<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
AMENDMENT NO. 1 TO FORM 8-K DATED APRIL 1, 1998
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 11, 1998 (March 27, 1998)
-------------------
PACKAGED ICE, INC.
-------------------
(Exact Name of Registrant as Specified in Its Charter)
TEXAS 333-29357 76-0316492
- ---------------------------- ------------ -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
8572 KATY FREEWAY, SUITE 101, HOUSTON, TX 77024
- ----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 464-9384
--------------
N/A
---
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
ACQUISITION OF REDDY ICE CORPORATION
On April 30, 1998, Packaged Ice, Inc. (the "Company") consummated the
purchase of all of the outstanding stock of Reddy Ice Corporation ("Reddy")
from Suiza Foods Corporation ("Suiza") for a total acquisition price of $177.5
million, all of which was paid in cash (the "Reddy Acquisition"). The
acquisition price was financed through the issuance of 13% Exchangeable
Preferred Stock ("13% Exchangeable Preferred Stock"), a tack-on of 9 3/4%
Senior Notes ("Notes") of the Company, due February 1, 2005, a new credit
facility ("New Credit Facility") with Antares Leveraged Capital Corp., and the
remainder was funded with cash on hand. The Reddy Acquisition was accounted
for using the purchase method of accounting.
Reddy, a leading nationwide producer and distributor of packaged ice
products with 1997 revenues of $66.3 million, represented 4% of Suiza's total
sales in 1997. Reddy's assets consist of approximately 37 separate ice
manufacturing facilities along with property, plant, equipment and rolling
stock, all of which are used to manufacture and distribute ice products.
Principally, the Company intends to continue such use; however, some redundant
facilities are planned for closure.
Sale of 13% Exchangeable Preferred Stock and Warrants
On April 30, 1998, the Company entered into a Securities Purchase
Agreement (the "Securities Purchase Agreement") with Ares Leveraged
Investment Fund, L.P. ("Ares") and SV Capital Partners, L.P. ("SV")
pursuant to which Ares acquired 325,000 shares and SV acquired 75,000
shares of the 13% Exchangeable Preferred Stock at $100 per share for
an aggregate amount of $40 million. Holders of the 13% Exchangeable
Preferred Stock shall have no voting rights, other than approval
rights with respect to the issuance of parity or senior securities. In
addition, there are various situations in which the Company may either
elect or be required to redeem the 13% Exchangeable Preferred Stock.
The following summary regarding the 13% Exchangeable Preferred Stock
and the Warrants is qualified in its entirety by reference to and
should be read in conjunction with the Securities Purchase Agreement
and all agreements ancillary thereto.
Ares and SV entered into Warrant Agreements granting warrants to
purchase an aggregate of 975,752 shares of the Company's Common Stock
with an exercise price of $.01 per share. The Warrants are valid
until May 31, 2005 but are exercisable only under certain conditions,
such as an initial public offering of Common Stock, change of control,
merger, asset sale, or default.
The 13% Exchangeable Preferred Stock bears a dividend rate of 13% per
annum, however, during the first twelve months following issuance the
dividend rate will be 11.5% and 12.25% during the second twelve
months. Dividends shall be fully
2
<PAGE> 3
cumulative and payable quarterly in cash, except that during the first
five years after issuance, dividends may be paid in kind by issuing
additional shares of 13% Exchangeable Preferred Stock. In the event the
Company is unable for any reason to pay dividends in cash after the
fifth anniversary, or in the event of a default, holders of the 13%
Exchangeable Preferred Stock will have the right to add up to two
directors to the Board of Directors and the dividend rate will be
increased until the default is cured.
The Securities Purchase Agreement contains certain restrictive
covenants and requires a vote of two-thirds of the Board of Directors
before the Company may take certain significant actions. The Company
may exchange the 13% Exchangeable Preferred Stock for subordinated
notes. Ares and SV were granted certain registration rights under
separate Registration Rights Agreements. The Company intends to file a
registration statement to offer to exchange the 13% Exchangeable
Preferred Stock for registered exchange shares with terms identical to
the 13% Exchangeable Preferred Stock.
Issuance of $125,000,000 Senior Notes Due 2005
On April 30, 1998, the Company issued an additional $125,000,000 of
9 3/4% Senior Notes due February 1, 2005 in a "tack-on" offering. The
Notes were issued under the indenture (the "Indenture") dated as of
January 28, 1998, amended and restated as of April 30, 1998, by and
among the Company, the Subsidiary Guarantors, as defined in the
Indenture, and U.S. Trust Company of Texas, N.A., as Trustee. The Notes
are of the same series as the $145 million of Notes issued January 28,
1998.
The Company obtained the consent of a majority of the holders of the
original Notes issued under the Indenture to certain amendments to the
Indenture. The Company paid consent fees aggregating $1,397,600 to
consenting holders. The principal amendments to the Indenture increase
the Permitted Indebtedness to allow the issuance of the Notes, and
increase the Permitted Indebtedness basket to permit the Company to
enter into the New Credit Facility.
Antares Leveraged Capital Corp. Credit Facility
Concurrently with the Reddy Acquisition, Antares Leveraged Capital
Corp., Chicago, Illinois, and the Company entered into an $80,000,000
five year senior credit facility consisting of a revolving working
capital facility of $15,000,000 and a revolving acquisition loan
facility of $65,000,000 (the "New Credit Facility"). The New Credit
Facility replaces the Company's previous credit facility with Frost
National Bank and Zion's National Bank, and the Company plans to use
the New Credit Facility for its immediate and future acquisition and
working capital needs.
3
<PAGE> 4
The outstanding principal balance under the New Credit Facility will
bear interest at the Company's option at a fluctuating rate equal to
(i) LIBOR plus two and three quarters percent (2.75%) per annum, or
(ii) the "prime" rate plus one percent (1.00%) with interest rates
subject to a pricing grid. All amounts outstanding under the
acquisition facility on the second anniversary will amortize in 12
equal quarterly installments over the remaining term.
The New Credit Facility contains general and financial covenants and
events of default customary for credit facilities of this type. The New
Credit Facility is secured by substantially all of the Company's assets
and the capital stock of all of the Company's significant subsidiaries.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
Reddy Ice Corporation
<TABLE>
<S> <C>
(i) Report of Independent Auditors - Deloitte & Touche LLP F-1
(ii) Balance Sheets as of December 31, 1997 and 1996 F-2
(iii) Statements of Operations for the Years Ended December 31,
1997, 1996 and 1995 F-3
(iv) Statements of Shareholder's Deficit for the Years Ended
December 31, 1997, 1996 and 1995 F-4
(v) Statements of Cash Flows for the Years Ended December 31,
1997, 1996 and 1995 F-5
(vi) Notes to Financial Statements F-6
(b) Pro Forma Financial Information F-13
The following unaudited pro forma consolidated financial statements are
filed with this report:
(i) Unaudited Pro Forma Combined Condensed Balance Sheet
as of December 31, 1997 F-14
(ii) Unaudited Pro Forma Combined Condensed Statement of
Operations for the Year Ended December 31, 1997 F-15
(iii) Notes to Unaudited Pro Forma Combined Condensed
Financial Statements F-16
</TABLE>
4
<PAGE> 5
(c) Exhibits
Exhibit Number Description of Document
2.1 Stock Purchase Agreement between Packaged Ice, Inc. and
Suiza Foods Corporation dated March 27, 1998.
2.2 Noncompetition Agreement by and among Packaged Ice, Inc.
and Suiza Foods Corporation dated April 30, 1998.
4.1 Indenture by and among Packaged Ice, Inc. as Issuer, the
Subsidiary Guarantors and U.S. Trust Company of Texas, N.A. as
Trustee dated as of January 28, 1998, Amended and Restated as
of April 30, 1998.
4.2 Purchase Agreement among the Company, its subsidiaries and
Jefferies & Co., Inc. as Initial Purchaser ($125,000,000
Senior Notes Offering) dated April 23, 1998.
4.3 Registration Rights Agreement by and among Packaged Ice, Inc.,
the Subsidiary Guarantors and Jefferies & Company, Inc. dated
January 28, 1998 and Amended and Restated as of April 30,
1998.
4.4 Securities Purchase Agreement dated April 30, 1998 by and
among Packaged Ice, Inc., Ares Leveraged Investment Fund,
L.P., and SV Capital Partners, L.P.
4.5 Warrant Agreement by and among Packaged Ice, Inc. and Ares
Leveraged Investment Fund, L.P. dated April 30, 1998.
4.6 Warrant Agreement by and among Packaged Ice, Inc. and SV
Capital Partners, L.P. dated April 30, 1998.
5
<PAGE> 6
4.7 Exchange Offer Registration Rights Agreement dated April 30,
1998 by and among Packaged Ice, Inc., Ares Leveraged
Investment Fund, L.P. and SV Capital Partners, L.P.
4.8 Registration Rights Agreement dated April 30, 1998 by and
among Packaged Ice, Inc. and Ares Leveraged Investment Fund,
L.P. and SV Capital Partners, L.P.
4.9 Registration Rights Agreement Dated April 30, 1998 by and
among Packaged Ice, Inc. and SV Capital Partners, L.P.
4.10 Preferred Stock Series Designation of Packaged Ice, Inc. dated
April 29, 1998 providing for the issuance of 13% Exchangeable
Preferred Stock Series A.
4.11 Preferred Stock Series Designation of Packaged Ice, Inc. dated
April 29, 1998 providing for the issuance of 13% Exchangeable
Preferred Stock Series B.
4.12 Amended and Restated Preferred Stock Series Designation of
Packaged Ice, Inc. dated April 29, 1998 providing for the
issuance of 10% Exchangeable Preferred Stock originally issued
December 2, 1997.
4.13 Parallel Exit Agreement dated April 30, 1998 by and among
Packaged Ice, Inc., James F. Stuart, A.J. Lewis, III, Ares
Leveraged Investment Fund, L.P., and SV Capital Partners,
L.P.
10.1 Credit Agreement dated April 30, 1998 by and among Packaged
Ice, Inc. and Antares Leveraged Capital Corp., individually,
and as agent for The Other Financial Institutions.
10.2 Security Agreement dated April 30, 1998, by and among Packaged
Ice, Inc. and Antares Leveraged Capital Corp.
10.3 Security Agreement dated April 30, 1998, by and among Reddy
Ice Corporation, Golden Eagle Ice-Texas, Inc., Packaged Ice,
Southeast, Inc., Packaged Ice Leasing, Inc., Southco Ice,
Inc., Southwest Texas Packaged Ice, Inc., Southwestern Ice,
Inc., Southern Bottled Water Company, Inc., Mission Party Ice,
Inc. and Antares Leveraged Capital Corp.
10.4 Guaranty dated April 30, 1998 by and among Reddy Ice
Corporation, Mission Party Ice, Inc., Southwest Texas
Packaged Ice, Inc., Southwestern Ice, Inc., Golden Eagle
Ice-Texas, Inc., Packaged Ice Southeast, Inc., Packaged Ice
Leasing, Inc., Southern Bottled Water Company, Inc., and
Southco Ice, Inc.
6
<PAGE> 7
99.1 Press Release issued by the Company and Suiza Foods, Inc. on
March 30, 1998, 9:19 am Eastern Time, announcing purchase of
Reddy Ice Corporation. (Filed as Exhibit 99.1 to the Company's
current report on Form 8-K dated April 1, 1998 and
incorporated herein by reference).
7
<PAGE> 8
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 hereunto duly authorized.
PACKAGED ICE, INC.
Date: May 11, 1998 By: /s/ JAMES C. HAZLEWOOD
--------------------------------
Name: James C. Hazlewood
Title: Chief Financial Officer
8
<PAGE> 9
INDEPENDENT AUDITORS' REPORT
To the Shareholder of Reddy Ice Corporation
Dallas, Texas
We have audited the accompanying balance sheets of Reddy Ice Corporation (the
"Company"), a wholly-owned subsidiary of Suiza Foods Corporation, as of December
31, 1997 and 1996, and the related statements of operations, shareholder's
deficit and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1997 and
1996, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
April 14, 1998
F-1
<PAGE> 10
REDDY ICE CORPORATION
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ........................................... $ 994,595 $ 438,139
Receivables, net .................................................... 5,451,013 3,076,414
Inventories ......................................................... 2,943,155 1,732,610
Prepaid expenses and other current assets ........................... 142,602 429,123
Deferred tax asset .................................................. 905,958 597,169
------------- -------------
Total current assets ........................................ 10,437,323 6,273,455
PROPERTY, PLANT AND EQUIPMENT, NET .................................... 66,212,840 36,407,092
DEFERRED TAX ASSET .................................................... 295,808
GOODWILL, NET ......................................................... 30,081,130 1,487,703
INTANGIBLE AND OTHER ASSETS, NET ...................................... 3,892,025 3,482,037
ADVANCES TO SHAREHOLDER, NET .......................................... 5,114,404
------------- -------------
TOTAL ................................................................. $ 110,623,318 $ 53,060,499
============= =============
LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses ............................... $ 8,657,611 $ 5,143,508
Current portion of long-term debt ................................... 220,452 204,248
------------- -------------
Total current liabilities ................................... 8,878,063 5,347,756
ADVANCES FROM SHAREHOLDER, NET ........................................ 42,927,599
SHAREHOLDER AND OTHER LONG-TERM DEBT .................................. 59,600,116 58,270,809
DEFERRED TAX LIABILITY ................................................ 716,424
COMMITMENTS AND CONTINGENCIES (Note 13)
SHAREHOLDER'S DEFICIT:
Common share, par value $.01 per share, 100 shares authorized,
issued and outstanding at December 31, 1997 and 1996 ............. 1 1
Additional paid-in capital .......................................... 10,022,204 1,648,004
Accumulated deficit ................................................. (11,521,089) (12,206,071)
------------- -------------
Total shareholder's deficit ................................. (1,498,884) (10,558,066)
------------- -------------
TOTAL............................................................... $ 110,623,318 $ 53,060,499
============= =============
</TABLE>
See notes to financial statements.
F-2
<PAGE> 11
REDDY ICE CORPORATION
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES ............................................ $ 66,449,199 $ 52,992,207 $ 50,507,298
COST OF SALES ........................................ 41,713,350 31,742,587 30,884,846
------------ ------------ ------------
GROSS PROFIT ......................................... 24,735,849 21,249,620 19,622,452
OPERATING COSTS AND EXPENSES:
Selling, general and administrative ................ 10,471,877 6,759,323 6,279,524
Depreciation and amortization ...................... 6,070,256 3,632,204 3,771,540
Shareholder management fee ......................... 480,000 480,000 510,000
Merger costs ....................................... 938,538
------------ ------------ ------------
Total operating costs and expenses ......... 17,022,133 10,871,527 11,499,602
------------ ------------ ------------
INCOME FROM OPERATIONS ............................... 7,713,716 10,378,093 8,122,850
OTHER INCOME/EXPENSE:
Shareholder interest expense ....................... (7,119,600) (6,960,000) (5,179,795)
Other interest expense, net ........................ (48,371) (48,306) (1,635,629)
Other income ....................................... 580,535 498,966 839,958
------------ ------------ ------------
Total other expense ........................ (6,587,436) (6,509,340) (5,975,466)
------------ ------------ ------------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY LOSS .... 1,126,280 3,868,753 2,147,384
INCOME TAX EXPENSE (BENEFIT) ......................... 441,298 1,492,371 (81,776)
------------ ------------ ------------
INCOME BEFORE EXTRAORDINARY LOSS ..................... 684,982 2,376,382 2,229,160
EXTRAORDINARY LOSS FROM EARLY EXTINGUISHMENT OF
DEBT ............................................... (2,597,778)
------------ ------------ ------------
NET INCOME (LOSS) .................................... $ 684,982 $ 2,376,382 $ (368,618)
============ ============ ============
</TABLE>
See notes to financial statements.
F-3
<PAGE> 12
REDDY ICE CORPORATION
STATEMENTS OF SHAREHOLDER'S DEFICIT
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------ PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 ..... 749,994 $ 7,500 $ 1,640,505 $(14,213,835) $(12,565,830)
Reorganization ............. (749,894) (7,499) 7,499 --
Net loss ................... (368,618) (368,618)
--------- --------- ------------ ------------ ------------
BALANCE, DECEMBER 31,
1995 ....................... 100 1 1,648,004 (14,582,453) (12,934,448)
Net income ................. 2,376,382 2,376,382
--------- --------- ------------ ------------ ------------
BALANCE, DECEMBER 31,
1996 ....................... 100 1 1,648,004 (12,206,071) (10,558,066)
Contributions .............. 8,374,200 8,374,200
Net income ................. 684,982 684,982
--------- --------- ------------ ------------ ------------
BALANCE, DECEMBER 31,
1997 ....................... 100 $ 1 $ 10,022,204 $(11,521,089) $ (1,498,884)
========= ========= ============ ============ ============
</TABLE>
See notes to financial statements.
F-4
<PAGE> 13
REDDY ICE CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................. $ 684,982 $ 2,376,382 $ (368,618)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ................... 6,070,256 3,632,204 3,771,540
(Gain) loss on sale of assets ................... 23,792 (27,850) (209,187)
Deferred income taxes ........................... 703,443 507,667 (1,400,644)
Extraordinary loss from early extinguishment
of debt ....................................... 2,597,778
Changes in operating assets and liabilities,
net of acquisitions:
Receivables ................................... (2,528,000) (86,513) (449,557)
Inventories ................................... (627,024) (302,827) (191,533)
Prepaid expenses and other assets ............. 286,521 (189,236) 312,840
Accounts payable and accrued expenses ......... 3,514,103 (2,014,587) 3,369,297
Other assets .................................. (381,362) 9,575 (122,664)
------------ ------------ ------------
Net cash provided by operating
activities ............................... 7,746,711 3,904,815 7,309,252
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net additions to property, plant and
equipment ....................................... (9,195,321) (3,749,343) (3,593,762)
Cash outflows for acquisitions ..................... (45,826,967) (5,367,115) (2,233,392)
Proceeds from sale of assets ....................... 112,918 112,846 250,761
------------ ------------ ------------
Net cash used in investing activities ...... (54,909,370) (9,003,612) (5,576,393)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt ................. 77,604 23,568 62,500,000
Repayment of debt .................................. (1,730,492) (232,933) (53,689,889)
Advances to/from shareholder ....................... 49,372,003 5,746,301 (15,360,705)
------------ ------------ ------------
Net cash provided by financing
activities ............................... 47,719,115 5,536,936 (6,550,594)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ........................................ 556,456 438,139 (4,817,735)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ....... 438,139 4,817,735
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ............. $ 994,595 $ 438,139 $ --
============ ============ ============
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest ............................. $ 7,168,019 $ 7,008,348 $ 8,251,222
============ ============ ============
Net assets acquired by capital contributions
from shareholder ................................ $ 8,374,200 $ -- $ --
Net assets acquired by assuming notes payable ...... 1,668,399 148,383 270,000
Net assets acquired by decrease in notes
receivable ...................................... 393,401
------------ ------------ ------------
Total non-cash net asset additions ......... $ 10,436,000 $ 148,383 $ 270,000
============ ============ ============
Advances to shareholder converted to (from)
notes payable to shareholder .................... $ 1,330,000 $ (4,500,000)
============ ============ ============
</TABLE>
See notes to financial statements.
F-5
<PAGE> 14
REDDY ICE CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business -- Reddy Ice Corporation (the "Company"), a wholly-owned
subsidiary of Suiza Foods Corporation ("Suiza"), manufactures and distributes
packaged and block ice products for retail, commercial and industrial use
through manufacturing facilities located in Texas, Florida, Georgia, Louisiana,
Tennessee, Arizona, New Mexico, Nevada, California, Alabama and Mississippi.
Prior to March 31, 1995, the Company operated as a separate business.
Effective March 31, 1995, the Company was acquired by and merged with Suiza in a
business combination transaction accounted for as a pooling of interests, and
incurred merger costs of $938,000 during 1995 in connection with this merger. As
a result of the merger, the Company repaid certain outstanding indebtedness and
recognized expenses of approximately $2,598,000 (net of income tax benefit of
$1,002,000) of debt issuance, legal and other costs associated with the debt
extinguishment. These amounts have been classified as an extraordinary loss in
accordance with the provisions of Statement of Financial Accounting Standards
("SFAS") No. 4, "Reporting Gains and Losses From the Extinguishment of Debt."
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
Inventories -- Inventories are stated at the lower of cost, using the
first-in, first-out ("FIFO") method, or market.
Property, Plant and Equipment -- Property, plant and equipment are stated
at cost. Depreciation and amortization are provided using the straight-line
method over the estimated useful lives of the assets, as follows:
<TABLE>
<CAPTION>
ASSET Useful Life
----- -----------
<S> <C>
Buildings and improvements..................... 10 to 40 years
Machinery and equipment........................ 3 to 20 years
Furniture and fixture.......................... 5 years
</TABLE>
Capitalized lease assets are amortized over the shorter of their lease term
or their estimated useful lives. Expenditures for repairs and maintenance that
do not improve or extend the life of the assets are expensed as incurred.
Goodwill, Intangible, and Other Assets -- Goodwill and other intangible
assets include the following intangibles that are amortized over their related
useful lives:
<TABLE>
<CAPTION>
INTANGIBLE ASSET USEFUL LIFE
---------------- -----------
<S> <C>
Goodwill.......................... Straight-line method over 20 to 40 years
Identifiable intangible assets:
Customer list .................. Straight-line method over seven to ten
years
Supply contract ................ Straight-line method over the terms of
the agreement
Noncompetition agreements ...... Straight-line method over the terms of
the agreements
</TABLE>
F-6
<PAGE> 15
Impairment -- Company management routinely reviews its long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
Revenue -- Revenue is recognized when the product is shipped to the
customer. Revenue from owned ice systems is recognized based upon the number of
ice packaging bags delivered to and accepted by customers under contractual
terms. Once accepted, there is no right of return with respect to the bags
delivered.
Income Taxes -- Prior to March 31, 1995, the Company was organized as a
small business corporation under Subchapter S of the Internal Revenue Code. As a
result, no income taxes were provided in the financial statements since they
were the responsibility of the individual shareholders. However, had these
operations been subject to corporate income taxes, available net operating
losses would have been sufficient to eliminate any corporate income taxes due.
On March 31, 1995, the Company became a wholly owned subsidiary of Suiza
and since that date has been included in Suiza's consolidated tax return.
Federal and state income taxes are provided for in the Company's financial
statements on a separate company basis in accordance with the provisions of SFAS
No. 109, "Accounting for Income Taxes." Deferred income taxes are provided for
temporary differences in the financial statement and tax basis of assets and
liabilities using current tax rates. Deferred tax assets, including the benefit
of net operating loss carryforwards, are evaluated based on the guidelines for
realization and may be reduced by a valuation allowance. Income taxes payable
are cleared through the intercompany accounts with Suiza.
Cash Equivalents -- The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.
2. ACQUISITIONS
During 1997, 1996 and 1995, the Company completed the following
acquisitions, which were accounted for using the purchase method of accounting
as of their respective acquisition dates. Accordingly, only the results of
operations of the acquired companies subsequent to their respective acquisition
dates are included in the financial statements of the Company. These
acquisitions were funded primarily by advances from Suiza, along with the
assumption of certain notes payable of the acquired businesses. At the
acquisition date, the purchase price was allocated to assets acquired, including
identifiable intangibles, and liabilities assumed based on their fair market
values. The excess of the total purchase prices over the fair values of the net
assets acquired represented goodwill.
During 1995, the Company acquired all of the net assets, including customer
lists, patents and other intangible assets of four small ice companies for a
total purchase price of approximately $2,503,000.
During 1996, the Company acquired all of the net assets of ten small ice
companies for a total purchase price of approximately $5,515,000.
During 1997, the Company acquired the approximate net assets of the
following ice companies:
<TABLE>
<CAPTION>
ACQUISITION DATE ACQUIRED COMPANY PURCHASE PRICE
---------------- ---------------- --------------
<S> <C> <C>
March 13, 1997 .......... Pure Ice $ 7,700,000
April 9, 1997 ........... Arctic Ice 3,075,000
April 22, 1997 .......... Riverside Ice 2,142,000
May 1, 1997 ............. Jackson Ice 4,005,000
August 1, 1997 .......... County Ice 5,616,000
September 10, 1997 ...... Consumer Ice 7,142,000
November 19, 1997 ....... MidSouth Ice 19,532,000
December 23, 1997 ....... City Ice 2,428,000
Various ................. 12 other small ice companies 4,623,000
</TABLE>
F-7
<PAGE> 16
In connection with the acquisitions, assets were acquired and liabilities
were assumed as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Purchase price:
Advances from shareholder ................. $45,826,967 $ 5,367,115 $ 2,233,392
Capital contribution from shareholder
(principally stock issued by
shareholder) ........................... 8,374,200
Notes payable assumed ..................... 1,668,399 148,383 270,000
Decrease in notes receivable .............. 393,401
----------- ----------- -----------
Total purchase price ........................ 56,262,967 5,515,498 2,503,392
Fair value of net assets acquired ........... 27,344,530 4,882,515 2,286,931
----------- ----------- -----------
Goodwill .................................... $28,918,437 $ 632,983 $ 216,461
=========== =========== ===========
</TABLE>
The following table presents unaudited pro forma results of operations of
the Company as if the above described 1997 and 1996 acquisitions had occurred at
the beginning of 1996:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Net sales ..... $84,132,384 $79,325,616
=========== ===========
Net income .... $ 1,796,894 $ 2,951,656
=========== ===========
</TABLE>
The unaudited pro forma results of operations are not necessarily
indicative of what the actual results of operations of the Company would have
been had the acquisitions occurred at the beginning of 1996, nor do they purport
to be indicative of the future results of operations of the Company.
3. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
December 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Trade accounts receivable ............... $ 4,913,804 $ 2,809,281
Other ................................... 907,714 418,238
----------- -----------
5,821,518 3,227,519
Less allowance for doubtful accounts .... (370,505) (151,105)
----------- -----------
$ 5,451,013 $ 3,076,414
=========== ===========
</TABLE>
4. INVENTORIES
<TABLE>
<CAPTION>
December 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Raw materials and supplies .... $2,519,473 $1,430,004
Finished goods ................ 423,682 302,606
---------- ----------
$2,943,155 $1,732,610
========== ==========
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Land .............................. $ 8,402,135 $ 5,631,592
Buildings and improvements ........ 25,205,582 17,023,195
Machinery and equipment ........... 59,340,175 36,174,031
Furniture and fixtures ............ 1,234,215 781,691
------------ ------------
94,182,107 59,610,509
Less accumulated depreciation ..... (27,969,267) (23,203,417)
------------ ------------
$ 66,212,840 $ 36,407,092
============ ============
</TABLE>
F-8
<PAGE> 17
6. GOODWILL, INTANGIBLE AND OTHER ASSETS
<TABLE>
<CAPTION>
December 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Goodwill .......................... $ 30,782,684 $ 1,836,787
Identifiable intangibles .......... 4,728,496 4,185,396
Deposits and other ................ 603,700 117,441
------------ ------------
36,114,880 6,139,624
Less accumulated amortization ..... (2,141,725) (1,169,884)
------------ ------------
$ 33,973,155 $ 4,969,740
============ ============
</TABLE>
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
December 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Accounts payable .................. $4,332,808 $2,850,286
Accrued payroll and benefits ...... 1,309,626 855,642
Accrued insurance ................. 1,642,256 969,386
Other ............................. 1,372,921 468,194
---------- ----------
$8,657,611 $5,143,508
========== ==========
</TABLE>
8. SHAREHOLDER AND OTHER LONG-TERM DEBT
<TABLE>
<CAPTION>
December 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Note payable to shareholder .... $ 59,330,000 $ 58,000,000
Other notes payable ............ 427,359 468,504
Capital lease obligations ...... 63,209 6,553
------------ ------------
59,820,568 58,475,057
Less current portion ........... (220,452) (204,248)
------------ ------------
$ 59,600,116 $ 58,270,809
============ ============
</TABLE>
Note Payable to Shareholder -- This balance represents a promissory note
payable to Suiza. The note provides for interest at 12% per annum, paid twice a
year in June and December.
Other Notes Payable -- Other notes payable include various promissory notes
for the purchase of property, plant, equipment and noncompete agreements. The
various promissory notes payable provide for interest at rates ranging from 6.5%
to 12% and are payable in monthly installments of principal and interest until
maturity, when the remaining principal balances are due.
Capital Lease Obligations -- Capital lease obligations represent machinery
and equipment financing obligations that are payable in monthly installments of
principal and interest and are collateralized by the related assets financed.
The scheduled maturities of long-term debt, which include capitalized lease
obligations, at December 31, 1997, were as follows:
<TABLE>
<S> <C>
1998 .......... $ 220,452
1999 .......... 82,904
2000 .......... 79,354
2001 .......... 72,912
2002 .......... 33,080
Thereafter .... 59,331,866
-----------
$59,820,568
===========
</TABLE>
F-9
<PAGE> 18
9. RELATED PARTY TRANSACTIONS
As necessary, Suiza funds acquisition and other costs for the Company.
These non-interest bearing fundings are recorded as advances to or from
shareholder. On January 1 of each year, the net increase or decrease in the
shareholder advances is converted to debt and added to the balance of the note
payable to shareholder. $49,690,000 and $1,330,000 were converted to debt at
January 1, 1998 and 1997, respectively.
Prior to March 31, 1995, the Company had consulting agreements with its
majority shareholders requiring monthly payments of $50,000. After March 31,
1995, the Company had a management agreement with Suiza to provide financial and
other advisory services which required monthly payments of $40,000. Amounts paid
to majority shareholders and Suiza under these agreements were recorded as
shareholder management fee.
10. INCOME TAXES
The income tax expense (benefit) is composed of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Current taxes payable (refundable):
Federal ......................... $ (241,448) $ 893,445 $ 1,196,640
State ........................... (20,697) 91,259 122,228
Deferred income taxes ............. 703,443 507,667 (1,400,644)
----------- ----------- -----------
$ 441,298 $ 1,492,371 $ (81,776)
=========== =========== ===========
</TABLE>
The following is a reconciliation of income taxes reported in the
statements of income:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Tax expense at statutory rates ............. $ 394,199 $ 1,354,064 $ 1,921,682
State income taxes ......................... 47,099 138,307 196,286
Tax effect of change from S Corporation to C
Corporation .............................. (2,199,744)
----------- ----------- -----------
$ 441,298 $ 1,492,371 $ (81,776)
=========== =========== ===========
</TABLE>
The tax effects of temporary differences giving rise to deferred income tax
assets and liabilities were:
<TABLE>
<CAPTION>
December 31,
---------------------
1997 1996
--------- --------
<S> <C> <C>
Deferred income tax assets:
Asset valuation reserves ............................. $ 84,537 $ 58,289
Nondeductible accruals ............................... 767,669 495,344
Depreciation and amortization ........................ 295,807
Other ................................................ 53,752 43,537
--------- --------
905,958 892,977
Deferred income tax liabilities -- depreciation and
amortization ......................................... (716,424)
--------- --------
Net deferred income tax asset .......................... $ 189,534 $892,977
========= ========
</TABLE>
These net deferred income tax assets (liabilities) are classified in the
consolidated balance sheet as follows:
<TABLE>
<CAPTION>
December 31,
---------------------
1997 1996
--------- --------
<S> <C> <C>
Current assets ............ $ 905,958 $597,169
Noncurrent assets ......... 295,808
Noncurrent liabilities .... (716,424)
--------- --------
$ 189,534 $892,977
========= ========
</TABLE>
F-10
<PAGE> 19
11. SHAREHOLDERS' EQUITY
At January 1, 1995, 749,994 shares of Class A common stock were issued and
outstanding. In conjunction with the merger described in Note 1, the Company's
Certificate of Incorporation was amended to change the number of authorized
shares to 100. At the same time, a reverse stock split became effective,
converting the 749,994 shares of common stock issued and outstanding into 100
shares of common stock, which resulted in a decrease of $7,499 in common stock
and a corresponding increase in additional paid-in capital.
12. EMPLOYEE RETIREMENT PLAN
The Company maintains a 401(k) plan for the benefit of its full-time
employees, as defined by the plan. Contributions by the Company are made at the
discretion of the Board of Directors. The Company accrued contributions to the
plan of $60,000, $48,000 and $33,705, for the years ended December 31, 1997,
1996 and 1995, respectively.
13. COMMITMENTS AND CONTINGENCIES
Leases -- The Company leases certain property, plant and equipment used in
its operations under both capital and operating lease agreements. Such leases,
which are primarily for machinery and equipment and vehicles, have lease terms
ranging from one to nine years. Certain of the operating lease agreements
require the payment of additional rentals for maintenance, along with additional
rentals, based on miles driven or units produced. Rent expense, including
additional rent, was $2,231,652, $1,574,184 and $1,338,874 for the years ended
December 31, 1997, 1996 and 1995, respectively.
The composition of capital leases that are reflected as property, plant and
equipment in the balance sheets is as follows:
<TABLE>
<CAPTION>
December 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Machinery and equipment ........... $ 77,604 $ 41,308
Furniture and fixtures ............ 19,045 19,045
Vehicles .......................... 8,569 8,569
Less accumulated amortization ..... (19,720) (24,055)
-------- --------
$ 85,498 $ 44,867
======== ========
</TABLE>
Future minimum payments at December 31, 1997, under noncancelable capital
and operating leases with terms in excess of one year are summarized below:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
--------- ----------
<S> <C> <C>
1998 .......................................... $ 18,014 $ 918,601
1999 .......................................... 15,836 847,213
2000 .......................................... 17,245 765,796
2001 .......................................... 18,802 696,052
2002 .......................................... 10,025 576,928
Thereafter .................................... 400,445
--------- ----------
Total minimum lease payments .................. 79,922 $4,205,035
Less amount representing interest ............. (16,713) ==========
---------
Present value of capital lease obligations .... 63,209
=========
</TABLE>
Litigation -- The Company is a party, in the ordinary course of business,
to certain claims and litigation. In management's opinion, the settlement of
such matters is not expected to have a material impact on the financial
statements.
F-11
<PAGE> 20
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments." The estimated fair
value amounts have been determined by the Company using available market
information and appropriate valuation methodologies. However, considerable
judgment is necessarily required to interpret market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize in a current
exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.
The carrying value of cash and cash equivalents, accounts receivable, and
accounts payable and accrued expenses approximates fair value due to the
relatively short-term nature of the financial instruments. The carrying value of
the other notes payable and capital lease obligations approximates fair value
because the weighted average interest rate on the notes and obligations
approximates current interest rates to be received on similar installments. The
fair value of advances to or from shareholder and note payable to shareholder is
not practicable to estimate due to the lack of similar financial instruments to
develop fair values.
15. MAJOR CUSTOMERS
The Company has a supply contract with one customer which requires certain
of the customer's retail sites to purchase their ice requirements from the
Company at defined prices. This supply contract, which requires market pricing,
is renewable annually. Sales to this customer under the supply contract
approximated $7,422,000, or 11% of net sales, for the year ended December 31,
1997; $7,327,000, or 14% of net sales, for the year ended December 31, 1996; and
$7,997,440, or 16% of net sales, for the year ended December 31, 1995.
16. SUBSEQUENT EVENTS
Subsequent to December 31, 1997, the Company completed the acquisition of
substantially all of the assets of five small ice companies for a total purchase
price of approximately $5,100,000 which resulted in recorded goodwill of
approximately $2,928,000. These acquisitions were financed by funding from
Suiza.
On March 27, 1998, Suiza signed a stock purchase agreement to sell the
Company to privately held Packaged Ice, Inc. of Houston, Texas, for
approximately $172.5 million in cash.
F-12
<PAGE> 21
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma combined condensed balance sheet has been prepared
to give effect to (i) the acquisition of Reddy and the related financing (the
"Transactions"), and (ii) nineteen insignificant acquisitions of the Company and
Reddy which have been consummated subsequent to December 31, 1997 and their
related financing in addition to two pending acquisitions of the Company (the
"Pending Acquisitions" collectively the "Other Acquisitions") as if they had
occurred on December 31, 1997.
The unaudited pro forma combined condensed statement of operations are
based on the income statements of the Company, Reddy (appearing elsewhere in the
Report on Form 8-K), 73 insignificant prior acquisitions of the Company and
Reddy since January 1, 1997 (the "Prior Acquisitions"), and the Pending
Acquisitions of the Company as if each of the acquisitions had occurred at the
beginning of the period presented (collectively the "Acquisitions"). The
unaudited pro forma combined condensed statement of operations is derived from
(i) the audited historical financial statements of the Company and Reddy for the
fiscal year ended December 31, 1997 and (ii) the unaudited historical financial
statements of the Prior Acquisitions and the Pending Acquisitions for the
applicable periods prior to their respective acquisition dates by the Company
and Reddy.
The unaudited pro forma combined condensed financial statements should be
read in conjunction with the notes thereto.
The pro forma adjustments which give effect to the various events described
above are based upon currently available information and upon certain
assumptions that management believes are reasonable. The acquisitions are
accounted for by the Company under the purchase method and the resulting assets
acquired and liabilities assumed are recorded at their estimated fair market
values at the respective dates of acquisition. The adjustments included in the
unaudited pro forma combined condensed financial statements reflect the
Company's preliminary assumptions and estimates based upon available
information. There can be no assurance that the actual adjustments will not vary
significantly from the estimated adjustments reflected in the unaudited pro
forma combined condensed financial statements. In addition, there can be no
assurance that the Company will consummate the pending acquisitions.
The unaudited pro forma combined condensed financial statements do not
purport to be indicative of the results of operations that would have occurred
or that may be obtained in the future if the transactions described had occurred
as presented in such statements. In addition, future results may vary
significantly from the results reflected in such statements due to general
economic conditions, utility prices, labor costs, competition, the Company's
ability to successfully integrate the operations of the acquisitions with its
current business, and several other factors, many of which are beyond the
Company's control.
