock as determined in good faith by the
Board of Directors of the Company.
3.2. In order to exercise all or any of the Warrants represented by the
Warrant Certificate, the Holder must surrender for exercise the Warrant
Certificate to the Company together with the form of election to purchase on the
reverse thereof duly filled in and signed, and upon payment to the Company of
the Exercise Price, which is set forth in the form of Warrant Certificate
attached hereto as Exhibit A, as adjusted as herein provided, for the number of
Warrant Shares in respect of which such Warrants are then exercised.
-5-
<PAGE> 7
3.3. Subject to the provisions of Section 5 hereof, upon compliance with
clause (b) above, the Company shall deliver or cause to be delivered with all
reasonable dispatch, to or upon the written order of the Holder and in such name
or names as the Holder may designate, a certificate or certificates for the
number of whole Warrant Shares issuable upon the exercise of such Warrants or
other securities or property to which such holder is entitled hereunder,
together with cash as provided in Section 9 hereof; provided that if any
consolidation, merger or lease or sale of assets is proposed to be effected by
the Company as described in Section 8(l) hereof, or a tender offer or an
exchange offer for shares of Common Stock shall be made, upon such surrender of
Warrants and payment of the Exercise Price as aforesaid, the Company shall, as
soon as possible, but in any event not later than two business days thereafter,
deliver or cause to be delivered the full number of Warrant Shares issuable upon
the exercise of such Warrants in the manner described in this sentence or other
securities or property to which such holder is entitled hereunder, together with
cash as provided in Section 9 hereof. Such certificate or certificates shall be
deemed to have been issued and any Person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise Price.
3.4. The Warrants shall be exercisable, at the election of the Holder,
either in full or from time to time in part. If less than all the Warrants
represented by the Warrant Certificate are exercised, the Warrant Certificate
shall be surrendered and a new Warrant Certificate of the same tenor and for the
number of Warrants which were not exercised shall be executed by the Company,
registered in such name or names as may be directed in writing by the Holder,
and the Company shall deliver the new Warrant Certificate to the Person or
Persons entitled to receive the same.
3.5. All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled by the Company.
3.6. The Company shall keep copies of this Agreement and any notices given
or received hereunder available for inspection by the Holder during normal
business hours at its office.
SECTION 4. PUT.
4.1. Put Option. At the written request of any Designated Holder which
shall be irrevocable (each, a "Put Notice") made during any Put Period
requesting the Company to purchase all Warrants and/or Nonpublic Warrant Shares
held by such Designated Holder, the Company shall promptly give written notice
of such request to all other holders of Warrants and/or Nonpublic Warrant Shares
notifying such holders of the inclusion of all their Warrants and Nonpublic
Warrant Shares in such Put Notice and purchase all the Warrants and/or Nonpublic
Warrant Shares specified in such Put Notice and held by any other holder of
Warrants and/or Nonpublic Warrant Shares other than the Designated Holder who
gave such Put Notice (the "Put Option"). Except as set forth in Section 4(e),
the Put Option may be exercised on no more than one occasion. The aggregate
purchase price payable by the Company to all holders upon any exercise of the
Put Option shall be the product of (A) the aggregate number of Warrants and
Nonpublic Warrant Shares and (B) the Put Price (as defined below) (such
aggregate amount being the "Aggregate Put Amount"). The Aggregate Put Amount
shall be apportioned to each selling holder hereunder in accordance with the
aggregate number of the Warrants and Nonpublic Warrant Shares of such holder.
The portion of the Aggregate Put Amount payable to each holder shall be reduced
by an amount equal to the product of (1) the number of Warrants of such holder
and (2) the Exercise Price that would have been payable had each such Warrant
been exercised.
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<PAGE> 8
4.2. The Put Price shall be determined as of the date of the Put Notice,
such determination to be made no later than 45 days thereafter. The "Put Price"
shall mean the fair market value per Warrant and/or Nonpublic Warrant Share
being purchased as determined in good faith by the Board of Directors of the
Company (and delivered in a written notice demonstrating in reasonable detail to
the holders of the Warrants and Nonpublic Warrant Shares being purchased), or if
a Designated Holder shall in the exercise of its sole discretion, object to any
such determinations, by an independent investment banking firm mutually selected
by the Company and the Designated Holders being purchased (50% of the cost of
the engagement of said investment banking firm to be borne by the Company and
50% of such cost to be borne by all selling holders of Warrants and Nonpublic
Warrant Shares, such cost to be divided among them pro rata based on the number
of Nonpublic Warrant Shares being sold by each of them; provided that if the Put
Price determined by such investment banking firm is more than 115% of the Put
Price determined by the Board of Directors of the Company, such cost shall be
borne by the Company); provided that if the Fair Value per share has been
determined pursuant to 8(g) within six months prior to any date as of which the
fair market value per Warrant and/or Nonpublic Warrant Share is to be determined
pursuant to this sentence, then such Fair Value per share shall constitute the
fair market value per Warrant and/or Nonpublic Warrant Share for purposes of
this sentence.
4.3. The Company shall purchase the Warrants and Nonpublic Warrant Shares
to be sold by each selling holder on a date designated in writing by the Company
to each holder (the "PUT CLOSING DATE"). The Put Closing Date shall be no later
than 90 days after the determination of the Put Price in connection with such
exercise of the Put Option.
4.4. On the Put Closing Date, each selling holder shall surrender its
Warrants and Nonpublic Warrant Shares to the Company without any representation
or warranty (other than that such holder has (i) good and valid title thereto
free and clear of liens, claims, encumbrances and restrictions of any kind
created by such holder and (ii) the power and authority to surrender such
Warrants and Nonpublic Warrant Shares), against payment therefor by (at the
option of such holder), (1) wire transfer to an account in a bank located in the
United States designated by such holder for such purpose or (2) a certified or
official bank check drawn on a member of the New York Clearing House payable to
the order of such holder.
4.5. In the event that the Company is prohibited by the terms of the Senior
Credit Agreement or the terms of the O'Sullivan Industries, Inc. 13-3/8% Senior
Subordinated Notes due 2009 from repurchasing the Warrants or the Nonpublic
Warrant Shares for cash, the Company shall pay the Aggregate Put Amount by
issuing to the holders promissory notes in the initial aggregate principal
amount of the Aggregate Put Amount. Such notes shall bear interest at the
greater of (i) Fleet Boston's Base Rate plus 500 basis points and (ii) 12% per
annum, payable semi-annually in arrears in cash or in kind at the Company's
option. Such notes will rank pari pasu with, amortize at the same rate and times
as, and be entitled to all of the covenants, rights and benefits of, the Senior
Notes under the Amended and Restated Securities Purchase Agreement dated as of
the date hereof, between the Company and the Holder.
SECTION 5. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes attributable to the
initial issuance of Warrant Shares upon the exercise of the Warrant; provided
that the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares in a name other than that of
the registered
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<PAGE> 9
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the Person or Persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
SECTION 6. RESERVATION OF WARRANT SHARES.
6.1. The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued Common
Stock or its authorized and issued Common Stock held in its treasury, for the
purpose of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise of the Warrant, the maximum number of shares of Common Stock which may
then be deliverable upon the exercise of all outstanding Warrants.
6.2. The Company or, if appointed, the transfer agent for the Common Stock
(the "TRANSFER AGENT") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 9 hereof. The Company will
furnish such Transfer Agent a copy of all notices of adjustments, and
certificates related thereto, transmitted to each holder pursuant to Section 10
hereof.
6.3. Before taking any action which would cause an adjustment pursuant to
Section 8 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
6.4. The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issuance thereof.
SECTION 7. OBTAINING STOCK EXCHANGE LISTINGS.
The Company will from time to time take all action which may be necessary
so that the Warrant Shares, immediately upon their issuance upon the exercise of
the Warrant, will be listed on the principal securities exchanges, automated
quotation systems or other markets within the United States of America, if any,
on which other shares of Common Stock are then listed, if any.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.
The Exercise Price and the number of Warrant Shares issuable upon the
exercise of the Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 8. For purposes of this
Section 8, "COMMON STOCK" means shares now or hereafter
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<PAGE> 10
authorized of any class of common stock of the Company and any other stock of
the Company, however designated, that has the right (subject to any prior rights
of any class or series of preferred stock) to participate in any distribution of
the assets or earnings of the Company without limit as to per share amount.
8.1. Adjustment for Change in Capital Stock.
If the Company (i) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock, (ii) subdivides its outstanding shares of
Common Stock into a greater number of shares, (iii) combines its outstanding
shares of Common Stock into a smaller number of shares, (iv) makes a
distribution on its Common Stock in shares of its capital stock other than
Common Stock or (v) issues by reclassification of its Common Stock any shares of
its capital stock, then the Exercise Price in effect immediately prior to such
action shall be proportionately adjusted so that the holder of any Warrant
thereafter exercised may receive the aggregate number and kind of shares of
capital stock of the Company which he would have owned immediately following
such action if such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification. If, after an
adjustment, a holder of a Warrant upon exercise of it may receive shares of two
or more classes of capital stock of the Company, the Company shall determine, in
good faith, the allocation of the adjusted Exercise Price between the classes of
capital stock. After such allocation, the exercise privilege and the Exercise
Price of each class of capital stock shall thereafter be subject to adjustment
on terms comparable to those applicable to Common Stock in this Section 8. Such
adjustment shall be made successively whenever any event listed above shall
occur.
8.2. Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all holders
of its Common Stock entitling them for a period expiring within 45 days after
the record date mentioned below to purchase shares of Common Stock at a price
per share less than the Fair Value (as defined herein) per share on that record
date, the Exercise Price shall be adjusted in accordance with the formula:
O + N x P
-----
E' = E x M
----------------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the
record date.
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<PAGE> 11
N = the number of additional shares of Common Stock issued
pursuant to such rights, options or warrants.
P = the aggregate price per share of the additional shares.
M = the Fair Value per share of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights, options
or warrants are issued and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights,
options or warrants. If at the end of the period during which such rights,
options or warrants are exercisable, not all rights, options or warrants shall
have been exercised, the Exercise Price shall be immediately readjusted to what
it would have been if "N" in the above formula had been the number of shares
actually issued.
8.3. Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of its
assets (including cash), debt securities, preferred stock or any rights or
warrants to purchase debt securities, preferred stock, assets (including cash)
or other securities of the Company, the Exercise Price shall be adjusted in
accordance with the formula:
M - F
E' = E x --------------------
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Fair Value per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date
of the debt securities, preferred stock,
assets, securities, rights or warrants to be
distributed in respect of one share of
Common Stock as determined in good faith by
the Board of Directors of the Company (the
"Board of Directors").
The adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
This Section 8(c) does not apply to cash dividends or cash distributions
paid out of consolidated current or retained earnings as shown on the books of
the Company prepared in accordance with generally accepted accounting
principles. Also, this Section 8(c) does not apply to rights, options or
warrants referred to in Section 8(b) hereof
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<PAGE> 12
8.4. Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a consideration per share
less than the Fair Value per share on the date the Company fixes the offering
price of such additional shares, the Exercise Price shall be adjusted in
accordance with the formula:
P
----
E' = E x O + M
-----------
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of
such additional shares.
M = the Fair Value per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (a), (b) and (c)
of this Section 8,
(2) the exercise of Warrants, or the conversion or exchange of other
securities convertible or exchangeable for Common Stock the issuance of
which caused an adjustment to be made under Section 8(e),
(3) Common Stock issued to the Company's employees, directors or
consultants (or any of the foregoing of its subsidiaries) under bona fide
employee benefit plans adopted by the Board of Directors and approved by
the holders of Common Stock when required by law, if such Common Stock
would otherwise be covered by this subsection (d) (but only to the extent
that the aggregate number of shares excluded hereby and issued after the
date of this Warrant Agreement shall not, together with the shares of
Common Stock underlying the options described in the last paragraph of
subsection 8(b) hereof, exceed 10% of the Common Stock
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<PAGE> 13
outstanding at the time of the adoption of each such plan, exclusive of
anti-dilution adjustments thereunder),
(4) Common Stock issued to shareholders of any Person which merges
into the Company, or with a subsidiary of the Company, in proportion to
their stock holdings of such Person immediately prior to such merger, upon
such merger, provided that if such Person is an Affiliate of the Company,
the Board of Directors shall have obtained a fairness opinion from a
nationally recognized investment banking, appraisal or valuation firm,
which is not an Affiliate of the Company, stating that the consideration
received in such merger is fair to the Company from a financial point of
view, or
(5) the issuance of shares of Common Stock pursuant to rights, options
or warrants which were originally issued in a Non-Affiliate Sale (as
defined below) together with one or more other securities as part of a unit
at a price per unit; including without limitation, the warrants issued in
connection with the offering by the Company and O'Sullivan Industries, Inc.
of 100,000 units, each consisting of $1,000 principal amount of maturity of
O'Sullivan Industries, Inc. 13 3/8% Senior Subordinated Notes due 2009, one
warrant to purchase shares of the Company's Common Stock and one warrant to
purchase shares of the Company's Series B junior preferred stock.
(6) the issuance of shares of Common Stock issuable upon exercise of
the warrants issued pursuant to the Warrant Agreement, dated November 30,
1999, between the Company and Norwest Bank Minnesota, National Association,
as warrant agent.
8.5. Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or exchangeable for
Common Stock (other than securities issued in transactions described in
subsections (a), (b) and (c) of this Section 8) for a consideration per share of
Common Stock initially deliverable upon conversion or exchange of such
securities less than the Fair Value per share on the date of issuance of such
securities, the Exercise Price shall be adjusted in accordance with this
formula:
P
-----
O + M
E' = E x -------
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior
to the issuance of such securities.
P = the aggregate consideration received for the
issuance of such securities.
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<PAGE> 14
M = the Fair Value per share on the date of
issuance of such securities.
D = the maximum number of shares deliverable upon
conversion or in exchange for such securities
at the initial conversion or exchange rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities have not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This subsection (e) does not apply to convertible securities issued to
shareholders of any person which merges into the Company, or with a subsidiary
of the Company, in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger, provided that if such
person is an Affiliate of the Company, the Board of Directors shall have
obtained a fairness opinion from a nationally recognized investment banking,
appraisal or valuation firm, which is not an Affiliate of the Company,
stating that the consideration received in such merger is fair to the Company
from a financial point of view.
8.6. Consideration Received.
For purposes of any computation respecting consideration received
pursuant to subsections (d), and (e) of this Section 8, the following shall
apply:
(1) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive,
and described in a Board resolution which shall be delivered to the
Holder;
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange
thereof (the consideration in each case to be determined in the same
manner as provided in clauses (1) and (2) of this subsection); and
(4) in the case of the issuance of shares of Common Stock pursuant
to rights, options or warrants which rights, options or warrants were
originally issued together with one or more other securities as part of a
unit at a price per unit, the consideration shall be deemed to be the
fair value of such rights, options or warrants at the time of issuance
thereof as
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<PAGE> 15
determined in good faith by the Board of Directors whose determination
shall be conclusive and described in a Board resolution which shall be
delivered to the Holder plus the additional minimum consideration, if any,
to be received by the Company upon the exercise, conversion or exchange
thereof (as determined in the same manner as provided in clauses (1) and
(2) of this subsection).
8.7. Fair Value.
In Sections 8(b), (c), (d) and (e) and Section 9 hereof, the "FAIR VALUE"
per security at any date of determination shall be (1) in connection with a sale
by the Company to a party that is not an Affiliate of the Company in an
arm's-length transaction (a "NON-AFFILIATE SALE"), the price per security at
which such security is sold and (2) in connection with any sale by the Company
to an Affiliate of the Company, (a) the last price per security at which such
security was sold in a Non-Affiliate Sale within the three-month period
preceding such date of determination or (b) if clause (a) is not applicable, the
fair market value of such security determined in good faith by (i) a majority of
the Board of Directors, including a majority of the Disinterested Directors, and
approved in a Board resolution delivered to the Holder or (ii) a nationally
recognized investment banking, appraisal or valuation firm, which is not an
Affiliate of the Company, in each case, taking into account, among all other
factors deemed relevant by the Board of Directors or such investment banking,
appraisal or valuation firm, the trading price and volume of such security on
any national securities exchange or automated quotation system on which such
security is traded.
For purposes of this Section 8(g), "DISINTERESTED DIRECTOR" means, in
connection with any issuance of securities that gives rise to a determination of
the Fair Value thereof, each member of the Board of Directors who is not an
officer, employee, director or other Affiliate of the party to whom the Company
is proposing to issue the securities giving rise to such determination.
For purposes of this Section 8(g), "AFFILIATE" of any specified Person
means (A) any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person and (B)
any director, officer or employee of such specified person. For purposes of this
definition "CONTROL" (including, with correlative meanings, the terms
"CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
8.8. When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 8 shall be made
to the nearest one-one thousandth of a cent or to the nearest one-one thousandth
of a share, as the case may be, it being understood that no such rounding shall
be made under subsection (p).
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<PAGE> 16
8.9. When No Adjustment Required.
No adjustment need be made for a transaction referred to Section 8(a), (b),
(c), (d), (e) or (f) hereof, if the Holder is to participate (without being
required to exercise its Warrants) in the transaction on a basis and with notice
that the Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of Common Stock participate in the
transaction. No adjustment need be made for (i) rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest or (ii) a
change in the par value or no par value of the Common Stock. To the extent the
Warrants become convertible into cash, no adjustment need be made thereafter as
to the cash. Interest will not accrue on the cash.
8.10. Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Section 10 hereof.
8.11. Notice of Certain Transactions.
If (i) the Company takes any action that would require an adjustment in the
Exercise Price pursuant to Section 8(a), (b), (c), (d), (e) or (f) hereof and if
the Company does not arrange for the Holder to participate pursuant to Section
8(i) hereof, (ii) the Company takes any action that would require a supplemental
Warrant Agreement pursuant to Section 8(l) hereof or (iii) there is a
liquidation or dissolution of the Company, then the Company shall mail to the
Holder a notice stating the proposed record date for a dividend or distribution
or the proposed effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The Company
shall mail the notice at least 15 days before such date. Failure to mail the
notice or any defect in it shall not affect the validity of the transaction.
8.12. Reorganization of Company.
Immediately after the date hereof, if the Company consolidates or merges
with or into, or transfers or leases all or substantially all its assets to, any
person, upon consummation of such transaction the Warrants shall automatically
become exercisable for the kind and amount of securities, cash or other assets
which the holder of a Warrant would have owned immediately after the
consolidation, merger, transfer or lease if the holder had exercised the Warrant
immediately before the effective date of the transaction. Concurrently with the
consummation of such transaction, the corporation formed by or surviving any
such consolidation or merger if other than the Company, or the person to which
such sale or conveyance shall have been made, shall enter into (i) a
supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 8(l) and (ii) a supplement to the
Registration Rights Agreement providing for the assumption of the Company's
obligations thereunder. The successor Company shall mail to Warrant holders a
notice describing the supplemental Warrant Agreement and Registration Rights
Agreement. If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an Affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement and Registration Rights Agreement. If this
Section 8(l) applies, Sections 8(a), (b), (c), (d), (e) and (f) hereof do not
apply.
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<PAGE> 17
8.13. Company Determination Final.
Any determination that the Company or the Board of Directors must make
pursuant to Section 8(a), (c), (d), (e), (f), (g), (h) or (i) hereof is
conclusive.
8.14. When Issuance or Payment May Be Deferred.
In any case in which this Section 8 shall require that an adjustment in the
Exercise Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event (i) issuing to the
Holder exercised after such record date the Warrant Shares and other capital
stock of the Company, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the Exercise Price and (ii) paying to Holder any
amount in cash in lieu of a fractional share pursuant to Section 10 hereof;
provided that the Company shall deliver to Holder a due bill or other
appropriate instrument evidencing Holder's right to receive such additional
Warrant Shares, other capital stock and cash upon the occurrence of the event
requiring such adjustment.
8.15. Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this Section 8 each
Warrant outstanding prior to the making of the adjustment in the Exercise Price
shall thereafter evidence the right to receive upon payment of the adjusted
Exercise Price that number of shares of Common Stock (calculated to the nearest
hundredth) obtained from the following formula:
N' = N x E
----
E'
where:
N' = the adjusted number of Warrant Shares issuable upon
exercise of a Warrant by payment of the adjusted
Exercise Price.
N = the number or Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise Price
prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
8.16. Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
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<PAGE> 18
SECTION 9. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant Shares on the
exercise of Warrants. If more than one Warrant shall be presented for exercise
in full at the same time by the same holder, the number of full Warrant Shares
which shall be issuable upon the exercise thereof shall be computed on the basis
of the aggregate number of Warrant Shares purchasable on exercise of the
Warrants so presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 9, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
Fair Value per Warrant Share, as determined on the day immediately preceding the
date the Warrant is presented for exercise, multiplied by such fraction,
computed to the nearest whole U.S. cent.
SECTION 10. NOTICES TO WARRANT HOLDERS.
10.1. Upon any adjustment of the Exercise Price pursuant to Section 8
hereof, the Company shall promptly thereafter (i) cause to be prepared a
certificate of a firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company (who may be the regular
auditors of the Company) setting forth the Exercise Price after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and setting forth the number of Warrant
Shares (or portion thereof) issuable after such adjustment in the Exercise
Price, upon exercise of a Warrant and payment of the adjusted Exercise Price,
which certificate shall be conclusive evidence of the correctness of the matters
set forth therein, and (ii) cause to be given to each of the holders of Warrants
at such holder's address as it appears in the records of the Company (unless
otherwise indicated by any such holder) written notice of such adjustments by
first-class mail, postage prepaid. Where appropriate, such notice may be given
in advance and included as a part of the notice required to be mailed under the
other provisions of this Section 10.
10.2. In case:
(i) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants;
(ii) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other
than dividends or cash distributions paid out of consolidated current or
retained earnings as shown on the books of the Company prepared in
accordance with generally accepted accounting principles or dividends
payable in shares of Common Stock or distributions referred to in Section
10(a) hereof);
(iii) of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of
Common Stock issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or a tender offer
or exchange offer for shares of Common Stock;
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
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<PAGE> 19
(v) the Company proposes to take any action (other than actions of the
character described in Section 8(a) hereof) which would require an
adjustment of the Exercise Price pursuant to Section 8 hereof;
then the Company shall cause to be given to each of the registered holders of
Warrants at such holder's address as it appears in the records of the Company
(unless otherwise indicated by any such holder), at least 20 days (or 10 days in
any case specified in clauses (i) or (ii) above) prior to the applicable record
date hereinafter specified, or promptly in the case of events for which there is
no record date, by first-class mail, postage prepaid, a written notice stating
(x) the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, (y) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (z) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 10 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
10.3. Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders of Warrants the
right to vote or to consent or to receive notice as stockholders in respect of
the meetings of stockholders or the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the Company.
SECTION 11. REPORTS
11.1. The Company agrees with Holder, for so long as any Warrants or
Warrant Shares remain outstanding and during any period in which the Company (i)
is not subject to Section 13 or 15(d) of the Exchange Act, to make available,
upon request of Holder, to such Holder or beneficial owner of Warrants or
Warrant Shares in connection with any sale thereof and any prospective purchaser
of such Warrants or Warrant Shares designated by such Holder or beneficial
owner, the information required by Rule 144(A)(d)(4) under the Securities Act in
order to permit resales of such Warrants or Warrant Shares pursuant to Rule
144A, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make
all filings required thereby in a timely manner in order to permit resales of
such Warrants or Warrant Shares pursuant to Rule 144A.
SECTION 12. NOTICES TO COMPANY.
Any notice or demand authorized by this Agreement to be given or made by
the registered holder of any Warrant to or on the Company shall be sufficiently
given or made when received if deposited in the mail, first class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Company) as follows:
-18-
<PAGE> 20
O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Telecopier No.: (417) 682-8113
Attention: Rowland H. Geddie, III, Esq.
With a copy to:
Kirkland & Ellis
International Financial Centre
Old Broad Street
London EC2N 1HQ UK
Telecopier No.: 44 171 816-8800
Attention: M. Gilbey Strub, Esq.
SECTION 13. FURTHER AGREEMENTS.
13.1. Public Equity Offering.
The Company agrees that it shall not undertake any initial Public Equity
Offering of common stock of any class other than the class of Common Stock into
which the Warrants are exercisable, unless the Company provides Holders of the
Warrants and Non Public Warrant Shares the ability to convert their Warrant
Shares or to exercise their Warrants for common stock of the same class as is
the subject of the initial Public Equity Offering.
13.2. Investment Company.
The Company agrees that it shall not, and shall not permit any of its
subsidiaries, to take any action that would subject it to the requirements of
the Investment Company Act of 1940.
SECTION 14. SUPPLEMENTS AND AMENDMENTS.
The Company may from time to time supplement or amend this Agreement
without the approval of any holders of Warrants in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
may deem necessary or desirable and which shall not in any way adversely affect
the interests of the holders of Warrants. Any amendment or supplement to this
Agreement that has an adverse effect on the interests of the holders of Warrants
shall require the written consent of the holders of Warrants exercisable into a
majority of the Warrant Shares. The consent of each holder of Warrants affected
shall be required for any amendment pursuant to which the Exercise Price would
be increased or the number of Warrant Shares purchasable upon exercise of
Warrants would be decreased (other than pursuant to adjustments provided in this
Agreement) or which would affect any holder of Warrants in a manner different
from any other holder of Warrants.
-19-
<PAGE> 21
SECTION 15. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or Holder shall bind and inure to the benefit of their respective
successors and assigns hereunder.
SECTION 16. TERMINATION.
This Agreement shall terminate at 5:00 p.m., New York City time on October
15, 2009. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date if all Warrants have been exercised.
SECTION 17. GOVERNING LAW.
This Agreement and the Warrant Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the internal laws of said State.
SECTION 18. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person other
than the Company and the registered holders of Warrants any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company and the registered holders of
Warrants.
SECTION 19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
SECTION 20. PREEMPTIVE RIGHTS.
20.1. Except for the issuance of Common Stock (or securities convertible
into or containing options or rights to acquire shares of Common Stock) (i)
pursuant to a Public Equity Offering, (ii) as consideration for the acquisition
of assets or stock of another Person, (iii) pursuant to the exercise of warrants
to purchase capital stock of the Company outstanding as of November 30, 1999,
(iv) pursuant to the terms of any capital stock or stock option issued to an
employee, director or consultant of the Company (or its subsidiaries), (v)
pursuant to a dividend or distribution made in respect of the Common Stock or
Preferred Stock, (vi) pursuant to the terms of any debt financing or (vii)
pursuant to which the Designated Holders have waived their rights to purchase
any securities pursuant to this Section 20, if the Company authorizes the
issuance and sale of any shares of any class of capital stock or any securities
convertible into or containing options or rights to acquire any shares of any
class of capital stock (such issuance and sale, a "Covered Offering" and the
securities proposed to be issued and sold thereunder, the "Offered Securities"),
the Company will first offer to sell to each Covered Holder a quantity of the
Offered Securities calculated by multiplying (x) the total number of Offered
Securities by (y) such holder's Ownership Percentage. Each Covered Holder will
be entitled to purchase such portion of the Offered Securities pursuant to the
terms and conditions set forth in paragraph (b) below.
-20-
<PAGE> 22
20.2. At least 20 days prior to the consummation of any Covered Offering,
the Company shall deliver a written notice (the "Sale Notice") to each Covered
Holder specifying in reasonable detail (i) the quantities and classes of Offered
Securities, (ii) the proposed offering price, (iii) the proposed date, time and
location of the closing of the Covered Offering, and (iv) such other information
necessary for such holder to calculate the number of Offered Securities that it
is entitled to purchase under this Section 20. The Covered Holders may make an
irrevocable election to purchase all or part of such securities, upon the same
terms and conditions and at the same time and place as described in the Sale
Notice, by delivering a written notice of such election to the Company within 10
days after the Sale Notice has been delivered by the Company. Any such election
notice shall specify the quantity of Offered Securities that the electing
Covered Holder is entitled to purchase under this Section 20. If any Covered
Holder elects to purchase Offered Securities pursuant to this Section 20, the
sale of such securities shall be consummated, together with the sale of any
Offered Securities not elected to be purchased under this Section 20, on the
terms and conditions specified in the Sale Notice at the time and place of the
closing of the Covered Offering specified in the Sale Notice or at such other
time (not later than 10 days after the time specified in the Sale Notice) and
place as the Company may decide and communicate to the electing Covered Holders
not less than 2 days prior to such closing. If no Covered Holder elects to
purchase Offered Securities pursuant to this Section 20, the Company shall be
free to sell the Offered Securities within 90 days after the expiration of the
offering period described above on terms and conditions no more favorable to the
purchasers thereof, in the aggregate, than set forth in the Sale Notice. Any
Offered Securities offered or sold by the Company after such 90 day period must
be reoffered to the Covered Holders pursuant to this Section 20.
20.3. Notwithstanding the foregoing provisions of this Section 20, in the
event that, in connection with any issuance and sale of securities of the
Company, a Covered Holder elects to purchase securities of the Company pursuant
to the exercise of any rights of such Covered Holder under Section 20 of the
Company's Amended and Restated Class B Warrant Agreement dated as of November
30, 1999 relating to a Class B Warrant to purchase 39,273 shares of Series B
Junior Preferred Stock of the Company, such Covered Holder shall not be entitled
to purchase securities of the Company pursuant to Section 20 of this Agreement
with respect to such issuance and sale; provided, that the foregoing provisions
of this Section 20.3 shall not apply with respect to any other Covered Holder.
SECTION 21. REGULATORY RESTRICTIONS
21.1 Any other provisions hereof to the contrary notwithstanding, no Person
which is a bank holding company or a subsidiary of a bank holding company (a
"Bank Affiliate") as defined in the Bank Holding Company Act of 1956, as
amended, or other applicable banking laws of the United States of America and
the rules and regulations promulgated thereunder shall be entitled to exercise
the right under the Warrant to purchase any share or shares of Common Stock if,
under any law or under any regulation, rule or other requirement of any
governmental authority at any time applicable to such Bank Affiliate, (a) as a
result of such purchase, such Bank Affiliate would own, control or have power to
vote a greater quantity of securities of any kind than the Bank Affiliate shall
be permitted to own, control or have power to vote, or (b) such purchase would
not be permitted. For purposes of this Section 21.1, a written statement of the
Bank Affiliate exercising the Warrant, delivered upon surrender of the Warrant
pursuant to this Agreement, to the effect that the Bank Affiliate is legally
entitled to exercise its right under the Warrant to purchase securities and that
such purchase will not violate the prohibitions set forth in the preceding
sentence, shall be conclusive and binding upon the Company and shall obligate
the Company to deliver certificates representing the shares of Common Stock so
purchased in accordance with the other provisions hereof and shall relieve the
Company of any liability under this Section 21.1.
-21-
<PAGE> 23
21.2. In the event that any Bank Affiliate is prevented from exercising any
rights to purchase any shares of Common Stock under the Warrant pursuant to
Section 21.1, the Company agrees to use its reasonable efforts to cause its
board of directors and shareholders to approve, and thereafter to cause its
officers to execute and file with the secretary of state of the state of
incorporation of the Company, an amendment to the certificate of incorporation
of the Company providing for (a) a new class of common stock (the "Non-Voting
Common Stock") identical in all respects to the voting Common Stock except that
it shall have no voting rights and (b) the convertibility of shares of voting
Common Stock into shares of Non-Voting Common Stock, and the convertibility of
shares of Non-Voting Common Stock into shares of voting Common Stock, at any
time at the election of the holder thereof.
-22-
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Phillip J. Pacey
---------------------------------------
Phillip J. Pacey, Senior Vice President
and Chief Financial Officer
BANCBOSTON INVESTMENTS, INC.
By: /s/ Theresa Nibi
----------------------------------------
Name: Theresa Nibi
Title: Director of BancBoston Investments Inc.
-23-
<PAGE> 25
EXHIBIT A
[Form of Class B Warrant Certificate]
[Face]
Private Placement and Transfer Restriction Legend: Each Warrant shall bear
the Private Placement Legend and Transfer Restriction Legend on the face
thereof:
No. ___________ ___Warrants
Class B Warrant Certificate
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
This Class B Warrant Certificate certifies that BancBoston Investments,
Inc. is the registered holder of Warrants expiring October 15, 2009 (the
"Warrants") to purchase Common Stock, par value $0.01 (the "Common Stock"), of
O'Sullivan Industries Holdings, Inc., a Delaware corporation (the "Company").
Each Class B Warrant entitles the registered holder upon exercise at any time
from 9:00 a.m. November 30, 1999 (the "Exercise Date") until 5:00 p.m. New York
City Time on October 15, 2009 to receive from the Company 0.9327 fully paid and
nonassessable shares of Common Stock (the "Warrant Shares") at the initial
exercise price (the "Exercise Price") of $0.01 per share payable upon surrender
of this Warrant Certificate and payment of the Exercise Price at the offices of
the Company, but only subject to the conditions set forth herein and in the
Warrant Agreement referred to on the reverse hereof. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Class B Warrant are
subject to adjustment upon the occurrence of certain events set forth in the
Warrant Agreement.
No Class B Warrant may be exercised after 5:00 p.m., New York City Time on
October 15, 2009, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Class B Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall be governed by and construed in accordance
with the internal laws of the State of New York.
A-1
<PAGE> 26
IN WITNESS WHEREOF, O'Sullivan Industries Holdings, Inc. has caused this
Class B Warrant Certificate to be signed below.
DATED: January __, 2000
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By:
-----------------------------------------
Name:
Title:
A-2
<PAGE> 27
[Reverse of Class B Warrant Certificate]
The Class B Warrants evidenced by this Class B Warrant Certificate are
issued pursuant to an Amended and Restated Class B Warrant Agreement dated as of
January ___, 2000 (the "Class B Warrant Agreement"), duly executed and delivered
by the Company to BancBoston Investments, Inc. which Class B Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Company and the holders
(the words "holders" or "holder" meaning the registered holders or registered
holder) of the Class B Warrant. A copy of the Class B Warrant Agreement may be
obtained by the holder hereof upon written request to the Company.
Class B Warrants may be exercised at any time on or after November 30, 1999
and on or before 5:00 p.m. New York City time on October 15, 2009; provided that
holders shall be able to exercise their Class B Warrants only if a registration
statement relating to the Warrant Shares is then in effect, or the exercise of
such Class B Warrants is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and such securities
are qualified for sale or exempt from qualification under the applicable
securities laws of the states in which the various holders of the Class B
Warrants or other persons to whom it is proposed that the Warrant Shares be
issued on exercise of the Class B Warrants reside. In order to exercise all or
any of the Class B Warrants represented by this Warrant Certificate, the holder
must deliver to the Company at its address set forth in Section 12 of the Class
B Warrant Agreement this Class B Warrant Certificate and the form of election to
purchase on the reverse hereof duly filled in and signed, and upon payment to
the Company of the Exercise Price, as adjusted as provided in the Class B
Warrant Agreement, for the number of Warrant Shares in respect of which such
Class B Warrants are then exercised. No adjustment shall be made for any
dividends on any Common Stock issuable upon exercise of this Class B Warrant.
The Class B Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Class B Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Class B Warrant shall be adjusted. No fractions of a share of
Common Stock will be issued upon the exercise of any Class B Warrant, but the
Company will pay the cash value thereof determined as provided in the Class B
Warrant Agreement.
The Company has agreed pursuant to a Registration Rights Agreement dated as
of November 30, 1999 (the "Registration Rights Agreement") to provide the
holders of the Warrants with certain demand and piggy-back registration rights
with respect to the Common Stock purchasable upon exercise of such Warrants, as
set forth in the Registration Rights Agreement. A copy of the Registration
Rights Agreement may be obtained by the holder hereof upon written request to
the Company.
The Class B Warrants and the shares of Common Stock underlying the Warrants
are subject to certain restrictions or transfer and other restrictions set forth
in a Stockholders Agreement, dated November 30, 1999. Copies of the Stockholders
Agreement may be obtained by the holder hereof, upon written request to the
Company.
Class B Warrant Certificates, when surrendered at the office of the Company
by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Class B Warrant Agreement,
A-3
<PAGE> 28
but without payment of any service charge, for another Class B Warrant
Certificate or Class B Warrant Certificates of like tenor evidencing in the
aggregate a like number of Class B Warrants.
Upon due presentation for registration of transfer of this Class B Warrant
Certificate at the office of the Company a new Class B Warrant Certificate or
Class B Warrant Certificates of like tenor and evidencing in the aggregate a
like number of Class B Warrants shall be issued to the transferee(s) in exchange
for this Class B Warrant Certificate, subject to the limitations provided in the
Class B Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Class B Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, of any distribution to the holder(s) hereof, and for all
other purposes, the Company shall not be affected by any notice to the contrary.
Neither the Class B Warrants nor this Class B Warrant Certificate entitles any
holder hereof to any rights of a stockholder of the Company.
A-4
<PAGE> 29
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Class B Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Class B Warrant Certificate, to receive _____________ shares
of Common Stock and herewith tenders payment for such shares to the order of
O'SULLIVAN INDUSTRIES HOLDINGS, INC., in the amount of the Aggregate Exercise
Price in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of _______________, whose
address is __________________ and that such shares be delivered to ___________,
whose address is ____________________________. If said number of shares is less
than all of the shares of Common Stock purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
such shares be registered in the name of ______________________, whose address
is ____________________, and that such Warrant Certificate be delivered to whose
address is ____________________.
----------------------------------------
Signature
Date:
B-1
<PAGE> 30
EXHIBIT B
ASSIGNMENT
FOR VALUE RECEIVED, _________________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Class B
Warrant (Certificate No. W______) with respect to the number of shares of the
Common Stock covered thereby set forth below, unto:
<TABLE>
<CAPTION>
Names of Assignee Address No. of Shares
----------------- ------- -------------
<S> <C> <C>
</TABLE>
Dated: Signature ------------------------
------------------------
Witness ------------------------
C-1
<PAGE> 1
EXHIBIT 10.1
================================================================================
CREDIT AGREEMENT
AMONG
O'SULLIVAN INDUSTRIES, INC.,
AS BORROWER,
O'SULLIVAN INDUSTRIES HOLDINGS, INC.,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
LEHMAN BROTHERS INC.,
AS LEAD ARRANGER AND BOOK MANAGER
WACHOVIA BANK, N.A.,
AS SYNDICATION AGENT
LEHMAN COMMERCIAL PAPER INC.,
AS ADMINISTRATIVE AGENT
AND
GENERAL ELECTRIC CAPITAL CORPORATION,
AS DOCUMENTATION AGENT
DATED AS OF NOVEMBER 30, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1. DEFINITIONS.........................................................................................1
1.1 Defined Terms.......................................................................................1
1.2 Other Definitional Provisions......................................................................29
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS....................................................................29
2.1 Term Loan Commitments..............................................................................29
2.2 Procedure for Term Loan Borrowing..................................................................30
2.3 Repayment of Term Loans............................................................................30
2.4 Revolving Credit Commitments.......................................................................31
2.5 Procedure for Revolving Credit Borrowing...........................................................32
2.6 Swing Line Commitment..............................................................................32
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans..................................33
2.8 Repayment of Loans; Evidence of Indebtedness.......................................................34
2.9 Commitment Fees, etc...............................................................................35
2.10 Termination or Reduction of Revolving Credit Commitments...........................................36
2.11 Optional Prepayments...............................................................................36
2.12 Mandatory Prepayments and Commitment Reductions....................................................36
2.13 Conversion and Continuation Options................................................................38
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches..........................................38
2.15 Interest Rates and Payment Dates...................................................................39
2.16 Computation of Interest and Fees...................................................................39
2.17 Inability to Determine Interest Rate...............................................................40
2.18 Pro Rata Treatment and Payments....................................................................40
2.19 Requirements of Law................................................................................42
2.20 Taxes..............................................................................................43
2.21 Indemnity..........................................................................................46
2.22 Illegality.........................................................................................47
2.23 Change of Lending Office...........................................................................47
2.24 Replacement of Lenders under Certain Circumstances.................................................47
SECTION 3. LETTERS OF CREDIT..................................................................................48
3.1 L/C Commitment.....................................................................................48
3.2 Procedure for Issuance of Letter of Credit.........................................................48
3.3 Fees and Other Charges.............................................................................48
3.4 L/C Participations.................................................................................49
3.5 Reimbursement Obligation of the Borrower...........................................................50
3.6 Obligations Absolute...............................................................................50
3.7 Letter of Credit Payments..........................................................................51
3.8 Applications.......................................................................................51
SECTION 4. REPRESENTATIONS AND WARRANTIES.....................................................................51
4.1 Financial Condition................................................................................51
4.2 No Change..........................................................................................52
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
4.3 Corporate Existence; Compliance with Law...........................................................52
4.4 Corporate Power; Authorization; Enforceable Obligations............................................52
4.5 No Legal Bar.......................................................................................53
4.6 No Material Litigation.............................................................................53
4.7 No Default.........................................................................................53
4.8 Ownership of Property; Liens.......................................................................53
4.9 Intellectual Property..............................................................................53
4.10 Taxes..............................................................................................54
4.11 Federal Regulations................................................................................54
4.12 Labor Matters......................................................................................54
4.13 ERISA..............................................................................................54
4.14 Investment Company Act; Other Regulations..........................................................55
4.15 Subsidiaries.......................................................................................55
4.16 Use of Proceeds....................................................................................55
4.17 Environmental Matters..............................................................................55
4.18 Accuracy of Information, etc.......................................................................56
4.19 Security Documents.................................................................................57
4.20 Solvency...........................................................................................58
4.21 Senior Indebtedness................................................................................58
4.22 Regulation H.......................................................................................58
4.23 Year 2000 Matters..................................................................................58
4.24 Insurance..........................................................................................59
4.25 Acquisition Documentation..........................................................................59
4.26 Mortgaged Properties...............................................................................59
4.27 Permits............................................................................................61
4.28 Lease Payments.....................................................................................61
SECTION 5. CONDITIONS PRECEDENT...............................................................................62
5.1 Conditions to Initial Extension of Credit..........................................................62
5.2 Conditions to Each Extension of Credit.............................................................67
SECTION 6. AFFIRMATIVE COVENANTS..............................................................................68
6.1 Financial Statements...............................................................................68
6.2 Certificates; Other Information....................................................................69
6.3 Payment of Obligations.............................................................................71
6.4 Conduct of Business and Maintenance of Existence, etc..............................................71
6.5 Maintenance of Property; Insurance.................................................................71
6.6 Inspection of Property; Books and Records; Discussions.............................................73
6.7 Notices............................................................................................73
6.8 Environmental Laws.................................................................................74
6.9 Interest Rate Protection...........................................................................74
6.10 Additional Collateral, etc.........................................................................74
6.11 Year 2000..........................................................................................76
6.12 Use of Proceeds....................................................................................76
6.13 ERISA Documents....................................................................................76
6.14 Further Assurances.................................................................................77
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 7. NEGATIVE COVENANTS.................................................................................77
7.1 Financial Condition Covenants......................................................................78
7.2 Limitation on Indebtedness.........................................................................82
7.3 Limitation on Liens................................................................................83
7.4. Limitation on Fundamental Changes..................................................................84
7.5. Limitation on Disposition of Property..............................................................84
7.6. Limitation on Restricted Payments..................................................................85
7.7. Limitation on Capital Expenditures.................................................................86
7.8. Limitation on Investments..........................................................................87
7.9. Limitation on Optional Payments and Modifications of Indebtedness..................................87
7.10. Limitation on Transactions with Affiliates.........................................................88
7.11. Limitation on Sales and Leasebacks.................................................................88
7.12. Limitation on Changes in Fiscal Periods............................................................88
7.13. Limitation on Negative Pledge Clauses..............................................................89
7.14. Limitation on Restrictions on Subsidiary Distributions, etc........................................89
7.15. Limitation on Lines of Business....................................................................89
7.16 Limitation on Amendments to Tandy Tax Sharing Agreement, Acquisition Documentation and Senior
Holdings Note Documentation........................................................................89
7.17 Limitation on Hedge Agreements.....................................................................90
7.18 Partnerships and Joint Ventures....................................................................90
7.19 Limitation on Activities of Holdings...............................................................90
7.20 Management Fees....................................................................................90
SECTION 8. EVENTS OF DEFAULT..................................................................................90
SECTION 9. THE AGENTS; THE ARRANGER...........................................................................95
9.1 Appointment........................................................................................95
9.2 Delegation of Duties...............................................................................95
9.3 Exculpatory Provisions.............................................................................95
9.4 Reliance by Agents.................................................................................95
9.5 Notice of Default..................................................................................96
9.6 Non-Reliance on Agents and Other Lenders...........................................................96
9.7 Indemnification....................................................................................97
9.8 Arranger and Agents in Their Individual Capacities.................................................97
9.9 Successor Agents...................................................................................97
9.10 Authorization to Release Liens.....................................................................98
9.11 The Arranger.......................................................................................98
SECTION 10. MISCELLANEOUS......................................................................................98
10.1 Amendments and Waivers.............................................................................98
10.2 Notices............................................................................................99
10.3 No Waiver; Cumulative Remedies....................................................................102
10.4 Survival of Representations and Warranties........................................................102
10.5 Payment of Expenses...............................................................................102
10.6 Successors and Assigns; Participations and Assignments............................................103
10.7 Adjustments; Set-off..............................................................................106
10.8 Counterparts......................................................................................106
</TABLE>
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<TABLE>
<S> <C> <C>
10.9 Severability......................................................................................106
10.10 Integration.......................................................................................107
10.11 Governing Law.....................................................................................107
10.12 Submission To Jurisdiction; Waivers...............................................................107
10.13 Acknowledgments...................................................................................107
10.14 Confidentiality...................................................................................108
10.15 Release of Collateral and Guarantee Obligations...................................................108
10.16 Accounting Changes................................................................................109
10.17 Delivery of Lender Addenda........................................................................109
10.18 Construction......................................................................................109
10.19 Waivers of Jury Trial.............................................................................109
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
ANNEXES:
A Pricing Grid
SCHEDULES:
1.1 Mortgaged Properties
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries
4.17 Environmental Compliance
4.19(a)-1 UCC Filing Jurisdictions - Collateral
4.19(a)-2 UCC Financing Statements to Remain on File
4.19(a)-3 UCC Financing Statements to be Terminated
4.19(b) Mortgage Filing Jurisdictions
4.19(c) UCC Filing Jurisdictions - Intellectual Property Collateral
4.25 Acquisition Documentation
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
EXHIBITS
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of Kirkland & Ellis
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
G-3 Form of Swing Line Note
H Form of Prepayment Option Notice
I Form of Exemption Certificate
J Form of Lender Addendum
K Form of Solvency Certificate
L Form of Subordinated Intercompany Note
M Form of Notice of Borrowing
</TABLE>
v
<PAGE> 7
CREDIT AGREEMENT, dated as of November 30, 1999, among O'Sullivan
Industries, Inc., a Delaware corporation (the "Borrower"), O'Sullivan Industries
Holdings, Inc., a Delaware corporation ("Holdings"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "Lenders"), Lehman Brothers Inc., as advisor, lead arranger and book
manager (in such capacity, the "Arranger"), WACHOVIA BANK, N.A., as syndication
agent (in such capacity, the "Syndication Agent"), and Lehman Commercial Paper
Inc., as administrative agent (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Sponsor has incorporated OSI, a Wholly Owned Subsidiary of the
Sponsor, for purposes of effecting the transactions contemplated by the
Acquisition Agreement (each, as defined below);
WHEREAS, pursuant to the Acquisition Agreement, the Sponsor will acquire
all of the issued and outstanding common stock (except for that portion of the
common stock retained by certain members of the management of Holdings and their
designees) of Holdings through a merger of OSI with and into Holdings with
Holdings as the surviving corporation;
WHEREAS, the Borrower is a Wholly Owned Subsidiary of Holdings;
WHEREAS, the Borrower has requested that the Lenders make credit facilities
available to the Borrower in order to finance the foregoing transactions and for
the other purposes set forth herein;
WHEREAS, the Lenders are willing to make such credit facilities available
upon and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.
"Acquisition": the acquisition pursuant to the Acquisition Agreement,
by the Sponsor of the issued and outstanding common stock (except for that
portion of the common stock retained by certain members of the management
of Holdings and their designees) of Holdings through a merger of OSI with
and into Holdings.
"Acquisition Agreement": the Amended and Restated Agreement and Plan
of Merger between OSI and Holdings, dated as of October 18, 1999, as the
same may be amended, supplemented, replaced or otherwise modified from time
to time in accordance with this Agreement.
<PAGE> 8
"Acquisition Documentation": collectively, the Acquisition Agreement
and all schedules, exhibits, annexes and amendments thereto and all side
letters and agreements affecting the terms thereof or entered into in
connection therewith, in each case, as amended, supplemented, replaced or
otherwise modified from time to time.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"Agents": the collective reference to the Syndication Agent and the
Administrative Agent.
"Aggregate Exposure": with respect to any Lender at any time, an
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loans and (ii)
the amount of such Lender's Revolving Credit Commitment then in effect or,
if the Revolving Credit Commitments have been terminated, the amount of
such Lender's Revolving Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the Aggregate Exposure of all Lenders at such
time.
"Agreement": this Credit Agreement, as amended, supplemented, replaced
or otherwise modified from time to time in accordance with this Agreement.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
<TABLE>
<CAPTION>
Base Rate Eurodollar
Loans Loans
--------- ----------
<S> <C> <C>
Revolving Credit Loans and
Swing Line Loans 2.25% 3.25%
Tranche A Term Loans 2.25% 3.25%
Tranche B Term Loans 2.75% 3.75%
</TABLE>
provided, that on and after the first Adjustment Date occurring after the
completion of two full fiscal quarters of the Borrower after the Closing
Date, the Applicable Margin
2
<PAGE> 9
with respect to Revolving Credit Loans, Swing Line Loans and Tranche A Term
Loans will be determined pursuant to the Pricing Grid.
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit.
"Arranger": as defined in the preamble hereto.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by
clause (a), (b), (c), (d), (f), (g) or (h) of Section 7.5) which yields
gross proceeds to the Borrower or any of its Subsidiaries (valued at the
initial principal amount thereof in the case of non-cash proceeds
consisting of notes or other debt securities and valued at fair market
value in the case of other non-cash proceeds) in excess of $2,000,000.
"Assignee": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
"Available Revolving Credit Commitment": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment then in effect over (b) such Lender's
Revolving Extensions of Credit then outstanding; provided, that in
calculating any Lender's Revolving Extensions of Credit for the purpose of
determining such Lender's Available Revolving Credit Commitment pursuant to
Section 2.9(a), the aggregate principal amount of Swing Line Loans then
outstanding shall be deemed to be zero.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day plus
1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof: "Prime Rate" shall mean the rate of interest
per annum publicly announced from time to time by the Reference Lender as
its prime or base rate in effect at its principal office in New York City
(the Prime Rate not being intended to be the lowest rate of interest
charged by the Reference Lender in connection with extensions of credit to
debtors); "Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which
is one and the denominator of which is one minus the C/D Reserve Percentage
and (b) the C/D Assessment Rate; and "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month certificates
of deposit reported as being in effect on such day (or, if such day shall
not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank
of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 A.M., New York City
time, on such day (or, if such day shall not be
3
<PAGE> 10
a Business Day, on the next preceding Business Day) by the Reference Lender
from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. Any change in the Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective as of the opening of business on
the effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans for which the applicable rate of interest is
based upon the Base Rate.
"Benefited Lender": as defined in Section 10.7.
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower": as defined in the preamble hereto.
"Borrowing Date": any Business Day specified by the Borrower as a date
on which the Borrower requests the relevant Lender(s) to make Loans
hereunder.
"Business Day": (i) for all purposes other than as covered by clause
(ii) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (i) and which is also a day for
trading by and between banks in Dollar deposits in the interbank eurodollar
market.
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of such Person and
its Subsidiaries.
"Capital Expenditure Carry Forward": as defined in Section 7.7.
"Capital Lease Obligations": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP, and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": (i) in the case of a corporation, any and all shares,
interests, participations or other equivalents (however designated) of
capital stock and (ii) in the case of any other Person, any and all
equivalent ownership or profit interests in a Person
4
<PAGE> 11
and in the case of clause (i) or (ii) above, any and all warrants, rights
or options to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition;
(b) certificates of deposit, time deposits, eurodollar time deposits or
overnight bank deposits having maturities of six months or less from the
date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States of America or any state
thereof having combined capital and surplus of not less than $250,000,000;
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Services ("S&P") or P-2 by Moody's Investors Service, Inc.
("Moody's"), or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within six
months from the date of acquisition; (d) repurchase obligations of any
Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; or (g) shares
of money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"C/D Assessment Rate": for any day as applied to any Base Rate Loan,
the annual assessment rate in effect on such day that is payable by a
member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. ss. 327.4 (or any successor
provision) to the FDIC (or any successor) for the FDIC's (or such
successor's) insuring time deposits at offices of such institution in the
United States.
"C/D Reserve Percentage": for any day as applied to any Base Rate
Loan, that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board, for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of the
Board as in effect from time to time) in respect of new non-personal time
deposits in Dollars having a maturity of 30 days or more.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date shall be not later
than November 30, 1999.
5
<PAGE> 12
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all Property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security
Document, including, without limitation, the Intellectual Property
Collateral.
"Commitment": as to any Lender, the sum of the Tranche A Term Loan
Commitment, the Tranche B Term Loan Commitment, and the Revolving Credit
Commitment of such Lender.
"Commitment Fee Rate": 1/2 of 1% per annum; provided, that on and
after the first Adjustment Date occurring after the completion of two full
fiscal quarters of the Borrower after the Closing Date, the Commitment Fee
Rate will be determined pursuant to the Pricing Grid.
"Commitment Letter": the Commitment Letter, dated October 17, 1999,
among the Sponsor, OSI, the Agents and the Arranger, as the same may be
amended, supplemented, replaced or otherwise modified from time to time in
accordance with this Agreement.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a Responsible
Officer substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential Information
Memorandum dated October, 1999 and furnished to the initial Lenders.
"Consolidated Current Assets": at any date, all amounts (other than
cash and Cash Equivalents) which would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of the Borrower and its Subsidiaries at such
date.