F-13
<PAGE> 22
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1997
ASSETS
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL OTHER COMBINED
PACKAGED ICE REDDY ICE TRANSACTIONS ACQUISITIONS PRO FORMA
------------ --------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and equivalents ......... $ 19,368,811 $ 994,595 $ (7,375,000)(d) $ 7,414,733(b) $ 19,408,544
............................ (994,595)(e)
Accounts receivable .......... 4,103,309 5,451,013 9,554,322
Inventories .................. 1,347,496 2,943,155 60,204(e) 4,350,855
Prepaid expenses ............. 321,492 142,602 464,094
Deferred tax asset ........... 905,958 905,958
------------- ------------- ------------ ------------ -------------
Total current assets ...... 25,141,108 10,437,323 (8,309,391) 7,414,733 34,683,773
Property, net .................. 43,297,449 66,212,840 2,908,925(e) 15,211,198(a) 127,630,412
Other assets, net .............. 9,581,329 3,892,025 9,800,000(d) 495,200(b)(c) 23,768,554
Goodwill ....................... 44,280,568 30,081,130 74,766,751(e) 45,633,592(a) 194,762,041
------------- ------------- ------------ ------------ -------------
Total assets .............. $ 122,300,454 $ 110,623,318 $ 79,166,285 $ 68,754,723 $ 380,844,780
============= ============= ============ ============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
debt ...................... $ 220,452 $ 2,279,548(d) $ 2,500,000
Accounts payable ............. $ 3,274,176 8,657,611 11,931,787
Accrued expenses ............. 5,312,970 (9,432)(d) 5,303,538
------------- ------------- ------------ -------------
Total current liabilities . 8,587,146 8,878,063 2,270,116 19,735,325
Deferred tax liability ......... 716,424 716,424
Long-term debt:
New Credit Facility .......... 12,500,000(d) 12,500,000
Affiliated debt .............. 102,257,599 (102,257,599)(e)
Senior Notes ................. 75,000,000 125,000,000(d) $ 70,000,000(b) 270,000,000
Other indebtedness ........... 270,116 (270,116)(d)
Debt discount/premium ........ (7,498,463) 625,000(d) 7,498,463(c) (279,800)
(904,800)
------------- ------------- ------------ -------------- -------------
Total long-term debt ...... 67,501,537 102,527,715 35,597,285 76,593,663 282,220,200
Exchangeable preferred stock ... 34,921,240(d) 34,921,240
Mandatorily redeemable preferred
stock ....................... 25,198,630 25,198,630
Preferred stock with put
redemption option:
Series A ..................... 2,496,527 2,496,527
Series B ..................... 726,226 726,226
Common stock with put
redemption option ............ 1,971,851 1,971,851
Shareholders' equity:
Common Stock ................. 40,160 1 (1)(e) 9,387(a) 49,547
Additional paid-in capital ... 28,804,811 10,022,204 (10,022,204)(e) 11,025,136(a) 44,708,707
4,878,760(d)
Treasury stock ............... (1,491,155) (1,491,155)
Accumulated deficit .......... (11,535,279) (11,521,089) 11,521,089(e) (18,873,463)(c) (30,408,742)
------------- ------------- ------------ -------------- -------------
Total shareholders' equity 15,818,537 (1,498,884) 6,377,644(f) (7,838,940) 12,858,357
------------- ------------- ------------ -------------- -------------
Total liabilities and
shareholders' equity...... $ 122,300,454 $ 110,623,318 $ 79,166,285 $ 68,754,723 $ 380,844,780
============= ============= ============ ============== =============
</TABLE>
See notes to unaudited pro forma combined condensed financial statements
F-14
<PAGE> 23
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA COMBINED
PACKAGED ICE REDDY ICE ACQUISITIONS ADJUSTMENTS PRO FORMA
------------ --------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues..................... 28,980,564 $ 66,449,199 $78,771,460 $ 174,201,223
Cost of goods sold .......... 18,723,786 41,713,350 53,211,413 113,648,549
----------- ------------ ----------- ------------- ------------
Gross profit ................ 10,256,778 24,735,849 25,560,047 60,552,674
Operating expenses .......... 7,635,538 10,951,877 8,468,816 (155,186)(a) 24,212,783
(1,545,025)(b)
(446,484)(c)
(71,769)(d)
(499,436)(e)
(125,548)(f)
Depreciation &
amortization .............. 5,129,879 6,070,256 6,719,401 4,457,510(g) 22,377,046
Interest expense ............ 6,585,317 7,167,971 1,909,539 15,516,891(h) 31,179,718
Other income (expense) ...... 655,320 580,535 302,150 (155,186)(a) 1,382,819
----------- ------------ ----------- ------------- ------------
Income (loss) before taxes .. (8,438,636) 1,126,280 8,764,441 (17,286,139) (15,834,054)
Income taxes ................ -- 441,298 -- (441,298)(j) --
----------- ------------ ----------- ------------- ------------
Income (loss) from operations
before preferred
dividends ................. (8,438,636) 684,982 8,764,441 (16,844,841) (15,834,054)
Preferred dividends ......... 198,630 7,501,370(i) 7,700,000
Loss to common
shareholders............... (8,637,266) $(23,534,054)
=========== ============
Net loss per share .......... $ (2.40) $ (4.65)
=========== ============
Weighted average number of
common shares
outstanding ............... 3,600,109 1,458,035 5,058,144
=========== ============= ============
SUPPLEMENTARY
INFORMATION:
EBITDA(k)................... $ 3,276,560 $ 14,364,507 $17,393,381 $ 2,688,262 $ 37,722,710
=========== ============ =========== ============= ============
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
F-15
<PAGE> 24
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(a) For the acquisitions consummated by the Company subsequent to December 31,
1997 and for the Pending Acquisitions, the excess of total purchase price
over the allocation of fair value to the net assets will be recorded as
goodwill, which is calculated based on the following assumptions:
<TABLE>
<S> <C>
Value of Common Stock consideration ...................... $11,034,523
Cash consideration ....................................... 49,810,267
-----------
Total purchase price ..................................... 60,844,790(1)
Historical net asset value of acquired companies 15,211,198
-----------
Goodwill ................................................. $45,633,592(2)
===========
</TABLE>
- ----------
(1) Total purchase price includes all acquisitions closed during the period
January 1, 1998 through March 31, 1998, and all acquisitions considered by
the Company to be probable of closing in the second quarter of 1998. The
acquisitions are assumed to be funded through the issuance of the
$145,000,000 9-3/4% Senior Notes due February 1, 2005(the "Original Notes")
issued January 1998 (the "Original Offering"). Common stock consideration
of 938,772 shares is reflected at the Company's valuation of fair value of
between $10.00 and $13.00 per share.
(2) The Company has not completed an assessment of the fair value of the net
assets to be acquired for purposes of allocating the purchase price.
Accordingly, the excess of the purchase price over the net asset value of
the acquired companies has been allocated entirely to goodwill. To the
extent that such assessments indicate the fair value of fixed assets is in
excess of the net book value, this excess would be allocated to fixed
assets and reduce the goodwill calculated above.
(b) Net proceeds of the Original Offering are calculated as follows:
<TABLE>
<S> <C> <C>
Original Notes (net of $904,800 debt discount) .... $144,095,200
Less cash used for:
Debt issuance costs on Original Notes ........... 6,995,200
Historical debt assumed to be retired:
12% Senior Notes ............................. $ 75,000,000
Premium and other redemption costs on
12%Senior Notes .............................. 4,875,000
1998 acquisitions and Pending
Acquisitions ............................... 49,810,267
------------
Total ................................... 129,685,267
------------
Net proceeds ................................. $ 7,414,733
============
</TABLE>
(c) An extraordinary charge related to the retirement of the $75,000,000 12%
Senior Notes is comprised of the following:
<TABLE>
<S> <C>
Debt discount......................................... $ 7,498,463
Debt issuance costs .................................. 6,500,000
-----------
Total non-cash items ....................... 13,998,463
Premium and other redemption costs.................... 4,875,000
-----------
Total extraordinary charge ................. $18,873,463
===========
</TABLE>
(d) Cash used for the Transactions is calculated using the following
assumptions:
F-16
<PAGE> 25
<TABLE>
<S> <C>
Proceeds from issuance of the Notes (includes
premium of $625,000) ................... $ 125,625,000
New Credit Facility ....................... 15,000,000
Proceeds from sale of 13% Exchangeable
Preferred Stock ........................ 39,800,000(1)
-------------
Total Transactions proceeds ..... $ 180,425,000
Less cash used for:
Transactions cost ....................... 9,800,000
Reddy Acquisition ....................... 177,500,000
Repayment of existing Reddy Debt ........ 500,000
-------------
Total ........................... 187,800,000
-------------
Pro forma cash used ....................... $ (7,375,000)
=============
</TABLE>
- ----------
(1) In connection with issuance of the $40,000,000 Exchangeable Preferred Stock,
the Company issued 975,752 $0.01 restricted warrants with an estimated fair
value of $5.00 a warrant.
(e) The excess of total purchase price over the allocation of fair value to the
net assets for the Transactions will be recorded as goodwill, which is
calculated based on the following assumptions:
<TABLE>
<S> <C>
Reddy purchase price .............................. $ 177,500,000
Historical net assets (equity) of Reddy (1)(2) .... $ (1,498,884)
Less cash of Reddy Ice not acquired ............... (994,595)
Plus historical liabilities of Reddy Ice not
assumed ........................................ 102,257,599
Plus net assets of 1998 Reddy acquisitions ........ 1,719,129
-------------
Total assets acquired ................... 101,483,249
Plus net assets of pending acquisitions of
Reddy Ice ....................................... 1,250,000
-------------
Goodwill .......................................... $ 74,766,751
=============
</TABLE>
- ----------
(1) In recording the purchase price allocation, all historical equity balances
of the acquired company are eliminated.
(2) The Company has not completed an assessment of the fair value of the
net assets to be acquired for purposes of allocating the purchase price.
Accordingly, the excess of the purchase price over the net asset value of
the acquired companies has been allocated entirely to goodwill. To the
extent that such assessments indicate the fair value of fixed assets is in
excess of the net book value, this excess would be allocated to fixed assets
and reduce the goodwill calculated above. Assuming a weighted average
depreciable life for fixed assets of five years, every $500,000 allocated to
fixed assets rather than goodwill would increase pro forma 1997 depreciation
and amortization expense by $87,500.
(f) Does not reflect pro forma undeclared preferred dividends of an additional
$2,301,370 on the $25,000,000 10% Mandatorily Redeemable Preferred Stock
and $5,200,000 on the $40,000,000 13% Exchangeable Preferred Stock.
F-17
<PAGE> 26
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(a) Elimination of intercompany revenues/expenses with respect to equipment
leasing and service agreements between Packaged Ice and certain acquired
companies purchase during 1997.
(b) Elimination of compensation and related benefits for Prior Acquisitions'
owners that do not continue with the Company after the respective
acquisition dates.
(c) Elimination of costs associated with operations not acquired.
(d) Elimination of lease costs related for facilities not contemplated under the
respective acquisition agreements.
(e) Elimination of corporate overhead charges to acquired entities which are not
of a continuing nature with the Company's core business.
(f) Reduction of defined contribution plan matching costs to conform with the
Company's existing benefit plans.
(g) The excess of total purchase price for the Acquisitions over the allocation
of fair value to the net assets acquired or to be acquired has been recorded
as goodwill, which is calculated and amortized based on the following
assumptions:
<TABLE>
<S> <C>
Value of Common Stock consideration ............ $ 23,668,133
Cash consideration ............................. 293,174,361
------------
Total purchase price ........................... 316,842,494
Total net assets acquired (1) .................. 122,080,453
------------
Goodwill ....................................... 194,762,041
40 year estimated life ......................... 40
------------
Calculated annual amortization .... 4,869,051
Less historical amortization ................... 411,541
------------
Adjustment to amortization ..................... $ 4,457,510
</TABLE>
- ---------
(1) The Company has not completed an assessment of the fair value of the net
assets acquired or to be acquired for purposes of allocating the purchase
price. Accordingly, the excess of the purchase price over the net asset
value of the Acquisitions has been allocated entirely to goodwill. To the
extent that such assessments indicate the fair value of fixed assets is in
excess of the Acquisitions' net book value, this excess would be allocated
to fixed assets and reduce the goodwill calculated above. Assuming a
weighted average depreciable life for fixed assets of five years, every
$500,000 allocated to fixed assets, rather than goodwill, would increase
pro forma depreciation and amortization expense by $87,500.
F-18
<PAGE> 27
(h) Interest expense adjustments are as follows:
<TABLE>
<S> <C>
Senior Notes ................................................... $ 270,000,000
Interest rate .................................................. 9.75%
-------------
Pro forma interest expense on Senior Notes ..................... 26,325,000
New Credit Facility ............................................ $ 15,000,000
Interest rate .................................................. 8.50%
-------------
Pro forma interest expense on New Credit Facility .............. 1,275,000
-------------
Total pro forma interest expense ..................... 27,600,000
Less: Packaged Ice historical interest expense for
debt to be retired ................................ (6,585,317)
Reddy Ice historical interest expense ................. (7,167,971)
Acquisitions historical interest expense .............. (1,909,539)
Amortization of premium on Notes:
Total premium of $625,000
Calculated amortization, 7 year life .............. (89,286)
Plus: Additional interest on amortization of debt
issuance costs and debt discount on
Original Offering and Transactions:
Total debt issuance costs of $16,795,200
Calculated amortization, 7-year life .............. 2,399,314
Additional amortization of issue cost and
accretion on Exchangeable Preferred Stock:
Total issue cost and accretion $5,078,760
Calculated amortization, 4-year life .............. 1,269,690
-------------
Net adjustment to interest expense ............................. $ 15,516,891
=============
</TABLE>
(i) Dividends on the $25,000,000 10% Mandatory Redeemable Preferred Stock and
the $40,000,000 Exchangeable Preferred Stock. The dividend rate for the
Exchangeable Preferred Stock is to be set five days prior to closing based
on the greater of (I) market yield of the Original Notes plus 250 basis
points or (ii) 13%. For pro forma purposes, the rate is assumed to be 13%.
(j) The elimination of Reddy Ice's income tax expense assumes that the combined
Company was in a loss position, therefore the Company would not incur
income tax expense.
(k) EBITDA represents income from continuing operations before interest expense,
income taxes, depreciation and amortization. The Company has included
EBITDA (which is not a measure of financial performance under GAAP) because
it understands that it is one measure used by certain investors to
determine a company's ability to service its indebtedness. EBITDA should
not be considered by an investor as an alternative to net income, as an
indicator of the Company's operating performance or as an alternative cash
flow as a measure of liquidity.
F-19
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
2.1 Stock Purchase Agreement between Packaged Ice, Inc. and
Suiza Foods Corporation dated March 27, 1998.
2.2 Noncompetition Agreement by and among Packaged Ice, Inc.
and Suiza Foods Corporation dated April 30, 1998.
4.1 Indenture by and among Packaged Ice, Inc. as Issuer, the
Subsidiary Guarantors and U.S. Trust Company of Texas, N.A. as
Trustee dated as of January 28, 1998, Amended and Restated as
of April 30, 1998.
4.2 Purchase Agreement among the Company, its subsidiaries and
Jefferies & Co., Inc. as Initial Purchaser ($125,000,000
Senior Notes Offering) dated April 23, 1998.
4.3 Registration Rights Agreement by and among Packaged Ice, Inc.,
the Subsidiary Guarantors and Jefferies & Company, Inc. dated
January 28, 1998 and Amended and Restated as of April 30,
1998.
4.4 Securities Purchase Agreement dated April 30, 1998 by and
among Packaged Ice, Inc., Ares Leveraged Investment Fund,
L.P., and SV Capital Partners, L.P.
4.5 Warrant Agreement by and among Packaged Ice, Inc. and Ares
Leveraged Investment Fund, L.P. dated April 30, 1998.
4.6 Warrant Agreement by and among Packaged Ice, Inc. and SV
Capital Partners, L.P. dated April 30, 1998.
</TABLE>
<PAGE> 29
<TABLE>
<S> <C>
4.7 Exchange Offer Registration Rights Agreement dated April 30,
1998 by and among Packaged Ice, Inc., Ares Leveraged
Investment Fund, L.P. and SV Capital Partners, L.P.
4.8 Registration Rights Agreement dated April 30, 1998 by and
among Packaged Ice, Inc. and Ares Leveraged Investment Fund,
L.P. and SV Capital Partners, L.P.
4.9 Registration Rights Agreement Dated April 30, 1998 by and
among Packaged Ice, Inc. and SV Capital Partners, L.P.
4.10 Preferred Stock Series Designation of Packaged Ice, Inc. dated
April 29, 1998 providing for the issuance of 13% Exchangeable
Preferred Stock Series A.
4.11 Preferred Stock Series Designation of Packaged Ice, Inc. dated
April 29, 1998 providing for the issuance of 13% Exchangeable
Preferred Stock Series B.
4.12 Amended and Restated Preferred Stock Series Designation of
Packaged Ice, Inc. dated April 29, 1998 providing for the
issuance of 10% Exchangeable Preferred Stock originally issued
December 2, 1997.
4.13 Parallel Exit Agreement dated April 30, 1998 by and among
Packaged Ice, Inc., James F. Stuart, A.J. Lewis, III, Ares
Leveraged Investment Fund, L.P., and SV Capital Partners,
L.P.
10.1 Credit Agreement dated April 30, 1998 by and among Packaged
Ice, Inc. and Antares Leveraged Capital Corp., individually,
and as agent for The Other Financial Institutions.
10.2 Security Agreement dated April 30, 1998, by and among Packaged
Ice, Inc. and Antares Leveraged Capital Corp.
10.3 Security Agreement dated April 30, 1998, by and among Reddy
Ice Corporation, Golden Eagle Ice-Texas, Inc., Packaged Ice,
Southeast, Inc., Packaged Ice Leasing, Inc., Southco Ice,
Inc., Southwest Texas Packaged Ice, Inc., Southwestern Ice,
Inc., Southern Bottled Water Company, Inc., Mission Party Ice,
Inc. and Antares Leveraged Capital Corp.
10.4 Guaranty dated April 30, 1998 by and among Reddy Ice
Corporation, Mission Party Ice, Inc., Southwest Texas
Packaged Ice, Inc., Southwestern Ice, Inc., Golden Eagle
Ice-Texas, Inc., Packaged Ice Southeast, Inc., Packaged Ice
Leasing, Inc., Southern Bottled Water Company, Inc., and
Southco Ice, Inc.
</TABLE>
<PAGE> 30
<TABLE>
<S> <C>
99.1 Press Release issued by the Company and Suiza Foods, Inc. on
March 30, 1998, 9:19 am Eastern Time, announcing purchase of
Reddy Ice Corporation. (Filed as Exhibit 99.1 to the Company's
current report on Form 8-K dated April 1, 1998 and
incorporated herein by reference).
</TABLE>
<PAGE> 1
EXHIBIT 2.1
================================================================================
STOCK PURCHASE AGREEMENT
between
PACKAGED ICE, INC.
and
SUIZA FOODS CORPORATION
regarding the sale of all of the outstanding stock of Reddy Ice Corporation
dated as of March 27, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS AND RULES OF INTERPRETATION..............................................1
Section 1.1 Definitions................................................................1
Section 1.2 Accounting Terms...........................................................8
Section 1.3 Articles, Sections, Exhibits and Schedules.................................8
Section 1.4 Attorneys' Fees............................................................8
Section 1.5 Breach.....................................................................8
Section 1.6 Monetary Thresholds........................................................8
Section 1.7 Drafting...................................................................9
Section 1.8 Headings...................................................................9
Section 1.9 Include....................................................................9
Section 1.10 Or........................................................................9
Section 1.11 Plural and Singular Words.................................................9
Section 1.12 Predecessors..............................................................9
Section 1.13 Pronouns..................................................................9
ARTICLE II. PURCHASE PRICE AND RELATED TERMS....................................................9
Section 2.1 Purchase of the Shares.....................................................9
Section 2.2 Purchase Price.............................................................9
Section 2.3 Payment of Preliminary Purchase Price.....................................10
Section 2.4 Purchase Price Adjustment.................................................10
ARTICLE III. CLOSING...........................................................................11
Section 3.1 Closing...................................................................11
Section 3.2 Deliveries by Seller......................................................11
Section 3.3 Deliveries by Purchaser...................................................12
Section 3.4 Simultaneous Deliveries...................................................13
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER...........................................13
Section 4.1 Organization; Good Standing; Delivery of Charter Documents................13
Section 4.2 Power and Authority.......................................................13
Section 4.3 Capitalization............................................................13
Section 4.4 No Conflict; Seller Consents..............................................14
Section 4.5 Financial Statements......................................................14
Section 4.6 No Funded Indebtedness or Undisclosed Liabilities.........................15
Section 4.7 Absence of Certain Changes................................................15
Section 4.8 Sufficiency and Condition of and Title to Assets..........................15
Section 4.9 Accounts Receivable.......................................................15
Section 4.10 Inventory................................................................15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 4.11 Real Property............................................................16
Section 4.12 Personal Property........................................................17
Section 4.13 Compliance with Laws.....................................................17
Section 4.14 Insurance................................................................17
Section 4.15 Contracts................................................................18
Section 4.16 Litigation; Orders.......................................................18
Section 4.17 Environmental Matters....................................................18
Section 4.18 Permits..................................................................19
Section 4.19 Intangible Assets........................................................20
Section 4.20 Employees................................................................20
Section 4.21 Employee Benefits........................................................21
Section 4.22 Taxes....................................................................23
Section 4.23 Bank Accounts; Powers of Attorney........................................25
Section 4.24 Suppliers and Customers..................................................25
Section 4.25 Affiliated Transactions..................................................25
Section 4.26 Books and Records........................................................25
Section 4.27 Capital Projects.........................................................25
Section 4.28 Brokers..................................................................26
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................26
Section 5.1 Organization; Good Standing; Delivery of Charter Documents................26
Section 5.2 Power and Authority.......................................................26
Section 5.3 Authorization; Execution and Validity.....................................26
Section 5.4 No Conflict; Purchaser Consents...........................................26
Section 5.5 Brokers...................................................................27
Section 5.6 Financing.................................................................27
ARTICLE VI. COVENANTS OF SELLER................................................................27
Section 6.1 Cooperation by Seller.....................................................27
Section 6.2 Pre-Closing Access to Information.........................................27
Section 6.3 Conduct of Business.......................................................28
Section 6.4 Supplements to Schedules..................................................30
Section 6.5 Standstill................................................................30
Section 6.6 Discharge of Encumbrances.................................................30
Section 6.7 Resignations..............................................................30
ARTICLE VII. COVENANTS OF PURCHASER............................................................30
Section 7.1 Cooperation by Purchaser..................................................30
Section 7.2 Pre-Closing Access to Information.........................................31
ARTICLE VIII. MUTUAL COVENANTS.................................................................31
Section 8.1 Governmental Consents.....................................................31
Section 8.2 Consents to Assign Leases and Contracts...................................32
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Section 8.3 Books and Records.........................................................32
Section 8.4 Further Assurances........................................................33
Section 8.5 Supplemental Agreements...................................................33
Section 8.6 Termination of Related Party Contracts....................................33
Section 8.7 Employee Plans............................................................33
ARTICLE IX. CONDITIONS PRECEDENT TO CLOSING....................................................34
Section 9.1 Conditions Precedent to Purchaser's Obligations...........................34
Section 9.2 Conditions Precedent to Seller's Obligations..............................35
Section 9.3 If Conditions Not Satisfied...............................................36
ARTICLE X. TERMINATION PRIOR TO CLOSING........................................................36
Section 10.1 Termination of Agreement.................................................36
Section 10.2 Procedure Upon Termination...............................................37
Section 10.3 Liquidated Damages.......................................................37
ARTICLE XI. TAXES..............................................................................38
Section 11.1 Section 338 Election.....................................................38
Section 11.3 Apportionment of Taxable Income..........................................39
Section 11.4 Preparation and Filing of Income Tax Returns.............................39
Section 11.5 Payment of Income Taxes..................................................39
Section 11.6 Section 338 Election - Payment of Taxes..................................39
Section 11.7 Audit....................................................................39
Section 11.8 Refunds..................................................................40
Section 11.9 Allocation Statement.....................................................40
ARTICLE XII. INDEMNIFICATION...................................................................40
Section 12.1 Survival of Representations and Warranties...............................40
Section 12.3 Indemnification of Seller................................................41
Section 12.5 Indemnification Procedure................................................42
Section 12.6 Sole and Exclusive Remedy................................................43
Section 12.7 Notice of Breach.........................................................43
Section 12.8 Discovery of Breach......................................................43
Section 12.9 Notification of Breach...................................................43
Section 12.10 Negligence and Strict Liability.........................................43
ARTICLE XIII. MEDIATION AND REMEDIES...........................................................43
Section 13.1 Mediation Meeting........................................................43
Section 13.2 Exclusive Jurisdiction...................................................44
Section 13.3 Expenses.................................................................44
ARTICLE XIV. MISCELLANEOUS.....................................................................44
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Section 14.1 Amendment................................................................44
Section 14.2 Counterparts.............................................................44
Section 14.3 Entire Agreement.........................................................44
Section 14.4 Expenses.................................................................44
Section 14.5 Governing Law............................................................44
Section 14.6 No Assignment............................................................45
Section 14.7 No Third Party Beneficiaries.............................................45
Section 14.8 Notices..................................................................45
Section 14.9 Public Announcements.....................................................46
Section 14.10 Representation by Legal Counsel.........................................46
Section 14.11 Schedules...............................................................46
Section 14.12 Severability............................................................46
Section 14.13 Specific Performance....................................................46
Section 14.14 Successors..............................................................47
Section 14.15 Time of the Essence.....................................................47
Section 14.16 Waiver..................................................................47
</TABLE>
<PAGE> 6
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of March 27,
1998 (the "SIGNING DATE"), is made by and between Suiza Foods Corporation, a
Delaware corporation ("SELLER"), and Packaged Ice, Inc., a Texas corporation
("PURCHASER"). Seller and Purchaser are sometimes together referred to as the
"PARTIES," and individually referred to as a "PARTY."
PRELIMINARY STATEMENTS
A. Seller owns 100 shares of the common stock, par value $.01 per share
(the "Common Stock") of Reddy Ice Corporation, a Delaware corporation (the
"Company").
B. Such shares of Common Stock (the "Shares") constitute all of the
outstanding shares of the Company's capital stock.
C. Seller desires to sell and assign the Shares to Purchaser, and
Purchaser desires to purchase the Shares on the terms and subject to the
conditions set forth in this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties set forth in this
Agreement and for other good, valid and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS AND RULES OF INTERPRETATION
Section 1.1 Definitions. Unless the context otherwise requires, the
terms defined in this Article I shall have the meanings specified below for all
purposes of this Agreement:
(a) "ACCOUNTS RECEIVABLE" shall have the meaning set forth in
Section 4.9.
(b) "ACTION" means any action, arbitration proceeding, cause
of action, charge, counterclaim, cross claim, inquiry, investigation, legal
action, litigation, Order, proceeding, or suit.
(c) "AGREEMENT" shall have the meaning set forth in the first
paragraph.
(d) "ADJUSTMENT STATEMENT" shall have the meaning set forth in
Section 2.4(a).
(e) "ANNUAL FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 4.5(a).
<PAGE> 7
(f) "AUDITED FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 6.2.
(g) "BALANCE SHEET DATE" shall have the meaning set forth in
Section 4.5(a).
(h) "BANK ACCOUNTS" shall have the meaning set forth in
Section 4.23.
(i) "BOOKS AND RECORDS" shall mean all the books and records
maintained by or for the Company, including all accounting records, minute
books, stock records, computerized records and storage media and the software
used in connection therewith.
(j) "CHARTER DOCUMENTS" shall mean (i) in the case of a
corporation, its articles or certificate of incorporation and its bylaws, (ii)
in the case of a partnership, its partnership certificate and its partnership
agreement, and (iii) in the case of any other Person, its organic and governing
documents; in each case as such document has been amended or supplemented from
time to time.
(k) "CLAIM" shall mean any claim, demand, assessment, fine,
penalty, Liability or Action.
(l) "CLOSING" shall have the meaning set forth in Section 3.1.
(m) "CLOSING BALANCE SHEET" shall have the meaning set forth
in Section 2.4(a).
(n) "CLOSING DATE" shall have the meaning set forth in Section
3.1.
(o) "CLOSING DATE CAPITAL LEASES" shall have the meaning set
forth on Schedule 2.2 hereto.
(p) "CLOSING DATE FUNDED INDEBTEDNESS" shall have the meaning
set forth on Schedule 2.2 hereto.
(q) "CLOSING DATE WORKING CAPITAL" shall have the meaning set
forth on Schedule 2.2 hereto.
(r) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(s) "COMPANY CONTROLLED GROUP MEMBER" shall mean a member of a
group of entities or trades or businesses that is aggregated with and includes
the Company under Code Section 414(b), (c), (m) or (o) and the Treasury
Regulations thereunder or under Section 4001 of ERISA.
(t) "COMPANY CONTROLLED GROUP PLAN" shall mean a Company Plan
and any other Plan maintained by or contributed to, at any time within six years
prior to the Closing Date, by any Company Controlled Group Member.
2
<PAGE> 8
(u) "COMPANY PLANS" shall mean all Plans maintained by or
contributed to by the Company or which cover any employees, former employees,
retirees, directors or independent contractors of the Company.
(v) "CONFIDENTIALITY AGREEMENT" shall have the meaning set
forth in Section 6.2.
(w) "CONSENT" shall mean a consent, approval, order,
authorization or waiver from, notice to or declaration, registration or filing
with any Person.
(x) "CONTRACT" shall mean, with respect to a Person, any oral
or written agreement, arrangement, commitment, contract, deed of trust,
franchise (other than a franchise issued by a Governmental Authority),
indenture, instrument, lease, license, mortgage, promise, undertaking, or other
document or obligation to which such Person is a party, under which such Person
possesses any rights or owes any obligations, or by which any of such Person's
assets are bound.
(y) "DAMAGES" shall have the meaning set forth in Section
12.2.
(z) "ENCUMBERED INSTRUMENT" shall mean any Contract to which
the Company is a party, Real Property Lease, Personal Property Lease or Permit,
in each case, that is listed in Section 4.4(d) of Seller's Disclosure Letter and
any other Contract, lease or Permit with respect to which, to the knowledge of
Seller or the Company, the execution, delivery and performance by Seller or the
Company of this Agreement or any other Transaction Document to which Seller or
the Company is a party will result in a breach or require a Consent.
(aa) "ENCUMBRANCE" shall mean any title defect or objection,
mortgage, lien, deed of trust, equity, judgment, claim, restrictive covenant,
use restriction, charge, pledge, security interest or other encumbrance of any
nature whatsoever, including all leases, chattel mortgages, conditional sales
contracts, collateral security arrangements and other title or interest
retention arrangements.
(bb) ENVIRONMENTAL CLAIM" shall mean a Claim under any
Environmental Law or with respect to the presence, use, release, manufacture,
generation, storage, transportation or disposal of any Hazardous Materials.
(cc) "ENVIRONMENTAL LAW" shall mean (i) the Clean Air Act (42
U.S.C. Section 7401 et seq.), (ii) the Clean Water Act (33 U.S.C. Section 1251
et seq.), (iii) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act of
1986 (42 U.S.C. Section 9601 et seq.), (iv) the Federal Water Pollution Control
Act (33 U.S.C. Section 1251 et seq.), (v) the Hazardous Materials Transportation
Act (49 U.S.C. Section 5101 et seq.), (vi) the National Environmental Policy Act
(42 U.S.C. Section 4321 et seq.), (vii) the Oil Pollution Act of 1990 (33 U.S.C.
Section 2701 et seq.), (viii) the Resource Conservation and Recovery Act, as
amended by the Hazardous and Solid Waste Amendments of 1984 (42 U.S.C. Section
6901 et seq.), (ix) the Safe Drinking Water Act (42 U.S.C. Section 300f et
seq.), (x) the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.),
(xi) any state or local law, ordinance, regulation, or statute
3
<PAGE> 9
regulating any
activity or substance regulated by any of the foregoing statutes, or (xii) any
other federal, state or local, law, ordinance, regulation, or statute
prohibiting, regulating, or restricting the disposal, generation, handling,
placement, recycling, release, storage, or treatment of any contaminant, liquid,
mass, material, matter, pollutant, solid, substance, or waste classified or
considered to be hazardous or toxic to human health or the environment or
otherwise related to environmental protection or health and safety.
(dd) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(ee) "FUNDED INDEBTEDNESS" shall have the meaning set forth on
Schedule 2.2 hereto.
(ff) "GAAP" shall mean generally accepted accounting
principles in effect in the United States of America as of the Signing Date.
(gg) "GOVERNMENTAL AUTHORITY" shall mean any federal, state,
local or other governmental agency, department, branch, commission, board,
bureau, court, instrumentality or body.
(hh) "HAZARDOUS MATERIAL" shall mean (i) any contaminant,
liquid, mass, material, matter, pollutant, solid, substance, or waste for which
any Environmental Law limits, prohibits, or regulates its disposal, generation,
handling, placement, recycling, release, storage, or treatment, (ii) any
carcinogenic, corrosive, explosive, flammable, infectious, mutagenic,
radioactive, or toxic substance, (iii) any diesel fuel, gasoline, or other
petroleum product in an unconfined manner, (iv) any substance that contains
polychlorinated biphenyls, (v) any substance that contains asbestos, (vi) any
substance that contains urea formaldehyde foam installation, (vii) any substance
that constitutes a nuisance upon any property, or (viii) any substance that
imposes a hazard to the health or safety of any individual.
(ii) "HSR ACT" shall have the meaning set forth in Section
4.4.
(jj) "INDEMNITEE" shall have the meaning set forth in Section
12.5(a).
(kk) "INDEMNITOR" shall have the meaning set forth in Section
12.5(a).
(ll) "INSURANCE POLICIES" shall have the meaning set forth in
Section 4.14.
(mm) "INTANGIBLE ASSET" shall mean any patent, trademark,
trademark license, computer software, trade name, masthead, brand name, slogan,
copyright, reprint right, license, process, invention, know-how, formula, trade
secret and other intangible asset that constitutes intellectual property,
together with any pending application, continuation-in-part or extension
therefor.
(nn) "INTERIM BALANCE SHEET" shall have the meaning set forth
in Section 4.5(b).
4
<PAGE> 10
(oo) "INTERIM FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 4.5(b).
(pp) "INTERIM PERIOD CAPITAL CONTRIBUTION" shall have the
meaning set forth in Section 2.2(a).
(qq) "INVENTORY" shall have the meaning set forth in Section
4.10.
(rr) "IRS" shall have the meaning set forth in Section
4.22(e).
(ss) "KNOWLEDGE OF SELLER OR THE COMPANY" shall mean the
actual knowledge as of the date that a specific representation or warranty is
made or deemed made of William Brick, Bill Daniel, Graham Davis, Nancy Green,
John Madden, Dave Miller, Jr., John Noble or James Weaver.
(tt) "LAW" shall mean any applicable code, statute, law,
common law, rule, regulation, order, ordinance, judgment, decree, order, writ or
injunction of any Governmental Authority.
(uu) "LAW AFFECTING CREDITORS' RIGHTS" shall mean any
bankruptcy, fraudulent conveyance or transfer, insolvency, moratorium,
reorganization, or other law affecting the enforcement of creditors' rights
generally, and any general principles of equity.
(vv) "LIABILITY" shall mean, with respect to any Person, any
liability or obligation of such Person of any kind, character or description,
whether known or unknown, absolute or contingent, direct or indirect, accrued or
unaccrued, liquidated or unliquidated, secured or unsecured, joint or several,
due under a guarantee of another Person's liability, due or to become due,
vested or unvested, executory, determined or determinable and whether or not the
same is required to be accrued on such Person's financial statements.
(ww) "MATERIAL ADVERSE CHANGE" shall mean, with respect to a
Person, that such Person has (i) breached a Material Contract, (ii) incurred a
Claim or become a party to an Action that could reasonably be expected to have a
material and detrimental effect upon it, (iii) suffered a Material Adverse
Effect, or (iv) violated any Law or Order to which it or any of its assets is
subject or bound that could reasonably be expected to have a Material Adverse
Effect.
(xx) "MATERIAL ADVERSE EFFECT" shall mean, with respect to a
Person, the occurrence of an event or the existence of a circumstance that has a
material adverse effect on such Person's assets, business, results of
operations, financial condition or liabilities.
(yy) "MATERIAL CONTRACTS" shall have the meaning set forth in
Section 4.15.
(zz) "MATERIAL EMPLOYEES" shall have the meaning set forth in
Section 4.20(a).
(aaa) "MATERIAL INTANGIBLE ASSETS" shall mean any of the
following Intangible Assets owned or licensed for use by the Company: a
registered trademark, service mark or application therefor; an unregistered
trademark or service mark owned or used by the Company in
5
<PAGE> 11
connection with the sale of more than 1,000,000 bags of ice in any 12 month
period; a patent or patent application; or any other Intangible Asset material
to the Company.
(bbb) "MATERIAL PERMITS" shall have the meaning set forth in
Section 4.18.
(ccc) "MEDIATION MEETING" shall have the meaning set forth in
Section 13.1.
(ddd) "OBJECTION NOTICE" shall have the meaning set forth in
Section 2.4(b).
(eee) "ORDER" shall mean any consent decree, decree,
determination, injunction, judgment, order, or writ of any arbitrator or
Governmental Authority.
(fff) "OWNED REAL PROPERTY" shall have the meaning set forth
in Section 4.11(a).
(ggg) "OUTSIDE DATE" shall have the meaning set forth in
Section 10.1(b).
(hhh) "PARTY" shall have the meaning set forth in the first
paragraph.
(iii) "PENSION BENEFIT PLAN" shall mean (i) an "employee
pension benefit plan" as defined in Section 3(2) of ERISA, and (ii) a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
(jjj) "PERMIT" shall mean any license, approval, certificate,
franchise, registration, permit or authorization issuable by any Governmental
Authority.
(kkk) "PERMITTED ENCUMBRANCE" shall mean any Encumbrance
directly related to (i) Taxes that are not yet due and payable or Taxes that are
being contested in good faith by an appropriate proceeding, and in each case as
to which adequate reserves have been established in accordance with GAAP, (ii)
Encumbrances shown on the Interim Balance Sheet as securing specified Claims
with respect to which no breach or default exists, (iii) workers', repairmen's
and similar Encumbrances imposed by Law that have been incurred in the ordinary
course of business, (iv) retention of title agreements with suppliers entered
into in the ordinary course of business, (v) the rights of others to customer
deposits and (vi) other Encumbrances, such as covenants, easements,
encroachments, restrictive covenants, rights-of-way and servitudes, that do not,
individually or in the aggregate, substantially impair or materially adversely
affect the use to which the applicable property is currently subject or
materially detract from the value of the applicable property excepting (i) any
liens which secure the payment of borrowed monies and (ii) any liens arising by,
through, or under Seller or the Company.
(lll) "PERSON" shall mean any association, bank, business
trust, corporation, estate, general partnership, Governmental Authority,
individual, joint stock company, joint venture, labor union, limited liability
company, limited partnership, non-profit corporation, professional association,
professional corporation, trust, or any other organization or entity.
(mmm) "PERSONAL PROPERTY LEASES" shall have the meaning set
forth in Section 4.12(b).
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(nnn) "PLAN" shall mean any bonus, deferred compensation,
incentive compensation, stock purchase, restricted stock, stock option,
severance, hospitalization or other medical, life or other insurance, employee
welfare, supplemental unemployment benefit, profit-sharing, pension or
retirement plan, program, agreement or arrangement or any other employee benefit
plan, program, agreement or arrangement, including any such plan, program,
agreement or arrangement covering retirees or former employees and including
without limitation any "employee pension benefit plan" and any "employee welfare
benefit plan" as those terms are defined in Section 3 of ERISA.
(ooo) "PRELIMINARY PURCHASE PRICE" shall have the meaning set
forth in Section 2.2.
(ppp) "PURCHASE PRICE" shall have the meaning set forth in
Section 2.2(a).
(qqq) "PURCHASER" shall have the meaning set forth in the
first paragraph.
(rrr) "PURCHASER DEFAULT" shall have the meaning set forth in
Section 10.1(e).
(sss) "REAL PROPERTY" shall mean the Owned Real Property and
the Leased Real Property.
(ttt) "REAL PROPERTY LEASES" shall have the meaning set forth
in Section 4.11(b).
(uuu) "RELATED PARTY CONTRACT" means a Contract between the
Company and any officer, director, stockholder or affiliate of the Company other
than Plans.
(vvv) "REPRESENTATIVES" shall mean, with respect to a Person,
such Person's directors, employees, officers, agents, accountants, affiliates,
consultants, investment bankers, attorneys, lenders, and shareholders.
(www) "REQUIRED CONSENT" shall have the meaning set forth in
Section 8.2(b).
(xxx) "SECTION 338 ELECTION" shall have the meaning set forth
in Section 11.1.
(yyy) "SECTION 338 GROSS-UP AMOUNT" shall mean the amount that
causes the net after-Tax proceeds to Seller from the sale of the Shares, taking
into account all increases in Tax liabilities resulting from (i) the Section 338
Election (including, without limitation, federal income Taxes, all state and
local Taxes of any description, any motor vehicle or real property transfer
Taxes, and any sales and use Taxes resulting from the Section 338 Election) and
(ii) the increase in the Purchase Price resulting from the addition to it of the
Section 338 Gross-up Amount, to equal what the net after-Tax proceeds to Seller
from the sale of the Shares would have been if no Section 338 Election had been
made.
(zzz) "SELLER" shall have the meaning set forth in the first
paragraph.
(aaaa) "SELLER DEFAULT" shall have the meaning set forth in
Section 10.1(d).
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(bbbb) "SELLER'S RELEASE" shall have the meaning set forth in
Section 3.2(b).
(cccc) "SIGNING DATE" shall have the meaning set forth in the
first paragraph.
(dddd) "TAX" shall mean any assessment, charge, duty, fee,
impost, levy, tariff, or tax of any nature whatsoever imposed by any
Governmental Authority or payable pursuant to any tax sharing agreement,
including any income, payroll, withholding, excise, gift, alternative minimum,
capital gain, added value, social security, sales, use, real and personal
property, use and occupancy, business and occupation, mercantile, real estate,
capital stock, and franchise tax or charge, together with any related interest,
penalties or additions thereon.
(eeee) "TAXING AUTHORITIES" shall have the meaning set forth
in Section 4.22(e).
(ffff) "TERMINATION AGREEMENTS" shall have the meaning set
forth in Section 8.6.
(gggg) "TERMINATION FEE" shall have the meaning set forth in
Section 10.3.
(hhhh) "TRANSACTION DOCUMENTS" shall have the meaning set
forth in Section 4.2.
(iiii) "YEAR-END BALANCE SHEET" shall have the meaning set
forth in Section 4.5(a).
Section 1.2 Accounting Terms. Except as otherwise provided in this
Agreement, all accounting terms defined in this Agreement, whether defined in
this Article or otherwise, shall be construed in accordance with GAAP on a
consolidated basis.
Section 1.3 Articles, Sections, Exhibits and Schedules. Except as
specifically stated otherwise, references to Articles, Sections, Exhibits and
Schedules refer to the Articles, Sections, Exhibits and Schedules of this
Agreement.
Section 1.4 Attorneys' Fees. Whenever this Agreement refers to a
Person's "attorneys' fees and expenses," such reference also shall include any
reasonable fees and expenses of accountants, experts, investigators, and other
professional advisors whose services such Person's attorney considered advisable
in connection with the prosecution or defense of the particular matter.
Section 1.5 Breach. The term "breach" with respect to any contract or
instrument means any breach or violation of, or default under, such contract or
instrument, any conflict with another contract or instrument or any emergence of
a right of another party to such contract or instrument to accelerate, cancel,
modify or terminate such contract or instrument, including any such breach,
violation, default, conflict, or right that will arise after notice or lapse of
time.
Section 1.6 Monetary Thresholds. The establishment of any monetary
thresholds shall not create a materiality standard under this Agreement
except as expressly provided.
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Section 1.7 Drafting. Neither this Agreement nor any provision
contained in this Agreement shall be interpreted in favor of or against either
Party because such Party or its legal counsel drafted this Agreement or such
provision. No prior draft of this Agreement or any provision contained in this
Agreement shall be used when interpreting this Agreement or its provisions.
Section 1.8 Headings. Article and section headings are used in this
Agreement only as a matter of convenience and shall not have any effect upon the
construction or interpretation of this Agreement.
Section 1.9 Include. The term "include" or any derivative of such term
does not mean that the items following such term are the only types of such
items.
Section 1.10 Or. The term "or" shall not be interpreted as excluding
any of the items described. --
Section 1.11 Plural and Singular Words. Whenever the plural form of a
word is used in this Agreement, that word shall include the singular form of
that word. Whenever the singular form of a word is used in this Agreement, that
word shall include the plural form of that word.
Section 1.12 Predecessors. Any of Seller's representations and
warranties concerning any Claim against the Company, any Liability of the
Company, or any violation of Law by the Company shall include any Claims,
Liabilities and violations with respect to each predecessor of the Company.
Section 1.13 Pronouns. Whenever a pronoun of a particular gender is
used in this Agreement, if appropriate that pronoun also shall refer to the
other gender and the neuter. Whenever a neuter pronoun is used in this
Agreement, if appropriate that pronoun also shall refer to the masculine and
feminine gender.
ARTICLE II.
PURCHASE PRICE AND RELATED TERMS
Section 2.1 Purchase of the Shares. At the Closing, Purchaser shall
purchase the Shares from Seller, and Seller shall sell the Shares to Purchaser,
free and clear of any Encumbrance.
Section 2.2 Purchase Price.
(a) Purchase Price. The total consideration for the Shares
(the "PURCHASE PRICE") shall be (a) the sum of (i) $172,500,000, (ii) the
amount, if any, of cash contributed by Seller to the Company after the Signing
Date and prior to the Closing Date that is used by the Company prior to the
Closing Date to (x) pay the purchase price and related reasonable accounting,
legal and consulting expenses for the acquisitions described in Schedule 2.2,
(y) pay for the capital project described in Schedule 2.2, and (z) pay, as
reasonably requested by Purchaser, for up to $50,000 of costs facilitating the
integration of the operations of Purchaser and the Company (the "INTERIM PERIOD
CAPITAL CONTRIBUTION"), (iii) the amount, if any, by which Closing Date Working
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Capital exceeds $0, and (iv) the amount of the Closing Date reserve established
consistent with past practice relating to Claims for which insurance coverage is
provided under the automobile bodily injury and property damage, general
liability, workers compensation indemnity and workers compensation medical
policies listed in Schedule 12.2(f), minus (b) the sum of (i) the amount, if
any, of Closing Date Funded Indebtedness, (ii) the amount, if any, of Closing
Date Capital Leases, and (iii) the amount, if any, by which Closing Date Working
Capital is less than $0.
(b) Estimate of Purchase Price. No later than two business
days prior to the Closing Date, Seller shall cause Deloitte & Touche, LLP to
prepare and deliver to Purchaser, based on the Company's books and records
maintained in accordance with past practices, an estimate of what each component
of the Purchase Price described in Section 2.2(a) will be on the Closing Date
and based thereon an estimate of the Purchase Price (the "PRELIMINARY PURCHASE
PRICE").
Section 2.3 Payment of Preliminary Purchase Price. At the Closing,
Purchaser shall pay to Seller an amount equal to the Preliminary Purchase Price
by wire transfer of immediately available funds to the bank account set forth on
a notice given by Seller to Purchaser not later than three business days prior
to the Closing Date.
Section 2.4 Purchase Price Adjustment.
(a) Closing Balance Sheet. As soon as reasonably practicable,
but not later than 90 days after the Closing Date, Purchaser shall prepare and
cause Deloitte & Touche, LLP to audit, and shall deliver to Seller a (i) balance
sheet of the Company prepared as of the close of business on the Closing Date
(the "CLOSING BALANCE SHEET") and (b) calculations of the components of the
Purchase Price described in Section 2.2(a) and the Purchase Price based thereon
(the work papers showing such calculation, the "ADJUSTMENT STATEMENT"). The
Closing Balance Sheet shall be prepared in accordance with GAAP; provided,
however, that the Closing Balance Sheet shall not be required to have notes to
the financial statements as required by GAAP.
(b) Review of Closing Date Balance Sheet and Adjustment
Statement. As soon as practicable, but not later than 120 days after the Closing
Date, Seller or Purchaser shall inform the other Party in writing of any
objection to the Adjustment Statement, which objection, if any, shall set forth
in reasonable detail the objecting Party's objections and the basis for those
objections (the "OBJECTION NOTICE"). If a Party so objects and the Parties do
not resolve such objections on a mutually agreeable basis within 150 days after
the Closing Date, then the disagreement shall be resolved as soon as practicable
thereafter, but not later than 180 after the Closing Date, by one of the largest
four national accounting firms, which accounting firm shall be jointly selected
by the Parties. The Parties acknowledge that the scope of such accounting firm's
work shall be limited to resolving the objections set forth in the Objection
Notice. The decision of such accounting firm shall be final and binding upon the
Parties. The Closing Balance Sheet, the Purchase Price components and the
Purchase Price based thereon (in each case, as adjusted, if applicable, by the
agreement of the Parties or the decision of the accounting firm), shall be
deemed final upon the earlier to occur of (i) the agreement of the Parties, (ii)
the decision of the accounting firm, or (iii) the failure of either Party to
deliver an Objection Notice to the other Party within 120 days after the Closing
Date. Each Party shall bear the fees, costs and expenses of its own accountants
and shall permit each other and each other's accountants
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reasonable access to the books and records necessary to perform the analysis
contemplated by this Section. The Parties shall share equally the fees, costs
and expenses of the accounting firm selected by the Parties to resolve any
disagreements regarding the Objection Notice, provided, however, that if only
one Party shall have objected and the decision of such accounting firm does not
result in an adjustment of more than $50,000 to the Purchase Price in favor of
the objecting Party, such Party shall pay all of the fees, costs and expenses of
such accounting firm.
(c) Purchase Price Adjustment; Procedure. The amount of
adjustment necessary to make the Preliminary Purchase Price paid by Purchaser to
Seller at the Closing equal to the Purchase Price as determined in accordance
with this Section 2.4, together with interest thereon from the Closing Date to
the date of payment calculated at a rate equal to the prime rate of The Chase
Manhattan Bank on the Closing Date shall be paid to the Party to whom it is owed
by wire transfer of immediately available funds within five business days after
the date on which the Purchase Price is deemed final in accordance with Section
2.4(b).
ARTICLE III.
CLOSING
Section 3.1 Closing. The consummation of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of Akin, Gump,
Strauss, Hauer & Feld, L.L.P., 1700 Pacific Avenue, Suite 4100, Dallas, Texas
75201, on the first business day following the date on which all of the
conditions contained in Article IX, to the extent not waived, are satisfied. The
Closing may be postponed to such other date as the Parties may mutually agree.
The date on which the Closing actually occurs is hereinafter referred to as the
"CLOSING DATE."
Section 3.2 Deliveries by Seller. At the Closing, Seller shall deliver
to Purchaser the following:
(a) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Purchaser;
(b) release in the form of Exhibit 3.2(b) executed by Seller
("SELLER'S RELEASE");
(c) noncompetition agreement in the form of Exhibit 3.2(c),
executed by Seller (the "NONCOMPETITION AGREEMENT"), in form and substance
satisfactory to Purchaser;
(d) [reserved];
(e) documents evidencing the release of all Encumbrances,
other than Permitted Encumbrances, on the Company's assets, and documents
evidencing the release of all Encumbrances on the Shares;
(f) documents evidencing the termination of all guarantees by
the Company of any indebtedness or obligations of Seller or any of Seller's
affiliates;
(g) the Termination Agreements for Related Party Contracts;
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(h) the officers' certificates referred to in Sections 9.1(d),
9.1(e) and 9.1(f);
(i) an opinion of Hughes & Luce, L.L.P., counsel to Seller, in
substantially the form of Exhibit 3.2(h) attached hereto, and the consent of
Hughes & Luce, L.L.P. stating that Purchaser's lenders and equity investors
providing financing for the transactions contemplated by this Agreement may rely
on such opinion;
(j) executed counterparts of all Required Consents;
(k) possession of all Books and Records;
(l) resignations of all directors of the Company and those
officers of the Company specified in writing by Purchaser to Seller concurrently
with the execution of this Agreement;
(m) a receipt for the payment of the Preliminary Purchase
Price;
(n) an affidavit executed by an authorized officer of Seller
containing Seller's Employer Identification Number and stating that Seller is
not a "foreign person" under Sections 1445 and 7701 of the Code;
(o) each of the agreements referred to in Section 8.5, each
executed by the appropriate party; and
(p) all other previously undelivered documents, instruments
and writings required to be delivered by Seller to Purchaser at or prior to the
Closing pursuant to this Agreement.
Section 3.3 Deliveries by Purchaser. At the Closing, Purchaser shall
deliver to Seller the following:
(a) federal or other immediately available funds by wire
transfer to Seller in an amount equal to the Preliminary Purchase Price;
(b) the Noncompetition Agreement;
(c) the officer's certificates referred to in Sections 9.2(c)
and 9.2(d);
(d) an opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
counsel to Purchaser, in substantially the form of Exhibit 3.3(d) attached
hereto;
(e) an affidavit executed by an authorized officer of
Purchaser containing Purchaser's Employer Identification Number and stating that
Purchaser is not a "foreign person" under Sections 1445 and 7701 of the Code;
and
(f) all other previously undelivered documents, instruments
and writings required to be delivered by Purchaser to Seller at or prior to the
Closing pursuant to this Agreement.
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Section 3.4 Simultaneous Deliveries. The delivery of the documents
required to be delivered at the Closing pursuant to this Agreement shall be
deemed to occur simultaneously. No delivery shall be effective until each
Party has received or waived receipt of all the documents that this
Agreement entitles such Party to receive.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth with reasonable specificity in a corresponding
numbered section of the Disclosure Letter delivered by Seller to Purchaser prior
to the execution of this Agreement ("SELLER'S DISCLOSURE LETTER"), Seller
represents and warrants to Purchaser as follows:
Section 4.1 Organization; Good Standing; Delivery of Charter Documents.
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified or licensed as a foreign corporation in each
jurisdiction where the Company conducts business or owns or leases property.
Section 4.1 of Seller's Disclosure Letter lists each jurisdiction where the
Company is qualified to transact business as a foreign corporation. Seller has
delivered to Purchaser true and complete copies of the Charter Documents of the
Company.
Section 4.2 Power and Authority. Seller has all corporate power and
authority necessary to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby,
including the execution, delivery and performance of all documents and
instruments to be delivered by Seller pursuant to the terms hereof (such
documents and instruments, together with this Agreement, the "TRANSACTION
DOCUMENTS"). The Company has all corporate power and authority necessary to
execute, deliver, and perform the Transaction Documents to which the Company is
a party. The Company also has all corporate power and authority necessary to own
or lease its assets, carry on its business as presently conducted, and perform
its obligations under the Material Contracts. Seller has duly authorized,
executed, and delivered this Agreement, and this Agreement constitutes a valid,
legal, and binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to any Law Affecting Creditors' Rights. Each
of the other Transaction Documents, when executed by Seller and delivered to
Purchaser, will be duly authorized, executed and delivered, and will constitute
a valid, legal and binding obligation of Seller, enforceable against Seller in
accordance with the terms of such Transaction Document, subject to any Law
Affecting Creditors' Rights.
Section 4.3 Capitalization. The authorized capital stock of the Company
consists of 100 shares of common stock, par value $.01 per share, of which 100
shares are issued and outstanding and constitute the Shares. The Company does
not hold any shares of its capital stock as treasury shares and has no shares of
capital stock reserved for issuance. Seller is and will be on the Closing Date
the record and beneficial owner of the Shares, and on the Closing Date will own
and hold the Shares free and clear of all Encumbrances. There are no contractual
or statutory preemptive rights with respect to any securities of the Company.
The Shares have been validly authorized and issued, are fully paid and
nonassessable, and were not issued in breach or violation of any applicable Law,
Contract, or contractual or statutory preemptive rights. There
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are no bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into securities having the right to vote) on any
matters on which stockholders of the Company may vote. There are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or obligating the Company to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Neither Seller nor the
Company is a party to any voting agreement with respect to the voting of any of
the Shares. There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any Shares. The Company has not agreed
to register any of the Shares under the Securities Act or otherwise. The Company
does not own any equity interest in any other Person in excess of $50,000, and
at Closing will not own any equity interest in any other Person.
Section 4.4 No Conflict; Seller Consents. Except as set forth in
Section 4.4 of Seller's Disclosure Letter, the execution and delivery of this
Agreement by Seller, the performance by Seller of this Agreement and the
execution, delivery and performance by Seller or the Company of each other
Transaction Document to which it is a party will not (a) violate any Law, (b)
violate any Charter Document of Seller or the Company, (c) violate any Order to
which Seller or the Company is a party or by which Seller or the Company or
their respective assets is bound, (d) breach any Material Contract to which the
Company is a party, Real Property Lease, Personal Property Lease or Material
Permit of the Company, (e) result in the creation of any Encumbrance on any of
the Company's assets, or (f) require any Consent from any Person, other than
filing the pre-merger notification report required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and obtaining
termination of the waiting period under the HSR Act.
Section 4.5 Financial Statements.
(a) Unaudited Annual Financial Statements. Section 4.5(a) of
Seller's Disclosure Letter are the unaudited balance sheets of the Company as of
December 31, 1997 (the "YEAR-END BALANCE SHEET" and such date the "BALANCE SHEET
DATE"), and December 31, 1995 and December 31, 1996, and the related statements
of operations and cash flows for the fiscal years ended on such dates
(collectively, the "ANNUAL FINANCIAL STATEMENTS"). The Annual Financial
Statements have been prepared in accordance with the Books and Records and with
GAAP (except as noted therein and the absence of detailed notes to such
statements), and present fairly, in all material respects, the financial
position of the Company as of the dates indicated and the results of its
operations and cash flows for the periods then ended.
(b) Unaudited Interim Financial Statements. Section 4.5(b) of
Seller's Disclosure Letter are the unaudited balance sheet of the Company as of
February 28, 1998 (the "INTERIM BALANCE SHEET") and the related statement of
operations and cash flows for the two-month period ended on such date
(collectively, the "INTERIM FINANCIAL STATEMENTS"). The Interim Financial
Statements have been prepared in accordance with the Books and Records and with
GAAP (except as noted therein and the absence of detailed notes to such
statements), and present fairly, in all material respects, the financial
position of the Company as of the date
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indicated and the results of its operations and cash flows for the period then
ended, subject to normal year-end adjustments.
Section 4.6 No Funded Indebtedness or Undisclosed Liabilities. Except
as set forth in Section 4.6(a) of Seller's Disclosure Letter, the Company has no
Funded Indebtedness. Except for Liabilities set forth in Section 4.6(b) of
Seller's Disclosure Letter, the Company has no Liabilities except for (a)
Liabilities reflected or reserved against in the Interim Balance Sheet, (b)
current Liabilities incurred in the ordinary course of business since the date
thereof or (c) Liabilities incurred in the ordinary course of business under
Contracts to which the Company is a party, which Liabilities are not required by
GAAP to be reflected in the Interim Balance Sheet.
Section 4.7 Absence of Certain Changes. Except as disclosed in Section
4.7 of Seller's Disclosure Letter, since the Balance Sheet Date, the Company has
conducted its business only in the ordinary course of business consistent with
past practices and, without limiting the generality of the foregoing, there has
been no (a) event or occurrence that has caused or will cause a Material Adverse
Change, or (b) action that would have been prohibited under Section 6.3 had such
action been taken after the Signing Date.
Section 4.8 Sufficiency and Condition of and Title to Assets.
(a) Sufficiency and Condition of Assets. The buildings,
plants, structures, and equipment of the Company are structurally sound, are in
reasonable operating condition and repair, and are adequate for the uses to
which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs. The assets of the Company are sufficient, and
constitute all of the properties, assets and rights necessary, for the continued
conduct of the Company's business after the Closing in substantially the same
manner as conducted prior to the Closing.
(b) Title to Assets. At the Closing, the Company will hold
good, valid and marketable title to, or a valid leasehold interest in, each of
the Company's assets, free and clear of all Encumbrances, other than Permitted
Encumbrances.
Section 4.9 Accounts Receivable. All accounts receivable of the Company
reflected on the Interim Balance Sheet (the "ACCOUNTS RECEIVABLE") represent or
will represent valid obligations arising from sales made, commissions earned or
services performed in the ordinary course of business. Unless paid prior to the
Closing Date, the Accounts Receivable are current and collectible net of the
respective reserves shown on the Interim Balance Sheet (which reserves are
adequate and, except as set forth in Section 4.9 of Seller's Disclosure Letter,
calculated consistent with past practice). Subject to such reserves, each of the
Accounts Receivable either has been or will be collected in full, without any
set-off, within 180 days after the day on which it first becomes due and
payable. Subject to such reserves, there is no contest, claim, or right of
set-off under any contract with any obligor of an Accounts Receivable relating
to the amount or validity of such Accounts Receivable.
Section 4.10 Inventory. The Company owns all of the inventory reflected
on the Year-End Balance Sheet and all inventory that it has acquired or created
after the Balance Sheet Date, other than inventory disposed of since then in the
ordinary course of the Company's business
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<PAGE> 21
consistent with past practices (the "INVENTORY"). The Inventory (a) is adequate
for the conduct of the business of the Company and (b) is not in excess of the
normal operating requirements of the business of the Company. Except as
disclosed in Section 4.10 of Seller's Disclosure Letter, the Company does not
hold any other Person's inventory on consignment or permit any other Person to
hold any of the Company's inventory on consignment.
Section 4.11 Real Property.
(a) Owned Real Property. Section 4.11(a) of Seller's
Disclosure Letter lists each parcel of real property owned by the Company,
including the street address and the complete legal description of each
property. Each parcel of real property listed on Schedule 4.11(a) and any parcel
of real property purchased after the Signing Date in accordance with Section 6.3
(collectively, the "OWNED REAL PROPERTY") is (i) in compliance with all material
Laws, including the Americans with Disabilities Act and any material building,
fire, land use, occupancy, safety, set-back, or zoning Law, and (ii) not
burdened by any covenant, easement, encroachment, restrictive covenant,
right-of-way, servitude or Encumbrance, other than Permitted Encumbrances.
Seller has delivered or made available to Purchaser a true and complete copy of
all surveys, title policies, title commitments, environmental reports, and
material correspondence within the past two years from Governmental Authorities,
in the possession of Seller or the Company with respect to each parcel of Owned
Real Property.
(b) Leased Real Property. Section 4.11(b) of Seller's
Disclosure Letter lists each lease of real property ("LEASED REAL PROPERTY") to
which the Company is a party which requires payments of more than $120,000 per
annum or is otherwise material to the Company. All of the leases on Section
4.11(b) of Seller's Disclosure Letter and any leases of real property entered
into after the Signing Date in accordance with Section 6.3 requiring payments of
more than $120,000 per annum (collectively, the "REAL PROPERTY LEASES") are
valid, binding and in full force and effect. Section 4.11(b) of Seller's
Disclosure Letter contains a copy of each Real Property Lease and whether the
consent of any other party to the lease (or their mortgage) is required to
consummate the transactions contemplated hereby. Except as disclosed in Section
4.11(b) of Seller's Disclosure Letter (i) each of the Real Property Leases is in
full force and effect and has not been amended or modified; (ii) neither the
Company nor any other party thereto is in default thereunder, nor is there any
event which with notice or lapse of time, or both, would constitute a default
thereunder; (iii) neither Seller nor the Company has received any notice that
any party to any Lease intends to cancel, terminate or refuse to renew the same
or to exercise or decline to exercise any option or other right thereunder; and
(iv) no rental under the Leases has been paid more than one month in advance.
True and complete copies of all the Real Property Leases, any amendments thereto
and the nondisturbance agreements have been provided to Purchaser.
(c) The zoning of each parcel of the Real Property permits the
improvements located thereon and the continuation of business presently being
conducted thereon. The Real Property is served by utilities and services
necessary for the normal and continued operation of the business presently
conducted thereon.
(d) At Closing, the Owned Real Property will be free and clear
of all Encumbrances, other than Permitted Encumbrances, and the Leased Real
Property will be free
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<PAGE> 22
and clear of any Encumbrance created by, through, or under Seller or the
Company. Neither Seller nor the Company has received notice that any of the Real
Property is subject to any governmental decree or order to be sold, or is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor has any such condemnation,
expropriation or taking been proposed.
Section 4.12 Personal Property.
(a) Owned Personal Property. Section 4.12(a) of Seller's
Disclosure Letter lists each item of personal property (including machinery,
equipment, vehicles, structures, fixtures and furniture) with a net book value
in excess of $5,000 owned by the Company, located on its premises or shown on
the Interim Balance Sheet or acquired after the date thereof (except for
inventory subsequently sold in the ordinary course of business and consistent
with past practice).
(b) Leased Personal Property. Section 4.12(b) of Seller's
Disclosure Letter lists each lease of personal property to which the Company is
a party that requires payments of more than $120,000 per annum. All of the
leases on Schedule 4.12(b) and any leases of personal property entered into
after the Signing Date in accordance with Section 6.3 requiring payments of more
than $120,000 per annum (collectively, the "PERSONAL PROPERTY LEASES") are
valid, binding and in full force and effect. Neither the Company nor any other
Person is in default under any Personal Property Lease, nor is there any event
which with notice or lapse of time, or both, would constitute a default
thereunder by the Company or any other Person. True and complete copies of all
the Personal Property Leases and any amendments thereto have been provided to
Purchaser.
Section 4.13 Compliance with Laws. The Company has been and is in
compliance with all Laws, except where the failure to be in compliance would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. Neither Seller nor the Company has received any notice from any
Governmental Authority or other Person asserting that Seller or the Company has
violated any Law.
Section 4.14 Insurance. Section 4.14 of Seller's Disclosure Letter
lists all insurance policies which insure the Company or any of the Company's
assets against loss (collectively, the "INSURANCE POLICIES"), including each
insurer's name, coverage deductible and limit, expiration date and current
premium. Each Insurance Policy is in full force and effect, all premiums with
respect thereto have been paid to the extent due, and no notice of cancellation
or termination has been received with respect to any such policy, other than any
policy that will be replaced or is intended to be replaced prior to the
expiration thereof by policies providing substantially the same coverage from an
insurer that is reputable. The coverages provided by the Insurance Policies are
not less in amounts and types than the coverages customary in the Company's
industry and will not in any way be affected by or terminate or lapse by reason
of the consummation of the transactions contemplated by this Agreement. No
Insurance Policy provides for any retrospective premium adjustment or other
experience-based liability on the part of the Company. True and complete copies
of all Insurance Policies have been provided to Purchaser. Section 4.14 of
Seller's Disclosure Letter contains a complete and accurate
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<PAGE> 23
description of the worker's compensation and liability claims experience of the
Company for the two year period ending on the Signing Date.
Section 4.15 Contracts. Section 4.15 of Seller's Disclosure Letter
lists each Contract to which the Company is a party or by which it is bound
that: (a) is a Related Party Contract; (b) relates to the use or non-disclosure
of any Material Intangible Asset; (c) is a joint venture, partnership or other
Contract involving a sharing of profits, losses, costs or liabilities with
another Person; (d) contains any covenant that in any way purports to restrict
the business activity of the Company or any affiliate of the Company or limit
the freedom of the Company or any affiliate of the Company to engage in any line
of business or to compete with any Person; (e) provides for a term of one year
or longer to supply ice; (f) involves a merger, consolidation, reorganization,
acquisition or purchase or sale of assets or stock of another Person pursuant to
which the Company or any other party thereto has any continuing obligation; (g)
pursuant to which the obligations of any party thereto are, or are contemplated
to be, in excess of $120,000 during any twelve month period during the term
thereof or more than $250,000 over the remaining term of the Contract; (h) is a
material agreement with any supplier or customer with respect to discounts or
allowances or extended payment terms; (i) is an agreement for the borrowing or
lending of money; or (j) is otherwise material to the Company. All of the
Contracts listed in Section 4.15 of Seller's Disclosure Letter and any material
Contracts entered into after the Signing Date in accordance with Section 6.3
(collectively, the "MATERIAL CONTRACTS") are valid and binding and in full force
and effect, subject to Laws Affecting Creditors' Rights. Neither Seller, the
Company nor, to the knowledge of Seller or the Company, any other Person is in
default under any Material Contract, nor is there any event which with notice or
lapse of time, or both, would constitute a default thereunder by Seller, the
Company or, to the knowledge of Seller or the Company, any other Person. True
and complete copies of all Material Contracts have been provided to Purchaser.
Section 4.16 Litigation; Orders. Section 4.16 of Seller's Disclosure
Letter lists and describes all Actions pending (except for any Actions relating
to worker's compensation and personal injury or property damage liability claims
which are being defended by or otherwise under the control of the Company's
insurers, none of which individually or in the aggregate will have a Material
Adverse Effect on the Company) or to the Knowledge of Seller and the Company,
threatened against or affecting the Company. There is no Action pending or, to
the knowledge of Seller or the Company, threatened affecting Seller or the
Company which, if adversely determined, would have, individually or in the
aggregate, a Material Adverse Effect on the Company. Neither the Company nor
Seller is subject to any Order relating to the Company or any of its business.
Section 4.17 Environmental Matters.
(a) Compliance with Environmental Laws. The Company has been
and is operated in compliance with all Environmental Laws and all Permits
related to Environmental Laws, except where the failure to be in compliance
would not have a Material Adverse Effect on the Company.
(b) Hazardous Materials. Except as disclosed in Section 4.17
of Seller's Disclosure Letter, the Company has neither caused nor allowed the
generation, treatment,
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<PAGE> 24
manufacture, processing, distribution, use, storage, discharge, release,
disposal, transport or handling of any Hazardous Materials at any of the
properties or facilities used in connection with the Company's business,
including the Owned Real Property and the property subject to the Real Property
Leases, except in compliance with all Environmental Laws. To the knowledge of
Seller or the Company, no generation, treatment, manufacture, processing,
distribution, use, storage, discharge, release, disposal, transport or handling
of any Hazardous Materials has occurred at any of the properties or facilities
used in connection with the Company's business, including the Owned Real
Property and the property subject to the Real Property Leases, except in
compliance with all Environmental Laws.
(c) Existence of an Action. Except as disclosed in Section
4.17 of Seller's Disclosure Letter, neither Seller nor the Company has received
any notice from any Governmental Authority or other Person alleging or
concerning any Claim against the Company under any Environmental Law, whether
for personal injuries or property damages, which Claims, individually or in the
aggregate, exceed $100,000. Except as disclosed in Section 4.17 of Seller's
Disclosure Letter, there is no Action pending or, to the Knowledge of Seller or
the Company, threatened affecting the Company alleging or concerning any Claim
under any Environmental Law, whether for personal injuries or property damages,
which Claims, individually or in the aggregate, exceed $100,000.
(d) Environmental Permits. The Company is in possession of and
in compliance with all material Permits required under the Environmental Laws
with respect to the operation of its business. There are no Actions pending or,
to the Knowledge of Seller and the Company, threatened which seek to modify,
revoke or deny renewal of any such Permit. Neither Seller nor the Company has
any knowledge of any fact or condition that is reasonably likely to give rise to
any Action to modify, revoke or deny renewal of any of such Permit. No Consent
from any Person is necessary for the transfer of any such Permit, and the
consummation of the transactions contemplated by this Agreement will not
violate, alter, impair or invalidate, in any respect, any such Permit.
(e) Miscellaneous. Without in any way limiting the generality
of the foregoing, except as disclosed in Section 4.17 of Seller's Disclosure
Letter, (i) to the knowledge of Seller and the Company, none of the off-site
locations where the Company has transported, released, discharged, stored,
disposed or arranged for the disposal of Hazardous Materials has been identified
as a facility that is subject to an existing Claim under any Environmental Law
or is the subject of any threatened Claim by any Person, (ii) no underground
improvement regulated by any Environmental Law, including any storage or
treatment tank, is located on the Owned Real Property or the property subject to
the Real Property Leases, (iii) to the Knowledge of Seller and the Company,
there is no asbestos contained in or forming part of the assets of the Company,
and (iv) no polychlorinated biphenyls or polychlorinated biphenyls-containing
items are used or stored at the Owned Real Property or the property subject to
the Real Property Leases.
Section 4.18 Permits. Section 4.18 of Seller's Disclosure Letter
describes each Permit issued to the Company or with respect to any of its assets
that is material to the Company (the "MATERIAL PERMITS"). Each Material Permit
is currently in effect, no violation of the terms of such Material Permit has
occurred, and the issuing Governmental Authority has not taken or, to the
knowledge of Seller and the Company, threatened to take any action to revoke or
limit such
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<PAGE> 25
Material Permit,. In addition, no issuing Governmental Authority has indicated
that it will not renew a Material Permit. The Material Permits constitute all of
the material Permits required for the Company to conduct its business in
compliance with all Laws. No Material Permit will terminate or require
re-issuance in connection with the change in control of the Company upon the
sale of the Shares to Purchaser.
Section 4.19 Intangible Assets.
(a) Owned Intangible Assets. Section 4.19(a) of Seller's
Disclosure Letter lists all Material Intangible Assets owned by the Company as
of the Signing Date. With respect to all Intangible Assets owned by the Company
and all Intangible Assets obtained or developed prior to the Closing, (i) the
Company owns all right, title and interest in and to such Intangible Assets free
and clear of all Encumbrances, (ii) the Company has not sold, transferred,
licensed, sub-licensed or conveyed any interest in any of such Intangible
Assets, and (iii) to the knowledge of Seller and the Company, no Person has
infringed upon or misappropriated any of such Intangible Assets.
(b) Licensed Intangible Assets. Section 4.19(b) of Seller's
Disclosure Letter lists all licenses and contracts related to any Material
Intangible Asset used by the Company as of the Signing Date. Each license or
contract listed on Section 4.19(b) of Seller's Disclosure Letter and each
license or contract related to an Intangible Asset which is entered into after
the Signing Date in accordance with Section 6.3 is valid, binding and in full
force and effect.
(c) No Infringement. The Company has not infringed upon or
misappropriated any Intangible Asset owned by another Person.
Section 4.20 Employees
(a) Employees. Section 4.20(a) of Seller's Disclosure Letter
lists the name, job title if an officer, date of employment and current annual
compensation (salary, bonus and all amounts paid pursuant to an Employee Benefit
Plan) for each salaried employee of the Company employed as of the Signing Date
whose total compensation for 1997 or expected total compensation for 1998 equals
or exceeds $40,000 (collectively, the "MATERIAL EMPLOYEES"). All employees of
the Company are either United States citizens or resident aliens specifically
authorized to engage in employment in the United States in accordance with all
Laws. All sums due for employee compensation and benefits and all vacation time
owing to any employee of the Company (including all persons whose employment by
the Company terminated prior to the Signing Date) have been duly and adequately
accrued on the accounting Books and Records of the Company.
(b) Contracts. Section 4.20(b) of Seller's Disclosure Letter
lists each (i) Contract between the Company and a Material Employee, and (ii)
collective bargaining agreement and other Contract to or with any labor union,
employee representative or group of employees. Other than the Contracts listed
on Schedule 4.20(b), (i) the Company's employment of each employee of the
Company is terminable at will without any penalty or severance obligation of any
kind on the part of the Company, subject to any requirements of applicable Law
and (ii) there are no employee Contracts pursuant to which any benefits will be
increased or
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<PAGE> 26
vest or pursuant to which any benefits are contingent upon, or the terms of
which are materially altered by, the occurrence of the transactions contemplated
by this Agreement or relating to an actual or potential change in control of the
Company.
(c) Compliance with Labor Laws. The Company has complied and
is presently complying in all material respects with all Laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and is not engaged in any unfair labor practice or unlawful
employment practice.
(d) Labor Actions and Relations. There is no unfair labor
practice charge or complaint against the Company pending or threatened before
the National Labor Relations Board nor is there any grievance or any arbitration
proceeding arising out of or under any collective bargaining agreement pending.
There is no labor strike, slowdown or work stoppage pending or, to the knowledge
of Seller and the Company, threatened against the Company. The Company has
neither experienced any significant work stoppages nor been a party to any
Action before the National Labor Relations Board involving any issue for the
past three years nor been a party to any arbitration proceeding arising out of
or under any collective bargaining agreement for the past three years. There is
no charge or complaint pending or threatened against the Company before the
Equal Employment Opportunity Commission or the Department of Labor or any state
or local agency of similar jurisdiction.
Section 4.21 Employee Benefits.
(a) Each of the Company Plans is, and has been, adopted and
operated in material compliance with its terms and all applicable Law
(including, where applicable, ERISA and the Code).
(b) Section 4.21 of Seller's Disclosure letter contains an
accurate and complete list of (i) all Company Plans, including a complete and
accurate description of all Company Plans that are not in writing and (ii) all
Company Controlled Group Plans that are subject to Code Section 412 or Title IV
or Section 302 of ERISA or for which the Company has any Liability. The Company
has not made any commitment, whether formal or informal, and whether legally
binding or not, to create or have liability under any Plan which is not listed
in Section 4.21 of Seller's Disclosure Letter, or to modify any existing Company
Plan.
(c) With respect to each Company Plan, the Seller or Company
has heretofore delivered or made available to the Purchaser true, correct and
complete copies of (i) each such Plan, (including any amendments to any such
Plans, any related trusts, summary plan descriptions, written descriptions of
any such Plans that are not in writing, insurance policies, investment
management agreements or annuity contracts, and any rules or regulations created
for use with any such Plans); (ii) the most recent IRS determination letter, if
any, with respect to each of such Plans; (iii) the Form 5500 (including all
schedules and attachments), if any, filed with respect to each of such Plans for
the most recent two (2) years; (iv) the most recent actuarial reports, if any,
filed with respect to each of the Company Plans; and (v) each collective
bargaining agreement or other contract relating to each Company Plan.
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(d) None of the Company Plans or any trusts relating thereto
have engaged in any transaction in connection with which Company or any
fiduciaries of any Company Plans or related trusts is or could be subject either
to a civil penalty or other liability under Sections 502(i), 406 or 409 of ERISA
or a tax imposed by Section 4975 of the Code, and no event has occurred and no
condition exists with respect to the Company Plans that could subject the
Company to any other tax or penalty under the Code or civil penalty or other
liability under ERISA or other laws.
(e) No litigation or administrative or other proceeding,
audit, claim, investigation or other matter (other than routine claims for
benefits) is pending or, to the knowledge of Seller or the Company, threatened
involving any Company Plan.
(f) As of the Closing Date all payments (including, without
limitation, contributions and premiums) required to have been made to or in
connection with Company Plans, by their terms or under ERISA or the Code, with
respect to any period prior to such date shall have been timely made in full,
determined by using the applicable actuarial and funding assumptions, if any.
(g) To the extent applicable, each Company Plan or related
trust which is intended to meet the requirements of Section 401(a) or 501(a) of
the Code meets such requirements. The Suiza Foods 401(k) Plan was adopted
effective as of January 1, 1998, and an application for a determination letter
to the Internal Revenue Service with respect thereto has not yet been made. The
Suiza Foods 401(k) Plan is the only Company Plan that is intended to be
qualified under Section 401(a) of the Code.
(h) No Company Plan is subject to Title IV of ERISA or is a
defined benefit plan.
(i) Except as provided by Section 4980B of the Code or Part 6
of Title I of ERISA, there are no health, medical or other welfare benefits or
insurance under the Company Plans for current or future retirees or other former
employees.
(j) With respect to each Company Controlled Group Plan, (i) no
liability arising under Title IV of ERISA is pending, has been incurred by or is
threatened against any Company Controlled Group Member, which liability has not
been satisfied; (iii) no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code, has been
incurred; and (iv) all contributions (including installments) to each said
Company Plan required by Section 302 of ERISA and Section 412 of the Code have
been timely made. The Company does not have any due but unpaid liability with
respect to any Company Controlled Group Plan. Except as disclosed in Schedule
4.21, no Company Controlled Group Plan is a multiemployer plan within the
meaning of Section 3(37) of ERISA or a multiemployer welfare plan. With respect
to each multiemployer pension or welfare Company Controlled Group Plan disclosed
in Schedule 4.21, no as yet unsatisfied liability has been or will be incurred
by Company for a withdrawal which occurs on or prior to the Closing Date or as a
result of the consummation of the transactions contemplated by this Agreement or
otherwise.
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(k) The assets of the Company Plans do not, with the exception
of the assets of the Suiza Foods 401(k) Plan, include any "employer securities"
or "employer real property" as such terms are defined in Section 407 of ERISA.
No material debt has been incurred by any of the Company Plans, other than
liabilities for the payment of benefits or insurance premiums. The Suiza Foods
401(k) Plan permits participants to direct the investment of the accounts in
such employer securities, but not employer real property.
(l) Except as set forth on in Section 4.21 of Sellers
Disclosure Letter, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee, officer, director
or independent contractor of Company to severance pay, unemployment compensation
or any other payment; (ii) accelerate the time of payment or vesting, or
increase the amount of payments or compensation due any such person; or (iii)
result in any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not available.
Section 4.22 Taxes.
(a) Consolidated Income Tax Returns. The Company has been
included in Seller's combined, consolidated, and unitary income Tax reports and
returns for all periods for which the applicable statute of limitations has not
expired other than the federal income Tax periods ending on or prior to March
31, 1995, during which the Company filed its federal income Tax returns as an S
corporation. In addition, the Company will remain a member of Seller's
affiliated group with respect to the filing of such income Tax reports and
returns through the Closing Date.