"Consolidated Current Liabilities": at any date, all amounts that
would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet
of the Borrower and its Subsidiaries at such date, but excluding (a) the
current portion of any Funded Debt of the Borrower and its Subsidiaries and
(b) without duplication of clause (a) above, all Indebtedness consisting of
Revolving Credit Loans or Swing Line Loans to the extent otherwise included
therein.
"Consolidated EBITDA": of any Person for any period, Consolidated Net
Income of such Person and its Subsidiaries for such period plus, without
duplication and to the extent reflected as a charge in the statement of
such Consolidated Net Income for such period, the sum of (a) all provisions
for Federal, state or other domestic and foreign income tax expense
(including, without limitation, any franchise taxes imposed in lieu of
6
<PAGE> 13
income taxes), (b) Consolidated Interest Expense of such Person and its
Subsidiaries, amortization or write-off of debt discount and debt issuance
costs and commissions, discounts and other fees and charges associated with
Indebtedness (including, in the case of the Borrower, the Loans and Letters
of Credit), (c) depreciation and amortization expense, (d) amortization of
intangibles (including, but not limited to, goodwill) and organization
costs, (e) any extraordinary, unusual or non-recurring expenses or losses
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, losses on sales
of assets outside of the ordinary course of business) and (f) any other
non-cash charges, and minus, to the extent included in the statement of
such Consolidated Net Income for such period, the sum of (a) interest
income (except to the extent deducted in determining Consolidated Interest
Expense), (b) any extraordinary, unusual or non-recurring income or gains
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the
sales of assets outside of the ordinary course of business) and (c) any
other non-cash income, all as determined on a consolidated basis; provided
that for purposes of calculating Consolidated EBITDA of the Borrower and
its Subsidiaries for any period, (i) the Consolidated EBITDA of any Person
or business acquired by the Borrower or its Subsidiaries during such period
shall be included on a pro forma basis for such period (assuming the
consummation of such acquisition and the incurrence or assumption of any
Indebtedness in connection therewith occurred on the first day of such
period) if the consolidated balance sheet of such acquired Person or
business and its consolidated Subsidiaries as at the end of the period
preceding the acquisition of such Person or business and the related
consolidated statements of income and stockholders' equity and of cash
flows for the period in respect of which Consolidated EBITDA is to be
calculated (x) have been previously provided to the Administrative Agent
and the Lenders and (y) either (1) have been reported on without a
qualification arising out of the scope of the audit by independent
certified public accountants of nationally recognized standing or (2) have
been found acceptable by the Administrative Agent and (ii) the Consolidated
EBITDA of any Person or business Disposed of by the Borrower or its
Subsidiaries during such period shall be excluded for such period (assuming
the consummation of such Disposition and the repayment of any Indebtedness
in connection therewith occurred on the first day of such period).
"Consolidated Fixed Charge Coverage Ratio": for any period, the ratio
of (a) Consolidated EBITDA of the Borrower and its Subsidiaries for such
period minus the aggregate amount actually paid by the Borrower and its
Subsidiaries in cash or Cash Equivalents during such period on account of
Capital Expenditures (except for such amounts paid from Excess Cash Flow
remaining after giving effect to any mandatory prepayment required by
Section 2.12(c)) to (b) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense of the Borrower and its
Subsidiaries for such period, (b) provision for cash income taxes made by
the Borrower or any of its Subsidiaries on a consolidated basis in respect
of such period and (c) scheduled payments made during such period on
account of principal of Indebtedness of the Borrower or any of its
Subsidiaries (including scheduled principal payments in respect of the Term
Loans, other
7
<PAGE> 14
than any such payments on the Tranche B Term Loans required to be made
under Section 2.3 from and after March 31, 2006 through and including June
30, 2007).
"Consolidated Funded Debt": at any date, the aggregate principal
amount of all Funded Debt of the Borrower and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA of the Borrower and its Subsidiaries for such
period to (b) Consolidated Interest Expense of the Borrower and its
Subsidiaries for such period.
"Consolidated Interest Expense": of any Person for any period, total
cash interest expense (including that attributable to Capital Lease
Obligations) of such Person and its Subsidiaries for such period with
respect to all outstanding Indebtedness of such Person and its Subsidiaries
(including, without limitation, all commissions, discounts and other fees
and charges owed by such Person with respect to letters of credit and
bankers' acceptance financing and net costs of such Person under Hedge
Agreements in respect of interest rates to the extent such net costs are
allocable to such period in accordance with GAAP including, in the case of
the Borrower, all capitalized fees and expenses incurred in connection with
the execution and delivery of this Agreement and the initial extension of
credit hereunder and the issuance of the Senior Subordinated Notes under
the Senior Subordinated Note Indenture on the Closing Date).
"Consolidated Leverage Ratio": as at the last day of any period of
four consecutive fiscal quarters, the ratio of (a) Consolidated Funded Debt
on such day to (b) Consolidated EBITDA of the Borrower and its Subsidiaries
for such period.
"Consolidated Net Income": of any Person for any period, the
consolidated net income (or loss) of such Person and its Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP;
provided, that in calculating Consolidated Net Income of the Borrower and
its consolidated Subsidiaries for any Period, there shall be excluded (a)
the income (or deficit) of any Person accrued prior to the date it becomes
a Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or any of its Subsidiaries, (b) the income (or deficit) of any
Person (other than a Subsidiary of the Borrower) in which the Borrower or
any of its Subsidiaries has an ownership interest, except to the extent
that any such income is actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary of the Borrower to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or Requirement of Law
applicable to such Subsidiary.
"Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Continuing Directors": as to any Person, the directors of such Person
on the Closing Date, after giving effect to the Acquisition and the other
transactions
8
<PAGE> 15
contemplated hereby, and each other director, if, in each case, such other
director's nomination for election to the board of directors of such Person
is recommended by at least 66-2/3% (or if there are fewer than six
directors on the board of directors, 60%) of the then Continuing Directors
or such other director receives the vote of each of the shareholders of
such Person on the Closing Date in his or her election by the shareholders
of such Person.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Control Agreement": each Control Agreement to be executed and
delivered by each Loan Party party thereto, substantially in the form of
Exhibit C, Exhibit D or Exhibit E, as the case may be, to the Guarantee and
Collateral Agreement, as the same may be amended, supplemented, replaced or
otherwise modified from time to time in accordance with this Agreement.
"Control Investment Affiliate": as to any Person, any other Person
that (a) directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person and (b) is organized by such Person
primarily for the purpose of making equity or debt investments in one or
more companies. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, to direct or cause the direction
of the management and policies of such Person whether by contract or
otherwise.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Derivatives Counterparty": as defined in Section 7.6.
"Disposition": with respect to any Property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer, license or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Disqualified Stock": any Capital Stock of any Loan Party that any
Loan Party is or, upon the passage of time or the occurrence of any event,
may become obligated to redeem, purchase, retire, defease or otherwise make
any payment in respect of in consideration other than Capital Stock (other
than Disqualified Stock).
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States of America.
"ECF Percentage": with respect to any fiscal year of the Borrower,
75%; provided, that, the ECF Percentage shall be 50% if the Consolidated
Leverage Ratio as of the last day of such fiscal year is less than 3.0 to
1.0.
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<PAGE> 16
"Environmental Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common law) of any
international authority, foreign government, the United States, or any
state, local, municipal or other governmental authority, regulating,
relating to or imposing liability or standards of conduct concerning
protection of the environment or of human health, or employee health and
safety, as has been, is now, or may at any time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses, approvals,
registrations, notifications, exemptions and any other authorization
required under any Environmental Law.
"Equity Documents": the Merger Agreement, the Management Subscription
Agreement, the Management Stock Agreement, the 1999 Preferred Stock Option,
each of the Preferred Stock Option Agreements, the Shareholders Agreement,
the Holdco Stock Registration Rights Agreement and the 1999 Common Stock
Option Plan.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period. In
the event that such rate does not appear on Page 3750 of the Telerate
screen (or otherwise on such screen), the "Eurodollar Base Rate" for
purposes of this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as
may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Reference Lender is
offered Dollar deposits at or about 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period in the London interbank
eurodollar market for delivery on the first day of such Interest Period for
the number of days comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
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<PAGE> 17
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/16th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Event of Default": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both,
has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess,
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income
of the Borrower and its Subsidiaries for such fiscal year, (ii) an amount
equal to the amount of all non-cash charges (including depreciation and
amortization) deducted in arriving at such Consolidated Net Income, (iii)
decreases in Consolidated Working Capital of the Borrower and its
Subsidiaries for such fiscal year, (iv) an amount equal to the aggregate
net non-cash loss on the Disposition of Property by the Borrower and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent deducted in arriving at such
Consolidated Net Income, (v) the net increase during such fiscal year (if
any) in deferred tax accounts of the Borrower and its Subsidiaries, (vi) an
amount equal to the Net Cash Proceeds received by the Borrower or any of
its Subsidiaries in such fiscal year from the sale of stock of Holdings to
employees of the Borrower or any of its Subsidiaries after the Closing Date
and (vii) in such fiscal year, the amount of Capital Expenditure Carry
Forward not expended by the Borrower or any of its Subsidiaries on Capital
Expenditures which was accrued in the immediately preceding fiscal year
over (b) the sum, without duplication, of (i) an amount equal to the amount
of all non-cash credits included in arriving at such Consolidated Net
Income, (ii) the aggregate amount actually paid by the Borrower and its
Subsidiaries in cash during such fiscal year on account of Capital
Expenditures plus any amount of Capital Expenditure Carry Forward accrued
during such fiscal year (excluding the principal amount of Indebtedness
incurred in connection with such expenditures and any such expenditures
financed with the proceeds of any Reinvestment Deferred Amount), (iii) the
aggregate amount of all regularly scheduled principal payments of Funded
Debt (including, without limitation, the Term Loans) of the Borrower and
its Subsidiaries and any optional prepayments of Loans (other than in
respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder such that after
giving effect to such commitment reduction the Borrower or the applicable
Subsidiary, as the case may be, would not be able to reborrow all or any of
the amount so prepaid), in each case, made during such fiscal year, (iv)
increases in Consolidated Working Capital of the Borrower and its
Subsidiaries for such fiscal year, (v) an amount equal to the aggregate net
non-cash gain on the Disposition of Property by the Borrower and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary
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course of business), to the extent included in arriving at such
Consolidated Net Income, (vi) the net decrease during such fiscal year (if
any) in deferred tax accounts of the Borrower and its Subsidiaries, (vii)
an amount equal to the sum of all cash Restricted Payments made during such
fiscal year pursuant to Sections 7.6(b), provided that in the case of
Restricted Payments made under Section 7.6(b)(iii), only such cash Payments
made after the Closing Date shall be included, (vii) in fiscal year 2000
only, cash expense incurred by the Borrower or any of its Subsidiaries in
connection with the Acquisition and actually paid by such Person in fiscal
year 2000 in an amount not to exceed $24,500,000 and (viii) the amount of
any gain recognized as a result of any Asset Sale or Recovery Event to the
extent included in arriving at such Consolidated Net Income.
"Excess Cash Flow Application Date": as defined in Section 2.12(c).
"Excluded Foreign Subsidiary": as of the date of determination, any
Foreign Subsidiary which is a foreign corporation (within the meaning of
Section 7701(a)(5) of the Code.
"Facility": each of (a) the Tranche A Term Loan Commitments and the
Tranche A Term Loans made thereunder (the "Tranche A Term Loan Facility"),
(b) the Tranche B Term Loan Commitments and the Tranche B Term Loans made
thereunder (the "Tranche B Term Loan Facility") and (c) the Revolving
Credit Commitments and the extensions of credit made thereunder (the
"Revolving Credit Facility").
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
"Fee Letter": the Credit Facilities Fee Letter, dated October 17,
1999, among the Sponsor, OSI, the Agents and the Arranger, as the same may
be amended, supplemented, replaced or otherwise modified from time to time
in accordance with this Agreement.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of such Person of
the types described in clauses (a) through (e) of the definition of
"Indebtedness" in this Section.
"Funding Office": the office of the Administrative Agent set forth in
Section 10.2 or otherwise specified from time to time by the Administrative
Agent as its funding office by notice to the Borrower and the Lenders.
"GAAP": generally accepted accounting principles in the United States
of America as in effect from time to time, except that for purposes of
Section 7.1, GAAP shall be determined on the basis of such principles in
effect on the date hereof and
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consistent with those used in the preparation of the most recent audited
financial statements delivered pursuant to Section 4.1(b).
"Governing Documents": collectively, as to any Person, the articles or
certificate of incorporation and bylaws, any shareholders agreement,
certificate of formation, limited liability company agreement, partnership
agreement or other formation or constituent documents of such Person.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by Holdings, the Borrower and each
Subsidiary Guarantor, substantially in the form of Exhibit A, as the same
may be amended, supplemented, replaced or otherwise modified from time to
time in accordance with this Agreement.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any Property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase Property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"Hedge Agreements": all swaps, caps or collar agreements or similar
arrangements entered into by the Borrower or any of its Subsidiaries
providing for
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protection against fluctuations in interest rates or currency exchange
rates or the exchange of nominal interest obligations, either generally or
under specific contingencies.
"Holdco Stock Registration Rights Agreement": the Registration Rights
Agreement dated November 30, 1999 among Holdings, the Sponsor and the
several other parties thereto, as in effect on the date hereof.
"Holdings": as defined in the preamble hereto.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services (other
than trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such Property), (e) all
Capital Lease Obligations or Synthetic Lease Obligations of such Person,
(f) all obligations of such Person, contingent or otherwise, as an account
party under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase, redeem,
retire or otherwise acquire for value any Capital Stock of such Person, (h)
all Guarantee Obligations of such Person in respect of obligations of the
kind referred to in clauses (a) through (g) above; (i) all obligations of
the kind referred to in clauses (a) through (h) above secured by (or for
which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on Property (including, without
limitation, accounts and contract rights) owned by such Person, whether or
not such Person has assumed or become liable for the payment of such
obligation and (j) for the purposes of Section 8(e) only, all obligations
of such Person in respect of Hedge Agreements. The amount of any
Indebtedness under clause (j) shall be the net amount, including any net
termination payments that would be required to be paid to a counterparty on
such date, if a termination of the applicable Hedge Agreement were to occur
on such date rather than the notional amount of the applicable Hedge
Agreement.
"Indemnified Liabilities": as defined in Section 10.5.
"Indemnitee": as defined in Section 10.5.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Insurance Requirements": all material terms of any insurance policy
required pursuant to this Agreement or any Security Document and all
material regulations and then current standards applicable to or affecting
any Mortgaged Property or any part thereof or any use or condition thereof,
which may, at any time, be recommended by the
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Board of Fire Underwriters, if any, having jurisdiction over any Mortgaged
Property, or any other body exercising similar functions.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, state, multinational or foreign laws or
otherwise, including, without limitation, copyrights, patents, trademarks,
service-marks, technology, know-how and processes, formulas, trade secrets,
or licenses (under which the applicable Person is licensor or licensee)
relating to any of the foregoing and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"Intellectual Property Collateral": all Intellectual Property of the
Loan Parties, now owned or hereafter acquired, upon which a Lien is
purported to be created by the Intellectual Property Security Agreement or
the Guarantee and Collateral Agreement.
"Intellectual Property Security Agreement": the Intellectual Property
Security Agreement to be executed and delivered by each Loan Party,
substantially in the form of Exhibit B to the Guarantee and Collateral
Agreement, as the same may be amended, supplemented, replaced or otherwise
modified from time to time in accordance with this Agreement.
"Interest Payment Date" (a) as to any Base Rate Loan, the last day of
each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day which is three months,
or a whole multiple thereof, after the first day of such Interest Period
and the last day of such Interest Period and (d) as to any Loan (other than
any Revolving Credit Loan that is a Base Rate Loan (unless all Revolving
Credit Loans are being repaid in full in immediately available funds and
the Revolving Credit Commitments terminated) and any Swing Line Loan), the
date of any repayment or prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six
months thereafter, as selected by the Borrower in its Notice of Borrowing
or notice of conversion, as the case may be, given with respect thereto;
and (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than three Business
Days prior to the last day of the then current Interest Period with respect
thereto; provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such
Interest Period into another
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calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or beyond the date final payment is due
on the Tranche A Term Loans or the Tranche B Term Loans, as the case may
be, shall end on the Revolving Credit Termination Date or such due date, as
applicable;
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Loan during an Interest Period for
such Loan.
"Investments": as defined in Section 7.8.
"Issuing Lender": Wachovia Bank, in its capacity as issuer of any
Letter of Credit.
"L/C Commitment": $15,000,000.
"L/C Fee Payment Date": the last day of each March, June, September
and December and the last day of the Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
that have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
"Lehman Entity": any of Lehman Commercial Paper Inc. or any of its
affiliates (including, without limitation, Syndicated Loan Funding Trust).
"Lender Addendum": with respect to any initial Lender, a Lender
Addendum, substantially in the form of Exhibit J, to be executed and
delivered by such Lender on the Closing Date as provided in Section 10.17.
"Lenders": as defined in the preamble hereto and includes the Issuing
Lender and the Swing Line Lender.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference,
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priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents, the Fee
Letter, the Commitment Letter, the Applications and the Notes.
"Loan Parties": the Borrower and each Subsidiary of the Borrower which
is a party to a Loan Document (including pursuant to Section 6.10).
"Majority Facility Lenders": with respect to any Facility, the holders
of more than 50% of the aggregate unpaid principal amount of the Term Loans
or the Total Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or, in the case of the Revolving Credit
Facility, prior to any termination of the Revolving Credit Commitments, the
holders of more than 50% of the Total Revolving Credit Commitments).
"Majority Revolving Credit Facility Lenders": the Majority Facility
Lenders in respect of the Revolving Credit Facility.
"Management Services Agreement": the management agreement dated
November 30, 1999 among the Borrower and Bruckmann, Rosser, Sherrill & Co.,
L.L.C., as the same may be amended, supplemented, replaced or modified from
time to time.
"Management Stock Agreement": the Management Stock Agreement dated
November 30, 1999 among Holdings, the Sponsor and each of the management
stockholders as in effect on the date hereof.
"Management Subscription Agreement": the Management Subscription
Agreement dated November 30, 1999 among Holdings, the Sponsor and each of
the management stockholders, as in effect on the date hereof.
"Material Adverse Effect": a material adverse effect on or affecting
(a) the consummation of the Acquisition, (b) the business, assets,
property, management, condition (financial or otherwise), value, results of
operations or prospects of the Loan Parties taken as a whole or Holdings
and its Subsidiaries taken as a whole, or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents, (d)
the validity, enforceability or priority of the Liens purported to be
created by the Security Documents, or (e) the rights or remedies of any
Agent or any Lender hereunder or under any of the other Loan Documents.
"Material Environmental Amount": an amount or amounts payable by the
Borrower and/or any of its Subsidiaries, in the aggregate in excess of
$100,000 (other than those arising in the ordinary course of business such
as wages and salaries of employees responsible for environmental matters,
permit fees, operations and
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maintenance costs associated with pollution control equipment and the costs
of administering environmental management programs), for: costs to comply
with any Environmental Law; costs of any government investigation, and any
remediation, of any Material of Environmental Concern; and compensatory
damages (including, without limitation damages to natural resources),
punitive damages, fines, and penalties pursuant to any Environmental Law.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos,
pollutants, contaminants, radioactivity, and any other substances or forces
of any kind, whether or not any such substance or force is defined as
hazardous or toxic under any Environmental Law, that is regulated pursuant
to or could give rise to liability under any Environmental Law.
"Mortgaged Properties": the real properties listed on Schedule 1.1, as
to which the Administrative Agent for the benefit of the Secured Parties
shall be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any Loan
Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Secured Parties, substantially in the form of Exhibit D
(with such changes thereto as shall be advisable under the law of the
jurisdiction in which such mortgage or deed of trust is to be recorded), as
the same may be amended, supplemented, replaced or otherwise modified from
time to time in accordance with this Agreement.
"Multiemployer Plan": a Plan that is a multiemployer plan as defined
in Section 3(37) or 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of reasonable
attorneys' fees, accountants' fees, investment banking fees, amounts
required to be applied to the repayment of Indebtedness secured by a Lien
expressly permitted hereunder on any asset which is the subject of such
Asset Sale or Recovery Event (other than any Lien pursuant to a Security
Document) and other reasonable fees and expenses, in each case, to the
extent actually incurred in connection therewith and net of (i) taxes paid
or reasonably estimated to be payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements) and (ii) solely in connection with any such Asset Sale, any
reserve established in accordance with GAAP or amounts deposited in escrow
for adjustment in respect of the sale price of such asset or assets or for
indemnities with respect to any Asset Sale, provided, that any such
reserved or escrowed amounts shall be Net Cash Proceeds to the extent and
at the time released or not required to be so used and (b) in connection
with any issuance or sale of equity securities or debt securities or
instruments or the incurrence of loans, the cash proceeds received from
such issuance or incurrence, net of reasonable attorneys' fees, investment
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banking fees, accountants' fees, underwriting discounts, fees and
commissions and other reasonable fees and expenses, in each case, to the
extent actually incurred in connection therewith.
"1999 Common Stock Option Plan": the 1999 Common Stock Option Plan of
Holdings, as in effect on the date hereof.
"1999 Preferred Stock Option Plan": the 1999 Preferred Stock Option
Plan of Holdings, as in effect on the date hereof.
"Non-Excluded Taxes": as defined in Section 2.20(a).
"Non-Recourse Indebtedness": Indebtedness as to which neither Holdings
nor any of its Subsidiaries: (1)(a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable as a guarantor or
otherwise, or (c) constitutes the lender; (2) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against a Subsidiary) would permit upon notice, lapse of
time or both any holder of any other Indebtedness (other than the
Indebtedness incurred hereunder) of Holdings or any of its Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof
to be accelerated or payable prior to its stated maturity; and (3) as to
which the lenders thereof have been notified in writing that they will not
have any recourse to the stock or assets of Holdings or any of its
Subsidiaries.
"Non U.S. Lender": as defined in Section 2.20(f).
"Notes": the collective reference to the Revolving Credit Notes, the
Term Notes and the Swing Line Notes, if any, evidencing Loans.
"Notice of Borrowing": a certificate duly executed by a Responsible
Officer substantially in the form of Exhibit M.
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any Loan Party, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other fees and obligations and liabilities of
the Loan Parties to the Arranger, to any Agent or to any Lender (or, in the
case of Specified Hedge Agreements, any affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, the Letters of
Credit, any Specified Hedge Agreement or any other document made, delivered
or given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees, charges and
disbursements of counsel to the Arranger, to any Agent or to any Lender
that are required to be paid by any Loan Party pursuant hereto or to any
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other Loan Document) or otherwise; provided, that (i) Obligations of the
Borrower or any other Loan Party under any Specified Hedge Agreement shall
be secured and guaranteed pursuant to the Security Documents only to the
extent that, and for so long as, the other Obligations are so secured and
guaranteed and (ii) any release of Collateral or Subsidiary Guarantors
effected in the manner permitted by this Agreement shall not require the
consent of holders of obligations under Specified Hedge Agreements.
"OSI": OSI Acquisition Inc., a Delaware corporation and a Wholly Owned
Subsidiary of the Sponsor.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or taxes, charges or levies arising from any
payment made hereunder or from the execution, delivery or enforcement of,
or otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 10.6(b).
"Payment Amount": as defined in Section 3.5.
"Payment Office": the office of the Administrative Agent specified in
Section 10.2 or as otherwise specified from time to time by the
Administrative Agent as its payment office by notice to the Borrower and
the Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"Permits": the collective reference to (i) Environmental Permits, and
(ii) any and all other franchises, licenses, leases, permits, approvals,
notifications, certifications, registrations, authorizations, exemptions,
qualifications, easements, rights of way, Liens and other rights,
privileges and approvals required under any Requirement of Law.
"Permitted Investors": the collective reference to the Sponsor and its
Control Investment Affiliates.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan that is
covered by ERISA and which the Borrower or any Commonly Controlled Entity
maintains, administers, contributes to or is required to contribute to or
within the previous five years has maintained, administered, or been
required to contribute to or under which the Borrower or any Commonly
Controlled Entity could incur any liability.
"Pledged Stock": as defined in the Guarantee and Collateral Agreement.
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"Preferred Stock Option Agreements": collectively, each of the
Preferred Stock Option Agreements dated November 30, 1999 between Holdings
and each of the management stockholders, in each case, as in effect on the
date hereof.
"Prepayment Option Notice": a notice executed by a Responsible Officer
substantially in the form of Exhibit H.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Private Placement Documents": The Borrower's 8.01% Senior Notes due
May 15, 2003 and all documentation relating thereto, as in effect on the
date hereof.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Purchase Agreement": the Purchase Agreement, dated November 30, 1999,
between the Borrower and Lehman Brothers, Inc.
"Qualified Offering": means an offering by Holdings or any of its
Subsidiaries of its Capital Stock to the public pursuant to an underwritten
public offering or other registered offering.
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding
relating to any asset of the Borrower or any of its Subsidiaries.
"Reference Lender": Deutsche Bank.
"Refunded Swing Line Loans": as defined in Section 2.7(b).
"Refunding Date": as defined in Section 2.7(c).
"Register": as defined in Section 10.6(d).
"Registration Rights Agreement": the Registration Rights Agreement,
dated November 30, 1999, among the Borrower, O'Sullivan
Industries-Virginia, Inc. and Lehman Brothers Inc.
"Regulation D": Regulation D of the Board as in effect from time to
time (and any successor to all or a portion thereof).
"Regulation H": Regulation H of the Board as in effect from time to
time (and any successor to all or a portion thereof).
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"Regulation T": Regulation T of the Board as in effect from time to
time (and any successor to all or a portion thereof).
"Regulation U": Regulation U of the Board as in effect from time to
time (and any successor to all or a portion thereof).
"Regulation X": Regulation X of the Board as in effect from time to
time (and any successor to all or a portion thereof).
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by the Borrower or any of
its Subsidiaries in connection therewith that are not applied to prepay the
Term Loans or reduce the Revolving Credit Commitments pursuant to Section
2.12(b) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Default or Event of Default has occurred and is
continuing and that the Borrower (directly or indirectly through a Wholly
Owned Subsidiary to the extent otherwise permitted hereunder) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an
Asset Sale or Recovery Event to acquire assets useful in its or such
Subsidiary's business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Borrower's or the applicable Subsidiary's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring nine months after such
Reinvestment Event and (b) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, acquire assets useful
in the Borrower's or the applicable Subsidiary's business with all or any
portion of the relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC
Reg. Section 4043.
"Required Lenders": at any time, the holders of more than 50% of (a)
until the Closing Date, the Commitments and (b) thereafter, the sum of (i)
the aggregate unpaid
22
<PAGE> 29
principal amount of the Term Loans then outstanding and (ii) the Total
Revolving Credit Commitments then in effect or, if the Revolving Credit
Commitments have been terminated, the Total Revolving Extensions of Credit
then outstanding.
"Required Prepayment Lenders": the Majority Facility Lenders in
respect of each Facility.
"Requirement of Law": as to any Person, the Governing Documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Responsible Officer": as to any Person, the chief executive officer,
president or chief or principal financial officer of such Person, but in
any event, with respect to financial matters, the chief or principal
financial officer of such Person. Unless otherwise qualified, all
references to a "Responsible Officer" shall refer to a Responsible Officer
of the Borrower.
"Restricted Payments": as defined in Section 7.6.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans and/or participate in
Swing Line Loans and Letters of Credit, in an aggregate principal and/or
face amount not to exceed the amount set forth under the heading "Revolving
Credit Commitment" opposite such Lender's name on Schedule 1 to the Lender
Addendum delivered by such Lender, or, as the case may be, in the
Assignment and Acceptance pursuant to which such Lender became a party
hereto, as the same may be changed from time to time pursuant to the terms
hereof.
"Revolving Credit Commitment Period": the period from and including
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Lender": each Lender that has a Revolving Credit
Commitment or that is the holder of Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Notes": as defined in Section 2.8(e).
"Revolving Credit Percentage": as to any Revolving Credit Lender at
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the Total Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal and/or face amount of such
Lender's Revolving Credit Extensions of Credit then outstanding constitutes
of the aggregate principal and/or face amount of the Total Revolving
Extensions of Credit then outstanding).
"Revolving Credit Termination Date": November 30, 2005.
23
<PAGE> 30
"Revolving Extensions of Credit": as to any Revolving Credit Lender at
any time, and amount equal to the sum of (a) the aggregate principal amount
of all Revolving Credit Loans by such Lender then outstanding, (b) such
Lender's Revolving Credit Percentage of the L/C Obligations then
outstanding and (c) such Lender's Revolving Credit Percentage of the
aggregate principal amount of Swing Line Loans then outstanding.
"SEC": the Securities and Exchange Commission (or successors thereto
or an analogous Governmental Authority).
"Secured Parties": collectively, the Arranger, the Agents, the Lenders
and, with respect to any Specified Hedge Agreement, any affiliate of any
Lender party thereto that has agreed to be bound by the provisions of
Section 7.2 of the Guarantee and Collateral Agreement as if it were a party
thereto and by the provisions of Section 9 hereof as if it were a Lender.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Intellectual Property Security Agreement, the
Control Agreements, the Mortgages and all other pledge and security
documents hereafter delivered to the Administrative Agent granting a Lien
on any Property of any Person to secure the obligations and liabilities of
any Loan Party under any Loan Document.
"Senior Debt": of any Person at any date, the aggregate principal
amount of all Funded Debt of such Person that is not expressly subordinated
to other Indebtedness of such Person.
"Senior Debt Coverage Ratio": of any Person for any period, the ratio
of (a) Senior Debt of such Person for such period, to (b) Consolidated
EBITDA of such Person for such period.
"Senior Holdings Note Documentation": the Senior Holdings Note
Purchase Agreement, the warrant agreements related thereto, together with
any other instruments and agreements entered into by Holdings and its
Subsidiaries in connection therewith, as the same may be amended,
supplemented, replaced or otherwise modified from time to time in
accordance with this Agreement.
"Senior Holdings Note Purchase Agreement": the Purchase Agreement
dated as of November 30, 1999, between Holdings and the Sponsor, as the
same may be amended, supplemented, replaced or otherwise modified from time
to time in accordance with this Agreement.
"Senior Holdings Notes": the senior Purchase Agreement notes of
Holdings due 2009 in the original principal amount of $15,000,000 plus
accreted value thereon, issued from time to time pursuant to the Senior
Holdings Note Purchase Agreement.
"Senior Subordinated Note Documentation": the Senior Subordinated Note
Indenture, the Purchase Agreement, the Registration Rights Agreement, the
Unit Agreement, together with any other instruments and agreements entered
into by the
24
<PAGE> 31
Borrower or its Subsidiaries in connection therewith, as the same may be
amended, supplemented, replaced or otherwise modified from time to time in
accordance with this Agreement.
"Senior Subordinated Note Indenture": the Indenture, dated as of
November 30, 1999, entered into by the Borrower, certain of its
Subsidiaries, as guarantors, and Norwest Bank Minnesota, National
Association, as trustee, in connection with the issuance of the Senior
Subordinated Notes, as the same may be amended, supplemented, replaced or
otherwise modified from time to time in accordance with this Agreement.
"Senior Subordinated Notes": the senior subordinated notes of the
Borrower due 2009 issued from time to time pursuant to the Senior
Subordinated Note Indenture in aggregate principal amount not to exceed
$100,000,000 on the Closing Date.
"Single Employer Plan": any Plan that is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvency Certificate": the Solvency Certificate to be executed and
delivered by the principal financial officer of Holdings and each Loan
Party, substantially in the form of Exhibit K, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
this Agreement.
"Solvent": when used with respect to any Person, as of any date of
determination, (a) the amount of the "present fair saleable value" of the
assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors, (b) the
present fair saleable value of the assets of such Person will, as of such
date, be greater than the amount that will be required to pay the liability
of such Person on its debts as such debts become absolute and matured, (c)
such Person will not have, as of such date, an unreasonably small amount of
capital with which to conduct its business, (d) such Person will be able to
pay its debts as they mature, and (e) such Person is not insolvent within
the meaning of any applicable Requirements of Law. For purposes of this
definition, (i) "debt" means liability on a "claim", and (ii) "claim" means
any (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right
to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Specified Change of Control": a "change of control" or similar event
(howsoever defined) as defined in the Senior Subordinated Note Indenture.
"Specified Hedge Agreement": any Hedge Agreement (a) entered into by
(i) the Borrower or any of its Subsidiaries and (ii) any Lender or any
affiliate thereof, as counterparty and (b) which has been designated by
such Lender and the Borrower, by
25
<PAGE> 32
notice to the Administrative Agent and the Syndication Agent not later than
90 days after the execution and delivery thereof by the Borrower or such
Subsidiary, as a Specified Hedge Agreement; provided that the designation
of any Hedge Agreement as a Specified Hedge Agreement shall not create in
favor of any Lender or affiliate thereof that is a party thereto any rights
in connection with the management or release of any Collateral or of the
obligations of any Subsidiary Guarantor under the Guarantee and Collateral
Agreement.
"Sponsor": Bruckmann, Rosser, Sherrill & Co., II, L.P., a Delaware
limited partnership.
"Sponsor Bid Letter": the letter, dated April 30, 1999, from
Bruckmann, Rosser, Sherrill & Co., L.L.C. to the Special Committee of the
Board of Directors of Holdings.
"Stockholders Agreement": the Stockholders Agreement dated November
30, 1999 among Holdings, the Sponsor and the several other parties thereto,
as in effect on the date hereof.
"Subordinated Intercompany Note": the Subordinated Intercompany Note
to be executed and delivered by the Borrower and each of its Subsidiaries,
substantially in the form of Exhibit L, as the same may be amended,
supplemented, replaced or otherwise modified from time to time in
accordance with this Agreement.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other than any
Excluded Foreign Subsidiary.
"Swing Line Commitment": the obligation of the Swing Line Lender to
make Swing Line Loans pursuant to Section 2.6 in an aggregate principal
amount at any one time outstanding not to exceed $5,000,000.
"Swing Line Lender": Wachovia Bank, in its capacity as the lender of
Swing Line Loans.
"Swing Line Loans": as defined in Section 2.6.
"Swing Line Notes": as defined in Section 2.8(e).
"Swing Line Participation Amount": as defined in Section 2.7(c).
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<PAGE> 33
"Syndication Agent": as defined in the preamble hereto.
"Synthetic Lease Obligations": all monetary obligations of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease
in respect of which such Person is the intended owner of the leased asset
for tax, bankruptcy or commercial law purposes (without regard to
accounting treatment), or (b) an agreement for the use or possession of
property creating obligations which do not appear on the balance sheet of
such Person but which, upon the insolvency or bankruptcy of such Person,
would be characterized as the Indebtedness of such Person (without regard
to accounting treatment).
"Taking": a taking or voluntary conveyance during the term of this
Agreement of all or part of any Mortgaged Property, or any interest therein
or right accruing thereto or use thereof, as the result of, or in
settlement of, any condemnation or other eminent domain proceeding by any
Governmental Authority affecting a Mortgaged Property or any portion
thereof whether or not the same shall have actually been commenced.
"Tandy Tax Sharing Agreement": the Amended and Restated Tax Benefit
Reimbursement Agreement, dated as of June 19, 1997, between Tandy
Corporation, TE Electronics Inc. and Holdings, as the same may be amended,
supplemented, replaced or otherwise modified from time to time in
accordance with this Agreement.
"Term Loan Facilities": the collective reference to the Tranche A Term
Loan Facility and the Tranche B Term Loan Facility.
"Term Loan Lenders": the collective reference to the Tranche A Term
Loan Lenders and the Tranche B Term Loan Lenders.
"Term Loans": the collective reference to the Tranche A Term Loans and
Tranche B Term Loans.
"Term Notes": as defined in Section 2.8(e).
"Title Insurance Company": as defined in Section 5.1(r).
"Total Revolving Credit Commitments": at any time, the aggregate
amount of the Revolving Credit Commitments then in effect; provided that
the amount of the Total Revolving Credit Commitments on the Closing Date
shall be $40,000,000.
"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders outstanding at such time.
"Tranche A Term Loan": as defined in Section 2.1.
"Tranche A Term Loan Commitment": as to any Tranche A Term Loan
Lender, the obligation of such Lender, if any, to make a Tranche A Term
Loan to the Borrower hereunder in a principal amount not to exceed the
amount set forth under the heading
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<PAGE> 34
"Tranche A Term Loan Commitment" opposite such Lender's name on Schedule 1
to the Lender Addendum delivered by such Lender, or, as the case may be, in
the Assignment and Acceptance pursuant to which such Lender became a party
hereto, as the same may be changed from time to time pursuant to the terms
hereof; provided that the original aggregate amount of the Tranche A Term
Loan Commitments is $35,000,000.
"Tranche A Term Loan Lender": each Lender that has a Tranche A Term
Loan Commitment or is the holder of a Tranche A Term Loan.
"Tranche A Term Loan Percentage": as to any Tranche A Term Loan Lender
at any time, the percentage which such Lender's Tranche A Term Loan
Commitment then constitutes of the aggregate Tranche A Term Loan
Commitments (or, at any time after the Closing Date, the percentage which
the aggregate principal amount of such Lender's Tranche A Term Loans then
outstanding constitutes of the aggregate principal amount of the Tranche A
Term Loans then outstanding).
"Tranche B Term Loan": as defined in Section 2.1.
"Tranche B Term Loan Commitment": as to any Tranche B Term Loan
Lender, the obligation of such Lender, if any, to make a Tranche B Term
Loan to the Borrower hereunder in a principal amount not to exceed the
amount set forth under the heading "Tranche B Term Loan Commitment"
opposite such Lender's name on Schedule 1 to the Lender Addendum delivered
by such Lender, or, as the case may be, in the Assignment and Acceptance
pursuant to which such Lender became a party hereto, as the same may be
changed from time to time pursuant to the terms hereof; provided that the
original aggregate amount of the Tranche B Term Loan Commitments is
$100,000,000.
"Tranche B Term Loan Lender": each Lender that has a Tranche B Term
Loan Commitment or which is the holder of a Tranche B Term Loan.
"Tranche B Term Loan Percentage": as to any Tranche B Term Loan Lender
at any time, the percentage which such Lender's Tranche B Term Loan
Commitment then constitutes of the aggregate Tranche B Term Loan
Commitments (or, at any time after the Closing Date, the percentage which
the aggregate principal amount of such Lender's Tranche B Term Loans then
outstanding constitutes of the aggregate principal amount of the Tranche B
Term Loans then outstanding); provided, that solely for purposes of
calculating the amount of each installment of Tranche B Term Loans (other
than the last installment) payable to a Term Loan Lender pursuant to
Section 2.3(b), such Term Loan Lender's Tranche B Term Loan Percentage
shall be calculated without giving effect to any portion of any prior
mandatory or optional prepayment attributable to such Term Loan Lender's
Tranche B Term Loans which shall have been declined by such Term Loan
Lender (or, in the case of any Term Loan Lender which shall have acquired
its Tranche B Term Loans by assignment from another Person, by such other
Person).
"Transferee": as defined in Section 10.14.
"Type": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
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<PAGE> 35
"Unit Agreement": the Unit Agreement dated November 30, 1999, by and
among Holdings, the Borrower, O'Sullivan Industries -- Virginia, Inc. and
Norwest Bank Minnesota, National Association.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is
a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the other Loan Documents or any
certificate or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
relating to Holdings, the Borrower and its Subsidiaries not defined in Section
1.1 and accounting terms partly defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
(e) The expressions "payment in full," "paid in full" and any other similar
terms or phrases when used herein with respect to the Obligations shall mean the
payment in full, in immediately available funds, of all of the Obligations.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions hereof, (a)
each Tranche A Term Loan Lender severally agrees to make a term loan (a "Tranche
A Term Loan") to the Borrower on the Closing Date in an amount not to exceed the
amount of the Tranche A Term Loan Commitment of such Lender and (b) each Tranche
B Term Loan Lender severally agrees to make a term loan (a "Tranche B Term
Loan") to the Borrower on the Closing Date in an amount not to exceed the amount
of the Tranche B Term Loan Commitment of such Lender. The Term Loans may from
time to time be Eurodollar Loans or Base Rate Loans, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.2 and 2.13.
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<PAGE> 36
2.2 Procedure for Term Loan Borrowing. A Responsible Officer shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, one Business Day
prior to the anticipated Closing Date) requesting that the Term Loan Lenders
make the Term Loans on the Closing Date and specifying the amount to be
borrowed. The Terms Loans made on the Closing Date shall initially be Base Rate
Loans, and no Term Loan may be converted into or continued as a Eurodollar Loan
having an Interest Period in excess of one month prior to the date which is 60
days after the Closing Date. Upon receipt of such notice the Administrative
Agent shall promptly notify each Term Loan Lender thereof. Not later than 12:00
Noon, New York City time, on the Closing Date each Term Loan Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the Term Loan or Term Loans to be made by
such Lender. The Administrative Agent shall make available to the Borrower the
aggregate of the amounts made available to the Administrative Agent by the Term
Loan Lenders in like funds.
2.3 Repayment of Term Loans.
(a) The Tranche A Term Loan of each Tranche A Lender shall mature in 23
consecutive quarterly installments, commencing on March 31, 2000, each of which
shall be in an amount equal to such Lender's Tranche A Term Loan Percentage
multiplied by the amount set forth below opposite such installment:
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
March 31, 2000 $500,000
June 30, 2000 $500,000
September 30, 2000 $500,000
December 31, 2000 $500,000
March 31, 2001 $750,000
June 30, 2001 $750,000
September 30, 2001 $750,000
December 31, 2001 $750,000
March 31, 2002 $750,000
June 30, 2002 $750,000
September 30, 2002 $750,000
December 31, 2002 $750,000
March 31, 2003 $1,250,000
June 30, 2003 $1,250,000
September 30, 2003 $1,250,000
December 31, 2003 $1,250,000
March 31, 2004 $2,500,000
June 30, 2004 $2,500,000
September 30, 2004 $2,500,000
December 31, 2004 $2,500,000
March 31, 2005 $4,000,000
June 30, 2005 $4,000,000
September 30, 2005 $4,000,000
</TABLE>
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<PAGE> 37
(b) The Tranche B Term Loan of each Tranche B Term Loan Lender shall mature
in 26 consecutive quarterly installments, commencing on March 31, 2001, each of
which shall be in an amount equal to such Lender's Tranche B Term Loan
Percentage multiplied by the amount set forth below opposite such installment:
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
March 31, 2001 $250,000
June 30, 2001 $250,000
September 30, 2001 $250,000
December 31, 2001 $250,000
March 31, 2002 $250,000
June 30, 2002 $250,000
September 30, 2002 $250,000
December 31, 2002 $250,000
March 31, 2003 $250,000
June 30, 2003 $250,000
September 30, 2003 $250,000
December 31, 2003 $250,000
March 31, 2004 $250,000
June 30, 2004 $250,000
September 30, 2004 $250,000
December 31, 2004 $250,000
March 31, 2005 $250,000
June 30, 2005 $250,000
September 30, 2005 $250,000
December 31, 2005 $250,000
March 31, 2006 $8,750,000
June 30, 2006 $8,750,000
September 30, 2006 $8,750,000
December 31, 2006 $8,750,000
March 31, 2007 $30,000,000
June 30, 2007 $30,000,000
</TABLE>
2.4 Revolving Credit Commitments.
(a) Subject to the terms and conditions hereof, each Revolving Credit
Lender severally agrees to make revolving credit loans ("Revolving Credit
Loans") to the Borrower from time to time during the Revolving Credit Commitment
Period in an aggregate principal amount at any one time outstanding which, when
added to such Lender's Revolving Credit Percentage of the sum of (i) the L/C
Obligations then outstanding and (ii) the aggregate principal amount of the
Swing Line Loans then outstanding, does not exceed the amount of such Lender's
Revolving Credit Commitment. During the Revolving Credit Commitment Period the
Borrower may use the Revolving Credit Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. The Revolving Credit Loans may from time
to time be Eurodollar Loans or Base Rate
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<PAGE> 38
Loans, as determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.5 and 2.13, provided that no Revolving Credit Loan
shall be made as a Eurodollar Loan after the day that is one month prior to the
Revolving Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit Loans on the
Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. The Borrower may borrow under
the Revolving Credit Commitments during the Revolving Credit Commitment Period
on any Business Day, provided that a Responsible Officer shall give the
Administrative Agent irrevocable notice in a Notice of Borrowing (which Notice
of Borrowing must be received by the Administrative Agent prior to 12:00 Noon,
New York City time, (a) three Business Days prior to the requested Borrowing
Date, in the case of Eurodollar Loans, or (b) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans), specifying (i) the
amount and Type of Revolving Credit Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the length of the
initial Interest Period therefor. Any Revolving Credit Loans made on the Closing
Date shall initially be Base Rate Loans, and no Revolving Credit Loan may be
made as, converted into or continued as a Eurodollar Loan having an Interest
Period in excess of one month prior to the date which is 60 days after the
Closing Date. Each borrowing under the Revolving Credit Commitments shall be in
an amount equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole
multiple thereof (or, if the then aggregate Available Revolving Credit
Commitments are less than $1,000,000 such lesser amount) and (y) in the case of
Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess
thereof; provided, that the Swing Line Lender may request, on behalf of the
Borrower, borrowings under the Revolving Credit Commitments which are Base Rate
Loans in other amounts pursuant to Section 2.7. Upon receipt of any such Notice
of Borrowing from the Borrower, the Administrative Agent shall promptly notify
each Revolving Credit Lender thereof. Each Revolving Credit Lender will make the
amount of its pro rata share of each borrowing available to the Administrative
Agent for the account of the Borrower at the Funding Office prior to 12:00 Noon,
New York City time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent in like funds as
received by the Administrative Agent.
2.6 Swing Line Commitment.
(a) Subject to the terms and conditions hereof, the Swing Line Lender
agrees to make a portion of the credit otherwise available to the Borrower under
the Revolving Credit Commitments from time to time during the Revolving Credit
Commitment Period by making swing line loans ("Swing Line Loans") to the
Borrower; provided that (i) the aggregate principal amount of Swing Line Loans
outstanding at any time shall not exceed the Swing Line Commitment then in
effect (notwithstanding that the Swing Line Loans outstanding at any time, when
aggregated with the Swing Line Lender's other outstanding Revolving Credit Loans
hereunder, may exceed the Swing Line Commitment then in effect) and (ii) the
Borrower shall not request, and the Swing Line Lender shall not make, any Swing
Line Loan if, after giving effect to the making of such Swing Line Loan, the
aggregate amount of the Available Revolving Credit Commitments would be less
than zero. During the Revolving Credit Commitment Period,
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<PAGE> 39
the Borrower may use the Swing Line Commitment by borrowing, repaying and
reborrowing, all in accordance with the terms and conditions hereof. Swing Line
Loans shall be Base Rate Loans only.
(b) The Borrower shall repay all outstanding Swing Line Loans on the
Revolving Credit Termination Date.
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans.
(a) Whenever the Borrower desires that the Swing Line Lender make Swing
Line Loans a Responsible Officer shall give the Swing Line Lender irrevocable
telephonic notice confirmed promptly in writing (which telephonic notice must be
received by the Swing Line Lender not later than 1:00 P.M., New York City time,
on the proposed Borrowing Date), specifying (i) the amount to be borrowed and
(ii) the requested Borrowing Date (which shall be a Business Day during the
Revolving Credit Commitment Period). Each borrowing under the Swing Line
Commitment shall be in an amount equal to $500,000 or a whole multiple of
$100,000 in excess thereof. Not later than 3:00 P.M., New York City time, on the
Borrowing Date specified in a notice in respect of Swing Line Loans, the Swing
Line Lender shall make available to the Administrative Agent at the Funding
Office an amount in immediately available funds equal to the amount of the Swing
Line Loan to be made by the Swing Line Lender. The Administrative Agent shall
make the proceeds of such Swing Line Loan available to the Borrower on such
Borrowing Date in immediately available funds.
(b) The Swing Line Lender, at any time and from time to time in its sole
and absolute discretion may, on behalf of the Borrower (which hereby irrevocably
directs the Swing Line Lender to act on its behalf), on one Business Day's
notice given by the Swing Line Lender no later than 12:00 Noon, New York City
time, request each Revolving Credit Lender to make, and each Revolving Credit
Lender hereby agrees to make, a Revolving Credit Loan, in an amount equal to
such Revolving Credit Lender's Revolving Credit Percentage of the aggregate
amount of the Swing Line Loans (the "Refunded Swing Line Loans") outstanding on
the date of such notice, to repay the Swing Line Lender. Each Revolving Credit
Lender shall make the amount of such Revolving Credit Loan available to the
Administrative Agent at the Funding Office in immediately available funds, not
later than 10:00 A.M., New York City time, one Business Day after the date of
such notice. The proceeds of such Revolving Credit Loans shall be immediately
made available by the Administrative Agent to the Swing Line Lender for
application by the Swing Line Lender to the repayment of the Refunded Swing Line
Loans. The Borrower irrevocably authorizes the Swing Line Lender to charge the
Borrower's accounts with the Administrative Agent (up to the amount available in
each such account) in order to immediately pay the amount of such Refunded Swing
Line Loans to the extent amounts received from the Revolving Credit Lenders are
not sufficient to repay in full such Refunded Swing Line Loans.
(c) If prior to the time a Revolving Credit Loan would have otherwise been
made pursuant to Section 2.7(b), one of the events described in Section 8(f)
shall have occurred and be continuing with respect to the Borrower or if for any
other reason, as determined by the Swing Line Lender in its sole discretion,
Revolving Credit Loans may not be made as contemplated by Section 2.7(b), each
Revolving Credit Lender shall, on the date such Revolving
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Credit Loan was to have been made pursuant to the notice referred to in Section
2.7(b) (the "Refunding Date"), purchase for cash an undivided participating
interest in the then outstanding Swing Line Loans by paying to the Swing Line
Lender an amount (the "Swing Line Participation Amount") equal to (i) such
Revolving Credit Lender's Revolving Credit Percentage times (ii) the sum of the
aggregate principal amount of Swing Line Loans then outstanding which were to
have been repaid with such Revolving Credit Loans.
(d) Whenever, at any time after the Swing Line Lender has received from any
Revolving Credit Lender such Lender's Swing Line Participation Amount, the Swing
Line Lender receives any payment on account of the Swing Line Loans, the Swing
Line Lender will distribute to such Revolving Credit Lender its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Revolving Credit Lender's
participating interest was outstanding and funded and, in the case of principal
and interest payments, to reflect such Revolving Credit Lender's pro rata
portion of such payment if such payment is not sufficient to pay the principal
of and interest on all Swing Line Loans then due); provided, however, that in
the event that such payment received by the Swing Line Lender is required to be
returned, such Revolving Credit Lender will return to the Swing Line Lender any
portion thereof previously distributed to it by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the Loans referred to
in Section 2.7(b) and to purchase participating interests pursuant to Section
2.7(c) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Revolving Credit Lender or the
Borrower may have against the Swing Line Lender, the Borrower or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Revolving Credit Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
2.8 Repayment of Loans; Evidence of Indebtedness.
(a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of the appropriate Revolving Credit Lender
or Term Loan Lender, as the case may be, (i) the then unpaid principal amount of
each Revolving Credit Loan of such Revolving Credit Lender on the Revolving
Credit Termination Date (or such earlier date on which the Loans become due and
payable pursuant to Section 8), (ii) the then unpaid principal amount of each
Swing Line Loan of such Swing Line Lender on the Revolving Credit Termination
Date (or such earlier date on which the Loans become due and payable pursuant to
Section 8) and (iii) the principal amount of each Term Loan of such Term Loan
Lender in installments according to the amortization schedule set forth in
Section 2.3 (or on such earlier date on which the Loans become due and payable
pursuant to Section 8). The Borrower hereby further agrees to pay interest on
the unpaid principal amount of the Loans from time to time outstanding from the
date hereof until payment in full thereof at the rates per annum, and on the
dates, set forth in Section 2.15.
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(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall maintain the
Register pursuant to Section 10.6(e), and a subaccount therein for each Lender,
in which shall be recorded (i) the amount of each Loan made hereunder and any
Note evidencing such Loan, the Type thereof and each Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) both
the amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement. As
between the Borrower, on the one hand, and the Lenders, on the other hand, the
Register shall, however, as provided in Section 10.6(d), be conclusive absent
manifest error as to the identity of the Person to whom the Borrower owes any
Obligations.
(e) The Borrower agrees that, upon the request to the Administrative Agent
by any Lender, the Borrower will execute and deliver to such Lender a promissory
note of the Borrower evidencing any Term Loans, Revolving Credit Loans or Swing
Line Loans, as the case may be, of such Lender, substantially in the forms of
Exhibit G-1, G-2 or G-3, respectively, with appropriate insertions as to date
and principal amount (such notes, respectively, "Term Notes", "Revolving Credit
Notes" and "Swing Line Notes").
2.9 Commitment Fees, etc.
(a) The Borrower agrees to pay to the Administrative Agent for the account
of each Revolving Credit Lender a commitment fee for the period from and
including the Closing Date to the last day of the Revolving Credit Commitment
Period, computed at the Commitment Fee Rate on the average daily amount of the
Available Revolving Credit Commitment of such Lender during the period for which
payment is made, payable quarterly in arrears on the last day of each March,
June, September and December and on the Revolving Credit Termination Date,
commencing on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Syndication Agent the fees in the
amounts and on the dates previously agreed to in writing by the Borrower and the
Syndication Agent including, without limitation, pursuant to the Fee Letter.
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(c) The Borrower agrees to pay to the Administrative Agent the fees in the
amounts and on the dates from time to time agreed to in writing by the Borrower
and the Administrative Agent including, without limitation, pursuant to the Fee
Letter.
2.10 Termination or Reduction of Revolving Credit Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments; provided
that no such termination or reduction of Revolving Credit Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans and Swing Line Loans made on the effective date thereof,
the Total Revolving Extensions of Credit would exceed the Total Revolving Credit
Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a
whole multiple thereof, and shall reduce permanently the Revolving Credit
Commitments then in effect.