(b) Tax Returns and Payments. Either Seller or the Company has
timely filed all Tax reports and returns required to be filed by Seller or the
Company in connection with the Company's assets, business, and employees and
either Seller or the Company has timely paid and discharged all Tax obligations
(including, without limitation, all income tax obligations of any affiliated
group of which the Company is or was a member) shown on such reports and
returns, including any withholding obligations. Such Tax reports and returns are
accurate and complete in all material respects and correctly compute the Tax
obligation to which each such report or return pertains.
(c) No Notices. Except as disclosed in Section 4.22 of
Seller's Disclosure Letter, neither Seller nor the Company has received any
determination letter, revenue agent report, or other notice of any proposed or
outstanding Tax deficiency against or allocable to the Company. In addition,
neither Seller, the Company, nor any other Person has executed any extension
agreement or waiver of any statute of limitations with respect to the assessment
or collection of any Tax against the Company.
(d) No Audits. Except as disclosed in Section 4.22 of Seller's
Disclosure Letter, neither the Internal Revenue Service ("IRS") nor any other
taxing authority (collectively with the IRS, the "TAXING AUTHORITIES") has
contacted Seller or the Company concerning a future audit or examination of any
Tax reports and returns that include the Company other than audits and
examinations which have previously been resolved and any Taxes due in connection
therewith have previously been paid. Except as disclosed in Section 4.22 of
Seller's Disclosure
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Letter, no such audit or examination is in process or has occurred with respect
to any period for which the statute of limitations has not expired.
(e) No Tax Liens. No Tax liens exist with respect to any
assets of the Company, other than statutory Tax liens for Taxes not yet due.
(f) No Agreements. No Tax ruling from any Taxing Authority
addressed to the Company or closing agreement with any Taxing Authority has a
continuing effect upon the Company. In addition, no such Tax ruling or closing
agreement is pending.
(g) No Tax Opinions. Neither Seller nor the Company has
received any Tax opinion pertaining to the Company from any accountants,
lawyers, or other advisers during the five years immediately preceding the date
of this Agreement. In addition, no such opinion received prior to such five-year
period has any continuing effect upon the Company. For purposes of this section
(g), "Tax opinion" means a written document in which the preparer comes to a
conclusion as to their "opinion" as to certain tax consequences.
(h) NOL Carryforwards. The Company has no net operating loss
carryforwards.
(i) No Golden Parachutes. The Company does not have any
Contract that could require the Company to make any "excess parachute payment"
as defined under Section 280G of the Code, determined without considering any of
the exceptions contained in such section.
(j) No Partnerships. The Company is not a member of any joint
venture, partnership, or other arrangement or Contract that is treated as a
partnership for Income Tax purposes.
(k) No Property Treated as Owned by Another Person. No
property of the Company is property that the Company is required to treat as
owned by another Person pursuant to Section 168(f)(8) of the Code or any other
applicable Law. After the Closing, the Company will not be required to treat
Purchaser as the owner of any of the Company's property.
(l) No Tax Exempt Use Property. No property of the Company is
"tax exempt use property" as defined under Section 168(h)(1) of the Code.
(m) No Tax Exempt Bond Financed Property. No property of the
Company is "tax exempt bond financed property" under Section 168(g) of the Code.
(n) No Transfer Taxes. The sale of the Shares to Purchaser
will not impose or create any Tax obligations on Purchaser or the Company,
including any withholding Tax obligations on Purchaser.
(o) No Revaluation of Assets. The sale of the Shares to
Purchaser will not cause any reassessment or revaluation of the Company's assets
for any ad valorem or property Tax purposes for any period prior to the Closing
Date.
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(p) No Foreign Seller. Seller is not a "foreign person" under
Sections 1445 and 7701 of the Code.
(q) S Election. The Company had a valid election to be taxed
as an S corporation in effect for all periods ending on or prior to March 31,
1995.
(r) No Tax Sharing Agreement. There is no contract to which
Seller and the Company are parties that relates to the liability of either for
the income taxes of the other.
Section 4.23 Bank Accounts; Powers of Attorney. Section 4.23 of
Seller's Disclosure Letter lists the names of (a) each bank, trust company and
stock or other broker with which the Company has an account, credit line or safe
deposit box or vault, or otherwise maintains relations (the "BANK ACCOUNTS"),
(b) all Persons authorized to draw on, or to have access to, each of the
Accounts, (c) all Persons authorized by proxies, powers of attorney or other
like instrument to act on behalf of the Company. Each of the Accounts has a zero
or positive cash balance. No proxies, powers of attorney or other like
instruments are irrevocable.
Section 4.24 Suppliers and Customers. The relationships of the Company
with its material suppliers and material customers are satisfactory. No such
material customer or supplier has canceled or otherwise terminated, or
threatened to cancel or otherwise terminate, its relationship with the Company,
or to materially decrease its services to the Company or its usage of the
services of the Company, provided, however, that any such cancellation,
termination or threat by a supplier or customer shall not constitute a breach of
this representation and warranty made or deemed made as of a date after the
Signing Date if such supplier or customer shall have become a supplier or
customer of Purchaser prior to the Closing Date.
Section 4.25 Affiliated Transactions. Except as set forth in Section
4.25 of Seller's Disclosure Letter, since the Balance Sheet Date, the Company
has not paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets (tangible or intangible) to, or entered into any
Contract with, any of the officers, directors or stockholders of Seller, the
Company or any of their respective affiliates, except for compensation to
officers at rates not exceeding the rates of compensation paid during the fiscal
year ended on the Balance Sheet Date and routine travel advances to officers and
employees. Except as set forth in Section 4.25 of Seller's Disclosure Letter,
since January 1, 1997, neither Seller nor any other affiliate of the Company
(other than executive officers and directors of the Company or Seller in their
capacities as executive officers and directors of the Company or Seller) has
provided any services to the Company, including, without limitation, accounting,
data processing, payroll, benefits or record management services.
Section 4.26 Books and Records. The Books and Records of the Company,
all of which have been made available to Purchaser, are complete and correct and
have been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls.
Section 4.27 Capital Projects. Section 4.27 of Seller's Disclosure
Letter sets forth a description of all capital projects of the Company,
including construction projects and acquisitions of capital assets, which have
been commenced but not completed, or with respect to
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<PAGE> 31
which commitments have been entered into with third persons, as of February 28,
1998 ("CAPITAL PROJECTS"). Section 4.27 of Seller's Disclosure Letter also sets
forth with respect to each Capital Project (a) the amounts budgeted by the
Company, or the amounts contractually committed to be expended for such Capital
Project, and (b) the amounts remaining to be paid after February 28, 1998, for
completion of such Capital Project.
Section 4.28 Brokers. No Person is or will become entitled to receive
any brokerage or finder's fee, advisory fee or other similar payment for the
transactions contemplated by this Agreement by virtue of having been engaged by
or acting on behalf of Seller or the Company other than the fees of Bear Stearns
& Co. whose fees will be paid by Seller.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 5.1 Organization; Good Standing; Delivery of Charter Documents.
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Texas. Purchaser is duly qualified or licensed as
a foreign corporation in each jurisdiction in which its assets are owned or
leased, or the nature of its business makes such qualification or licensing
necessary, except those jurisdictions wherein the failure to so qualify could
not have a Material Adverse Effect on Purchaser. Purchaser has delivered to
Seller true and complete copies of Purchaser's Charter Documents.
Section 5.2 Power and Authority. Purchaser has all requisite corporate
power and authority necessary to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby, including the execution, delivery and performance of all the other
Transaction Documents to which Purchaser is a party. Purchaser has all requisite
corporate power and authority necessary to own, operate and lease its assets and
to carry on its business as and where conducted.
Section 5.3 Authorization; Execution and Validity. Purchaser has duly
authorized, executed and delivered this Agreement and this Agreement constitutes
a valid, legal and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to any Law Affecting Creditors'
Rights. Each of the other Transaction Documents to which Purchaser is a party,
when executed delivered by Purchaser to Seller, will be duly authorized,
executed and delivered, and will constitute a valid, legal and binding
obligation of Purchaser, enforceable against Purchaser in accordance with the
terms of such Transaction Document, subject to any Law Affecting Creditors'
Rights.
Section 5.4 No Conflict; Purchaser Consents. The execution and delivery
by Purchaser of this Agreement do not, the performance by Purchaser of this
Agreement will not, and the execution, delivery and performance by Purchaser of
each other Transaction Document to which it is a party will not (a) violate any
Law, (b) violate any Charter Document of Purchaser, (c) violate any Order to
which Purchaser is a party or by which Purchaser or its assets is bound, or (d)
require any Consent from any Person other than filing the pre-merger
notification
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report required under the HSR Act and obtaining termination of the waiting
period under the HSR Act.
Section 5.5 Brokers. No Person is or will become entitled to receive any
brokerage or finder's fee, advisory fee or other similar payment for the
transactions contemplated by this Agreement by virtue of having been engaged by
or acting on behalf of Purchaser other than the fees of Jefferies & Company,
Inc. and Williams Financial Group (James M. Raines).
Section 5.6 Financing. Purchaser has previously delivered to Seller
true and correct copies of letters from its prospective lenders and equity
investors concerning Purchaser's anticipated financing for the transactions
contemplated by this Agreement.
ARTICLE VI.
COVENANTS OF SELLER
Section 6.1 Cooperation by Seller. From the Signing Date through the
Closing Date, Seller shall use, and shall cause the Company to use, all
reasonable efforts (a) to take all actions and to do all things necessary or
advisable to consummate the transactions contemplated by this Agreement, (b) to
cooperate with Purchaser in connection with the foregoing, including using
reasonable efforts to obtain all of the Consents set forth in Section 4.4 of
Seller's Disclosure Letter or otherwise required to consummate the transactions
contemplated hereby, and (c) subject to the other terms and conditions of this
Agreement, to cause all the conditions set forth in Section 9.1, the
satisfaction of which is in the reasonable control of Seller or the Company, to
be satisfied on or prior to Closing.
Section 6.2 Pre-Closing Access to Information.
(a) General. From the Signing Date through the Closing Date, to the
extent not prohibited by applicable Law, Seller shall, and shall cause the
Company, to (a) provide to Purchaser and its Representatives full access to the
personnel, properties, and Books and Records of the Company (and those books and
records of Seller relating to the Company), (b) furnish Purchaser and its
Representatives copies of all such Books and Records as Purchaser may reasonably
request, and (c) furnish Purchaser and its Representatives with such additional
financial, operating and other data information as Purchaser may reasonably
request. Subject to Section 6.2(b), Purchaser agrees to be bound by all the
terms of that certain Confidentiality Agreement, dated December 31, 1997,
between Seller and Purchaser, as amended by Amendment No. 1 thereto (the
"CONFIDENTIALITY AGREEMENT"), and the Parties agree that all information which
has been or is hereafter disclosed to Purchaser is and remains subject to the
terms of the Confidentiality Agreement except as provided in Section 6.2(b).
(b). Audit. Promptly following the Signing Date, Seller shall, and
shall cause the Company to, permit Deloitte & Touche, LLP to audit the Annual
Financial Statements and in connection therewith shall (i) provide Deloitte &
Touche, LLP full access to the personnel, properties, and Books and Records of
the Company (and those books and records of Seller relating to the Company) as
Deloitte & Touche, LLP may reasonably request, and (ii) otherwise cooperate
fully with the audit and furnish such additional information as Deloitte &
Touche, LLP may reasonably request. The cost of such audit shall be paid by
Purchaser. Seller hereby
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consents to the inclusion and dissemination to prospective investors of such
audited Annual Financial Statements (the "AUDITED FINANCIAL STATEMENTS") and
general information concerning the Company's business in offering documents
prepared by Purchaser in connection with its financing of the transactions
contemplated by this Agreement.
Section 6.3 Conduct of Business.
From the Signing Date through the Closing Date, Seller shall, and shall
cause the Company to, use all reasonable efforts to (i) preserve substantially
the relationships with the Company's material Representatives, suppliers and
customers, (ii) perform its obligations under all material Contracts, leases and
Permits in all material respects, (iii) comply with all Laws, (iv) confer with
Purchaser regarding operational matters of a material nature, (v) report
periodically to Purchaser regarding the status of the business and the results
of operations of the Company, and (vi) except as set forth in Section 6.3 of
Seller's Disclosure Letter, conduct the Company's business in the ordinary
course and consistent with past practices. Without limiting the foregoing,
except as otherwise required or permitted by this Agreement or listed in Section
6.3 of Seller's Disclosure Letter, from the Signing Date through the Closing
Date, Seller shall not, without Purchaser's prior written consent, permit the
Company to:
(a) amend its Charter Documents;
(b) (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to the Company's
capital stock, (ii) redeem, purchase or otherwise acquire directly or indirectly
any shares of the capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities; (iii) authorize for issuance, issue, sell, pledge, deliver or agree
to commit to issue, sell, pledge or deliver (whether through the issuance or
granting of any options, warrants, calls, subscriptions, stock appreciation
rights or other rights or other agreements) or otherwise encumber any shares of
capital stock of any class of the Company or any securities convertible into or
exchangeable for shares of capital stock of any class of the Company; or (iv)
split, combine or reclassify the outstanding capital stock of the Company or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of the capital stock of the Company;
(c) [reserved];
(d) except as disclosed in Section 6.3(d) of Seller's
Disclosure Letter, sell, lease, license, transfer, mortgage or subject to any
Encumbrance (other than Permitted Encumbrances) or otherwise dispose of any
assets of the Company other than sales of inventory and equipment in the
ordinary course of business and consistent with past practice;
(e) except as disclosed in Section 4.27 of the Seller's
Disclosure Letter, make or agree to make any new capital expenditure or
expenditures;
(f) except as required to comply with applicable Law or with
Contracts or Plans existing on the Signing Date, (i) adopt, enter into,
terminate or amend in any material respect any employment contract, collective
bargaining agreement or Plan, (ii) increase in any
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manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee, except for increases in accordance with past
practices in salaries or wages of employees of the Company who are not officers
of the Company, (iii) pay any benefit not provided for under any Plan, (iv)
increase in any manner the severance or termination pay of any officer or
employee, (v) grant any awards under any Plan (including the grant of stock
options, stock appreciation rights, stock-based or stock-related awards,
performance units or restricted stock or the removal of existing restrictions in
any Plans or agreements or awards made thereunder), except for grants in
accordance with past practices to employees who neither are, nor would be
following such grant, Material Employees, or (vi) take any action to fund or in
any other way secure the payment of compensation or benefits under any employee
Contract or Plan;
(g) amend, terminate or enter into any Material Contract,
other than customer contracts in the ordinary course of business and consistent
with past practice;
(h) (i) incur or assume any debt, other than trade and
accounts payable incurred in the ordinary course of business in amounts
consistent with past practice, (ii) issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company; (iii)
enter into any "keep well" or other arrangement to maintain any financial
condition of another Person; (iv) guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other Person; or (v) make any loans, advances or capital contributions
to, or investments in, any other Person;
(i) make any material change in accounting methods, principles
or practices unless required by GAAP;
(j) compromise or settle any material Claim or Action other
than the matter listed as Item 2 in Section 4.16 of Seller's Disclosure Letter;
(k) take, or agree to commit to take, any action that would or
is reasonably likely to result in any of the conditions set forth in Article IX
not being satisfied, or would make any representation or warranty of Seller
contained herein inaccurate in any respect at, or as of any time prior to, the
Closing, or that would impair the ability of Seller to consummate the
transactions contemplated hereby in accordance with the terms hereof or delay
such consummation;
(l) make or rescind any Tax election or settle or compromise
any Tax liability or refund or change in any material respect any of the methods
of reporting income or deductions for federal income tax purposes;
(m) permit any material insurance policy naming the Company as
a beneficiary or a loss payable payee to be canceled or terminated, except in
the ordinary course of business and consistent with past practice;
(n) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company;
(o) enter into any Related Party Contract; or
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(p) enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or authorize, recommend, propose or
announce an intention to do any of the foregoing.
Section 6.4 Supplements to Schedules. If, between the Signing Date and
the Closing Date, Seller or the Company becomes aware that any of the
representations and warranties in this Agreement or the schedules to this
Agreement was inaccurate when made or if during such period any event occurs or
condition changes that would cause any such representation or warranty to be
inaccurate had such representation or warranty been made as of the time of such
occurrence or change, then Seller shall notify Purchaser thereof in writing and
supplement the schedules hereto to account for any such inaccuracy, event or
change. Any such supplement to the schedules shall not be deemed to have been
disclosed as of the Signing Date or to have cured any breach of a representation
or warranty made in this Agreement, unless so agreed to in writing by Purchaser.
Section 6.5 Standstill. Until the earlier to occur of the Closing or
the termination of this Agreement pursuant to Article X, Seller shall not, nor
shall Seller permit the Company or any Representative of Seller or the Company
to, (a) directly or indirectly, encourage, solicit, initiate or participate in
discussions or negotiations with, or provide any information or assistance to,
any Person (other than Purchaser and its Representatives) concerning any merger,
sale of securities, sale of substantial assets, investment proposals or similar
transaction involving the Company, (b) entertain or discuss any acquisition or
investment proposals whatsoever relating to the Company, or (c) disclose to any
third party any non-published information concerning the Company or its
financial condition
Section 6.6 Discharge of Encumbrances. Seller shall take all actions
and do all things necessary to cause all Encumbrances other than Permitted
Encumbrances on the assets of the Company to be terminated or otherwise
discharged at or prior to the Closing. Seller shall take all actions and do all
things necessary to cause the Company to have no Funded Indebtedness or Capital
Leases as of the Closing or to be the guarantor of any indebtedness or other
obligations of any other Person as of the Closing, other than Funded
Indebtedness, Capital Leases or guarantees to which Purchaser shall have
consented in writing prior to Closing.
Section 6.7 Resignations. Seller shall cause each of the directors of
the Company, and each officer or employee of the Company whose resignation
Purchaser has requested in writing to Seller concurrently with the execution of
this Agreement, to resign pursuant to a written resignation effective
immediately before the Closing.
ARTICLE VII.
COVENANTS OF PURCHASER
Section 7.1 Cooperation by Purchaser. From the Signing Date through the
Closing Date, Purchaser shall use all reasonable efforts (a) to take all actions
and to do all things necessary or advisable to consummate the transactions
contemplated by this Agreement, (b) to cooperate with Seller in connection with
the foregoing and (c) subject to the other terms and conditions of this
Agreement, to cause all the conditions set forth in Section 9.2, the
satisfaction of which is in the reasonable control of Purchaser, to be satisfied
on or prior to Closing.
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Section 7.2 Pre-Closing Access to Information. Purchaser shall comply
with the limitations on the disclosure and use of information set forth in the
Confidentiality Agreement with respect to the information that Seller provides
to Purchaser in and pursuant to this Agreement.
Section 7.3 Employee Matters. As of the Closing Date the employees of
the Company shall continue employment with the Company in the same positions and
at the same level of wages and/or salary and without having incurred a
termination of employment or separation from service; provided, however, except
as may be specifically required by applicable Law or any Contract, neither
Purchaser nor the Company shall be obligated to continue any employment
relationship with any employee for any specific period of time or on any
specific terms, except as otherwise set forth in employment contracts listed in
Section 4.20(b) of Seller's Disclosure Letter that are not assumed by Seller
pursuant to Section 8.6 hereof. For the period beginning on the Closing Date and
ending on December 31, 1998, Purchaser shall provide to the employees of the
Company employee benefits (including without limitation, welfare plan and
pension plan benefits) which are substantially similar to either (i) those
benefits provided to similarly-situated employees of Purchaser and its
affiliates from time to time or (ii) those benefits which are provided to the
employees of the Company immediately prior to the Closing Date. In addition, any
employee of the Company immediately prior to the Closing Date (aside from
part-time employees, seasonal employees and employees employed for less than one
year) whose employment with the Company is terminated without cause during the
period beginning on the Closing Date and ending on the earlier of (a) the
expiration of six months after the Closing Date or (b) November 30, 1998, shall
receive severance pay of not less than two weeks' pay for every year of service
with the Company or with Sparkle Ice, but not for service with a predecessor of
the Company or Sparkle Ice, up to a maximum of sixteen weeks' pay. To the extent
any employee benefit plan, program or policy of Purchaser or its affiliates that
is substantially similar to the benefits described in items 1 - 7 of the Welfare
Benefit Plans section of Schedule 4.21 and items 2 - 6 of the Employee
Arrangement section of such Schedule is made available to any person who is an
employee of the Company as of the Closing Date: (i) continuous service with the
Company or any predecessor Company by any employee prior to the Closing Date
shall be credited for eligibility and vesting purposes and additional benefits
tied to periods of service under such plan, program or policy; and (ii) with
respect to any welfare benefit plans under which such employees may become
eligible, Purchaser shall cause such plans to provide credit for any co-payments
or deductibles by such employees during the current plan year of the Company and
waive all pre-existing condition exclusions and waiting periods, other than
limitations or waiting periods that have not been satisfied under any welfare
plains maintained by the Company for its employees prior to the Closing Date.
Each employee of the Company shall be a third party beneficiary with respect to
Purchaser's obligations under this Section 7.3 and shall have the right to
enforce such obligations in its own name and right.
ARTICLE VIII.
MUTUAL COVENANTS
Section 8.1 Governmental Consents. Promptly after the Signing Date,
each Party shall take all reasonable actions, do all reasonable things necessary
and cooperate with each other to
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obtain all Consents required by any Governmental Authority to consummate the
transactions contemplated hereby, including the filing of any pre-merger
notification required under the HSR Act. The Parties shall use all reasonable
efforts to comply as promptly as practicable with any request made pursuant to
the HSR Act for additional information. Purchaser shall pay the statutory filing
fee required by the HSR Act.
Section 8.2 Consents to Assign Leases and Contracts.
(a) Cooperation and Reasonable Efforts. Each Party hereby
agrees to use reasonable efforts, to take reasonable actions (including
Purchaser's delivery to third parties of its audited financial statements) and
to cooperate with each other as may be reasonably necessary to obtain Consents
to transfer and assign the Encumbered Instruments, to obtain nondisturbance
agreements from lenders of lessors under the Real Property Leases and to obtain
estoppel certificates in recordable form with respect to the Real Property
Leases. Prior to sending any request for a Consent, Seller shall submit such
request to Purchaser for its approval, which shall not be unreasonably withheld.
Seller shall promptly deliver to Purchaser copies of all Consents received and
all correspondence and requests concerning the Consents. Purchaser shall have
the right to reasonably participate in any discussions between Seller and any
Person from whom Seller seeks a Consent. Except as expressly provided herein,
neither Party shall be required to pay any sum, to incur any obligation or to
agree to any amendment of any Encumbered Instrument in order to obtain any such
Consent to transfer and assign the Encumbered Instrument.
(b) Required Consents. Schedule 8.2(b) lists the Encumbered
Instruments to which a Consent to transfer and assign must be obtained from the
appropriate third party prior to Closing (collectively, the "REQUIRED
CONSENTS"). Except for the Required Consents, the obtaining of any Consents
related to the Encumbered Instruments shall not be a condition to Closing, and
Closing shall occur irrespective of whether any such Consent has been obtained.
(c) Post-Closing Efforts to Obtain Consents. In the event any
Consent required by any Encumbered Instrument is not obtained on or prior to
Closing, each Party will, for a period of one year following the Closing Date,
(i) abide by the requirements of Section 8.2(a), and (ii) cooperate with each
other in any lawful and reasonable arrangement to provide that Purchaser shall
receive the benefits under any Encumbered Instrument not assigned and
transferred at the Closing by reason of the failure to obtain such Consent;
provided that, to the extent the Parties are successful in providing the
material benefits of any such instrument to the Company, the Company shall pay,
honor and discharge when due all liabilities of the Company related thereto to
the extent the liabilities were incurred after the Closing Date.
Section 8.3 Books and Records.
(a) Access. For a period of six years after Closing, each
Party shall provide the other Party with reasonable access during normal
business hours to its Books and Records relating to the Company (other than
books and records protected by the attorney-client privilege) to the extent that
they relate to the condition or operation of the Company prior to Closing and
are requested by such Party to prepare its tax returns, to respond to third
party Claims or for any
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other legitimate purpose specified in writing. Each Party shall have the right,
at its own expense, to make copies of any such Books and Records.
(b) Destruction. No Party shall dispose of or destroy any
Books and Records relating to the Company to the extent that they relate to the
condition or operation of the Company prior to the Closing without first
offering to turn over possession thereof to the other Party by written notice at
least 30 days prior to the proposed date of disposition or destruction.
(c) Confidentiality. Each Party may take such action as it
deems reasonably appropriate to separate or redact information unrelated to the
Company from documents and other materials requested and made available pursuant
to this Section and may condition the other Party's access to documents and
other materials that it deems confidential to the execution and delivery of an
agreement by the other Party not to disclose or misuse such information.
(d) Assistance. Each Party shall, upon written request and at
the requesting Party's expense, make personnel available to assist in locating
and obtaining any Books and Records relating to the Company to the extent that
they relate to the condition or operation of the Company prior to Closing and
make personnel available whose assistance, participation or testimony is
reasonably required in anticipation of, preparation for or the prosecution or
defense of any third party Claim in which the other Party does not have any
adverse interest.
Section 8.4 Further Assurances. Subject to the other terms and
conditions of this Agreement, at any time and from time to time, whether before
or after Closing, each Party shall execute and deliver all instruments and
documents and take all other action that the other Party may reasonably request
to consummate or to evidence the consummation of the transactions contemplated
by this Agreement.
Section 8.5 Supplemental Agreements. At the Closing, Seller shall
execute and deliver the Seller's Release and the Parties shall execute and
deliver the Non-Competition Agreement.
Section 8.6 Termination of Related Party Contracts. Immediately prior
to the Closing, Seller shall cause to be terminated all Related Party Contracts
(other than employee contracts listed in Section 4.20(b) and the contracts
listed in Section 4.15(a) of Seller's Disclosure Letter) without any Liability
or payment by the Company pursuant to agreements in form and substance
satisfactory to Purchaser (the "TERMINATION Agreements"). With respect to each
employee contract listed on Schedule 8.6(a) hereto, Seller shall cause the
parties thereto to enter into prior to the Closing a novation agreement, in form
and substance satisfactory to Purchaser, pursuant to which Seller shall assume
all obligations of the Company under such contract without any Liability or
payment by the Company. The Parties also agree to the matters set forth in
Schedule 8.6(b) hereto.
Section 8.7 Employee Plans. At or prior to the Closing, the Company
shall withdraw as a participating employer in the Suiza Foods 401(k) Plan.
Purchaser agrees that the qualified plan in which the employees of the Company
will participate after the Closing will accept rollover contributions from
participants who have received a distribution from the Suiza Foods 401(k) Plan
after the Closing Date; provided, however, that such rollover contributions (i)
will
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be accepted only after a favorable determination letter is received regarding
the Suiza Foods 401(k) Plan, (ii) will be accepted only upon the receipt by the
plan administrator of Purchaser's qualified plan of reasonably satisfactory
assurances that the Suiza Foods 401(k) Plan is a qualified plan under section
401(a) of the Code, and (iii) qualify as valid rollover contributions (including
direct rollover contributions) that were distributed from the Suiza Foods 401(k)
Plan and have not been first deposited in an IRA or other qualified plan. The
Company shall not have any obligation to terminate its participation in any
Company Plan (other than the Suiza Foods 401(k) Plan) on or prior to the
Closing, although Purchaser or the Company may terminate the Company's
participation in all or any such plans after Closing, provided that the
covenants set forth in Section 7.3 hereof are satisfied. Certain of the Company
Plans may be insured plans, and the consent of the relevant insurer may be
necessary in order for such plans to cover Company employees after the Closing.
Seller shall use its best efforts to cooperate with the Company and Purchaser,
both before and after the Closing, in giving any notices regarding Company Plans
and in terminating the Company's participation in any and all Company Plans
designated by Purchaser.
ARTICLE IX.
CONDITIONS PRECEDENT TO CLOSING
Section 9.1 Conditions Precedent to Purchaser's Obligations. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following conditions, any
of which may be waived in writing by Purchaser.
(a) Accuracy of Representations and Warranties. The
representations and warranties made by Seller in this Agreement shall be true
and correct, in each case as of the Signing Date and as of the Closing Date as
though made as of the Closing Date, except to the extent such representations or
warranties made as of a specific date shall have been true and correct as of the
specified date; provided, however, that this Section 9.1(a) shall be deemed
satisfied if the failures of the representations and warranties to be true and
correct as set forth in this Section 9.1(a) would not, individually or in the
aggregate, be reasonably likely to result in damages to the Company of more than
$2.0 million.
(b) Performance of Covenants. Seller shall have performed and
complied in all material respects with all agreements, covenants and obligations
required by this Agreement to be performed by Seller prior to or at the Closing.
(c) Consents. Seller shall have received and delivered to
Purchaser all the Required Consents, each in form and substance reasonably
satisfactory to Purchaser, and all such Required Consents shall be in full force
and effect.
(d) Closing Certificate. An executive officer of Seller shall
have delivered to Purchaser a certificate confirming (i) the satisfaction of the
conditions set forth in Sections 9.1(a) and 9.1(b), and (ii) the continuing
force and effect of the Required Consents.
(e) Seller Secretary's Certificate. Seller shall have
delivered to Purchaser a certificate executed by the Secretary or an Assistant
Secretary of Seller certifying as to (i)
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Seller's Charter Documents, (ii) Seller's good standing, (iii) the resolutions
in which Seller's board of directors approved this Agreement and the
transactions contemplated hereby, and (iv) the incumbency of Seller's officers
who execute any documents on behalf of Seller in connection with this Agreement.
(f) Company Secretary's Certificate. Seller shall have
delivered to Purchaser a certificate executed by the Secretary of the Company
certifying as to (i) the Company's Charter Documents and (ii) the Company's good
standing.
(g) Legal Opinion. Seller shall have delivered to Purchaser
the legal opinion referred to in Section 3.2(h).
(h) Deliveries. Seller shall have delivered to Purchaser the
documents required by Section 3.2 and such other documents and certificates as
Purchaser may reasonably require.
(i) Compliance with HSR Act. All applicable waiting periods
under the HSR Act shall have expired or been terminated.
(j) No Order or Action. No Order shall be in effect forbidding
or enjoining the consummation of the transactions contemplated hereby. No Action
shall be pending before any court or other Governmental Authority seeking to
enjoin the Closing, or challenging or seeking damages or other relief against
Purchaser as a result of any of the transactions contemplated by this Agreement.
(k) Financing. Purchaser shall have obtained the financing
referenced in Section 5.6 or other adequate financing on terms satisfactory to
Purchaser to consummate the transactions contemplated hereby.
Section 9.2 Conditions Precedent to Seller's Obligations. The
obligation of Seller to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following conditions, any
of which may be waived in writing by Seller.
(a) Accuracy of Representations and Warranties. The
representations and warranties made by Purchaser in this Agreement shall be true
and correct, in each case as of the Signing Date and as of the Closing Date as
though made as of the Closing Date, except to the extent such representations or
warranties made as of a specific date shall have been true and correct as of the
specified date; provided, however, that this Section 9.2(a) shall be deemed
satisfied if the failures of the representations and warranties to be true and
correct as set forth in this Section 9.2(a) would not, individually or in the
aggregate, be reasonably likely to result in damages to Seller of more than $2.0
million.
(b) Performance of Covenants. Purchaser shall have performed
and complied in all material respects with all agreements, covenants and
obligations required by this Agreement to be performed by Purchaser prior to or
at the Closing.
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(c) Closing Certificate. An executive officer of Purchaser
shall have delivered to Seller a certificate confirming the satisfaction of the
conditions set forth in Sections 9.2(a) and 9.2(b).
(d) Secretary's Certificate. Purchaser shall have delivered to
Seller a certificate executed by the Secretary or an Assistant Secretary of
Purchaser certifying as to (i) Purchaser's Charter Documents, (ii) Purchaser's
good standing, (iii) the resolutions in which Purchaser's board of directors
approved this Agreement and the transactions contemplated hereby, and (iv) the
incumbency of Purchaser's officers who execute any documents on behalf of
Purchaser in connection with this Agreement.
(e) Legal Opinion. Purchaser shall have delivered to Seller
the legal opinion referred to in Section 3.3(d).
(f) Deliveries. Purchaser shall have delivered to Seller the
documents required by Section 3.3.
(g) Compliance with HSR Act. All applicable waiting periods
under the HSR Act shall have expired or been terminated.
(h) No Order or Action. No Order shall be in effect forbidding
or enjoining the consummation of the transactions contemplated hereby. No Action
shall be pending before any court or other Governmental Authority seeking to
enjoin the Closing or challenging or seeking damages or other relief against
Seller as a result of any of the transactions contemplated by this Agreement.
Section 9.3 If Conditions Not Satisfied. In the event that any of the
conditions set forth in this Article IX are not satisfied, and the Parties
nevertheless consummate the transactions contemplated by this Agreement to take
place at the Closing, the Parties shall not be deemed to have waived any Claim
for damages or other relief arising from or in connection with such
non-satisfaction.
ARTICLE X.
TERMINATION PRIOR TO CLOSING
Section 10.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual agreement of the Parties;
(b) by Purchaser or Seller, if any of the conditions provided
for in Section 9.1 or 9.2, respectively, shall not have been met or waived by
the later to occur of (i) May 31, 1998 or (ii) the 42nd day after Purchaser's
receipt of the Audited Financial Statements (the "OUTSIDE DATE"); provided,
however, that if a Party shall have received a second request from a
Governmental Authority relating to its HSR filing and the HSR waiting period
applicable to the transactions contemplated by this Agreement shall have expired
or been terminated less than 30 days prior to the Outside Date as determined
above, then the Outside Date shall be extended to
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be the 30th day following expiration or termination of the HSR waiting period,
but in no event later than June 30, 1998.
(c) by Purchaser by giving written notice to Seller at any
time prior to the Closing in the event that Seller is in breach of any
representation, warranty, covenant or agreement hereunder, which breach or
breaches, individually or in the aggregate, would be reasonably likely to result
in damages of the Company of more than $2.0 million (a "SELLER DEFAULT"), and
the Seller Default has continued without cure for a period of twenty (20) days
after the notice of such Seller Default, provided that no Purchaser Default or
event which, with notice or lapse of time or both, would constitute a Purchaser
Default shall have occurred and be continuing; or
(d) by Seller by giving written notice to Purchaser at any
time prior to the Closing in the event that Purchaser is in breach of any
representation, warranty, covenant or agreement hereunder, which breach or
breaches, individually or in the aggregate, would be reasonably likely to result
in damages of more than $2.0 million (a "Purchaser Default"), and the Default
has continued without cure for a period of twenty (20) days after the notice of
such Default, provided that no Seller Default or event which, with notice or
lapse of time or both, would constitute a Seller Default shall have occurred and
be continuing; provided, however, that nothing contained in this Section 10.1(d)
shall be construed so as to permit Purchaser to reduce the Preliminary Purchase
Price as determined pursuant to Article II hereof.
Section 10.2 Procedure Upon Termination. In the event of termination
pursuant to Section 10.1, written notice thereof shall be immediately given to
the other Party and the transactions contemplated by this Agreement shall be
terminated, without any further action by either Party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(a) each Party shall return all documents, work papers and
other materials of the other party, whether obtained before or after the
execution hereof, to the Party furnishing the same; and
(b) such termination shall not in any way limit, restrict or
relieve any Party of liability for any breach of this Agreement.
Section 10.3 Liquidated Damages. In the event (a) Purchaser shall
terminate this Agreement due to the condition set forth in Section 9.1(k) not
being satisfied or (b) either Party shall terminate this Agreement pursuant to
Section 10.1(b) and at the time of such termination the condition set forth in
Section 9.1(k) shall be the sole condition set forth in Section 9.1 that has not
been satisfied, then Purchaser shall promptly, but in any event not later than
the second business day after the date of such termination, pay Seller a fee
equal to $5.0 million (the "TERMINATION FEE"), payable by wire transfer of same
day funds; provided, however, that no Termination Fee shall be payable if such
condition shall not be satisfied due to (i) a declaration of a banking
moratorium or suspension of payments in respect of banks in the United States,
(ii) any material limitation by any Governmental Entity on, or other similar
event that materially adversely affects, the extension of credit in the United
States by banks or other lending institutions, or (iii) commencement of a war or
armed hostilities or other national or international
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calamity directly or indirectly involving the United States which materially
adversely affects the extension of credit. Purchaser acknowledges that the
agreement contained in this Section 10.3 is an integral part of the transactions
contemplated by this Agreement and constitutes liquidated damages and not a
penalty, and that without such agreement, Seller would not enter into this
Agreement.
ARTICLE XI.
TAXES
Section 11.1 Section 338 Election. If Purchaser so elects by notifying
Seller in writing no later than September 30, 1998, the Parties shall elect to
treat the purchase of the Shares as a purchase of assets for federal income Tax
purposes pursuant to Section 338(h)(10) of the Code and any similar provisions
under state and other income Tax laws (collectively, the "SECTION 338
ELECTION"); provided, however, if the Section 338 Election is made, the Purchase
Price shall be increased by the Section 338 Gross-up Amount. For purposes of the
Section 338 Election, the Parties shall allocate the aggregate of the Purchase
Price and the Company's liabilities to the Company's assets and the Non-Compete
Covenant as set forth in an Allocation Statement prepared by Purchaser.
Section 11.2 Section 338 Gross-Up Amount.
(a) As soon as reasonably practicable, but not later than 10 days after
the date Purchaser makes the Section 338 Election, Purchaser shall prepare and
deliver to Seller a calculation of the Section 338 Gross-Up Amount prepared by
Deloitte & Touche, LLP (the workpapers showing such calculation, the "SECTION
338 STATEMENT").
(b) Review of Section 338 Statement. As soon as practicable, but not
later than 20 days after receipt of the Section 338 Statement, Seller shall
inform the Purchaser in writing of any objection to the Section 338 Statement,
which objection, if any, shall set forth in reasonable detail Seller's
objections and the basis for those objections (the "SECTION 338 OBJECTION
NOTICE"). If Seller so objects and the Parties do not resolve such objections on
a mutually agreeable basis within 50 days after the date Purchaser makes the
Section 338 Election, then the disagreement shall be resolved as soon as
practicable thereafter, but not later than 85 days after the date Purchaser
makes the Section 338 Election, by one of the largest four national accounting
firms, which accounting firm shall be jointly selected by the Parties. The
Parties acknowledge that the scope of such accounting firm's work shall be
limited to resolving the objections set forth in the Section 338 Objection
Notice. The decision of such accounting firm shall be final and binding upon the
Parties. The Section 338 Gross-up Amount (as adjusted, if applicable, by the
agreement of the Parties or the decision of the accounting firm), shall be
deemed final upon the earlier to occur of (i) the agreement of the Parties, (ii)
the decision of the accounting firm, or (iii) the failure of Seller to deliver a
Section 338 Objection Notice to Purchaser within 20 days after Seller's receipt
of the Section 338 Statement. Each Party shall bear the fees, costs and expenses
of its own accountants and shall permit each other and each other's accountants
reasonable access to the books and records necessary to perform the analysis
contemplated by this Section. The Parties shall share equally the fees, costs
and expenses of the accounting firm selected by the Parties to resolve any
disagreements regarding the Section 338 Objection Notice, provided, however,
that if Seller shall have objected and the decision of such accounting firm
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does not result in an adjustment of more than $50,000 to the Section 338
Gross-up Amount in favor of Seller, Seller shall pay all of the fees, costs and
expenses of such accounting firm. If the decision of the accounting firm results
in an increase of more than $50,000 to the Section 338 Gross-up Amount,
Purchaser may rescind the Section 338 Election by delivering notice of such
rescission to Seller within 10 days after the Section 338 Gross-up Amount is
deemed final, but in no event later than December 30, 1998.
(c) Purchase Price Adjustment; Procedure. The amount of the Section 338
Gross-up Amount shall be paid by Purchaser to Seller by wire transfer of
immediately available funds within two business days after the date on which the
Section 338 Gross-up Amount is deemed final in accordance with Section 11.2(b),
without payment of any interest thereon.
Section 11.3 Apportionment of Taxable Income. With respect to any
combined, consolidated, or unitary income Tax reports or returns that Seller
files with the Company, the Parties shall elect to treat the Closing Date as the
last day of a taxable period of the Company (a "PRE-CLOSING TAX PERIOD").
Notwithstanding the foregoing, Purchaser or the Company shall be responsible for
preparing and filing all income Tax reports and returns covering the Company for
Tax periods ending after the Closing Date, even if such reports and returns
cover periods prior to the Closing Date.
Section 11.4 Preparation and Filing of Income Tax Returns. When
preparing the income Tax reports and returns for any Pre-Closing Tax Period,
Seller shall prepare such reports and returns in a manner consistent with prior
years and determine the income, gain, expenses, losses, deductions, and credits
of the Company consistently with prior practices. With respect to any such
income Tax report or return, the Company shall provide to Seller the information
necessary to prepare such reports and returns no later than 60 days after the
Closing Date. Seller shall submit such reports and returns to Purchaser a
reasonable period before filing them with the respective Taxing Authorities and
Seller shall comply with any reasonable request of Purchaser to change such
reports and returns so long as the Tax liability of Seller is not increased,
except for any Tax liability contemplated by the Section 338 Election.
Section 11.5 Payment of Income Taxes. Any taxable income or loss of the
Company for any Pre-Closing Tax Period shall be included in Seller's
consolidated federal income Tax return and any consolidated, combined, or
unitary income Tax reports and returns that Seller files after the Closing Date.
Seller shall pay all Taxes owed with respect to such reports and returns when
due.
Section 11.6 Section 338 Election - Payment of Taxes. Notwithstanding
anything to the contrary in this Agreement, Seller shall bear any income Taxes
owed in connection with the Section 338 Election and the Company shall not
reimburse Seller (other than by payment of the Section 338 Gross-up Amount) for
any such income Taxes.
Section 11.7 Audit. If after the Closing either Party or the Company
receives a notice of deficiency or a proposed adjustment in connection with any
audit or other proceeding concerning any income Tax report or return covering
the operations of the Company on or before the Closing Date, the Party receiving
such item shall notify the other Party, or if the Company received such notice
the Company shall notify Seller, of its receipt. Seller shall have the sole and
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exclusive right to settle or contest any such notice of deficiency or proposed
adjustment and to represent the Company in connection with any audit or other
proceeding relating to any income Tax reports or returns including the
operations of the Company for any Tax periods ending on or before the Closing
Date. Seller, however, shall not settle any issue without the prior consent of
Purchaser if such settlement would adversely affect any past, present, or future
income Taxes of Purchaser or the Company or the Company's future operations.
Purchaser shall have the sole and exclusive right to settle or contest any
notice of deficiency or proposed adjustment, and to represent the Company in
connection with any audit or other proceeding relating to any income Tax report
or return including the operations of the Company for any Tax period ending
after the Closing Date. Purchaser, however, shall not settle any issue without
Seller's prior consent if such report or return includes the operations of the
Company for a period before the Closing Date and increases the Tax liability of
Seller.
Section 11.8 Refunds. If the Company or Purchaser receives any Tax
refunds relating to or resulting from the business or assets of the Company for
any Pre-Closing Tax Period, the Company or Purchaser, as the case may be, shall
immediately forward the Tax refund to Seller.
Section 11.9 Allocation Statement. If the Section 338 Election is made,
for purposes of Section 1060 of the Code and any Tax election requiring an
allocation of the Purchase Price, the aggregate of the Purchase Price and the
Company's liabilities shall be allocated to Company's assets and the
Noncompetition Agreement (the "ALLOCATION STATEMENT"). The Parties shall
allocate any adjustment to the Purchase Price proportionately to such assets and
the Noncompetition Agreement unless the adjustment specifically relates to a
particular asset. In such a case, the Parties shall allocate such adjustment to
such asset.
ARTICLE XII.
INDEMNIFICATION
Section 12.1 Survival of Representations and Warranties. All
representations and warranties made by any Party in this Agreement shall survive
the Closing for a period of one year from the Closing Date, provided that the
representations and warranties set forth in (a) Section 4.3 shall survive
indefinitely, and (b) Sections 4.17 and 4.22 shall survive until expiration of
the applicable statute of limitations, as such statutory period may be expanded
from time to time. If a Party receives notice of a Claim for indemnification
before the expiration of the applicable representation or warranty, the Party
shall remain responsible for any Damages relating thereto notwithstanding the
subsequent expiration of such representation or warranty.
Section 12.2 Indemnification of Purchaser. From and after the Closing,
Seller shall indemnify and hold harmless Purchaser, the Company and their
respective directors, officers, employees, stockholders, controlling persons,
and affiliates (collectively, the "INDEMNIFIED PERSONS") from, and will pay to
the Indemnified Persons the amount of any loss, Liability, Claim, Action,
damage, expense (including costs of investigation and defense and reasonable
attorneys' fees), penalty, fine, or diminution of value, whether or not
involving a third-party claim (collectively, "DAMAGES"), arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by
Seller in this Agreement (without giving effect to any supplement to Seller's
Disclosure Letter), Seller's
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Disclosure Letter, the supplements to Seller's Disclosure Letter, or any other
certificate or document delivered by or on behalf of Seller pursuant to this
Agreement;
(b) any breach of any representation or warranty made by
Seller in this Agreement as if such representation or warranty were made on and
as of the Closing Date without giving effect to any supplement to Seller's
Disclosure Letter;
(c) any breach by Seller of any covenant or obligation of
Seller in this Agreement;
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either Seller or the Company
(or any Person acting on their behalf) in connection with this Agreement or any
of the transactions contemplated hereby;
(e) any Taxes attributable to taxable years or periods ending
on or prior to the Closing Date, that are attributable to any affiliated group
or member thereof (as defined under Code section 1504(a)) of which the Company
was a member on or prior to the Closing Date.
(f) any Claims and any insurance deductibles with respect
thereto (regardless of whether made before or after Closing) that arise from any
facts or circumstances occurring prior to the Closing Date for which insurance
coverage is provided under the automobile, bodily injury and property damage,
general liability and workers compensation indemnity and workers compensation
medical insurance policies listed in Schedule 12.2(f), which indemnified Claims
shall include, without limitation, the Claims described in such Schedule;
(g) any employee contract listed on Schedule 8.6 hereto and
any breach of any of Seller's obligations under Section 8.6 hereof; and
(h) any Claim made before Closing or within 9 months after
Closing relating to or arising out of the product recall occurring at the
Company's Tampa plant on October 29, 1997.
Section 12.3 Indemnification of Seller. From and after the Closing,
Purchaser shall indemnify and hold harmless Seller from and will pay to Seller
the amount of any Damages arising, directly or indirectly, from or in connection
with:
(a) any breach of any representation or warranty made by
Purchaser in this Agreement or any other certificate or document delivered by or
on behalf of Purchaser pursuant to this Agreement;
(b) any breach of any representation or warranty made by
Purchaser in this Agreement as if such representation or warranty were made on
and as of the Closing Date.
(c) any breach by Purchaser of any covenant or obligation of
Purchaser in this Agreement; or
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(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Purchaser (or any Person
acting on its behalf) in connection with this Agreement or any of the
transactions contemplated hereby.
Section 12.4 Limitations on Amount. Seller will have no liability for
indemnification under Section 12.2 with respect to the matters described in
Sections 12.2(a), 12.2(b), or 12.2(c) (to the extent relating to any failure to
perform or comply prior to the Closing Date) until the total of all Damages with
respect to such matters exceeds $2,000,000, and then only for the amount by
which such Damages exceed $2,000,000. The maximum liability for which Seller
shall be liable for indemnification pursuant to Section 12.2 with respect to the
matters referred to in the immediately preceding sentence shall be $20,000,000.
However, this Section 12.4 will not apply to any intentional breach by Seller of
any representation, warranty, covenant or obligation.
Section 12.5 Indemnification Procedure. The indemnification
obligations under this Agreement shall be subject to the following
procedures:
(a) Third Party Claims. Promptly after receipt by an
indemnified party (an "INDEMNITEE") under Section 12.2 or 12.3 of notice of the
commencement of any Action against it, such Indemnitee will, if a claim is to be
made against an indemnifying party (an "INDEMNITOR") under such Section, give
notice to the Indemnitor of the commencement of such Action, but the failure to
notify the Indemnitor will not relieve the Indemnitor of any liability that it
may have to any Indemnitee, except to the extent that the Indemnitor
demonstrates that the defense of such action is prejudiced by the Indemnitee's
failure to give such notice. With respect to any such Action, the Indemnitor
will be entitled to participate in such Action and, to the extent that it wishes
(unless (i) the Indemnitor is also a party to such Action and the Indemnitee
determines in good faith that joint representation would be inappropriate, or
(ii) the Indemnitor fails to provide reasonable assurance to the Indemnitee of
its financial capacity to defend such Action and provide indemnification with
respect to such Action), to assume the defense of such Action with counsel
satisfactory to the Indemnitee and, after notice from the Indemnitor to the
Indemnitee of its election to assume the defense of such Action, the Indemnitor
will not, as long as it diligently conducts such defense, be liable to the
Indemnitee under this Article 12 for any fees of other counsel or any other
expenses with respect to the defense of such Action, in each case subsequently
incurred by the Indemnitee in connection with the defense of such Action, other
than reasonable costs of investigation. If the Indemnitor assumes the defense of
an Action, (i) no compromise or settlement of such claims may be effected by the
Indemnitor without the Indemnitee's consent unless (A) there is no finding or
admission of any violation of Law or any violation of the rights of any Person
and no effect on any other claims that may be made against the Indemnitor, and
(B) the sole relief provided is monetary damages that are paid in full by the
Indemnitor; and (ii) the Indemnitee will have no liability with respect to any
compromise or settlement of such claims effected without its consent (which may
not be unreasonably withheld). If notice is given to an Indemnitor of the
commencement of any Action and the Indemnitor does not, within ten days after
the Indemnitee's notice is given, give notice to the Indemnitee of its election
to assume the defense of such Action, the Indemnitor will be bound by any
determination made in such Action or any reasonable compromise or settlement
effected by the Indemnitee. Notwithstanding the foregoing, if an Indemnitee
determines in good faith that there
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is a reasonable probability that an Action may adversely affect it or its
affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnitee may, by notice
to the Indemnitor, assume the exclusive right to defend, compromise, or settle
such Action, but the Indemnitor will not be bound by any determination of an
Action so defended or any compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(b) Other Claims. A claim for indemnification for any matter
not involving a third-party claim may be asserted by notice to the party from
whom indemnification is sought.
Section 12.6 Sole and Exclusive Remedy. The Parties agree that except
as otherwise provided in this Agreement, to the extent permitted by applicable
Law, the indemnification provided in this Article XII shall be the sole and
exclusive relief and remedy available to the parties hereto with respect to a
breach of a representation, warranty, covenant or agreement contained in this
Agreement if the Closing occurs. Notwithstanding the foregoing, no provision in
this Agreement shall in any manner limit the right of a Party to seek judicial
or other relief for fraud.
Section 12.7 Notice of Breach. If before the Closing a Party notifies
another Party of its breach of this Agreement, such notification shall neither
prevent such other Party from seeking damages for such breach nor decrease or
mitigate such damages if such other Party still closes the transactions
contemplated by this Agreement.
Section 12.8 Discovery of Breach. If before the Closing a Party
discovers that another Party has breached this Agreement, such discovery shall
neither prevent such Party from seeking damages for such breach nor decrease or
mitigate such damages if such Party still closes the transactions contemplated
by this Agreement.
Section 12.9 Notification of Breach. If, to the knowledge of Seller or
the Company prior to Closing, the Purchaser has breached a representation,
warranty, covenant or agreement contained in this Agreement, Seller shall notify
Purchaser of such breach prior to Closing. If, to the actual knowledge of an
executive officer of Purchaser prior to Closing, Seller has breached a
representation, warranty, covenant or agreement contained in this Agreement,
Purchaser shall notify Seller of such breach prior to Closing.
Section 12.10 Negligence and Strict Liability. THE PROVISIONS OF THIS
AGREEMENT CONCERNING CLAIMS FOR DAMAGES AND INDEMNIFICATION SHALL APPLY WHETHER
OR NOT THE PARTY OR OTHER PERSON CLAIMING SUCH DAMAGES OR INDEMNIFICATION WAS
NEGLIGENT, OR STRICTLY LIABLE IN CONNECTION WITH THE EVENTS GIVING RISE TO SUCH
CLAIM.
ARTICLE XIII.
MEDIATION AND REMEDIES
Section 13.1 Mediation Meeting The Parties shall attempt in good faith
to resolve promptly through negotiations any Claim or dispute under this
Agreement. If any Claim or dispute should arise that the Parties are unable to
resolve, the Parties shall meet at least once to attempt to resolve the matter
by mediation with a mediator mutually selected by the Parties (the
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"MEDIATION MEETING"). Either Party may request the other Party to attend a
Mediation Meeting at a mutually agreed time and place within ten days after
delivery of a notice of a Claim or dispute. The occurrence of a Mediation
Meeting with respect to a Claim or dispute shall be a condition precedent to
seeking any judicial remedy, provided that if a Party refuses to attend a
Mediation Meeting or the Parties are unable to agree on a mediator, the Parties
may pursue judicial remedies. No decision reached at a Mediation Meeting shall
be binding on a Party without its written consent.
Section 13.2 Exclusive Jurisdiction. The Parties agree that any action
brought by one party against the other party shall be instituted in a federal or
state court sitting in Dallas, Texas, which courts and their respective
appellate courts shall be the exclusive venue for any such claim. Each Party
waives any objection that it may have to the laying of such venue, and
irrevocably submits to the jurisdiction of any such court with respect to any
such claim. Any service of process and other notice in any such case shall be
effective against a Party when transmitted in accordance with Section 14.8,
provided that a Party also may serve process in any manner permitted by Law.
Section 13.3 Expenses. If any Party commences an Action with respect to
this Agreement, the prevailing Party in such Action may receive as part of any
award or judgment reimbursement of such Party's reasonable attorneys' fees and
expenses.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1 Amendment. No amendment of this Agreement shall be
effective unless in a writing signed by the Parties.
Section 14.2 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original agreement, but
all of which shall constitute one and the same agreement. Any Party may execute
and deliver this Agreement by an executed signature page transmitted by a
facsimile machine. If a Party transmits its signature page by a facsimile
machine, such Party shall promptly thereafter deliver an originally executed
signature page to the other Party, provided that any failure to deliver such an
originally executed signature page shall not affect the validity, legality, or
enforceability of this Agreement.
Section 14.3 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the Parties and supersedes all prior
agreements and understandings, both written and oral, with respect to the
subject matter of this Agreement.
Section 14.4 Expenses. Each Party shall bear its own expenses with
respect to the negotiation and preparation of this Agreement and the Closing,
including any fees and expenses of its Representatives, provided that if a Party
terminates this Agreement because of another Party's breach of this Agreement,
the non-breaching Party shall be entitled to seek reimbursement of its expenses
as part of its damages with respect to such breach.
Section 14.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF TEXAS, REGARDLESS OF THE LAWS THAT MIGHT
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OTHERWISE GOVERN UNDER THE CONFLICTS OF LAWS PRINCIPLES OF SUCH STATE.
Section 14.6 No Assignment. No Party may assign its benefits or
delegate its duties under this Agreement without the prior consent of the other
Party. Any attempted assignment or delegation without such prior consent shall
be void. Notwithstanding this prohibition against assignment and delegation,
Purchaser may assign its rights and delegate its duties under this Agreement to
a wholly-owned subsidiary of Purchaser without Seller's consent but such
assignment and delegation shall not release Purchaser from any liability under
this Agreement. In addition, after the Closing, Purchaser may assign its rights
under this Agreement to a purchaser of all of the assets or equity of Purchaser
without Seller's consent, and any such purchaser and any subsequent purchasers
of all of the assets or equity of Purchaser may similarly assign such rights.
Section 14.7 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the Parties and no other Person shall have any right, interest,
or claim under this Agreement, except as provided in Section 7.3 hereof.
Section 14.8 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement shall be in
writing. Such claims, consents, designations, notices, waivers, and other
communications shall be considered received (a) on the day of actual transmittal
when transmitted by facsimile with written confirmation of such transmittal, (b)
on the next business day following actual transmittal when transmitted by a
nationally recognized overnight courier, or (c) on the third business day
following actual transmittal when transmitted by certified mail, postage
prepaid, return receipt requested; in each case when transmitted to a Party at
its address set forth below (or to such other address to which such Party has
notified the other Parties in accordance with this Section to send such claims,
consents, designations, notices, waivers, and other communications):
Purchaser: Packaged Ice, Inc.
8572 Katy Freeway, Suite 101
Houston, Texas 77024
Attn: James Stuart, Chief Executive Officer
phone: (713) 464-9384
fax: (713) 464-4681
Copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P.
300 Convent, Suite 1500
San Antonio, Texas 78205
Attn: Alan Schoenbaum
phone: (210) 270-0853
fax: (210) 224-2035
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Seller: Suiza Foods Corporation
3811 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attn: Gregg L. Engles, Chief Executive Officer
phone: (214) 528-9922
fax: (214) 528-9929
Copy to: Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attn: William McCormack
phone: (214) 939-5500
fax: (214) 939-6100
Section 14.9 Public Announcements. The Parties shall agree on the terms
of any press releases or other public announcements related to this Agreement,
and shall consult with each other before issuing any press releases or other
public announcements related to this Agreement; provided, however, that any
Party may make a public disclosure if in the opinion of such Party's counsel it
is required by Law or the rules of the New York Stock Exchange or the NASDAQ
National Market to make such disclosure. The Parties agree, to the extent
practicable, to consult with each other regarding any such public announcement
in advance thereof.
Section 14.10 Representation by Legal Counsel. Each Party is a
sophisticated Person that was advised by experienced legal counsel and other
advisors in the negotiation and preparation of this Agreement.
Section 14.11 Schedules. All references in this Agreement to schedules
shall mean the schedules identified in this Agreement, which are incorporated
into this Agreement and shall be deemed a part of this Agreement for all
purposes. Each Section of this Agreement that refers to a schedule shall have a
separate schedule. In addition, any disclosure under a particular section's
schedule shall be made under the heading of any relevant subsection of such
section. A disclosure of an item in a schedule for a particular section shall
not be a disclosure under any other section's schedule, unless so noted
specifically on such schedule.
Section 14.12 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions of this Agreement or affect the validity or enforceability
of such provision in any other jurisdiction. In addition, any such prohibited or
unenforceable provision shall be given effect to the extent possible in the
jurisdiction where such provision is prohibited or unenforceable.
Section 14.13 Specific Performance. The Parties agree that money
damages or other remedy at law would not be sufficient or adequate remedy for
breach of this Agreement and that in addition to all other remedies available to
them, each of them shall be entitled to the fullest extent permitted by law to
an injunction or other equitable relief requiring specific performance of this
Agreement.
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Section 14.14 Successors. This Agreement shall be binding upon and
shall inure to the benefit of each Party and its heirs, legal representatives,
permitted assigns, and successors, provided that this Section shall not permit
the assignment or other transfer of this Agreement, whether by operation of law
or otherwise, if such assignment of other transfer is not otherwise permitted
under this Agreement.
Section 14.15 Time of the Essence. Time is of the essence in the
performance of this Agreement and all dates and periods specified in this
Agreement.
Section 14.16 Waiver. No provision of this Agreement shall be
considered waived unless such waiver is in writing and signed by the Party that
benefits from the enforcement of such provision. No waiver of any provision in
this Agreement, however, shall be deemed a waiver of a subsequent breach of such
provision or a waiver of a similar provision. In addition, a waiver of any
breach or a failure to enforce any term or condition of this Agreement shall not
in any way affect, limit, or waive a Party's rights under this Agreement at any
time to enforce strict compliance thereafter with every term and condition of
this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by a duly authorized officer as of the Signing Date.
SELLER: SUIZA FOODS CORPORATION
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
PURCHASER: PACKAGED ICE, INC.
By:
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Name:
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Title:
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48
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EXHIBIT 2.2
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of
____________, 1998, by and among Packaged Ice, Inc., a Texas corporation
("Purchaser"), and Suiza Foods Corporation, a Delaware corporation ("Seller").
PRELIMINARY STATEMENTS
Seller was the holder of all of the outstanding capital stock of Reddy
Ice Corporation, a Delaware corporation (the "Company"), which was sold to
Purchaser pursuant to that certain Stock Purchase Agreement dated as of March
27, 1998 (the "Stock Purchase Agreement")
Section 3.2(c) of the Stock Purchase Agreement requires that Seller
execute and deliver a noncompetition agreement as a condition to the
consummation of the transactions contemplated by the Stock Purchase Agreement.
AGREEMENT
For valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. ACKNOWLEDGMENTS BY SELLER.
Seller understands, acknowledges and agrees that (a) Purchaser has
required that Seller make the covenants set forth in Sections 2 and 3 of this
Agreement as a condition to Purchaser's acquisition of the Company; (b) the
provisions of Sections 2 and 3 of this Agreement are reasonable (including with
respect to duration, geographical area and scope) and do not impose a greater
restraint on Seller than is necessary to protect the goodwill or other business
interest of Purchaser; (c) the provisions set forth in Sections 2 and 3 are not
oppressive to Seller nor injurious to the public; and (d) Purchaser would be
irreparably damaged if Seller were to breach the covenants set forth in
Sections 2 and 3 of this Agreement.
2. CONFIDENTIAL INFORMATION.
Subject to Section 8.3 of the Stock Purchase Agreement, Seller
acknowledges and agrees that all confidential information known or obtained by
Seller, whether before or after the date hereof, relating to the Company is now
the property of Purchaser. Therefore, Seller agrees that it will not, at any
time, disclose to any unauthorized persons or use for its own account or for
the benefit of any third party any such confidential information, without the
prior written consent of Purchaser, unless and to the extent that such
confidential information:
(i) is or becomes generally known to and available for use by the
public, other than as a result of the fault of Seller, including, without
limitation, Seller's officers, directors, employees,
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consultants, agents and investment bankers ("Representatives") or any other
person bound by a duty of confidentiality to Purchaser,
(ii) becomes available to Seller on a non-confidential basis from a
source other than Purchaser, provided that such source is not bound by a
confidentiality agreement or other contractual, legal or fiduciary obligation
of confidentiality to Purchaser, or
(iii) Seller or any of its Representatives are compelled to disclose
by judicial or administrative process or, in the opinion of Seller' counsel, by
other mandatory requirements of law.
Seller agrees to deliver to Purchaser at any time Purchaser may
request, all documents, memoranda, notes, plans, records, reports, and other
documentation, models, components, devices, or computer software, whether
embodied in a disk or in other form (and all copies of all of the foregoing,
excluding Seller's personal copies of the transactional documents related to
the aforementioned Stock Purchase Agreement ), relating to the Company that
Seller may then possess or have under its control. Seller's obligations with
respect to this Section 2 shall terminate five (5) years after the date of this
Agreement.
3. NONCOMPETITION.
As an inducement for Purchaser to enter into and consummate the Stock
Purchase Agreement, and in exchange for the consideration paid to Seller under
the Stock Purchase Agreement, Seller covenants and agrees that:
(a) For a period of five (5) years after the date hereof within a
three hundred (300) mile radius of any packaged, block, agricultural or dry ice
manufacturing or distribution facility of Purchaser, any subsidiary of
Purchaser or Reddy Ice Corporation in existence on the date hereof (the
"Territory"):
(i) Neither Seller nor any of its subsidiaries will
directly or indirectly, engage or invest in, own, manage, operate, finance,
control or participate in the ownership, management, operation, financing or
control of, be employed by, lend Seller's name or any similar name to, lend
Seller's credit to, or render services or advice to, any business whose
products or activities compete in whole or in part with the products or
activities of Purchaser or any of its subsidiaries as it relates to the
production, distribution, transportation, and sale of packaged, block,
agricultural or dry ice products; provided, however, Seller may own not more
than 5% of the outstanding capital stock of a publicly held company engaged in
any such business, and provided further, that Seller may acquire companies in
the Territory with respect to which the production, distribution,
transportation and sale of packaged, block, agricultural or dry ice products is
incidental so long as Seller (a) disposes of such incidental business within
180 days following the acquisition thereof and (b) with respect to such
disposition, provides Purchaser with a right of first refusal to purchase such
incidental business at the same price and on substantially the same terms as
Seller proposes to dispose of such business to any third party, which right
Purchaser may exercise within ten days after receipt of the forms of definitive
documentation for such proposed disposition. If Purchaser so elects to
exercise its right to acquire such business, Purchaser and Seller shall
promptly thereafter enter into definitive agreements for such acquisition
substantially similar to the definitive documentation for the proposed
disposition to the third party;
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(ii) As it relates to the manufacture, distribution and
sale of packaged, block, agricultural or dry ice products by Purchaser or any
of its subsidiaries, neither Seller nor any of its subsidiaries will, directly
or indirectly, either for its own behalf or on behalf of any other person or
entity, solicit the business of any person or entity known to Seller to be a
customer or prospective customer of Purchaser or any of its subsidiaries,
whether or not Seller had personal contact with such customer or prospective
customer of Purchaser or any of its subsidiaries, with respect to products or
activities which compete in whole or in part with the products or activities of
Purchaser or any of its subsidiaries.
(b) For a period of two (2) years after the date hereof, neither
Seller nor any of its subsidiaries will directly or indirectly, for its own
behalf or on behalf of any other person or entity, (i) solicit or attempt to
solicit any employee of Purchaser or any of its subsidiaries or attempt to
encourage any such employee to leave the employ of Purchaser or any of its
subsidiaries, or (ii) induce or attempt to induce any customer, supplier,
licensee, or business relation of Purchaser or any of its subsidiaries to cease
doing business with Purchaser or any of its subsidiaries; and
(c) For a period of two (2) years after the date hereof, neither
Seller nor any of its subsidiaries will, directly or indirectly, for its own
behalf or on behalf of any other person or entity, knowingly employ or
otherwise engage as an employee, independent contractor or otherwise any
employee of Purchaser or any of its subsidiaries.
(d) In the event of a breach by Seller of any covenant set forth
in Subsection 3(a), (b) or (c) of this Agreement, the term of such covenant
will be extended by the period of the duration of such breach.
4. REMEDIES.
If Seller breaches any covenant set forth in Section 2 or 3 of this
Agreement, Purchaser will be entitled to the following remedies:
(a) damages from Seller; and
(b) in addition to its right to damages and any other rights
Purchaser may have, to obtain injunctive or other equitable relief to restrain
any breach or threatened breach or otherwise to specifically enforce the
provisions of Sections 2 and 3 of this Agreement, it being agreed that money
damages alone would be inadequate to compensate Purchaser and would be an
inadequate remedy for such breach.
5. SUCCESSORS AND ASSIGNS.
This Agreement will be binding upon Seller and its assigns, heirs and
legal representatives and will inure to the benefit of Purchaser and its
affiliates, successors and assigns. Neither this Agreement nor any rights or
obligations hereunder shall be assignable by Seller. Purchaser shall have the
right to assign its rights under this Agreement to any entity which acquires
all or substantially all of the assets or stock of Purchaser.
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6. WAIVER.
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will operate
as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law:
(a) no claim or right arising out of this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing and signed by the other party;
(b) no waiver that may be given by a party will be applicable except
in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.
7. GOVERNING LAW.
This Agreement will be governed by the laws of the State of Texas.
8. JURISDICTION.
The parties hereto intend to and hereby confer jurisdiction to enforce
the covenants contained in this Agreement upon the District Court of Dallas
County, Texas.
9. SEVERABILITY.
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited by law or invalid, then such
provision or term will be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement. If any of the covenants set forth in this Agreement are held by
a court of competent jurisdiction to contain limitations as to time,
geographical area or scope of activity to be restrained that are not reasonable
and impose a greater restraint than is necessary to protect the goodwill or
other business interest of Purchaser, the court shall reform the covenants to
the extent necessary to cause the limitations contained in the covenants as to
time, geographical area and scope of activity to be restrained to be reasonable
and to impose a restraint that is not greater than necessary to protect the
goodwill or other business interest of Purchaser and enforce the covenants as
reformed.
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10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
11. SECTION HEADINGS, CONSTRUCTION.
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement unless otherwise specified. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
12. NOTICES.
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when:
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to other parties):
Seller: Suiza Foods Corporation
3811 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: Gregg L. Engles, Chief Executive Officer
With a copy to: Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attention: William McCormack, Esq.
Purchaser: Packaged Ice, Inc.
8572 Katy Freeway, Suite 101
Houston, Texas 77024
Attention: A.J. Lewis, President
With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
Attention: Alan Schoenbaum, Esq.
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13. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter of this Agreement. This Agreement may not be
amended except by a written agreement executed by the party to be charged with
the amendment.
[NONCOMPETITION AGREEMENT
SIGNATURE PAGE FOLLOWS]
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[NONCOMPETITION AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
SUIZA FOODS CORPORATION
By:
-----------------------------------------------
Print Name:
------------------------------
Print Title:
-----------------------------
PACKAGED ICE, INC.
By:
-----------------------------------------------
Print Name:
------------------------------
Print Title:
-----------------------------
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Exhibit 4.1
================================================================================
PACKAGED ICE, INC.
as Issuer,
THE SUBSIDIARY GUARANTORS NAMED HEREIN
AND
U.S. TRUST COMPANY OF TEXAS, N.A.
as Trustee
----------------------------------------
INDENTURE
Dated as of January 28, 1998
Amended and Restated as of April 30, 1998
----------------------------------------
9 3/4% Series A Senior Notes
due February 1, 2005
9 3/4% Series B Senior Notes
due February 1, 2005
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ----------
<S> <C> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10; 11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 4.08; 4.10; 11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02; 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02; 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05; 7.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(l)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(l)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
- --------------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Incorporation by Reference of TIA . . . . . . . . . . . . . 21
SECTION 1.03. Rules of Construction . . . . . . . . . . . . . . . . . . . 21
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating. . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . . . . 22
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . 23
SECTION 2.04. Paying Agent to Hold Assets in Trust. . . . . . . . . . . . 24
SECTION 2.05. Securityholder Lists . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . 24
SECTION 2.07. Replacement Securities. . . . . . . . . . . . . . . . . . . 25
SECTION 2.08. Outstanding Securities . . . . . . . . . . . . . . . . . . . 25
SECTION 2.09. Treasury Securities . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.10. Temporary Securities . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.12. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.13. Deposit of Moneys . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.14. Book-Entry Provisions for Global Securities . . . . . . . . 27
SECTION 2.15. Registration of Transfers and Exchanges . . . . . . . . . . 28
SECTION 2.16. Designation . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.02. Selection of Securities to Be Redeemed . . . . . . . . . . . 32
SECTION 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . 33
SECTION 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . 33
SECTION 3.06. Securities Redeemed in Part . . . . . . . . . . . . . . . . 34
SECTION 3.07 Optional Redemption . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.08. Procedures for Purchase Offers . . . . . . . . . . . . . . . 34
</TABLE>
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<TABLE>
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ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . . 36
SECTION 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . . 36
SECTION 4.03. Limitation on Restricted Payments . . . . . . . . . . . . . 36
SECTION 4.04. Limitation on Indebtedness . . . . . . . . . . . . . . . . . 38
SECTION 4.05. Corporate Existence . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.06. Payment of Taxes and Other Claims . . . . . . . . . . . . . 39
SECTION 4.07. Maintenance of Properties and Insurance . . . . . . . . . . 39
SECTION 4.08. Compliance Certificate; Notice of Default; Tax Information . 40
SECTION 4.09. Compliance with Laws . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.10. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.11. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . 41
SECTION 4.12. Limitation on Transactions with Affiliates . . . . . . . . . 41
SECTION 4.13. Limitation on Conduct of Business . . . . . . . . . . . . . 42
SECTION 4.14. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . 42
SECTION 4.15. Limitation on Liens . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.16. Offer to Repurchase Upon Change of Control . . . . . . . . . 43
SECTION 4.17. Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.18. Limitation on Issuances and Sales of Capital Stock of
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.19. Limitation on Status as Investment Company . . . . . . . . . 46
SECTION 4.20 Sale and Leaseback Transactions . . . . . . . . . . . . . . 46
SECTION 4.21 Additional Subsidiary Guarantees. . . . . . . . . . . . . . 46
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Consolidations and Sale of Assets . . . . . . . . . 47
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . 51
SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.07. Rights of Holders to Receive Payment . . . . . . . . . . . . 52
SECTION 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . 52
SECTION 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . 52
</TABLE>
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<TABLE>
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SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . 53
SECTION 6.12 Restoration of Rights and Remedies. . . . . . . . . . . . . 53
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . 55
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.05. Notice of Default . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . 56
SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . 56
SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . 57
SECTION 7.09. Successor Trustee by Merger, Etc . . . . . . . . . . . . . . 58
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . 58
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . 59
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance . . . . . . . . . . 59
SECTION 8.02. Satisfaction and Discharge . . . . . . . . . . . . . . . . . 62
SECTION 8.03. Survival of Certain Obligations . . . . . . . . . . . . . . 63
SECTION 8.04. Acknowledgment of Discharge by Trustee . . . . . . . . . . . 63
SECTION 8.05. Application of Trust Assets . . . . . . . . . . . . . . . . 63
SECTION 8.06. Repayment to the Company or Subsidiary Guarantors;
Unclaimed Money . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders . . . . . . . . . . . . . . . . . 64
SECTION 9.02. With Consent of Holders . . . . . . . . . . . . . . . . . . 65
SECTION 9.03. Compliance with TIA . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.04. Revocation and Effect of Consents . . . . . . . . . . . . . 66
SECTION 9.05. Notation on or Exchange of Securities . . . . . . . . . . . 67
SECTION 9.06. Trustee to Sign Amendments, Etc . . . . . . . . . . . . . . 67
</TABLE>
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<TABLE>
<S> <C>
ARTICLE TEN
GUARANTEE
SECTION 10.01. Unconditional Guarantee . . . . . . . . . . . . . . . . . 67
SECTION 10.02. Severability . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.03. Limitation of Subsidiary Guarantor's Liability . . . . . . 68
SECTION 10.04. Subsidiary Guarantors May Consolidate, etc., on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.05. Contribution . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.06. Waiver of Subrogation . . . . . . . . . . . . . . . . . . 70
SECTION 10.07. Execution of Subsidiary Guarantee . . . . . . . . . . . . 71
SECTION 10.08. Waiver of Stay, Extension or Usury Laws . . . . . . . . . 71
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.03. Communications by Holders with Other Holders . . . . . . . 73
SECTION 11.04. Certificate and Opinion as to Conditions Precedent . . . . 73
SECTION 11.05. Statements Required in Certificate or Opinion . . . . . . 73
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar . . . . . . . . 74
SECTION 11.07. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 11.09. No Adverse Interpretation of Other Agreements . . . . . . 74
SECTION 11.10. No Recourse Against Others . . . . . . . . . . . . . . . . 74
SECTION 11.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.12. Duplicate Originals . . . . . . . . . . . . . . . . . . . 75
SECTION 11.13. Severability . . . . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
SIGNATURES
Exhibit A-l - Form of Series A Security
Exhibit A-2 - Form of Series B Security
Exhibit B - Form of Legend for Global Securities
Exhibit C - Form of Certificate Deliverable Upon Transfer or Exchange of
Securities
Exhibit D - Transferee Certificate for Non-QIB Accredited Investors
Note: This Table of Contents shall not, for any purpose, be deemed to be part
of the Indenture.
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THIS INDENTURE dated as of January 28, 1998, as amended and restated as
of April 30, 1998, is among PACKAGED ICE, INC., a Texas corporation (the
"Company"), PACKAGED ICE LEASING, INC., a Nevada corporation, SOUTHCO ICE,
INC., a Texas corporation, MISSION PARTY ICE, INC., a Texas corporation,
SOUTHWEST TEXAS PACKAGED ICE, INC., a Texas corporation, SOUTHWESTERN ICE,
INC., a Texas corporation, GOLDEN EAGLE ICE - TEXAS, INC., a Texas corporation,
and PACKAGED ICE SOUTHEAST, INC., a Texas corporation, SOUTHERN BOTTLED WATER
COMPANY, INC., a Texas corporation, and REDDY ICE CORPORATION, a Delaware
corporation (collectively, the "Subsidiary Guarantors"), and U.S. TRUST COMPANY
OF TEXAS, N.A., a national banking association, as Trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Series A Securities
and the Series B Securities (as such terms are hereinafter defined), without
preference of one such series over the other:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" of any Person means Indebtedness of another
Person and any of its Subsidiaries existing at the time such other Person
becomes a Subsidiary of such Person or at the time it merges or consolidates
with such Person or any of such Person's Subsidiaries or is assumed by such
Person or any Subsidiary of such Person in connection with the acquisition of
assets from such other Person and in each case not Incurred by such Person or
any Subsidiary of such Person or such other Person in connection with, or in
anticipation or contemplation of, such other Person becoming a Subsidiary of
such Person or such acquisition, merger or consolidation, and which
Indebtedness is without recourse to the Company or any of its Subsidiaries or
to any of their respective properties or assets other than the Person or such
Person's Subsidiaries or the assets to which such Indebtedness related prior to
the time such Person becomes a Subsidiary of the Company or the time of such
acquisition, merger or consolidation.
"Adjusted Net Assets" has the meaning provided in Section 10.05.
"Affiliate" means, when used with reference to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct or cause the direction of management or policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative of the foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.12.
"Agent" means any Registrar, Paying Agent or co-Registrar.
<PAGE> 8
"Asset Acquisition" means (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be merged with or into the
Company or any Subsidiary of the Company or (ii) the acquisition by the Company
or any Subsidiary of the Company of assets of any Person comprising an existing
business (whether existing as a separate entity), subsidiary, division or unit
of such Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition to any Person other than the Company or any of its
Subsidiaries (including, without limitation, by means of a sale and leaseback
transaction or a merger or consolidation) (collectively, for purposes of this
definition, a "transfer"), directly or indirectly, in one or a series of
related transactions, of (a) any Capital Stock of any Subsidiary held by the
Company or any other Subsidiary, (b) all or substantially all of the properties
and assets of any division or line of business of the Company or any of its
Subsidiaries, (c) any other properties or assets of the Company or any of its
Subsidiaries other than transfers of cash, Cash Equivalents, accounts
receivable, or properties or assets in the ordinary course of business;
provided that the transfer of all or substantially all of the properties or
assets of the Company and its Subsidiaries, taken as a whole, will be governed
by the provisions of Section 5.01 and/or Section 4.16 and not by the provisions
of Section 4.17. For the purposes of this definition, the term "Asset Sale"
also shall not include any of the following: (i) sales of damaged, worn-out or
obsolete equipment or assets that, in the Company's reasonable judgment, are
either (A) no longer used or (B) no longer useful in the business of the
Company or its Subsidiaries; (ii) any lease of any property entered into the
ordinary course of business and with respect to which the Company or any
Subsidiary is the lessor, except any such lease that provides for the
acquisition of such property by the lessee during or at the end of the term
thereof for an amount that is less than the fair market value thereof at the
time the right to acquire such property is granted; (iii) a Restricted Payment
or Permitted Investment permitted under Section 4.03; and (iv) any transfers
that, but for this clause (iv), would be Asset Sales, if (A) the Company elects
to designate such transfers as not constituting Asset Sales and (B) after
giving effect to such transfers, the aggregate fair market value of the
properties or assets transferred in such transaction or any such series of
related transactions so designated by the Company does not exceed $1,000,000.
"Asset Proceeds Deficiency" has the meaning set forth in Section 4.17.
"Asset Proceeds Offer" has the meaning set forth in Section 4.17.
"Attributable Indebtedness" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) 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 which such lease has been extended or may, at the
option of the lessor, be extended). As used in the preceding sentence, the
"net rental payments" under any lease for any such period shall mean the sum of
rental and other payments required to be paid with respect to such period by
the lessee thereunder, excluding any amounts required to be paid by such lessee
on account of maintenance and repairs, insurance, taxes, assessments, water
rates or similar charges. In the case of any lease that is terminable by the
lessee upon payment of penalty, such net rental payment shall also include the
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<PAGE> 9
amount of such penalty, but no rent shall be considered as required to be paid
under such lease subsequent to the first date upon which it may be so
terminated.