2.11 Optional Prepayments. The Borrower may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent at least three Business
Days prior thereto in the case of Eurodollar Loans and at least one Business Day
prior thereto in the case of Base Rate Loans, which notice shall specify the
date and amount of prepayment and whether the prepayment is of Eurodollar Loans
or Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 2.21. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with (except in the
case of Revolving Credit Loans (unless all Revolving Credit Loans are being
repaid and the Revolving Credit Commitments terminated) that are Base Rate Loans
and Swing Line Loans) accrued interest to such date on the amount prepaid and
such amount shall be applied on such date to the prepayment of the Term Loans
and the reduction of the Revolving Credit Commitments as set forth in Section
2.12(d). Partial prepayments of Term Loans and Revolving Credit Loans shall be
in an aggregate principal amount of $1,000,000 or a whole multiple thereof.
Partial prepayments of Swing Line Loans shall be in an aggregate principal
amount of $100,000 or a whole multiple thereof.
2.12 Mandatory Prepayments and Commitment Reductions.
(a) Unless the Required Prepayment Lenders shall otherwise agree, subject
to Section 2.18(d), if any Capital Stock shall be issued by Holdings or any of
its Subsidiaries pursuant to a Qualified Offering or if any Funded Debt
(excluding any Funded Debt incurred in accordance with Section 7.2 as in effect
on the date of this Agreement) shall be incurred by the Borrower or its
Subsidiaries, an amount equal to (i) in the case of Capital Stock issued
pursuant to a Qualified Offering, 50% or (ii) in the case of Funded Debt, 100%
of the Net Cash Proceeds thereof shall be applied on the date of such issuance
or incurrence toward the prepayment of the Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.12(d).
(b) Unless the Required Prepayment Lenders shall otherwise agree, subject
to Section 2.18(d), if on any date the Borrower or any of its Subsidiaries shall
receive Net Cash
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Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be
applied on such date toward the prepayment of the Term Loans and the reduction
of the Revolving Credit Commitments as set forth in Section 2.12(d); provided,
that, notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of
Asset Sales that may be excluded from the foregoing requirement pursuant to a
Reinvestment Notice shall not exceed $2,000,000 in any fiscal year of the
Borrower, (ii) the aggregate Net Cash Proceeds of Recovery Events that may be
excluded from the foregoing requirement pursuant to a Reinvestment Notice shall
not exceed $10,000,000 in any fiscal year of the Borrower and (iii) on each
Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment
Amount with respect to the relevant Reinvestment Event shall be applied toward
the prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.12(d).
(c) Unless the Required Prepayment Lenders shall otherwise agree, subject
to Section 2.18(d), if, for any fiscal year of the Borrower commencing with the
fiscal year ending June 30, 2000, there shall be Excess Cash Flow, the Borrower
shall or shall cause or the applicable Subsidiary to, on the relevant Excess
Cash Flow Application Date, apply the ECF Percentage of such Excess Cash Flow
toward the prepayment of the Term Loans as set forth in Section 2.12(d). Each
such prepayment and commitment reduction shall be made on a date (an "Excess
Cash Flow Application Date") no later than ten days after the earlier of (i) the
date on which the financial statements of the Borrower referred to in Section
6.1(a), for the fiscal year with respect to which such prepayment is made, are
required to be delivered to the Lenders and (ii) the date such financial
statements are actually delivered.
(d) Subject to Section 2.18, amounts to be applied in connection with
prepayments and Commitment reductions made pursuant to this Section 2.12 shall
be applied, first, to the prepayment of the Term Loans, second, to reduce
permanently the Revolving Credit Commitments and, third, to the Borrower or such
other Person as shall be lawfully entitled thereto. Any such reduction of the
Revolving Credit Commitments shall be accompanied by prepayment of the Revolving
Credit Loans and/or Swing Line Loans to the extent, if any, that the Total
Revolving Extensions of Credit exceed the amount of the Total Revolving Credit
Commitments as so reduced, provided that if the aggregate principal amount of
Revolving Credit Loans and Swing Line Loans then outstanding is less than the
amount of the Total Revolving Credit Commitments as so reduced (because L/C
Obligations constitute a portion thereof), the Borrower shall, to the extent of
the balance of such excess, replace outstanding Letters of Credit and/or deposit
an amount in immediately available funds in a cash collateral account
established with the Administrative Agent for the benefit of the Secured Parties
on terms and conditions satisfactory to the Administrative Agent (and the
Borrower hereby grants to the Administrative Agent, for the ratable benefit of
the Administrative Agent and the Secured Parties, a continuing security interest
in all amounts at any time on deposit in such cash collateral account to secure
all L/C Obligations from time to time outstanding and all other Obligations). If
at any time the Administrative Agent determines that any funds held in such cash
collateral account are subject to any right or claim of any Person other than
the Administrative Agent and the Secured Parties or that the total amount of
such funds is less than the amount of such excess, the Borrower shall, forthwith
upon demand by the Administrative Agent, pay to the Administrative Agent, as
additional funds to be deposited and held in such cash collateral account, an
amount equal to the excess of (a) the amount of such excess over (b) the total
amount of funds, if any, then held in
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such cash collateral account that the Administrative Agent determines to be free
and clear of any such right and claim. The application of any prepayment
pursuant to Section 2.11 and this Section 2.12 shall be made, first, to Base
Rate Loans and, second, to Eurodollar Loans. Each prepayment of the Loans under
Section 2.11 and this Section 2.12 (except in the case of Revolving Credit Loans
(unless the Revolving Credit Loans are being repaid in full and the Revolving
Credit Commitments terminated) that are Base Rate Loans and Swing Line Loans)
shall be accompanied by accrued interest to the date of such prepayment to the
applicable Lender on the amount prepaid.
2.13 Conversion and Continuation Options.
(a) The Borrower may elect from time to time to convert Eurodollar Loans to
Base Rate Loans by giving the Administrative Agent at least two Business Days'
prior irrevocable notice of such election, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert Base Rate
Loans to Eurodollar Loans by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election (which notice shall
specify the length of the initial Interest Period therefor), provided that no
Base Rate Loan under a particular Facility may be converted into a Eurodollar
Loan (i) when any Event of Default has occurred and is continuing and the
Administrative Agent or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan under a particular Facility may be continued as such (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of such Facility, and provided, further, that if the Borrower
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of
$1,000,000 in excess thereof and (b) no more than ten Eurodollar Tranches shall
be outstanding at any one time.
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2.15 Interest Rates and Payment Dates.
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal to
the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
that is equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus
2.0% or (y) in the case of Reimbursement Obligations, the rate applicable to
Base Rate Loans under the Revolving Credit Facility plus 2.0%, and (ii) if all
or a portion of any interest payable on any Loan or Reimbursement Obligation or
any commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate then applicable
to Base Rate Loans under the relevant Facility plus 2.0% (or, in the case of any
such other amounts that do not relate to a particular Facility, the rate then
applicable to Base Rate Loans under the Revolving Credit Facility plus 2.0%), in
each case, with respect to clauses (i) and (ii) above, from the date of such
non-payment until such amount is paid in full (after as well as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.
2.16 Computation of Interest and Fees.
(a) Interest, fees and commissions payable pursuant hereto shall be
calculated on the basis of a 360-day year for the actual days elapsed, except
that, with respect to Base Rate Loans the rate of interest on which is
calculated on the basis of the Prime Rate, the interest thereon shall be
calculated on the basis of a 365-day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of the effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.15(a).
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2.17 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:
(a) the Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the Majority
Facility Lenders in respect of the relevant Facility that the Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such Interest
Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted, on the last day of the then current
Interest Period with respect thereto, to Base Rate Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans under
the relevant Facility shall be made or continued as such, nor shall the Borrower
have the right to convert Loans under the relevant Facility to Eurodollar Loans.
2.18 Pro Rata Treatment and Payments.
(a) Each borrowing by the Borrower from the Lenders hereunder, each payment
by the Borrower on account of any commitment fee and any reduction of the
Commitments of the Lenders shall be made pro rata according to the respective
Tranche A Term Loan Percentages, Tranche B Term Loan Percentages, or Revolving
Credit Percentages, as the case may be, of the relevant Lenders. Subject to
Section 2.18(c), each payment (other than prepayments) in respect of principal
or interest in respect of the Loans, and each payment in respect of fees or
expenses payable hereunder shall be applied to the amounts of such obligations
owing to the Lenders pro rata according to the respective amounts then due and
owing to the Lenders. The application of any prepayment pursuant to this Section
2.18 shall be made, first, to Base Rate Loans and, second, to Eurodollar Loans.
(b) Each mandatory prepayment required by Section 2.12 to be applied to
Term Loans shall be allocated among the Term Loan Facilities pro rata according
to the respective outstanding principal amounts of Term Loans under such
Facilities. Each optional prepayment in respect of the Term Loans shall be
allocated among the Term Loan Facilities pro rata according to the respective
outstanding principal amounts of Term Loans under such Facilities. Each payment
(including each prepayment) of the Term Loans outstanding under any Term Loan
Facility shall be allocated among the Term Loan Lenders holding such Term Loans
pro rata based on the principal amount of such Term Loans held by such Term Loan
Lenders, and shall be applied to the installments of such Term Loans pro rata
based on the remaining
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outstanding principal amount of such installments. Amounts prepaid on account of
the Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Revolving Credit Loans shall be made pro rata
according to the respective outstanding principal amounts of the Revolving
Credit Loans then held by the Revolving Credit Lenders. Each payment in respect
of Reimbursement Obligations in connection with any Letter of Credit shall be
made to the Issuing Lender.
(d) Notwithstanding anything to the contrary in Sections 2.11 or 2.12 or
this Section 2.18, so long as any Tranche A Term Loans are outstanding, each
Tranche B Term Loan Lender may, at its option, decline up to 100% of the portion
of any optional prepayment or mandatory payment applicable to the Tranche B Term
Loans of such Lender; accordingly, with respect to the amount of any optional
prepayment described in Section 2.11 or mandatory prepayment described in
Section 2.12 that is allocated to Tranche B Term Loans (such amounts, the
"Tranche B Prepayment Amount"), at any time when Tranche A Term Loans remain
outstanding, the Borrower will, (i) in the case of any optional prepayment which
the Borrower wishes to make, not later than 10 Business Days prior to the date
on which the Borrower wishes to make such optional prepayment, and (ii) in the
case of any mandatory prepayment required to be made pursuant to Section 2.12,
in lieu of applying such amount to the prepayment of Tranche B Term Loans as
provided in Sections 2.12(d) and 2.18(b), on the date specified in Section 2.12
for such prepayment, (x) deposit such amount in a cash collateral account opened
by the Administrative Agent pending application of such amount in accordance
with this Section 2.18(d), and (y) give the Administrative Agent telephonic
notice (promptly confirmed in writing) requesting that the Administrative Agent
prepare and provide to each Tranche B Term Loan Lender a Prepayment Option
Notice as described below. As promptly as practicable after receiving such
notice from the Borrower, the Administrative Agent will send to each Tranche B
Term Loan Lender a Prepayment Option Notice, which shall include an offer by the
Borrower to prepay on the date (each a "Prepayment Date") that is 10 Business
Days after the date of the Prepayment Option Notice, the relevant Term Loans of
such Lender by an amount equal to the portion of the Prepayment Amount indicated
in such Lender's Prepayment Option Notice as being applicable to such Lender's
Tranche B Term Loans. On the Prepayment Date, (i) the Administrative Agent shall
apply from the amount deposited in the cash collateral account pursuant to this
Section 2.18(d), the aggregate amount necessary to prepay that portion of the
outstanding relevant Term Loans in respect of which Tranche B Term Loan Lenders
have accepted prepayment as described above (such Lenders, the "Accepting
Lenders"), and such amount shall be applied to reduce the Tranche B Prepayment
Amounts with respect to each Accepting Lender and (ii) the Administrative Agent
shall apply from the amount deposited in the cash collateral account pursuant to
this Section 2.18(d) an amount equal to 100% of the portion of the Tranche B
Prepayment Amount not accepted by the Tranche B Term Loan Lenders, and such
amount shall be applied to the prepayment of the Tranche A Term Loans. The
Borrower hereby grants to the Administrative Agent, for the ratable benefit of
the Secured Parties, a continuing security interest in all amounts at any time
on deposit in such cash collateral account to secure all Obligations from time
to time outstanding.
(e) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without
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setoff or counterclaim and shall be made prior to 12:00 Noon, New York City
time, on the due date thereof to the Administrative Agent, for the account of
the Lenders, at the Payment Office, in Dollars and in immediately available
funds. The Administrative Agent shall distribute such payments to the Lenders
promptly upon receipt in like funds as received. If any payment hereunder (other
than payments on the Eurodollar Loans) becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day. If any payment on a Eurodollar Loan becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day unless the result of such extension would be to
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day. In the case of any
extension of any payment of principal pursuant to the preceding two sentences,
interest thereon shall be payable at the then applicable rate during such
extension.
(f) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the Administrative Agent submitted to any Lender with respect
to any amounts owing under this paragraph shall be conclusive in the absence of
manifest error. If such Lender's share of such borrowing is not made available
to the Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to Base Rate Loans
under the relevant Facility, on demand, from the Borrower.
(g) Subject to Section 2.18(d) unless the Administrative Agent shall have
been notified in writing by the Borrower prior to the date of any payment being
made hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days of
such required date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
2.19 Requirements of Law.
(a) If the adoption of or any change in any Requirement of Law (other than
a Requirement of Law relating to Taxes, which shall be dealt with under Section
2.20) or in the
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interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(ii) shall impose on such Lender any other condition; and the result
of any of the foregoing is to increase the cost to such Lender, by an
amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate
such Lender on an after-tax basis for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower (with a
copy to the Administrative Agent) of the event by reason of which it has
become so entitled.
(b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on such
Lender's or such corporation's capital as a consequence of its obligations
hereunder or under or in respect of any Letter of Credit to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after submission by such
Lender to the Borrower (with a copy to the Administrative Agent) of a written
request therefor, the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender on an after-tax basis for such
reduction.
(c) A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.20 Taxes.
(a) All payments made by the Borrower under this Agreement or any other
Loan Document shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or
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assessed by any Governmental Authority, excluding net income taxes and any other
taxes imposed on or measured by net income or capital, imposed on the Arranger,
any Agent or any Lender as a result of a present or former connection between
the Arranger, such Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Arranger's, such Agent's or such Lender's having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to the Arranger,
any Agent or any Lender hereunder, the amounts so payable to the Arranger, such
Agent or such Lender shall be increased to the extent necessary to yield to the
Arranger, such Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts that would have been received hereunder had
such withholding not been required; provided, however, that the Borrower or a
Subsidiary Guarantor shall not be required to increase any such amounts payable
to the Arranger, any Agent or any Lender with respect to any Non-Excluded Taxes
(i) that are attributable to the Arranger's, such Agent's or such Lender's
failure to comply with the requirements of paragraph (f) of this Section, or
(ii) that are United States withholding taxes imposed on amounts payable to the
Arranger, such Agent or such Lender at the time the Arranger, such Agent or such
Lender becomes a party to this Agreement, except to the extent that the
Arranger's, such Agent's or such Lender's assignor (if any) was entitled, at the
time of assignment, to receive additional amounts from the Borrower or a
Subsidiary Guarantor with respect to such Non-Excluded Taxes pursuant to this
Section 2.20(a). The Borrower or the applicable Subsidiary Guarantor shall make
any required withholding and pay the full amount withheld to the relevant tax
authority or other Governmental Authority in accordance with applicable
Requirements of Law.
(b) The Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable Requirements of Law.
(c) The Borrower shall indemnify the Arranger, each Agent and any Lender
for the full amount of Non-Excluded Taxes which were not grossed up under
Section 2.20(a) (other than as a result of the application of the proviso in the
second sentence thereof) or Other Taxes arising in connection with payments made
under this Agreement (including, without limitation, any Non-Excluded Taxes
which were not grossed up under Section 2.20(a) or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.20) paid by the Arranger,
such Agent or Lender or any of their respective Affiliates and any liability
(including penalties, additions to tax interest and expenses) arising therefrom
or with respect thereto. Payment under this indemnification shall be made within
ten days from the date the Arranger, any Agent or any Lender or any of their
respective Affiliates makes written demand therefor; provided, however, that the
Borrower shall not be obligated to make payment to the Arranger, any Agent or
any Lender (as the case may be) pursuant to this Section 2.20(c) in respect of
penalties, interest and other liabilities attributable to any Non-Excluded Taxes
or Other Taxes, if (i) written demand therefor has not been made by the
Arranger, such Agent or such Lender within 60 days from the date on which the
Arranger, such Agent or such Lender received written notice of the imposition of
Non-Excluded Taxes or Other Taxes by the relevant taxing or Governmental
Authority, but only to the extent such penalties, interest and other similar
liabilities are solely attributable to such failure or delay by the Arranger,
such Agent or such
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Lender in making such written demand and only if the Borrower is not (and is not
required by law to be) notified of such imposition, (ii) such penalties,
interest and other liabilities have accrued more than 10 days after the Borrower
has indemnified or paid in full an additional amount due as of the date of such
payment pursuant to this Section 2.20(c) as a result of the Arranger's, such
Agent's or the Lender's (as the case may be) failure to pay an amount due to the
appropriate taxing authorities or (iii) such penalties, interest and other
liabilities are attributable solely to the gross negligence or willful
misconduct of the Arranger, such Agent or such Lender or such Affiliates as
determined by a final and nonappealable decision of a court of competent
jurisdiction.
(d) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the Arranger or the relevant Agent or
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower or, if such receipt is not available, other evidence of
payment reasonably acceptable to the Administration Agent showing payment
thereof.
(e) The agreements in this Section 2.20 shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(f) Each Lender (or Transferee), except to the extent not legally able to
do so, will deliver to the Borrower or the Administrative Agent (or, in the case
of a Participant, to the Lender from which the related participation was
purchased), (i) if it is not a citizen or resident of the United States of
America, a corporation, partnership or other entity created or organized in or
under the laws of the United States of America (or any jurisdiction thereof), or
any estate or trust that is subject to federal income taxation regardless of the
source of its income (a "Non U.S. Lender") two copies of either U.S. Internal
Revenue Service Form 1001 or Form 4224 (or a Form W-8 with equivalent effect, as
permitted by the transitional rules of the Treasury Regulations issued under
Section 1441 of the Code in October 1997 and generally effective on January 1,
2001), or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest," a statement substantially in the form of
Exhibit I to the effect that such Lender is eligible for a complete exemption
from withholding of U.S. taxes under Section 871(h) or 881(c) of the Code and a
Form W-8, or any subsequent versions thereof or successors thereto properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or a reduced rate of, U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents, or (ii) if it is not
a Non-U.S. Lender and is not an individual or entity exempt from back up
withholding tax (including, without limitation, a corporation and a tax-exempt
entity) two properly completed and duly executed copies of U.S. Internal Revenue
Service Form W-9, certifying that it is exempt from backup withholding under
Section 3406 of the Code. Such forms shall be delivered by each applicable
Lender on or before the date it becomes a party to this Agreement (or, in the
case of any Participant, on or before the date such Participant purchases the
related participation). In addition, each applicable Lender or Participant shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Lender. Each Lender shall promptly notify the
Borrower (and each Participant shall notify the Lender from which it purchased
such participation) at any time it determines that it is no longer in a position
to provide any previously delivered certificate to the
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Borrower (or, in the case of a Participant, to the Lender from which it
purchased its participation) (or any other form of certification adopted by the
U.S. taxing authorities for such purpose).
(g) If and to the extent that any Lender is able, in its sole opinion, to
apply or otherwise take advantage of any offsetting tax credit or other similar
tax benefit arising out of or in conjunction with any deduction or withholding
which gives rise to an obligation on the Borrower to pay any Taxes or Other
Taxes pursuant to this Section 2.20 then such Lender shall, to the extent that
in its sole opinion it can do so without prejudice to the retention of the
amount of such credit or benefit and without any other adverse tax consequences
for such Lender, reimburse to the Borrower at such time as such tax credit or
benefit shall have actually been received by such Lender such amount as such
Lender shall, in its sole opinion, have determined to be attributable to the
relevant deduction or withholding and as will leave such Lender in no better or
worse position than it would have been in if the payment of such Taxes or Other
Taxes had not been required. Nothing in this Section 2.20 shall oblige any
Lender to disclose to the Borrower or any other Person any information regarding
its tax affairs or tax computations or interfere with the right of any Lender to
arrange its tax affairs in whatever manner it thinks fit and, in particular, no
Lender shall be under any obligation to claim relief from its corporate profits
or similar tax liability in credits or deductions available to it and, if it
does so claim, the extent, order and manner in which it does so shall be at its
absolute discretion.
(h) A Lender that is entitled to an exemption from or reduction of non-U.S.
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
2.21 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense that such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment or conversion of Eurodollar Loans on
a day that is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest that would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would have accrued to such Lender on such amount by placing such amount on
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deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section
submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and Letters of Credit and all other amounts payable
hereunder.
2.22 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.21.
2.23 Change of Lending Office. Each Lender agrees that, upon the occurrence
of any event giving rise to the operation of Section 2.19, 2.20(a) or 2.22 with
respect to such Lender, it will, if requested by the Borrower, use reasonable
efforts (subject to overall policy considerations of such Lender) to designate
another lending office for any Loans affected by such event with the object of
avoiding the consequences of such event; provided, that such designation is made
on terms that, in the sole judgment of such Lender, cause such Lender and its
lending office(s) to suffer no economic, legal or regulatory disadvantage, and
provided, further, that nothing in this Section shall affect or postpone any of
the obligations of any Borrower or the rights of any Lender pursuant to Section
2.19, 2.20(a) or 2.22.
2.24 Replacement of Lenders under Certain Circumstances. The Borrower shall
be permitted to replace any Lender that (a) requests reimbursement for amounts
owing pursuant to Section 2.19, 2.20(a) or 2.22 or (b) defaults in its
obligation to make Loans hereunder, with a replacement financial institution;
provided that (i) such replacement does not conflict with any Requirement of
Law, (ii) no Event of Default shall have occurred and be continuing at the time
of such replacement, (iii) prior to any such replacement, such Lender shall have
taken no action under Section 2.23 so as to eliminate the continued need for
payment of amounts owing pursuant to Section 2.19, 2.20(a) or 2.22, (iv) the
replacement financial institution shall purchase, at par, all Loans and other
amounts owing to such replaced Lender on or prior to the date of replacement,
(v) the Borrower shall be liable to such replaced Lender under Section 2.21 (as
though Section 2.21 were applicable) if any Eurodollar Loan owing to such
replaced Lender shall be purchased other than on the last day of the Interest
Period relating thereto, (vi) the replacement financial institution, if not
already a Lender, shall be reasonably satisfactory to the Administrative Agent,
(vii) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 10.6 (provided that the Borrower shall
be obligated to pay the registration and processing fee referred to therein),
(viii) until such time as such replacement shall be consummated, the Borrower
shall pay all additional amounts (if any) required pursuant to Section 2.19,
2.20(a) or 2.22, as the case may be, and (ix) any such
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replacement shall not be deemed to be a waiver of any rights that the Borrower,
the Administrative Agent or any other Lender shall have against the replaced
Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment.
(a) Subject to the terms and conditions hereof, the Issuing Lender, in
reliance on the agreements of the other Revolving Credit Lenders set forth in
Section 3.4(a), agrees to issue standby and trade letters of credit ("Letters of
Credit") for the account of the Borrower on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by the Issuing Lender; provided that the Issuing Lender shall have no
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the
aggregate amount of the Available Revolving Credit Commitments would be less
than zero. Each Letter of Credit shall (i) be denominated in Dollars and (ii)
expire no later than the earlier of (x) the first anniversary of its date of
issuance and (y) the date which is five Business Days prior to the Revolving
Credit Termination Date, provided that any Letter of Credit with a one-year term
may provide for the renewal thereof for additional one-year periods (which shall
in no event extend beyond the date referred to in clause (y) above).
(b) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may from time
to time request that the Issuing Lender issue a Letter of Credit by delivering
to the Issuing Lender at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may request. Upon receipt of any Application, the Issuing Lender will process
such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative Agent, which shall
in turn promptly furnish to the Lenders, notice of the issuance of each Letter
of Credit (including the amount thereof).
3.3 Fees and Other Charges.
(a) The Borrower will pay a fee on the aggregate drawable amount of each
outstanding Letter of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans under the Revolving Credit
Facility, shared ratably among the
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Revolving Credit Lenders and payable quarterly in arrears on each L/C Fee
Payment Date after the issuance date of such Letter of Credit. In addition, the
Borrower shall pay to the Issuing Lender for its own account a fronting fee on
the aggregate drawable amount of each outstanding Letter of Credit of 1/4 of 1%
per annum, payable quarterly in arrears on each L/C Fee Payment Date after the
issuance date of such Letter of Credit.
(b) In addition to the foregoing fees, the Borrower shall pay or reimburse
the Issuing Lender for such normal and customary costs and expenses as are
incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
3.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Revolving Credit
Percentage in the Issuing Lender's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for which the
Issuing Lender is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Issuing Lender,
regardless of the occurrence or continuance of a Default or an Event of Default
or the failure to satisfy any of the other conditions specified in Section 5,
upon demand, at the Issuing Lender's address for notices specified herein an
amount equal to such L/C Participant's Revolving Credit Percentage of the amount
of such draft, or any part thereof, that is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the Issuing
Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any
payment made by the Issuing Lender under any Letter of Credit is paid to the
Issuing Lender within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Lender on demand an amount equal
to the product of (i) such amount, times (ii) the daily average Federal Funds
Effective Rate during the period from and including the date such payment is
required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans under the Revolving Credit Facility. A certificate
of the Issuing Lender submitted to any L/C Participant with respect to any
amounts owing under this Section shall be conclusive in the absence of manifest
error.
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(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender for the amount of (a) such draft so paid
and (b) any taxes (other than taxes based on the net income of the Issuing
Lender), fees, charges or other costs or expenses incurred by the Issuing Lender
in connection with such payment (the amounts described in the foregoing clauses
(a) and (b) in respect of any drawing, collectively, the "Payment Amount"). Each
such payment shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States of America and in
immediately available funds. Interest shall be payable on each Payment Amount
from the date of the applicable drawing until payment in full at the rate set
forth in (i) until the second Business Day following the date of the applicable
drawing, Section 2.15(b) and (ii) thereafter, Section 2.15(c). Each drawing
under any Letter of Credit shall (unless an event of the type described in
clause (i) or (ii) of Section 8(f) shall have occurred and be continuing with
respect to the Borrower, in which case the procedures specified in Section 3.4
for funding by L/C Participants shall apply) constitute a request by the
Borrower to the Administrative Agent for a borrowing pursuant to Section 2.5 of
Base Rate Loans (or, at the option of the Administrative Agent and the Swing
Line Lender in their sole discretion, a borrowing pursuant to Section 2.7 of
Swing Line Loans) in the amount of such drawing. The Borrowing Date with respect
to such borrowing shall be the first date on which a borrowing of Revolving
Credit Loans (or, if applicable, Swing Line Loans) could be made, pursuant to
Section 2.5 (or, if applicable, Section 2.7), if the Administrative Agent had
received a notice of such borrowing at the time of such drawing under such
Letter of Credit.
3.6 Obligations Absolute. The Borrower's obligations under this Section 3
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment that the Borrower
may have or have had against the Issuing Lender, any beneficiary of a Letter of
Credit or any other Person. The Borrower also agrees with the Issuing Lender
that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Borrower agrees that
any action taken or omitted by the Issuing Lender under or in connection with
any
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Letter of Credit or the related drafts or documents, if done in accordance with
the standards or care specified in the Uniform Commercial Code of the State of
New York, shall be binding on the Borrower and shall not result in any liability
of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Arranger, the Agents and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower (and, as to Sections 4.3 through 4.6, 4.8 and 4.21 only,
Holdings) hereby represent and warrant to the Arranger, each Agent and each
Lender that:
4.1 Financial Condition.
(a) The unaudited pro forma consolidated balance sheet of Holdings and its
consolidated Subsidiaries as at June 30, 1999 (including the notes thereto) (the
"Pro Forma Balance Sheet"), copies of which have heretofore been furnished to
each Lender, has been prepared giving effect (as if such events had occurred on
such date) to (i) the consummation of the Acquisition, (ii) the Loans to be made
on the Closing Date, the Senior Subordinated Notes to be issued pursuant to the
Senior Subordinated Note Indenture, the note or notes to be issued pursuant to
the Senior Holdings Note Purchase Agreement and the use of proceeds of each
thereof and (iii) the payment of fees and expenses in connection with the
foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to the Borrower as of the date of delivery thereof and on
good faith estimates and assumptions reasonably believed by it to be reasonable
as of the date of delivery thereof, and presents fairly on a pro forma basis the
estimated financial position of Holdings and its consolidated Subsidiaries as at
June 30, 1999, assuming that the events specified in the preceding sentence had
actually occurred at such date.
(b) The audited consolidated balance sheets of Holdings and its
consolidated Subsidiaries as at June 30, 1997, June 30, 1998 and June 30, 1999
and the related consolidated statements of income and of cash flows for the
fiscal years ended on such dates, reported on by and accompanied by an
unqualified report from PriceWaterhouse Coopers LLP, present fairly the
consolidated financial condition of Holdings and its consolidated Subsidiaries
as at such date, and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal years then ended. All such
financial statements, including the related schedules and notes
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thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). Holdings and its Subsidiaries do not have
any material Guarantee Obligations, contingent liabilities and liabilities for
taxes for the covered periods, or any long-term leases or unusual forward or
long-term commitments, including, without limitation, any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from June 30, 1999 to and
including the date hereof there has been no Disposition by Holdings or its
Subsidiaries of any material part of its respective businesses or Properties.
4.2 No Change. Since June 30, 1999, there has been no development or event
that has had or could reasonably be expected to have a Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of Holdings, the
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing (to the extent such concept exists under applicable Requirements
of Law) under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification except where the failure to be so qualified could
not reasonably be expected to have a Material Adverse Effect (to the extent such
concept exists under applicable Requirements of Law) and (d) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Holdings and
each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents and Acquisition Documentation to
which it is a party and, in the case of the Borrower, to borrow hereunder.
Holdings and each Loan Party has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents and
Acquisition Documentation to which it is a party and, in the case of the
Borrower, to authorize the borrowings on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the Acquisition and the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement,
any of the Loan Documents or any Acquisition Documentation, except (i) consents,
authorizations, filings and notices described in Schedule 4.4, which consents,
authorizations, filings and notices have been obtained or made and are in full
force and effect, (ii) the filings referred to in Section 4.19 and (iii) other
consents, authorizations, filings and notices by or in respect of Persons other
than any Governmental Authority which could not reasonably be expected to have a
Material Adverse Effect. Each Loan Document and Acquisition Documentation to
which Holdings or any Loan Party is a party has been duly executed and delivered
on behalf of each such Person. This Agreement constitutes, and each other Loan
Document and Acquisition Documentation to which Holdings or any Loan Party is a
party upon execution will constitute, a legal, valid and binding obligation of
each such Person, enforceable against each such Person in accordance with its
terms, except as enforceability may
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be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of this
Agreement, the other Loan Documents, the Senior Subordinated Note Documentation,
the Senior Holdings Note Documentation and the Acquisition Documentation, the
issuance of Letters of Credit, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or any Contractual
Obligation of Holdings, the Borrower or any of its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security Documents).
No Requirement of Law or Contractual Obligation applicable to Holdings, the
Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
4.6 No Material Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against Holdings, OSI, the Borrower
or any of its Subsidiaries or against any of their respective properties or
revenues (a) with respect to any of the Loan Documents or the Acquisition
Documentation or any of the transactions contemplated hereby or thereby, or (b)
that could reasonably be expected to have a Material Adverse Effect.
4.7 No Default. Neither Holdings, the Borrower nor any of its Subsidiaries
is in default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default presently exists.
4.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries
has good and, subject to the purchase options described on Schedule 7.3(f)
hereof, indefeasible title in fee simple to, or a valid leasehold interest in,
all its real property, and good title to, or a valid leasehold interest in, all
its other Property, and none of such Property is subject to any Lien except as
permitted by Section 7.3. Holdings has good title to its Pledged Stock. None of
the Pledged Stock is subject to any Lien except for non-consensual Liens
permitted by Section 7.3 to the extent arising by operation of law.
4.9 Intellectual Property. The Borrower and each of its Subsidiaries owns,
or is licensed or otherwise has the right to use, all Intellectual Property
necessary for the conduct of its business as currently conducted, except for any
Intellectual Property the failure of which to own, license or otherwise have the
right to use could not reasonably be expected to have a Material Adverse Effect.
No material claim has been asserted in writing or is pending by any Person
challenging or questioning the use of any Intellectual Property or the validity
or effectiveness of any Intellectual Property, nor does the Borrower know of any
valid basis for any such claim. To the best knowledge of the Borrower, the use
of Intellectual Property by the Borrower and its Subsidiaries does not infringe
on the rights of any Person in any manner that could reasonably be expected to
have a Material Adverse Effect.
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4.10 Taxes. Each of Holdings, the Borrower and each of its Subsidiaries has
filed or caused to be filed all Federal, state and other material tax returns
that are required to be filed and has paid all taxes shown to be due and payable
on said returns or on any assessments made against it or any of its Property and
all other taxes, fees or other charges imposed on it or any of its Property by
any Governmental Authority (other than any (i) the amount or validity of which
are currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of Holdings, the Borrower or its Subsidiaries, as the case may be, or (ii)
in respect of which the applicable statute of limitations has expired and no
further claims for payment thereof, or for any interest or penalties thereon,
may be brought under applicable law); the contents of all such material tax
returns are correct and accurate in all material respects, no tax Lien has been
filed, and, to the knowledge of the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge except for Liens that would be
permitted under Section 7.3(a).
4.11 Federal Regulations. No part of the proceeds of the Loans or Letters
of Credit will be used for purchasing or carrying any "margin stock" (within the
meaning of Regulation U) or for the purpose of purchasing, carrying or trading
in any securities under such circumstances as to involve the Borrower in a
violation of Regulation X or to involve any broker or dealer in a violation of
Regulation T. No indebtedness being reduced or retired out of the proceeds of
the Loans or Letters of Credit was or will be incurred for the purpose of
purchasing or carrying any "margin stock" (within the meaning of Regulation U).
Following application of the proceeds of the Loans and Letters of Credit,
"margin stock" (within the meaning of Regulation U) does not constitute more
than 25% of the value of the assets of Holdings, the Borrower and its
Subsidiaries. None of the transactions contemplated by this Agreement
(including, without limitation, the direct and indirect use of proceeds of the
Loans and Letters of Credit) will violate or result in a violation of Regulation
T, Regulation U or Regulation X. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.
4.12 Labor Matters. There are no strikes, stoppages, slowdowns or other
labor disputes against the Borrower or any of its Subsidiaries pending or, to
the knowledge of the Borrower, threatened that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect. Hours
worked by and payment made to employees of the Borrower and its Subsidiaries
have not been in violation of the Fair Labor Standards Act or any other
applicable Requirement of Law dealing with such matters that (individually or in
the aggregate) could reasonably be expected to have a Material Adverse Effect.
All payments due from the Borrower or any of its Subsidiaries on account of
employee health and welfare insurance that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of the Borrower or the relevant
Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
complies and has complied in all material respects with all applicable
provisions of ERISA and the Code. No termination of a Single
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Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period. The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits by a material amount. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither the Borrower
nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. None of Holdings or any
Loan Party is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. None of Holdings or any Loan Party is subject to regulation under
any Requirement of Law (other than Regulation X) which limits or conditions its
ability to incur Indebtedness.
4.15 Subsidiaries.
(a) The Subsidiaries listed on Schedule 4.15 constitute all the
Subsidiaries of Holdings and of the Borrower as of the Closing Date after giving
effect to the Acquisition. Schedule 4.15 sets forth as of the Closing Date and
after giving effect to the Acquisition, the name and jurisdiction of
incorporation of each Subsidiary of Holdings and the Borrower and, as to each
such Subsidiary, the percentage and number of each class of Capital Stock owned
by Holdings, the Borrower and its Subsidiaries.
(b) There are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than stock options granted to
employees or directors and directors' qualifying shares) of any nature relating
to any Capital Stock of the Borrower or any Subsidiary. None of the Borrower or
any of its Subsidiaries has issued, or authorized the issuance of, any
Disqualified Stock.
4.16 Use of Proceeds. The proceeds of the Term Loans shall be used to
finance a portion of the Acquisition and to pay related fees and expenses. The
proceeds of the Revolving Credit Loans and the Swing Line Loans, and the Letters
of Credit, shall be used to finance the working capital needs and for general
corporate purposes of the Borrower and its Subsidiaries in the ordinary course
of business.
4.17 Environmental Matters. Except as disclosed on Schedule 4.17 and other
exceptions to any of the following that could not, individually or in the
aggregate, reasonably be expected to result in the payment of a Material
Environmental Amount:
(a) The Borrower and its Subsidiaries: (i) are, and within the period of
all applicable statutes of limitation have been, in compliance in all material
respects with all applicable Environmental Laws; and (ii) reasonably believe
that compliance with any
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Environmental Law that is or is expected to become applicable to any of them
will be timely attained and maintained, without material expense.
(b) Materials of Environmental Concern are not present at, on, under, in,
or about any real property now or formerly owned, leased or operated by the
Borrower or any of its Subsidiaries, or at any other location (including,
without limitation, any location to which Materials of Environmental Concern
have been sent for re-use or recycling or for treatment, storage, or disposal)
which could reasonably be expected to (i) give rise to liability of the Borrower
or any of its Subsidiaries under any applicable Environmental Law or otherwise
result in costs to the Borrower or any of its Subsidiaries, or (ii) interfere
with the Borrower's or any of its Subsidiaries' continued operations, or (iii)
impair the fair saleable value of any real property owned or leased by the
Borrower or any of its Subsidiaries.
(c) There is no judicial, administrative, or arbitral proceeding (including
any notice of violation or alleged violation) under or relating to any
Environmental Law to which the Borrower or any of its Subsidiaries is, or to the
knowledge of the Borrower will be, named as a party that is pending or, to the
knowledge of the Borrower, threatened.
(d) Neither the Borrower nor any of its Subsidiaries has received any
written request for information, or been notified that it is a potentially
responsible party under or relating to the federal Comprehensive Environmental
Response, Compensation, and Liability Act or any similar Environmental Law, or
with respect to any Materials of Environmental Concern.
(e) Neither the Borrower nor any of its Subsidiaries has entered into or
agreed to any consent decree, order, or settlement or other agreement, or is
subject to any judgment, decree, or order or other agreement, in any judicial,
administrative, arbitral, or other forum for dispute resolution, relating to
compliance with or liability under any Environmental Law.
(f) Neither the Borrower nor any of its Subsidiaries has assumed or
retained, by contract or operation of law, any liabilities of any kind, fixed or
contingent, known or unknown, under any Environmental Law or with respect to any
Material of Environmental Concern.
(g) To the best of the Borrower's knowledge, there are no written
environmental assessments conforming to the standards of the ASTM "Standard
Practice for Environmental Assessments: Phase I Environmental Site Assessment
Process" that have been prepared as to the Collateral other than those delivered
to the Administrative Agent pursuant to Section 5.1(l).
4.18 Accuracy of Information, etc. No statement or information contained in
this Agreement, any other Loan Document, the Confidential Information Memorandum
or any other document, certificate or statement furnished to the Arranger, the
Administrative Agent, the Syndication Agent or the Lenders or any of them, by or
on behalf of Holdings, OSI, the Sponsor, Bruckmann, Rosser, Sherrill & Co.,
L.C.C., the Borrower or any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished (or, in the case of the Confidential Information Memorandum, as
of the date of this Agreement),
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any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in the
materials referenced above are based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. As of the Closing
Date, the representations and warranties contained in the Acquisition
Documentation are true and correct in all material respects. There is no fact
known to Holdings, OSI, the Sponsor, Bruckmann, Rosser, Sherrill & Co., L.C.C.,
the Borrower or any of its Subsidiaries that could reasonably be expected to
have a Material Adverse Effect that has not been expressly disclosed herein, in
the other Loan Documents, in the Confidential Information Memorandum or in any
other documents, certificates and written statements furnished to the Arranger,
the Agents and the Lenders for use in connection with the transactions
contemplated hereby and by the other Loan Documents.
4.19 Security Documents.
(a) The Guarantee and Collateral Agreement is effective to create in favor
of the Administrative Agent, for the benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral described therein and
proceeds and products thereof. In the case of the Pledged Stock, when any stock
certificates representing such Pledged Stock are delivered to the Administrative
Agent, and in the case of the other Collateral described in the Guarantee and
Collateral Agreement, when financing statements in appropriate form are filed in
the offices specified on Schedule 4.19(a)-1 (which financing statements have
been duly completed and executed in accordance with applicable Requirements of
Law and delivered to the Administrative Agent for filing) and such other filings
as are specified on Schedule 3 to the Guarantee and Collateral Agreement are
made (all of which filings have been duly completed and executed in accordance
with applicable Requirements of Law and delivered to the Administrative Agent
for filing), the Guarantee and Collateral Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
Holdings and the Loan Parties in such Collateral and the proceeds and products
thereof, as security for the Obligations (as defined in the Guarantee and
Collateral Agreement), in each case prior and superior in right to any other
Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by Section 7.3 and, in the case of Collateral consisting of Pledged
Stock, non-consensual Liens permitted by Section 7.3 to the extent arising by
operation of law). Schedule 4.19(a)-2 lists each UCC Financing Statement that
(i) names any Holdings or Loan Party as debtor and (ii) will remain on file
after the Closing Date. Schedule 4.19(a)-3 lists each UCC Financing Statement
that (i) names Holdings or any Loan Party as debtor and (ii) will be terminated
on or prior to the Closing Date; and on or prior to the Closing Date, the
Borrower will have delivered to the Administrative Agent, or caused to be filed,
duly completed UCC termination statements, signed by the relevant secured party,
in respect of each such UCC Financing Statement.
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable Lien on the Mortgaged Properties described, and as defined, therein
and proceeds and products thereof, and when the Mortgages are filed in the
offices specified on Schedule 4.19(b), each such Mortgage
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shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in the Mortgaged Properties and the
proceeds and products thereof, as security for the Obligations (as defined in
the relevant Mortgage), in each case prior and superior in right to any other
Person except for Liens, rights and other interests permitted under Section 7.3.
(c) The Intellectual Property Security Agreement is effective to create in
favor of the Administrative Agent, for the benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Intellectual Property
Collateral described therein and proceeds and products thereof. Upon the filing
and recording of (i) the Intellectual Property Security Agreement in the
appropriate indexes of the United States Patent and Trademark Office relative to
patents and trademarks (within three (3) months after the Closing Date), and the
United States Copyright Office relative to copyrights (within thirty (30) days
after the Closing Date), together with provision for payment of all requisite
fees, and (ii) financing statements in appropriate form for filing in the
offices specified on Schedule 4.19(c) (which financing statements have been duly
completed and executed in accordance with applicable Requirements of Law and
delivered to the Administrative Agent for filing) the Intellectual Property
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in the
Intellectual Property Collateral and the proceeds and products thereof, as
security for the Obligations (as defined in the Guarantee and Collateral
Agreement), in each case prior and superior in right to any other Person (except
non-consensual Liens permitted by Section 7.3 to the extent arising by operation
of law).
4.20 Solvency. Holdings and each Loan Party is, and after giving effect to
the Acquisition and the incurrence of all Indebtedness and obligations being
incurred in connection with the Loan Documents and the Acquisition will be and
will continue to be, Solvent.
4.21 Senior Indebtedness. The Obligations (including, without limitation,
the guarantee obligations of each Subsidiary Guarantor under the Guarantee and
Collateral Agreement) constitute "Senior Debt," "Designated Senior Debt" and
"Permitted Debt" under and as defined in the Senior Subordinated Note Indenture.
4.22 Regulation H. No Mortgage encumbers improved real property which is
located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.
4.23 Year 2000 Matters. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Borrower's and each of
its Subsidiaries' computer systems which are material to the operation of the
business of the Borrower or any of its Subsidiaries and (ii) equipment
containing embedded microchips which are material to the operation of the
business of the Borrower or any of its Subsidiaries (including systems and
equipment supplied by others or with which the Borrower's or any of its
Subsidiaries' systems interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed by December 30, 1999. The cost
to the Borrower and its Subsidiaries of such reprogramming and testing and of
the reasonably foreseeable consequences of year 2000 to the Borrower and its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) could not reasonably be expected to
result in a Default
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or a Material Adverse Effect. Except for such of the reprogramming referred to
in the preceding sentence as may be necessary, the computer and management
information systems of the Borrower and its Subsidiaries which are material to
the operation of the business of the Borrower or any of its Subsidiaries are
and, with ordinary course upgrading and maintenance, will continue to be,
sufficient to permit the Borrower and its Subsidiaries to conduct its business
without Material Adverse Effect.
4.24 Insurance. Each of the Borrower and its Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which it
is engaged; and none of the Borrower or any of its Subsidiaries (i) has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other material expenditures will have to be made in order to
continue such insurance or (ii) has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers at a cost that could not
reasonably be expected to have a Material Adverse Effect.
4.25 Acquisition Documentation. The Acquisition Documentation listed on
Schedule 4.25 attached hereto constitute all of the material agreements,
instruments and undertakings to which Holdings, the Sponsor, Bruckmann, Rosser,
Sherrill & Co., L.C.C., OSI, the Borrower or any of its Subsidiaries is bound or
by which such Person or any of its property or assets is bound or affected
relating to, or arising out of, the Acquisition (including, without limitation,
any agreements, instruments or undertakings assumed pursuant to the Acquisition
Agreement). None of such material agreements, instruments or undertakings have
been amended, supplemented or otherwise modified, and all such material
agreements, instruments and undertakings are in full force and effect. None of
Holdings or any Loan Party which is party to any Acquisition Documentation is
currently in default thereunder and no party thereto, or any other Person, has
the right to terminate any Acquisition Documentation. The Borrower has disclosed
to the Lenders (i) all matters disclosed by Holdings to OSI, its agents,
advisers or affiliates as a result of any of their searches or inquires made as
of the date of the Acquisition Agreement, and (ii) all matters disclosed by
Holdings or any of its directors, officers, employees, agents, advisers or
affiliates to OSI, its agents, advisers or affiliates, each of which matters is
deemed by the terms of the Acquisition Documentation to qualify the otherwise
stated terms of such Acquisition Documentation (the disclosures pursuant to
clauses (i) and (ii), collectively, the "Disclosed Matters"). The Disclosed
Matters could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
4.26 Mortgaged Properties.
(a) Each Mortgaged Property is in compliance with all applicable
Requirements of Law (including building and zoning ordinances and codes) and
with all Insurance Requirements, except where noncompliance could not reasonably
be expected to have a Material Adverse Effect.
(b) No Taking has been commenced or, to the best of the Borrower's
knowledge, is contemplated with respect to all or any portion of the applicable
Mortgaged Property or for the relocation of roadways providing access to such
Mortgaged Property.
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(c) There are no pending or, to the best knowledge of the Borrower,
proposed special or other assessments for public improvements or otherwise
affecting any Mortgaged Property, nor are there any contemplated improvements to
such Mortgaged Property that may result in such special or other assessments.
(d) None of the Borrower or any of its Subsidiaries has suffered, permitted
or initiated the joint assessment of any Mortgaged Property with any other real
property constituting a separate tax lot. Each Mortgaged Property is comprised
of one or more parcels, each of which constitutes a separate tax lot and none of
which constitutes a portion of any other tax lot.
(e) Each of the Borrower and its Subsidiaries has obtained all permits,
licenses, variances and certificates required by Requirements of Law to be
obtained by such Person and necessary to the use and operation of each Mortgaged
Property except in each case where the failure to have obtained the same could
not reasonably be expected to have a Material Adverse Effect. The use being made
of each Mortgaged Property is in conformity with the certificate of occupancy
and/or such other permits, licenses, variances and certificates for such
Mortgaged Property and any other restrictions, covenants or conditions affecting
such Mortgaged Property except in each case where the failure to have obtained
the same could not reasonably be expected to have a Material Adverse Effect.
(f) Each Mortgaged Property is free from structural defects and all
building systems contained therein are in good working order and condition,
ordinary wear and tear excepted, and are suitable for the purposes for which
they are currently being used except in each case where the failure to meet such
standards could not reasonably be expected to have a Material Adverse Effect.
(g) Except as permitted by Section 7.3, no Person has any possessory
interest in any Mortgaged Property or right to occupy any Mortgaged Property
except the Borrower. There are no outstanding options to purchase or rights of
first refusal or restrictions on transferability affecting any Mortgaged
Property except as set forth on Schedule 7.3(f).
(h) Each Mortgaged Property has adequate rights of access to public ways
and is served by public utilities necessary to the continued use and enjoyment
of each Mortgaged Property as used and enjoyed on the Closing Date. Except for
public streets and sidewalks, none of the Borrower or any of its Subsidiaries
uses or occupies any real property other than such Mortgaged Property in
connection with the use and operation of any Mortgaged Property.
(i) No building or structure constituting a Mortgaged Property or any
appurtenance thereto or equipment thereon, or the operation or maintenance
thereof, violates any restrictive covenant or encroaches on any easement or on
any property owned by others, which violation or encroachment materially
interferes with the use or could materially adversely affect the value of such
building, structure or appurtenance or which encroachment is necessary for the
operation of the business at any Mortgaged Property. All buildings, structures,
appurtenances and equipment necessary for the use of each Mortgaged Property for
the purpose for which it is currently being used are located on the real
property encumbered by such Mortgage.
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(j) As of the Closing Date, each Mortgaged Property is located within an
area having a Zone Designation C by the Federal Emergency Management Agency and
does not lie within the 100 year Flood Plain, as shown on the current and
applicable Flood Insurance Rate Map for the community in which each such
Mortgaged Property is situated.
4.27 Permits.
(a) Other than exceptions to any of the following that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (or, in the case of Environmental Permits, result in the payment
of a Material Environmental Amount), both before and after consummation of the
Acquisition: (i) each of the Borrower and its Subsidiaries has obtained and
holds all Permits required for any property owned, leased or otherwise operated
by or on behalf of, or for the benefit of, such Person and for the operation of
each of its businesses as presently conducted and as proposed to be conducted,
(ii) all such Permits are in full force and effect, and each of the Borrower and
its Subsidiaries has performed and observed all requirements of such Permits,
(iii) no event has occurred which allows or results in, or after notice or lapse
of time would allow or result in, revocation or termination by the issuer
thereof or in any other impairment of the rights of the holder of any such
Permit, (iv) no such Permits contain any restrictions, either individually or in
the aggregate, that are materially burdensome to the Borrower or any of its
Subsidiaries, or to the operation of any of its businesses or any property
owned, leased or otherwise operated by such Person, (v) each of the Borrower and
its Subsidiaries reasonably believes that each of its Permits will be timely
renewed and complied with, without material expense, and that any additional
Permits that may be required of such Person will be timely obtained and complied
with, without material expense, and (vi) the Borrower has no knowledge or reason
to believe that any Governmental Authority is considering limiting, suspending,
revoking or renewing on materially burdensome terms any such Permit.
(b) Both before and after giving effect to the Acquisition, no consent or
authorization of, filing with, Permit from, or other act by or in respect of,
any Governmental Authority is required in connection with the execution,
delivery, performance, validity or enforceability of, or enforcement of remedies
(including, without limitation, foreclosure on the Collateral) pursuant to, this
Agreement and the other Loan Documents other than consents and approvals of, and
Permits (other than Environmental Permits) issued by, Governmental Authorities
required in connection with any foreclosure on the Collateral pursuant to the
Security Documents.
4.28 Lease Payments. Both before and after giving effect to the
Acquisition, each of the Borrower and its Subsidiaries has paid all payments
required to be made by it under leases of real property where any of the
Collateral is or may be located from time to time (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or such Subsidiary, as the case may be);
to the Borrower's knowledge, no landlord Lien has been filed, and, to the
knowledge of the Borrower, no claim is being asserted, with respect to any such
payments.
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SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each Lender
to make the initial extension of credit requested to be made by it is subject to
the satisfaction, prior to or concurrently with the making of such extension of
credit on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the Borrower,
(ii) the Guarantee and Collateral Agreement, executed and delivered by a duly
authorized officer of Holdings, the Borrower and each Subsidiary Guarantor,
(iii) the Intellectual Property Security Agreement, executed and delivered by a
duly authorized officer of the Borrower and each Subsidiary Guarantor, (iv) each
Acknowledgment and Consent, executed and delivered by a duly authorized officer
of the Issuer (as defined in the Guarantee and Collateral Agreement) party
thereto, (v) a Mortgage covering each of the Mortgaged Properties, executed and
delivered by a duly authorized officer of each Loan Party party thereto, (vi)
the Subordinated Intercompany Note, executed and delivered by a duly authorized
officer of the Borrower and each of its Subsidiaries, and (vii) if requested by
any Lender, for the account of such Lender, Notes conforming to the requirements
hereof and executed and delivered by a duly authorized officer of the Borrower.
(b) Acquisition, etc. The following transactions shall have been
consummated, in each case on terms and conditions reasonably satisfactory to the
Lenders:
(i) the Acquisition shall have been consummated for an aggregate
purchase price not exceeding $358,100,000 (including fees and expenses not
exceeding $24,500,000 in the aggregate) pursuant to, and in strict
compliance with, Acquisition Documentation satisfactory to the Lenders, and
no provision thereof shall have been waived, amended, supplemented or
otherwise modified;
(ii) Holdings shall (a) have received not less than $58,900,000 in
cash or contributed capital from the issuance of its Capital Stock (other
than Disqualified Stock) to the Sponsor, or its Affiliates, or by the
retention of its Capital Stock by members of the management of Holdings and
its Subsidiaries, (b) have received not less than $24,600,000 in gross cash
proceeds from the issuance of preferred Capital Stock of Holdings, in each
case, on terms reasonably satisfactory to the Lenders, and (c) have
received not less than $15,000,000 in gross cash proceeds from the issuance
of the Senior Holdings Notes pursuant to, and in compliance with, the
Senior Holdings Note Purchase Agreement, and all such proceeds shall have
been contributed as a capital contribution in cash to the Borrower (it
being understood that the terms and conditions on Exhibit A to the Sponsor
Bid Letter are satisfactory);
(iii) the capital structure of Holdings and each Loan Party
immediately after the Acquisition shall be as described in Schedule 4.15;
and
(iv) each of the conditions precedent to the issuance of the Senior
Subordinated Notes pursuant to the Senior Subordinated Note Documentation
shall have
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been satisfied in strict compliance with the terms thereof, and no
provision thereof shall have been waived, amended, supplemented or
otherwise modified in a manner that could be materially adverse to any
Agent or any Lender, and the Borrower shall have received at least
$98,000,000 in gross cash proceeds from the issuance of the Senior
Subordinated Notes.
(c) Pro Forma Balance Sheet; Financial Statements. The Lenders shall have
received (a) the Pro Forma Balance Sheet, (b) audited consolidated financial
statements of Holdings and its consolidated Subsidiaries for the 1997, 1998 and
1999 fiscal years and (c) unaudited interim consolidated financial statements of
Holdings and its consolidated Subsidiaries for each fiscal month and quarterly
period ended subsequent to the date of the latest applicable financial
statements delivered pursuant to clause (b) of this paragraph as to which such
financial statements are available, and such financial statements shall not, in
the reasonable judgment of the Lenders, reflect any material adverse change in
the consolidated financial condition of Holdings and its Subsidiaries, as
reflected in the financial statements or projections contained in the
Confidential Information Memorandum.
(d) Approvals. All governmental and third party approvals (including
landlords' and other consents) necessary or, in the reasonable discretion of the
Administrative Agent, advisable in connection with the Acquisition, the
continuing operations of the Borrower and its Subsidiaries and the transactions
contemplated hereby or by the Acquisition Documentation shall have been obtained
and be in full force and effect, and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on the
Acquisition or the financing contemplated hereby or by the Senior Subordinated
Note Documentation or the Senior Holdings Note Documentation.
(e) Related Agreements. The Administrative Agent shall have received (in a
form and substance reasonably satisfactory to the Administrative Agent), with a
copy for each Lender, true and correct copies, certified as to authenticity by
the Borrower, of such documents or instruments as may be reasonably requested by
the Syndication Agent and the Administrative Agent, including, without
limitation, a copy of the Senior Subordinated Note Documentation, the Senior
Holdings Note Documentation and any other debt instrument, security agreement or
other material contract to which Holdings or any Loan Party may be a party.
(f) Termination of Private Placement Documents. The Administrative Agent
shall have received evidence satisfactory to the Administrative Agent and the
Syndication Agent that the Private Placement Documents shall be terminated and
all amounts thereunder shall be paid in full, in each case, concurrently with
the initial extension of credit hereunder.
(g) Fees and Other Obligations. The Lenders, the Arranger, the Syndication
Agent and the Administrative Agent shall have received all fees and expenses
required to be paid (including, without limitation, the reasonable fees,
disbursements and other charges of counsel to the Agents), on or before the
Closing Date, and the Sponsor, OSI and Holdings shall have complied with all of
their obligations under the Commitment Letter and the Fee Letter. All such
amounts will be paid with proceeds of Loans made on the Closing Date and will be
reflected in
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the funding instructions given by the Borrower to the Administrative Agent on or
before the Closing Date.
(h) Business Plan. The Administrative Agent on behalf of each Lender shall
have received a business plan of the Borrower and its Subsidiaries satisfactory
to each Lender for calendar years 1999 through and including 2007.
(i) Solvency. The Lenders shall have received a Solvency Certificate
executed by the principal financial officer of Holdings, the Borrower and each
Subsidiary Guarantor, as the case may be, which shall document the solvency of
Holdings, the Borrower and each Subsidiary Guarantor after giving effect to the
Acquisition and the transactions contemplated hereby.
(j) Budget. The Lenders shall have received a budget for the Borrower and
its Subsidiaries for the 2000 fiscal year.
(k) Lien Searches. The Administrative Agent shall have received the results
of a recent lien, tax lien, judgment and litigation search in each of the
jurisdictions or offices (including, without limitation, in the United States
Patent and Trademark Office and the United States Copyright Office) in which
Uniform Commercial Code financing statements or other filings or recordations
should be made to evidence or perfect (with the priority required under the Loan
Documents) security interests in all Property of the Loan Parties and in the
Capital Stock of the Borrower, and such search shall reveal no Liens on any of
the assets of the Borrower or its Subsidiaries or on any Collateral except for
(i) in the case of assets or Collateral other than Pledged Stock, Liens
permitted by Section 7.3, (ii) in the case of assets or Collateral consisting of
Pledged Stock, non-consensual Liens permitted by Section 7.3 to the extent
arising by operation of law, or (iii) Liens set forth on Schedule 4.19(a)-3.
(l) Environmental Matters. The Administrative Agent shall have received,
with a copy for each Lender, any written environmental assessments conforming to
the standards of the ASTM "Standard Practice for Environmental Assessments:
Phase I Environmental Site Assessment Process" that have been prepared as to any
of the Collateral and that are in the Borrower's possession.
(m) Closing Certificate. The Administrative Agent shall have received a
certificate of Holdings and each Loan Party, dated as of the Closing Date,
substantially in the form of Exhibit C, with appropriate insertions and
attachments.
(n) Other Certifications. The Administrative Agent shall have received the
following:
(i) a copy of the charter of Holdings and each of its Subsidiaries and
each amendment thereto, certified (as of a date reasonably near the date of
the initial extension of credit) as being a true and correct copy thereof
by the Secretary of State or other applicable Governmental Authority of the
jurisdiction in which each such Person is organized;
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(ii) a copy of a certificate of the Secretary of State or other
applicable Governmental Authority of the jurisdiction in which each such
Person is organized, dated reasonably near the date of the initial
extension of credit, listing the charter of Holdings and each of its
Subsidiaries and each amendment thereto on file in such office and
certifying that (a) such amendments are the only amendments to such
Person's charter on file in such office, (b) such Person has paid all
franchise taxes to the date of such certificate and (c) such Person is duly
organized and in good standing (to the extent such concept exists) under
the laws of such jurisdiction; and
(iii) a copy of a certificate of the Secretary of State or other
applicable Governmental Authority of each jurisdiction in which Holdings
and each of its Subsidiaries is required to be qualified as a foreign
corporation or entity, dated reasonably near the date of the initial
extension of credit, stating that Holdings and each of its Subsidiaries is
duly qualified and in good standing as a foreign corporation or entity in
each such jurisdiction and has filed all annual reports required to be
filed to the date of such certificate; and telephonic confirmation from the
Secretary of State or other applicable Governmental Authority of each such
jurisdiction on the date of the initial extension of credit as to the due
qualification and continued good standing of each such Person as a foreign
corporation or entity in each such jurisdiction on or about such date,
together with a written confirmatory report in respect thereof prepared by,
or on behalf of, a filing service acceptable to the Administrative Agent.
(o) Opinions. The Administrative Agent shall have received the following
executed legal and other opinions:
(i) the legal opinion of Kirkland & Ellis, special counsel to Holdings
and its Subsidiaries, substantially in the form of Exhibit F-1;
(ii) each opinion (including, without limitation, each legal opinion,
solvency opinion and fairness opinion), if any, delivered in connection
with the Acquisition Agreement, which opinions shall provide for the
reliance thereon by the Agents and the Lenders; and
(iii) the legal opinion of local counsel in each of Missouri, Virginia
and Utah of such other special and local counsel as may be reasonably
requested by the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(p) Pledged Stock, Stock Power; Pledged Notes. The Administrative Agent
shall have received (i) the certificates representing the shares of Capital
Stock pledged pursuant to the Guarantee and Collateral Agreement, together with
an undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof and (ii) each promissory note
(including the Subordinated Intercompany Note) pledged to the Administrative
Agent pursuant to the Guarantee and Collateral Agreement endorsed (without
recourse) in blank
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(or accompanied by an executed transfer form in blank satisfactory to the
Administrative Agent) by the pledgor thereof.
(q) Filings, Registrations and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statement) required by
the Security Documents or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent, for the benefit of the Secured Parties, a
perfected Lien on the Collateral described therein, prior and superior in right
to any other Person (other than, with respect to Collateral other than Pledged
Stock, Liens expressly permitted by Section 7.3 and, with respect to Collateral
consisting of Pledged Stock, non-consensual Liens expressly permitted by Section
7.3 to the extent arising by operation of law expressly permitted by Section
7.3), shall have been delivered to the Administrative Agent in proper form for
filing, registration or recordation, as applicable.
(r) Title Insurance; Flood Insurance.
(i) If requested by the Administrative Agent, the Administrative Agent
shall have received, and the title insurance company issuing the policy
referred to in clause (ii) below (the "Title Insurance Company") shall have
received, maps or plats of an as-built survey of the sites of the Mortgaged
Properties certified to the Administrative Agent and the Title Insurance
Company in a manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative
Agent and the Title Insurance Company, which maps or plats and the surveys
on which they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1992 or 1998 and meeting the accuracy requirements
of an "Urban" survey as defined therein, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such
maps, plats or surveys the following: (A) the locations on such sites of
all the buildings, structures and other improvements and the established
building setback lines; (B) the lines of streets abutting the sites and
width thereof; (C) all access and other easements appurtenant to the sites;
(D) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (E) any encroachments on any adjoining
property by the building structures and improvements on the sites; (F) if
the site is described as being on a filed map, a legend relating the survey
to said map; and (G) the flood zone designations, if any, in which the
Mortgaged Properties are located.
(ii) The Administrative Agent shall have received in respect of each
Mortgaged Property a mortgagee's title insurance policy (or policies) or
marked up unconditional binder for such insurance. Each such policy shall
(A) be in an amount satisfactory to the Administrative Agent; (B) be issued
at ordinary rates; (C) insure that the Mortgage insured thereby creates a
valid first Lien on such Mortgaged Property free and clear of all defects
and encumbrances, except as disclosed therein; (D) name the Administrative
Agent for the benefit of the Secured Parties as the insured thereunder; (E)
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if available in the jurisdiction where the Mortgaged Property is located,
be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84)
(or equivalent policies); (F) contain such endorsements and affirmative
coverage as the Administrative Agent may reasonably request in form and
substance acceptable to the Administrative Agent, including, without
limitation (to the extent applicable with respect to such Mortgaged
Property and available in the jurisdiction in which such Mortgaged Property
is located), the following: variable rate endorsement; survey endorsement;
comprehensive endorsement; zoning (ALTA 3.1 with parking added)
endorsement; first loss, last dollar and tie-in endorsement; access
coverage; separate tax parcel coverage; contiguity coverage; and such other
endorsements as the Administrative Agent shall reasonably require in order
to provide insurance against specific risks identified by the
Administrative Agent in connection with such Mortgaged Property, and (G) be
issued by title companies satisfactory to the Administrative Agent
(including any such title companies acting as co-insurers or reinsurers, at
the option of the Administrative Agent). The Administrative Agent shall
have received evidence satisfactory to it that all premiums in respect of
each such policy, all charges for mortgage recording tax, and all related
expenses, if any, have been paid.
(iii) If reasonably requested by the Administrative Agent, the
Administrative Agent shall have received with respect to any property
encumbered by a Mortgage which is located in a flood hazard zone (A) a
policy of flood insurance that (1) covers any parcel of improved real
property that is encumbered by any Mortgage (2) is written in an amount not
less than the outstanding principal amount of the indebtedness secured by
such Mortgage that is reasonably allocable to such real property or the
maximum limit of coverage made available with respect to the particular
type of property under the National Flood Insurance Act of 1968, whichever
is less, and (3) has a term ending not later than the maturity of the
Indebtedness secured by such Mortgage and (B) confirmation that the
Borrower has received the notice required pursuant to Section 208(e)(3) of
Regulation H.
(iv) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in clause (ii) above and a copy of all
other material documents affecting the Mortgaged Properties.
(s) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements of Section 4.24 and of Section 5.3 of
the Guarantee and Collateral Agreement.
(t) Miscellaneous. The Administrative Agent shall have received such other
documents, agreements, certificates and information as it shall reasonably
request.
5.2 Conditions to Each Extension of Credit. The agreement of each Lender to
make any extension of credit requested to be made by it on any date (including,
without limitation, its initial extension of credit) is subject to the
satisfaction of the following conditions precedent:
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(a) Representations and Warranties. Each of the representations and
warranties made by Holdings or any Loan Party in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as of such
date as if made on and as of such date, except (i) in the case of the initial
extension of credit hereunder, in which case such representations and warranties
shall be true and correct on and as of such date as if made on and as of such
date, and (ii) for representations and warranties expressly stated to relate to
a specific earlier date, in which case such representations and warranties shall
have been true and correct as of such earlier date.
(b) No Default. No Default or Event of Default shall exist on such date or
after giving effect to the extensions of credit requested to be made on such
date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower (and, as to clause (ii) below only, Holdings) hereby agrees
that, so long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other Obligation (excluding Obligations in respect of
any Specified Hedge Agreement and unmatured contingent reimbursement and
indemnification Obligations) is owing to any Lender, the Arranger or any Agent
hereunder, (i) the Borrower shall and shall cause each of its Subsidiaries to
and, (ii) as to Section 6.14 only, Holdings shall and shall cause each of its
Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent and each
Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
and consolidating balance sheet of Holdings and its consolidated
Subsidiaries as at the end of such year and the related audited
consolidated statements of income and of cash flows for such year, setting
forth in each case in comparative form the figures for the previous year,
reported on without a "going concern" or like qualification or exception,
or qualification arising out of the scope of the audit, by PriceWaterhouse
Cooper LLP or other independent certified public accountants of nationally
recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated and consolidating balance
sheet of Holdings and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated and consolidating statements
of income and of cash flows for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer of Holdings as being fairly stated in all material
respects (subject to normal year-end audit adjustments and the absence of
footnotes); and
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(c) as soon as available, but in any event not later than 45 days
after the end of each month occurring during each fiscal year of the
Borrower (other than the third, sixth, ninth and twelfth such month), the
unaudited consolidated and consolidating balance sheets of Holdings and its
Subsidiaries as at the end of such month and the related unaudited
consolidated and consolidating statements of income and of cash flows for
such month and the portion of the fiscal year through the end of such
month, setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer of Holdings as being
fairly stated in all material respects (subject to normal year-end audit
adjustments and the absence of footnotes);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative Agent on
behalf of each Lender, or, in the case of clause (k), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that, to the best of each such Responsible Officer's knowledge, Holdings
and each Loan Party during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in
this Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) in the case of quarterly or annual
financial statements, (x) a Compliance Certificate containing all
information and calculations necessary for determining compliance by the
Borrower and its Subsidiaries with the provisions of this Agreement
referred to therein as of the last day of the fiscal quarter or fiscal year
of the Borrower, as the case may be, and (y) to the extent not previously
disclosed to the Administrative Agent in writing, a listing of any county,
state, territory, province, region or any other jurisdiction, or any
political subdivision thereof, whether of the United States or otherwise,
where any Loan Party keeps inventory or equipment (other than mobile goods)
and of any Intellectual Property acquired by any Loan Party since the date
of the most recent list delivered pursuant to this clause (y) (or, in the
case of the first such list so delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 45 days after
the end of each fiscal year of the Borrower, a detailed consolidated and
consolidating budget for the following fiscal year (including a projected
consolidated and consolidating balance sheet of Holdings and its
Subsidiaries as of the end of the following fiscal year, and the related
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consolidated and consolidating statements of projected cash flow, projected
changes in financial position and projected income), and, as soon as
available, significant revisions, if any, of such budget and projections
with respect to such fiscal year (collectively, the "Projections"), which
Projections shall in each case be accompanied by a certificate of a
Responsible Officer stating that such Projections are based on reasonable
estimates, information and assumptions and that such Responsible Officer
has no reason to believe that such Projections are incorrect or misleading
in any material respect;
(d) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of Holdings and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current fiscal
year to the end of such fiscal quarter, as compared to the portion of the
Projections covering such periods and to the comparable periods of the
previous year;
(e) as soon as possible and in any event no later than five Business
Days prior to the effectiveness thereof, copies of substantially final
drafts of any proposed amendment, supplement, waiver or other modification
with respect to the Senior Subordinated Note Documentation, the Senior
Holdings Note Documentation, the Acquisition Agreement, any other
Acquisition Documentation or the Governing Documents of Holdings, the
Borrower or any of its Subsidiaries;
(f) within five days after the same are sent, copies of all financial
statements and reports that the Borrower or any of its Subsidiaries sends
to the holders of any class of its debt securities or public equity
securities and, within five days after the same are filed, copies of all
financial statements and reports that the Borrower or any of its
Subsidiaries may make to, or file with, the SEC;
(g) as soon as possible and in any event within five Business Days of
obtaining knowledge thereof: (i) notice of any development, event, or
condition that, individually or in the aggregate with other developments,
events or conditions, could reasonably be expected to result in the payment
by the Borrower or any of its Subsidiaries, in the aggregate, of a Material
Environmental Amount; and (ii) any notice that any Governmental Authority
may condition approval of, or any application for, an Environmental Permit
or any other material Permit held by the Borrower or any of its
Subsidiaries on terms and conditions that are materially burdensome to the
Borrower or any of its Subsidiaries, or to the operation of any of its
businesses (both before and after giving effect to the Acquisition) or any
property owned, leased or otherwise operated by such Person;
(h) on the date of the occurrence thereof, notice that (i) any or all
of the obligations under the Senior Subordinated Note Indenture have been
accelerated, or (ii) the trustee or the required holders of Senior
Subordinated Notes has given notice that any or all such obligations are to
be accelerated;
(i) on the date of the occurrence thereof, notice that (i) any or all
of the obligations under the Senior Holdings Notes have been accelerated,
or (ii) any of the
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holders of Senior Holdings Notes have given notice that any or all such
obligations are to be accelerated;
(j) to the extent not included in clauses (a) through (i) above, no
later than the date the same are required to be delivered thereunder,
copies of all agreements, documents or other instruments or items
(including, without limitation regular, periodic and special securities
reports) that Holdings or any of its Subsidiaries is required to provide
pursuant to the terms of the Senior Subordinated Note Documentation or the
Senior Holdings Note Documentation; and
(k) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence, etc. (a) (i)
Preserve, renew and keep in full force and effect its corporate existence and
(ii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise permitted by Section 7.4 and except, in the case of
clause (ii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 Maintenance of Property; Insurance.
(a) Keep all Property and systems useful and necessary in its business in
good working order and condition, ordinary wear and tear excepted.
(b) Maintain all rights of way, easements, grants, privileges, licenses,
certificates, and permits necessary or advisable for the use of any Mortgaged
Property and will not, without the prior written consent of the Administrative
Agent, consent to any public or private restriction as to the use of any
Mortgaged Property.
(c) Ensure that the Mortgaged Property known as Halifax County/South Boston
Industrial Park, First Addition does not remain idle for a period of more than
18 consecutive months, and will not permit any occupant of such Mortgaged
Property to engage in any business or manufacturing activity not contemplated
for such Mortgaged Property for a period of more than 18 consecutive months.
(d) Maintain with financially sound and reputable insurance companies
insurance on all its Property (including, without limitation, all inventory,
equipment and vehicles) in at least such amounts and against at least such risks
as are usually insured against in the same general area by companies engaged in
the same or a similar business; and furnish to the
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<PAGE> 78
Administrative Agent with copies for each Secured Party, upon written request,
full information as to the insurance carried; provided that in any event each of
the Borrower and its Subsidiaries will maintain (i) property and casualty
insurance on all Property on an all risks basis (including the perils of flood
and quake, loss by fire, explosion and theft and such other risks and hazards as
are covered by a standard extended coverage insurance policy), covering the
repair or replacement cost of all such Property and consequential loss coverage
for business interruption and extra expense (which shall include construction
expenses and such other business interruption expenses as are otherwise
generally available to similar businesses) provided that, with respect to any
such Property located in a flood hazard zone, any such insurance must comply
with Section 5.1(r)(iii), (ii) public liability insurance, and (iii) building
law and ordinance coverage in such amount as to address to the satisfaction of
the Administrative Agent any increased cost of construction, debris removal
and/or demolition expenses incurred as a result of the application of any
building law and/or ordinance. All such insurance with respect to each of the
Borrower and its Subsidiaries shall be provided by insurers or reinsurers which
(x) in the case of United States insurers and reinsurers, have an A.M. Best
policyholders rating of not less than A- with respect to primary insurance and
B+ with respect to excess insurance and (y) in the case of non-United States
insurers or reinsurers, the providers of at least 80% of such insurance have
either an ISI policyholders rating of not less than A, an A.M. Best
policyholders rating of not less than A- or a surplus of not less than
$500,000,000 with respect to primary insurance, and an ISI policyholders rating
of not less than BBB with respect to excess insurance, or, if the relevant
insurance is not available from such insurers, such other insurers as the
Administrative Agent may approve in writing. All insurance shall (i) provide
that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after receipt by the
Administrative Agent of written notice thereof, (ii) if reasonably requested by
the Administrative Agent, include a breach of warranty clause, (iii) contain a
"Replacement Cost Endorsement" with a waiver of depreciation and a waiver of
subrogation against any Secured Party, (iv) contain a standard noncontributory
mortgagee clause naming the Administrative Agent (and/or such other party as may
be designated by the Administrative Agent) as the party to which all payments
made by such insurance company shall be paid, (v) if requested by the
Administrative Agent, contain endorsements providing that none of the Borrower
or any of its Subsidiaries, any Secured Party or any other Person shall be a
co-insurer under such insurance policies, and (vi) be reasonably satisfactory in
all other respects to the Administrative Agent. Each Secured Party shall be
named as an additional insured on all liability insurance policies of each of
the Borrower and its Subsidiaries and the Administrative Agent shall be named as
loss payee on all property and casualty insurance policies of each such Person.
(e) Deliver to the Administrative Agent on behalf of the Secured Parties,
(i) on the Closing Date, a certificate dated such date showing the amount and
types of insurance coverage as of such date, (ii) upon request of any Secured
Party from time to time, full information as to the insurance carried, (iii)
promptly following receipt of notice from any insurer, a copy of any notice of
cancellation or material change in coverage from that existing on the Closing
Date, (iv) forthwith, notice of any cancellation or nonrenewal of coverage by
any of the Borrower or any of its Subsidiaries, and (v) promptly after such
information is available to any of the Borrower or any of its Subsidiaries, full
information as to any claim for an amount in excess of $1,000,000 with respect
to any property and casualty insurance policy maintained by any of the Borrower
or its Subsidiaries.
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<PAGE> 79
(f) Preserve and protect the Lien status of each respective Mortgage and,
if any Lien (other than unrecorded Liens permitted under Section 7.3 that arise
by operation of law and other Liens permitted under Section 7.3(f)) is asserted
against a Mortgaged Property, promptly and at its expense, give the
Administrative Agent a detailed written notice of such Lien and pay the
underlying claim in full or take such other action so as to cause it to be
released or bonded over in a manner satisfactory to Administrative Agent.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit
representatives of any Lender to visit and inspect any of its properties and
examine and, at the Borrower's expense, make abstracts from any of its books and
records at any reasonable time and to discuss the business, operations,
properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with their respective independent certified public accountants; provided
that for so long as no Default or Event of Default exists, such visits shall be
coordinated with the Administrative Agent so that in any fiscal quarter of the
Borrower, no Lender other than the Administrative Agent shall be permitted to
visit more than once.
6.7 Notices. Promptly give notice to the Administrative Agent on behalf of
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, that in
either case, if not cured or if adversely determined, as the case may be,
could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding known to the Borrower affecting the
Borrower or any of its Subsidiaries in which the amount involved is
$1,000,000 or more and not covered by insurance or in which injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower or any of its Subsidiaries knows or has reason
to know thereof: (i) the occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Single or
Multi-Employer Plan, the creation of any Lien in favor of the PBGC or a
Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower
or any Commonly Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the termination, Reorganization or Insolvency of,
any Plan;
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect; and
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<PAGE> 80
(f) any notice of default given to the Borrower or any of its
Subsidiaries from a landlord in connection with any leased property where
inventory of the Borrower or its Subsidiaries is located.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower or the relevant Subsidiary proposes to take
with respect thereto.
6.8 Environmental Laws.
(a) Comply in all material respects with, and ensure compliance in all
material respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws and Environmental Permits, and obtain, maintain and comply in
all material respects with and maintain, and ensure that all tenants and
subtenants obtain, maintain and comply in all material respects with and
maintain, any and all material licenses, approvals, notifications, registrations
or permits required by applicable Environmental Laws.
(b) Conduct and complete in all material respects all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material respects
with all lawful orders and directives of all Governmental Authorities regarding
Environmental Laws.
6.9 Interest Rate Protection. In the case of the Borrower, within 90 days
after the Closing Date, enter into Hedge Agreements to the extent necessary to
provide that at least 50% of the aggregate principal amount of the Term Loans is
subject to either a fixed interest rate or interest rate protection for a period
of not less than three years, which Hedge Agreements shall have terms and
conditions reasonably satisfactory to the Administrative Agent.
6.10 Additional Collateral, etc.
(a) With respect to any Property acquired after the Closing Date or, in the
case of inventory or equipment, any Property moved after the Closing Date, by
the Borrower or any of its Subsidiaries or any Capital Stock of the Borrower
acquired by Holdings after the Closing Date (other than (x) any Property
described in paragraphs (b), (c) or (d) of this Section, (y) any Property
subject to a Lien expressly permitted by Section 7.3(g) and (z) Property
acquired by an Excluded Foreign Subsidiary) as to which the Administrative
Agent, for the benefit of the Secured Parties, does not have a perfected Lien,
promptly (and, in any event, within 30 days following the date of such
acquisition) (or, with respect to any Capital Stock of the Borrower acquired by
Holdings after the Closing Date, shall cause Holdings to) (i) execute and
deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement or such other documents (including landlord waivers) as the
Administrative Agent deems necessary or advisable to grant to the Administrative
Agent, for the benefit of the Secured Parties, a security interest in such
Property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in such Property, including without limitation, the
filing of Uniform Commercial Code financing statements in such jurisdictions as
may be required by the Guarantee and Collateral Agreement or by law or as may be
requested by the Administrative Agent.
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(b) With respect to any fee interest in any real property having a value
(together with improvements thereof) of at least $1,000,000 acquired after the
Closing Date by the Borrower or any of its Subsidiaries (other than any such
real property owned by an Excluded Foreign Subsidiary or subject to a Lien
expressly permitted by Section 7.3(g)) promptly (and, in any event, within 30
days following the date of such acquisition) (i) execute and deliver a first
priority Mortgage in favor of the Administrative Agent, for the benefit of the
Secured Parties, covering such real property, (ii) if requested by the
Administrative Agent, provide the Secured Parties with (x) title and extended
coverage insurance covering such real property in an amount at least equal to
the purchase price of such real property (or such other amount as shall be
reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Administrative Agent
in connection with such Mortgage, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) With respect to any Subsidiary (other than an Excluded Foreign
Subsidiary) created or acquired after the Closing Date (which, for the purposes
of this paragraph, shall include any existing Subsidiary that ceases to be an
Excluded Foreign Subsidiary), by the Borrower or any of its Subsidiaries,
promptly (and, in any event, within 30 days following such creation or the date
of such acquisition) (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Secured Parties, a perfected first priority security interest in
the Capital Stock of such Subsidiary that is owned by the Borrower or any of its
Subsidiaries, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the Borrower or such
Subsidiary, as the case may be, (iii) cause such Subsidiary (A) to become a
party to the Guarantee and Collateral Agreement and the Intellectual Property
Security Agreement and (B) to take such actions necessary or advisable to grant
to the Administrative Agent for the benefit of the Secured Parties a perfected
first priority security interest in the Collateral described in the Guarantee
and Collateral Agreement and the Intellectual Property Security Agreement with
respect to such Subsidiary, including, without limitation, the recording of
instruments in the United States Patent and Trademark Office and the United
States Copyright Office, the execution and delivery by all necessary Persons of
Control Agreements and the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement, the Intellectual Property Security Agreement or by law or
as may be requested by the Administrative Agent, (iv) cause such Subsidiary to
become a party to the Subordinated Intercompany Note and (v) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) With respect to any Excluded Foreign Subsidiary created or acquired
after the Closing Date by the Borrower or any of its Domestic Subsidiaries,
promptly (and, in any event, within 30 days following such creation or the date
of such acquisition) (i) execute and
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deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement as the Administrative Agent deems necessary or advisable in
order to grant to the Administrative Agent, for the benefit of the Secured
Parties, a perfected first priority security interest in the Capital Stock of
such Subsidiary that is owned directly by the Borrower or any of its Domestic
Subsidiaries (provided that in no event shall more than 65% of the total
outstanding Capital Stock of any such Subsidiary be required to be so pledged),
(ii) deliver to the Administrative Agent the certificates representing such
Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the Borrower or such Subsidiary, as
the case may be, and take such other action as may be necessary or, in the
opinion of the Administrative Agent, desirable to perfect the Lien of the
Administrative Agent thereon, (iii) cause such Subsidiary to become a party to
the Subordinated Intercompany Note, and (iv) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
(e) Notwithstanding anything to the contrary in this Section 6.10,
paragraphs (a), (b), (c) and (d) of this Section 6.10 shall not apply to any
Property, Subsidiary or Excluded Foreign Subsidiary created or acquired after
the Closing Date, as applicable, as to which the Administrative Agent has
determined in its sole discretion that the collateral value thereof is
insufficient to justify the difficulty, time and/or expense of obtaining a
perfected Lien thereon.
6.11 Year 2000. Take all action necessary and commit adequate resources to
assure that their respective computer-based and other systems are able to
effectively process data including dates before, on and after January 1, 2000
without experiencing any year 2000 problem that could reasonably be expected to
cause a Material Adverse Effect. At the request of the Administrative Agent, the
Borrower shall provide or cause to be provided to the Administrative Agent with
assurance and substantiation (including, but not limited to, the results of
internal or external audit reports prepared in the ordinary course of business)
reasonably acceptable to the Administrative Agent as to the year 2000 capability
of the Borrower and its Subsidiaries and their respective abilities to conduct
their respective businesses and operations before, on and after January 1, 2000
without experiencing a year 2000 problem causing a Material Adverse Effect. For
purposes hereof, "year 2000 problem" means the failure of computer-based and
other systems or equipment, whether of the Borrower or any of its Subsidiaries
or otherwise, to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999, and any
reprogramming errors resulting therefrom.
6.12 Use of Proceeds. Use the proceeds of the Loans only for the purposes
specified in Section 4.16.
6.13 ERISA Documents. The Borrower will cause to be delivered to the
Administrative Agent, promptly upon the Administrative Agent's request, any or
all of the following: (i) a copy of each Plan (or, where any such Plan is not in
writing, a complete description thereof) and, if requested, related trust
agreements or other funding instruments and all amendments thereto, and all
written interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of the Borrower or any of its
Subsidiaries; (ii) the most recent determination letter issued by the Internal
Revenue Service with respect to each applicable Plan; (iii) for the three most
recent plan years preceding the
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Administrative Agent's request, Annual Reports on Form 5500 Series required to
be filed with any governmental agency for each applicable Plan; (iv) a listing
of all Multiemployer Plans, with the aggregate amount of the most recent annual
contributions required to be made by the Borrower or any Commonly Controlled
Entity to each such Plan and copies of the collective bargaining agreements
requiring such contributions; (v) any information that has been provided to the
Borrower or any Commonly Controlled Entity regarding withdrawal liability under
any Multiemployer Plan; (vi) the aggregate amount of payments made under any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) to any
retired employees of the Borrower or any of its Subsidiaries (or any dependents
thereof) during the most recently completed fiscal year; and (vii) documents
reflecting any agreements between the PBGC and the Borrower or any Commonly
Controlled Entity with respect to any Plan.
6.14 Further Assurances
(a) From time to time execute and deliver, or cause to be executed and
delivered, such additional instruments, certificates or documents, and take all
such actions, as the Administrative Agent may reasonably request, for the
purposes of implementing or effectuating the provisions of this Agreement and
the other Loan Documents, or of more fully perfecting or renewing the rights of
the Administrative Agent and the Lenders with respect to the Collateral (or with
respect to any additions thereto or replacements or proceeds or products thereof
or with respect to any other property or assets hereafter acquired by Holdings,
the Borrower or any Subsidiary which may be deemed to be part of the Collateral)
pursuant hereto or thereto. Upon the exercise by the Administrative Agent or any
Lender of any power, right, privilege or remedy pursuant to this Agreement or
the other Loan Documents which requires any consent, approval, recording,
qualification or authorization of any Governmental Authority, Holdings and the
Borrower will execute and deliver, or will cause the execution and delivery of,
all applications, certifications, instruments and other documents and papers
that the Administrative Agent or such Lender may be required to obtain from
Holdings, the Borrower or any of its Subsidiaries for such governmental consent,
approval, recording, qualification or authorization.
(b) As soon as reasonably practicable and, in any event within 10 days
following a Default or Event of Default, deliver to the Administrative Agent,
with a copy for each Lender, written environmental assessments, prepared by a
third party reasonably satisfactory to the Administrative Agent, conforming to
the standards of the ASTM "Standard Practice for Environmental Assessments:
Phase I Environmental Site Assessment Process" for each of the Mortgaged
Properties.
SECTION 7. NEGATIVE COVENANTS
The Borrower (and, as to clauses (ii) and (iii) below only, Holdings)
hereby agrees that, so long as the Commitments remain in effect, any Letter of
Credit remains outstanding or any Loan or other Obligation (excluding
Obligations in respect of any Specified Hedge Agreement and unmatured contingent
reimbursement and indemnification Obligations) is owing to any Lender, the
Arranger or any Agent hereunder, (i) the Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, (ii) as to Sections
7.2, 7.3, 7.9(d), 7.13, and 7.16 only, Holdings shall not and shall not permit
any of its Subsidiaries to, directly or indirectly, and (iii) as to Section 7.19
only, Holdings shall not, directly or indirectly:
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7.1 Financial Condition Covenants.
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as
at the last day of any period of four consecutive fiscal quarters of the
Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to exceed the ratio
set forth below opposite such fiscal quarter:
<TABLE>
<CAPTION>
Consolidated
Fiscal Quarter Leverage Ratio
-------------- --------------
<S> <C>
December, 31, 1999 4.90 : 1.00
March 31, 2000 4.90 : 1.00
June 30, 2000 4.75 : 1.00
September 30, 2000 4.75 : 1.00
December 31, 2000 4.75 : 1.00
March 31, 2001 4.75 : 1.00
June 30, 2001 4.60 : 1.00
September 30, 2001 4.60 : 1.00
December 31, 2001 4.60 : 1.00
March 31, 2002 4.50 : 1.00
June 30, 2002 4.35 : 1.00
September 30, 2002 4.35 : 1.00
December 31, 2002 4.25 : 1.00
March 31, 2003 4.25 : 1.00
June 30, 2003 4.00 : 1.00
September 30, 2003 4.00 : 1.00
December 31, 2003 4.00 : 1.00
March 31, 2004 4.00 : 1.00
June 30, 2004 3.75 : 1.00
September 30, 2004 3.75 : 1.00
December 31, 2004 3.75 : 1.00
March 31, 2005 3.75 : 1.00
June 30, 2005 3.75 : 1.00
September 30, 2005 3.75 : 1.00
December 31, 2005 3.75 : 1.00
March 31, 2006 3.75 : 1.00
June 30, 2006 3.75 : 1.00
September 30, 2006 3.75 : 1.00
December 31, 2006 3.75 : 1.00
March 31, 2007 3.75 : 1.00
June 30, 2007 3.75 : 1.00
</TABLE>
; provided, that for the purposes of determining the ratio described above for
the fiscal quarters of the Borrower ending December 31, 1999, March 31, 2000 and
June 30, 2000, Consolidated EBITDA for the relevant period shall be deemed to be
equal to Consolidated EBITDA for the trailing 12-month period ending on the last
date of each such fiscal quarter.
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(b) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest
Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
<TABLE>
<CAPTION>
Consolidated Interest
Fiscal Quarter Coverage Ratio
-------------- --------------
<S> <C>
December, 31, 1999 1.75 : 1.00
March 31, 2000 1.75 : 1.00
June 30, 2000 1.75 : 1.00
September 30, 2000 1.75 : 1.00
December 31, 2000 1.75 : 1.00
March 31, 2001 1.75 : 1.00
June 30, 2001 1.90 : 1.00
September 30, 2001 1.90 : 1.00
December 31, 2001 2.00 : 1.00
March 31, 2002 2.00 : 1.00
June 30, 2002 2.00 : 1.00
September 30, 2002 2.00 : 1.00
December 31, 2002 2.00 : 1.00
March 31, 2003 2.00 : 1.00
June 30, 2003 2.00 : 1.00
September 30, 2003 2.00 : 1.00
December 31, 2003 2.00 : 1.00
March 31, 2004 2.00 : 1.00
June 30, 2004 2.25 : 1.00
September 30, 2004 2.25 : 1.00
December 31, 2004 2.25 : 1.00
March 31, 2005 2.25 : 1.00
June 30, 2005 2.25 : 1.00
September 30, 2005 2.25 : 1.00
December 31, 2005 2.75 : 1.00
March 31, 2006 2.75 : 1.00
June 30, 2006 2.75 : 1.00
September 30, 2006 2.75 : 1.00
December 31, 2006 2.75 : 1.00
March 31, 2007 2.75 : 1.00
June 30, 2007 2.75 : 1.00
</TABLE>
(c) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed
Charge Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
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<TABLE>
<CAPTION>
Consolidated Fixed
Fiscal Quarter Charge Coverage Ratio
-------------- ---------------------
<S> <C>
December, 31, 1999 1.10 : 1.00
March 31, 2000 1.10 : 1.00
June 30, 2000 1.10 : 1.00
September 30, 2000 1.10 : 1.00
December 31, 2000 1.10 : 1.00
March 31, 2001 1.10 : 1.00
June 30, 2001 1.10 : 1.00
September 30, 2001 1.10 : 1.00
December 31, 2001 1.10 : 1.00
March 31, 2002 1.10 : 1.00
June 30, 2002 1.10 : 1.00
September 30, 2002 1.10 : 1.00
December 31, 2002 1.10 : 1.00
March 31, 2003 1.10 : 1.00
June 30, 2003 1.10 : 1.00
September 30, 2003 1.10 : 1.00
December 31, 2003 1.10 : 1.00
March 31, 2004 1.10 : 1.00
June 30, 2004 1.20 : 1.00
September 30, 2004 1.20 : 1.00
December 31, 2004 1.20 : 1.00
March 31, 2005 1.20 : 1.00
June 30, 2005 1.20 : 1.00
September 30, 2005 1.20 : 1.00
December 31, 2005 1.20 : 1.00
March 31, 2006 1.20 : 1.00
June 30, 2006 1.20 : 1.00
September 30, 2006 1.20 : 1.00
December 31, 2006 1.20 : 1.00
March 31, 2007 1.20 : 1.00
June 30, 2007 1.20 : 1.00
</TABLE>
(d) Minimum Consolidated EBITDA. Permit Consolidated EBITDA for the
Borrower and its Subsidiaries for any period of four consecutive fiscal quarters
of the Borrower ending with any fiscal quarter set forth below to be less than
the amount set forth below opposite such fiscal quarter.
<TABLE>
<CAPTION>
Fiscal Quarter Minimum EBITDA
-------------- --------------
<S> <C>
June 30, 2000 $50,000,000
June 30, 2001 $53,500,000
June 30, 2002 $57,000,000
</TABLE>
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<TABLE>
<CAPTION>
Fiscal Quarter Minimum EBITDA
-------------- --------------
<S> <C>
June 30, 2003 $60,000,000
June 30, 2004 $62,000,000
June 30, 2005 $62,000,000
June 30, 2006 $62,000,000
June 30, 2007 $62,000,000
</TABLE>
(e) Senior Debt Coverage Ratio. Permit the Senior Debt Coverage Ratio for
the Borrower and its Subsidiaries for any period of four consecutive fiscal
quarters of the Borrower (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending with any fiscal quarter set forth below
to be greater than the ratio set forth below opposite such fiscal quarter;
<TABLE>
<CAPTION>
Senior Debt
Fiscal Quarter Coverage Ratio
-------------- --------------
<S> <C>
December, 31, 1999 3.00 : 1.00
March 31, 2000 3.00 : 1.00
June 30, 2000 3.00 : 1.00
September 30, 2000 3.00 : 1.00
December 31, 2000 3.00 : 1.00
March 31, 2001 3.00 : 1.00
June 30, 2001 2.85 : 1.00
September 30, 2001 2.85 : 1.00
December 31, 2001 2.85 : 1.00
March 31, 2002 2.75 : 1.00
June 30, 2002 2.50 : 1.00
September 30, 2002 2.50 : 1.00
December 31, 2002 2.50 : 1.00
March 31, 2003 2.50 : 1.00
June 30, 2003 2.35 : 1.00
September 30, 2003 2.35 : 1.00
December 31, 2003 2.35 : 1.00
March 31, 2004 2.35 : 1.00
June 30, 2004 2.00 : 1.00
September 30, 2004 2.00 : 1.00
December 31, 2004 2.00 : 1.00
March 31, 2005 2.00 : 1.00
June 30, 2005 2.00 : 1.00
September 30, 2005 2.00 : 1.00
December 31, 2005 2.00 : 1.00
March 31, 2006 2.00 : 1.00
June 30, 2006 2.00 : 1.00
September 30, 2006 2.00 : 1.00
December 31, 2006 2.00 : 1.00
March 31, 2007 2.00 : 1.00
June 30, 2007 2.00 : 1.00
</TABLE>
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<PAGE> 88
; provided, that for the purposes of determining the ratio described above for
the fiscal quarters of the Borrower ending December 31, 1999, March 31, 2000 and
June 30, 2000, Consolidated EBITDA for the relevant period shall be deemed to be
equal to Consolidated EBITDA for the trailing 12-month period ending on the last
date of each such fiscal quarter.
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness of Holdings or any Loan Party pursuant to any Loan
Document;
(b) Unsecured Indebtedness of the Borrower to any Subsidiary and of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
provided that such Indebtedness is evidenced by, and subject to the terms and
conditions of, the Subordinated Intercompany Note and is otherwise subordinated
in right of payment to the Obligations under the Loan Documents on terms and
conditions satisfactory to the Administrative Agent;
(c) Indebtedness of the Borrower and its Subsidiaries (including, without
limitation, Capital Lease Obligations) secured by Liens permitted by Section
7.3(g) in an aggregate principal amount not to exceed $5,000,000 at any one time
outstanding;
(d) Indebtedness (other than the Indebtedness referred to in Section
7.2(f)) of the Borrower and its Subsidiaries outstanding on the date hereof and
listed on Schedule 7.2(d) and any refinancings, replacements, refundings,
renewals or extensions thereof (without any increase in the principal amount
thereof or any shortening of the maturity of any principal amount thereof);
(e) Unsecured Guarantee Obligations made in the ordinary course of business
by the Borrower or any of its Subsidiaries of obligations of the Borrower or any
Subsidiary Guarantor;
(f) (i) Unsecured Indebtedness of the Borrower created under the Senior
Subordinated Note Indenture in respect of the Senior Subordinated Notes in an
aggregate principal amount not to exceed $100,000,000 and (ii) Guarantee
Obligations of any Subsidiary Guarantor in respect of such Indebtedness;
provided that such Guarantee Obligations are subordinated to the obligations of
such Subsidiary Guarantor under the Guarantee and Collateral Agreement to the
same extent as the obligations of the Borrower in respect of the Senior
Subordinated Notes are subordinated to the Obligations; and
(g) Indebtedness of the Borrower consisting of customary indemnification,
adjustments of purchase price or similar obligations, in each case incurred or
assumed in connection with the acquisition of any business or assets permitted
to be acquired hereunder;
(h) Unsecured Indebtedness of Holdings created under the Senior Holdings
Notes or the Senior Holdings Note Purchase Agreement in an aggregate principal
amount (excluding accreted value thereon) not to exceed $15,000,000 at any one
time outstanding; and
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(i) additional Indebtedness of Holdings or any of its Subsidiaries in an
aggregate principal amount (for the Borrower and all Subsidiaries) not to exceed
$5,000,000 (or, if the Consolidated Leverage Ratio is less than 4.0 to 1.0,
$7,500,000) at any one time outstanding.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its Property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due and payable or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its Subsidiaries,
as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or that are being contested in good
faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits by or on behalf of the Borrower or any of its Subsidiaries to
secure the performance of bids, trade contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business that, in the aggregate, are not
substantial in amount and which do not in any case materially detract from the
value of the Property subject thereto or materially interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(d), provided that no such Lien is
spread to cover any additional Property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any of its Subsidiaries
incurred pursuant to Section 7.2(c) to finance the acquisition of fixed or
capital assets, provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets, (ii) such
Liens do not at any time encumber any Property other than the Property financed
by such Indebtedness and (iii) the amount of Indebtedness secured thereby is not
increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into by the
Borrower or any of its Subsidiaries in the ordinary course of its business and
covering only the assets so leased;
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<PAGE> 90
(j) leases or subleases permitted by Section 7.5 granted to third Persons
not materially interfering with the ordinary course of business of the Borrower
or any of its Subsidiaries;
(k) all building codes and zoning ordinances and other laws, ordinances,
regulations, rules, orders or determinations of any federal, state, county,
municipal or other Governmental Authority now or hereafter enacted which do not
in any case materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the Borrower
or any of its Subsidiaries;
(l) Liens consisting of rights of set-off of a customary nature or bankers'
liens on amounts on deposit, to the extent arising by operation of law, incurred
in the ordinary course of business;
(m) Liens in favor of the trustee under Section 7.07 of the Senior
Subordinated Note Indenture as in effect on the date hereof and securing fees
and other amounts payable to the trustee thereunder;
(n) Liens on Schedule 7.3(f) which are disclosed in title insurance
policies insuring the Administrative Agent pursuant to this Agreement; and
(o) Liens (not otherwise permitted hereunder) (other than Liens in favor of
Holdings, the Borrower or any of its Subsidiaries) which secure obligations not
exceeding $3,000,000 in the aggregate at any time outstanding, which are pari
passu with or subordinated to the Liens created in favor of the Administrative
Agent pursuant to this Agreement and the other Loan Documents and with respect
to which no foreclosure or other enforcement actions have been commenced.
7.4. Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:
(a) any Solvent Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be
the continuing or surviving corporation) or with or into any Subsidiary
Guarantor (provided that the Subsidiary Guarantor shall be the continuing
or surviving corporation); and
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary Guarantor.
7.5. Limitation on Disposition of Property. Dispose of any of its Property
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary of Holdings,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
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<PAGE> 91
(b) the Disposition of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of (i) any Subsidiary's Capital Stock (other
than Disqualified Stock) to the Borrower or any Subsidiary Guarantor or
(ii) the Borrower's Capital Stock (other than Disqualified Stock) to
Holdings;
(e) the Disposition by the Borrower or any of its Subsidiaries of
other tangible or intangible assets having a fair market value not to
exceed $5,000,000 in the aggregate for any fiscal year of the Borrower;
(f) Restricted Payments permitted under Section 7.6;
(g) Dispositions of Cash Equivalents, provided that the aggregate
consideration received therefor is at least equal to the aggregate fair
market value of the Cash Equivalents so Disposed of; and
(h) any Recovery Event, provided, that the requirements of Section
2.12(b) are complied with in connection therewith.
7.6. Limitation on Restricted Payments. Declare or pay any dividend (other
than dividends payable solely in common stock (excluding Disqualified Stock) of
the Person making such dividend) on, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Capital Stock of
the Borrower or any of its Subsidiaries, whether now or hereafter outstanding,
or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the Borrower or any
of its Subsidiaries, or enter into any derivatives or other transaction with any
financial institution, commodities or stock exchange or clearinghouse (a
"Derivatives Counterparty") obligating the Borrower or any of its Subsidiaries
to make payments to such Derivatives Counterparty as a result of any change in
market value of any such Capital Stock (collectively, "Restricted Payments"),
except that:
(a) any Wholly Owned Subsidiary may declare and pay cash dividends to
the Borrower or any Subsidiary Guarantor;
(b) the Borrower may declare and pay cash dividends to Holdings to
permit Holdings to (i) pay corporate overhead expenses incurred in the
ordinary course of business not to exceed $500,000 in any fiscal year
($1,000,000 as to the fiscal year ending June 30, 2000) of the Borrower;
(ii) pay any taxes which are due and payable by Holdings and the Borrower
as part of a consolidated group; (iii) repurchase stock of Holdings held by
employees of the Borrower not to exceed $2,000,000 in any fiscal year of
the Borrower; (iv) after November 30, 2004, pay cash interest then due and
payable on the Senior Holdings Notes in an aggregate amount not to exceed
12% per annum on the Senior Holdings Notes issued November 30, 1999, plus
interest at the same rate on any Senior Holdings Notes issued to pay
interest thereon; provided that, in each case, such cash payments are used
within 30 days of such payment to make interest payments on such
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<PAGE> 92
senior notes; and (v) satisfy tax obligations that are actually due and
owing, in accordance with the Tandy Tax Sharing Agreement as in effect on
the date hereof; provided that the amount of such dividends does not exceed
the amount that, without recognizing any tax loss carryforwards or
carrybacks or other tax attributes, such as alternative minimum tax
carryforwards, would otherwise be due and owing if the Borrower and its
Subsidiaries were an independent, individual taxpayer; provided that, as to
clauses (iv) and (v) only, the Borrower may not declare and pay cash
dividends if a Default or Event of Default exists;
(c) on the Closing Date, the Borrower may declare and pay cash
dividends to Holdings in an aggregate amount not to exceed $201,753,000 to
permit Holdings to consummate the Acquisition in accordance with the
Acquisition Documentation (including, without limitation, to the extent
permitted under the Acquisition Documentation, to make payments or
distributions to dissenting shareholders of the Borrower); and
(d) any Solvent Wholly Owned Subsidiary of a Loan Party may declare
and pay dividends on its Capital Stock (other than Disqualified Stock) to
its parent in order to effect a reorganization otherwise permitted
hereunder.
7.7. Limitation on Capital Expenditures. Make or commit to make any
Capital Expenditure, except (a) Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business not exceeding in any fiscal year
of the Borrower the amount set forth below opposite such fiscal year:
<TABLE>
<CAPTION>
Fiscal Year Maximum Capital Expenditures
----------- ----------------------------
<S> <C>
2000 $18,500,000
2001 $20,000,000
2002 $26,000,000
2003 $25,000,000
2004 $20,000,000
2005 $20,000,000
2006 $30,000,000
2007 $30,000,000
</TABLE>
provided, that (i) up to 50% of any such amount referred to above, if not
so expended in the fiscal year for which it is permitted, may be carried over
for expenditure in the next succeeding fiscal year ("Capital Expenditure Carry
Forward") and (ii) Capital Expenditures made pursuant to this clause (a) during
any fiscal year shall be deemed made, first, in respect of amounts permitted for
such fiscal year as provided above and second, in respect of any Capital
Expenditure Carry Forward, (b) Capital Expenditures made with the proceeds of
any Reinvestment Deferred Amount, (c) Capital Expenditures made with the
proceeds of Excess Cash Flow remaining after giving effect to any mandatory
prepayments required by Section 2.12(c) and (d) Capital Expenditures made with
the proceeds of any capital contribution by Holdings to the Borrower.
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<PAGE> 93
7.8. Limitation on Investments. Make any advance, loan, extension of
credit (by way of guaranty or otherwise) or capital contribution to, or purchase
any Capital Stock, bonds, notes, debentures or other debt securities of, or any
assets constituting an ongoing business from, or make any other investment in,
any other Person (all of the foregoing, "Investments"), except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Investments arising in connection with the incurrence of
Indebtedness permitted by Section 7.2(b) and (e);
(d) loans and advances to employees of the Borrower or any
Subsidiaries of the Borrower in the ordinary course of business (including,
without limitation, for travel, entertainment and relocation expenses) in
an aggregate amount for the Borrower and its Subsidiaries not to exceed
$1,000,000 at any one time outstanding;
(e) the Acquisition;
(f) Investments in assets useful in the Borrower's or the applicable
Subsidiary's business made by the Borrower or any of its Subsidiaries with
(i) the proceeds of any Reinvestment Deferred Amount, (ii) the proceeds of
any capital contribution by Holdings to the Borrower or (iii) Excess Cash
Flow remaining after giving effect to any mandatory prepayments required by
Section 2.12(c);
(g) Investments (other than those relating to the incurrence of
Indebtedness permitted by Section 7.8(c)) by the Borrower or any of its
Subsidiaries in the Borrower or any Person that, prior to such Investment,
is a Subsidiary Guarantor;
(h) Investments consisting of promissory notes and other deferred
payment obligations of Persons to which the Borrower or any of its
Subsidiaries shall have made Dispositions of assets permitted by Section
7.5, provided that the aggregate principal amount thereof does not exceed
$5,000,000 at any one time outstanding;
(i) security and other deposits permitted by Section 7.3(d); and
(j) in addition to Investments otherwise expressly permitted by this
Section Investments by the Borrower or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed $10,000,000 during the term
of this Agreement.
7.9. Limitation on Optional Payments and Modifications of
Indebtedness.
(a) Make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of, or otherwise voluntarily or optionally
defease, the Senior Subordinated Notes on any other Indebtedness of the Borrower
or its Subsidiaries that is subordinated to the Indebtedness created hereunder
(other than the exchange of Senior Subordinated Notes pursuant to the terms of
the Registration Rights Agreement), or segregate
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funds for any such payment, prepayment, repurchase, redemption or defeasance, or
enter into any derivative or other transaction with any Derivatives Counterparty
obligating the Borrower or any of its Subsidiaries to make payments to such
Derivatives Counterparty as a result of any change in market value of the Senior
Subordinated Notes or any such subordinated Indebtedness of the Borrower or its
Subsidiaries, (b) amend, modify or otherwise change, or consent or agree to any
amendment, modification, waiver or other change to, any of the terms (including,
without limitation, the subordination terms) of the Senior Subordinated Note
Documentation or any such subordinated Indebtedness of the Borrower or its
Subsidiaries (other than any such amendment, modification, waiver or other
change which (i) would extend the maturity or reduce the amount of any payment
of principal thereof, reduce the rate or extend the date for payment of interest
thereon and (ii) does not involve the payment of a consent fee), (c) designate
any Indebtedness (other than the Obligations) as "Designated Senior Debt" for
the purposes of the Senior Subordinated Note Indenture or the agreement or
instrument governing or evidencing any other indebtedness of the Borrower or its
Subsidiaries that is subordinated to the Indebtedness created hereunder, or (d)
amend or permit the amendment of its Governing Documents in any manner
determined by the Administrative Agent to be materially adverse to the Lenders.