"Available Proceeds Amount" has the meaning set forth in Section 4.17.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state
or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person duly authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in The City of New York or Dallas, Texas are
required or authorized by law or other governmental action to be closed.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person, and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease that are required to
be classified and accounted for as capital lease obligations under GAAP and,
for purposes of this definition, the amount of such obligations at any date
shall be the capitalized amount of such obligations at such date, determined in
accordance with GAAP.
"Cash Equivalents" means (i) 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 thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than 270 days from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-l from S&P or at least P-l from
Moody's; (iv) certificates of deposit or bankers" acceptances maturing within
180 days from the date of acquisition thereof issued by any commercial bank
organized under the laws of the United States of America or any state thereof
or the District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less
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<PAGE> 10
than $250,000,000; (v) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; (vi) deposits available for withdrawal on demand with any commercial
bank not meeting the qualifications specified in clause (ii) above, provided
that all such deposits do not exceed $5,000,000 in the aggregate at any one
time; (vii) demand and time deposits and certificates of deposit with any
commercial bank organized in the United States not meeting the qualifications
specified in clause (ii) above, provided that such deposits and certificates
support bond, letter of credit and other similar types of obligations incurred
in the ordinary course of business; and (viii) investments in money market or
other mutual funds substantially all of whose assets comprise securities of the
types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of any of the following: (i)
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 to the Company or a Subsidiary Guarantor; (ii) the Company
consolidates with or merges into another Person or any Person consolidates
with, or merges into, the Company, in any such event pursuant to a transaction
in which the outstanding Voting Stock of the Company is changed into or
exchanged for cash, securities or other property, other than any such
transaction where (a) the outstanding Voting Stock of the Company is changed
into or exchanged for Voting Stock of the surviving or resulting Person that is
Qualified Capital Stock and (b) the holders of the Voting Stock of the Company
immediately prior to such transaction own, directly or indirectly, not less
than a majority of the Voting Stock of the surviving or resulting Person
immediately after such transaction; (iii) the adoption of a plan relating to
the liquidation or dissolution of the Company not involving a merger or
consolidation or a sale or other disposition of assets described in clause (i)
above; (iv) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any person (as defined
above), excluding Permitted Holders, becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the total voting power of the Voting Stock
of the Company; provided that the sale of Voting Stock of the Company to a
Person or Persons acting as underwriters in connection with a firm commitment
underwriting shall not constitute a Change of Control; or (v) the first day on
which a majority of the members of the Board of Directors of the Company are
not Continuing Directors (other than by action of the Permitted Holders). For
purposes of this definition, any transfer or an equity interest of an entity
that was formed for the purpose of acquiring Voting Stock of the Company will
be deemed to be a transfer of such portion of such Voting Stock as corresponds
to the portion of the equity of such entity that has been so transferred.
"Change of Control Offer" has the meaning provided in Section 4.16.
"Change of Control Payment" has the meaning provided in Section 4.16.
"Change of Control Payment Date" has the meaning provided in Section
4.16.
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<PAGE> 11
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation,
all series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income plus (ii) to the
extent that any of the following shall have been taken into account in
determining Consolidated Net Income, (A) all income taxes of such Person and
its Subsidiaries paid or accrued in accordance with GAAP for such period (other
than income taxes attributable to extraordinary, unusual or nonrecurring gains
or losses or taxes attributable to sales or dispositions of assets outside the
ordinary course of business), Consolidated Interest Expense, amortization
expense and depreciation expense, and (B) other non-cash items (other than non-
cash interest) reducing Consolidated Net Income, other than any non-cash item
which requires the accrual of or a reserve for cash charges for any future
period and other than any non-cash charge constituting an extraordinary item of
loss, less other non-cash items increasing Consolidated Net Income, all as
determined on a consolidated basis for such Person and its Subsidiaries in
conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters for which financial information is available (the "Four Quarter
Period") ending on or prior to the date of the transaction or event giving rise
to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the
"Transaction Date") to Consolidated Fixed Charges of such Person for the Four
Quarter Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to (i) the Incurrence or repayment of any
Indebtedness of such Person or any of its Subsidiaries (and the application of
the proceeds thereof) giving rise to the need to make such calculation and any
Incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the Incurrence or repayment of Indebtedness in
the ordinary course of business for working capital purposes pursuant to
working capital facilities, at any time subsequent to the first day of the Four
Quarter Period and on or prior to the Transaction Date, as if such Incurrence
or repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period, and (ii) any Asset Sales
or Asset Acquisitions (including, without limitation, any Asset Acquisition
giving rise to the need to make such calculation as a result of such Person or
one of its Subsidiaries (including any Person who becomes a Subsidiary as a
result of any such Asset Acquisition) Incurring, assuming or otherwise being
liable for Acquired Indebtedness) at any time subsequent to the first day of
the Four Quarter Period and on or prior to the Transaction Date, as if such
Asset Sale or Asset Acquisition (including the Incurrence, assumption or
liability for any such Indebtedness or Acquired Indebtedness and also including
any Consolidated EBITDA, based upon the four fiscal quarters of such Person for
which financial information is available immediately preceding such Asset
Acquisition, associated with such Asset Acquisition) occurred on the first day
of the Four Quarter Period; provided that the Consolidated EBITDA of any Person
acquired shall be included only to the extent includable pursuant to the
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<PAGE> 12
definition of "Consolidated Net Income." If such Person or any of its
Subsidiaries directly or indirectly guarantees Indebtedness of a third person,
the preceding sentence shall give effect to the Incurrence of such guaranteed
Indebtedness as if such Person or any Subsidiary of such Person had directly
Incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in
calculating "Consolidated Fixed Charges" for purposes of determining the
denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage
Ratio," (1) interest on Indebtedness determined on a fluctuating basis as of
the Transaction Date (including Indebtedness actually Incurred on the
Transaction Date) and which will continue to be so determined thereafter shall
be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date; and (2)
notwithstanding clause (1) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements
relating to Interest Swap Obligations, shall be deemed to accrue at the rate
per annum resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in Qualified Capital
Stock) paid (to the extent not accrued in a prior period), accrued or scheduled
to be paid or accrued during such period times (y) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
effective consolidated Federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the aggregate of the interest expense of such Person and its
Subsidiaries (excluding amortization of deferred financing fees) for such
period, on a consolidated basis, as determined in accordance with GAAP, and
including (a) all amortization of original issue discount (other than any
original issue discount on Indebtedness attributable to proceeds of the sale of
warrants issued in connection with the Incurrence of such Indebtedness); (b)
the interest component of Capitalized Lease Obligations paid (to the extent not
accrued in a prior period), accrued and/or scheduled to be paid or accrued by
such Person and its Subsidiaries during such period; (c) net cash costs under
all Interest Swap Obligations (including amortization of fees); (d) all
capitalized interest; and (e) the interest portion of any deferred payment
obligations for such period.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided that there shall be excluded therefrom (a) after-tax gains and losses
from Asset Sales or abandonments or reserves relating thereto, (b) after-tax
items classified as extraordinary or nonrecurring gains, (c) the net income or
loss of any Person acquired in a "pooling of interests" transaction accrued
prior to the date it becomes a Subsidiary of the referent Person or is merged
or consolidated with the referent Person or any Subsidiary of the referent
Person, (d) the net income (but not loss) of any Subsidiary of the referent
Person to the extent that the declaration of dividends or similar distributions
by that Subsidiary of that income is restricted by a contract, operation of law
or otherwise, (e) the net income of any Person, other than a Subsidiary of the
referent Person, except to the extent of cash dividends or distributions paid
to the referent Person or to a wholly-owned Subsidiary of the referent person
by such Person, (f) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of
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<PAGE> 13
Consolidated Net Income accrued at any time following the Issue Date, (g)
income or loss attributable to discontinued operations (including, without
limitation, operations disposed of during such period whether or not such
operations were classified as discontinued), and (h) in the case of a successor
to the referent Person by consolidation or merger or as a transferee of the
referent Person's assets, any earnings of the successor corporation prior to
such consolidation, merger or transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated
stockholders" equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person for
any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Subsidiaries for such period, on a consolidated
basis, as determined in accordance with GAAP.
"Continuing Director" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Issue Date; (ii) 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 of Directors at the time of such nomination or
election (iii) was elected or nominated for election pursuant to the Voting
Agreement.
"Covenant Defeasance" has the meaning set forth in Section 8.01(c).
"Credit Facilities" means, with respect to the Company, the credit
facilities provided for under the Credit Agreement dated April 30, 1998, among
the Company, Antares Leveraged Capital Corp., as agent, and the persons from
time to time lenders thereunder, and one or more other debt facilities or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing or letters of
credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depository" means, with respect to the Securities issued in the form of
one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Disqualified Capital Stock" means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the holder thereof, in whole or in part, on or
prior to the final maturity date of the Securities; provided, however, that any
Capital Stock that would constitute Disqualified Capital Stock solely because
the holders thereof have the right to require the
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<PAGE> 14
Company to repurchase or redeem such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Capital
Stock if the terms of such Capital Stock provide that the Company may not
repurchase or redeem any such Capital Stock pursuant to such provisions unless
(i) all obligations of the Company under this Indenture with respect to such
Change of Control or Asset Sale have been satisfied prior to such repurchase or
redemption and (ii) such repurchase or redemption does not violate any covenant
of this Indenture.
"Events of Default" has the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"Existing Indebtedness" means up to $85 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries in existence on the
Issue Date, until such amounts are repaid.
The term "fair market value" or "fair value" means, with respect to any
asset or property, the price which could be negotiated in an arm's-length, free
market transaction, for cash, between an informed and willing seller and an
informed and willing and able buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Fair market value shall be determined
by the Board of Directors of the Company acting reasonably and in good faith
and shall be evidenced by a Board Resolution delivered to the Trustee;
provided, however, that if the aggregate non-cash consideration to be received
by the Company or any of its Subsidiaries from any Asset Sale or the issuance
of Qualified Capital Stock could be reasonably likely to exceed $5,000,000 the
fair market value shall be determined by an Independent Financial Advisor.
"Family Member" means, when used with reference to any natural Person,
such Person's spouse, siblings, parents, children, or other lineal descendants
(whether by adoption or consanguinity), and shall mean a trust, the primary
beneficiary of which is the Person's spouse, siblings, parents, children, or
other lineal descendants (whether by adoption or consanguinity).
"Financial Advisor" means an accounting, appraisal or investment banking
firm of nationally recognized standing that is, in the reasonable and good
faith judgment of the Board of Directors of the Company, qualified to perform
the task for which such firm has been engaged.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Fixed Charge Coverage Ratio" above.
"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 may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Global Security" means a Security evidencing all or a part of the
Securities issued to the Depository in accordance with Section 2.01 and bearing
the legend prescribed in Exhibit B.
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<PAGE> 15
"Holder" or "Security holder" means a Person in whose name a Security is
registered on the Registrar's books.
"Ice Business" means (i) the manufacture and sale (including, without
limitation, direct sales, wholesale sales and retail sales) of ice; (ii) the
manufacture and sale of ice and water by means of ice manufacturing or water
purification equipment (including ice makers, bins, baggers, merchandisers,
delivery devices and related equipment) installed on the premises of the
Company's customer(s) whether or not such equipment is owned by the Company,
the customers, or a third party; (iii) contract on-premises ice or water
service (including leasing of ice or water related equipment) for a customer's
internal use; (iv) providing cold storage and freezer related services in
conjunction with the traditional ice business; (v) the sale of products
incidental or related to the foregoing; and (v) all logical extensions of the
foregoing.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise,
of any such Indebtedness or other obligation on the balance sheet of such
Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring" shall have
meanings correlative to the foregoing); provided, however, that (A) any
Indebtedness assumed in connection with an acquisition of assets and any
Indebtedness of a Person existing at the time such Person becomes a Subsidiary
(whether by merger, consolidation, acquisition or otherwise) of the Company or
at the time such Person is merged or consolidated with the Company or any
subsidiary of the Company shall be deemed to be Incurred at the time of the
acquisition of such assets or by such Subsidiary at the time it becomes, or is
merged or consolidated with, a Subsidiary of the Company or by the Company at
the time of such merger or consolidation, as the case may be, and (B) any
amendment, modification or waiver of any document pursuant to which
Indebtedness was previously Incurred shall not be deemed to be an Incurrence of
Indebtedness unless such amendment, modification or waiver increases the
principal or premium thereof or interest rate thereon (including by way of
original issue discount), and (C) a change in GAAP that results in an
obligation of a Person that exists at such time becoming Indebtedness shall not
be deemed an Incurrence of Indebtedness. A guarantee by the Company or a
Subsidiary Guarantor of Indebtedness Incurred by the Company or a Subsidiary
Guarantor, as applicable, shall not be a separate incurrence of Indebtedness.
"Indebtedness" means with respect to any Person, without duplication,
(i) all Obligations of such Person for borrowed money, (ii) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all Capitalized Lease Obligations of such Person, (iv) all Obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and accrued liabilities arising
in the ordinary course of business that are not overdue by 90 days or more or
are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (v) all Obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) all Indebtedness of others (including all dividends of other
Persons for the payment of which is) guaranteed, directly or indirectly, by
such Person or that is otherwise its legal liability or which such Person has
agreed to purchase or repurchase or in respect of which such Person has agreed
contingently to supply or advance funds but excluding endorsements of
negotiable instruments and documents in the ordinary
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<PAGE> 16
course of business, (vii) net liabilities of such Person under Interest Swap
Obligations, (viii) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on any asset or property (including, without
limitation, leasehold interests and any other tangible or intangible property)
of such Person, whether or not such Indebtedness is assumed by such Person or
is not otherwise such Person's legal liability; provided that if the
Obligations so secured have not been assumed by such Person or are otherwise
not such Person's legal liability, the amount of such Indebtedness for the
purposes of this definition shall be limited to the lesser of the amount of
such Indebtedness secured by such Lien or the fair market value of the assets
or property securing such Lien, and (ix) all Disqualified Capital Stock issued
by such Person with the amount of Indebtedness represented by such Disqualified
Capital Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price, but excluding
accrued dividends if any. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at
such date; provided that the amount outstanding at any time of any non-interest
bearing Indebtedness or other Indebtedness issued with original issue discount
is the full amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with GAAP, but such Indebtedness shall only be deemed to be
Incurred as of the date of original issuance thereof.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Independent" when used with respect to any specified Person means such
a Person who (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Company or any of
its Subsidiaries, or in any Affiliate of the Company or any of its Subsidiaries
and (c) is not an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions for the Company or any of its
Subsidiaries. Whenever it is provided in this Indenture that any Independent
Person's opinion or certificate shall be furnished to the Trustee, such Person
shall be appointed by the Company and approved by the Trustee in the exercise
of reasonable care, and such opinion or certificate shall state that the signer
has read this definition and that the signer is Independent within the meaning
thereof.
"Initial Purchaser" means Jefferies & Company, Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Securities.
"Interest Swap Obligations" means the obligations of any Person under
any interest rate protection agreement, interest rate future, interest rate
option, interest rate swap, interest rate cap or other interest rate hedge or
arrangement.
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"Investment" by any Person means any direct or indirect (i) loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property (valued at the fair market value thereof as
of the date of transfer) to others or payments for property or services for the
account or use of others, or otherwise) (excluding commission, travel and
similar advances to officers and employees made in the ordinary course of
business); (ii) purchase or acquisition of Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by any other
Person; (iii) guarantee or assumption of any Indebtedness or any other
obligation of any other Person (except for an assumption of Indebtedness for
which the assuming Person receives consideration at the time of such assumption
in the form of property or assets with a fair market value at least equal to
the principal amount of the Indebtedness assumed, extensions of trade credit or
other advances to customers on commercially reasonable terms in accordance with
normal trade practices or otherwise in the ordinary course of business,
workers" compensation, utility, lease and similar deposits and prepaid expenses
made in the ordinary course of business, and endorsements of negotiable
instruments and documents in the ordinary course of business); and (iv) all
other items that would be classified as investments on a balance sheet of such
Person prepared in accordance with GAAP. The amount of any Investment shall
not be adjusted for increases or decreases in value, or write-ups, write-downs
or write-offs with respect to such Investment. If the Company or any
Subsidiary of the Company sells or otherwise disposes of any Common Stock of
any direct or indirect Subsidiary of the Company such that, after giving effect
to any such sale or disposition, the Company no longer owns, directly or
indirectly, greater than 50% of the outstanding Common Stock of such
Subsidiary, the Company shall be deemed to have made an Investment on the date
of any such sale or disposition equal to the fair market value of the Common
Stock of such Subsidiary not sold or disposed of.
"Issue Date" means January 28, 1998, the first date on which Series A
Securities were issued hereunder.
"Lien" means, with respect to any Person, any mortgage, pledge, lien,
encumbrance, easement, restriction, covenant, right-of-way, charge or adverse
claim affecting title or resulting in an encumbrance against real or personal
property of such Person, or a security interest of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option, right of first refusal or other similar agreement to sell,
in each case securing obligations of such Person and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or
equivalent statute or statutes) of any jurisdiction other than to reflect
ownership by a third party of property leased to the referent Person or any of
its Subsidiaries under a lease that is not in the nature of a conditional sale
or title retention agreement).
"Maturity Date" means February 1, 2005.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
in the form of cash or Cash Equivalents (including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents) received by the Company or any of its Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, brokerage, legal, accounting and
investment banking fees and sales commissions), (b) taxes paid or payable ((1)
including, without limitation, income taxes reasonably estimated to be actually
payable as a result of any disposition of property within two years of the date
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<PAGE> 18
of disposition and (2) after taking into account any reduction in tax liability
due to available tax credits or deductions and any tax sharing arrangements)
and (c) appropriate amounts to be provided by the Company or any Subsidiary, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Net Equity Proceeds" means (a) in the case of any sale by the Company
of Qualified Capital Stock of the Company, the aggregate net cash proceeds and
the fair market value of any property or securities received by the Company,
after payment of expenses, commissions and the like (including, without
limitation, brokerage, legal, accounting and investment banking fees and
commissions) incurred in connection therewith, and (b) in the case of any
exchange, exercise, conversion or surrender of any outstanding Indebtedness of
the Company or any Subsidiary issued after the Issue Date for or into shares of
Qualified Capital Stock of the Company, the amount of such Indebtedness (or, if
such Indebtedness was issued at an amount less than the stated principal amount
thereof, the accrued amount thereof as determined in accordance with GAAP) as
reflected in the consolidated financial statements of the Company prepared in
accordance with GAAP as of the most recent date next preceding the date of such
exchange, exercise, conversion or surrender (plus any additional amount
required to be paid by the holder of such Indebtedness to the Company or to any
wholly-owned Subsidiary of the Company upon such exchange, exercise, conversion
or surrender and less any and all payments made to the holders of such
Indebtedness, and all other expenses incurred by the Company in connection
therewith), in each case (a) and (b) to the extent consummated after December
31, 1997.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offered Price" has the meaning set forth in Section 4.17.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Chief Accounting Officer, the Treasurer or Assistant
Treasurer, the Controller, the Secretary or Assistant Secretary of such Person.
"Officers' Certificate" means a certificate signed by two Officers of
the Company.
"Opinion of Counsel" means a written opinion from legal counsel which
and who are reasonably acceptable to the Trustee.
"Original Securities" has the meaning set forth in Section 2.02.
"Pari Passu Indebtedness" means any Indebtedness of the Company that is
pari passu in right of payment to the Securities.
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<PAGE> 19
"Pari Passu Offer" has the meaning set forth in Section 4.17.
"Paying Agent" shall have the meaning set forth in Section 2.03.
"Payment Amount" has the meaning set forth in Section 4.17.
The term "payment default" has the meaning set forth in Section 6.01.
"Payment Restriction" has the meaning set forth in Section 4.14.
"Permitted Holders" means the following Persons: Ares Leveraged
Investment Fund, L.P., Culligan Water Technologies, Inc., Erica Jesselson, SV
Capital Partners, L.P.; Norwest Equity Partners V, a Minnesota Limited
Partnership, The Food Fund II Limited Partnership, A. J. Lewis III, Steven P.
Rosenberg, and James F. Stuart, and any of their respective Affiliates and
Family Members, each of the foregoing individually being a "Permitted Holder."
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Original Securities and the Second
Issuance Securities;
(ii) Indebtedness under any Existing Indebtedness;
(iii) Indebtedness in respect of bid, performance or surety
bonds issued for the account of the Company or any Subsidiary thereof in
the ordinary course of business, including guarantees or obligations of
the Company or any Subsidiary thereof with respect to letters of credit
supporting such bid, performance or surety obligations (in each case
other than for an obligation for money borrowed);
(iv) Permitted Refinancing Indebtedness;
(v) The Subsidiary Guarantees of the Original Securities and
the Second Issuance Securities ;
(vi) Indebtedness under Credit Facilities in an aggregate
principal amount not to exceed $80 million at any one time outstanding
and any guarantee thereof, reduced by any permanent repayment or
permanent reduction thereof after the Second Issue Date which is
accompanied by a corresponding permanent commitment reduction pursuant
to Section 4.17 hereof;
(vii) Interest Swap Obligations of the Company; provided,
however, that such Interest Swap Obligations are entered into to protect
the Company and its Subsidiaries from fluctuations in interest rates on
Indebtedness Incurred in accordance with this Indenture to the extent
the notional principal amount of such Interest Swap Obligation does not
exceed the principal amount of the Indebtedness to which such Interest
Swap Obligation relates ("Permitted Swaps");
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<PAGE> 20
(viii) Indebtedness of a direct or indirect Subsidiary of the
Company to the Company or to a direct or indirect Subsidiary of the
Company for so long as such Indebtedness is held by the Company or a
direct or indirect Subsidiary of the Company in each case subject to no
Lien held by a Person other than the Company or a direct or indirect
Subsidiary of the Company or the holders of Indebtedness under the
Credit Facilities (or an agent for such holders); provided that if as of
any date any Person other than the Company or a direct or indirect
Subsidiary of the Company or the holders of Indebtedness under the
Credit Facilities (or an agent for such holders) owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the date of the Incurrence of Indebtedness not
constituting Permitted Indebtedness by the issuer of such Indebtedness;
(ix) Indebtedness of the Company to a direct or indirect
Subsidiary of the Company for so long as such Indebtedness is held by a
direct or indirect Subsidiary of the Company in each case subject to no
Lien held by a Person other than the holders of Indebtedness under the
Credit Facilities (or an agent for such holders); provided, that (a) any
Indebtedness of the Company to any direct or indirect Subsidiary of the
Company is unsecured and subordinated, pursuant to a written agreement,
to the Company's Obligations under this Indenture and the Securities,
and (b) if as of any date any Person other than a direct or indirect
Subsidiary of the Company owns or holds any such Indebtedness or any
Person other than the holders of Indebtedness under the Credit
Facilities (or an agent for such holders) holds a Lien in respect of
such Indebtedness, such date shall be deemed the date of the Incurrence
of Indebtedness not constituting Permitted Indebtedness by the issuer of
such Indebtedness; and
(x) additional Indebtedness not to exceed an aggregate
principal amount of $10,000,000 at any one time outstanding and any
guarantee thereof.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents; (b) Investments by the Company or by any Subsidiary of the Company
in any Person that is or will become immediately after such Investment a direct
or indirect Subsidiary of the Company; (c) any Investments in the Company by
any Subsidiary of the Company; provided that any Indebtedness evidencing such
Investment is unsecured; (d) Investments made by the Company or by its
Subsidiaries as a result of an Asset Sale made in compliance with Section 4.17;
(e) Permitted Swaps; (f) Investments in ventures organized outside the United
States in an amount not to exceed $5,000,000 at any one time outstanding; (g)
Investments in an amount not to exceed $500,000 at any one time outstanding,
(h) Investments held by any Person on the date such Person becomes a Subsidiary
to the extent such Investments are not incurred in anticipation of or in
connection with such acquisition; and (i) Investments in stock, obligations or
securities received in settlement of debts owing to the Company or any
Subsidiary as a result of bankruptcy or insolvency proceedings or upon the
foreclosure, perfection or enforcement of any Lien in favor of the Company or
any Subsidiary, in each case as to debt owing to the Company or any Subsidiary
that arose in the ordinary course of business of the Company or any such
Subsidiary, provided that any stocks, obligations or securities received in
settlement of debts that arose in the ordinary course of business (and received
other than as a result of bankruptcy or insolvency proceedings or upon
foreclosure, perfection or enforcement of any Lien) that are, within 30 days of
receipt, converted into cash or Cash Equivalents shall be treated as having
been cash or Cash Equivalents at the time received.
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<PAGE> 21
"Permitted Liens" means, without duplication, each of the following:
(i) Liens existing as of the Issue Date;
(ii) Liens securing the Securities, the Subsidiary Guarantees or any
Indebtedness under the Credit Facilities;
(iii) Liens in favor of the Company;
(iv) Liens for taxes, assessments and governmental charges or claims
either (i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or its Subsidiaries shall have set
aside on its books such reserves as may be required pursuant to GAAP;
(v) contractual and statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for sums not
delinquent for more than 30 days or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made in respect thereof;
(vi) Liens incurred or deposits made in the ordinary course of
business in connection with workers" compensation, unemployment insurance and
other types of social security, or to secure the payment or performance of
tenders, statutory or regulatory obligations, surety and appeal bonds, bids,
government contracts and leases, performance and return of money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money);
(vii) judgment Liens not giving rise to an Event of Default so long as
any appropriate legal proceedings which may have been duly initiated for the
review of such judgment shall not have been finally terminated or the period
within which such proceeding may be initiated shall have not expired;
(viii) any interest or title of a lessor under any Capital Lease
Obligation or operating lease;
(ix) Liens securing Purchase Money Indebtedness incurred in compliance
with Section 4.04; provided, however, that (i) the related Purchase Money
Indebtedness shall not be secured by any property or assets of the Company or
any Subsidiary other than the property or assets so acquired and any proceeds
therefrom and (ii) the Lien securing any such Indebtedness shall be created
within 90 days of such acquisition;
(x) Liens securing obligations under or in respect of Interest Swap
Obligations;
(xi) Liens upon specific items of inventory or other goods of any
Person securing such Person's obligations in respect of bankers" acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;
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<PAGE> 22
(xii) Liens securing reimbursement obligations with respect to
commercial letters of credit that encumber documents and other property or
assets relating to such letters of credit and products and proceeds thereof;
(xiii) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements of the Company
or any of its Subsidiaries, including rights of offset and set-off;
(xiv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company and Liens on property or assets of
a Subsidiary existing at the time it became a Subsidiary, provided that such
Liens were in existence prior to the contemplation of the acquisition and do
not extend to any assets other than the property of such Person or the acquired
property (and the proceeds thereof), as applicable; and
(xv) Liens on capital stock or other equity interests in Unrestricted
Subsidiaries and Permitted Investments made pursuant to clause (f) of the
definition thereof.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to refinance, renew, replace, defease or refund, other
Indebtedness of the Company or any of its Subsidiaries incurred pursuant to
clause (i), (ii) or (v) of the definition of "Permitted Indebtedness"; provided
that: (i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so exchanged, refinanced,
renewed, replaced, defeased or refunded (plus the amount of related prepayment
penalties, fees and reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later 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 exchanged, refinanced, renewed, replaced, defeased or refunded; (iii) if
the Indebtedness being exchanged, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Securities or the
Subsidiary Guarantees, such Permitted Refinancing Indebtedness is subordinated
in right of payment to, the Securities or the Subsidiary Guarantees, as the
case may be, on terms at least as favorable to the Holders of Securities as
those contained in the documentation governing the Indebtedness being
exchanged, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or by the Subsidiary that is the
obligor on the Indebtedness being exchanged, refinanced, renewed, replaced,
defeased or refunded.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Physical Securities" has the meaning set forth in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
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<PAGE> 23
"principal" of any Indebtedness (including the Securities) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Placement Legend" means the legend initially set forth on the
Series A Securities in the form set forth on Exhibit A-l.
"Public Equity Offering" means an underwritten offer and sale of
Qualified Capital Stock of the Company pursuant to a registration statement
that has been declared effective by the SEC 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).
"Purchase Date" means the Change of Control Payment Date or purchase
date with respect to an Asset Proceeds Offer, as applicable.
"Purchase Money Indebtedness" means Indebtedness or that portion of
Indebtedness of the Company or any Subsidiary incurred in connection with the
acquisition by the Company or such Subsidiary, subsequent to the Issue Date, of
any property or assets, including Capitalized Lease Obligations.
"Purchase Offer" means either a Change of Control Offer or an Asset
Proceeds Offer, as applicable.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" has the meaning specified in
Rule 144A under the Securities Act.
"Record Date" means the Record Dates specified in the Securities.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to the terms of
this Indenture and Paragraph 5 in the forms of Security annexed hereto as
Exhibit A-1 and A-2.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to the terms of
this Indenture and Paragraph 5 in the forms of Security annexed hereto as
Exhibit A-1 and A-2.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, renew, refund, repay, prepay, redeem, defease or retire, or to issue
a security or Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Registered Exchange Offer" means the offer to exchange the Series B
Securities for all of the outstanding Series A Securities in accordance with
the Registration Rights Agreement.
"Registrar" has the meaning set forth in Section 2.03.
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<PAGE> 24
"Registration Rights Agreement" means the Registration Rights Agreement
by and among the Company, the Subsidiary Guarantors named therein and the
Initial Purchaser, relating to the Securities, dated as of the Issue Date, as
amended and restated as of the Second Issue Date (or a later date on which
Series A Securities other than the Original Securities or the Second Issuance
Securities are issued), as the same may be amended, supplemented or modified
from time to time in accordance with the terms thereof.
"Resale Restriction Termination Date" has the meaning provided in
Section 2.15.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Group (or any successor group) of the
Trustee, including without limitation any Vice President, any Assistant Vice
President, any Assistant Secretary or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers, who shall, in any case, be responsible for the
administration of this document or have familiarity with it, and also means,
with respect to particular corporate trust matters, any other officer to whom
such matter is referred because of his or her knowledge of and familiarity with
the particular subject.
"Restricted Payment" has the meaning provided in Section 4.03.
"Restricted Security" has the meaning set forth in Rule 144(a)(3) under
the Securities Act and includes, without limitation, any Private Exchange Note
(as defined in the Registration Rights Agreement); provided that the Trustee
shall be entitled to request and conclusively rely upon an Opinion of Counsel
with respect to whether any Security is a Restricted Security.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Second Issuance Securities" has the meaning set forth in Section 2.02.
"Second Issue Date" means April 30, 1998, the first date on which Series
A Securities constituting the Second Issuance Securities were issued hereunder.
"Securities" means the Series A Securities and Series B Securities as
amended or supplemented from time to time in accordance with the terms hereof
that are issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Series A Securities" means the 9 3/4% Series A Senior Notes due February
1, 2005, being issued pursuant to this Indenture.
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<PAGE> 25
"Series B Securities" means the 9 3/4% Series B Senior Notes due February
1, 2005 (the terms of which are identical to the Series A Securities except
that the Series B Securities shall be registered under the Securities Act, and
shall not contain the restrictive legend on the face of the form of the Series
A Securities), to be issued in exchange for the Series A Securities pursuant to
the Registered Exchange Offer and this Indenture.
"Significant Subsidiary" shall have the meaning set forth in Rule
1.02(v) of Regulation S-X under the Securities Act.
"Specified Affiliate Transactions" means certain transactions among the
Company and Subsidiaries and certain Affiliates which were entered into prior
to the Issue Date as set forth in Schedule I to this Indenture.
"Subordinated Indebtedness" means any Indebtedness of the Company or a
Subsidiary Guarantor that is expressly subordinated in right of payment to the
Securities or the Subsidiary Guarantees, as the case may be.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
Notwithstanding the foregoing, an Unrestricted Subsidiary shall be deemed not
to be a Subsidiary of the Company for purposes of this Indenture.
"Subsidiary Guarantee" means any guarantee of the Securities by a
Subsidiary Guarantor in accordance with the provisions described under Article
Ten.
"Subsidiary Guarantor" means (i) each of Packaged Ice Leasing, Inc.,
Southco Ice, Inc., Mission Party Ice, Inc., Southwest Texas Packaged Ice, Inc.,
Southwestern Ice, Inc., Golden Eagle Ice--Texas, Inc., Packaged Ice Southeast,
Inc., Southern Bottled Water Company, Inc., and Reddy Ice Corporation and (ii)
each of the Company's Subsidiaries that in the future executes a supplemental
indenture in which such Subsidiary agrees to be bound by the terms of this
Indenture as a Subsidiary Guarantor; provided that any Person constituting a
Subsidiary Guarantor as described above shall cease to constitute a Guarantor
when its respective Subsidiary Guarantee is released in accordance with the
terms of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended, as in effect on the date of the execution of this
Indenture until such time as this Indenture is qualified under the TIA, and
thereafter as in effect on the date on which this Indenture is qualified under
the TIA, except as otherwise provided in Section 9.03.
"Trust Officer" means any officer within the corporate trust
administration department (or any successor group of the Trustee), including
any vice president, assistant vice president, assistant secretary or any other
officer or assistant officer of the Trustee customarily performing functions
similar to those performed by the persons who at that time shall be such
officers, and also means,
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with respect to a particular corporate trust matter, any other officer to whom
such trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"U.S. Government Obligations" has the meaning provided in Section 8.01.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company which
at the time of determination shall be an Unrestricted Subsidiary (as designated
by the Board of Directors as provided below) and (2) any Subsidiary or
Subsidiaries of an Unrestricted Subsidiary. The Board of Directors may
designate any Subsidiary of the Company (including any newly acquired or newly
formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any lien on any property
of, any other Subsidiary of the Company which is not a Subsidiary of the
Subsidiary of the Company to be so designated or otherwise an Unrestricted
Subsidiary, provided that (x) such designation complies with the Section 4.03
hereof, (y) each Subsidiary so designated and each of its Subsidiaries has not
at the time of designation, and does not thereafter, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with
respect to any Indebtedness pursuant to which the lender has recourse to any of
the assets of the Company or any of its Subsidiaries and (z) unless such
designation is a Permitted Investment, immediately after giving pro forma
effect to such designation, the Company could incur $1.00 of additional
Indebtedness pursuant to Section 4.04(b). Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"Voting Agreement" means that certain amended and restated voting
agreement dated September 20, 1995, as amended, by and among the shareholders
of the Company named therein and the Company.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members 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 (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
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"Wholly-owned Subsidiary" of any Person means any Subsidiary of such
Person of which all the outstanding voting securities which normally have the
right to vote in the election of directors, other than director's qualifying
shares, are owned by such Person or any wholly-owned Subsidiary of such Person.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such provision
is incorporated by reference in, and made a part of, this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Holder or a Security holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company, any Subsidiary
Guarantor or any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
(6) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision.
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ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Series A Securities and Series B Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibits
A-l and A-2, respectively. The Securities may have notations, legends or
endorsements (including notations relating to the Guarantee) required by law,
stock exchange rule or usage. The Company and the Trustee shall approve the
form of the Securities and any notation, legend or endorsement (including
notations relating to the Subsidiary Guarantee) on them. Each Security shall
be dated the date of its authentication.
The terms and provisions contained in the Securities and the Subsidiary
Guarantee shall constitute, and are hereby expressly made, a part of this
Indenture. The Series A Securities and the Series B Securities shall be
considered collectively to be a single class for all purposes of this
Indenture, including, without limitation, waivers, amendments, redemptions and
offers to purchase.
Series A Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent Global Securities in
registered form, substantially in the form set forth in Exhibit A-l ("Global
Securities"), deposited with the Trustee, as custodian for the Depository, and
shall bear the legend set forth on Exhibit B. Series B Securities (other than
any constituting Private Exchange Notes) shall be issued initially in the form
of one or more permanent Global Securities in registered form, substantially
in the form set forth in Exhibit A-2, deposited with the Trustee, as custodian
for the Depositary, and shall bear the legend set forth on Exhibit B. The
aggregate principal amount of any Global Security may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository, as hereinafter provided.
Series A Securities offered and sold in reliance on any other exemption
from registration under the Securities Act other than as described in the
preceding paragraph and any Series B Securities constituting Private Exchange
Notes shall be issued in the form of certificated Securities in registered form
in substantially the form set forth in Exhibit A-l and Exhibit A-2,
respectively (the "Physical Securities").
SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by manual or facsimile
signature. The Company's seal shall also be affixed to or imprinted or
reproduced on the Securities.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall
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be valid nevertheless. Each Subsidiary Guarantor shall execute the Subsidiary
Guarantee in the manner set forth in Section 10.07.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Series A Securities for original
issue on the Issue Date in the aggregate principal amount of $145,000,000 (the
"Original Securities"), (ii) Series A Securities for original issue on the
Second Issue Date in the aggregate principal amount of $125,000,000 (the
"Second Issuance Securities"), (iii) Series A Securities for original issue
after the Second Issue Date in such additional principal amounts as may be set
forth in an Officers' Certificate described as follows and (iv) Series B
Securities from time to time for issue only in exchange for a like principal
amount of Series A Securities, in each case upon receipt of a written order of
the Company in the form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of Securities to be authenticated, the series and type
of Securities, the date on which the Securities are to be authenticated and the
date from which interest on such securities shall accrued. The aggregate
principal amount of Securities outstanding at any time may not exceed
$270,000,000 plus any additional principal amount issued pursuant to item (iii)
of the first sentence of this paragraph, except as provided in Section 2.07.
Upon receipt of a written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
The Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in The City of New York,
where (a) Securities may be presented or surrendered for registration of
transfer or for exchange ("Registrar"), (b) Securities may be presented or
surrendered for payment ("Paying Agent") and (c) notices and demands in respect
of the Securities and this Indenture may be served. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company,
upon notice to the Trustee, may have one or more co-Registrars and one or more
additional Paying Agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. The Company initially
appoints the Trustee as Registrar and Paying Agent until such time as the
Trustee has resigned or a successor has been appointed. Except as set forth in
Section 2.13, neither the Company nor any Affiliate of the Company may act as
Paying Agent.
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SECTION 2.04. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by such Paying Agent for the payment of
principal of, or interest on, the Securities, and shall notify the Trustee of
any Default by the Company in making any such payment. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee
and to account for any assets distributed. Upon distribution to the Trustee of
all assets that shall have been delivered by the Company to the Paying Agent,
the Paying Agent shall have no further liability for such assets. If the
Company or any of its Affiliates 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. During the continuance of any Event of Default, the
Trustee shall serve as the sole Paying Agent of the Securities.
SECTION 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before each Record Date and at such other times as the Trustee
may request in writing a list as of such date and in such form as the Trustee
may reasonably require of the names and addresses of Holders, which list may be
conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.14 and 2.15, when Securities are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of the same series and other authorized
denominations, the Registrar or co-Registrar shall register the transfer or
make the exchange as requested if its requirements for such transaction are
met; provided, however, that the Securities surrendered for transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar or co-Registrar,
duly executed by the Holder thereof or his attorney duly authorized in writing.
To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Securities at the Registrar's or co-
Registrar's written request. No service charge shall be made for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or other
governmental charge payable upon exchanges or transfers pursuant to Section
2.10, 3.06, 4.16, or 9.05). The Registrar or co-Registrar shall not be
required to register the transfer of or exchange of any Security (i) during a
period beginning at the opening of business 15 days before the mailing of a
notice of redemption of Securities and ending at the close of business on the
day of such mailing, (ii) selected for redemption in whole or in part pursuant
to Article Three, except the unredeemed portion of any Security being redeemed
in part (iii) during a period beginning 15 days
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before the mailing of a notice of an offer to repurchase pursuant to Section
4.16 or 4.17 or (iv) between a Record Date and the next succeeding Interest
Payment Date.