7.10. Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate unless such transaction
is (a) otherwise permitted under this Agreement, (b) in the ordinary course of
business of the Borrower or such Subsidiary, as the case may be, and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person that is not an Affiliate. Notwithstanding the
foregoing, the Borrower and its Subsidiaries may, subject to Section 7.20, pay
to the Sponsor and its Control Investment Affiliates fees and expenses pursuant
to the Management Services Agreement approved by the board of directors of the
Borrower in an aggregate amount not to exceed the greater of 1.0% of Holdings'
Consolidated EBITDA for the immediately preceding fiscal year and $300,000 in
any fiscal year of the Borrower. The limitations in the first sentence of this
Section 7.10 shall not apply to transactions with Affiliates which are (a)
pursuant to the Equity Documents or (b) loans and advances to employees of the
Borrower or any of its Subsidiaries in the ordinary course of business in
accordance with Section 7.8(d).
7.11. Limitation on Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any of its Subsidiaries
of Property which has been or is to be sold or transferred by the Borrower or
such Subsidiary to such Person or to any other Person to whom funds have been or
are to be advanced by such Person on the security of such Property or rental
obligations of the Borrower or such Subsidiary, provided that the Borrower or
any of its Subsidiaries may enter into such arrangements so long as (i) the
Property so sold or transferred is sold or transferred for fair value for cash
consideration, and (ii) the gross cash proceeds received by the Borrower or such
Subsidiary from such sales or transfers do not exceed $5,000,000 in the
aggregate for the Borrower and its Subsidiaries.
7.12. Limitation on Changes in Fiscal Periods. Permit the fiscal year of
the Borrower or any of its Subsidiaries to end on a day other than June 30 or
change the Borrower's
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<PAGE> 95
or any of its Subsidiaries' method of determining fiscal quarters, in each case,
without the prior written consent of the Administrative Agent which consent
shall not be unreasonably withheld.
7.13. Limitation on Negative Pledge Clauses. Enter into or suffer to exist
or become effective any agreement that prohibits or limits the ability of
Holdings, the Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its Property or revenues, whether now owned
or hereafter acquired, to secure the Obligations or, in the case of any
guarantor, its obligations under the Guarantee and Collateral Agreement, other
than (a) this Agreement and the other Loan Documents, (b) any agreements
governing any purchase money Liens or Capital Lease Obligations otherwise
permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby), (c) Section 4.12 of the Senior
Subordinated Note Indenture, as in effect on the date hereof, and (d) the Senior
Holdings Note Purchase Agreement.
7.14. Limitation on Restrictions on Subsidiary Distributions, etc. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of the Borrower or any of its Subsidiaries (or, in
the case of clause (a) only, any Subsidiary of the Borrower) to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay or subordinate any Indebtedness owed to, the Borrower or any other
Subsidiary, (b) make Investments in the Borrower or any other Subsidiary or (c)
transfer any of its assets to the Borrower or any other Subsidiary, except for
such encumbrances or restrictions existing under or by reason of (i) any
restrictions existing under the Loan Documents, (ii) any restrictions under
Section 4.08 of the Senior Subordinated Note Indenture, as in effect on the date
hereof and (iii) any restrictions with respect to a Subsidiary imposed pursuant
to an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary.
7.15. Limitation on Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement (after
giving effect to the Acquisition) or that are reasonably related thereto. For
the avoidance of doubt, the entry by the Borrower into the business of the
manufacture and sale of cabinetry shall be deemed to be reasonably related to
the Borrower's existing line of business.
7.16 Limitation on Amendments to Tandy Tax Sharing Agreement, Acquisition
Documentation and Senior Holdings Note Documentation. Amend, supplement, replace
or otherwise modify (whether pursuant to a waiver granted by or to such Person
or otherwise) or fail to enforce strictly the terms and conditions of (i) the
Tandy Tax Sharing Agreement or any of the Acquisition Documentation in a manner
which is reasonably determined by the Administrative Agent to be adverse to any
Agent or any Lender, (ii) any of the Senior Holdings Note Documentation (other
than the warrant agreements related to the Senior Holdings Note Purchase
Agreement), without the prior written consent of the Administrative Agent, or
(iii) any of the warrant agreements related to the Senior Holdings Note Purchase
Agreement without the prior written consent of the Administrative Agent, other
than any such amendment or modification that could not be adverse to any Agent
or any Lender.
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7.17 Limitation on Hedge Agreements. Enter into any Hedge Agreement other
than Specified Hedge Agreements entered into in the ordinary course of business,
and not for speculative purposes.
7.18 Partnerships and Joint Ventures. Become a general or limited partner
in a partnership or a joint venturer in any joint venture, or permit the
Borrower or any of its Subsidiaries to do so, other than any joint venture
permitted by Section 7.8, provided that the Indebtedness of such joint venture
is Non-Recourse Indebtedness.
7.19 Limitation on Activities of Holdings. (a) Conduct, transact or
otherwise engage in, or commit to conduct, transact or otherwise engage in, any
business or operations other than those incidental to (i) Holdings' ownership of
the Capital Stock of its Subsidiaries existing on the date hereof and (ii) the
incurrence and repayment of the Indebtedness on the Senior Holdings Notes and
Indebtedness permitted under Section 7.2(i), (b) own, lease, manage or otherwise
operate any properties or assets (including cash (other than cash received in
connection with dividends made by the Borrower in accordance with Section 7.6
pending application in the manner contemplated by such Section) and Cash
Equivalents) other than the ownership of shares of Capital Stock of its
Subsidiaries existing on the date hereof, (c) create or form any direct
Subsidiaries, or (d) otherwise cease to be a holding company.
7.20 Management Fees. Permit Holdings or any of its Subsidiaries to pay
management fees or expenses pursuant to the Management Services Agreement unless
(i) such fees and expenses are then due and payable under the Management
Services Agreement, (ii) the amount of such management fees does not exceed the
greater of (a) 1.0% of the Borrower's Consolidated Cash Flow (as defined in and
determined in accordance with the Management Services Agreement as in effect on
the date hereof) and (b) $300,000 in any fiscal year of the Borrower, (iii) the
amount of such expenses does not exceed $50,000 in any fiscal year of the
Borrower and (iv) no Default or Event of Default exists.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been false or misleading in any material
respect on or as of the date made or deemed made; or
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(c) (i) Any Loan Party shall default in the observance or performance
of any agreement contained in clause (i) or (ii) of Section 6.4(a) (with
respect to the Borrower only), Section 6.7(a) or Section 7 hereof, (ii)
Holdings or any Loan Party shall default in the observance or performance
of any agreements contained in Section 5 of the Guarantee and Collateral
Agreement, (iii) an "Event of Default" under and as defined in any Mortgage
shall have occurred and be continuing; or (iv) Holdings shall default in
the observance or performance of any agreement contained in any of Sections
7.2, 7.3, 7.9(d), 7.13, 7.16 and 7.19 hereof; or
(d) Holdings or any Loan Party shall default in the observance or
performance of any other covenant or agreement contained in this Agreement
or any other Loan Document (other than as provided in paragraphs (a)
through (c) of this Section), and such default shall continue unremedied
for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness (including, without
limitation, any Guarantee Obligation, but excluding the Loans) on the
scheduled or original due date with respect thereto; or (ii) default in
making any payment of any interest on any such Indebtedness beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness was created; or (iii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause,
or to permit the holder or beneficiary of such Indebtedness (or a trustee
or agent on behalf of such holder or beneficiary) to cause, with the giving
of notice if required, such Indebtedness to become due prior to its stated
maturity or (in the case of any such Indebtedness constituting a Guarantee
Obligation) to become payable; provided, that a default, event or condition
described in clause (i), (ii) or (iii) of this -------- paragraph (e) shall
not at any time constitute an Event of Default unless, at such time, one or
more defaults, events or conditions of the type described in clauses (i),
(ii) and (iii) of this paragraph (e) shall have occurred and be continuing
with respect to Indebtedness the outstanding principal amount of which
exceeds in the aggregate $5,000,000; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above that
(A) results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the Borrower
or any of its Subsidiaries any case, proceeding or other
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action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets that
results in the entry of an order for any such relief that shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise
on the assets of the Borrower or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan, (vi) the Borrower, any of its Subsidiaries or any
Commonly Controlled Entity shall be required to make during any fiscal year
of the Borrower payments pursuant to any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides benefits to retired
employees (or their dependents) that, in the aggregate, exceed $1,000,000
with respect to such fiscal year, (vii) the Borrower, any of its
Subsidiaries or any Commonly Controlled Entity shall be required to make
during any fiscal year of the Borrower contributions to any defined benefit
pension plan subject to Title IV of ERISA (including any Multiemployer
Plan) that, in the aggregate, exceed $1,000,000 with respect to such fiscal
year or (viii) any other similar event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (i) through (viii)
above, such event or condition, together with all other such events or
conditions, if any, could, in the sole judgment of the Required Lenders,
reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving for the Borrower and its
Subsidiaries taken as a whole a liability (not paid or fully covered by
insurance as to which the relevant insurance company has acknowledged
coverage) of $3,000,000 or more, and all such judgments or decrees shall
not have been vacated, discharged, stayed or bonded pending appeal within
30 days from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason (other
than pursuant to the terms thereof), to be in full force and effect, or
Holdings, any Loan Party or any Affiliate of Holdings or any Loan Party
shall so assert, or any Lien created by any
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of the Security Documents shall cease to be enforceable and of the same
effect and priority purported to be created thereby; or
(j) Any Loan Party shall default under a lease obligation such that
the landlord under such lease shall be entitled to place a Lien (other than
any Lien permitted under Section 7.3 or, in the case of Collateral
consisting of Pledged Stock, any non-consensual Lien permitted under
Section 7.3 to the extent arising by operation of law) on any of the
Collateral; or
(k) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason (other than pursuant to
the terms thereof), to be in full force and effect or any Loan Party or any
Affiliate of any Loan Party shall so assert; or
(l) Holdings or any Loan Party or any Affiliate of Holdings or any
Loan Party shall assert that any provision of any Loan Document is not in
full force and effect; or
(m) (i) The Permitted Investors shall cease to have the power to vote
or direct the voting of securities having a majority of the ordinary voting
power for the election of directors of Holdings (determined on a fully
diluted basis); (ii) the Permitted Investors shall cease to own of record
and beneficially an amount of common stock of Holdings equal to at least
70% of the amount of common stock of Holdings owned by the Permitted
Investors of record and beneficially as of the Closing Date; (iii) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
excluding the Permitted Investors, shall become, or obtain rights (whether
by means or warrants, options or otherwise) to become, the "beneficial
owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act),
directly or indirectly, of more than 30% of the outstanding common stock of
Holdings; (iv) the board of directors of Holdings or the Borrower shall
cease to consist of a majority of Continuing Directors; (v) Holdings shall
cease to own and control, of record and beneficially, directly, 100% of
each class of outstanding Capital Stock of the Borrower free and clear of
all Liens (except non-consensual Liens permitted under Section 7.3 to the
extent arising by operation of law); or (vi) a Specified Change of Control
shall occur; or
(n) The Indebtedness under the Senior Subordinated Note Documentation
or any guarantees thereof shall cease, for any reason, to be validly
subordinated to the Obligations or the obligations of the Subsidiary
Guarantors under the Guarantee and Collateral Agreement, as the case may
be, as provided in the Senior Subordinated Note Documentation, or any Loan
Party, any Affiliate of any Loan Party or the holders (or any trustee on
behalf of the holders) of at least 25% in aggregate principal amount of
such Indebtedness shall so assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to any Loan Party,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without
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limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Majority Revolving Credit Facility
Lenders, the Administrative Agent may, or upon the request of the Majority
Revolving Credit Facility Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Revolving Credit Commitments to be terminated
forthwith, whereupon the Revolving Credit Commitments shall immediately
terminate; and (ii) with the consent of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the other
Loan Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Upon the
occurrence and during the continuation of an Event of Default, the
Administrative Agent and the Lenders shall be entitled to exercise any and all
remedies available under the Security Documents, including, without limitation,
the Guarantee and Collateral Agreement and the Mortgages, or otherwise available
under applicable law or otherwise. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount in
immediately available funds equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit (and the Borrower hereby grants to the
Administrative Agent, for the ratable benefit of the Administrative Agent and
the Secured Parties, a continuing security interest in all amounts at any time
on deposit in such cash collateral account to secure the undrawn and unexpired
amount of such Letters of Credit and all other Obligations). If at any time the
Administrative Agent determines that any funds held in such cash collateral
account are subject to any right or claim of any Person other than the
Administrative Agent and the Secured Parties or that the total amount of such
funds is less than the aggregate undrawn and unexpired amount of outstanding
Letters of Credit, the Borrower shall, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional funds to be
deposited and held in such cash collateral account, an amount equal to the
excess of (a) such aggregate undrawn and unexpired amount over (b) the total
amount of funds, if any, then held in such cash collateral account that the
Administrative Agent determines to be free and clear of any such right and
claim. Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Loan Parties hereunder and under the other Loan Documents.
After all such Letters of Credit shall have expired or been fully drawn upon,
all Reimbursement Obligations shall have been satisfied and all other
Obligations of the Loan Parties hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Loan Parties (or such other Person as may be
lawfully entitled thereto).
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SECTION 9. THE AGENTS; THE ARRANGER
9.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Agents as the agents of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes each Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.
9.2 Delegation of Duties. Each Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither the Arranger, nor any Agent nor any of
their respective officers, directors, partners, employees, agents, attorneys and
other advisors, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except to the extent
that any of the foregoing are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted solely from its or such
Person's own gross negligence or willful misconduct) or (ii) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by any Loan Party or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Arranger or
the Agents under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of any Loan Party party thereto to perform its obligations hereunder or
thereunder. The Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 Reliance by Agents. Each Agent shall be entitled to rely, and shall be
fully protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to Holdings and the Loan Parties), independent accountants
and other experts selected by such Agent. The Agents may deem and treat the
payee of any Note as the owner thereof for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. Each Agent shall be fully justified in failing or
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refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required Lenders
or the requisite Lenders under Section 10.1 to authorize or require such action
or inaction (or, if so specified by this Agreement, all Lenders) as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action. Each Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Required
Lenders or the requisite Lenders under Section 10.1 to authorize or require such
action (or, if so specified by this Agreement, all Lenders), and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Loans and Letters of Credit.
9.5 Notice of Default. No Agent shall be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder unless such Agent
has received notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the requisite Lenders (or,
if so specified by this Agreement, all Lenders); provided that unless and until
the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Arranger, the Agents nor any of their respective
officers, directors, employees, agents, attorneys and other advisors, partners,
attorneys-in-fact or affiliates have made any representations or warranties to
it and that no act by the Arranger or any Agent hereinafter taken, including any
review of the affairs of Holdings or a Loan Party or any affiliate of Holdings
or a Loan Party, shall be deemed to constitute any representation or warranty by
the Arranger or any Agent to any Lender. Each Lender represents to the Arranger
and the Agents that it has, independently and without reliance upon the Arranger
or any Agent or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition, prospects and
creditworthiness of Holdings and the Loan Parties and their affiliates and made
its own decision to make its Loans (and in the case of the Issuing Lender, its
Letters of Credit) hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Arranger or
any Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition, prospects and creditworthiness of Holdings and the Loan Parties and
their affiliates. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent hereunder,
neither the Arranger nor any Agent shall have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness
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of Holdings or any Loan Party or any affiliate of Holdings or a Loan Party that
may come into the possession of the Arranger or such Agent or any of its
officers, directors, employees, agents, attorneys and other advisors, partners,
attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify the Arranger and each
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Arranger or such Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents, the Acquisition Documentation or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Arranger or
such Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted solely from the Arranger's
or such Agent's gross negligence or willful misconduct. The agreements in this
Section 9.7 shall survive the payment of the Loans and Letters of Credit and all
other amounts payable hereunder.
9.8 Arranger and Agents in Their Individual Capacities. The Arranger and
each Agent and their respective affiliates may make loans to, accept deposits
from and generally engage in any kind of business with any Loan Party as though
the Arranger was not the Arranger and such Agent was not an Agent. With respect
to its Loans made or renewed by it and with respect to any Letter of Credit
issued or participated in by it, the Arranger and each Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not the Arranger or an Agent,
as the case may be, and the terms "Lender" and "Lenders" shall include the
Arranger and each Agent in their respective individual capacities.
9.9 Successor Agents. The Administrative Agent may resign as Administrative
Agent upon 10 Business Days' notice to the Lenders and the Borrower. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall
(unless an Event of Default under Section 8(a) or Section 8(f) with respect to
the Borrower shall have occurred and be continuing) be subject to approval by
the Borrower (which approval shall not be unreasonably withheld or delayed),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement
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or any holders of the Loans or Letters of Credit. If no successor agent has
accepted appointment as Administrative Agent by the date that is 10 Business
Days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. The Syndication Agent may, at
any time, by notice to the Lenders and the Administrative Agent, resign as
Syndication Agent hereunder, whereupon the duties, rights, obligations and
responsibilities of the Syndication Agent hereunder shall automatically be
assumed by, and inure to the benefit of, the Administrative Agent, without any
further act by the Arranger, the Syndication Agent, the Administrative Agent or
any Lender. After any retiring Agent's resignation as Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
9.10 Authorization to Release Liens. The Administrative Agent is hereby
irrevocably authorized by each of the Lenders to release any Lien covering any
Property of Holdings, the Borrower or any of its Subsidiaries that is the
subject of a Disposition which is permitted by this Agreement or which has been
consented to by the requisite Lenders in accordance with Section 10.1.
9.11 The Arranger. The Arranger, in its capacity as such, shall have no
duties or responsibilities, and shall incur no liability, under this Agreement
and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party and/or Holdings, as the case may be, party
to the relevant Loan Document may, or (with the written consent of the Required
Lenders) the Agents and each Loan Party and/or Holdings, as the case may be,
party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents (including amendments and restatements hereof or thereof) for the
purpose of adding any provisions to this Agreement or the other Loan Documents
or changing in any manner the rights of the Lenders or of Holdings and the Loan
Parties hereunder or thereunder or (b) waive, on such terms and conditions as
may be specified in the instrument of waiver, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan or Reimbursement Obligation, extend
the scheduled date or change the amount of any amortization payment in respect
of any Term Loan, reduce the stated rate of any interest or fee payable
hereunder or extend the scheduled date of any payment thereof, or increase the
amount or extend the expiration date of any Commitment of any Lender, in each
case without the consent of each Lender directly affected thereby; (ii) amend,
modify or waive any provision of this Section or reduce any percentage specified
in the definition of Required Lenders, Required Prepayment Lenders or Majority
Facility Lenders, consent to the assignment or transfer by
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Holdings or any Loan Party of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Subsidiary Guarantors from
their guarantee obligations under the Guarantee and Collateral Agreement, in
each case without the consent of all Lenders; (iii) amend, modify or waive any
condition precedent to any extension of credit under the Revolving Credit
Facility set forth in Section 5.2 (including, without limitation, the waiver of
an existing Default or Event of Default required to be waived in order for such
extension of credit to be made) without the consent of the Majority Revolving
Credit Facility Lenders; (iv) reduce the percentage specified in the definition
of Majority Facility Lenders with respect to any Facility without the written
consent of all Lenders under such Facility; (v) amend, modify or waive any
provision of Section 9 without the consent of the Arranger or any Agent directly
affected thereby; (vi) amend, modify or waive any provision of Section 2.6 or
2.7 without the written consent of the Swing Line Lender; (vii) amend, modify or
waive any provision of Section 2.12 or Section 2.18 without the consent of each
Lender directly affected thereby; or (viii) amend, modify or waive any provision
of Section 3 without the consent of the Issuing Lender. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon Holdings, the Loan Parties, the Lenders, the
Agents, the Arranger and all future holders of the Loans and Letters of Credit.
In the case of any waiver, Holdings, the Loan Parties, the Lenders, the Arranger
and the Agents shall be restored to their former position and rights hereunder
and under the other Loan Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereon. Any such waiver, amendment, supplement or modification shall
be effected by a written instrument signed by the parties required to sign
pursuant to the foregoing provisions of this Section; provided, that delivery of
an executed signature page of any such instrument by facsimile transmission
shall be effective as delivery of a manually executed counterpart thereof. For
the avoidance of doubt, this Agreement may be amended (or amended and restated)
with the written consent of the Required Lenders, the Arranger, the Agents,
Holdings and the Borrower (x) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the "Additional Extensions of Credit") to share ratably in the
benefits of this Agreement and the other Loan Documents with the Term Loans and
Revolving Extensions of Credit and the accrued interest and fees in respect
thereof and (y) to include appropriately the Lenders holding such credit
facilities in any determination of the Required Lenders, Required Prepayment
Lenders and Majority Facility Lenders; provided, however, that no such amendment
shall permit the Additional Extensions of Credit to share ratably with or with
preference to the Term Loans in the application of mandatory prepayments without
the consent of the Required Prepayment Lenders or otherwise to share ratably
with or with preference to the Revolving Extensions of Credit without the
consent of the Majority Revolving Facility Lenders.
10.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy when
accompanied by confirmation thereof), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered or the
next Business Day after being delivered to an overnight courier, FedEx, or
similar service or, in the case of telecopy notice, when received, addressed (a)
in the case of Holdings, the Borrower, the Arranger and the Agents, as follows
and
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(b) in the case of the Lenders, as set forth on Schedule 1 to the Lender
Addendum to which such Lender is a party or, in the case of a Lender which
becomes a party to this Agreement pursuant to an Assignment and Acceptance, in
such Assignment and Acceptance or (c) in the case of any party, to such other
address as such party may hereafter notify to the other parties hereto:
The Borrower: O'Sullivan Industries, Inc.
1900 Gulf Street
Lamar, Missouri 64759-1899
Attention: Vice President - Finance and
Treasurer
Telecopy: (417) 682-8120
Telephone: (417) 682-8312
with a copy to: Bruckmann, Rosser, & Sherrill & Co.
126 East 56th Street, 29th Floor
New York, New York 10022
Attention: Stephen Edwards
Telecopy: (212) 521-3700
Telephone: (212) 521-3799
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy: (212) 446-4900
Telephone: (212) 446-4800
Holdings: O'Sullivan Industries, Inc.
1900 Gulf Street
Lamar, Missouri 64759-1899
Attention: Vice President - Finance
and Treasurer
Telecopy: (417) 682-8120
Telephone: (417) 682-8312
with a copy to: Bruckmann, Rosser, & Sherrill & Co.
126 East 56th Street, 29th Floor
New York, New York 10022
Attention: Stephen Edwards
Telecopy: (212) 521-3700
Telephone: (212) 521-3799
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Kirkland & Ellis
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy: (212) 446-4900
Telephone: (212) 446-4800
The Syndication Agent: Wachovia Bank, N.A.
191 Peachtree St. N.E.
Atlanta, Georgia 30303
Attention: Scott Sundal
Telecopy: (404) 332-6552
Telephone: (404) 332-6920
with a copy to: King & Spalding
191 Peachtree St. N.E.
Atlanta, Georgia 30303
Attention: Jerry Woods
Telecopy: (404) 572-5149
Telephone: (404) 572-4786
The Administrative Agent: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michael O'Brien
Telecopy: (212) 526-7691
Telephone: (212) 526-0437
with a copy to: Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10386
Attention: Christopher R. Plaut, Esq.
Telecopy: (212) 751-4864
Telephone: (212) 906-1262
The Arranger: Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Attention: Michael O'Brien
Telecopy: (212) 526-7691
Telephone: (212) 526-0437
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<PAGE> 108
with a copy to: Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10386
Attention: Christopher R. Plaut, Esq.
Telecopy: (212) 751-4864
Telephone: (212) 906-1262
Issuing Lender: As notified by the Issuing Lender to
the Administrative Agent and the
Borrower
provided that any notice, request or demand to or upon any Agent or any Lender
shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Arranger, any Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document, or
certificate delivered pursuant to any Loan Document shall survive the execution
and delivery of this Agreement and the making of the Loans and other extensions
of credit hereunder.
10.5 Payment of Expenses. The Borrower agrees (a) to pay or reimburse the
Arranger and the Agents for all their reasonable out-of-pocket costs and
expenses incurred in connection with the syndication of the Facilities (other
than fees payable to syndicate members) and the preparation, negotiation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements and other charges of counsel to each of the
Arranger, the Administrative Agent and the Syndication Agent, (b) to pay or
reimburse each Lender, the Arranger and each Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
to each Lender and of counsel to the Arranger and each Agent, (c) to pay,
indemnify, and hold each Lender, the Arranger and the Agents harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender, the Arranger, each Agent, their respective affiliates, and their
respective officers, directors, partners, trustees, employees, attorneys and
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<PAGE> 109
other advisors, agents, attorneys-in-fact and controlling persons (each, an
"Indemnitee") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or Letters of Credit or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of any Loan Party or
any of the Properties and the fees and disbursements and other charges of legal
counsel in connection with claims, actions or proceedings by any Indemnitee
against the Borrower hereunder (all the foregoing in this clause (d),
collectively, the "Indemnified Liabilities"), provided, that the Borrower shall
have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
solely from the gross negligence or willful misconduct of such Indemnitee.
Without limiting the foregoing, and to the extent permitted by applicable law,
the Borrower agrees not to assert and to cause its Subsidiaries not to assert,
and hereby waives and agrees to cause its Subsidiaries so to waive, all rights
for contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee. All amounts due
under this Section shall be payable not later than 5 days after written demand
therefor. Statements payable by the Borrower pursuant to this Section shall be
submitted to the Borrower in accordance with Section 10.2, or to such other
Person or address as may be hereafter designated by the Borrower in a written
notice to the Administrative Agent. The agreements in this Section shall survive
repayment of the Loans and Letters of Credit and all other amounts payable
hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of
Holdings, the Borrower, the Lenders, the Arranger, the Agents, all future
holders of the Loans and the Letters of Credit and their respective successors
and assigns, except that neither Holdings nor the Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Arranger, the Agents and each Lender.
(b) Any Lender may, without the consent of the Borrower or any other
Person, in accordance with applicable law, at any time sell to one or more
banks, financial institutions or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating interest
to a Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower, the Arranger and the Agents shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to
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<PAGE> 110
any departure by any Loan Party therefrom, except to the extent that such
amendment, waiver or consent would reduce the principal of, or interest on, the
Loans or any fees payable hereunder, or postpone the date of the final maturity
of the Loans, in each case to the extent subject to such participation. The
Borrower agrees that if amounts outstanding under this Agreement and the Loans
are due or unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall, to
the maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in Section
10.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that
each Participant shall be entitled to the benefits of Sections 2.19, 2.20 and
2.21 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that, in the case
of Section 2.20, such Participant shall have complied with the requirements of
said Section and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable law and
upon written notice to the Syndication Agent, at any time and from time to time
assign to any other Lender or any affiliate or Control Investment Affiliate of
any Lender or, with the consent of the Borrower and the Agents and, in the case
of any assignment of Revolving Credit Commitments, the written consent of the
Issuing Lender and the Swing Line Lender (which, in each case, shall not be
unreasonably withheld or delayed) (provided (x) that no such consent need be
obtained by a Lehman Entity for a period of 180 days following the Closing Date
and (y) the consent of the Borrower need not be obtained with respect to any
assignment of Term Loans), to an additional bank, financial institution or other
entity (an "Assignee") all or any part of its rights and obligations under this
Agreement pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit E, executed by such Assignee and such Assignor (and, where the consent
of the Borrower or, the Agents or the Issuing Lender or the Swing Line Lender is
required pursuant to the foregoing provisions, by the Borrower and such other
Persons) and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that no such assignment to an Assignee
(other than any Lender or any affiliate thereof) shall be in an aggregate
principal amount of less than $5,000,000 or, after giving effect thereto, result
in such assigning Lender having a Commitment and/or outstanding Loans in an
aggregate amount of less than $2,500,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower, the Syndication Agent and the Administrative
Agent. Any such assignment need not be ratable as among the Facilities. Upon
such execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such Assignor shall cease to be
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<PAGE> 111
a party hereto). Notwithstanding any provision of this Section, the consent of
the Borrower shall not be required for any assignment that occurs at any time
when any Event of Default shall have occurred and be continuing.
(d) The Administrative Agent shall, on behalf of the Borrower, maintain at
its address referred to in Section 10.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Loans and any Notes evidencing such
Loans recorded therein for all purposes of this Agreement. Any assignment of any
Loan, whether or not evidenced by a Note, shall be effective only upon
appropriate entries with respect thereto being made in the Register (and each
Note shall expressly so provide). Any assignment or transfer of all or part of a
Loan evidenced by a Note shall be registered on the Register only upon surrender
for registration of assignment or transfer of the Note evidencing such Loan,
accompanied by a duly executed Assignment and Acceptance; thereupon one or more
new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower marked "canceled". The Register shall be available for
inspection by the Borrower or any Lender (with respect to any entry relating to
such Lender's Loans) at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor and an Assignee (and, in any case where the consent of any other Person
is required by Section 10.6(c), by each such other Person) together with payment
to the Administrative Agent of a registration and processing fee of $3,500
(except that no such registration and processing fee shall be payable (y) in
connection with an assignment by or to a Lehman Entity or (z) in the case of an
Assignee which is already a Lender or is an affiliate of a Lender or a Person
under common management with a Lender), the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Borrower. On
or prior to such effective date, the Borrower, at its own expense, upon request,
shall execute and deliver to the Administrative Agent (in exchange for the
Revolving Credit Note and/or applicable Term Notes, as the case may be, of the
assigning Lender) a new Revolving Credit Note and/or applicable Term Notes, as
the case may be, to such Assignee or its registered assigns in an amount equal
to the Revolving Credit Commitment and/or applicable Term Loans, as the case may
be, assumed or acquired by it pursuant to such Assignment and Acceptance and, if
the Assignor has retained a Revolving Credit Commitment and/or Term Loans, as
the case may be, upon request, a new Revolving Credit Note and/or Term Notes, as
the case may be, to the Assignor or its registered assigns in an amount equal to
the Revolving Credit Commitment and/or applicable Term Loans, as the case may
be, retained by it hereunder. Such new Note or Notes shall be dated the Closing
Date and shall otherwise be in the form of the Note or Notes replaced thereby.
(f) For the avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and Notes
relate only to
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absolute assignments and that such provisions do not prohibit assignments
creating security interests, including, without limitation, any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law.
10.7 Adjustments; Set-off.
(a) Except to the extent that this Agreement provides for payments to be
allocated to a particular Lender or to the Lenders under a particular Facility,
if any Lender (a "Benefited Lender") shall at any time receive any payment of
all or part of the Obligations owing to it, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 8(f), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Obligations, such Benefited
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Obligations, or shall provide such
other Lenders with the benefits of any such collateral, as shall be necessary to
cause such Benefited Lender to share the excess payment or benefits of such
collateral ratably with each of the Lenders; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered from such
Benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower during
the existence of an Event of Default, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of the Borrower. Each Lender
agrees to notify promptly the Borrower and the Administrative Agent after any
such setoff and application made by such Lender, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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10.10 Integration. This Agreement and the other Loan Documents represent
the agreement of Holdings, the Borrower, the Agents, the Arranger and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Arranger, any Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of Holdings and the
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to Holdings or the
Borrower, as the case may be, at its address set forth in Section 10.2 or at
such other address of which the Administrative Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
10.13 Acknowledgments. Each of Holdings and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Arranger, any Agent nor any Lender has any fiduciary
relationship with or duty to Holdings or the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Arranger, the
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Agents and Lenders, on one hand, and Holdings and the Borrower, on the other
hand, in connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Arranger, the Agents and the Lenders or among Holdings, the Borrower and the
Lenders.
10.14 Confidentiality. Each of the Arranger, the Agents and the Lenders
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent the Arranger, any Agent
or any Lender from disclosing any such information (a) to the Arranger, any
Agent, any other Lender or any affiliate of any thereof (b) to any Participant
or Assignee (each, a "Transferee") or prospective Transferee that agrees to
comply with the provisions of this Section, (c) to any of its employees,
directors, agents, attorneys, accountants and other professional advisors,
(d) to any financial institution that is a direct or indirect contractual
counterparty in swap agreements or such contractual counterparty's professional
advisor (so long as such contractual counterparty or professional advisor to
such contractual counterparty agrees to be bound by the provisions of this
Section), (e) upon the request or demand of any Governmental Authority having
jurisdiction over it, (f) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (g) if requested or required to do so in connection with any
litigation or similar proceeding, (h) that has been publicly disclosed other
than in breach of this Section, (i) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender or (j) in
connection with the exercise of any remedy hereunder or under any other Loan
Document; provided, further, that in the case of clauses (e) and (f) only, to
the extent permitted under applicable Requirements of Law, the Arranger or the
applicable Agent or Lender, as the case may be, shall notify such Loan Party of
any such request, demand or order applicable to it so that such Loan Party may
seek a protective order or other appropriate remedy to prevent the disclosure
thereof.
10.15 Release of Collateral and Guarantee Obligations.
(a) Notwithstanding anything to the contrary contained herein or in any
other Loan Document, upon request of the Borrower in connection with any
Disposition of Property permitted by the Loan Documents, the Administrative
Agent shall (without notice to or vote or consent of any Lender, or any
affiliate of any Lender that is a party to any Specified Hedge Agreement) take
such actions as shall be required to release its security interest in any
Collateral being Disposed of in such Disposition, and to release any guarantee
obligations of any Person being Disposed of in such Disposition, to the extent
necessary to permit consummation of such Disposition in accordance with the Loan
Documents provided that the Borrower shall have delivered to the Administrative
Agent, at least five Business Days prior to the date of the proposed release, a
written request for release identifying the relevant Collateral being Disposed
of in such Disposition and the terms of such Disposition in reasonable detail,
including the date thereof, the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with this Agreement and the other
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Loan Documents and that the proceeds of such Disposition will be applied in
accordance with this Agreement and the other Loan Documents.
(b) Notwithstanding anything to the contrary contained herein or any other
Loan Document, when all Loans and Reimbursement Obligations in respect of
Letters of Credit have been paid in full, and all other Obligations (excluding
Obligations in respect of any Specified Hedge Agreement and unmatured contingent
reimbursement and indemnification Obligations) have been paid in full, all
Commitments have terminated or expired and no Letter of Credit shall be
outstanding, upon request of the Borrower, the Administrative Agent shall
(without notice to or vote or consent of any Lender, or any affiliate of any
Lender that is a party to any Specified Hedge Agreement) take such actions as
shall be required to release its security interest in all Collateral, and to
release all guarantee obligations provided for in any Loan Document, whether or
not on the date of such release there may be outstanding Obligations in respect
of Specified Hedge Agreements.
10.16 Accounting Changes. In the event that any "Accounting Change" (as
defined below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then
Holdings and the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating Holdings' and the Borrower's financial condition shall
be the same after such Accounting Changes as if such Accounting Changes had not
been made. Until such time as such an amendment shall have been executed and
delivered by Holdings, the Borrower, the Administrative Agent and the Required
Lenders, all financial covenants, standards and terms in this Agreement shall
continue to be calculated or construed as if such Accounting Changes had not
occurred. "Accounting Changes" refers to changes in accounting principles
required or permitted by the promulgation of any rule, regulation, pronouncement
or opinion by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants or, if applicable, the SEC.
10.17 Delivery of Lender Addenda. Each initial Lender shall become a party
to this Agreement by delivering to the Administrative Agent and the Syndication
Agent a Lender Addendum duly executed by such Lender, the Borrower and each
Agent.
10.18 Construction. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.
10.19 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE ARRANGER, THE
AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
O'SULLIVAN INDUSTRIES, INC.
By: /s/ Richard D. Davidson
-------------------------------------
Name: Richard D. Davidson
Title: President & Chief Operating
Officer
Acknowledged and agreed as to its
agreements and obligations in Sections
2.12, 4.8, 4.21, 6.14, 7.2, 7.3, 7.9(d),
7.13, 7.16, 7.19, 7.20, 10.6(a), 10.10
through 10.13, 10.16 and 10.19 only,
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Richard D. Davidson
-------------------------------------
Name: Richard D. Davidson
Title: President & Chief Operating
Officer
LEHMAN BROTHERS INC.,
as Arranger
By: /s/ Michael O'Brien
-------------------------------------
Name:
Title:
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WACHOVIA BANK, N.A., as
Syndication Agent
By: /s/ Stephen R. Philpott
-------------------------------------
Name: Stephen R. Philpott
Title: Vice President
LEHMAN COMMERCIAL PAPER INC., as
Administrative Agent
By: /s/ Michael O'Brien
-------------------------------------
Name:
Title:
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Annex A
PRICING GRID FOR REVOLVING CREDIT LOANS, SWING LINE LOANS,
TRANCHE A TERM LOANS AND COMMITMENT FEES
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------
Consolidated Applicable Margin For Commitment Applicable Margin For
Leverage Ratio Eurodollar Loans Fee Base Rate Loans
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
=> 4.0 : 1.0 3.25% 0.50% 2.25%
=> 3.0 : 1.0 and < 3.00% 0.50% 2.00%
4.0 : 1.0
< 3.0 : 1.0 2.50% 0.375% 1.50%
</TABLE>
Changes in the Applicable Margin with respect to Tranche A Loans, Revolving
Credit Loans and Swing Line Loans or in the Commitment Fee Rate resulting from
changes in the Consolidated Leverage Ratio shall become effective on the first
day after the date (the "Adjustment Date") on which financial statements are
delivered to the Lenders pursuant to Section 6.1 (but in any event not later
than the 45th day after the end of each of the first three quarterly periods of
each fiscal year or the 90th day after the end of each fiscal year, as the case
may be) and shall remain in effect until the next change to be effected pursuant
to this paragraph. If any financial statements referred to above are not
delivered within the time periods specified above, then, until and including the
date on which such financial statements are delivered, the Consolidated Leverage
Ratio as at the end of the fiscal period that would have been covered thereby
shall for the purposes of this definition be deemed to be greater than 4.0 to
1.0. In addition, at all times while an Event of Default shall have occurred and
be continuing, the Consolidated Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 4.0 to 1.0. Each determination of the
Consolidated Leverage Ratio pursuant to this definition shall be made with
respect to the period of four consecutive fiscal quarters of the Borrower ending
as of the last day of the period covered by the relevant financial statements.
A-1
<PAGE> 119
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
O'SULLIVAN INDUSTRIES, INC.
By: /s/ Richard D. Davidson
-------------------------------------
Name: Richard D. Davidson
Title: President & Chief Operating
Officer
Acknowledged and agreed as to its
agreements and obligations in Sections
2.12, 4.8, 4.21, 6.14, 7.2, 7.3, 7.9(d),
7.13, 7.16, 7.19, 7.20, 10.6(a), 10.10
through 10.13, 10.16 and 10.19 only,
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Richard D. Davidson
-------------------------------------
Name: Richard D. Davidson
Title: President & Chief Operating
Officer
LEHMAN BROTHERS INC.,
as Arranger
By: /s/ Michael O'Brien
-------------------------------------
Name:
Title:
<PAGE> 120
WACHOVIA BANK, N.A., as
Syndication Agent
By: /s/ Stephen R. Philpott
-------------------------------------
Name: Stephen R. Philpott
Title: Vice President
LEHMAN COMMERCIAL PAPER INC., as
Administrative Agent
By: /s/ Michael O'Brien
-------------------------------------
Name:
Title:
<PAGE> 121
WACHOVIA BANK, N.A., as
Syndication Agent
By: /s/ Stephen R. Philpott
-------------------------------------
Name: Stephen R. Philpott
Title: Vice President
LEHMAN COMMERCIAL PAPER INC., as
Administrative Agent
By: /s/ Michael O'Brien
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.2
BRUCKMANN, ROSSER, SHERRILL & CO., L.L.C.
126 EAST 56TH STREET, 29TH FLOOR
NEW YORK, NEW YORK
November 30, 1999
O'Sullivan Industries, Inc.
1900 Gulf Street
Lamar, MO 64759-1899
Re: Management Services Agreement
Gentlemen:
This letter sets forth our understanding with respect to the engagement by
you, O'Sullivan Industries, Inc., a Delaware corporation (the "Company"), of the
undersigned Bruckmann, Rosser, Sherrill & Co., L.L.C., a Delaware limited
liability company ("BRS"), to provide management and financial advisory services
to the Company.
1. Duties.
The Company hereby retains BRS to provide management services including,
without limitation, providing strategic direction and oversight of corporate and
financial planning and analyzing and negotiating financial alternatives, as the
Company may reasonably request from time to time (the "Services"). The Services
will be provided to the Company on a non-exclusive basis on the terms and
conditions set forth in this Agreement.
The Company will use the services of BRS and BRS will make itself available
for the performance of services under this Agreement upon reasonable notice. BRS
will perform its services at the times and places reasonably requested by the
Company to meet its needs and requirements, taking into account other
engagements that BRS may have.
2. Compensation of BRS. As consideration payable to BRS or any of its
affiliates for providing the services set forth in Section 1, the Company shall
make the following payments to BRS:
(a) A management fee in respect of the period beginning on the date hereof
and ending June 30, 2000 (the "Interim Period") in an amount equal to the
greater of (x) $175,000 and (y) one percent of the Company's Consolidated Cash
Flow (as such term is defined in the Indenture relating to the Company's 133/8%
Senior Subordinated Notes due 2009 (the "Indenture") for the Interim Period (the
"Interim Management Fee"). The Interim Management Fee shall be payable on the
date hereof in the amount of $175,000. In the event that it shall be determined
following the end
<PAGE> 2
O'Sullivan Industries, Inc.
November 30, 1999
Page 2
of the Interim Period that one percent of the Company's Consolidated Cash Flow
for the Interim Period exceeds $175,000 (as determined by the Board in its good
faith business judgment), such excess shall promptly be paid to BRS in respect
of the Interim Management Fee;
(b) An annual management fee in respect of each fiscal year of the Company
(other than the fiscal year ending June 30, 2000) in an amount equal to the
greater of (x) $300,000 and (y) one percent of the Company's Consolidated Cash
Flow for such fiscal year (the "Annual Management Fee" and, together with the
Interim Management Fee, the "Management Fee"). The Annual Management Fee shall
be payable semi-annually in advance on each July 1 and January 1, commencing
July 1, 2000, in an amount equal to the greater of (i) $150,000 (representing
one-half of $300,000) and (ii) one percent of the budgeted Consolidated Cash
Flow (without giving effect to the reduction for cash payments made pursuant to
this Agreement under clause (8) of the definition of Consolidated Cash Flow set
forth in the Indenture), as determined by the Board by reference to the
Company's budget for such period, for the two full fiscal quarters immediately
following such payment date. In the event that it shall be determined following
the end of each fiscal year of the Company, excluding the fiscal year ending
June 30, 2000, that the amount equal to the greater of (1) $300,000 and (2) one
percent of the Company's Consolidated Cash Flow (as determined by the Board by
reference to the Company's audited financial statements for such year and
without giving effect to the reduction for cash payments made pursuant to this
Agreement under clause (8) of the definition of Consolidated Cash Flow set forth
in the Indenture) for such fiscal year exceeds the amount of cash actually paid
to BRS for such fiscal year, the Company shall promptly pay an amount equal to
such excess to BRS in respect of the Annual Management Fee, and in the event
that it shall be determined that the amount of cash actually paid to BRS for
such fiscal year exceeds the greater of (1) $300,000 and (2) one percent of the
Company's Consolidated Cash Flow (without giving effect to the reduction for
cash payments made pursuant to this Agreement under clause (8) of the definition
of Consolidated Cash Flow set forth in the Indenture), an amount equal to such
excess to the Company shall be offset against the next payment payable to BRS
hereunder; and
(c) Actual and direct out-of-pocket expenses (including fees and
disbursements of attorneys, accountants and other professionals and consultants
retained by BRS in connection with the Services provided hereunder) incurred by
BRS and its personnel in performing the Services, which shall be reimbursed to
BRS by the Company upon the delivery of rendering of a statement such supporting
data as the Company reasonably shall require.
Notwithstanding the foregoing, the right of BRS to receive cash payments
pursuant to this Section 2 and the ability of the Company to make any cash
payments pursuant to this Section 2 shall be conditional and contingent upon the
following: (i) the Fixed Charge Coverage Ratio (as defined in the Indenture) for
the four most recently ended full fiscal quarters for which internal financial
statements are available to management immediately preceding any payment date is
at least 2.0 to 1 and (ii) the payments must be permitted pursuant to Section
7.20 of the Credit Agreement. Any payments to which BRS has no right pursuant to
the limitations of the preceding sentence and that are not permitted to be paid
by the Company shall be paid in cash only at the time, if any, such
<PAGE> 3
O'Sullivan Industries, Inc.
November 30, 1999
Page 3
payments are permitted pursuant to the Fixed Charge Coverage Ratio test above
and are permitted under the Credit Agreement.
In the event of a bankruptcy, liquidation or winding-up of the Company, the
payment of all accrued and unpaid fees and other obligations under this
agreement shall be subordinated to the prior payment in full of all amounts due
and owing under the Indenture and the Credit Agreement.
In the event the Company acquires other entities (including by way of merger,
consolidation or otherwise), the Management Fee shall be subject to increase in
an amount that is mutually agreed upon by the Company and BRS.
3. Indemnification. In the event that BRS or any of its affiliates,
principals, partners, directors, members, stockholders, employees, agents and
representatives (collectively, the "Indemnified Parties") becomes involved in
any capacity in any action, proceeding or investigation in connection with any
matter referred to in or contemplated by this Agreement, or in connection with
the Services, the Company will indemnify and hold harmless the Indemnified
Parties from and against any actual or threatened claims, lawsuits, actions or
liabilities (including out-of-pocket expenses and the fees and expenses of
counsel and other litigation costs and the cost of any preparation or
investigation of any kind or nature ("Losses")), arising as a result of or in
connection with this Agreement and the Services, and will periodically reimburse
BRS for its expenses as described above, except that the Company will not be
obligated to so indemnify any Indemnified Party if, and to the extent that, such
claims, lawsuits, actions or liabilities against such Indemnified Party directly
result from the gross negligence or wilful misconduct of such Indemnified Party
as admitted in any settlement by such Indemnified Party or held in any final,
non-appealable judicial or administrative decision. In connection with such
indemnification, the Company will promptly remit or pay to BRS any amounts which
BRS certifies to the Company in writing are payable to BRS or other Indemnified
Parties hereunder. The reimbursement and indemnify obligations of the Company
under this Section 3 shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
Indemnified Party, as the case may be, of BRS and any such affiliate and shall
be binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, BRS and any such Indemnified Party. The
foregoing provisions shall not supersede any obligation of a party hereto to
provide indemnification to another party hereto pursuant to any other agreement
among such parties, or to release such indemnifying party from any
indemnification obligation pursuant to such other agreement. The provisions of
this Section 3 shall survive the termination of this Agreement.
4. Independent Contractors. Nothing herein shall be construed to create a
joint venture or partnership between the parties hereto or an employee/employer
relationship. BRS shall be an independent contractor pursuant to this Agreement.
No party hereto shall have any express or implied right or authority to assume
or create any obligations on behalf of or in the name of the other parties or to
bind the other parties to any contract, agreement or undertaking with any third
party.
<PAGE> 4
O'Sullivan Industries, Inc.
November 30, 1999
Page 4
5. Termination and Engagement. This Agreement and the Company's engagement
of BRS hereunder shall terminate on November 30, 2009 or upon mutual agreement
of BRS and the Company.
6. Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed first class, certified mail, return receipt
requested, postage and registry fees prepaid and addressed as follows:
If to BRS:
Bruckmann, Rosser, Sherrill & Co., L.L.C.
126 East 56th Street, 29th Floor
New York, New York 10022
Attention: Mr. Stephen F. Edwards
If to the Company:
O'Sullivan Industries, Inc.
1900 Gulf Street
Lamar, MO 64759-1899
Attention: President
Addresses may be changed by a notice in writing in accordance with the
provisions of this paragraph 6.
7. Assignment. This Agreement shall inure to the benefit of and be binding
upon the parties and their successors and assigns. However, neither this
Agreement nor any of the rights of the parties hereunder may be transferred or
assigned by either party hereto, except that (i) if the Company shall merge or
consolidate with or into, or sell or otherwise transfer substantially all its
assets to, another corporation which assumes the Company's obligations under
this Agreement, the Company may assign its rights hereunder to that corporation,
and (ii) BRS may assign its rights and obligations hereunder to any other person
or entity controlled, and which continues to be so controlled, directly or
indirectly, by Bruce C. Bruckmann, Harold O. Rosser II, Stephen C. Sherrill,
Stephen F. Edwards and Paul Kaminski. Any attempted transfer or assignment in
violation of this Section 7 shall be void.
<PAGE> 5
O'Sullivan Industries, Inc.
November 30, 1999
Page 5
8. Miscellaneous. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. This Agreement
may not be modified or amended, and no term or provision hereof may be waived or
discharged, except in a writing signed by the party against which such
modification, amendment, waiver or discharge is sought to be enforced. This
Agreement cannot be assigned by either party hereto. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
<PAGE> 6
O'Sullivan Industries, Inc.
November 30, 1999
Page 6
If you are in agreement with the foregoing, please so indicate by signing
the enclosed copy of this letter, whereupon it shall become a binding agreement
between the parties hereto as of the day and year first above written.
BRUCKMANN, ROSSER, SHERRILL & CO., L.L.C.
By: /s/ Stephen F. Edwards
---------------------------
Name: Stephen F. Edwards
Title:
Accepted and agreed as of the date first above written:
O'SULLIVAN INDUSTRIES, INC.
By: /s/ Richard D. Davidson
---------------------------------------
Name: Richard D. Davidson
Title: President and Chief Operating Officer
<PAGE> 1
EXHIBIT 10.3
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
1999 PREFERRED STOCK OPTION PLAN
The 1999 Preferred Stock Option Plan (the "Plan") of O'SULLIVAN INDUSTRIES
HOLDINGS, INC., a Delaware corporation (the "Company"), adopted by the board of
directors of the Company on November 30, 1999, for executive and other key
employees of the Company and its Subsidiaries, is intended to advance the best
interests of the Company by providing those persons who have a substantial
responsibility for its management and growth with additional incentives by
allowing them to acquire an ownership interest in the Company and thereby
encouraging them to contribute to the success of the Company and to remain in
its employ.
1. DEFINITIONS.
For purposes of the Plan, except where the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:
"Board" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday or Sunday or a day on
which commercial banks are required or authorized to close in New York, New
York.
"Certificate of Incorporation" means the Company's Certificate of
Incorporation as in effect after consummation of the Merger and other
transactions contemplated by the Merger Agreement, a copy of which is attached
hereto as Exhibit A, as such may be amended, restated or modified from time to
time.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Liquidation Value" means with respect to any share of Series A Preferred,
as of any date of determination, the liquidation value thereof as determined in
accordance with the Company's Certificate of Incorporation.
"Options" shall have the meaning set forth in Article IV hereof.
"Option Shares" means, collectively, (i) all shares of Series A Preferred
issued or issuable upon the exercise of an Option, and (ii) any shares of the
Company's capital stock issued with respect to the shares of Series A Preferred
set forth in clause (i) by way of merger, consolidation, reclassification, stock
split, reverse stock split, stock dividend or other recapitalization with
respect to the Series A Preferred. Option Shares shall continue to be Option
Shares in the hands of any holder other than Participant (including, without
limitation, any Permitted Transferee of the Participant), except for the
Company, or any transferee in an underwritten public offering registered under
the Securities Act of 1933, as amended. Except as otherwise provided herein,
each
<PAGE> 2
other holder of Option Shares will succeed to the rights and obligations
attributable to the Participant as a holder of Option Shares hereunder.
"Participant" shall mean any executive or other key employee of the Company
who has been selected to participate in the Plan by the Board.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Series A Preferred" means the Company's Series A Junior Preferred Stock,
par value $1.00 per share, having the rights and privileges set forth in the
Certificate of Incorporation or if such outstanding Series A Junior Preferred
Stock is hereafter changed into or exchanged for different securities of the
Company, such other securities.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (i) if a corporation or a limited liability company, a majority of the
total voting power of securities entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest in a
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of partnership, association or other business
entity gains or losses or shall be or control the managing director or general
partner of such partnership, association or other business entity.
2. ADMINISTRATION. The Plan shall be administered by the Board. Subject to
the limitations of the Plan or any Option Agreement, the Board shall have the
sole and complete authority to: (i) select Participants, (ii) grant Options to
Participants in such forms and amounts as it shall determine, (iii) impose such
limitations, restrictions and conditions upon such Options as it shall deem
appropriate, (iv) interpret the Plan and adopt, amend and rescind administrative
guidelines and other rules and regulations relating to the Plan, (v) correct any
defect or omission or reconcile any inconsistency in the Plan or in any Option
granted hereunder, and (vi) make all other determinations and take all other
actions necessary or advisable for the implementation and administration of the
Plan. The Board's determinations on matters within its authority shall be
conclusive and binding upon the Participants, the Company and all other Persons.
All expenses associated with the administration of the Plan shall be borne by
the Company.
3. LIMITATION ON AGGREGATE SHARES. The number of shares of Series A
Preferred with respect to which options may be granted under the Plan (the
"Options") and which may be issued upon the exercise thereof shall not exceed,
in the aggregate 60,000 shares; provided, that the type and the aggregate number
of shares which may be subject to Options shall be subject to adjustment in
accordance with the provisions of paragraph 5(e) below, and further provided
that
-2-
<PAGE> 3
to the extent any Options expire unexercised or are canceled, terminated or
forfeited in any manner without the issuance of Series A Preferred thereunder,
such shares shall again be available for issuance under the Plan. The 60,000
shares of Series A Preferred available under the Plan may be either authorized
and unissued shares, treasury shares or a combination thereof, as the Board
shall determine.