Any Holder of the Global Security shall, by acceptance of such Global
Security, agree that, subject to Section 2.15(d), transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Depository (or its agent), and that ownership of a
beneficial interest in the Global Security shall be required to be reflected in
a book entry.
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee, upon the Company's written
request, shall authenticate a replacement Security of the same series if the
Trustee's requirements are met. If required by the Trustee or the Company,
such Holder must provide an indemnity bond or other indemnity, sufficient in
the judgment of both the Company and the Trustee, to protect the Company, the
Trustee and any Agent from any loss which any of them may suffer if a Security
is replaced. The Company and the Trustee may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Security, including
reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding.
Subject to Section 2.09, a Security does not cease to be outstanding because
the Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds U.S.
Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Securities payable on that date, then on and
after that date such Securities cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or any of its Affiliates shall be disregarded, except that, for
the purposes of determining whether the Trustee shall be protected in relying
on any such direction, waiver or consent, only Securities that the Trustee
actually knows are so owned shall be disregarded. Securities so owned which
have been pledged
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in good faith shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to the
Securities and that the pledgee is not the Company, a Subsidiary Guarantor or
any other obligor upon the Securities or any Affiliate of any of them.
The Trustee may require an Officers' Certificate listing Securities
owned by the Company, a Subsidiary of the Company or an Affiliate of the
Company.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall, upon the Company's written request, authenticate
temporary Securities upon receipt of a written order of the Company in the form
of an Officers' Certificate. The Officers' Certificate shall specify the
amount of temporary Securities to be authenticated and the date on which the
temporary Securities are to be authenticated. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate upon receipt of a written order of the Company pursuant to Section
2.02 definitive Securities in exchange for temporary Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue new
Securities to replace Securities that it has paid or delivered to the Trustee
for cancellation. If the Company or any Subsidiary Guarantor shall acquire any
of the Securities, such acquisition shall not operate as a redemption or
satisfaction of the Indebtedness represented by such Securities unless and
until the same are surrendered to the Trustee for cancellation pursuant to this
Section 2.11.
SECTION 2.12. CUSIP Number.
The Company in issuing each series of the Securities will use a "CUSIP"
number, and if so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities. The Company shall promptly notify the Trustee of any such
CUSIP number used by the Company in connection with the Securities and any
change in such CUSIP number.
SECTION 2.13. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each Interest Payment Date and
Maturity Date, the Company shall have deposited with the Paying Agent U.S.
Legal Tender sufficient to make cash
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payments due on such Interest Payment Date or Maturity Date, as the case may
be, and so as to permit the Paying Agent to remit payment in immediately
available funds to the Holders on such Interest Payment Date or Maturity Date,
as the case may be. Alternatively, the Company may make payments on the
Securities by wire transfer, in same day funds, or, in the case of Physical
Securities, by check delivered to the Holders thereof at their registered
addresses. To the extent the Company makes such payments directly to the
Holders, the Company shall simultaneously notify the Trustee thereof in
writing.
SECTION 2.14. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Exhibit B.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Security, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.
(b) Global Securities may be transferred as a whole, and interests of
beneficial owners in Global Securities may be transferred or exchanged for
Physical Securities, only in accordance with the rules and procedures of the
Depository and the provisions of Section 2.15. In addition, Physical
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in Global Securities if (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for any Global
Security and a successor depositary is not appointed by the Company within 90
days of such notice or (ii) an Event of Default has occurred and is continuing
and the Registrar has received a request from the Depository to issue Physical
Securities.
(c) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of
Physical Securities of authorized denominations.
(d) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to
paragraph (b) or (c) of this Section shall, except as otherwise provided by
Section 2.15, bear the legend regarding transfer restrictions applicable to the
Physical Securities set forth in Exhibit A-l.
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(e) The Holder of any Global Security may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
SECTION 2.15. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When Physical
Securities are presented to the Registrar with a request:
(i) to register the transfer of the Physical Securities; or
(ii) to exchange such Physical Securities for an equal number
of Physical Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Section 2.15 for such transactions are met;
provided, however, that the Physical Securities presented or surrendered for
registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Company
and the Registrar or co-Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing;
and
(II) in the case of Physical Securities the offer and sale of
which have not been registered under the Securities Act
and are presented for transfer or exchange prior to (x)
the date which is two years after the later of the date of
original issue and the last date on which the Company or
any affiliate of the Company was the owner of such
Security, or any predecessor thereto and (y) such later
date, if any, as may be required by any subsequent change
in applicable law (the "Resale Restriction Termination
Date"), such Physical Securities shall be accompanied, in
the sole discretion of the Company, by the following
additional information and documents, as applicable:
(A) if such Physical Security is being delivered to the
Registrar by a Holder for registration in the name
of such Holder, without transfer, a certification
from such Holder to that effect (in substantially
the form of Exhibit C hereto); or
(B) if such Physical Security is being transferred to a
qualified institutional buyer (as defined in Rule
144A under the Securities Act) in accordance with
Rule 144A under the Securities Act or pursuant to
an exemption from registration in accordance with
Rule 144 under the Securities Act, a certification
to that effect (in substantially the form of
Exhibit C hereto); or
(C) if such Physical Security is being transferred to
an institutional "accredited investor" within the
meaning of subparagraph (a)(1),
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(a)(2), (a)(3) or (a)(7) of Rule 501 under the
Securities Act, delivery of a Certificate of
Transfer in the form of Exhibit D hereto and an
opinion of counsel and/or other information
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act;
or
(D) if such Physical Security is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification
to that effect (in substantially the form of
Exhibit C hereto) and an opinion of counsel
reasonably acceptable to the Company to the effect
that such transfer is in compliance with the
Securities Act.
(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar of a Physical
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Registrar, together with:
(A) certification, substantially in the form of Exhibit
C hereto, that such Security is being transferred
to a qualified institutional buyer (as defined in
Rule 144A under the Securities Act) in accordance
with Rule 144A under the Securities Act; and
(B) written instructions directing the Registrar to
make, or to direct the Depositary to make, an
endorsement on the Global Security to reflect an
increase in the aggregate amount of the Securities
represented by the Global Security,
then the Registrar shall cancel such Physical Security and cause, or direct the
Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Registrar, the number of
Securities represented by the Global Security to be increased accordingly. If
no Global Security is then outstanding, the Company shall issue and the
Registrar shall authenticate a new Global Security in the appropriate amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
Physical Security.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial
interest for a Physical Security. Upon receipt by the
Registrar of written instructions or such other form of
instructions as is customary for the Depositary from the
Depositary or its
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nominee on behalf of any Person having a beneficial
interest in a Global Security and upon receipt by the
Registrar of a written order or such other form of
instructions as is customary for the Depositary or the
Person designated by the Depositary as having such a
beneficial interest containing registration instructions
and, in the case of any such transfer or exchange prior to
the Resale Restriction Termination Date, the following
additional information and documents:
(A) if such beneficial interest is being transferred to
the Person designated by the Depositary as being
the beneficial owner, a certification from such
Person to that effect (in substantially the form of
Exhibit C hereto); or
(B) if such beneficial interest is being transferred to
a qualified institutional buyer (as defined in Rule
144A under the Securities Act) in accordance with
Rule 144A under the Securities Act or pursuant to
an exemption from registration in accordance with
Rule 144 under the Securities Act, a certification
to that effect from the transferee or transferor
(in substantially the form of Exhibit C hereto); or
(C) if such beneficial interest is being transferred to
an institutional "accredited investor" within the
meaning of subparagraph (a)(l), (a)(2), (a)(3) or
(a)(7) of Rule 501 under the Securities Act,
delivery of a Certificate of Transfer in the form
of Exhibit D hereto and an opinion of counsel
and/or other information satisfactory to the
Company to the effect that such transfer is in
compliance with the Securities Act; or
(D) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification
to that effect (in substantially the form of
Exhibit C hereto) and an opinion of counsel
reasonably acceptable to the Company to the effect
that such transfer is in compliance with the
Securities Act,
then the Registrar will cause, in accordance with the
standing instructions and procedures existing between the
Depositary and the Registrar, the aggregate amount of the
Global Security to be reduced and, following such
reduction, the Company will execute and, upon receipt of
an authentication order in the form of an Officers'
Certificate, the Registrar will authenticate and deliver
to the transferee a Physical Security.
(ii) Physical Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section
2.15(d) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct
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the Registrar in writing. The Registrar shall deliver
such Physical Securities to the Persons in whose names
such Physical Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.15), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless, and the Trustee is hereby authorized to
deliver Securities without the Private Placement Legend only if, (i) the
circumstances contemplated by paragraph (a)(ii)(II) of this Section 2.15 exist,
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act or (iii) such
Security has been sold pursuant to an effective registration statement under
the Securities Act.
(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of, and each beneficial interest in, such a
Security acknowledges the restrictions on transfer of such Security set forth
in this Indenture and in the Private Placement Legend and agrees that it will
transfer such Security only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.14 or this Section 2.15.
The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
SECTION 2.16. Designation.
The Indebtedness evidenced by the Securities is hereby irrevocably
designated as "senior indebtedness" or such other term denoting seniority for
the purposes of any future Indebtedness of the Company which the Company makes
subordinate to any senior indebtedness or such other term denoting seniority.
SECTION 2.17 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, 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 Securities 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 Security and the date of the proposed payment. The Trustee may fix or
cause to be fixed each such special record date and payment date,
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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 payment 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 THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant to Section 3.07
hereof, it shall notify the Trustee in writing of the Redemption Date and the
principal amount of Securities to be redeemed. The Company shall give notice
of redemption to the Paying Agent and Trustee at least 30 days but not more
than 60 days before the Redemption Date (unless a shorter notice shall be
agreed to by the Trustee in writing), together with an Officers' Certificate
stating that such redemption will comply with the conditions contained herein.
SECTION 3.02. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed at any time,
selection of such Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Securities are listed or, if such Securities are not then
listed on a national securities exchange, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate.
The Trustee shall make the selection from the Securities outstanding and
not previously called for redemption and shall promptly notify the Company in
writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date, the
Trustee, at the Company's request made at least 45 days before the Redemption
Date (unless a shorter notice shall be agreed to by the Trustee in writing)
shall mail a notice of redemption by first class mail, postage prepaid, to each
Holder whose Securities are to be redeemed at the addresses of such Holders as
they appear in the register maintained by the Register pursuant to Section
2.03. The Trustee shall give the notice of redemption in the Company's name
and at the Company's expense. Each notice for redemption shall identify the
Securities to be redeemed and shall state:
(1) the Redemption Date;
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(2) the Redemption Price and the amount of accrued interest,
if any, to be paid;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price plus accrued
interest, if any;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date, and the only remaining right of the
Holders of such Securities is to receive payment of the Redemption Price
upon surrender to the Paying Agent of the Securities redeemed;
(6) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion
thereof will be issued
(7) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption; and
(8) the subparagraph of the Securities pursuant to which the
Securities are to be redeemed.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any. Upon surrender to
the Trustee or Paying Agent, such Securities called for redemption shall be
paid at the Redemption Price (which shall include accrued interest thereon to
the Redemption Date), but installments of interest, the maturity of which is on
or prior to the Redemption Date, shall be payable to Holders of record at the
close of business on the relevant Record Dates. Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of notice to
any other Holder.
SECTION 3.05. Deposit of Redemption Price.
On or before 11:00 a.m. New York Time on the Redemption Date, the
Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued interest, if any, of all Securities to be
redeemed on that date. The Paying Agent shall promptly return to the Company
any U.S. Legal Tender so deposited which is not required for that purpose upon
the written request of the Company, except with respect to monies owed as
obligations to the Trustee pursuant to Article Seven.
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If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Securities to be redeemed will cease to accrue on and
after the applicable Redemption Date, whether or not such Securities are
presented for payment.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the Company
shall execute and the Trustee, upon the Company's written request, shall
authenticate for the Holder a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
SECTION 3.07 Optional Redemption.
(a) The Securities shall be redeemable, at the Company's option, in
whole at any time or in part from time to time, on and after February 1, 2002
at the following Redemption Prices (expressed as percentages of the principal
amount) if redeemed during the twelve-month period commencing on February 1 of
the year set forth below, plus, in each case, accrued and unpaid interest
thereon to the Redemption Date.
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2002 ........................................... 104.8750%
2003 ........................................... 102.4375%
2004 and thereafter ............................ 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time on or prior to
February 1, 2001, the Company may redeem up to 35% of the aggregate principal
amount of Securities originally issued at a Redemption Price of 109.75% of the
principal amount thereof, plus accrued and unpaid interest thereon, to the
Redemption Date, with the net proceeds of any Public Equity Offering; provided
that at least 65% aggregate principal amount of Securities originally issued
remain outstanding immediately after the occurrence of such redemption; and,
provided, further, that such redemption occurs within 90 days of the date of
the closing of such Public Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. Procedures for Purchase Offers.
Notice of a Purchase Offer pursuant to this Section 3.08 shall be mailed
or caused to be mailed, by first class mail, by the Company not less than 30
nor more than 60 days before the Purchase Date to all Holders at their last
registered addresses, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Purchase Offer and shall state the following terms:
(1) the section of the Indenture pursuant to which the Purchase Offer
is being made and that all Securities properly tendered will be
accepted for payment; provided, however,
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that if the aggregate principal amount of Securities tendered in
connection with an Asset Proceeds Offer plus accrued interest at
the expiration of such offer exceeds the Payment Amount, the
Company shall select the Securities to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by the
Company so that only Securities in denominations of $1,000 or
multiples thereof shall be purchased);
(2) the purchase price (including the amount of accrued interest) and
the Purchase Date and that the Purchase Offer will remain open
for at least 20 Business Days and until the close of business on
the Business Day prior to the Purchase Date;
(3) that any Security not properly tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment therefor, any
Security accepted for payment pursuant to the Purchase Offer
shall cease to accrue interest after the Purchase Date;
(5) that Holders electing to have a Security purchased pursuant to a
Purchase Offer will be required to surrender the Security, with
the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Security completed, to the Paying Agent at the
address specified in the notice prior to the close of business on
the third Business Day prior to the Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than one Business Day prior to
the Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount
of the Securities the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have
such Security purchased; and
(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered; provided that
each Security purchased and each new Security issued shall be in
an original principal amount of $1,000 or integral multiples
thereof.
On or before 11:00 a.m. New York Time on the Purchase Date, the Company
shall (i) accept for payment Securities or portions thereof tendered pursuant
to the Purchase Offer which are to be purchased in accordance with item (1)
above, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the purchase price plus accrued interest, if any, of all Securities to be
purchased and (iii) deliver to the Trustee Securities so accepted together with
an Officers' Certificate stating the Securities or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail or otherwise
deliver to the Holders of Securities so accepted payment in an amount equal to
the purchase price plus accrued interest, if any. For purposes of any Purchase
Offer, the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Securities pursuant to a
Purchase Offer shall be returned by the Trustee to the Company.
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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 in connection with the purchase
of Securities pursuant to a Purchase Offer. To the extent the provisions of
any such rule conflict with the provisions of this Indenture relating to a
Purchase Offer, the Company shall comply with the provisions of such rule and
be deemed not to have breached its obligations relating to such Purchase Offer
by virtue thereof.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the Securities in
New York, New York in the manner provided in the Securities and this Indenture.
An installment of principal of or interest on the Securities shall be
considered paid on the date it is due if the Trustee or Paying Agent holds on
that date U.S. Legal Tender designated for and sufficient to pay the
installment.
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain in The City of New York, the office or agency
required under Section 2.03. 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 address of the Trustee set forth in Section 11.02. The Company hereby
initially designates the office of United States Trust Company, an affiliate of
the Trustee, as its office or agency in The City of New York.
SECTION 4.03. Limitation on Restricted Payments.
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or
make any distribution (other than dividends or distributions payable solely in
Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock, (b) purchase, redeem
or otherwise acquire or retire for value (each, an "acquisition of") any
Capital Stock of the Company, or any warrants, rights or options to acquire
shares of any class of such Capital Stock, other than through the exchange
therefor solely of Qualified Capital Stock of the Company or warrants, rights
or options to acquire Qualified Capital Stock of the Company, (c) make any
principal payment on, purchase, defease, redeem, prepay, decrease or otherwise
acquire or retire for value, prior to any scheduled final maturity, scheduled
repayment or scheduled sinking fund payment (each, an "acquisition of"), any
Subordinated Indebtedness of the Company or (d) make any Investment (other than
Permitted Investments) in any Person (each of the foregoing prohibited actions
set forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted
Payment"), if at the time of such proposed Restricted Payment or immediately
after giving effect thereto, (i) a Default or an Event of Default has occurred
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and is continuing or would result therefrom, or (ii) the Company is not able to
Incur at least $1.00 of additional Indebtedness in accordance with paragraph
(b) of Section 4.04 (as if such Restricted Payment had been made as of the last
day of the Four Quarter Period), or (iii) the aggregate amount of Restricted
Payments (including such proposed Restricted Payment) made subsequent to the
Issue Date exceeds or would exceed the sum of: (u) 50% of the Consolidated Net
Income (or if Consolidated Net Income shall be a loss, minus 100% of such loss)
of the Company during the period (treating such period as a single accounting
period) from April 1, 1998 to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available at the
time of such Restricted Payment; (v) 100% of the aggregate Net Equity Proceeds
received by the Company from any Person from the issuance and sale subsequent
to the Issue Date of Qualified Capital Stock of the Company other than any
Qualified Capital Stock sold to a Subsidiary of the Company; (w) the aggregate
net cash proceeds received after the Issue Date by the Company (other than from
any of its Subsidiaries) upon the exercise of any options, warrants or rights
to purchase shares of Qualified Capital Stock of the Company; (x) the aggregate
net cash proceeds received after the Issue Date by the Company from the
issuance or sale (other than to any of its Subsidiaries) of debt securities or
shares of Disqualified Capital Stock that have been converted into or exchanged
for Qualified Capital Stock of the Company, together with the aggregate cash
received by the Company at the time of such conversion or exchange; (y) an
amount equal to the net reduction in Investments, subsequent to the Issue Date,
in any Person resulting from payments of interest on debt, dividends,
repayments of loans or advances, return of capital, or other transfers of
property (but only to the extent such distributions are not included in the
calculation of Consolidated Net Income of the Company), in each case, to the
Company or any Subsidiary from any Person, not to exceed in the case of any
Person, the amount of Investments previously made by the Company or any
Subsidiary in such Person and which was treated as a Restricted Payment; and
(z) $500,000.
Notwithstanding the foregoing, these provisions do not prohibit: (1)
the acquisition of Capital Stock of the Company or warrants, rights or options
to acquire Capital Stock of the Company either (i) solely in exchange for
shares of Qualified Capital Stock of the Company or warrants, rights or options
to acquire Qualified Capital Stock of the Company, or (ii) through the
application of net proceeds of a substantially concurrent sale for cash (other
than to a Subsidiary of the Company) of shares of Qualified Capital Stock of
the Company or warrants, rights or options to acquire Qualified Capital Stock
of the Company; (2) the acquisition of any Subordinated Indebtedness of the
Company either (i) solely in exchange for shares of Qualified Capital Stock of
the Company, or (ii) through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the Company) of (A)
shares of Qualified Capital Stock of the Company or warrants, rights or options
to acquire Qualified Capital Stock of the Company or (B) Permitted Refinancing
Indebtedness; or (3) loans by the Company to employees in the ordinary course
of business up to an aggregate amount of $250,000 at any one time outstanding;
provided, however, that in the case of clauses (1), (2) and (3) of this
paragraph, no Default or Event of Default shall have occurred and be continuing
at the time of such payment or as a result thereof. In determining the
aggregate amount of Restricted Payments made subsequent to the Issue Date,
amounts expended pursuant to clauses (1)(ii), (2)(i) and (2)(ii)(A) shall, in
each case, be included in such calculation.
For purposes of the foregoing provisions, the amount of any Restricted
Payment (other than cash) shall be the fair market value (evidenced by a
resolution of the Board of Directors set forth in
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an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Company or
such Subsidiary, as the case may be, pursuant to the Restricted Payment. Not
later than the date of making any Restricted Payment, the Company shall deliver
to the Trustee an Officers' Certificate stating that such Restricted Payment
complies with this Indenture and setting forth in reasonable detail the basis
upon which the required calculations were computed, which calculations may be
based upon the Company's latest available internal quarterly financial
statements.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would be permitted by the
provisions of this Section 4.03 and if such Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary. For purposes of making
such determination, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid in cash prior to such
designation) in the Restricted Subsidiary so designated will, at the election
of the Company, either (A) reduce the amount available for Restricted Payments
under clause (iii) of the first paragraph of this Section 4.03 or (B)
constitute Permitted Investments under clauses (f) or (g) of the definition
thereof. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation.
For purposes of this Section 4.03, if a particular Restricted Payment
involves a non-cash payment, including a distribution of assets, then such
Restricted Payment shall be deemed to be an amount equal to the cash portion of
such Restricted Payment, if any, plus an amount equal to the fair market value
of the non-cash portion of such Restricted Payment.
SECTION 4.04. Limitation on Indebtedness.
(a) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, Incur any Indebtedness, including,
without limitation, any Acquired Indebtedness (other than Permitted
Indebtedness).
(b) Notwithstanding the foregoing limitations, the Company and its
Subsidiaries may Incur Indebtedness (including, without limitation, Acquired
Indebtedness), in each case, if (i) no Default or Event of Default shall have
occurred and be continuing on the date of the proposed Incurrence thereof or
would result as a consequence of such proposed Incurrence and (ii) immediately
after giving effect to such proposed Incurrence, the Consolidated Fixed Charge
Coverage Ratio of the Company is at least equal to 1.75 to 1.0 if such proposed
Incurrence is on or prior to September 30, 1999; and at least equal to 2.0 to
1.0 if such proposed Incurrence is thereafter.
(c) Neither the Company nor any Subsidiary Guarantor will, directly
or indirectly, in any event Incur any Indebtedness which by its terms (or by
the terms of any agreement governing such Indebtedness) is subordinated to any
other Indebtedness of the Company or such Subsidiary Guarantor, as the case may
be, unless such Indebtedness is also by its terms (or by the terms of any
agreement governing such Indebtedness) made expressly subordinate to the
Securities or the Subsidiary Guarantee of such Subsidiary Guarantor, as the
case may be, to the same extent and in the same manner as such Indebtedness is
subordinated pursuant to subordination provisions that are
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most favorable to the holders of any other Indebtedness of the Company or such
Subsidiary Guarantor, as the case may be.
SECTION 4.05. Corporate Existence.
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other
existence of each of its Subsidiaries and the rights (charter and statutory)
and material franchises of the Company and each of its Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right or
franchise, or the corporate, partnership or other existence of any Subsidiary,
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and each of its Subsidiaries, taken as a whole, and that the loss thereof is
not, and will not be, disadvantageous in any material respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments
and governmental charges levied or imposed upon it or any of its Subsidiaries
or upon the income, profits or property of it or any of its Subsidiaries and
(ii) all lawful claims for labor, materials and supplies which, in each case,
if unpaid, might by law become a Lien upon the property of it or any of its
Subsidiaries; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which appropriate provision has been
made.
SECTION 4.07. Maintenance of Properties and Insurance.
(a) The Company shall cause all material properties owned by or
leased by it or any of its Subsidiaries used or useful to the conduct of its
business or the business of any of its Subsidiaries to be improved or
maintained and kept in normal condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in its
judgment may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 4.07 shall prevent the Company or any of
its Subsidiaries from discontinuing the use, operation or maintenance of any of
such properties, or disposing of any of them, if such discontinuance or
disposal is, in the judgment of the Board of Directors or of the board of
directors of any Subsidiary of the Company concerned, or of an officer (or
other agent employed by the Company or of any of its Subsidiaries) of the
Company or any of its Subsidiaries having managerial responsibility for any
such property, desirable in the conduct of the business of the Company or any
Subsidiary of the Company, and if such discontinuance or disposal is not
adverse in any material respect to the Holders.
(b) The Company shall maintain, and shall cause its Subsidiaries to
maintain, insurance with responsible carriers against such risks and in such
amounts, and with such deductibles,
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retentions, self-insured amounts and co-insurance provisions, as are
customarily carried by similar businesses of similar size.
SECTION 4.08. Compliance Certificate; Notice of Default; Tax Information.
(a) The Company shall deliver to the Trustee, within 120 days after
the close of each fiscal year an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries 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 knowledge the Company during such
preceding fiscal year has kept, observed, performed and fulfilled each and
every such covenant and no Default or Event of Default occurred during such
year and at the date of such certificate there is no Default or Event of
Default has occurred and is continuing or, if such signers do know of such
Default or Event of Default, the certificate shall describe its status with
particularity. The Officers' Certificate shall also notify the Trustee should
the Company elect to change the manner in which it fixes its fiscal year end.
Upon the qualifications of this Indenture under the TIA, such Officer's
Certificate shall comply with TIA Section 314(a)(4).
(b) So long as (and to the extent) not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
annual financial statements delivered pursuant to Section 4.10 shall be
accompanied by a written report of the Company's independent accountants (who
shall be a firm of established national reputation) that in conducting their
audit 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 5 of this Indenture insofar as they relate to accounting matters
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 deliver to the Trustee, promptly upon any
Officer becoming aware of any Default or Event of Default in the performance of
any covenant, agreement or condition contained in this Indenture, an Officers'
Certificate specifying the Default or Event of Default and describing its
status with particularity.
(d) The Company shall calculate and deliver to the Trustee all
original issue discount information to be reported by the Trustee to Holders as
required by law.
SECTION 4.09. Compliance with Laws.
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their
respective properties, except for such noncompliances as would not in the
aggregate have a material adverse effect on the financial condition or results
of operations of the Company and its Subsidiaries taken as a whole.
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SECTION 4.10. SEC Reports.
(a) The Company will file with the SEC all information, documents and
reports required to be filed with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act, whether or not the Company is subject to such filing
requirements so long as the SEC will accept such filings. The Company will
file with the Trustee within 15 days after it files them with the SEC, copies
of the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe), without exhibits, which the Company files with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. Upon qualification of
this Indenture under the TIA, the Company shall also comply with the provisions
of TIA Section 314(a).
(b) Regardless of whether the Company is required to furnish such
reports to its stockholders pursuant to the Exchange Act, the Company shall
cause its consolidated financial statements, comparable to that which would
have been required to appear in annual or quarterly reports, to be delivered to
the Trustee and the Holders. The Company will also make such reports available
to prospective purchasers of the Securities, securities analysts and broker-
dealers upon their request.
(c) For so long as any of the Securities remain outstanding the
Company will make available to any prospective purchaser of the Securities or
beneficial owner of the Securities in connection with any sale thereof the
information required by Rule 144A(d)(4) under the Securities Act, until such
time as the Company has consummated the Registered Exchange Offer or until such
time as the holders thereof have disposed of such Securities pursuant to an
effective registration statement filed by the Company.
SECTION 4.11. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of and/or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture, and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 4.12. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, conduct any business or enter into any transaction or series
of transactions with or for the benefit of any of their Affiliates (each an
"Affiliate Transaction") but excluding Specified Affiliate Transactions, except
in good faith and on terms that are no less favorable to the Company or such
Subsidiary, as the case may be, than those that could have been obtained in a
comparable transaction on an arm's-length basis from a Person not an Affiliate
of the Company or such Subsidiary. All
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Affiliate Transactions (and each series of related Affiliate Transactions which
are similar or part of a common plan) involving aggregate payments or other
property with a fair market value in excess of $1,000,000 shall be approved by
the Board of Directors of the Company, such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Subsidiary of the Company enters into an Affiliate Transaction (or a series of
related Affiliate Transactions related to a common plan) that involves an
aggregate fair market value of more than $10,000,000, the Company or such
Subsidiary shall, prior to the consummation thereof, obtain a favorable opinion
as to the fairness of such transaction or series of related transactions to the
Company or the relevant Subsidiary, as the case may be, from a financial point
of view, from an Independent Financial Advisor and file the same with the
Trustee. Notwithstanding the foregoing, the restrictions set forth in this
Section 4.12 shall not apply to (i) transactions between the Company and any
Subsidiary or between Subsidiaries, (ii) any employee compensation arrangement
of the Company or any Subsidiary which has been approved by a majority of the
Company's disinterested directors and found in good faith by such directors to
be in the reasonable best interest of the Company or such Subsidiary, as the
case may be, or (iii) customary directors" fees, indemnification and similar
arrangements.
SECTION 4.13. Limitation on Conduct of Business.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in the conduct of any business other than the Ice Business.
SECTION 4.14. Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (a) pay dividends or make any other distributions
on its Capital Stock; (b) make loans or advances or pay any Indebtedness or
other obligation owed to the Company or to any Subsidiary of the Company; or
(c) transfer any of its property or assets to the Company or to any Subsidiary
of the Company (each such encumbrance or restriction in clause (a), (b), or (c)
a "Payment Restriction"), except for such encumbrances or restrictions existing
under or by reason of: (1) applicable law; (2) this Indenture; (3) customary
non-assignment provisions of any lease or license agreements or similar
agreements entered into the ordinary course of business of any Subsidiary of
the Company; (4) any instrument governing Acquired Indebtedness Incurred in
accordance with paragraph (b) of Section 4.04; provided that such encumbrance
or restriction is not, and will not be, applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property or
assets of the Person, becoming a Subsidiary of the Company; (5) agreements
existing on the Issue Date to the extent and in the manner such agreements are
in effect on the Issue Date; (6) any restriction or encumbrance contained in
contracts for the sale of assets to be consummated in accordance with this
Indenture solely in respect of the assets to be sold pursuant to such contract;
(7) any restrictions on the sale or other disposition or encumbrance of any
property securing Indebtedness as a result of a Permitted Lien on such
property; (8) any agreement relating to an acquisition of property, so long as
the encumbrances or restrictions in any such agreement relate solely to the
property so acquired and are not or were not
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created in anticipation of or in connection with the acquisition thereof; (9)
the Credit Facilities; or (10) any encumbrance or restriction contained in
Permitted Indebtedness or Permitted Refinancing Indebtedness Incurred to
Refinance the Indebtedness Incurred pursuant to an agreement referred to in
clauses (2), (4), (5) or (9) above (whether the Indebtedness Refinanced is
repaid in whole or in part); provided, that the provisions relating to such
encumbrance or restriction contained in any such Permitted Refinancing
Indebtedness are no less favorable to the Company or to the Holders in any
material respect in the reasonable and good faith judgment of the Board of
Directors of the Company than the provisions relating to such encumbrance or
restriction contained in agreements referred to in such clause (2), (4), (5) or
(9).
SECTION 4.15. Limitation on Liens.
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume, affirm or
suffer to exist or become effective any Lien of any kind except for Permitted
Liens, upon any of their respective property or assets, whether owned on or
acquired after the Issue Date, or any income, profits or proceeds therefrom, to
secure (a) any Indebtedness of the Company or such Subsidiary (if it is not
also a Subsidiary Guarantor), unless prior to, or contemporaneously therewith,
the Securities are equally and ratably secured, or (b) any Indebtedness of any
Subsidiary Guarantor, unless prior to, or contemporaneously therewith, the
Subsidiary Guarantee of such Subsidiary Guarantor is equally and ratably
secured; provided, however, that if such Indebtedness is expressly subordinated
to the Securities or the Subsidiary Guarantees, the Lien securing such
Indebtedness will be subordinated and junior to the Lien securing the
Securities or the Subsidiary Guarantees, as the case may be, with the same
relative priority as such Indebtedness has with respect to the Securities or
the Subsidiary Guarantees. The foregoing covenant will not apply to any Lien
securing Acquired Indebtedness, provided that any such Lien extends only to the
property or assets that were subject to such Lien prior to the related
acquisition by the Company or such Subsidiary and was not created, incurred or
assumed in contemplation of such transaction.
SECTION 4.16. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of
Securities shall have the right to require the Company to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's
Securities on a Business Day (the "Change of Control Payment Date") not more
than 60 nor less than 30 days following such Change of Control, pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon to the date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, the Trustee, at the written
direction of the Company, shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and the
Company's offer to repurchase Securities pursuant to the procedures required by
Section 3.08 and 4.16 and described in such notice. 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 in connection with the repurchase of the Securities
as a result of a Change of Control.
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(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment all Securities or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with
the Paying Agent an amount equal to the Change of Control Payment in respect of
all Securities or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Securities so accepted, together with an Officers'
Certificate stating the aggregate principal amount of Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail
or otherwise deliver to each Holder of Securities so tendered the Change of
Control Payment for such Securities, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Security equal in principal amount to any unpurchased portion of the
Securities surrendered, if any; provided that each such new Security 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) The Change of Control provisions described above shall be
applicable whether or not any other provisions of this Indenture are
applicable.
(d) 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 Indenture applicable to a Change of Control
Offer made by the Company and purchases all Securities validly tendered and not
withdrawn under such Change of Control Offer.
SECTION 4.17. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in an Asset Sale unless (i) the Company or the Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at least equal to
the fair market value (evidenced by a resolution of the Board of Directors of
the Company set forth in an Officers' Certificate delivered to the Trustee) of
the assets or Properties issued or sold or otherwise disposed of and (ii) at
least 85% of the consideration therefor received by the Company or such
Subsidiary is in the form of cash or Cash Equivalents; provided that the amount
of (x) any liabilities (as shown on the Company's or such Subsidiary's most
recent balance sheet) of the Company or any Subsidiary (other than contingent
liabilities and liabilities that are Subordinated Indebtedness or otherwise by
their terms subordinated to the Securities or the Subsidiary Guarantees) that
are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Subsidiary from further
liability and (y) any notes or other obligations received by the Company or any
such Subsidiary from such transferee that are converted by the Company or such
Subsidiary into cash within 360 days of closing such Asset Sale (to the extent
of the cash received), shall be deemed to be cash for purposes of this
provision.
Within 360 days after the receipt of any Net Cash Proceeds from any
Asset Sale, the Company may (i) apply all or any of the Net Cash Proceeds
therefrom to repay Indebtedness (other than Subordinated Indebtedness) of the
Company or any Subsidiary, provided, in each case, that the related loan
commitment of any revolving credit facility or other borrowing (if any) is
thereby permanently reduced by the amount of such Indebtedness so repaid, or
(ii) invest all or any part of
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the Net Cash Proceeds thereof in properties and other capital assets that
replace the properties or other capital assets that were the subject of such
Asset Sale or in other properties or other capital assets that will be used in
the Ice Business. Pending the final application of any such Net Cash Proceeds,
the Company may temporarily reduce borrowings under any revolving credit
facility or otherwise invest such Net Cash Proceeds in any manner that is not
prohibited by this Indenture. Any Net Cash Proceeds from an Asset Sale that
are not applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "Available Proceeds Amount." When the aggregate
Available Proceeds Amount exceeds $5,000,000, the Company shall make an offer
to purchase, from all Holders of the Securities and any then outstanding Pari
Passu Indebtedness required to be repurchased or repaid on a permanent basis in
connection with an Asset Sale, an aggregate principal amount of Securities and
any such Pari Passu Indebtedness equal to such Available Proceeds Amount as
follows:
(i) (A) The Company shall make an offer to purchase (an "Asset
Proceeds Offer") from all Holders of the Securities in accordance with
the procedures set forth in this Indenture the maximum principal amount
(expressed as a multiple of $1,000) of Securities that may be purchased
out of an amount (the "Payment Amount") equal to the product of such
Available Proceeds Amount multiplied by a fraction, the numerator of
which is the outstanding principal amount of the Securities and the
denominator of which is the sum of the outstanding principal amount of
the Securities and such Pari Passu Indebtedness, if any (subject to
proration in the event such amount is less than the aggregate Offered
Price (as defined in clause (ii) below) of all Securities tendered), and
(B) to the extent required by any such Pari Passu Indebtedness and
provided there is a permanent reduction in the principal amount of such
Pari Passu Indebtedness, the Company shall make an offer to purchase
such Pari Passu Indebtedness (a "Pari Passu Offer") in an amount (the
"Pari Passu Indebtedness Amount") equal to the excess of the Available
Proceeds Amount over the Payment Amount.
(ii) The offer price for the Securities shall be payable in
cash in an amount equal to 100% of the principal amount of the
Securities tendered pursuant to an Asset Proceeds Offer, plus accrued
and unpaid interest, if any, to the date such Asset Proceeds Offer is
consummated (the "Offered Price"), in accordance with the procedures set
forth in this Indenture. To the extent that the aggregate Offered Price
of the Securities tendered pursuant to an Asset Proceeds Offer is less
than the Payment Amount relating thereto or the aggregate amount of the
Pari Passu Indebtedness that is purchased or repaid pursuant to the Pari
Passu Offer is less than the Pari Passu Indebtedness Amount (such
shortfall constituting an "Asset Proceeds Deficiency"), the Company may
use such Asset Proceeds Deficiency, or a portion thereof, for general
corporate purposes, subject to the limitations of Section 4.03.
(iii) If the aggregate Offered Price of Securities validly
tendered and not withdrawn by Holders thereof exceeds the Payment
Amount, Securities to be purchased will be selected on a pro rata basis.
Upon completion of such Net Proceeds Offer and Pari Passu Offer, the
amount of Available Proceeds Amount shall be reset to zero.
The Company shall not permit any Subsidiary to enter into or suffer to
exist any agreement (excluding Permitted Liens) that would place any
restriction of any kind (other than pursuant to law or regulation) on the
ability of the Company to make an Asset Proceeds Offer following any Asset
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Sale. The Company will comply with Rule 14e-1 under the Exchange Act, and any
other securities laws and regulations thereunder, if applicable, in the event
that an Asset Sale occurs and the Company is required to purchase Securities as
described above.
Any amounts remaining after the purchase of Securities pursuant to an
Asset Sale Offer shall be returned by the Trustee to the Company.
SECTION 4.18. Limitation on Issuances and Sales of Capital Stock of
Subsidiaries.
The Company shall not cause or permit any of its Subsidiaries to issue
or sell any Capital Stock (other than to the Company or to a wholly-owned
Subsidiary of the Company) or permit any Person (other than the Company or a
wholly-owned Subsidiary of the Company) to own or hold any Capital Stock of any
Subsidiary of the Company or any Lien or security interest therein; provided,
however, that this Section 4.18 shall not prohibit (i) Permitted Liens or (ii)
the disposition (by sale, merger or otherwise) of all of the Capital Stock of a
Subsidiary provided any Net Cash Proceeds therefrom are applied in accordance
with Section 4.17.
SECTION 4.19. Limitation on Status as Investment Company.
The Company shall not, nor shall it permit any Subsidiary Guarantor to,
register as an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or otherwise become subject to regulation
under the Investment Company Act of 1940.
SECTION 4.20 Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any sale and leaseback transaction; provided that the Company or any
Subsidiary, as applicable, may enter into a sale and leaseback transaction if
(i) the Company could have (a) incurred Indebtedness in an amount equal to the
Attributable Indebtedness relating to such sale and leaseback transaction
pursuant to the Consolidated Fixed Charge Coverage Ratio test set forth in
clause (b) of Section 4.04 and (b) incurred a Lien to secure such Indebtedness
pursuant to the covenant described above under Section 4.15, (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 of the
Company 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 transfer of assets in such sale and leaseback transaction is
permitted by, and the Company applies the proceeds of such transaction in
compliance with, the covenant described under Section 4.17.
SECTION 4.21 Additional Subsidiary Guarantees.
If the Company or any of its Subsidiaries transfers or causes to be
transferred, in one transaction or a series of related transactions, any
property to any Subsidiary that is not a Subsidiary Guarantor, or if the
Company or any of its Subsidiaries shall organize, acquire or otherwise invest
in another Subsidiary having total assets with a book value in excess of
$250,000, then such transferee or acquired or other Subsidiary shall (i)
execute and deliver to the Trustee a supplemental indenture in form reasonably
satisfactory to the Trustee pursuant to which such Subsidiary shall fully
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and unconditionally guarantee all of the Company's obligations under the
Securities and the Indenture on the terms set forth in the Indenture and (ii)
deliver to the Trustee an Opinion of Counsel that such supplemental indenture
has been duly authorized, executed and delivered by such Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such
Subsidiary. Thereafter, such Subsidiary shall be a Subsidiary Guarantor for
all purposes of the Indenture.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Consolidations and Sale of Assets.