4. AWARDS.
(a) Options. The Board may grant Options to Participants in accordance with
this Section 4.
(b) Form of Option. Options granted under this Plan shall be nonqualified
stock options, and are not intended to be "incentive stock options" within the
meaning of Section 422 of the Code, subject to Section 83 of the Code.
(c) Exercise Price. The Option exercise price per share of Series A
Preferred (the "Exercise Price") shall be $50.00, or as otherwise set forth in
the applicable Option Agreement.
(d) Exercisability. Options shall be exercisable at such time or times as
the Board shall determine at or subsequent to grant as set forth in the
applicable Option Agreement.
(e) Procedure for Exercise. Options shall be exercised in whole or in part
by written notice to the Company (to the attention of the Company's Secretary)
accompanied by payment in full of an amount (the "Option Price") equal to the
product of (i) the Exercise Price for the applicable Options, multiplied by (ii)
the number of Option Shares to be acquired and such other documents or
instruments as the Committee shall specify in any Option Agreement. Payment of
the Exercise Price may be made (i) in cash (including certified check, bank
draft or money order or the equivalent acceptable to the Committee) or (ii) by a
reduction in the number of shares of Series A Preferred to be delivered to
Executive pursuant to such exercise of the Options by the number of shares of
Series A Preferred, the Liquidation Value as of the date of exercise, less the
aggregate exercise price, of which is equal to the Option Price that would
otherwise be payable by the Executive to the Company in connection with such
exercise.
(f) Terms of Options. The Board shall determine the term of each Option,
which term shall in no event exceed twenty-five years from the date of grant.
5. GENERAL PROVISIONS.
(a) Conditions and Limitations on Exercise. Options may be made exercisable
in one or more installments, upon the happening of certain events, upon the
passage of a specified period of time, upon the fulfillment of certain
conditions or upon the achievement by the Company of certain performance goals,
as the Board shall decide in each case when the Options are granted.
(b) Written Agreement. Each Option granted hereunder to a Participant shall
be embodied in a written agreement (an "Option Agreement") which shall be signed
by the Participant and by the Chairman or the President of the Company for and
in the name and on behalf of the
-3-
<PAGE> 4
Company and shall be subject to the terms and conditions of the Plan prescribed
in the Option Agreement (including any terms and conditions which the Board
shall deem necessary and desirable).
(c) Nontransferability. Options may not be transferred other than by will
or the laws of descent and distribution and, during the lifetime of the
Participant to whom they were granted, may be exercised only by such Participant
(or his legal guardian or legal representative). In the event of the death of a
Participant, exercise of Options granted hereunder shall be made only:
(i) by the executor or administrator of the estate of the deceased
Participant or the Person or Persons to whom the deceased Participant's
rights under the Option shall pass by will or the laws of descent and
distribution; and
(ii) to the extent that the deceased Participant was entitled thereto
at the date of his death, unless otherwise provided by the Board in such
Participant's Option Agreement.
(d) Expiration of Options. In no event shall any part of any Option be
exercisable after the date of expiration thereof, as determined by the Board
pursuant to Section 4(f).
(e) Adjustments. If and to the extent specified by the Board, the number of
shares of Series A Preferred which may be issued pursuant to the exercise of
Options shall be appropriately adjusted for any stock dividend, stock split,
recapitalization, merger, consolidation or other recapitalization with respect
to the Series A Preferred; provided, that any Options to purchase fractional
shares of Series A Preferred resulting from any such adjustment shall be rounded
to the nearest whole share. Adjustments under this Section 5(e) shall be made by
the Board in its reasonable discretion, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive. The issuance by the Company of shares of stock of any class, or
options or securities exercisable or convertible into shares of stock of any
class, for cash or property, or for labor or services either upon direct sale,
or upon the exercise of rights or warrants to subscribe therefor, or upon
exercise or conversion of other securities, shall not affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Series A Preferred then subject to any Options.
(f) Employment. Nothing contained in this Plan or in any Option Agreement
shall interfere with or limit in any way the right of the Company to terminate
any Participant's employment at any time nor confer upon any Participant any
right to continue in the employ of the Company for any period of time or to
continue his present (or any other) rate of compensation. No employee shall have
a right to be selected as a Participant or, having been so selected, to be
selected against as a Participant.
(g) No Rights as Stockholder. No Participant by reason of holding any
Option shall have rights as a stockholder with respect to shares of Series A
Preferred subject to Options prior to the date of exercise of such Options and
payment in full of the Exercise Price except to the extent set forth in any
Option Agreement.
-4-
<PAGE> 5
(h) Amendment, Suspension and Termination of Plan. The Board may suspend or
terminate the Plan or any portion thereof at any time and may amend it from time
to time in such respects as the Board may deem advisable; provided that no such
amendment shall be made without stockholder approval to the extent such approval
is required by law, agreement or the rules of any exchange upon which the Series
A Preferred is listed, and no such amendment, suspension or termination shall
impair the rights of Participants under outstanding Options without the consent
of the Participants affected thereby. No Options shall be granted hereunder
after the twenty-fifth anniversary of the adoption of the Plan.
(i) Amendment, Modification and Cancellation of Outstanding Options. The
Board may amend or modify any Option in any manner to the extent that the Board
would have had the authority under the Plan initially to grant such Option;
provided, that no such amendment or modification shall impair the rights of any
Participant under any Option unless the holders of a majority of the aggregate
number of Options (based upon the number of Option Shares to be obtained upon
exercise) granted under the Plan consent to such amendment in writing and such
amendment affects all grantees under the various Option Agreements similarly.
With the Participant's consent, the Board may cancel any Option and issue a new
Option to such Participant.
(j) Indemnification. In addition to such other rights of indemnification as
they may have as members of the Board, the members of the Board shall be
indemnified by the Company against all costs and expenses reasonably incurred by
them in connection with any action, suit or proceeding to which they or any of
them may be party by reason of any action taken or failure to act under or in
connection with the Plan or any Option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding; provided that
any such Board member shall be entitled to the indemnification rights set forth
in this Section 5(j) only if such member has acted in good faith and in a manner
that such member reasonably believed to be in or not opposed to the best
interests of the Company and, with respect to any criminal action or proceeding,
had no reasonable cause to believe that such conduct was unlawful, and further
provided that upon the institution of any such action, suit or proceeding a
Board member shall give the Company written notice thereof and an opportunity,
at its own expense, to handle and defend the same before such Board member
undertakes to handle and defend it on his own behalf.
* * * * *
-5-
<PAGE> 1
EXHIBIT 10.4
Form of
PREFERRED STOCK OPTION AGREEMENT
PREFERRED STOCK OPTION AGREEMENT, dated as of November 30, 1999, by and
between O'SULLIVAN INDUSTRIES HOLDINGS, INC., a Delaware corporation (the
"Company"), and ___________________ (the "Executive"). Capitalized terms used
but not otherwise defined herein shall have the meanings assigned to such terms
in Section 1.
WHEREAS, the Executive is currently a management employee of the Company,
and the Company desires to grant the Executive certain stock purchase options in
accordance with the terms hereof pursuant to the Agreement and Plan of Merger,
dated as of May 17, 1999, by and between OSI Acquisition, Inc. and the Company
(as amended, restated or modified from time to time, the "Merger Agreement") in
exchange for certain stock options held by the Executive prior to the
transactions contemplated thereby.
NOW THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties to this Agreement agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
"Board" means the Board of Directors of the Company.
"Certificate of Incorporation" means the Company's Certificate of
Incorporation as in effect after consummation of the Merger and other
transactions contemplated by the Merger Agreement, a copy of which is attached
hereto as Exhibit A, as such may be amended, restated or modified from time to
time.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Expiration Date" means the close of business on December 31, 2025, subject
to earlier expiration as provided in Section 3.
"Form" means those forms of the Internal Revenue Service used by taxpayers
to file federal income tax returns or reports required under the Code or
applicable Treasury Regulations promulgated thereunder.
"Liquidation Value" means, as of any date of determination, the liquidation
value of each share of Series A Preferred as set forth in the Certificate of
Incorporation.
<PAGE> 2
1. Definitions. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall mean, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Approved Sale" means the sale of the Company, in a single transaction or a
series of related transactions, to an Unaffiliated Third Party (a) pursuant to
which such Unaffiliated Third Party proposes to acquire all of the outstanding
Common Stock (whether by merger, consolidation, recapitalization,
reorganization, purchase of the outstanding Common Stock or otherwise) or all or
substantially all of the consolidated assets of the Company, (b) which has been
approved by the Board and holders of a majority of the BRS Shares (the
"Approving Stockholders"), (c) pursuant to which all holders of Stockholder
Shares receive (whether in such transaction or, with respect to an asset sale,
upon a subsequent liquidation) the same form and amount of consideration per
share of Common Stock (as adjusted for any consideration payable by such holders
in connection with the exercise of any securities convertible and/or
exchangeable into Common Stock) as each other holder of Stockholder Shares, or
if any holders of Stockholder Shares are given an option as to the form and
amount of consideration received, all such holders of Stockholder Shares are
given the same option (provided, that any amounts paid or under bona fide
employment agreements, consulting agreements, management agreements or other
similar agreements for actual services to be rendered shall not be counted as
consideration for purposes of this clause (c)), and (d) which has been
designated by the Approving Stockholders as an "Approved Sale."
"Board" means the Company's board of directors.
"BRS Closing Date Shares" means Stockholder Shares held by BRS as of the
date hereof.
"BRS Shares" means Stockholder Shares owned by BRS and the BRS Investors,
or any of their respective Permitted Transferees.
"Co-Invest Shares" in the case of any Executive, means such Executive's
"Co-Invest Shares" as defined in the Management Stock Agreement.
"Common Stock" means the Company's Common Stock, par value $0.01 per share,
as adjusted for any stock split, stock dividend or other combination, exchange,
conversion, recapitalization, merger, consolidation or reorganization, or, if
the shares of Common Stock are hereafter changed or exchanged for different
shares, interests or securities of the Company, such other shares, interests or
securities, and any other Common Stock of the Company hereafter issued.
- 2 -
<PAGE> 3
"Executive Shares" means Stockholder Shares owned by the Executives or any
of their Permitted Transferees.
"Family Group" means, with respect to an individual Stockholder, such
Stockholder's spouse and descendants (whether natural or adopted) and any trust
or other entity solely for the benefit of such Stockholder and/or such
Stockholder's spouse, their respective ancestors and/or descendants (whether
natural or adopted).
"Initial Public Offering" means the sale, in the initial underwritten
public offering registered under the Securities Act, of shares of the Company's
Common Stock where, after such offering, the Common Stock sold in such offering
is subject to being traded in the NASDAQ National Market or a national
securities exchange.
"Management Stock Agreement" means the Management Stock Agreement dated on
even date herewith among the Company and certain of its Stockholders.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of May
17, 1999, between the Company and OSI Acquisition, Inc., a Delaware corporation,
as amended, restated or modified from time to time.
"Other Stockholders" means, with respect to a Stockholder, all Stockholders
other than such Stockholder.
"Permitted Transferees" has the meaning set forth in Section 4(c).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Public Sale" means any sale of Stockholder Shares to the public pursuant
to an offering registered under the Securities Act or to the public effected
through a broker, dealer or market maker pursuant to the provisions of Rule 144
under the Securities Act.
"Qualified Public Offering" means the sale, in an underwriting primary
public offering of Common Stock registered under the Securities Act, of shares
of Common Stock which is expected to result in net cash proceeds to the Company
in an aggregate amount of not less than $30 million.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Stockholder Shares" means (i) any Common Stock now held or hereafter
acquired by the Stockholders, (ii) any Common Stock issued or issuable upon
exercise of any securities convertible and/or exchangeable for Common Stock, and
(iii) any equity securities issued or issuable directly or indirectly with
respect to the securities referred to in clauses (i) and (ii) above by way of
- 3 -
<PAGE> 4
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares constituting Stockholder Shares, such shares will cease to be
Stockholder Shares when they have been sold or acquired in a Public Sale or in
an Approved Sale or upon the consummation of a Qualified Public Offering. For
purposes of this Agreement, a Person will be deemed to be a holder of
Stockholder Shares whenever such Person has the right to acquire directly or
indirectly such Stockholder Shares (upon conversion or exercise in connection
with a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation or limited liability company (with voting securities), a
majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company (without voting securities), association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest in a
partnership, limited liability company, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, limited
liability company, association or other business entity gains or losses or shall
be or control the managing director or general partner of such partnership,
limited liability company, association or other business entity.
"Transaction Documents" means (i) this Agreement, (ii) the Merger
Agreement, (iii) the Registration Rights Agreement dated as of the date hereof
by and among the parties hereto, (iv) the Management Stock Subscription
Agreement, (v) the Management Stock Agreement, and (vi) the Warrant Agreements
dated as of the date hereof between the Company and each of Lehman Brothers Inc.
and Bruckmann, Rosser, Sherrill & Co. II, L.P.
"Transfer" has the meaning set forth in Section 4(a).
"Unaffiliated Third Party" means any Person who, immediately prior to the
contemplated transaction, (i) is not a Person who owns in excess of 5% of the
Common Stock on a fully diluted basis (a "5% Owner"), (ii) is not an Affiliate
of any such 5% Owner and (iii) is not the spouse or descendent (by birth or
adoption) of any such 5% Owner or a trust for the benefit of such 5% Owner
and/or such other Persons.
"Warrant Shares" means Stockholder Shares owned by the Warrant Holders, or
any of their Permitted Transferees.
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<PAGE> 5
2. Board of Directors.
(a) Until the provisions of this Section 2 cease to be effective, to the
extent permitted by law, each Stockholder shall vote all voting securities of
the Company over which such Stockholder has voting control, and shall take all
other necessary or desirable lawful actions within such Stockholder's control
(whether in such Stockholder's capacity as a stockholder, director, member of a
board committee or officer of the Company or otherwise, and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company and its Subsidiaries shall take all necessary and desirable actions
within their control (including, without limitation, calling special board and
stockholder meetings), so that:
(i) the authorized number of directors of the Board shall be
established and maintained at seven (7) and will be designated as follows:
(A) five (5) directors shall be designated by the holders of a majority of
the BRS Shares (the "BRS Directors") who shall initially include Stephen
Edwards and Harold O. Rosser;(B) Richard D. Davidson shall be a director of
the Company for so long as he is the duly elected and acting Chief
Executive Officer of the Company, and thereafter such directorship shall be
held by the duly elected Chief Executive Officer of the Company, and (C)
one (1) director shall be designated by the Chief Executive Officer of the
Company and subject to the approval of the remainder of the Board who shall
initially be Daniel P. O'Sullivan.
(ii) the composition of the board of directors (or similar bodies) of
each of the Company's Subsidiaries (a "Sub Board") shall be the same as
that of the Board;
(iii) any committees of the Board or a Sub Board shall be created only
upon the approval of a majority of the voting power of the Board and the
composition of each such committee (if any) shall consist of not more than
three Persons, at least one of which will be a BRS Director;
(iv) any director shall be removed from the Board, a Sub Board or any
committee thereof (with or without cause) at the written request of the
Stockholder or Stockholders which have the right to designate such director
hereunder, but only upon such written request and under no other
circumstances; provided, that the holders of Stockholder Shares may remove
any director for cause, but the replacement director may only be designated
by the Stockholders which have the right to designate such director
hereunder; and
(v) in the event that any representative designated hereunder for any
reason ceases to serve as a member of the Board or a Sub Board or any
committee thereof during such representative's term of office, the
resulting vacancy on the Board or such Sub Board or committee shall be
filled by a representative designated by the Stockholders referred to in
clause (i).
- 5 -
<PAGE> 6
(b) The Company shall pay the reasonable out-of-pocket expenses incurred by
each director in connection with attending the meetings of the Board or any Sub
Board and any committee thereof. In addition, the Company shall pay such
additional compensation to directors who are not employees of the Company or any
of its Subsidiaries as the Board so determines.
(c) If any party fails to designate a representative to fill a directorship
pursuant to the terms of this Section 2, the election of a Person to such
directorship shall be accomplished in accordance with the Company's bylaws and
applicable law (provided that such party may subsequently remove and replace
such Person). In the event that any provision of the Company's bylaws or
articles of incorporation is inconsistent with any provision of this Section 2,
the Stockholders shall take such action as may be necessary to amend any such
provision in the Company's bylaws or certificate of incorporation to remedy such
inconsistency.
(d) The provisions of this Section 2 shall terminate automatically and be
of no further force and effect upon the consummation of a Qualified Public
Offering.
3. Representations and Warranties. (a) Each Stockholder represents and
warrants that (i) this Agreement has been duly authorized, executed and
delivered by such Stockholder and constitutes the valid and binding obligation
of such Stockholder, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors rights generally or by general equitable principles, and
(ii) such Stockholder has not granted and is not a party to any proxy, voting
trust or other agreement which is inconsistent with, conflicts with or violates
any provision of this Agreement. No holder of Stockholder Shares shall grant any
such proxy or become party to any such voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
(b) The Company represents and warrants that (i) it is a corporation duly
organized and validly existing under the laws of the State of Delaware and is
qualified to do business in every jurisdiction in which its ownership of
property or conduct of business requires it to qualify, except for such
jurisdictions in which the failure to so qualify, would not have a material
adverse effect on the Company, (ii) the execution, delivery and performance of
this Agreement have been duly authorized by the Company, and (iii) this
Agreement constitutes a valid and binding obligation of the Company, enforceable
in accordance with its terms, except to the extent that the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general principles of
equity.
4. Restrictions on Transfer of Stockholder Shares.
(a) Tag Along Rights. Subject to Sections 4(c) and 4(d), at least 15 days
prior to any sale, transfer, assignment, pledge or other disposal (a "Transfer")
of Stockholder Shares by BRS of more than 10% of the total number of BRS Closing
Date Shares (or any lesser number of Stockholder Shares which together with all
Stockholder Shares previously Transferred by BRS equal an amount in excess of
10% of the BRS Closing Date Shares), BRS shall deliver a written notice (the
- 6 -
<PAGE> 7
"Sale Notice") to the Company and to each of the Other Stockholders, specifying
in reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of the Transfer; provided, that this Section 4(a) shall not apply
to any Transfer made pursuant to an Approved Sale or a Public Sale. Each
Stockholder may elect to participate in the contemplated Transfer by delivering
written notice to BRS within 15 days after receipt of the Sale Notice. If any of
the Stockholders have elected to participate in such Transfer, each of BRS and
such Other Stockholders shall be entitled to sell in the contemplated Transfer,
at the same price and on the same terms, a number of Stockholder Shares of any
class equal to the product of (i) the quotient determined by dividing the number
of Stockholder Shares owned by such Stockholder by the aggregate number of
Stockholder Shares owned by the Stockholders participating in such Transfer and
(ii) the aggregate number of Stockholder Shares to be sold in the contemplated
Transfer. Each Stockholder transferring Stockholder Shares pursuant to this
Section 4(a) shall pay its pro rata share (based on the number of Stockholder
Shares to be sold) of the expenses incurred by the Stockholders in connection
with such Transfer and shall be obligated to join in any indemnification
obligations that BRS agrees to provide in connection with such Transfer on a pro
rata basis in accordance with the number of Stockholder Shares sold in such
Transfer; provided, that each Stockholder's indemnification obligations shall
not exceed the aggregate amount of proceeds received by such Stockholder in such
Transfer; and provided further, that the representations and warranties and
indemnification obligations of holders of Warrant Shares shall be limited to
representations regarding title to such Stockholder Shares.
(b) First Offer Rights. Subject to Sections 4(c) and 4(d), at least 30 days
prior to any Transfer of Stockholder Shares (other than BRS Shares and other
than Warrant Shares), such Person making such Transfer (the "Offering
Stockholder") shall deliver a written notice (the "Transfer Notice") to the
Company and BRS specifying in reasonable detail the number of Stockholder Shares
proposed to be transferred, the proposed purchase price (which shall be payable
solely in cash) and the other terms and conditions of the Transfer; provided,
that this Section 4(b) shall not apply to any Transfer made following an
Approved Sale or the exercise of a "Repurchase Option" (as defined and set forth
in the Management Stock Agreement). BRS (or its designees) may elect to purchase
all (but not less than all) of the Stockholder Shares to be transferred, upon
the same terms and conditions as those set forth in the Transfer Notice, by
delivering a written notice of such election to the Offering Stockholder and the
Company within 10 days after the Transfer Notice has been delivered to the
Company. If BRS (or its designees) does not elect to purchase all of the
Stockholder Shares specified in the Transfer Notice, then the Company may elect
to purchase all or any portion of the remaining Stockholder Shares to be
transferred, upon the same terms and conditions set forth in the Transfer
Notice, by delivering a written notice of such election to the Offering
Stockholder within 20 days after the Transfer Notice has been delivered to the
Company. If BRS (or its designees) and the Company do not elect to purchase the
Stockholder Shares specified in the Transfer Notice, then the Offering
Stockholder may transfer the Stockholder Shares specified in the Transfer Notice
at a price and on terms no more favorable to the transferee(s) thereof than
specified in the Transfer Notice during the 90-day period immediately following
the earlier of (i) 20 days after delivery of the Transfer Notice and (ii) the
date as of which both BRS and the Company have declined in writing to exercise
their options under this Section 4(b). Any Stockholder Shares
- 7 -
<PAGE> 8
not transferred within such 90-day period will be subject to the provisions of
this Section 4(b) upon subsequent Transfer.
(c) Permitted Transfers. The restrictions contained in this Section 4 shall
not apply with respect to any Transfer of Stockholder Shares by any Stockholder
(i) in the case of an individual Stockholder, (1) pursuant to applicable laws of
descent and distribution or among such Stockholder's Family Group, (2) with
respect to shares held by Richard D. Davidson, to Kurt Sagehorn, Stephen K.
Weeks and Michael V. Aumann, in each case, so long as such individuals are
employees of the Company and its Subsidiaries, (3) with respect to Co-Invest
Shares held by any Executive, so long as such Executive has good and valid
reason to transfer such Co-Invest Shares, to any other Executive upon receipt of
the prior written consent of the Board, which consent shall not be unreasonably
withheld, or (ii) in the case of a holder of the BRS Shares and its Permitted
Transferees, (A) among its Affiliates and partners, (B) to any employee,
prospective employee, director or prospective director of the Company or any
Subsidiary of the Company as incentive compensation, (C) to any BRS Investor or
any employee or director (whether current, former or prospective) of BRS or any
Affiliate of BRS or (D) to BRS; provided, in each case contemplated by this
clause (ii), that the rights and restrictions contained in this Section 4 shall
continue to be applicable to such Stockholder Shares after any such Transfer as
if such Stockholder Shares were held by the transferor; and provided further,
that (x) the transferees of such Stockholder Shares shall have agreed in writing
to be bound by the provisions of this Agreement which affect the Stockholder
Shares so transferred by executing a joinder in substantially the form attached
hereto as Exhibit A and (y) with respect to any transferee of Executive Shares,
a joinder to the applicable Management Stock Agreement. All transferees
permitted under this Section 4(c) are collectively referred to herein as
"Permitted Transferees."
(d) Termination of Restrictions. The restrictions set forth in this Section
4 shall continue with respect to each Stockholder Share until the consummation
of an Initial Public Offering.
5. Sale of the Company.
(a) In the event of an Approved Sale, each Stockholder will thereafter (i)
consent to and raise no objections against the Approved Sale or the process
pursuant to which the Approved Sale was arranged, (ii) waive any dissenter's
rights and other similar rights, and (iii) if the Approved Sale is structured as
a sale of securities, each Stockholder will agree to sell its Stockholder Shares
on the terms and conditions of the Approved Sale. Each Stockholder will take all
necessary and desirable actions as directed by the Board in connection with the
consummation of any Approved Sale, including, without limitation, executing the
applicable purchase agreements and joining in any indemnification obligations
(whether directly to the buyer in such Approved Sale or pursuant to a
contribution arrangement) on a pro rata basis in accordance with the number of
Stockholder Shares sold in such Approved Sale; provided, that each Stockholder's
indemnification obligation shall not exceed the aggregate amount of proceeds
received by such Stockholder in such Approved Sale.
- 8 -
<PAGE> 9
(b) If the Company or the holders of the Company's securities enter into
any negotiation or transaction for which Rule 506 (or any similar rule then in
effect) under the Securities Act may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), the Stockholders will, at the request of the Company, appoint a
purchaser representative (as such term is defined in Rule 501) reasonably
acceptable to the Company. If any Stockholder appoints a purchaser
representative designated by the Company, the Company will pay the fees of such
purchaser representative, but if any Stockholder declines to appoint the
purchaser representative designated by the Company such holder will appoint
another purchaser representative (reasonably acceptable to the Company), and
such holder will be responsible for the fees of the purchaser representative so
appointed.
(c) All Stockholders (other than holders of Warrant Shares) will bear their
pro rata share (based upon the number of Stockholder Shares sold) of the
reasonable costs of any sale of Stockholder Shares pursuant to an Approved Sale
to the extent such costs are incurred for the benefit of all selling
Stockholders and are not otherwise paid by the Company or the acquiring party.
Costs incurred by any Stockholder on its own behalf will not be considered costs
of the transaction hereunder.
(d) This Section 5 shall automatically terminate upon the consummation of
an Initial Public Offering.
6. Legend. Each certificate or instrument evidencing Stockholder Shares and
each certificate or instrument issued in exchange for or upon the Transfer of
any Stockholder Shares (if such shares remain Stockholder Shares, each as
defined herein after such Transfer) shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
___________, ____, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER 30,
1999, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND
CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER
HEREOF UPON WRITTEN REQUEST."
The Company shall imprint such legend on certificates and instruments evidencing
Stockholder Shares outstanding prior to the date hereof. The legend set forth
above shall be removed from the certificates and instruments evidencing any
units which cease to be Stockholder Shares.
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<PAGE> 10
7. Transfer of Stockholder Shares.
(a) Stockholder Shares are transferable only pursuant to (i) public
offerings registered under the Securities Act, (ii) subject to the provisions of
Section 4 above, Rule 144 or Rule 144A or Regulation S (or any similar rules
then in effect) of the Securities and Exchange Commission if such rule is
available, and (iii) subject to Section 4 or 5 and Section 7(b) below, any other
legally available means of Transfer.
(b) In connection with the Transfer of any Stockholder Shares other than a
Transfer described in clause (i) or (ii) of Section 7(a) above, the holder
thereof shall deliver written notice to the Company describing in reasonable
detail the Transfer or proposed Transfer, together with an opinion of counsel
reasonably acceptable to the Company (which such opinion requirement may be
waived by the Company in its sole discretion) to the effect that such Transfer
of Stockholder Shares may be effected without registration of such Stockholder
Shares under the Securities Act. In addition, if the holder of the Stockholder
Shares delivers to the Company an opinion of counsel that no subsequent Transfer
of such Stockholder Shares shall require registration under the Securities Act
and that such Stockholder Shares are no longer subject to the restrictions
herein, the Company shall, if such Stockholder Shares are certificated, promptly
upon such contemplated Transfer deliver new certificates for such Stockholder
Shares which do not bear the legend set forth in Section 6 above. If the Company
is not required pursuant to the immediately preceding sentence to deliver new
certificates for such Stockholder Shares without such legend, the holder thereof
shall not consummate a Transfer of the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this Section 7 and Section 6 above.
(c) Upon the request of a holder of Stockholder Shares, the Company shall
promptly supply to such Person or its prospective transferees all information
regarding the Company required to be delivered in connection with a Transfer
pursuant to Rule 144A (or any similar rule or rules then in effect) of the
Securities and Exchange Commission.
(d) Upon the request of any holder of Stockholder Shares, the Company shall
remove the legend set forth in Section 6 above from the certificates for such
holder's Stockholder Shares (or the eligible portion thereof); provided, that
such Stockholder Shares have been either registered under the Securities Act or
are eligible for sale pursuant to Rule 144 (or any similar rule or rules then in
effect) of the Securities and Exchange Commission.
(e) Any Transfer or attempted Transfer of any Stockholder Shares in
violation of any provision of this Agreement shall be null and void, and the
Company shall not record such Transfer on its books or treat any purported
transferee of such Stockholder Shares as the owner of such shares for any
purpose.
8. Amendment and Waiver. Except as otherwise provided herein, (a) no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing
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<PAGE> 11
by, respectively, the Company or the holders of a majority of the Stockholder
Shares on a fully diluted basis, and (b) no modification, amendment or waiver
which materially adversely affects the rights of a Stockholder under this
Agreement vis-a-vis Other Stockholders shall be effective against such
Stockholder unless such modification, amendment or waiver is approved in writing
by such Stockholder. For avoidance of doubt, an amendment to add another party
to this Agreement is not an action which, in and of itself, affects any
Stockholder materially adversely. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
9. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
10. Entire Agreement. Except as otherwise expressly set forth herein, this
document and the other Transaction Documents embody the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
11. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
12. Counterparts. This Agreement may be executed in separate counterparts
each of which shall be an original and all of which taken together shall
constitute one and the same agree ment.
13. Remedies. The parties hereto shall be entitled to enforce their rights
under this Agreement specifically to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights existing in
their favor. The parties hereto agree and acknowledge that money damages may not
be an adequate remedy for any breach of the provisions of this Agreement and
that the Company and each of the Stockholders may in his, hers, or its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief (without posting a bond or other
security) in order to enforce or prevent any violation of the provisions of this
Agreement.
14. WAIVER OF JURY TRIAL. THE COMPANY AND EACH STOCKHOLDER HEREBY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW,
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<PAGE> 12
TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION
WITH, OR ARISING OUT OF THIS AGREEMENT OR THE VALIDITY, PROTECTION,
INTERPRETATION OR ENFORCEMENT THEREOF. THE COMPANY AND EACH STOCKHOLDER AGREES
THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND WOULD
NOT ENTER INTO THIS AGREEMENT IF THIS SECTION WERE NOT PART OF THIS AGREEMENT.
15. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient accompanied by a certified or registered mailing. Such notices,
demands and other communications will be sent to the address indicated below:
To the Company, to:
------------------
O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Attention: President and Secretary
Facsimile: (417) 682-8120 (President
(417) 682-8113 (Secretary)
With a copy, which shall not constitute notice to the Company, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To BRS, to:
----------
Bruckmann, Rosser, Sherrill & Co. II, L.P.
126 East 56th Street
New York, NY 10022
Attention: Stephen F. Edwards
Facsimile: (212) 521-3799
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<PAGE> 13
With a copy, which shall not constitute notice to BRS, to:
----------------------------------------------------------
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To any of the Executives, to:
----------------------------
[EXECUTIVE]
c/o O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Facsimile: (417) 682-8113
With a copy, which shall not constitute notice to such Executive, to:
---------------------------------------------------------------------
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To any Warrant Holder, to:
-------------------------
To the address for such Warrant Holder set forth in the Company's
records;
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
16. GOVERNING LAW. THE CORPORATE LAW OF DELAWARE SHALL GOVERN ALL ISSUES
CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
17. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
* * * * *
- 13 -
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first above written.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Richard D. Davidson
---------------------------------------
Name: Richard D. Davidson
Its: President and Chief Operating Officer
BRUCKMANN, ROSSER, SHERRILL & CO. II, L.P.
By: BRSE, L.L.C.
Its: General Partner
By: /s/ Stephen F. Edwards
--------------------------------------
Name: Stephen F. Edwards
Its:
<PAGE> 15
BRS INVESTOR SIGNATURE PAGE
-----------------------------------
BONNIE DIETRICH
-----------------------------------
RICE EDMONDS
-----------------------------------
JULIET FRIST
-----------------------------------
SUSAN KAIDER
-----------------------------------
SARAH POLIZOTTO
-----------------------------------
WALKER SIMMONS
-----------------------------------
MARILENA TIBREA
<PAGE> 16
EXECUTIVE SIGNATURE PAGE (PAGE 1 OF 4)
/s/ Richard D. Davidson /s/ David E. Pittman
- - ----------------------------------- -------------------------------------------
RICHARD D. DAVIDSON DAVID E. PITTMAN
/s/ Michael P. O'Sullivan /s/ David S. Thiesse
- - ----------------------------------- -------------------------------------------
MICHAEL P. O'SULLIVAN DAVID S. THIESSE
/s/ Phillip J. Pacey /s/ Gary Blankenship
- - ----------------------------------- -------------------------------------------
PHILLIP J. PACEY GARY R. BLANKENSHIP
/s/ Tyrone E. Riegel /s/ Jason Stansberry
- - ----------------------------------- -------------------------------------------
TYRONE E. RIEGEL JASON STANSBERRY
/s/ Thomas M. O'Sullivan, Jr. /s/ Joe J. Whyman
- - ----------------------------------- -------------------------------------------
THOMAS M. O'SULLIVAN, JR. JOE J. WHYMAN
/s/ James C. Hillman /s/ John R. Cox
- - ----------------------------------- -------------------------------------------
JAMES C. HILLMAN JOHN R. COX
/s/ Rowland H. Geddie, III /s/ Larry G. Edge
- - ----------------------------------- -------------------------------------------
ROWLAND H. GEDDIE, III LARRY G. EDGE
/s/ Stuart D. Schotte /s/ Leonard R. Saldana
- - ----------------------------------- -------------------------------------------
STUART D. SCHOTTE LEONARD R. SALDANA
/s/ E. Thomas Riegel /s/ Maureen M. Wood
- - ----------------------------------- -------------------------------------------
E. THOMAS RIEGEL MAUREEN M. WOOD
/s/ Tommy W. Thieman /s/ Max Simmons
- - ----------------------------------- -------------------------------------------
TOMMY W. THIEMAN MAX SIMMONS
/s/ Cliff Bickel, Jr. /s/ Michael L. Franks
- - ----------------------------------- -------------------------------------------
CLIFF BICKEL, JR. MICHAEL L. FRANKS
<PAGE> 17
EXECUTIVE SIGNATURE PAGE (PAGE 2 OF 4)
/s/ David R. Turney /s/ Ronald E. Wegener
- - ----------------------------------- -------------------------------------------
DAVID R. TURNEY RONALD E. WEGENER
/s/ John D. Blevins /s/ Kenneth S. Ladd
- - ----------------------------------- -------------------------------------------
JOHN D. BLEVINS KENNETH S. LADD
/s/ Neal C. Ruggeberg /s/ Terry J. Braden
- - ----------------------------------- -------------------------------------------
NEAL C. RUGGEBERG TERRY J. BRADEN
/s/ Daniel P. O'Sullivan /s/ Daniel F. O'Sullivan
- - ----------------------------------- -------------------------------------------
DANIEL P. O'SULLIVAN DANIEL F. O'SULLIVAN
O'SULLIVAN PROPERTIES, INC.
/s/ Randall Day By:
- - ----------------------------------- -------------------------------------------
RANDALL DAY Name:
Title:
/s/ Timothy E. Riegel /s/ Mary Davidson
- - ----------------------------------- -------------------------------------------
TIMOTHY E. RIEGEL MARY DAVIDSON
/s/ Thomas J. Tirdil /s/ Jennifer O'Sullivan
- - ----------------------------------- -------------------------------------------
THOMAS J. TIRDIL JENNIFER O'SULLIVAN
/s/ Robert G. Gillespie /s/ Michael P. O'Sullivan
- - ----------------------------------- -------------------------------------------
ROBERT G. GILLESPIE MICHAEL P. O'SULLIVAN, as custodian for
Tara O'Sullivan
<PAGE> 18
EXECUTIVE SIGNATURE PAGE (PAGE 3 OF 4)
/s/ Michael P. O'Sullivan /s/ Kim O'Sullivan
- - ----------------------------------- -------------------------------------------
MICHAEL P. O'SULLIVAN, as custodian KIM O'SULLIVAN
for Trevor O'Sullivan
/s/ Michael P. O'Sullivan /s/ Kathleen O'Sullivan Day
- - ----------------------------------- -------------------------------------------
MICHAEL P. O'SULLIVAN, as custodian KATHLEEN O'SULLIVAN DAY
for Tierny O'Sullivan
/s/ Rose Pacey /s/ Diane Riegel
- - ----------------------------------- -------------------------------------------
ROSE PACEY DIANE RIEGEL
/s/ Maria O'Sullivan /s/ George R. Wood
- - ----------------------------------- -------------------------------------------
MARIA O'SULLIVAN GEORGE R. WOOD
KAREN O'SULLIVAN WEGENER
REVOCABLE LIVING TRUST
/s/ Colin E. O'Sullivan By:/s/ Karen O'Sullivan Wegener
- - ----------------------------------- -------------------------------------------
COLIN E. O'SULLIVAN Karen O'Sullivan Wegener, Trustee
/s/ Thomas M. O'Sullivan, Jr. /s/ Tommy W. Thieman
- - ----------------------------------- -------------------------------------------
THOMAS M. O'SULLIVAN, JR. as TOMMY W. THIEMAN, custodian for
custodian for Colin O'Sullivan Ellen A. Thieman
BATO, L.P.
By: /s/ Thomas M. O'Sullivan, Jr. /s/ Karen Simmons
------------------------------- -------------------------------------------
Thomas M. O'Sullivan, Jr., KAREN SIMMONS, custodian for Matthew
General Partner Simmons
/s/ James A. Hillman /s/ Peggy E. Geddie
- - ----------------------------------- -------------------------------------------
JAMES A. HILLMAN PEGGY E. GEDDIE
<PAGE> 19
EXECUTIVE SIGNATURE PAGE (PAGE 4 OF 4)
/s/ Betty O'Sullivan Thieman /s/ Thomas Brent Thieman
- - ----------------------------------- -------------------------------------------
BETTY O'SULLIVAN THIEMAN THOMAS BRENT THIEMAN
/s/ Kelly Thieman Hull /s/ Linda O'Sullivan
- - ----------------------------------- -------------------------------------------
KELLY THIEMAN HULL LINDA O'SULLIVAN
/s/ Jeffrey Thieman
- - -----------------------------------
JEFFREY THIEMAN
<PAGE> 20
WARRANT HOLDER SIGNATURE PAGE
LEHMAN BROTHERS INC.
By:
- - -----------------------------------
Name:
Title:
<PAGE> 21
EXHIBIT A
FORM OF JOINDER TO
STOCKHOLDERS AGREEMENT
THIS JOINDER to the Stockholders Agreement, dated as of _________________,
____ by and among O'Sullivan Industries Holdings, Inc., a Delaware corporation
(the "Company"), and certain stockholders of the Company (the "Agreement"), is
made and entered into as of _____________________ by and between the Company
and _________________________ ("Holder"). Capitalized terms used herein but not
otherwise defined shall have the meanings set forth in the Agreement.
WHEREAS, Holder has acquired certain shares of Common Stock, and the
Agreement and the Company requires Holder, as a holder of such shares, to
become a party to the Agreement, and Holder agrees to do so in accordance with
the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Joinder hereby agree as follows:
1. Agreement to be Bound. Holder hereby agrees that upon execution of this
Joinder, he, she or it shall become a party to the Agreement and shall be fully
bound by, and subject to, all of the covenants, terms and conditions of the
Agreement as though an original party thereto and shall be deemed a Stockholder
for all purposes thereof. In addition, Holder hereby agrees that all Common
Stock held by Holder shall be deemed Stockholder Shares for all purposes of the
Agreement.
2. Successors and Assigns. Except as otherwise provided herein, this
Joinder shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and Holder and any subsequent holders of
Stockholder Shares and the respective successors and assigns of each of them,
so long as they hold any Stockholder Shares.
3. Counterparts. This Joinder may be executed in separate counterparts
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
4. Notices. For purposes of Section 15 of the Agreement, all notices,
demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Facsimile Number]
A-1
<PAGE> 22
5. GOVERNING LAW. THE LIMITED LIABILITY COMPANY LAW OF
DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY
AND ITS MEMBERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW
YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
6. Descriptive Headings. The descriptive headings of this
Joinder are inserted for convenience only and do not constitute a part of this
Joinder.
* * * * *
A-2
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have executed this Joinder
as of the date first above written.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By:_________________________________
Name:
Title:
[HOLDER]
By:________________________________
A-3
<PAGE> 1
EXHIBIT 10.5
EXECUTION COPY
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT is made as of November 30, 1999, by and among
O'Sullivan Industries Holdings, Inc., a Delaware corporation (the "Company"),
Bruckmann, Rosser, Sherrill & Co. II, L.P., a Delaware limited partnership
("BRS"), each of the Persons (as defined herein) executing the BRS Investor
Signature Page attached hereto (each, a "BRS Investor" and collectively, the
"BRS Investors"), each of the individuals executing an Executive Signature Page
attached hereto (collectively, the "Executives" and individually an "Executive")
and each of the warrant holders executing a Warrant Holder Signature Page
attached hereto and such other Persons acquiring a Warrant after the date hereof
(collectively, the "Warrant Holders" and individually, a "Warrant Holder"). BRS,
the BRS Investors, the Executives, the Warrant Holders and each other Person
acquiring Common Stock (as defined below) from the Company after the date hereof
and executing a joinder hereto in the form attached as Exhibit A hereto and the
respective Permitted Transferees (as defined in Section 4(c)) of all of the
foregoing Persons are collectively referred to herein as the "Stockholders", and
each as a "Stockholder". Unless otherwise indicated herein, capitalized terms
used herein are defined in Section 1 hereof.
WHEREAS, BRS and the BRS Investors have acquired certain shares of Common
Stock pursuant to the Merger Agreement;
WHEREAS, each of the Executives has acquired beneficial ownership of
certain shares of Common Stock pursuant to the Merger Agreement;
WHEREAS, in connection with the transactions described in the preceding
paragraph, the Company, BRS and the Executives have entered into a Management
Stock Agreement dated as of the date hereof by (as amended, restated or modified
from time to time, the "Management Stock Agreement");
WHEREAS, each Warrant Holder has acquired or will acquire certain warrants
to acquire certain shares of Common Stock; and
WHEREAS, the Company and the Stockholders desire to enter into this
Agreement for the purposes, among others, of (i) establishing the composition of
the Board, (ii) assuring continuity in the management and ownership of the
Company and (iii) limiting the manner and terms by which the Stockholder Shares
may be transferred.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
<PAGE> 2
1. Definitions. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall mean, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Approved Sale" means the sale of the Company, in a single transaction or a
series of related transactions, to an Unaffiliated Third Party (a) pursuant to
which such Unaffiliated Third Party proposes to acquire all of the outstanding
Common Stock (whether by merger, consolidation, recapitalization,
reorganization, purchase of the outstanding Common Stock or otherwise) or all or
substantially all of the consolidated assets of the Company, (b) which has been
approved by the Board and holders of a majority of the BRS Shares (the
"Approving Stockholders"), (c) pursuant to which all holders of Stockholder
Shares receive (whether in such transaction or, with respect to an asset sale,
upon a subsequent liquidation) the same form and amount of consideration per
share of Common Stock (as adjusted for any consideration payable by such holders
in connection with the exercise of any securities convertible and/or
exchangeable into Common Stock) as each other holder of Stockholder Shares, or
if any holders of Stockholder Shares are given an option as to the form and
amount of consideration received, all such holders of Stockholder Shares are
given the same option (provided, that any amounts paid or under bona fide
employment agreements, consulting agreements, management agreements or other
similar agreements for actual services to be rendered shall not be counted as
consideration for purposes of this clause (c)), and (d) which has been
designated by the Approving Stockholders as an "Approved Sale."
"Board" means the Company's board of directors.
"BRS Closing Date Shares" means Stockholder Shares held by BRS as of the
date hereof.
"BRS Shares" means Stockholder Shares owned by BRS and the BRS Investors,
or any of their respective Permitted Transferees.
"Co-Invest Shares" in the case of any Executive, means such Executive's
"Co-Invest Shares" as defined in the Management Stock Agreement.
"Common Stock" means the Company's Common Stock, par value $0.01 per share,
as adjusted for any stock split, stock dividend or other combination, exchange,
conversion, recapitalization, merger, consolidation or reorganization, or, if
the shares of Common Stock are hereafter changed or exchanged for different
shares, interests or securities of the Company, such other shares, interests or
securities, and any other Common Stock of the Company hereafter issued.
- 2 -
<PAGE> 3
"Executive Shares" means Stockholder Shares owned by the Executives or any
of their Permitted Transferees.
"Family Group" means, with respect to an individual Stockholder, such
Stockholder's spouse and descendants (whether natural or adopted) and any trust
or other entity solely for the benefit of such Stockholder and/or such
Stockholder's spouse, their respective ancestors and/or descendants (whether
natural or adopted).
"Initial Public Offering" means the sale, in the initial underwritten
public offering registered under the Securities Act, of shares of the Company's
Common Stock where, after such offering, the Common Stock sold in such offering
is subject to being traded in the NASDAQ National Market or a national
securities exchange.
"Management Stock Agreement" means the Management Stock Agreement dated on
even date herewith among the Company and certain of its Stockholders.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
May 17, 1999, between the Company and OSI Acquisition, Inc., a Delaware
corporation, as amended, restated or modified from time to time.
"Other Stockholders" means, with respect to a Stockholder, all Stockholders
other than such Stockholder.
"Permitted Transferees" has the meaning set forth in Section 4(c).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Public Sale" means any sale of Stockholder Shares to the public pursuant
to an offering registered under the Securities Act or to the public effected
through a broker, dealer or market maker pursuant to the provisions of Rule 144
under the Securities Act.
"Qualified Public Offering" means the sale, in an underwriting primary
public offering of Common Stock registered under the Securities Act, of shares
of Common Stock which is expected to result in net cash proceeds to the Company
in an aggregate amount of not less than $30 million.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Stockholder Shares" means (i) any Common Stock now held or hereafter
acquired by the Stockholders, (ii) any Common Stock issued or issuable upon
exercise of any securities convertible and/or exchangeable for Common Stock, and
(iii) any equity securities issued or issuable directly or indirectly with
respect to the securities referred to in clauses (i) and (ii) above by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger,
- 3 -
<PAGE> 4
consolidation or other reorganization. As to any particular shares constituting
Stockholder Shares, such shares will cease to be Stockholder Shares when they
have been sold or acquired in a Public Sale or in an Approved Sale or upon the
consummation of a Qualified Public Offering. For purposes of this Agreement, a
Person will be deemed to be a holder of Stockholder Shares whenever such Person
has the right to acquire directly or indirectly such Stockholder Shares (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation or limited liability company (with voting securities), a
majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company (without voting securities), association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest in a
partnership, limited liability company, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, limited
liability company, association or other business entity gains or losses or shall
be or control the managing director or general partner of such partnership,
limited liability company, association or other business entity.
"Transaction Documents" means (i) this Agreement, (ii) the Merger
Agreement, (iii) the Registration Rights Agreement dated as of the date hereof
by and among the parties hereto, (iv) the Management Stock Subscription
Agreement, (v) the Management Stock Agreement, and (vi) the Warrant Agreements
dated as of the date hereof between the Company and each of Lehman Brothers Inc.
and Bruckmann, Rosser, Sherrill & Co. II, L.P.
"Transfer" has the meaning set forth in Section 4(a).
"Unaffiliated Third Party" means any Person who, immediately prior to the
contemplated transaction, (i) is not a Person who owns in excess of 5% of the
Common Stock on a fully diluted basis (a "5% Owner"), (ii) is not an Affiliate
of any such 5% Owner and (iii) is not the spouse or descendent (by birth or
adoption) of any such 5% Owner or a trust for the benefit of such 5% Owner
and/or such other Persons.
"Warrant Shares" means Stockholder Shares owned by the Warrant Holders, or
any of their Permitted Transferees.
- 4 -
<PAGE> 5
2. Board of Directors.
(a) Until the provisions of this Section 2 cease to be effective, to the
extent permitted by law, each Stockholder shall vote all voting securities of
the Company over which such Stockholder has voting control, and shall take all
other necessary or desirable lawful actions within such Stockholder's control
(whether in such Stockholder's capacity as a stockholder, director, member of a
board committee or officer of the Company or otherwise, and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company and its Subsidiaries shall take all necessary and desirable actions
within their control (including, without limitation, calling special board and
stockholder meetings), so that:
(i) the authorized number of directors of the Board shall be
established and maintained at seven (7) and will be designated as follows:
(A) five (5) directors shall be designated by the holders of a majority of
the BRS Shares (the "BRS Directors") who shall initially include Stephen
Edwards and Harold O. Rosser;(B) Richard D. Davidson shall be a director of
the Company for so long as he is the duly elected and acting Chief
Executive Officer of the Company, and thereafter such directorship shall be
held by the duly elected Chief Executive Officer of the Company, and (C)
one (1) director shall be designated by the Chief Executive Officer of the
Company and subject to the approval of the remainder of the Board who shall
initially be Daniel P. O'Sullivan.
(ii) the composition of the board of directors (or similar bodies) of
each of the Company's Subsidiaries (a "Sub Board") shall be the same as
that of the Board;
(iii) any committees of the Board or a Sub Board shall be created only
upon the approval of a majority of the voting power of the Board and the
composition of each such committee (if any) shall consist of not more than
three Persons, at least one of which will be a BRS Director;
(iv) any director shall be removed from the Board, a Sub Board or any
committee thereof (with or without cause) at the written request of the
Stockholder or Stockholders which have the right to designate such director
hereunder, but only upon such written request and under no other
circumstances; provided, that the holders of Stockholder Shares may remove
any director for cause, but the replacement director may only be designated
by the Stockholders which have the right to designate such director
hereunder; and
(v) in the event that any representative designated hereunder for any
reason ceases to serve as a member of the Board or a Sub Board or any
committee thereof during such representative's term of office, the
resulting vacancy on the Board or such Sub Board or committee shall be
filled by a representative designated by the Stockholders referred to in
clause (i).
(b) The Company shall pay the reasonable out-of-pocket expenses incurred by
each director in connection with attending the meetings of the Board or any Sub
Board and any
- 5 -
<PAGE> 6
committee thereof. In addition, the Company shall pay such additional
compensation to directors who are not employees of the Company or any of its
Subsidiaries as the Board so determines.
(c) If any party fails to designate a representative to fill a directorship
pursuant to the terms of this Section 2, the election of a Person to such
directorship shall be accomplished in accordance with the Company's bylaws and
applicable law (provided that such party may subsequently remove and replace
such Person). In the event that any provision of the Company's bylaws or
articles of incorporation is inconsistent with any provision of this Section 2,
the Stockholders shall take such action as may be necessary to amend any such
provision in the Company's bylaws or certificate of incorporation to remedy such
inconsistency.
(d) The provisions of this Section 2 shall terminate automatically and be
of no further force and effect upon the consummation of a Qualified Public
Offering.
3. Representations and Warranties. (a) Each Stockholder represents and
warrants that (i) this Agreement has been duly authorized, executed and
delivered by such Stockholder and constitutes the valid and binding obligation
of such Stockholder, enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors rights generally or by general equitable principles, and
(ii) such Stockholder has not granted and is not a party to any proxy, voting
trust or other agreement which is inconsistent with, conflicts with or violates
any provision of this Agreement. No holder of Stockholder Shares shall grant any
such proxy or become party to any such voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
(b) The Company represents and warrants that (i) it is a corporation duly
organized and validly existing under the laws of the State of Delaware and is
qualified to do business in every jurisdiction in which its ownership of
property or conduct of business requires it to qualify, except for such
jurisdictions in which the failure to so qualify, would not have a material
adverse effect on the Company, (ii) the execution, delivery and performance of
this Agreement have been duly authorized by the Company, and (iii) this
Agreement constitutes a valid and binding obligation of the Company, enforceable
in accordance with its terms, except to the extent that the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general principles of
equity.
4. Restrictions on Transfer of Stockholder Shares.
(a) Tag Along Rights. Subject to Sections 4(c) and 4(d), at least 15 days
prior to any sale, transfer, assignment, pledge or other disposal (a "Transfer")
of Stockholder Shares by BRS of more than 10% of the total number of BRS Closing
Date Shares (or any lesser number of Stockholder Shares which together with all
Stockholder Shares previously Transferred by BRS equal an amount in excess of
10% of the BRS Closing Date Shares), BRS shall deliver a written notice (the
"Sale Notice") to the Company and to each of the Other Stockholders, specifying
in reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of the Transfer; provided, that this Section 4(a) shall not apply
to any Transfer made pursuant to an Approved Sale
- 6 -
<PAGE> 7
or a Public Sale. Each Stockholder may elect to participate in the contemplated
Transfer by delivering written notice to BRS within 15 days after receipt of the
Sale Notice. If any of the Stockholders have elected to participate in such
Transfer, each of BRS and such Other Stockholders shall be entitled to sell in
the contemplated Transfer, at the same price and on the same terms, a number of
Stockholder Shares of any class equal to the product of (i) the quotient
determined by dividing the number of Stockholder Shares owned by such
Stockholder by the aggregate number of Stockholder Shares owned by the
Stockholders participating in such Transfer and (ii) the aggregate number of
Stockholder Shares to be sold in the contemplated Transfer. Each Stockholder
transferring Stockholder Shares pursuant to this Section 4(a) shall pay its pro
rata share (based on the number of Stockholder Shares to be sold) of the
expenses incurred by the Stockholders in connection with such Transfer and shall
be obligated to join in any indemnification obligations that BRS agrees to
provide in connection with such Transfer on a pro rata basis in accordance with
the number of Stockholder Shares sold in such Transfer; provided, that each
Stockholder's indemnification obligations shall not exceed the aggregate amount
of proceeds received by such Stockholder in such Transfer; and provided further,
that the representations and warranties and indemnification obligations of
holders of Warrant Shares shall be limited to representations regarding title to
such Stockholder Shares.
(b) First Offer Rights. Subject to Sections 4(c) and 4(d), at least 30 days
prior to any Transfer of Stockholder Shares (other than BRS Shares and other
than Warrant Shares), such Person making such Transfer (the "Offering
Stockholder") shall deliver a written notice (the "Transfer Notice") to the
Company and BRS specifying in reasonable detail the number of Stockholder Shares
proposed to be transferred, the proposed purchase price (which shall be payable
solely in cash) and the other terms and conditions of the Transfer; provided,
that this Section 4(b) shall not apply to any Transfer made following an
Approved Sale or the exercise of a "Repurchase Option" (as defined and set forth
in the Management Stock Agreement). BRS (or its designees) may elect to purchase
all (but not less than all) of the Stockholder Shares to be transferred, upon
the same terms and conditions as those set forth in the Transfer Notice, by
delivering a written notice of such election to the Offering Stockholder and the
Company within 10 days after the Transfer Notice has been delivered to the
Company. If BRS (or its designees) does not elect to purchase all of the
Stockholder Shares specified in the Transfer Notice, then the Company may elect
to purchase all or any portion of the remaining Stockholder Shares to be
transferred, upon the same terms and conditions set forth in the Transfer
Notice, by delivering a written notice of such election to the Offering
Stockholder within 20 days after the Transfer Notice has been delivered to the
Company. If BRS (or its designees) and the Company do not elect to purchase the
Stockholder Shares specified in the Transfer Notice, then the Offering
Stockholder may transfer the Stockholder Shares specified in the Transfer Notice
at a price and on terms no more favorable to the transferee(s) thereof than
specified in the Transfer Notice during the 90-day period immediately following
the earlier of (i) 20 days after delivery of the Transfer Notice and (ii) the
date as of which both BRS and the Company have declined in writing to exercise
their options under this Section 4(b). Any Stockholder Shares not transferred
within such 90-day period will be subject to the provisions of this Section 4(b)
upon subsequent Transfer.
(c) Permitted Transfers. The restrictions contained in this Section 4 shall
not apply with respect to any Transfer of Stockholder Shares by any Stockholder
(i) in the case of an
- 7 -
<PAGE> 8
individual Stockholder, (1) pursuant to applicable laws of descent and
distribution or among such Stockholder's Family Group, (2) with respect to
shares held by Richard D. Davidson, to Kurt Sagehorn, Stephen K. Weeks and
Michael V. Aumann, in each case, so long as such individuals are employees of
the Company and its Subsidiaries, (3) with respect to Co-Invest Shares held by
any Executive, so long as such Executive has good and valid reason to transfer
such Co-Invest Shares, to any other Executive upon receipt of the prior written
consent of the Board, which consent shall not be unreasonably withheld, or (ii)
in the case of a holder of the BRS Shares and its Permitted Transferees, (A)
among its Affiliates and partners, (B) to any employee, prospective employee,
director or prospective director of the Company or any Subsidiary of the Company
as incentive compensation, (C) to any BRS Investor or any employee or director
(whether current, former or prospective) of BRS or any Affiliate of BRS or (D)
to BRS; provided, in each case contemplated by this clause (ii), that the rights
and restrictions contained in this Section 4 shall continue to be applicable to
such Stockholder Shares after any such Transfer as if such Stockholder Shares
were held by the transferor; and provided further, that (x) the transferees of
such Stockholder Shares shall have agreed in writing to be bound by the
provisions of this Agreement which affect the Stockholder Shares so transferred
by executing a joinder in substantially the form attached hereto as Exhibit A
and (y) with respect to any transferee of Executive Shares, a joinder to the
applicable Management Stock Agreement. All transferees permitted under this
Section 4(c) are collectively referred to herein as "Permitted Transferees."
(d) Termination of Restrictions. The restrictions set forth in this Section
4 shall continue with respect to each Stockholder Share until the consummation
of an Initial Public Offering.
5. Sale of the Company.
(a) In the event of an Approved Sale, each Stockholder will thereafter (i)
consent to and raise no objections against the Approved Sale or the process
pursuant to which the Approved Sale was arranged, (ii) waive any dissenter's
rights and other similar rights, and (iii) if the Approved Sale is structured as
a sale of securities, each Stockholder will agree to sell its Stockholder Shares
on the terms and conditions of the Approved Sale. Each Stockholder will take all
necessary and desirable actions as directed by the Board in connection with the
consummation of any Approved Sale, including, without limitation, executing the
applicable purchase agreements and joining in any indemnification obligations
(whether directly to the buyer in such Approved Sale or pursuant to a
contribution arrangement) on a pro rata basis in accordance with the number of
Stockholder Shares sold in such Approved Sale; provided, that each Stockholder's
indemnification obligation shall not exceed the aggregate amount of proceeds
received by such Stockholder in such Approved Sale.
(b) If the Company or the holders of the Company's securities enter into
any negotiation or transaction for which Rule 506 (or any similar rule then in
effect) under the Securities Act may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), the Stockholders will, at the request of the Company, appoint a
purchaser representative (as such term is defined in Rule 501) reasonably
acceptable to the Company. If any Stockholder appoints a purchaser
representative designated by the Company, the Company will pay the fees of such
purchaser representative, but if any Stockholder declines to
- 8 -
<PAGE> 9
appoint the purchaser representative designated by the Company such holder will
appoint another purchaser representative (reasonably acceptable to the Company),
and such holder will be responsible for the fees of the purchaser representative
so appointed.
(c) All Stockholders (other than holders of Warrant Shares) will bear their
pro rata share (based upon the number of Stockholder Shares sold) of the
reasonable costs of any sale of Stockholder Shares pursuant to an Approved Sale
to the extent such costs are incurred for the benefit of all selling
Stockholders and are not otherwise paid by the Company or the acquiring party.
Costs incurred by any Stockholder on its own behalf will not be considered costs
of the transaction hereunder.
(d) This Section 5 shall automatically terminate upon the consummation of
an Initial Public Offering.
6. Legend. Each certificate or instrument evidencing Stockholder Shares and
each certificate or instrument issued in exchange for or upon the Transfer of
any Stockholder Shares (if such shares remain Stockholder Shares, each as
defined herein after such Transfer) shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON ___________, ____, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 30, 1999, BY AND AMONG THE ISSUER OF SUCH
SECURITIES (THE "COMPANY") AND CERTAIN OF THE COMPANY'S STOCKHOLDERS.
A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE
BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
The Company shall imprint such legend on certificates and instruments evidencing
Stockholder Shares outstanding prior to the date hereof. The legend set forth
above shall be removed from the certificates and instruments evidencing any
units which cease to be Stockholder Shares.
7. Transfer of Stockholder Shares.
(a) Stockholder Shares are transferable only pursuant to (i) public
offerings registered under the Securities Act, (ii) subject to the provisions of
Section 4 above, Rule 144 or Rule 144A or Regulation S (or any similar rules
then in effect) of the Securities and Exchange Commission if such rule is
available, and (iii) subject to Section 4 or 5 and Section 7(b) below, any other
legally available means of Transfer.
- 9 -
<PAGE> 10
(b) In connection with the Transfer of any Stockholder Shares other than a
Transfer described in clause (i) or (ii) of Section 7(a) above, the holder
thereof shall deliver written notice to the Company describing in reasonable
detail the Transfer or proposed Transfer, together with an opinion of counsel
reasonably acceptable to the Company (which such opinion requirement may be
waived by the Company in its sole discretion) to the effect that such Transfer
of Stockholder Shares may be effected without registration of such Stockholder
Shares under the Securities Act. In addition, if the holder of the Stockholder
Shares delivers to the Company an opinion of counsel that no subsequent Transfer
of such Stockholder Shares shall require registration under the Securities Act
and that such Stockholder Shares are no longer subject to the restrictions
herein, the Company shall, if such Stockholder Shares are certificated, promptly
upon such contemplated Transfer deliver new certificates for such Stockholder
Shares which do not bear the legend set forth in Section 6 above. If the Company
is not required pursuant to the immediately preceding sentence to deliver new
certificates for such Stockholder Shares without such legend, the holder thereof
shall not consummate a Transfer of the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this Section 7 and Section 6 above.
(c) Upon the request of a holder of Stockholder Shares, the Company shall
promptly supply to such Person or its prospective transferees all information
regarding the Company required to be delivered in connection with a Transfer
pursuant to Rule 144A (or any similar rule or rules then in effect) of the
Securities and Exchange Commission.
(d) Upon the request of any holder of Stockholder Shares, the Company shall
remove the legend set forth in Section 6 above from the certificates for such
holder's Stockholder Shares (or the eligible portion thereof); provided, that
such Stockholder Shares have been either registered under the Securities Act or
are eligible for sale pursuant to Rule 144 (or any similar rule or rules then in
effect) of the Securities and Exchange Commission.
(e) Any Transfer or attempted Transfer of any Stockholder Shares in
violation of any provision of this Agreement shall be null and void, and the
Company shall not record such Transfer on its books or treat any purported
transferee of such Stockholder Shares as the owner of such shares for any
purpose.
8. Amendment and Waiver. Except as otherwise provided herein, (a) no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by, respectively, the Company or the
holders of a majority of the Stockholder Shares on a fully diluted basis, and
(b) no modification, amendment or waiver which materially adversely affects the
rights of a Stockholder under this Agreement vis-a-vis Other Stockholders shall
be effective against such Stockholder unless such modification, amendment or
waiver is approved in writing by such Stockholder. For avoidance of doubt, an
amendment to add another party to this Agreement is not an action which, in and
of itself, affects any Stockholder materially adversely. The failure of any
party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
- 10 -
<PAGE> 11
9. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
10. Entire Agreement. Except as otherwise expressly set forth herein, this
document and the other Transaction Documents embody the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
11. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares.
12. Counterparts. This Agreement may be executed in separate counterparts
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
13. Remedies. The parties hereto shall be entitled to enforce their rights
under this Agreement specifically to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights existing in
their favor. The parties hereto agree and acknowledge that money damages may not
be an adequate remedy for any breach of the provisions of this Agreement and
that the Company and each of the Stockholders may in his, hers, or its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief (without posting a bond or other
security) in order to enforce or prevent any violation of the provisions of this
Agreement.
14. WAIVER OF JURY TRIAL. THE COMPANY AND EACH STOCKHOLDER HEREBY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR
THE VALIDITY, PROTECTION, INTERPRETATION OR ENFORCEMENT THEREOF. THE COMPANY AND
EACH STOCKHOLDER AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF
THIS AGREEMENT AND WOULD NOT ENTER INTO THIS AGREEMENT IF THIS SECTION WERE NOT
PART OF THIS AGREEMENT.
15. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent
- 11 -
<PAGE> 12
via facsimile to the recipient accompanied by a certified or registered mailing.
Such notices, demands and other communications will be sent to the address
indicated below:
To the Company, to:
O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Attention: President and Secretary
Facsimile: (417) 682-8120 (President
(417) 682-8113 (Secretary)
With a copy, which shall not constitute notice to the
Company, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To BRS, to:
Bruckmann, Rosser, Sherrill & Co. II, L.P.
126 East 56th Street
New York, NY 10022
Attention: Stephen F. Edwards
Facsimile: (212) 521-3799
With a copy, which shall not constitute notice to
BRS, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To any of the Executives, to:
[EXECUTIVE]
c/o O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Facsimile: (417) 682-8113
- 12 -
<PAGE> 13
With a copy, which shall not constitute notice to
such Executive, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To any Warrant Holder, to:
To the address for such Warrant Holder set forth in
the Company's records;
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
16. GOVERNING LAW. THE CORPORATE LAW OF DELAWARE SHALL GOVERN ALL ISSUES
CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
17. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
* * * * *
- 13 -
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first above written.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Richard D. Davidson
------------------------------------------
Name: Richard D. Davidson
Its: President and Chief Operating Officer
BRUCKMANN, ROSSER, SHERRILL & CO. II,
L.P.
By: BRSE, L.L.C.
Its: General Partner
By: /s/ Stephen F. Edwards
------------------------------------------
Name: Stephen F. Edwards
Its:
<PAGE> 15
BRS INVESTOR SIGNATURE PAGE
/s/ Bonnie Dietrich
----------------------------------------
BONNIE DIETRICH
/s/ Rice Edmonds
----------------------------------------
RICE EDMONDS
/s/ Juliet Frist
----------------------------------------
JULIET FRIST
/s/ Susan Kaider
----------------------------------------
SUSAN KAIDER
/s/ Sarah Polizotto
----------------------------------------
SARAH POLIZOTTO
/s/ Walker Simmons
----------------------------------------
WALKER SIMMONS
/s/ Marilena Tibrea
----------------------------------------
MARILENA TIBREA
<PAGE> 16
EXECUTIVE SIGNATURE PAGE (PAGE 1 OF 4)
/s/ Richard D. Davidson /s/ David E. Pittman
- - --------------------------------- ---------------------------------
RICHARD D. DAVIDSON DAVID E. PITTMAN
/s/ Michael P. O'Sullivan /s/ David S. Thiesse
- - --------------------------------- ---------------------------------
MICHAEL P. O'SULLIVAN DAVID S. THIESSE
/s/ Phillip J. Pacey /s/ Gary Blankenship
- - --------------------------------- ---------------------------------
PHILLIP J. PACEY GARY R. BLANKENSHIP
/s/ Tyrone E. Riegel /s/ Jason Stansberry
- - --------------------------------- ---------------------------------
TYRONE E. RIEGEL JASON STANSBERRY
/s/ Thomas M. O'Sullivan, Jr. /s/ Joe J. Whyman
- - --------------------------------- ---------------------------------
THOMAS M. O'SULLIVAN, JR. JOE J. WHYMAN
/s/ James C. Hillman /s/ John R. Cox
- - --------------------------------- ---------------------------------
JAMES C. HILLMAN JOHN R. COX
/s/ Rowland H. Geddie, III /s/ Larry G. Edge
- - --------------------------------- ---------------------------------
ROWLAND H. GEDDIE, III LARRY G. EDGE
/s/ Stuart D. Schotte /s/ Leonard R. Saldana
- - --------------------------------- ---------------------------------
STUART D. SCHOTTE LEONARD R. SALDANA
/s/ E. Thomas Riegel /s/ Maureen M. Wood
- - --------------------------------- ---------------------------------
E. THOMAS RIEGEL MAUREEN M. WOOD
/s/ Tommy W. Thieman /s/ Max Simmons
- - --------------------------------- ---------------------------------
TOMMY W. THIEMAN MAX SIMMONS
/s/ Cliff Bickel, Jr. /s/ Michael L. Franks
- - --------------------------------- ---------------------------------
CLIFF BICKEL, JR. MICHAEL L. FRANKS
EXECUTIVE SIGNATURE PAGE (PAGE 2 OF 4)
<PAGE> 17
/s/ David R. Turney /s/ Ronald E. Wegener
- - --------------------------------- ---------------------------------
DAVID R. TURNEY RONALD E. WEGENER
/s/ John D. Blevins /s/ Kenneth S. Ladd
- - --------------------------------- ---------------------------------
JOHN D. BLEVINS KENNETH S. LADD
/s/ Neal C. Ruggeberg /s/ Terry J. Braden
- - --------------------------------- ---------------------------------
NEAL C. RUGGEBERG TERRY J. BRADEN
/s/ Daniel P. O'Sullivan /s/ Daniel F. O'Sullivan
- - --------------------------------- ---------------------------------
DANIEL P. O'SULLIVAN DANIEL F. O'SULLIVAN
O'SULLIVAN PROPERTIES, INC.
/s/ Randall Day By: /s/ Thomas M. O'Sullivan, Sr.
- - --------------------------------- ---------------------------------
RANDALL DAY Name: Thomas M. O'Sullivan, Sr.
Title: President
/s/ Timothy E. Riegel /s/ Mary Davidson
- - --------------------------------- ---------------------------------
TIMOTHY E. RIEGEL MARY DAVIDSON
/s/ Thomas J. Tirdil /s/ Jennifer O'Sullivan
- - --------------------------------- ---------------------------------
THOMAS J. TIRDIL JENNIFER O'SULLIVAN
/s/ Robert G. Gillespie /s/ Michael P. O'Sullivan
- - --------------------------------- ---------------------------------
ROBERT G. GILLESPIE MICHAEL P. O'SULLIVAN, as
custodian for Tara O'Sullivan
<PAGE> 18
EXECUTIVE SIGNATURE PAGE (PAGE 3 OF 4)
/s/ Michael P. O'Sullivan /s/ Kim O'Sullivan
- - --------------------------------- ---------------------------------
MICHAEL P. O'SULLIVAN, as custodian KIM O'SULLIVAN
for Trevor O'Sullivan
/s/ Michael P. O'Sullivan /s/ Kathleen O'Sullivan Day
- - --------------------------------- ---------------------------------
MICHAEL P. O'SULLIVAN, as custodian for KATHLEEN O'SULLIVAN DAY
Tierny O'Sullivan
/s/ Rose Pacey /s/ Diane Riegel
- - --------------------------------- ---------------------------------
ROSE PACEY DIANE RIEGEL
/s/ Maria O'Sullivan /s/ George R. Wood
- - --------------------------------- ---------------------------------
MARIA O'SULLIVAN GEORGE R. WOOD
KAREN O'SULLIVAN WEGENER
REVOCABLE LIVING TRUST
/s/ Colin E. O'Sullivan By: /s/ Karen O'Sullivan Wegener
- - --------------------------------- ---------------------------------
COLIN E. O'SULLIVAN Karen O'Sullivan Wegener,
Trustee
/s/ Thomas M. O'Sullivan, Jr. /s/ Tommy W. Thieman
- - --------------------------------- ---------------------------------
THOMAS M. O'SULLIVAN, JR. as TOMMY W. THIEMAN, custodian for
custodian for Colin O'Sullivan Ellen A. Thieman
BATO, L.P.
By: /s/ Thomas M. O'Sullivan, Jr. /s/ Karen Simmons
- - --------------------------------- ---------------------------------
Thomas M. O'Sullivan, Jr., KAREN SIMMONS, custodian for
General Partner Matthew Simmons
/s/ James A. Hillman /s/ Peggy E. Geddie
- - --------------------------------- ---------------------------------
JAMES A. HILLMAN PEGGY E. GEDDIE
<PAGE> 19
EXECUTIVE SIGNATURE PAGE (PAGE 4 OF 4)
/s/ Betty O'Sullivan Thieman /s/ Thomas Brent Thieman
- - --------------------------------- ---------------------------------
BETTY O'SULLIVAN THIEMAN THOMAS BRENT THIEMAN
/s/ Kelly Thieman Hull /s/ Linda O'Sullivan
- - --------------------------------- ---------------------------------
KELLY THIEMAN HULL LINDA O'SULLIVAN
/s/ Jeffrey Thieman
- - ---------------------------------
JEFFREY THIEMAN
<PAGE> 20
WARRANT HOLDER SIGNATURE PAGE
LEHMAN BROTHERS INC.
By: /s/
----------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.6
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made as of November 30,
1999, by and among O'Sullivan Industries Holdings, Inc., a Delaware corporation
(the "Company"), Bruckmann, Rosser, Sherrill & Co. II, L.P., a Delaware limited
partnership ("BRS"), each of the Persons (as defined herein) executing the BRS
Investor Signature Page attached hereto (each, a "BRS Investor" and
collectively, the "BRS Investors"), each of the stockholders executing an
Executive Signature Page attached hereto or members of management acquiring
Common Stock after the date hereof and executing a joinder hereto in the form
attached as Exhibit A (collectively, the "Executives" and individually an
"Executive") and each of the warrant holders executing a Warrant Holder
Signature Page attached hereto and such other Persons acquiring a Warrant after
the date hereof (collectively, the "Warrant Holders" and individually, a
"Warrant Holder"). Unless otherwise indicated herein, capitalized terms used
herein are defined in Section 1 hereof.
WHEREAS, BRS and the BRS Investors have acquired certain
shares of Common Stock pursuant to the Merger Agreement;
WHEREAS, each Executive acquired beneficial ownership of
certain shares of Common Stock pursuant to the Merger Agreement; and
WHEREAS, each Warrant Holder has acquired or will acquire
certain warrants to acquire certain shares of Common Stock and Preferred Stock.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Definitions. As used herein, the following terms
shall have the following meanings.
"Affiliate" means as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"BRS Registrable Securities" means (i) any Common Stock issued
or issuable to BRS and the BRS Investors on the date hereof or acquired by BRS,
the BRS Investors or any of their respective affiliates or partners after the
date hereof, and (ii) any shares of capital stock of the Company issued or
issuable with respect to the securities referred to in clause (i) by way of a
stock
<PAGE> 2
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, a Person will be deemed to be a holder of BRS Registrable
Securities whenever such Person has the right to acquire directly or indirectly
such BRS Registrable Securities (upon conversion or exercise in connection with
a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected. Such securities will cease to be BRS Registrable
Securities when sold pursuant to Rule 144 or any offering registered under the
Securities Act.
"Common Stock" means (i) the Company's Common Stock, par value
$0.01 per share, (ii) any other class or series of the Company's common stock
and (iii) any capital stock of the Company issued or issuable with respect to
the securities referred to in clauses (i) or (ii) by way of stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization.
"Demand Registration" has the meaning set forth in Section
2(c).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive Registrable Securities" means (i) any shares of
Common Stock acquired by, or issued or issuable to, the Executives (but only to
the extent that such shares of Common Stock are vested pursuant to the terms of
the Management Stock Purchase Agreement, dated as of the date hereof, by and
among the Company and the Executive), and (ii) any equity securities issued or
issuable directly or indirectly with respect to the securities referred to in
clause (i) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, including a recapitalization or exchange. As to any particular
Executive Registrable Securities, such securities shall cease to be Executive
Registrable Securities when they have been distributed to the public pursuant to
an offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144. For purposes of this
Agreement, a Person will be deemed to be a holder of Executive Registrable
Securities whenever such Person has the right to acquire directly or indirectly
such Executive Registrable Securities upon conversion or exercise in connection
with a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
"IPO" means the sale, in the initial underwritten public
offering registered under the Securities Act, of shares of the Company's Common
Stock (other than an offering solely to employees of the Company or its
subsidiaries) where, after such offering, the Common Stock sold in such offering
is subject to being traded in the NASDAQ National Market System or a national
securities exchange.
"Merger Agreement" means the Agreement and Plan of Merger,
dated as of May 17, 1999, between the Company and OSI Acquisition, Inc., a
Delaware corporation, as amended, restated or modified from time to time.
-2-
<PAGE> 3
"Management Stock Agreement" means that certain Management
Stock Agreement dated on even date herewith by and among the Company and the
several stockholders of the company whose names appear on the signature pages
thereto.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section
4(a).
"Preferred Demand Registration" has the meaning set forth in
Section 3(c).
"Preferred Stock" means (i) the Company's Series B Junior
Preferred Stock, par value $0.01 per share, and (ii) any capital stock of the
Company issued or issuable with respect to the securities referred to in clause
(i) by way of stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Qualified Public Offering" means the sale, in an underwritten
primary public offering of Common Stock registered under the Securities Act, of
shares of Common Stock which is expected to result in net cash proceeds to the
Company in an aggregate amount of not less than $30 million.
"Registrable Preferred Securities" means the Warrant
Registrable Preferred Securities.
"Registrable Securities" means, collectively, the BRS
Registrable Securities, the Executive Registrable Securities and the Warrant
Registrable Common Securities.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company.
"Required Warrant Holders" means, at any time, holders of 25%
of the Warrant Registrable Securities outstanding on the date hereof.
"Rule 144" means Rule 144 under the Securities Act (or any
similar rule then in force).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant Holder Demand Event" means the earlier to occur of
(i) the 180th day after the date on
-3-
<PAGE> 4
which an IPO is consummated and (ii) other than in connection with an IPO, the
date on which any class of Common Stock is listed on a national securities
exchange or authorized for quotation on the NASDAQ National Market System.
"Warrant Registrable Common Securities" means (i) any Common
Stock issued or issuable to any Warrant Holder on the date hereof or acquired by
any Warrant Holder after the date hereof, and (ii) any shares of capital stock
of the Company issued or issuable with respect to the securities referred to in
clause (i) by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. For purposes of this Agreement, a Person will be deemed to be a
holder of Warrant Registrable Common Securities whenever such Person has the
right to acquire directly or indirectly such Warrant Registrable Common
Securities (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected. Such securities will cease to be Warrant Registrable Common Securities
when sold pursuant to Rule 144 or any offering registered under the Securities
Act.
"Warrant Registrable Preferred Securities" means (i) any
Preferred Stock issued or issuable to any Warrant Holder on the date hereof or
acquired by any Warrant Holder after the date hereof, and (ii) any shares of
capital stock of the Company issued or issuable with respect to the securities
referred to in clause (i) by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. For purposes of this Agreement, a Person will be deemed
to be a holder of Warrant Registrable Preferred Securities whenever such Person
has the right to acquire directly or indirectly such Warrant Registrable
Preferred Securities (upon conversion or exercise in connection with a transfer
of securities or otherwise, but disregarding any restrictions or limitations
upon the exercise of such right), whether or not such acquisition has actually
been effected. Such securities will cease to be Warrant Registrable Preferred
Securities when sold pursuant to Rule 144 or any offering registered under the
Securities Act.
"Warrant Registrable Securities" means the Warrant Registrable
Common Securities and the Warrant Registrable Preferred Securities.
2. Demand Registrations for Registrable Securities.
(a) Requests for Registration. Subject to the terms and
conditions of this Agreement, (i) at any time and from time to time, the holders
of a majority of the BRS Registrable Securities may request registration, and
(ii) at any time after the occurrence of a Warrant Holder Demand Event, the
Required Warrant Holders may request one (1) registration, in each case whether
underwritten or otherwise, under the Securities Act of all or part of their
Registrable Securities on Form S-1 or any similar long-form registration
("Long-Form Registrations") or on Form S-2 or S-3 or any similar short-form
registration ("Short-Form Registrations") if available. Each request for a
Long-Form Registration or Short-Form Registration shall specify the approximate
number of Registrable Securities requested to be registered, the anticipated per
share price range for such offering (if known) and the intended method of
distribution.
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(b) Long-Form Registrations. The holders of a majority of the
BRS Registrable Securities will be entitled to request up to three (3) Long-Form
Registrations in which the Company will pay all Registration Expenses. Until
such time as the Required Warrant Holders request a Short-Form Registration
under Section 2(c) below, such holders will be entitled to request one Long-Form
Registration in which the Company will pay all Registration Expenses. A
registration will not count as the permitted Long-Form Registration until it has
become effective and unless the holders of Registrable Securities are able to
register and sell 100% of the Registrable Securities requested to be included in
such registration, it being understood and agreed that the requisite holders of
Registrable Securities making a request for a Demand Registration hereunder may
withdraw from such registration at any time prior to the effective date of such
Demand Registration, in which case such request will not count as one of the
permitted Demand Registrations for such holders, irrespective of whether or not
such registration is effected.
(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to Section 2(b), (i) the holders of the BRS
Registrable Securities will be entitled to request an unlimited number of
Short-Form Registrations, and (ii) until such time as the Required Warrant
Holders request a Long-Form Registration under Section 2(b) above, such holders
will be entitled to request one Short-Form Registration, in each case in which
the Company will pay all Registration Expenses. A registration will not count as
the permitted Short-Form Registration until it has become effective and unless
the holders of Registrable Securities are able to register and sell 100% of the
Registrable Securities requested to be included in such registration; it being
understood and agreed that the requisite holders of Registrable Securities
making a request for a Demand Registration hereunder may withdraw from such
registration at any time prior to the effective date of such Demand
Registration, in which case such request will not count as one of the permitted
Demand Registrations for such holders, irrespective of whether or not such
registration is effected. Demand Registrations will be Short-Form Registrations
whenever the Company is permitted to use any applicable short form. After the
Company has become subject to the reporting requirements of the Exchange Act,
the Company will use its best efforts to make Short-Form Registrations available
for the sale of Registrable Securities. All registrations requested pursuant to
Sections 2(b) and 2(c) are referred to herein as "Demand Registrations."
(d) Priority on Demand Registrations. The Company will not
include in any Demand Registration any securities which are not Registrable
Securities without the prior written consent of the holders of at least a
majority of the Registrable Securities included in such registration. If a
Demand Registration is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering exceeds the number of Registrable Securities and other
securities, if any, which can be sold therein without adversely affecting the
marketability of the offering, the Company will include in such registration for
any Demand Registration, (i) first, the Registrable Securities requested to be
included in such registration, pro rata among the holders thereof on the basis
of the number of shares of Registrable Securities requested to be included
therein by each such holder, and (ii) second, any other securities of the
Company requested to be included in such registration pro rata, if necessary, on
the basis of the number of shares of such other securities owned by each such
holder.
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<PAGE> 6
(e) Restrictions on Demand Registrations. The Company will
not be obligated to effect any Demand Registration within six months after the
effective date of a previous Demand Registration.
(f) Selection of Underwriters. In the case of a Demand
Registration, the holders of a majority of the Registrable Securities to be
included in such Demand Registration will have the right to select the
investment banker(s) and manager(s) to administer the offering, which investment
banker(s) and manager(s) will be nationally recognized, subject to the Company's
approval which will not be unreasonably withheld.
(g) Other Registration Rights. Except as provided in this
Agreement, the Company will not grant to any Persons the right to request the
Company to register any equity or similar securities of the Company, or any
securities convertible or exchangeable into or exercisable for such securities,
whether on a "demand" or "piggyback" basis, without the prior written consent of
the holders of a majority of the Registrable Securities.
3. Demand Registrations for Registrable Preferred Securities.
(a) Requests for Registration. Subject to the terms and
conditions of this Agreement (including, without limitation, Section 3(e)), at
any time after the occurrence of a Warrant Holder Demand Event, the Required
Warrant Holders may request one (1) registration, whether underwritten or
otherwise, under the Securities Act of all or part of their Registrable
Preferred Securities as either a Long-Form Registration or Short-Form
Registration. Each request for a Long-Form Registration or Short-Form
Registration shall specify the approximate number of Registrable Preferred
Securities requested to be registered, the anticipated per share price range for
such offering (if known) and the intended method of distribution.
(b) Long-Form Registrations. Until such time as the Required
Warrant Holders request a Short-Form Registration under Section 3(c) below, such
holders will be entitled to request one Long-Form Registration in which the
Company will pay all Registration Expenses. A registration will not count as the
permitted Long-Form Registration until it has become effective and unless the
holders of Registrable Preferred Securities are able to register and sell 100%
of the Registrable Securities requested to be included in such registration, it
being understood and agreed that the requisite holders of Registrable Preferred
Securities making a request for a Preferred Demand Registration hereunder may
withdraw from such registration at any time prior to the effective date of such
Preferred Demand Registration, in which case such request will not count as one
of the permitted Preferred Demand Registrations for such holders, irrespective
of whether or not such registration is effected.
(c) Short-Form Registrations. In addition to the Long-Form
Registration provided pursuant to Section 3(b), until such time as the Required
Warrant Holders request a Long- Form Registration under Section 3(b) above, such
holders will be entitled to request one Short-Form Registration, in each case in
which the Company will pay all Registration Expenses. A registration will not
count as the permitted Short-Form Registration until it has become effective and
unless the holders of Registrable Preferred Securities are able to register and
sell 100% of the Registrable Preferred Securities requested to be included in
such registration; it being understood and agreed that
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<PAGE> 7
the requisite holders of Registrable Preferred Securities making a request for a
Preferred Demand Registration hereunder may withdraw from such registration at
any time prior to the effective date of such Preferred Demand Registration, in
which case such request will not count as one of the permitted Preferred Demand
Registrations for such holders, irrespective of whether or not such registration
is effected. Preferred Demand Registrations will be Short-Form Registrations
whenever the Company is permitted to use any applicable short form. After the
Company has become subject to the reporting requirements of the Exchange Act,
the Company will use its best efforts to make Short-Form Registrations available
for the sale of Registrable Preferred Securities. All registrations requested
pursuant to Sections 3(b) and Section 3(c) are referred to herein as "Preferred
Demand Registrations."
(d) Priority on Preferred Demand Registrations. The Company
will not include in any Preferred Demand Registration any securities which are
not Registrable Preferred Securities without the prior written consent of the
holders of at least a majority of the Registrable Preferred Securities included
in such registration. If a Preferred Demand Registration is an underwritten
offering and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Preferred Securities and, if permitted
hereunder, other securities requested to be included in such offering exceeds
the number of Registrable Preferred Securities and other securities, if any,
which can be sold therein without adversely affecting the marketability of the
offering, the Company will include in such registration for any Preferred Demand
Registration, (i) first, the Registrable Preferred Securities requested to be
included in such registration, pro rata among the holders thereof on the basis
of the number of shares of Registrable Preferred Securities requested to be
included therein by each such holder, and (ii) second, any other securities of
the Company requested to be included in such registration pro rata, if
necessary, on the basis of the number of shares of such other securities owned
by each such holder.
(e) Restrictions on Preferred Demand Registrations. The
Company will not be obligated to effect any Preferred Demand Registration within
six months after the effective date of a previous Demand Registration.
(f) Selection of Underwriters. In the case of a Preferred
Demand Registration, the holders of a majority of the Registrable Preferred
Securities to be included in such Preferred Demand Registration will have the
right to select the investment banker(s) and manager(s) to administer the
offering, which investment banker(s) and manager(s) will be nationally
recognized, subject to the Company's approval which will not be unreasonably
withheld.
4. Piggyback Registrations for Registrations of
Registrable Securities.
(a) Right to Piggyback. Whenever the Company proposes to
register any of its Common Stock under the Securities Act (other than pursuant
to a Demand Registration or an IPO that is not a Qualified Public Offering, and
other than pursuant to a registration statement on Form S-8 or S-4 or any
similar form or in connection with a registration the primary purpose of which
is to register debt securities (i.e., in connection with a so-called "equity
kicker")) and a registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company will give
prompt written notice to all holders of Registrable Securities of its intention
to effect such a registration and will include in such registration (subject to
the
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<PAGE> 8
provisions of this Agreement) all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 20
days after the receipt of the Company's notice.
(b) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
the Company will include in such registration all securities requested to be
included in such registration; provided, that if the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration (A) first, the securities the Company proposes to sell, (B)
second, the other Registrable Securities requested to be included in such
registration, pro rata among the holders of such Registrable Securities on the
basis of the number of shares of Registrable Securities requested to be included
therein by each such holder, and (C) third, other securities, if any, requested
to be included in such registration.
(c) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities (which registration was consented to pursuant to
Section 2(g) above), and the managing underwriters advise the Company in writing
that in their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration (i) first, the securities requested to be included therein
by the holders requesting such registration, (ii) second, the Registrable
Securities requested to be included in such registration, pro rata among the
holders of such Registrable Securities on the basis of the number of shares of
Registrable Securities owned by each such holder, and (iii) third, other
securities requested to be included in such registration not covered by clause
(i) or clause (ii) above.
(d) Selection of Underwriters. If any Piggyback Registration
is an underwritten offering, the Company shall select the investment banker(s)
and manager(s) for the offering subject to the approval of the holders of a
majority of the BRS Registrable Securities, which approval will not be
unreasonably withheld.
(e) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to this
Section 4, and if such previous registration has not been withdrawn or
abandoned, the Company will not file or cause to be effected any other
registration of any of its equity or similar securities or securities
convertible or exchangeable into or exercisable for its equity or similar
securities under the Securities Act (except on Forms S-4 or S-8 or any successor
forms), whether on its own behalf or at the request of any holder or holders of
such securities, until a period of at least six months has elapsed from the
effective date of such previous registration. In the event the Company proposes
to register any of the Preferred Stock under the Securities Act (other than
pursuant to a Demand Registration) and a registration form to be used may be
used for the registration of Preferred Registrable Securities, the provisions of
Sections 4(a)-(e) shall apply to such registration of Preferred Registrable
Securities.
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<PAGE> 9
5. Holdback Agreements.
(a) Each holder of Registrable Securities (or Registrable
Preferred Securities, as applicable) hereby agrees not to effect any public sale
or distribution (including sales pursuant to Rule 144) of equity securities of
the Company, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and the 180-day period
beginning on the effective date of any Demand Registration or Piggyback
Registration (or any Preferred Demand Registration, as applicable) for a public
offering to be underwritten on a firm commitment basis in which Registrable
Securities (or Registrable Preferred Securities, as applicable) are included
(except as part of such underwritten registration), unless the underwriters
managing the registered public offering otherwise agree; provided, that with
respect to any Warrant Holder, the foregoing 187 day period shall be 180 days in
the case of an IPO and 90 days in the case of all other underwritten public
offerings.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 180-day period beginning on the effective date of any
underwritten Demand Registration or Piggyback Registration (except as part of
such underwritten registration or pursuant to registrations on Forms S-4 or S-8
or any successor forms), or any Preferred Demand Registration, as applicable,
unless the underwriters managing the registered public offering otherwise agree,
and (ii) to cause each holder of Registrable Securities (or any Registrable
Preferred Securities, as applicable) and each other holder of at least 5% (on a
fully diluted basis) of Common Stock (or Preferred Stock, as applicable), or any
securities convertible into or exchangeable or exercisable for Common Stock (or
Preferred Stock, as applicable), purchased from the Company at any time after
the date of this Agreement (other than in a registered public offering) to agree
not to effect any public sale or distribution (including sales pursuant to Rule
144) of any such securities during such period (except as part of such
underwritten registration, if otherwise permitted), unless the underwriters
managing the registered public offering otherwise agree.
6. Registration Procedures.
(a) Whenever the holders of Registrable Securities or
Registrable Preferred Securities have requested that any Registrable Securities
or Registrable Preferred Securities be registered pursuant to this Agreement,
the Company will use its best efforts to effect the registration and the sale of
such Registrable Securities or Registrable Preferred Securities, as applicable,
in accordance with the intended method of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible (or within such specific
time period as may otherwise be specified):
(i) subject to Section 6(b) below, within ten (10) days after
receipt of any request for a Demand Registration or Preferred Demand
Registration, the Company will give written notice of such requested
registration to all other holders of Registrable Securities or Registrable
Preferred Securities, as applicable, and will include (subject to the provisions
of this Agreement) in such registration, all Registrable Securities or
Registrable Preferred Securities, as applicable, with respect to which the
Company has received written requests for inclusion therein within ten (10)
business days after the receipt of the Company's notice;
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<PAGE> 10
(ii) subject to Section 6(b) below, prepare and file with the
SEC a registration statement with respect to such Registrable Securities or
Registrable Preferred Securities, as applicable, and cause such registration
statement to become effective within 120 days of the Company's receipt of a
request for a Demand Registration or Preferred Demand Registration, as
applicable (provided that before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company will furnish to the
counsel selected pursuant to Section 6(b) below copies of all such documents
proposed to be filed);
(iii) subject to Section 6(b) below, prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary (i) to keep such
registration statement effective for a period (the "Effectiveness Period") equal
to the shorter of (x) 180 days or (y) the period of time as all of the
Registrable Securities or Registrable Preferred Securities, as
applicable, included in the registration statement shall have been sold
thereunder, and (ii) comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(iv) furnish to each seller of Registrable Securities or
Registrable Preferred Securities, as applicable, such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller;
(v) if requested by the holders of a majority of the BRS
Registrable Securities in connection with any Demand Registration requested by
such holders, use its commercially reasonable efforts to cause to be included in
such registration Common Stock having an aggregate value (based on the midpoint
of the proposed offering price range specified in the registration statement
used to offer such securities) of up to $30.0 million, to be offered in a
primary offering of the Company's securities contemporaneously with such
offering of Registrable Securities;
(vi) register or qualify such Registrable Securities or
Registrable Preferred Securities, as applicable, under such other securities or
blue sky laws of such jurisdictions as any seller reasonably requests and do any
and all other acts and things which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
Registrable Securities or Registrable Preferred Securities, as applicable, owned
by such seller (provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subsection, (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of process (i.e.,
service of process which is not limited solely to securities law violations) in
any such jurisdiction);
(vii) notify each seller of such Registrable Securities or
Registrable Preferred Securities, as applicable, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and, at the
request of any such seller, the
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<PAGE> 11
Company will promptly prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Securities or Registrable Preferred Securities, as applicable, such prospectus
will not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(viii) in the case of Registrable Securities only, cause all such
Registrable Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed and, if not so listed, to be
listed on the Nasdaq National Market System ("Nasdaq Market") and, if listed on
the Nasdaq Market, secure designation of all such Registrable Securities covered
by such registration statement as a Nasdaq "National Market System security"
within the meaning of Rule 11Aa2-1 of the SEC or, failing that, to secure Nasdaq
Market authorization for such Registrable Securities and, without limiting the
generality of the foregoing, arrange for at least two market makers to register
as such with respect to such Registrable Securities with the National
Association of Securities Dealers;
(ix) provide a transfer agent and registrar for all such
Registrable Securities or Registrable Preferred Securities, as applicable, not
later than the effective date of such registration statement;
(x) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities or Registrable Preferred Securities, as
applicable, being sold or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities or
Registrable Preferred Securities (including, without limitation, effecting a
stock split or a combination of shares);
(xi) make available for inspection by any seller of Registrable
Securities or Registrable Preferred Securities, as applicable, any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such seller or underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(xii) comply with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon as reasonably
practicable, an earning statement covering the period of at least twelve months
beginning with the first day of the Company's first full calendar quarter after
the effective date of the registration statement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder;
(xiii) permit any holder of Registrable Securities or Registrable
Preferred Securities, as applicable, which holder, in its sole and exclusive
judgment, might be deemed to be an underwriter or a controlling person of the
Company, to participate in the preparation of such registration or comparable
statement and to require the insertion therein of material, furnished to the
Company in writing, which in the reasonable judgment of the Company and its
counsel should be included;
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<PAGE> 12
(xiv) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(xv) cause such Registrable Securities or Registrable Preferred
Securities, as applicable, covered by such registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the sellers thereof to consummate the disposition
of such Registrable Securities or Registrable Preferred Securities; and (xvi)
obtain a "cold comfort" letter from the Company's independent public accountants
in customary form and covering such matters of the type customarily covered by
"cold comfort" letters as the holders of a majority of the Registrable
Securities or Registrable Preferred Securities, as applicable, being sold
reasonably request.
If any such registration or comparable statement refers to any holder by name or
otherwise as the holder of any securities of the Company and if, in its sole and
exclusive judgment, such holder is or might be deemed to be a controlling person
of the Company, such holder shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to such holder and
presented to the Company in writing, to the effect that the holding by such
holder of such securities is not to be construed as a recommendation by such
holder of the investment quality of the Company's securities covered thereby and
that such holding does not imply that such holder will assist in meeting any
future financial requirements of the Company, or (ii) in the event that such
reference to such holder by name or otherwise, in the opinion of counsel to the
Company, is not required by the Securities Act or any similar Federal statute
then in force, the deletion of the reference to such holder.
(b) If a the Company receives a request for a Demand Registration
or Preferred Demand Registration during any "lock up" or "black out" period
imposed pursuant to Section 5(a) hereof or in connection with any underwriting
or purchase agreement relating to a Rule 144A offering or registered public
offering of Common Stock, O'Sullivan Holdings will not be required to notify the
holders of Registrable Securities (or Registrable Preferred Securities, as
applicable) or file a registration statement prior to the end of such "lock up"
or "black out" period; provided, that in such case the Company will use
commercially reasonable efforts to cause the registration statement to become
effective no later than 180 days after the Company's receipt of such request for
a Demand Registration or Preferred Demand Registration or, if applicable, 90
days after the end of such "lock up" or "black out" period. Notwithstanding the
foregoing to the contrary, the Company may postpone the filing of, or suspend
the effectiveness of, any registration statement or amendment thereto, suspend
the use of any prospectus and shall not be required to amend or supplement the
registration statement, any related prospectus or any document incorporated
therein by reference (other than an effective registration statement being used
for an underwritten offering) in the event that, and for a period (a "Suspension
Period") not to exceed an aggregate of 45 days if (i) an event or circumstance
occurs and is continuing as a result of which the registration statement, any
related prospectus or any document incorporated therein by reference as then
amended or supplemented or
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<PAGE> 13
proposed to be filed would, in the Company's good faith judgment, contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (ii)(A) the
Company determines in its good faith judgment that the disclosure of the
event at that time would have a material adverse effect on its business,
operations, or prospects or (B) the disclosure otherwise relates to a
material business transaction or development that has not yet been publicly
disclosed; provided, that if a Suspension Period occurs during an
Effectiveness Period (as defined in Section 6(a)(iii) above), the
Effectiveness Period shall be extended by the number of days in the
Suspension Period. In the event of any "lock up" or "black out" period
which arises pursuant to any underwriting or purchase agreement between the
Company and an underwriter, the Company will promptly notify the holders of
Registrable Securities and Registrable Preferred Securities of the same.
7. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all Registration
Expenses, will be borne by the Company.
(b) In connection with each Registration effected under any of
Sections 2, 3, 4 or 5 hereof, the Company will reimburse the holders of
Registrable Securities and Registrable Preferred Securities, as applicable
covered by such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of a majority of the Registrable Securities (or
Registrable Preferred Securities) participating in such registration.
8. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by
law, each holder of Registrable Securities or Registrable Preferred Securities,
as applicable, its officers, directors and partners and each Person who controls
such holder (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses arising out of or based upon any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse such holder, director, officer, partner or
controlling Person for any legal or other expenses reasonably incurred by such
holder, director, officer, partner or controlling Person in connection with the
investigation or defense of such loss, claim, damage, liability or expense,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use therein or
by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities or Registrable Preferred Securities.
-13-
<PAGE> 14
(b) In connection with any registration statement in which a
holder of Registrable Securities or Registrable Preferred Securities is
participating, each such holder will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and a written
undertaking to indemnify the Company, its directors and officers and each Person
who controls the Company (within the meaning of the Securities Act) (i) against
any losses, claims, damages, liabilities and expenses resulting from any untrue
or alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder, and (ii) with respect to compliance by such holder with applicable laws
in effecting the sale or other disposition of the Registrable Securities or
Registrable Preferred Securities in connection with such registration.
(c) Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (provided that such consent shall
not be unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and will survive the transfer of securities. The
Company also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
9. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements; provided, that no holder of Registrable Securities or Registrable
Preferred Securities included in any underwritten registration shall be required
to make any representations or warranties to the Company or the underwriters
other than representations and warranties regarding such holder and such
holder's intended method of distribution.
-14-
<PAGE> 15
10. Rule 144 Reporting. With a view to making available to the
holders of Registrable Securities or Registrable Preferred Securities, as
applicable, the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities or Registrable Preferred
Securities, as applicable, to the public without registration, the Company
agrees to use its best efforts to:
(a) make and keep current public information available, within
the meaning of Rule 144 or any similar or analogous rule promulgated under the
Securities Act, at all times after it has become subject to the reporting
requirements of the Exchange Act;
(b) file with the SEC, in a timely manner, all reports and
other documents required of the Company under the Securities Act and Exchange
Act (after it has become subject to such reporting requirements); and
(c) so long as any party hereto owns any Registrable
Securities, furnish to such Person forthwith upon request, a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 (at any time commencing 90 days after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements); a copy of the most recent
annual or quarterly report of the Company; and such other reports and documents
as such Person may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration.
11. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally, mailed by certified or registered mail, return receipt requested and
postage prepaid, or sent via a nationally recognized overnight courier, or sent
via facsimile to the recipient accompanied by a certified or registered mailing.
Such notices, demands and other communications will be sent to the address
indicated below:
To the Company, to:
------------------
O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Attention: President, and
Secretary
Facsimile: (417) 682-8120 (President)
(417) 682-8113 (Secretary)
-15-
<PAGE> 16
With a copy, which shall not constitute notice to the
Company, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To BRS, to:
----------
Bruckmann, Rosser, Sherrill & Co., L.P.
126 East 56th Street
New York, NY 10022
Facsimile: (212) 521-3799
Attn: Stephen F. Edwards
With a copy, which shall not constitute notice to
BRS, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To any Executive, to:
--------------------
[Executive]
c/o O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Attention: [Executive]
Facsimile: (417) 682-8120
To any Warrant Holder, to:
-------------------------
To the address for such Warrant Holder set forth in
the Company's records;
or, in the case of any party, to such other address or to the attention of such
other person as the recipient party shall have specified by prior written notice
to the sending party.
12. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not
enter into any agreement which is inconsistent with or violates the rights
granted to the holders of Registrable Securities or
Registrable Preferred Securities in this Agreement.
-16-
<PAGE> 17
(b) Remedies. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(c) Amendments and Waivers. Except as otherwise provided
herein, (a) no modification, amendment or waiver of any provision of this
Agreement shall be effective against the Company or the holders of Registrable
Securities or Registrable Preferred Securities unless such modification,
amendment or waiver is approved in writing by, respectively, the Company or the
holders of a majority of the Registrable Securities or Registrable Preferred
Securities, as applicable, and (b) no modification, amendment or waiver which
materially adversely affects the rights of a class of holders of Registrable
Securities or Registrable Preferred Securities, as applicable, under this
Agreement vis-a-vis other classes of holders of Registrable Securities or
Registrable Preferred Securities shall be effective against such class unless
such modification, amendment or waiver is approved in writing by holders of a
majority of such class of Registrable Securities or Registrable Preferred
Securities, as applicable. For avoidance of doubt, an amendment to add another
party to this Agreement is not an action which, in and of itself, affects any
holder of Registrable Securities materially adversely. The failure of any party
to enforce any of the provisions of this Agreement shall in no way be construed
as a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
(d) Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities or Registrable Preferred
Securities, as applicable, are also for the benefit of, and enforceable by, any
subsequent holder of Registrable Securities or Registrable Preferred Securities.
(e) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(f) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
-17-
<PAGE> 18
(H) GOVERNING LAW. THE CORPORATE LAWS OF THE STATE OF DELAWARE
WILL GOVERN ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
* * * * *
-18-
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: ---------------------------------------
Name:
Title:
BRUCKMANN, ROSSER, SHERRILL & CO. II, L.P.
By: BRSE, L.L.C.,
Its: General Partner
By: ---------------------------------------
Name:
Title:
<PAGE> 20
EXECUTIVE SIGNATURE PAGE (PAGE 1 OF 4)
/s/ Richard D. Davidson /s/ David E. Pittman
- - ---------------------------------- ----------------------------------
RICHARD D. DAVIDSON DAVID E. PITTMAN
/s/ Michael P. O'Sullivan /s/ David S. Thiesse
- - ---------------------------------- ----------------------------------
MICHAEL P. O'SULLIVAN DAVID S. THIESSE
/s/ Phillip J. Pacey /s/ Gary R. Blankenship
- - ---------------------------------- ----------------------------------
PHILLIP J. PACEY GARY R. BLANKENSHIP
/s/ Tyrone E. Riegel /s/ Jason Stansberry
- - ---------------------------------- ----------------------------------
TYRONE E. RIEGEL JASON STANSBERRY
/s/ Thomas M. O'Sullivan, Jr. /s/ Joe J. Whyman
- - ---------------------------------- ----------------------------------
THOMAS M. O'SULLIVAN, JR. JOE J. WHYMAN
/s/ James C. Hillman /s/ John R. Cox
- - ---------------------------------- ----------------------------------
JAMES C. HILLMAN JOHN R. COX
/s/ Rowland H. Geddie, III /s/ Larry G. Edge
- - ---------------------------------- ----------------------------------
ROWLAND H. GEDDIE, III LARRY G. EDGE
/s/ Stuart D. Schotte /s/ Leonard R. Saldana
- - ---------------------------------- ----------------------------------
STUART D. SCHOTTE LEONARD R. SALDANA
/s/ E. Thomas Riegel /s/ Maureen M. Wood
- - ---------------------------------- ----------------------------------
E. THOMAS RIEGEL MAUREEN M. WOOD
/s/ Tommy W. Thieman /s/ Max Simmons
- - ---------------------------------- ----------------------------------
TOMMY W. THIEMAN MAX SIMMONS
/s/ Cliff Bickel, Jr. /s/ Michael L. Franks
- - ---------------------------------- ----------------------------------
CLIFF BICKEL, JR. MICHAEL L. FRANKS
<PAGE> 21
EXECUTIVE SIGNATURE PAGE (PAGE 2 OF 4)
/s/ David R. Turney /s/ Ronald E. Wegener
- - ---------------------------------- ----------------------------------
DAVID R. TURNEY RONALD E. WEGENER
/s/ John D. Blevins /s/ Kenneth S. Ladd
- - ---------------------------------- ----------------------------------
JOHN D. BLEVINS KENNETH S. LADD
/s/ Neal C. Ruggeberg /s/ Terry J. Braden
- - ---------------------------------- ----------------------------------
NEAL C. RUGGEBERG TERRY J. BRADEN
/s/ Daniel P. O'Sullivan /s/ Daniel F. O'Sullivan
- - ---------------------------------- ----------------------------------
DANIEL P. O'SULLIVAN DANIEL F. O'SULLIVAN
O'SULLIVAN PROPERTIES, INC.
/s/ Randall Day By: /s/ Thomas M. O'Sullivan, Sr.
- - ---------------------------------- ----------------------------------
RANDALL DAY Name:
Title:
/s/ Timothy E. Riegel /s/ Mary Davidson
- - ---------------------------------- ----------------------------------
TIMOTHY E. RIEGEL MARY DAVIDSON
/s/ Thomas J. Tirdil /s/ Jennifer O'Sullivan
- - ---------------------------------- ----------------------------------
THOMAS J. TIRDIL JENNIFER O'SULLIVAN
/s/ Robert G. Gillespie /s/ Michael P. O'Sullivan
- - ---------------------------------- ----------------------------------
ROBERT G. GILLESPIE MICHAEL P. O'SULLIVAN, as custodian
for Tara O'Sullivan
<PAGE> 22
EXECUTIVE SIGNATURE PAGE (PAGE 3 OF 4)
/s/ Michael P. O'Sullivan /s/ Kim O'Sullivan
- - ---------------------------------- ----------------------------------
MICHAEL P. O'SULLIVAN, as custodian KIM O'SULLIVAN
for Trevor O'Sullivan
/s/ Michael P. O'Sullivan /s/ Kathleen O'Sullivan Day
- - ---------------------------------- ----------------------------------
MICHAEL P. O'SULLIVAN, as custodian KATHLEEN O'SULLIVAN DAY
for Tierny O'Sullivan
/s/ Rose Pacey /s/ Diane Riegel
- - ---------------------------------- ----------------------------------
ROSE PACEY DIANE RIEGEL
/s/ Maria O'Sullivan /s/ George R. Wood
- - ---------------------------------- ----------------------------------
MARIA O'SULLIVAN GEORGE R. WOOD
KAREN O'SULLIVAN WEGENER
REVOCABLE LIVING TRUST
/s/ Colin E. O'Sullivan By: /s/ Karen O'Sullivan Wegener
- - ---------------------------------- ----------------------------------
COLIN E. O'SULLIVAN Karen O'Sullivan Wegener, Trustee
/s/ Thomas M. O'Sullivan, Jr. /s/ Tommy W. Thieman
- - ---------------------------------- ----------------------------------
THOMAS M. O'SULLIVAN, JR. as TOMMY W. THIEMAN, custodian for
custodian for Colin O'Sullivan Ellen A. Thieman
BATO, L.P.
By: /s/ Thomas M. O'Sullivan, Jr. /s/ Karen Simmons
- - ---------------------------------- ----------------------------------
Thomas M. O'Sullivan, Jr., General KAREN SIMMONS, custodian for Matthew
Partner Simmons
/s/ James A. Hillman /s/ Peggy E. Geddie
- - ---------------------------------- ----------------------------------
JAMES A. HILLMAN PEGGY E. GEDDIE
<PAGE> 23
EXECUTIVE SIGNATURE PAGE (PAGE 4 OF 4)
/s/ Betty O'Sullivan Thieman /s/ Thomas Brent Thieman
- - ---------------------------------- ----------------------------------
BETTY O'SULLIVAN THIEMAN THOMAS BRENT THIEMAN
/s/ Kelly Thieman Hull /s/ Linda O'Sullivan
- - ---------------------------------- ----------------------------------
LINDA O'SULLIVAN
KELLY THIEMAN HULL
/s/ Jeffrey Thieman
- - ----------------------------------
JEFFREY THIEMAN
<PAGE> 24
BRS INVESTORS SIGNATURE PAGE
/s/ Bonnie Dietrich /s/ Rice Edmonds
- - ---------------------------------- ----------------------------------
BONNIE DIETRICH RICE EDMONDS
/s/ Juliet Frist /s/ Susan Kaider
- - ---------------------------------- ----------------------------------
JULIET FRIST SUSAN KAIDER
/s/ Sarah Polizotto /s/ Walker Simmons
- - ---------------------------------- ----------------------------------
SARAH POLIZOTTO WALKER SIMMONS
/s/ Marilena Tibrea
- - ----------------------------------
MARILENA TIBREA
<PAGE> 25
WARRANT HOLDERS SIGNATURE PAGE
LEHMAN BROTHERS INC.
By: /s/
- - ----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.7
EXECUTION COPY
MANAGEMENT STOCK AGREEMENT
This MANAGEMENT STOCK AGREEMENT is dated as of November 30, 1999, by and
among O'Sullivan Industries Holdings, Inc., a Delaware corporation (the
"Company"), the individuals whose signatures appear on the signature pages
hereto (collectively, the "Purchasers" and each individually, a "Purchaser")
and Bruckmann, Rosser, Sherrill & Co. II, L.P., a Delaware limited partnership
("BRS"). Capitalized terms used but not otherwise defined herein shall have
the meaning ascribed to such terms in Section 1.
WHEREAS, each Purchaser acquired beneficial ownership of (x) the number of
shares of the Company's Common Stock, par value $0.01 per share (the "Common
Stock"), and (y) the number of shares of the Junior Preferred Stock (as defined
below), in each case set forth opposite such Purchaser's name on the attached
Schedule 1, in exchange for (i) shares of common stock or junior preferred
stock of OSI Acquisition, Inc., a Delaware corporation ("OSI"), pursuant to
Section 3.1 of that certain Agreement and Plan of Merger (as amended, restated
or modified from time to time, the "Merger Agreement") dated as of May 17,
1999, between the Company and OSI, and (ii) "Retained Shares" (as defined in
the Merger Agreement) pursuant to Section 3.2 thereof; and
WHEREAS, BRS acquired shares of Common Stock and shares of the Company's
Series B Junior Preferred Stock, par value $0.01 per share, upon the terms and
conditions set forth in the Merger Agreement on the understanding, among other
things, that the Company and the Purchasers enter into this Agreement. Certain
provisions of this Agreement are intended for the benefit of, and will be
enforceable by, BRS.
NOW, THEREFORE, in consideration of the mutual undertaking contained
herein, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings.
"Board" means the board of directors of the Company.
"Cause" means (i) a material breach of this Agreement by the Executive,
(ii) a breach of the Executive's duty of loyalty to the Company and its
Subsidiaries, or (iii) Executive's commission of a crime involving an act of
moral turpitude or which constitutes a felony in the jurisdiction in which
Executive is employed, regardless of whether the crime involves the Company or
any of its Subsidiaries.
"Co-Invest Shares" for any Purchaser means the shares of Common Stock set
forth opposite such Purchaser's name on the attached Schedule 1 under the
heading "Co-Invest Shares."
"Executive" means any person whose name appears on the attached Schedule 1
and who is an officer or employee of the Company.
<PAGE> 2
"Executive Stock" with respect to any Executive means, collectively, (i)
all of the shares of Common Stock and Junior Preferred Stock set forth opposite
such Executive and such Executive's Related Parties' names, as applicable, on
the attached Schedule 1, (ii) all shares of Common Stock and Junior Preferred
Stock over which such Executive, its Related Parties ortheir respective
designees acquire beneficial ownership hereafter, and (iii) shares of the
Company's capital stock issued with respect to the shares of capital stock
referred to in paragraph (i) or (ii) by way of a split, dividend, combination,
exchange, recapitalization, merger, consolidation or other reorganization or
into or for which any such shares are converted or exchanged. With respect to
any Executive, Executive Stock will continue to be Executive Stock in the hands
of any holder or beneficial owner other than such Executive, including all of
such Executive's Related Parties and the transferees of such Executive and such
other Persons (except for the Company and BRS (or its designee)), and except as
otherwise provided herein, each such other holder of Executive Stock will
succeed to all rights and obligations attributable to the Executive as a holder
of Executive Stock hereunder. Executive Stock will cease to be Executive Stock
when transferred pursuant to a Public Sale.
"Fair Value" for any date of determination means (a) for each share of
Common Stock, (i) the average of the closing prices of the sales of the
Company's Common Stock on all securities exchanges on which the Common Stock
may at the time be listed, or, if there have been no sales on any such exchange
on such day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, (ii) if on any day the Common Stock is
not so listed, the average of the representative bid and asked prices quoted in
the Nasdaq National Market System ("Nasdaq NMS") as of 4:00 P.M., New York
time, or, (iii) if on any day the Common Stock is not quoted in the Nasdaq NMS,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Value is
being determined and the 20 consecutive business days prior to such day, or
(iv) if at any time the Common Stock is not listed on any securities exchange
or quoted in the Nasdaq NMS or the over-the-counter market, the Fair Value of
each share of Common Stock shall be determined by the Board in its good faith
judgment; provided, that in the case of clause (iv), the Fair Value of each
share of Common Stock determined by the Board shall not be less than the value
attributed to such shares in the most recent written communication by BRS to
its limited partners, and (b) for each share of Junior Preferred Stock means
the liquidation value of such share plus all accumulated and accrued and unpaid
but not yet accumulated dividends thereon.
"IPO" means the sale of shares of Common Stock in an underwritten initial
public offering registered under the Securities Act where, after such offering,
the Common Stock sold in such offering is subject to being traded on the NASDAQ
National Market or a nationally recognized securities exchange.
"Junior Preferred Stock" means, collectively, (i) the Company's Series A
Junior Preferred Stock, par value $0.01 per share, and (ii) the Company's
Series B Junior Preferred Stock, par value $0.01 per share.
-2-
<PAGE> 3
"Original Cost" of each share of Common Stock will be equal to $1.00, as
proportionately adjusted for all subsequent stock splits, stock dividends and
other recapitalizations.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Promote Shares" for any Purchaser means the shares of Common Stock set
forth opposite such Purchaser's name on the attached Schedule 1 under the
heading "Promote Shares."
"Qualified Public Offering" means the sale, in an underwritten public
offering registered under the Securities Act, of shares of the Company's Common
Stock having an aggregate value (based upon the offering price of such
offering) of at least $30 million.
"Related Parties" with respect to any Executive means the Persons set
forth beneath such Executive's name on the attached Schedule 1.
"Sale of the Company" means the sale of the Company, in a single
transaction or a series of related transactions, to an Unaffiliated Third Party
pursuant to which such Unaffiliated Third Party acquires all of the outstanding
Common Stock (whether by merger, consolidation, recapitalization,
reorganization, purchase or otherwise) or all or substantially all of the
consolidated assets of the Company.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Stockholders Agreement" means the Stockholders Agreement dated on even
date herewith by and among the Company, BRS, the Purchasers and the other
parties thereto, as amended, restated or modified from time to time.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation or limited liability company (with voting securities), a
majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company (without voting securities), association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a partnership, limited liability company, association or other
business entity if such Person or Persons shall be allocated a majority of
partnership, limited liability company, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such partnership, limited liability company, association or other business
entity.
-3-
<PAGE> 4
"TPA" for each Executive means the Termination Protection Agreement
between the Company and such Executive.
"Unaffiliated Third Party" means any Person who, immediately prior to the
contemplated transaction (i) does not own in excess of 5% of the Common Stock
on a fully diluted basis (a "5% Owner"), (ii) is not controlling, controlled by
or under common control with any such 5% Owner and (iii) is not the spouse or
descendent (by birth or adoption) of any such 5% Owner or a trust for the
benefit of such 5% Owner and/or such other Persons.
2. Vesting of Purchaser Stock.
(a) For purposes of this Agreement and with respect to each Purchaser, (i)
all of the Co-Invest Shares and all of the shares of Junior Preferred Stock set
forth opposite such Purchaser's name on the attached Schedule 1 will be deemed
to be fully vested as of the date hereof, and (ii) all of the Promote Shares
set forth opposite such Purchaser's name on the attached Schedule 1 will become
vested in accordance with the following schedule if, as of each such date, such
Purchaser is still employed by the Company or any of its Subsidiaries
<TABLE>
<CAPTION>
Cumulative Percentage of Promote
Date Shares Which Will Vest
- - ------------------------------------- --------------------------------
<S> <C>
first anniversary of the date hereof 20%
second anniversary of the date hereof 40%
third anniversary of the date hereof 60%
fourth anniversary of the date hereof 80%
fifth anniversary of the date hereof 100%
</TABLE>
All of the shares of Common Stock which have become vested are referred to
herein as "Vested Common Shares," and all other shares of Common Stock are
referred to herein as "Unvested Common Shares."
(b) Notwithstanding anything contained in this Section 3 to the contrary,
with respect to each Executive who has been employed by the Company or its
Subsidiaries from the date hereof through the earlier of the date of (i) the
consummation of a Sale of the Company or (ii) the consummation of an IPO, all
Unvested Common Shares beneficially owned by such Executive, its Related
Parties, if any, or their respective permitted transferee as of such date shall
automatically become Vested Common Shares.
3. Repurchase Option. With respect to each Executive, in the event such
Executive's employment with the Company is terminated (the "Termination") for
any reason, all of the Executive Stock (whether held or beneficially owned by
the Executive, such Executive's Related Parties or any transferee of such
Executive or such Executive's Related Parties) will be subject to
-4-
<PAGE> 5
repurchase by the Company and BRS (or its designee) pursuant to the terms and
conditions set forth in this Section 3 (the "Repurchase Option").
(a) With respect to each holder of Executive Stock, the purchase price for
(x) each Unvested Common Share will be Original Cost for such share (with
Unvested Common Shares having the lowest cost subject to repurchase prior to
Unvested Common Shares with a higher cost) and (y) each Vested Common Share and
each share of Junior Preferred Stock will be the Fair Value for such share.
Notwithstanding the foregoing to the contrary, in the event any such
Termination is by the Company for Cause, the purchase price for each share of
Common Stock (whether vested or unvested) shall be the Original Cost of such
share.
(b) With respect to each Executive, the Board may elect to cause the
Company to purchase all or any portion of Executive Stock by delivering written
notice (the "Repurchase Notice") to the holder or holders of the Executive
Stock within 45 days after the Termination; provided, that in the event the
Company elects to purchase less than all of such Executive Stock, the Company
may not purchase any shares of Common Stock unless it also purchases a pro rata
portion of shares of Junior Preferred Stock. The Repurchase Notice will set
forth the number of Unvested Common Shares, Vested Common Shares and shares of
Junior Preferred Stock to be acquired from each holder, the aggregate
consideration to be paid for such securities and the time and place for the
closing of the transaction. The number of shares to be repurchased by the
Company shall first be satisfied to the extent possible from the shares of
Executive Stock held by the Executive at the time of delivery of the Repurchase
Notice. If the number of shares of Executive Stock then held by such Executive
is less than the total number of shares of Executive Stock the Company has
elected to purchase, the Company shall purchase the remaining shares elected to
be purchased from the other holder(s) of Executive Stock (i.e. such Executive's
Related Parties or any Permitted Transferee under the Stockholders Agreement)
under this Agreement, pro rata according to the number of shares of Executive
Stock held by such other holder(s) at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest share). The number
of Unvested Common Shares, Vested Common Shares and shares of Junior Preferred
Stock to be repurchased hereunder will be allocated among the Executive and the
other holders of Executive Stock (if any) pro rata according to the number of
shares of Executive Stock to be purchased from such Persons.
(c) With respect to each Executive, if for any reason the Company does not
elect to purchase all of the Executive Stock pursuant to the Repurchase Option,
BRS (or its designee) shall be entitled to exercise the Repurchase Option for
all or any portion of the Executive Stock that the Company has not elected to
purchase (the "Available Shares"). Available Shares which are Vested Common
Shares are referred to herein as "Available Vested Common Shares", Available
Shares which are Unvested Common Shares are referred to herein as "Available
Unvested Common Shares" and Available Shares which are shares of Junior
Preferred Stock are referred to herein as "Available Junior Preferred Shares".
As soon as practicable after the Company has determined that there will be
Available Shares, but in any event within 45 days after the Termination, the
Company shall give written notice (the "Option Notice") to BRS (or its
designee) setting forth the number of any Available Vested Common Shares,
Available Unvested Common Shares and Available Junior Preferred Shares. BRS
(or its designee) may elect to purchase all or a portion of the Available
Shares by giving written notice to the Company within 30 days after the Option
Notice has been
-5-
<PAGE> 6
given by the Company; provided, however, that in the event BRS (or its
designee) elects to purchase less than all of the Available Shares, BRS (or its
designee) may not purchase any Available Unvested Common Shares or Available
Vested Common Shares unless it also purchases a pro rata portion of Available
Junior Preferred Shares. As soon as practicable, and in any event within ten
days after the expiration of the 30-day period set forth above, the Company
shall notify each holder of Executive Stock as to the number of Available
Vested Common Shares, Available Unvested Common Shares and Available Junior
Preferred Shares being purchased from such holder by BRS (or its designee) (the
"Supplemental Repurchase Notice"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Executive Stock, the Company
shall also deliver written notice to BRS (or its designee) setting forth the
number of Vested Common Shares, Unvested Common Shares and shares of Junior
Preferred Stock which BRS (or its designee) is entitled to purchase, the
aggregate purchase price and the time and place of the closing of the
transaction.
(d) With respect to each Executive, the closing of the purchase of the
Executive Stock pursuant to the Repurchase Option shall take place on the date
designated by the Company in the Repurchase Notice or Supplemental Repurchase
Notice, which date shall not be later than the 60th day after the delivery of
the later of such notices to be delivered (or, if later, the 15th day after the
Fair Value is finally determined) nor earlier than the fifth day after such
delivery. The Company and/or BRS (or its designee) will pay for the Executive
Stock to be purchased pursuant to the Repurchase Option by delivery of a
certified or cashier's check or wire transfer of funds. The purchasers of
Executive Stock hereunder will be entitled to receive customary representations
and warranties from the sellers thereof as to title, authority and capacity to
sell and to require all sellers' signatures to be guaranteed.
(e) Notwithstanding anything to the contrary contained in this Agreement,
all repurchases of Executive Stock by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law. If
any such restrictions prohibit the repurchase of Executive Stock hereunder
which the Company is otherwise entitled to make, the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.
4. Restrictions on Transfer.
(a) The certificates representing the Executive Stock will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION
FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS
SET FORTH IN A MANAGEMENT STOCK AGREEMENT BETWEEN THE COMPANY AND
THE SIGNATORY THERETO AND A STOCKHOLDERS AGREEMENT AMONG
-6-
<PAGE> 7
THE COMPANY AND CERTAIN OTHER PARTIES THERETO BOTH DATED AS OF
NOVEMBER 30, 1999. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY
THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS
WITHOUT CHARGE."
(b) The Executive Stock is subject to the restrictions on transfer set
forth in the Stockholders Agreement.
5. Representations and Warranties. In connection with the purchase and
sale of the Executive Stock pursuant to the Merger Agreement, each Purchaser
represents and warrants to the Company that:
(a) such Purchaser is the beneficial owner of the "Retained Shares" (as
defined in Section 3.2 of the Merger Agreement) that such Purchaser (or its
designee) exchanged for certain shares of Executive Stock pursuant to Section
3.2 of the Merger Agreement.
(b) the Executive Stock to be acquired by such Purchaser will be acquired
for such Purchaser's own account (or for the account of one or more members of
such Purchaser's family) and not with a view to, or any present intention of,
distribution thereof in violation of the Securities Act, or any applicable
state securities laws, and the Executive Stock will not be disposed of in
contravention of the Securities Act or any applicable state securities laws.
(c) no commission, fee or other remuneration is to be paid or given,
directly or indirectly, to any Person for soliciting such Executive to purchase
the Executive Stock.
(d) such Purchaser (1) is either an officer or employee of the Company or
one of its Subsidiaries or is otherwise an "accredited investor" as such term
is defined in Rule 501 of Regulation D of the Securities Act, (2) is
sufficiently sophisticated in financial matters to analyze the investment in
the Executive Stock, (3) is able to evaluate the risks and benefits of the
investment in the Executive Stock, and (4) has determined that such investment
in the Executive Stock is suitable for such Purchaser, based upon such
Purchaser's financial situation and needs, as well as such Purchaser's other
securities holdings.
(e) such Purchaser:
(i) has not been convicted within the last five years of any felony or
misdemeanor in connection with the offer, purchase, or sale of any security or
any felony involving fraud or deceit, including, but not limited to, forgery,
embezzlement, obtaining money under false pretenses, larceny, or conspiracy to
defraud;
(ii) is not currently subject to any state administrative enforcement
order or judgment entered by a state securities administrator within the last
five years or is subject to any state's administrative enforcement order or
judgment in which fraud or deceit, including, but not limited to, making untrue
statements of material facts and omitting to state material facts, was found
and the order or judgment was entered within the last five years;
-7-
<PAGE> 8
(iii) is not subject to any state's administrative enforcement order or
judgment which prohibits, denies or revokes the use of any exemption from
registration in connection with the offer, purchase or sale of securities; or
(iv) is not currently subject to any order, judgment or decree of any
court of competent jurisdiction, entered within the last five years,
temporarily or preliminarily restraining or enjoining such Purchaser from
engaging in or continuing any conduct or practice in connection with the
purchase or sale of any security or involving the making of any false filing
with the state.
(f) such Purchaser is able to bear the economic risk of such Purchaser's
investment in the Executive Stock for an indefinite period of time and the
Purchaser understands that the Executive Stock has not been registered under
the Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(g) such Purchaser has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Executive Stock
and has had full access to such other information concerning the Company as the
Purchaser has requested. The Purchaser has reviewed, or has had an opportunity
to review, the following documents: (A) the Company's Certificate of
Incorporation and Bylaws; (B) the Merger Agreement; and (C) all of the
materials provided by the Company to any Person providing financing to the
Company, including, but not limited to, the Company's pro forma balance sheet,
as well as financial projections, estimates, forecasts, budgets, summaries,
reports and other related documents.
(h) this Agreement constitutes the legal, valid and binding obligation of
such Purchaser, enforceable in accordance with its terms (except as the same
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally or by general equitable principles), and
the execution, delivery and performance of this Agreement by such Purchaser
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which such Purchaser is a party or any
judgment, order or decree to which such Purchaser is subject.
(i) As an inducement to the Company to issue the Executive Stock to such
Purchaser, and as a condition thereto, such Purchaser acknowledges and agrees
that neither the issuance of the Executive Stock to the Purchaser (or to the
account of such Purchaser) nor any provision contained herein shall, in the
case of any Purchaser who is an officer or employee of the Company, entitle
such Purchaser to remain in the employment of the Company and its Subsidiaries
or affect the right of the Company to terminate such Purchaser's employment at
any time for any reason.
6. Confidential Information. Each Executive acknowledges that the
information, observations and data obtained by him/her while employed by the
Company or any of its Subsidiaries concerning the business or affairs of the
Company or any Subsidiary ("Confidential Information") are the property of the
Company or such Subsidiary. Therefore, each Executive agrees that he/she will
not disclose to any unauthorized person or use for his own account any
Confidential Information without the prior written consent of the Board, unless
and to the extent that the aforementioned
-8-
<PAGE> 9
matters (i) become generally known to and available for use by the public other
than as a result of such Executive's acts or omissions to act or (ii) are
required to be disclosed under applicable law or a duly issued subpoena. Each
Executive shall deliver to the Company at the termination of such Executive's
employment, or at any other time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes and software and other documents and
data (and copies thereof) relating to the Confidential Information, Work
Product (as defined below) and the business of the Company or any Subsidiary
which he/she may then possess or have under his/her control.
7. Inventions and Patents. Each Executive agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relates to the Company's
or any of its Subsidiaries' actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by such Executive while employed by the Company or any of its
Subsidiaries ("Work Product") belong to the Company or such Subsidiary. The
Executive will promptly disclose such Work Product to the Board and perform all
actions reasonably requested by the Board (whether during or after such
Executive's employment period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
8. Noncompete, Nonsolicitation.
(a) Each Executive acknowledges that in the course of his/her employment
with the Company and its Subsidiaries he/she has become familiar, and he will
become familiar, with the Company's and its Subsidiaries' trade secrets and
with other Confidential Information and that his/her services have been and
will be of special, unique and extraordinary value to the Company and its
Subsidiaries. Therefore, such Executive agrees that, during the time he/she is
employed by the Company and its Subsidiaries and thereafter for a period equal
to six (6) months, or such longer period during which such Executive receives
compensation from the Company pursuant to such Executive's TPA (the "Noncompete
Period"), he/she will not directly or indirectly own, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business (including by himself or through any other entity) competing with
the businesses of the Company or its Subsidiaries as such businesses exist or
are in process on the date of the termination of such Executive's employment.
Nothing herein will prohibit any Executive from being a passive owner of not
more than 2% of the outstanding stock of a corporation which is publicly
traded, so long as such Executive has no active participation in the business
of such corporation.
(b) During the Noncompete Period, each Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary of the Company to leave the employ of the
Company or such Subsidiary, or in any way materially interfere with the
relationship between the Company or any Subsidiary of the Company and any
employee thereof, (ii) hire any person who was an employee of the Company or
any Subsidiary of the Company within the last twelve months prior to the
termination of such Executive's employment with the Company, or (iii) induce or
attempt to induce any customer, supplier, licensee or other business relation
of the Company or any Subsidiary of the Company to cease doing business with
the Company or such Subsidiary, or in any way materially interfere with the
relationship
-9-
<PAGE> 10
between any such customer, supplier, licensee or business relation and the
Company or any Subsidiary of the Company.
(c) If, at the time of enforcement of this Section 7, a court shall hold
that the duration, scope or area restrictions stated herein are unreasonable
under circumstances then existing, the parties agree that the maximum duration,
scope or area reasonable under such circumstances shall be substituted for the
stated duration, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum period, scope and area
permitted by law.
(d) In the event of a breach or a threatened breach by any Executive of
any of the provisions of this Section 7, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security).
9. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient (followed by telephone confirmation to the receiving party).
Such notices, demands and other communications will be sent to the address
indicated below:
To the Company to:
O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Attention: President and Secretary
Facsimile: (417) 682-8120 (President)
(417) 682-8113 (Secretary)
With a copy, which shall not constitute notice to the Company, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To any Executive or Purchaser to:
[EXECUTIVE OR PURCHASER]
c/o O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Facsimile: (417) 682-8113
-10-
<PAGE> 11
To BRS:
Bruckmann, Rosser, Sherrill & Co. II, L.P.
126 East 56th Street
New York, NY 10022
Facsimile: (212) 521-3799
Attn: Mr. Harold O. Rosser
With a copy, which shall not constitute notice to BRS, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
10 Miscellaneous.
(a) Section 83(b) Election. Within thirty (30) days after the date hereof,
each Executive will make an effective election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code and the regulations
promulgated thereunder in the form of Exhibit I attached hereto.
(b) Transfers in Violation of Agreement. Any transfer or attempted
transfer of any Executive Stock in violation of any provision of this Agreement
shall be null and void, and the Company shall not record such transfer on its
books or treat any purported transferee of such Executive Stock as the owner of
such stock for any purpose.
(c) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) Complete Agreement. This Agreement embodies the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
-11-
<PAGE> 12
(e) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Purchasers, the Company, BRS and their respective successors and assigns
(including subsequent holders of Executive Stock); provided, that the rights
and obligations of the Purchasers under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Stock hereunder.
(G) GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE WILL GOVERN
ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS HERETO WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(h) Remedies. Each of the parties to this Agreement (including BRS) will
be entitled to enforce its rights under this Agreement specifically, to recover
damages and costs (including reasonable attorneys' fees) caused by any breach
of any provision of this Agreement and to exercise all other rights existing in
its favor. The parties hereto agree and acknowledge that money damages may not
be an adequate remedy for any breach of the provisions of this Agreement and
that any party may in its sole discretion apply to any court of law or equity
of competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
(i) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company, the Purchasers
and BRS.
* * * * *
-12-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Management Stock
Purchase Agreement as of the date first written above.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Richard D. Davidson
--------------------------------------------
Name: Richard D. Davidson
Its: President and Chief Operating Officer
/s/ Richard D. Davidson
--------------------------------------------
RICHARD D. DAVIDSON
/s/ Richard D. Davidson & Mary Davidson
--------------------------------------------
RICHARD D. DAVIDSON & MARY DAVIDSON, JOINT
TENANTS
MLPF&S
FBO RICHARD D. DAVIDSON IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ Michael P. O'Sullivan
--------------------------------------------
MICHAEL P. O'SULLIVAN
/s/ Michael P. O'Sullivan
/s/ Jennifer O'Sullivan
--------------------------------------------
MICHAEL P. O'SULLIVAN & JENNIFER O'SULLIVAN,
JOINT TENANTS
/s/ Michael P. O'Sullivan
--------------------------------------------
MICHAEL P. O'SULLIVAN,
AS CUSTODIAN FOR TARA O'SULLIVAN
<PAGE> 14
/s/ Michael P. O'Sullivan
--------------------------------------------
MICHAEL P. O'SULLIVAN,
AS CUSTODIAN FOR TIERNEY O'SULLIVAN
/s/ Michael P. O'Sullivan
--------------------------------------------
MICHAEL P. O'SULLIVAN,
AS CUSTODIAN FOR TREVOR O'SULLIVAN
AG EDWARDS & SONS, INC., CUST. MICHAEL
P. O'SULLIVAN IRA
By: /s/
--------------------------------------------
Name:
Its:
AG EDWARDS & SONS, INC., CUST. JENNIFER
O'SULLIVAN IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ Phillip J. Pacey
--------------------------------------------
PHILLIP J. PACEY
/s/ Phillip J. Pacey
--------------------------------------------
PHILLIP J. PACEY & ROSE C. PACEY, JOINT
TENANTS
EDWARD D. JONES & CO., CUST. PHILLIP J.
PACEY IRA
By: /s/
--------------------------------------------
Name:
Its:
<PAGE> 15
/s/ Tyrone E. Riegel
--------------------------------------------
TYRONE E. RIEGEL
/s/ Tyrone E. Riegel
--------------------------------------------
THE ESTATE OF PATRICIA K. RIEGEL
MLPF&S, CUST. FBO TYRONE E. RIEGEL IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ Thomas M. O'Sullivan, Jr.
--------------------------------------------
THOMAS M. O'SULLIVAN, JR.
/s/ Thomas M. O'Sullivan, Jr.
--------------------------------------------
BATO FAMILY INVESTMENT LP
/s/ Colin E. O'Sullivan
--------------------------------------------
COLIN E. O'SULLIVAN
/s/ Thomas M. O'Sullivan, Jr.
--------------------------------------------
THOMAS M. O'SULLIVAN, JR., AS CUSTODIAN FOR
COLIN E. O'SULLIVAN
/s/ Thomas M. O'Sullivan, Jr.
/s/ Maria O'Sullivan
--------------------------------------------
THOMAS M. O'SULLIVAN, JR. & MARIA
O'SULLIVAN, JOINT TENANTS
<PAGE> 16
AG EDWARDS & SONS, INC., CUST. TOM
O'SULLIVAN, JR. IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ James C. Hillman
--------------------------------------------
JAMES C. HILLMAN
/s/ James C. Hillman
--------------------------------------------
JAMES C. HILLMAN, AS CUSTODIAN FOR
JAMES A. HILLMAN
AG EDWARDS & SONS, INC., CUST.
JIM C. HILLMAN IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ Rowland H. Geddie, III
--------------------------------------------
ROWLAND H. GEDDIE, III
/s/ Rowland H. Geddie /s/ Peggy E. Geddie
--------------------------------------------
ROWLAND H. GEDDIE & PEGGY E. GEDDIE,
JOINT TENANTS
/s/ Stuart D. Schotte
--------------------------------------------
STUART D. SCHOTTE
/s/s Edward T. Riegel
--------------------------------------------
EDWARD T. RIEGEL
<PAGE> 17
/s/ Tommy W. Thieman
--------------------------------------------
TOMMY W. THIEMAN
/s/ Betty Rhea O'Sullivan Thieman
--------------------------------------------
BETTY RHEA O'SULLIVAN THIEMAN
/s/ Tommy W. Thieman /s/ Betty R. Thieman
--------------------------------------------
TOMMY W. THIEMAN & BETTY R. THIEMAN,
JOINT TENANTS
/s/ Kelly L. Thieman
--------------------------------------------
KELLY L. THIEMAN
/s/ Tommy W. Thieman
--------------------------------------------
TOMMY W. THIEMAN, AS CUSTODIAN FOR
JEFFREY M. THIEMAN
/s/ Tommy W. Thieman
--------------------------------------------
TOMMY W. THIEMAN, AS CUSTODIAN FOR
ELLEN A. THIEMAN
/s/ Tommy W. Thieman
--------------------------------------------
TOMMY W. THIEMAN, AS CUSTODIAN FOR
THOMAS B. THIEMAN
MLPF&S, CUST. FBO TOMMY W. THIEMAN IRA
By: /s/
--------------------------------------------
Name:
Its:
<PAGE> 18
UMB BANK, TRUSTEE U/A FBO TOMMY THIEMAN IRA
By: /s/
--------------------------------------------
Name:
Its:
MLPF&S, CUST. FBO BETTY THIEMAN IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ Clifford Bickel
--------------------------------------------
CLIFFORD BICKEL
/s/ Clifford Bickel /s/ Angeline Bickel
--------------------------------------------
CLIFFORD BICKEL & ANGELINE BICKEL,
JOINT TENANTS
FAHNESTOCK & CO., CUST. CLIFF BICKEL IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ David R. Turney
--------------------------------------------
DAVID R. TURNEY
/s/ John D. Blevins
--------------------------------------------
JOHN D. BLEVINS
<PAGE> 19
/s/ Neal C. Ruggeberg
--------------------------------------------
NEAL C. RUGGEBERG
/s/ Neal C. Ruggeberg /s/ Dawn D. Ruggeberg
--------------------------------------------
NEAL C. RUGGEBERG & DAWN D. RUGGEBERG,
JOINT TENANTS
/s/ Daniel Patrick O'Sullivan
--------------------------------------------
DANIEL PATRICK O'SULLIVAN
/s/ Daniel Patrick O'Sullivan
/s/ Kimberley O'Sullivan
--------------------------------------------
DANIEL PATRICK O'SULLIVAN &
KIMBERLY O'SULLIVAN
AG EDWARDS & SONS, INC., CUST.
DANIEL PATRICK O'SULLIVAN IRA
By:
--------------------------------------------
Name:
Its:
/s/ Randall Day
--------------------------------------------
RANDALL DAY
/s/ Kathleen Jane O'Sullivan Day
--------------------------------------------
KATHLEEN JANE O'SULLIVAN DAY
/s/ Randall Day /s/ Kathleen J. Day
--------------------------------------------
RANDALL DAY & KATHLEEN J. DAY
<PAGE> 20
MLPF&S, CUST. FBO RANDY DAY IRA
By:
--------------------------------------------
Name:
Its:
MLPF&S, CUST. FBO KATIE J. DAY IRA
By:
--------------------------------------------
Name:
Its:
/s/ Timothy E. Riegel
--------------------------------------------
TIMOTHY E. RIEGEL
/s/ Timothy E. Riegel
--------------------------------------------
TIMOTHY E. RIEGEL, AS CUSTODIAN FOR
KALIE E. RIEGEL
/s/ Timothy E. Riegel /s/ Carla D. Riegel
--------------------------------------------
TIMOTHY E. RIEGEL & CARLA D. RIEGEL,
JOINT TENANTS
/s/ Thomas J. Tidil
--------------------------------------------
THOMAS J. TIRDIL
/s/ Robert G. Gillespie
--------------------------------------------
ROBERT G. GILLESPIE
/s/ David E. Pittman
--------------------------------------------
DAVID E. PITTMAN
<PAGE> 21
EDWARD D. JONES & CO., CUST. FBO
DAVID E. PITTMAN IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ David S. Thiesse
--------------------------------------------
DAVID S. THIESSE
/s/ Gary R. Blankenship
--------------------------------------------
GARY R. BLANKENSHIP
/s/ Jason Stansberry
--------------------------------------------
JASON STANSBERRY
/s/ Jason Stansberry /s/ Angela Stansberry
--------------------------------------------
JASON STANSBERRY & ANGELA STANSBERRY,
JOINT TENANTS
/s/ Joe J. Whyman
--------------------------------------------
JOE J. WHYMAN
UMB BANK TRUSTEE U/A FBO JOE WHYMAN IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ John R. Cox, Jr.
--------------------------------------------
JOHN R. COX, JR.
/s/ Larry G. Edge
--------------------------------------------
LARRY G. EDGE
<PAGE> 22
EDWARD D. JONES & CO., CUST. LARRY EDGE IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ Maureen M. Wood
--------------------------------------------
MAUREEN M. WOOD
/s/ Maureen M. Wood /s/ George R. Wood
--------------------------------------------
MAUREEN M. WOOD & GEORGE R. WOOD
AG EDWARDS & SONS, INC., CUST.
MAUREEN WOOD IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ Leonard Saldana
--------------------------------------------
LEONARD SALDANA
/s/ Max W. Simmons
--------------------------------------------
MAX W. SIMMONS
/s/ Karen J. Simmons /s/ Matthew C. Simmons
--------------------------------------------
KAREN J. SIMMONS, AS CUSTODIAN FOR
MATTHEW C. SIMMONS
/s/ Max W. Simmons /s/ Karen J. Simmons
--------------------------------------------
MAX W. SIMMONS & KAREN J. SIMMONS,
JOINT TENANTS
<PAGE> 23
AG EDWARDS & SONS, INC., CUST.
MAX W. SIMMONS IRA
--------------------------------------------
By: /s/
--------------------------------------------
Name:
Its:
/s/ Michael L. Franks
--------------------------------------------
MICHAEL L. FRANKS
/s/ Ronald E. Wegener
--------------------------------------------
RONALD E. WEGENER
/s/ Kenneth S. Ladd
--------------------------------------------
KENNETH S. LADD
EDWARD D. JONES & CO., CUST. SAM LADD IRA
By: /s/
--------------------------------------------
Name:
Its:
/s/ Terry J. Braden
--------------------------------------------
TERRY J. BRADEN
/s/ Terry J. Braden /s/ Jeannette M. Braden
--------------------------------------------
TERRY J. BRADEN & JEANNETTE M. BRADEN,
JOINT TENANTS
/s/ Daniel F. O'Sullivan
--------------------------------------------
DANIEL F. O'SULLIVAN
<PAGE> 24
AG EDWARDS & SONS, INC., CUST.
LINDA F. O'SULLIVAN IRA
By: /s/
--------------------------------------------
Name:
Its:
O'SULLIVAN PROPERTIES, INC.
By: /s/ Thomas M. O'Sullivan, Sr.
--------------------------------------------
Name: Thomas M. O'Sullivan, Sr.
Its: President
Agreed and Accepted:
BRUCKMANN, ROSSER, SHERRILL &
CO. II, L.P.
By: BRSE, L.L.C.
- - --------------------------------------------
Its: General Partner
By: /s/ Stephen F. Edwards
- - --------------------------------------------
Name: Stephen F. Edwards
Title:
<PAGE> 1
EXHIBIT 10.8
EXECUTION COPY
MANAGEMENT SUBSCRIPTION AGREEMENT
This MANAGEMENT SUBSCRIPTION AGREEMENT is dated as of November 30, 1999,
by and among OSI Acquisition, Inc., a Delaware corporation (the "Company"), and
the individuals whose signatures appear on the signature pages hereto
(collectively, the "Purchasers" and each individually, a "Purchaser").
Capitalized terms used but not otherwise defined herein shall have the meaning
ascribed to such terms in Section 1.
WHEREAS, the Company and the Purchasers desire to enter into an agreement
to provide for the acquisition by each Purchaser of beneficial ownership of the
number of shares of Common Stock and/or Preferred Stock set forth opposite such
Purchaser's name on the attached Schedule 1 (the "Purchaser Stock"), upon the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual undertaking contained
herein, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings.
"BRS" means Bruckmann, Rosser, Sherrill & Co. II, L.P., a Delaware limited
partnership.
"Common Stock" means the Company's Common Stock, par value $0.01 per
share.
"Management Stock Agreement" means the Management Stock Agreement, dated
on even date herewith, by and among the Company, BRS, and the Purchasers, as
amended, restated or modified from time to time.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Stock" means the Company's Junior Preferred Stock, par value
$0.01 per share.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Stockholders Agreement" means the Stockholders Agreement, dated on even
date herewith by and among the Company, BRS, the Purchasers and the other
stockholders from time to time party thereto, as amended, restated or modified
from time to time.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power
<PAGE> 2
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a partnership, limited liability company, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association or
other business entity if such Person or Persons shall be allocated a majority
of partnership, limited liability company, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such partnership, limited liability company, association or other business
entity.
2. Purchase and Sale of Purchased Stock; Representations and Warranties of
the Purchasers.
(a) Upon the execution of this Agreement, each Purchaser will purchase,
and the Company will sell, (i) the number of shares of Common Stock set forth
opposite such Purchaser's name on the attached Schedule 1 at a purchase price
of $1.00 per share and (ii) the number of shares of Preferred Stock set forth
opposite such Purchaser's name on the attached Schedule 1 at a purchase price
of $100.00 per share . In furtherance thereof, each Purchaser will deliver to
the Company a check or promissory note (payable to the order of such payee as
may be designated by the Company) in the aggregate amount set forth opposite
such Purchaser's name on the attached Schedule 1. Upon execution of this
Agreement, each Purchaser shall execute and deliver the Stockholders Agreement
and the Management Stock Agreement.
(b) In connection with the purchase and sale of the Purchaser Stock
hereunder, each Purchaser represents and warrants to the Company that:
(i) the Purchaser Stock to be acquired by such Purchaser (or such
Purchaser's designee) will be acquired for such Purchaser's own account
(or for the account of one or more members of such Purchaser's family)
and not with a view to, or any present intention of, distribution thereof
in violation of the Securities Act, or any applicable state securities
laws, and the Purchaser Stock will not be disposed of in contravention of
the Securities Act or any applicable state securities laws.
(ii) no commission, fee or other remuneration is to be paid or
given, directly or indirectly, to any Person for soliciting such
Purchaser to purchase the Purchaser Stock.
(iii) such Purchaser (1) is either an officer or employee of the
Company or one of its Subsidiaries or is otherwise an "accredited
investor" as such term is defined in Rule 501 of Regulation D of the
Securities Act, (2) is sufficiently sophisticated in financial matters to
analyze the investment in the Purchaser Stock, (3) is able to evaluate
the risks and benefits of the investment in the Purchaser Stock, and (4)
has determined that such
-2-
<PAGE> 3
investment in the Purchaser Stock is suitable for such Purchaser, based
upon such Purchaser's financial situation and needs, as well as such
Purchaser's other securities holdings.
(iv) such Purchaser:
(A) has not been convicted within the last five years of any
felony or misdemeanor in connection with the offer, purchase, or
sale of any security or any felony involving fraud or deceit,
including, but not limited to, forgery, embezzlement, obtaining
money under false pretenses, larceny, or conspiracy to defraud;
(B) is not currently subject to any state administrative
enforcement order or judgment entered by a state securities
administrator within the last five years or is subject to any
state's administrative enforcement order or judgment in which fraud
or deceit, including, but not limited to, making untrue statements
of material facts and omitting to state material facts, was found
and the order or judgment was entered within the last five years;
(C) is not subject to any state's administrative enforcement
order or judgment which prohibits, denies or revokes the use of any
exemption from registration in connection with the offer, purchase
or sale of securities; or
(D) is not currently subject to any order, judgment or decree
of any court of competent jurisdiction, entered within the last
five years, temporarily or preliminarily restraining or enjoining
such Purchaser from engaging in or continuing any conduct or
practice in connection with the purchase or sale of any security or
involving the making of any false filing with the state.
(v) such Purchaser is able to bear the economic risk of such
Purchaser's investment in the Purchaser Stock for an indefinite period of
time and the Purchaser understands that the Purchaser Stock has not been
registered under the Securities Act and cannot be sold unless
subsequently registered under the Securities Act or an exemption from
such registration is available.
(vi) such Purchaser has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Purchaser Stock and has had full access to such other information
concerning the Company as the Purchaser has requested. The Purchaser has
reviewed, or has had an opportunity to review, the following documents:
(A) the Company's Certificate of Incorporation and (B) the Merger
Agreement.
(vii) this Agreement constitutes the legal, valid and binding
obligation of such Purchaser, enforceable in accordance with its terms
(except as the same may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally or
by general equitable principles), and the execution, delivery and
performance of this Agreement by such Purchaser does not and will not
conflict with, violate or cause a breach
-3-
<PAGE> 4
of any agreement, contract or instrument to which such Purchaser is a
party or any judgment, order or decree to which such Purchaser is
subject.
(c) As an inducement to the Company to issue the Purchaser Stock to such
Purchaser, and as a condition thereto, such Purchaser acknowledges and agrees
that neither the issuance of the Purchaser Stock to the Purchaser (or to the
account of such Purchaser) nor any provision contained herein shall, in the
case of any Purchaser who is an officer or employee of the Company, entitle
such Purchaser to remain in the employment of the Company and its Subsidiaries
or affect the right of the Company to terminate such Purchaser's employment at
any time for any reason.
3. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient (followed by telephone confirmation to the receiving party).
Such notices, demands and other communications will be sent to the address
indicated below:
To the Company to:
O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Attention: President and Secretary
Facsimile: (417) 682-8120 (President)
(417) 682-8113 (Secretary)
With a copy, which shall not constitute notice to the Company, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
Attention: Kirk A. Radke, Esq.
Facsimile No.: (212) 446-4900
To each Purchaser to:
[PURCHASER]
c/o O'Sullivan Industries Holdings, Inc.
1900 Gulf Street
Lamar, Missouri 64759
Facsimile: (417) 682-8113
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
-4-
<PAGE> 5
4. Miscellaneous.
(a) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement embodies the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
(c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Purchaser, the Company and their respective successors and assigns (including
subsequent holders of Purchaser Stock); provided, that the rights and
obligations of the Purchaser under this Agreement shall not be assignable
except in connection with a permitted transfer of Purchaser Stock hereunder.
(E) GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE WILL GOVERN
ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS HERETO WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(f) Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover damages and
costs (including reasonable attorneys' fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of this Agreement and that
any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
-5-
<PAGE> 6
(g) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company and the
Purchasers.
* * * * *
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Management Stock
Purchase Agreement as of the date first written above.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
By: /s/ Richard D. Davidson
---------------------------------------------
Name: Richard D. Davidson
Its: President and Chief Operating
Officer
/s/ Richard D. Davidson
---------------------------------------------
RICHARD D. DAVIDSON
/s/ Richard D. Davidson /s/ Mary Davidson
---------------------------------------------
RICHARD D. DAVIDSON & MARY DAVIDSON, JOINT
TENANTS
/s/ Michael P. O'Sullivan
---------------------------------------------
MICHAEL P. O'SULLIVAN
/s/ Michael P. O'Sullivan
/s/ Jennifer O'Sullivan
---------------------------------------------
MICHAEL P. O'SULLIVAN & JENNIFER
O'SULLIVAN, JOINT TENANTS
/s/ Michael P. O'Sullivan
---------------------------------------------
MICHAEL P. O'SULLIVAN,
AS CUSTODIAN FOR TARA O'SULLIVAN
/s/ Michael P. O'Sullivan
---------------------------------------------
MICHAEL P. O'SULLIVAN,
AS CUSTODIAN FOR TIERNEY O'SULLIVAN
/s/ Michael P. O'Sullivan
---------------------------------------------
MICHAEL P. O'SULLIVAN,
AS CUSTODIAN FOR TREVOR O'SULLIVAN
<PAGE> 8
/s/ Phillip J. Pacey
---------------------------------------------
PHILLIP J. PACEY
/s/ Phillip J. Pacey /s/ Rose C. Pacey
---------------------------------------------
PHILLIP J. PACEY & ROSE C. PACEY,
JOINT TENANTS
/s/ Tyrone E. Riegel
---------------------------------------------
TYRONE E. RIEGEL
/s/ Tyrone E. Riegel
---------------------------------------------
THE ESTATE OF PATRICIA K. RIEGEL
/s/ Thomas M. O'Sullivan, Jr.
---------------------------------------------
THOMAS M. O'SULLIVAN, JR.
/s/ Thomas M. O'Sullivan, Jr.
---------------------------------------------
BATO FAMILY INVESTMENT LP
/s/ Colin E. O'Sullivan
---------------------------------------------
COLIN E. O'SULLIVAN
/s/ Thomas M. O'Sullivan, Jr.
---------------------------------------------
THOMAS M. O'SULLIVAN, JR., AS CUSTODIAN FOR
COLIN E. O'SULLIVAN
/s/ Thomas M. O'Sullivan, Jr.
/s/ Maria O'Sullivan
---------------------------------------------
THOMAS M. O'SULLIVAN, JR. & MARIA O'SULLIVAN,
JOINT TENANTS
/s/ James C. Hillman
---------------------------------------------
JAMES C. HILLMAN
<PAGE> 9
/s/ James C. Hillman
---------------------------------------------
JAMES C. HILLMAN, AS CUSTODIAN FOR
JAMES A. HILLMAN
/s/ Rowland H. Geddie, III
---------------------------------------------
ROWLAND H. GEDDIE, III
/s/ Rowland H. Geddie /s/ Peggy E. Geddie
---------------------------------------------
ROWLAND H. GEDDIE & PEGGY E. GEDDIE,
JOINT TENANTS
/s/ Stuart D. Schotte
---------------------------------------------
STUART D. SCHOTTE
/s/ Edward T. Riegel
---------------------------------------------
EDWARD T. RIEGEL
/s/ Tommy W. Thieman
---------------------------------------------
TOMMY W. THIEMAN
/s/ Betty Rhea O'Sullivan Thieman
---------------------------------------------
BETTY RHEA O'SULLIVAN THIEMAN
/s/ Tommy W. Thieman /s/ Betty R. Thieman
---------------------------------------------
TOMMY W. THIEMAN & BETTY R. THIEMAN,
JOINT TENANTS
/s/ Kelly L. Thieman
---------------------------------------------
KELLY L. THIEMAN
/s/ Tommy W. Thieman
---------------------------------------------
TOMMY W. THIEMAN, AS CUSTODIAN FOR
JEFFREY M. THIEMAN
<PAGE> 10
/s/ Tommy W. Thieman
---------------------------------------------
TOMMY W. THIEMAN, AS CUSTODIAN FOR
ELLEN A. THIEMAN
/s/ Tommy W. Thieman
---------------------------------------------
TOMMY W. THIEMAN, AS CUSTODIAN FOR
THOMAS B. THIEMAN
/s/ Clifford Bickel
---------------------------------------------
CLIFFORD BICKEL
/s/ Clifford Bickel /s/ Angeline Bickel
---------------------------------------------
CLIFFORD BICKEL & ANGELINE BICKEL,
JOINT TENANTS
/s/ David R. Turney
---------------------------------------------
DAVID R. TURNEY
/s/ John D. Blevins
---------------------------------------------
JOHN D. BLEVINS
/s/ Neal C. Ruggeberg
---------------------------------------------
NEAL C. RUGGEBERG
/s/ Neal C. Ruggeberg
---------------------------------------------
NEAL C. RUGGEBERG & DAWN D. RUGGEBERG,
JOINT TENANTS
/s/ Daniel Patrick O'Sullivan
---------------------------------------------
DANIEL PATRICK O'SULLIVAN
<PAGE> 11
/s/ Daniel Patrick O'Sullivan
/s/ Kimberly O'Sullivan
---------------------------------------------
DANIEL PATRICK O'SULLIVAN &
KIMBERLY O'SULLIVAN
/s/ Randall Day
---------------------------------------------
RANDALL DAY
/s/ Kathleen Jane O'Sullivan Day
---------------------------------------------
KATHLEEN JANE O'SULLIVAN DAY
/s/ Randall Day /s/ Kathleen J. Day
---------------------------------------------
RANDALL DAY & KATHLEEN J. DAY
/s/ Timothy E. Riegel
---------------------------------------------
TIMOTHY E. RIEGEL
/s/ Timothy E. Riegel
---------------------------------------------
TIMOTHY E. RIEGEL, AS CUSTODIAN FOR
KALIE E. RIEGEL
/s/ Timothy E. Riegel /s/ Carla D. Riegel
---------------------------------------------
TIMOTHY E. RIEGEL & CARLA D. RIEGEL,
JOINT TENANTS
/s/ Thomas J. Tirdil
---------------------------------------------
THOMAS J. TIRDIL
/s/ Robert G. Gillespie
---------------------------------------------
ROBERT G. GILLESPIE
/s/ David E. Pittman
---------------------------------------------
DAVID E. PITTMAN
<PAGE> 12
EDWARD D. JONES & CO., CUST. FBO
DAVID E. PITTMAN IRA
By: /s/
---------------------------------------------
Name:
Its:
/s/ David S. Thiesse
---------------------------------------------
DAVID S. THIESSE
/s/ Gary R. Blankenship
---------------------------------------------
GARY R. BLANKENSHIP
/s/ Jason Stansberry
---------------------------------------------
JASON STANSBERRY
/s/ Jason Stansberry /s/ Angela Stansberry
---------------------------------------------
JASON STANSBERRY & ANGELA STANSBERRY,
JOINT TENANTS
/s/ Joe J. Whyman
---------------------------------------------
JOE J. WHYMAN
/s/ John R. Cox, Jr.
---------------------------------------------
JOHN R. COX, JR.
/s/ Larry G. Edge
---------------------------------------------
LARRY G. EDGE
/s/ Maureen M. Wood
---------------------------------------------
MAUREEN M. WOOD
/s/ Maurreen M. Wood /s/ George R. Wood
---------------------------------------------
MAUREEN M. WOOD & GEORGE R. WOOD
<PAGE> 13
/s/ Leonard Saldana
---------------------------------------------
LEONARD SALDANA
/s/ Max W. Simmons
---------------------------------------------
MAX W. SIMMONS
/s/ Karen J. Simmons
---------------------------------------------
KAREN J. SIMMONS, AS CUSTODIAN FOR
MATTHEW C. SIMMONS
/s/ Max W. Simmons /s/ Karen J. Simmons
---------------------------------------------
MAX W. SIMMONS & KAREN J. SIMMONS,
JOINT TENANTS
/s/ Michael L. Franks
---------------------------------------------
MICHAEL L. FRANKS
/s/ Ronald E. Wegener
---------------------------------------------
RONALD E. WEGENER
/s/ Kenneth S. Ladd
---------------------------------------------
KENNETH S. LADD
/s/ Terry J. Braden
---------------------------------------------
TERRY J. BRADEN
/s/ Terry J. Braden /s/ Jeannette M. Braden
---------------------------------------------
TERRY J. BRADEN & JEANNETTE M. BRADEN,
JOINT TENANTS
<PAGE> 14
/s/ Daniel F. O'Sullivan
---------------------------------------------
DANIEL F. O'SULLIVAN
Agreed and Accepted:
BRUCKMANN, ROSSER, SHERRILL & CO. II, L.P.
By: BRSE, L.L.C.
Its: General Partner
By: /s/ Stephen F. Edwards
- - ---------------------------------------------
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF O'SULLIVAN INDUSTRIES HOLDINGS, INC. FOR THE PERIOD
ENDED SEPTEMBER 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 15,633
<SECURITIES> 0
<RECEIVABLES> 72,281
<ALLOWANCES> 2,659
<INVENTORY> 54,524
<CURRENT-ASSETS> 145,602
<PP&E> 161,954
<DEPRECIATION> 66,135
<TOTAL-ASSETS> 297,209
<CURRENT-LIABILITIES> 53,340
<BONDS> 249,082
11,681
52,170
<COMMON> 14
<OTHER-SE> (88,244)
<TOTAL-LIABILITY-AND-EQUITY> 297,209
<SALES> 213,015
<TOTAL-REVENUES> 213,015
<CGS> 149,448
<TOTAL-COSTS> 149,448
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,497
<INCOME-PRETAX> (4,735)
<INCOME-TAX> 1,835
<INCOME-CONTINUING> (6,570)
<DISCONTINUED> 0
<EXTRAORDINARY> 305
<CHANGES> 0
<NET-INCOME> (6,875)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