(a) The Company shall not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of the Company's assets (determined on a consolidated basis for the Company
and the Company's Subsidiaries) whether as an entirety or substantially as an
entirety to any Person unless: (i) either (1) the Company shall be the
surviving or continuing corporation or (2) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or
the Person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company and of the Company's
Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be
a corporation organized and validly existing under the laws of the United
States or any State thereof or the District of Columbia and (y) shall expressly
assume, by supplemental indenture (in form and substance satisfactory to the
Trustee), executed and delivered to the Trustee, the due and punctual payment
of the principal of, and premium, if any, and interest on all of the Securities
and the performance of every covenant of the Securities, this Indenture and the
Registration Rights Agreement on the part of the Company to be performed or
observed; (ii) immediately after giving effect to such transaction and, if
applicable, the assumption contemplated by clause (i)(2)(y) above (including
giving effect to any Indebtedness and Acquired Indebtedness Incurred or
anticipated to be Incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be, (1)
shall have a Consolidated Net Worth equal to or greater than the Consolidated
Net Worth of the Company immediately prior to such transaction and (2) shall be
able to Incur at least $1.00 of additional Indebtedness pursuant to paragraph
(b) of Section 4.04 hereof; provided that in determining the Consolidated Fixed
Charge Coverage Ratio of the Company or such Surviving Entity, as the case may
be, such ratio shall be calculated as if the transaction (including the
Incurrence of any Indebtedness or Acquired Indebtedness) took place on the
first day of the Four Quarter Period; (iii) immediately before and immediately
after giving effect to such transaction and the assumption contemplated by
clause (i)(2)(y) above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness Incurred or anticipated to be Incurred
and any Lien granted in connection with or in respect of the transaction) no
Default and no Event of Default shall have occurred or be continuing; and (iv)
the Company or the Surviving Entity shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with
such transaction, such supplemental indenture comply with the applicable
provisions of this Indenture and that all conditions precedent in this
Indenture relating to such transaction have been satisfied.
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(b) Upon any such consolidation, merger, conveyance, lease or
transfer in accordance with the foregoing, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
lease or transfer is made will succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor had been named as the Company therein, and
thereafter (except in the case of a sale, assignment, transfer, lease,
conveyance or other disposition) the predecessor corporation will be relieved
of all further obligations and covenants under this Indenture and the
Securities.
(c) Each Subsidiary Guarantor (other than any Subsidiary Guarantor
whose Subsidiary Guarantee is to be released in accordance with the terms of
the Guarantee and this Indenture in connection with any transaction complying
with the provisions of Section 4.17) will not, and the Company will not cause
or permit any Subsidiary Guarantor to, consolidate with or merge with or into
any Person or sell, assign, transfer, care, convey or otherwise dispose of all
or substantially all of its assets, other than the Company or any other
Subsidiary Guarantor unless: (i) the entity formed by or surviving any such
consolidation or merger (if other than the Subsidiary Guarantor), or to which
such disposition shall have been made, is a corporation organized and existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) such entity assumes by supplemental indenture all of the
obligations of the Subsidiary Guarantor on the Subsidiary Guarantee; (iii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; and (iv) immediately after
giving effect to such transaction and the use of any net proceeds therefrom on
a pro forma basis, the Company could satisfy the provisions of clause (a)(ii)
of this Section 5.01. Any merger or consolidation of a Subsidiary Guarantor
with and into the Company (with the Company being the surviving entity) or
another Subsidiary Guarantor need only comply with clause (a)(iv) of this
Section 5.01.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Security when the
same becomes due and payable and such failure continues for a period of
30 days; or
(2) the Company fails to pay the principal of or premium on
any Security, when such principal or premium becomes due and payable,
whether at maturity, upon redemption or otherwise (including the failure
to make a payment to purchase securities properly tendered pursuant to a
Change of Control Offer or an Asset Proceeds Offer); or
(3) the Company defaults in the observance or performance of
any other covenant or agreement contained in this Indenture or any
Security Document which default continues for a period of 30 days after
the Company receives written notice specifying the default from the
Trustee or from Holders of at least 25% in principal amount of
outstanding Securities (except in the case of a default
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with respect to Section 5.01 hereof, which will constitute an Event of
Default with notice but without passage of time); or
(4) the Company defaults under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness of the Company or of any
Subsidiary of the Company (or the payment of which is guaranteed by the
Company or any Subsidiary of the Company) which default (a) is caused by
a failure to pay principal of, interest or premium, if any, on such
Indebtedness after any applicable grace period provided in such
Indebtedness on the date of such default (a "payment default"), or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any 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 $2,500,000; or
(5) one or more judgments in an aggregate amount in excess of
$1,000,000 (which are not covered by third-party insurance as to which a
financially sound insurer has not disclaimed coverage) being rendered
against the Company or any of its Subsidiaries and such judgments remain
undischarged, or unstayed or unsatisfied for a period of 60 days after
such judgment or judgments become final and non-appealable; or
(6) the Company or any of its Subsidiary Guarantors or
Significant Subsidiaries (A) admits in writing its inability to pay its
debts generally as they become due, (B) commences a voluntary case or
proceeding under any Bankruptcy Law with respect to itself, (C) consents
to the entry of a judgment, decree or order for relief against it in an
involuntary case or proceeding under any Bankruptcy Law, (D) consents to
the appointment of a Custodian of it or for substantially all of its
property, (E) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (F) makes a general
assignment for the benefit of its creditors, or (G) takes any corporate
action to authorize or effect any of the foregoing;
(7) a court of competent jurisdiction enters a judgment,
decree or order for relief in respect of the Company or any of its
Subsidiaries in an involuntary case or proceeding under any Bankruptcy
Law, which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any of its Subsidiaries, (B) appoint a Custodian of the
Company or any of its Subsidiaries or for substantially all of its
property or (C) order the winding-up or liquidation of its affairs, and
such judgment, decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(8) any of the Subsidiary Guarantees ceases to be in full
force and effect, or any of the Subsidiary Guarantees is declared to be
null and void and unenforceable or any of the Subsidiary Guarantees is
found to be invalid or any of the Subsidiary Guarantors denies its
liability under its Subsidiary Guarantee (other than by reason of
release of a Subsidiary Guarantor in accordance with the terms of this
Indenture).
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The Trustee shall, within 90 days after the occurrence of any Default
actually known to it, give to the Holders notice of such Default; provided
that, except in the case of a Default in the payment of principal of or
interest on any of the Securities, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers, of
the Trustee in good faith determines that the withholding of such notice is in
the interest of the Holders.
Notwithstanding the foregoing, if an Event of Default specified in
Section 6.01(4) shall have occurred and be continuing, such Event of Default
and any consequential acceleration shall be automatically rescinded if the
Indebtedness that is the subject of such Event of Default has been repaid, or
if the default relating to such Indebtedness is waived or cured and if such
Indebtedness has been accelerated, the holders thereof have rescinded their
declaration of acceleration in respect of such Indebtedness (provided, in each
case, that such repayment, waiver, cure or rescission is effected within a
period of 10 days from the continuation of such default beyond the applicable
grace period or the occurrence of such acceleration).
SECTION 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (6) or (7) above with respect to the Company) occurs and is continuing,
then and in every such case the Trustee or the Holders of not less than 25% in
aggregate principal amount of the then outstanding Securities may declare the
unpaid principal of, premium, if any, and accrued and unpaid interest on, all
the Securities then outstanding to be due and payable, by a notice in writing
to the Company (and to the Trustee, if given by Holders) and upon such
declaration such principal amount, premium, if any, and accrued and unpaid
interest will become immediately due and payable. If an Event of Default with
respect to the Company specified in clauses (6) or (7) above occurs, all unpaid
principal of, and premium, if any, and accrued and unpaid interest on, the
Securities then outstanding will ipso facto become due and payable without any
declaration or other act on the part of the Trustee or any Holder. The Holders
of a majority in principal amount of the Securities then outstanding by notice
to the Trustee may rescind an acceleration and its consequences if (i) all
existing Events of Default, other than the non-payment of the principal and
premium, if any, and interest of the Securities which has become due solely by
such declaration of acceleration, have been cured or waived and (ii) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Security holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
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SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 2.09, 6.02, 6.07 and 9.02, the Holders of not less
than a majority in principal amount of the outstanding Securities by notice to
the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of or interest on
any Security as specified in clauses (1) and (2) of Section 6.01. The Company
shall deliver to the Trustee an Officers' Certificate stating that the
requisite percentage of Holders have consented to such waiver and attaching
copies of such consents. When a Default or Event of Default is waived, it is
cured and ceases.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of not less than a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. Subject to Section 7.01,
however, the Trustee may refuse to follow any direction that conflicts with any
law or this Indenture that the Trustee determines may be unduly prejudicial to
the rights of another Security holder, or that may involve the Trustee in
personal liability; provided that the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction.
In the event the Trustee takes any action or follows any direction
pursuant to this Indenture or any Security Document, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
any loss or expense caused by taking such action or following such direction.
SECTION 6.06. Limitation on Suits.
Subject to Section 6.07 below, a Security holder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holder or Holders of at least 25% in principal amount
of the outstanding Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer and, if requested, provide to
the Trustee security or indemnity reasonably satisfactory to the Trustee
against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(5) during such 60-day period the Holder or Holders of a
majority in principal amount of the outstanding Securities do not give
the Trustee a direction which, in the opinion of the Trustee, is
inconsistent with the request.
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A Security holder may not use this Indenture to prejudice the rights of
another Security holder or to obtain a preference or priority over such other
Security holder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and interest on a Security, on or
after the respective due dates expressed in such Security, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of the Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified in
clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole amount of
principal and accrued interest and fees remaining unpaid, together with
interest on overdue principal, in each case at the rate per annum borne by the
Securities 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 may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Security holders
allowed in any judicial proceedings relating to the Company or the Subsidiary
Guarantors, its creditors or its property and shall be entitled and empowered
to collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same, and any Custodian in any such
judicial proceedings is hereby authorized by each Security 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 Security 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. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Security holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Security holder in
any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
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Second: to Holders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Company or the Subsidiary Guarantors, as their
respective interests may appear.
The Trustee, upon prior notice to the Company, may fix a record date and
payment date for any payment to Security holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys" fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Securities.
SECTION 6.12 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default actually known to the Trustee has occurred
and is continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs. The Trustee will be
under no obligation to exercise any of its rights or powers under this
Indenture at the request of any of the holders of Securities, unless they shall
have offered and, if requested, provided to the Trustee security and indemnity
satisfactory to it.
(b) Except during the continuance of an Event of Default actually
known to the Trustee:
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(1) The Trustee need perform only those duties as are
specifically set forth herein and no others and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions and
such other documents delivered to it and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform, on their face, to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that repayment of
such funds is not assured to it or it does not receive security or indemnity
reasonably satisfactory to it in its sole discretion against such risk,
liability, loss, fee or expense which might be incurred by it in compliance
with such request or direction.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to this Section 7.01.
(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 or
any Subsidiary Guarantor. 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.
Subject to Section 7.01:
(a) The Trustee may conclusively rely on any document believed
by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in
the document.
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(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate and an Opinion of Counsel, which shall
conform to the provisions of Section 11.05. The Trustee shall not be
liable for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
(other than an agent who is an employee of the Trustee) appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(e) The Trustee may consult with counsel and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action
taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of
this Indenture, unless such Holders shall have offered and, if
requested, provided to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company or any
Subsidiary Guarantor shall be sufficient if signed by an Officer of the
Company or such Subsidiary Guarantor.
(h) Except with respect to Section 4.01 and 4.08 hereof, the
Trustee shall have no duty to inquire as to the performance of the
Company's covenants in Article 4 hereof. In addition, the Trustee shall
not be deemed to have knowledge of any Default or Event of Default
except (i) any event of Default occurring pursuant to Sections 6.01(1)
and 6.01(2) hereof or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual
knowledge.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company, its
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11.
SECTION 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, the Securities or the Subsidiary
Guarantees, it shall not be accountable for the Company's use of the proceeds
from the Securities, it shall not be responsible for the use or
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application of any money by a Paying Agent other than the Trustee and it shall
not be responsible for any statement of the Company in this Indenture or any
document issued in connection with the sale of Securities or any statement in
the Securities other than the Trustee's certificate of authentication. The
Trustee makes no representations with respect to the effectiveness or adequacy
of this Indenture or the validity or perfection, if any, of Liens granted under
this Indenture. The Trustee shall not be responsible for independently
ascertaining or maintaining such validity or perfection, if any, and shall be
fully protected in relying upon certificates and opinions delivered to it in
accordance with the terms of this Indenture.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and the
Trustee receives actual notice of such event, the Trustee shall mail to each
Security holder, as their names and addresses appear on the Security holder
list described in Section 2.05, notice of the uncured Default or Event of
Default within 90 days after the Trustee receives such notice. Except in the
case of a Default or an Event of Default in payment of principal of, or
interest on, any Security, including the failure to make any payment due on (i)
the Change of Control Payment Date pursuant to a Change of Control Offer or
(ii) the Purchase Date pursuant to a Purchase Offer, the Trustee may withhold
the notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or Responsible Officers, of the Trustee
in good faith determines that withholding the notice is in the interest of the
Security holders.
SECTION 7.06. Reports by Trustee to Holders.
This Section 7.06 shall not be operative as a part of this Indenture
until this Indenture is qualified under the TIA, and, until such qualification,
this Indenture shall be construed as if this Section 7.06 were not contained
herein.
Within 60 days after each April 15 beginning with April 15, 1998, the
Trustee shall, to the extent that any of the events described in TIA Section
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Security holder a brief report dated as of such April 15 that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section
313(b), 313(c) and 313(d).
A copy of each report at the time of its mailing to Security holders
shall be mailed to the Company and filed with the SEC and each securities
exchange, if any, on which the Securities are listed.
The Company shall notify the Trustee if the Securities become listed on
any securities exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder (which shall be agreed to from time to
time by the Company and the Trustee). The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company shall promptly reimburse the Trustee upon request for all reasonable
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disbursements, expenses and advances (including reasonable fees and expenses of
counsel) incurred or made by it in addition to the compensation for its
services, except any such disbursements, expenses and advances as may be
attributable to the Trustee's negligence or bad faith. Such expenses shall
include the reasonable compensation, disbursements and expenses of the
Trustee's agents, accountants, experts and counsel and any taxes or other
expenses incurred by a trust created pursuant to Section 8.01 hereof.
The Company shall indemnify the Trustee and each predecessor trustee
for, and hold it harmless against, any loss, liability, claim, damage or
expense incurred by the Trustee without negligence or willful misconduct on its
part arising out of or in connection with the administration of this trust and
its duties under this Indenture, including the reasonable expenses and
attorneys" fees of defending itself against any claim of liability arising
hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. However, the 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 (and may employ its own counsel) at the
Company's expense. The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee as a result of the
violation of this Indenture by the Trustee if such violation arose from the
Trustee's negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a senior claim prior to the Securities against all money or
property held or collected by the Trustee, in its capacity as Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (6) or (7) of Section 6.01 occurs, the expenses
(including the reasonable fees and expenses of its agents and counsel) and the
compensation for the services shall be preferred over the status of the Holders
in a proceeding under any Bankruptcy Law and are intended to constitute
expenses of administration under any Bankruptcy Law. The Company's obligations
under this Section 7.07 and any claim arising hereunder shall survive the
resignation or removal of any Trustee, the discharge of the Company's
obligations pursuant to Article Eight and any rejection or termination under
any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company in
writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee
in writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
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(4) 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 notify each Holder of such
event and 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 Securities may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer, after payment of all sums then owing
to the Trustee pursuant to Section 7.07, all property held by it as Trustee to
the successor Trustee, subject to its rights under Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Security holder.
If a successor Trustee does not take office within 30 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 outstanding Securities
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Security holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another Person,
the resulting, surviving or transferee corporation without any further act
shall, if such resulting, surviving or transferee Person is otherwise eligible
hereunder, be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirement
of TIA Sections 310(a)(1) and 310(a)(5). The Trustee and/or its ultimate parent
entity shall have a combined capital and surplus of at least $100,000,000 as
set forth in its most recent published annual report of condition. The Trustee
shall have a combined capital and surplus of at least $150,000 as set forth in
its most recent published annual report of condition. The Trustee shall comply
with TIA Section 310(b); provided, however, that there shall be excluded from
the operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
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SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee, in its capacity as Trustee hereunder shall comply with TIA
Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board Resolution, at any time,
with respect to the Securities, elect to have either paragraph (b) or paragraph
(c) below be applied to the outstanding Securities upon compliance with the
conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company and the Subsidiary Guarantors
shall be deemed to have been released and discharged from their respective
obligations with respect to the outstanding Securities and the Subsidiary
Guarantees on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of the Sections and matters
under this Indenture referred to in (i) and (ii) below, and to have satisfied
all their respective obligations under such Securities, the Subsidiary
Guarantees and this Indenture, except for the following which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of Holders
of outstanding Securities to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph, payments in
respect of the principal of and interest on such Securities when such payments
are due and (ii) obligations listed in Section 8.03, subject to compliance with
this Section 8.01. The Company may exercise its option under this paragraph
(b) notwithstanding the prior exercise of its option under paragraph (c) below
with respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company and the Subsidiary Guarantors
shall be released and discharged from their respective obligations under any
covenant contained in Article 5 and in Sections 4.03 through 4.22 with respect
to the outstanding Securities on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and the Securities
shall thereafter be deemed to be not "outstanding" for the purpose of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities, the Company and any Subsidiary 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(3), nor shall any event referred to in Section 6.01(4) or
(5) thereafter constitute
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a Default or an Event of Default thereunder but, except as specified above, the
remainder of this Indenture and such Securities shall be unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Securities:
(1) The Company shall have irrevocably deposited or caused to
be deposited, in trust, with the Trustee, for the benefit of the
Holders, U.S. Legal Tender or direct non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit
of the United States of America is pledged ("U.S. Government
Obligations") maturing as to principal and interest in such amounts and
at such times as are sufficient, without consideration of the
reinvestment of such interest and after payment of all Federal, state
and local taxes or other charges or assessments in respect thereof
payable by the Trustee, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification
thereof (in form and substance reasonably satisfactory to the Trustee)
delivered to the Trustee, to pay the principal of, premium, if any, and
interest on all the outstanding Securities on the dates on which any
such payments are due and payable in accordance with the terms of this
Indenture and of the Securities (whether at stated maturity or on the
applicable redemption date);
(2) Such deposits shall not cause the Trustee to have a
conflicting interest as defined in and for purposes of the TIA;
(3) The Trustee shall have received Officers' Certificates
stating that no Default or Event of Default or event which with notice
or lapse of time or both would become a Default or an Event of Default
with respect to the Securities shall have occurred and be continuing on
the date of such deposit or, insofar as Section 6.01(6) or (7) is
concerned, at any time during the period ending on the 91st day after
the date of such deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such period);
(4) The Trustee shall have received Officers' Certificates
stating that such deposit will not result in a Default under this
Indenture or a breach or violation of, or constitute a default under,
any other material instrument or agreement to which the Company or any
of its Subsidiaries is a party or by which it or its property is bound;
(5) (i) In the event the Company elects paragraph (b) hereof,
the Company shall deliver to the Trustee an Opinion of Counsel in the
United States, in form and substance reasonably satisfactory to the
Trustee to the effect that (A) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or (B)
since the Issue Date, 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 state that Holders of the Securities will
not recognize income gain or loss for Federal income tax purposes as a
result of such deposit and the defeasance contemplated hereby and will
be subject to Federal
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income taxes in the same manner and at the same times as would have been
the case if such deposit and defeasance had not occurred, or (ii) in the
event the Company elects paragraph (c) hereof, the Company shall deliver
to the Trustee an Opinion of Counsel in the United States, in form and
substance reasonably satisfactory to the Trustee, to the effect that
Holders of the Securities will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and the
defeasance contemplated hereby and will be subject to Federal income tax
in the same amounts and in the same manner and at the same times as
would have been the case if such deposit and defeasance had not
occurred;
(6) The deposit shall not result in the Company, the Trustee
or the trust becoming or being deemed to be an "investment company"
under the Investment Company Act of 1940;
(7) The Company shall have delivered to the Trustee an
Officer's Certificate, in form and substance reasonably satisfactory to
the Trustee, stating that the deposit under clause (1) was not made by
the Company or any Subsidiary with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company or any
Subsidiary or others;
(8) The Company shall have delivered to the Trustee an Opinion
of Counsel, in form and substance reasonably satisfactory to the
Trustee, to the effect that, (A) the trust funds will not be subject to
any rights of holders of Indebtedness, including, without limitation,
those rights arising under this Indenture, and (B) the 91st day
following the deposit after the trust funds will not be subject to any
applicable Bankruptcy Law; provided, however, that if a court were to
rule under any such law in any case or proceeding that the trust funds
remained property of the Company, no opinion needs to be given as to the
effect of such laws on the trust funds except the following: (A)
assuming such trust funds remained in the Trustee's possession prior to
such court ruling to the extent not paid to Holders of Securities, the
Trustee will hold, for the benefit of the Holders of Securities, a valid
and enforceable security interest in such trust funds that is not
avoidable in bankruptcy or otherwise, subject only to principles of
equitable subordination, (B) the Holders of Securities will be entitled
to receive adequate protection of their interests in such trust funds if
such trust funds are used, and (C) no property, rights in property or
other interests granted to the Trustee or the Holders of Securities in
exchange for or with respect to any of such funds will be subject to any
prior rights of any other person, subject only to prior Liens granted
under Section 364 of Title 11 of the U.S. Bankruptcy Code (or any
section of any other Bankruptcy Law having the same effect), but still
subject to the foregoing clause (B); and
(9) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by
this Section 8.01 have been complied with.
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, the Company must make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of the notice of
such redemption or redemptions by the Trustee in the name and at the expense of
the Company.
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SECTION 8.02. Satisfaction and Discharge.
This Indenture shall upon the request of the Company cease to be of
further effect (except as provided in Section 8.03) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when
(a) either
(i) all Securities theretofore authenticated and delivered
(other than (A) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.07 and (B)
Securities for whose payment money has been deposited in trust with the
Trustee or any Paying Agent and thereafter paid to the Company or
discharged from such trust) have been delivered to the Trustee for
cancellation; or
(ii) all such Securities not theretofore delivered to the
Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at their maturity
within one year, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of clause (A), (B) or (C) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose money or U.S. Government
Obligations in an amount sufficient (as certified by an independent
public accountant designated by the Company) to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or the stated maturity or Redemption Date,
as the case may be;
(b) the Company has paid or caused to paid all other sums then
due and payable hereunder by the Company;
(c) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit and after giving effect to such deposit; and
(d) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
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SECTION 8.03. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture and of
the Securities referred to in Section 8.01 or 8.02, the respective obligations
of the Company and the Trustee under Sections 2.02, 2.03, 2.04, 2.05, 2.06,
2.07, 2.08. 2.10, 2.12, 3.01, 3.02, 3.03, 3.04, 3.05, 3.06, 3.07(a), 4.02,
6.07, Article Seven, Sections 8.04, 8.05, 8.06 and 8.07 shall survive until the
Securities are no longer outstanding, and thereafter the obligations of the
Company and the Trustee under Sections 7.07, 8.04, 8.05, 8.06 and 8.07 shall
survive. Nothing contained in this Article Eight shall abrogate any of the
obligations or duties of the Trustee under this Indenture.
SECTION 8.04. Acknowledgment of Discharge by Trustee.
Subject to Section 8.07, after (i) the conditions of Section 8.01 or
8.02 have been satisfied, (ii) the Company has paid or caused to be paid all
other sums payable hereunder by the Company and (iii) the Company has delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 8.03.
SECTION 8.05. Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it pursuant to this Article Eight in the irrevocable
trust established pursuant to Section 8.01 or 8.02. The Trustee shall apply
the deposited U.S. Legal Tender or the U.S. Government Obligations, together
with earnings thereon, either directly or through the Paying Agent, in
accordance with this Indenture to the payment of principal of and interest on
the Securities. The U.S. Legal Tender or U.S. Government Obligations so held
in trust and deposited with the Trustee in compliance with Section 8.01 or 8.02
shall not be part of the trust estate under this Indenture, but shall
constitute a separate trust fund for the benefit of all Holders entitled
thereto.
SECTION 8.06. Repayment to the Company or Subsidiary Guarantors; Unclaimed
Money.
Subject to Sections 7.07 and 8.01, the Trustee shall promptly pay to the
Company, or if deposited with the Trustee by any Subsidiary Guarantor, to such
Subsidiary Guarantor, upon receipt by the Trustee of an Officers' Certificate,
any excess money, determined in accordance with Section 8.01, held by it at any
time. The Trustee and the Paying Agent shall pay to the Company or any
Subsidiary Guarantor, as the case may be, upon receipt by the Trustee or the
Paying Agent, as the case may be, of an Officers' Certificate, any money held
by it for the payment of principal, premium, if any, or interest that remains
unclaimed for one year after payment to the Holders is required; provided,
however, that the Trustee and the Paying Agent before being required to make
any payment may, but need not, at the expense of the Company cause to be
published once in a newspaper of general circulation in The City of New York or
mail to each Holder entitled to such money notice that such money remains
unclaimed and that after a date specified therein, which shall be at least 30
days from the date of such publication or mailing, any unclaimed balance of
such money then remaining will be repaid to the Company. After payment to the
Company of any
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Subsidiary Guarantor, as the case may be, Security holders entitled to money
must look solely to the Company for payment as general creditors unless an
applicable abandoned property law designates another person, and all liability
of the Trustee or Paying Agent with respect to such money shall thereupon
cease.
SECTION 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture 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,
then and only then the Company's and each Subsidiary Guarantor's, if any,
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had been made pursuant to this Indenture until
such time as the Trustee is permitted to apply all such money or U.S.
Government Obligations in accordance with this Indenture provided, however,
that if the Company or the Subsidiary Guarantors, as the case may be, have made
any payment of principal of, premium, if any, or interest on any Securities
because of the reinstatement of its obligations, the Company or the Subsidiary
Guarantors, as the case may be, shall be, subrogated to the rights of the
holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company and each Subsidiary Guarantor, when authorized by a Board
Resolution, and the Trustee, together, may amend or supplement this Indenture
or the Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to evidence the succession in accordance with Article V
hereof of another Person to the Company and the assumption by any such
successor of the covenants of the Company herein and in the Securities;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
(4) to make any other change that does not materially
adversely affect the rights of any Securityholders hereunder; or
(5) to comply with any requirements of the SEC in connection
with the qualification of this Indenture under the TIA; or
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(6) to add or release any Subsidiary Guarantor pursuant to the
terms of this Indenture; or
(7) to evidence and provide for the acceptance or appointment
hereunder by a successor Trustee with respect to the Securities.
provided that the Company has delivered to the Trustee an Opinion of Counsel
and an Officers' Certificate, each stating that such amendment or supplement
complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and each Subsidiary Guarantor, when
authorized by a Board Resolution, and the Trustee, together, with the written
consent of the Holder or Holders of at least a majority in aggregate principal
amount of the outstanding Securities, may amend or supplement this Indenture,
or the Securities, without notice to any other Securityholders. Subject to
Section 6.07, the Holder or Holders of a majority in aggregate principal amount
of the outstanding Securities may waive compliance by the Company with any
provision of this Indenture, or the Securities without notice to any other
Securityholder. Without the consent of each Securityholder affected hereby,
however, no amendment, supplement or waiver, including a waiver pursuant to
Section 6.04, may:
(1) reduce the principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver of any provision of
this Indenture, the Securities or the Subsidiary Guarantees;
(2) reduce the rate or change the time for payment of
interest, including default interest, on any Security;
(3) reduce the principal amount of any Security;
(4) change the Maturity Date of any Security, or change the
date on which any Securities may be subject to redemption or repurchase
or reduce the redemption price or repurchase price therefor;
(5) make any change in provisions of this Indenture protecting
the right of each Holder to receive payment of principal of and interest
on such Security on or after the due date thereof or to bring suit to
enforce such payment, or permitting Holders of a majority in principal
amount of the Securities to waive Defaults or Events of Default;
(6) make any changes in Section 6.04, 6.07 or this Section
9.02;
(7) make the principal of, or the interest on any Security
payable in money other than as provided for in this Indenture, the
Securities and the Guarantees as in effect on the date hereof;
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(8) affect the ranking of the Securities or the Guarantees, in
each case in a manner adverse to the Holders;
(9) amend, modify or change the obligation of the Company to
make or consummate a Change of Control Offer, a Purchase Offer or waive
any default in the performance thereof or modify any of the provisions
or definitions with respect to any such offers; or
(10) release any Subsidiary Guarantor from any of its
obligations under its Subsidiary Guarantee or the Indenture otherwise
than in accordance with the terms of the Indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Compliance with TIA.
From the date on which this Indenture is qualified under the TIA, every
amendment, waiver or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by notice to the Trustee
or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented (and not theretofore revoked such consent)
to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those persons who were Holders
at such record date (or their duly designated proxies), and only those persons,
shall be entitled to revoke any consent previously given, whether or not such
persons continue to be Holders after such record date. No such consent shall
be valid or effective for more than 120 days after such record date.
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After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (10) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security.
SECTION 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company
or the Trustee so determines, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms. Failure to make the appropriate notation or issue a new
security shall not affect the validity of such amendment, supplement or waiver.
SECTION 9.06. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article Nine provided that the Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects
the Trustee's own rights, duties or immunities under this Indenture. The
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel and an Officers' Certificate each stating that the
execution of any amendment, supplement or waiver authorized pursuant to this
Article Nine is authorized or permitted by this Indenture and constituted the
legal, valid and binding obligations of the Company enforceable in accordance
with its terms. Such Opinion of Counsel shall be at the expense of the
Company, and the Trustee shall have a lien under Section 7.07 for any such
expense.
ARTICLE TEN
GUARANTEE
SECTION 10.01. Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally, jointly and severally,
guarantees (such guarantee to be referred to herein as the "Subsidiary
Guarantee") to each Holder of a Security authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, the Securities or
the Obligations of the Company hereunder or thereunder, that: (i) the
principal of and interest on the Securities will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise and interest on the overdue principal, if any, and
interest on any interest, to the extent lawful, of the Securities 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 (ii) in case of any extension of time of
payment or renewal of any Securities or of any such other obligations, the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or
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otherwise, subject, however, in the case of clauses (i) and (ii) above, to the
limitations set forth in Section 10.03. Each Subsidiary Guarantor hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Securities or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Securities with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, and action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Subsidiary 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 covenants that this Subsidiary Guarantee will not be discharged
except by complete performance of the obligations contained in the Securities,
this Indenture and in this Subsidiary Guarantee. If any Security holder or the
Trustee is required by any court or otherwise to return to the Company, any
Subsidiary Guarantor, or any custodian, trustee, liquidator or other similar
official acting in relation to the Company or any Subsidiary Guarantor, any
amount paid by the Company or any Subsidiary Guarantor to the Trustee or such
Security holder, the Subsidiary Guarantees, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Subsidiary
Guarantor further agrees that, as between each Subsidiary Guarantor, 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 Six
for the purposes of the Subsidiary Guarantees, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any acceleration of such
obligations as provided in Article Six, such obligations (whether or not due
and payable) shall forthwith become due and payable by each Subsidiary
Guarantor for the purpose of the Subsidiary Guarantees. A Subsidiary Guarantee
shall not become valid or obligatory for any purpose with respect to a Security
unless the certificate of authentication on such Security shall have been
signed by or on behalf of the Trustee.
SECTION 10.02. Severability.
In case any provision of the Subsidiary Guarantees 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 10.03. Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor and by its acceptance hereof each Holder
hereby confirms that it is the intention of all such parties that the guarantee
by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law. To effectuate the foregoing intention,
the Holders and such Subsidiary Guarantor hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee shall
be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under its Subsidiary Guarantee or pursuant to
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Section 10.05, result in the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee not constituting such fraudulent transfer or conveyance
under federal or state law.
SECTION 10.04. Subsidiary Guarantors May Consolidate, etc., on Certain
Terms.
(a) Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of a Subsidiary Guarantor with or
into the Company or another Subsidiary Guarantor or shall prevent any sale of
assets or conveyance of the property of a Subsidiary Guarantor as an entirety
or substantially as an entirety, to the Company or another Subsidiary
Guarantor. Upon any such consolidation, merger, sale or conveyance, the
Subsidiary Guarantee given by such Subsidiary Guarantor shall no longer have
any force or effect.
(b) Except as set forth in Article Four, Article Five hereof and
Section 10.04(c), nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of a Subsidiary Guarantor
with or into other Persons other than the Company or another Subsidiary
Guarantor (whether or not affiliated with the Subsidiary Guarantor) or shall
prevent any sale of assets, or conveyance of the property, of a Subsidiary
Guarantor as an entirety or substantially as an entirety, to Persons other than
the Company or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor); provided, however, that, (i) immediately after such
transaction, and giving effect thereto such transaction does not (a) violate
any covenants set forth herein or (b) result in a Default or Event of Default
under this Indenture that is continuing, and (ii) upon any such consolidation,
merger, sale or conveyance, the Subsidiary Guarantee set forth in this Article
Ten, and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by such Subsidiary
Guarantor, shall be expressly assumed (in the event that the Subsidiary
Guarantor is not the surviving Person in the merger), by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee, by
the Person formed by such consolidation, or into which the Subsidiary Guarantor
shall have merged, or by the Person that shall have acquired such assets or
property. In the case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor corporation, by supplemental indenture
executed and delivered to the Trustee and satisfactory in form to the Trustee
of the due and punctual performance of all of the covenants and conditions of
this Indenture to be performed by the Subsidiary Guarantor, such successor
Person shall succeed to and be substituted for the Subsidiary Guarantor with
the same effect as if it had been named herein as a Subsidiary Guarantor;
provided, however, that solely for purposes of computing amounts described in
subclause (iii) of the first paragraph of Section 4.03 any such successor
Person shall only be deemed to have succeeded to and be substituted for any
Subsidiary Guarantor with respect to periods subsequent to the effective time
of such merger, consolidation or transfer of assets.
(c) Upon the sale or disposition (whether by merger, stock purchase,
asset sale or otherwise) of a Subsidiary Guarantor (or all or substantially all
its assets) to an entity which is not a Subsidiary of the Company and which
sale or disposition is otherwise in compliance with the terms of this Indenture
(including, without limitation, Sections 4.17, 4.20 and 4.21), such Subsidiary
Guarantor shall be deemed released from all obligations under this Article Ten
without any further action required on the part of the Trustee or any Holder;
provided, however, that any such termination shall occur only to the extent
that all obligations of such Subsidiary Guarantor under all
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of its guarantees of, and under all of its pledges of assets or other security
interests which secure, any other Indebtedness of the Company shall also
terminate upon such release, sale or transfer.
The Trustee shall deliver an appropriate instrument or instruments
evidencing such release upon receipt of a request by the Company accompanied by
an Officers' Certificate and Opinion of Counsel certifying as to the compliance
with this Section 10.04. Any Subsidiary Guarantor not so released remains
liable for the full amount of principal of and interest on the Securities as
provided in this Article Twelve.
SECTION 10.05. Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under the Subsidiary Guarantee, such Funding Guarantor
shall be entitled to a contribution from all other Subsidiary Guarantors in a
pro rata amount based on the Adjusted Net Assets of each Subsidiary Guarantor
(including the Funding Guarantor) for all payments, damages and expenses
incurred by that Funding Guarantor in discharging the Company's obligations
with respect to the Securities or any other Subsidiary Guarantor's obligations
with respect to the Subsidiary Guarantee. "Adjusted Net Assets" of such
Subsidiary Guarantor at any date shall mean the lesser of the amount by which
(x) the fair value of the property of such Subsidiary Guarantor exceeds the
total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date (other than liabilities of such Subsidiary
Guarantor under Indebtedness Subordinated to such Subsidiary Guarantor's
Subsidiary Guarantee)), but excluding liabilities under the Subsidiary
Guarantee, of such Subsidiary Guarantor at such date and (y) the present fair
salable value of the assets of such Subsidiary Guarantor at such date exceeds
the amount that will be required to pay the probable liability of such
Subsidiary Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date and after giving effect
to any collection from any Subsidiary of such Subsidiary Guarantor in respect
of the obligations of such Subsidiary under the Subsidiary Guarantee),
excluding debt in respect of the Subsidiary Guarantee of such Subsidiary
Guarantor, as they become absolute and matured.
SECTION 10.06. Waiver of Subrogation.
Until all Subsidiary Guarantee Obligations are paid in full each
Subsidiary Guarantor hereby irrevocably waives any claims or other rights which
it may now or hereafter acquire against the Company that arise from the
existence, payment, performance or enforcement of such Subsidiary Guarantor's
obligations under the Subsidiary Guarantee and this Indenture, including,
without limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Holder of Securities against the Company, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including,
without limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Subsidiary Guarantor in violation of the preceding
sentence and the Securities shall not have been paid in full, such amount shall
have been deemed to have been paid to such Subsidiary Guarantor for the benefit
of, and held in trust for the benefit of,
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the Holders of the Securities, and shall, forthwith be paid to the Trustee for
the benefit of such Holders to be credited and applied upon the Securities,
whether matured or unmatured, in accordance with the terms of this Indenture.
Each Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and
that the waiver set forth in this Section 10.06 is knowingly made in
contemplation of such benefits.
SECTION 10.07. Execution of Subsidiary Guarantee.
To evidence their guarantee to the Security holders set forth in this
Article Ten, the Subsidiary Guarantors hereby agree to execute the Subsidiary
Guarantee in substantially the form included in Exhibit A-l and A-2, which
shall be endorsed on each Security ordered to be authenticated and delivered by
the Trustee. Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in this Article Ten shall remain in full force and effect
notwithstanding any failure to endorse on each Security a notation of such
Subsidiary Guarantee. Each such Subsidiary Guarantee shall be signed on behalf
of each Subsidiary Guarantor by an Officer (who shall, in each case, have been
duly authorized by all requisite corporate actions) prior to the authentication
of the Security on which it is endorsed, and the delivery of such Security by
the Trustee, after the authentication thereof hereunder, shall constitute due
delivery of such Subsidiary Guarantee on behalf of such Subsidiary Guarantor.
Such signature upon the Subsidiary Guarantee may be by manual or facsimile
signature of such Officer and may be imprinted or otherwise reproduced on the
Subsidiary Guarantee, and in case any such Officer who shall have signed the
Subsidiary Guarantee shall cease to be such officer before the Security on
which such Subsidiary Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Company, such Security
nevertheless may be authenticated and delivered or disposed of as though the
person who signed the Subsidiary Guarantee had not ceased to be such Officer of
the Subsidiary Guarantor.
SECTION 10.08. Waiver of Stay, Extension or Usury Laws.
Each Subsidiary Guarantor covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law that would prohibit or forgive each such
Subsidiary Guarantor from performing its Subsidiary Guarantee as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) each such Subsidiary Guarantor hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
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ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
the duties imposed by operation of Sections 310 to 318, inclusively of the TIA,
the imposed duties shall control.
SECTION 11.02. Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
if to the Company or any Subsidiary Guarantor:
Packaged Ice, Inc.
8572 Katy Freeway
Suite 101
Houston, Texas 77024
Attention: President
with copies to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
Attention: Alan Schoenbaum
Facsimile: (210) 224-2035
Telephone: (210) 270-0800
if to the Trustee:
U.S. Trust Company of Texas, N.A.
2001 Ross Avenue, 27th Floor
Dallas, Texas 75201
Attention: Corporate Trust Department
Facsimile: (214) 754-1303
Telephone: (214) 281-7000
Each of the Company, the Subsidiary Guarantors and the Trustee by
written notice to each other such person may designate additional or different
addresses for notices to such person. Any notice or communication to the
Company and the Trustee, shall be deemed to have been given or made as of the
date so delivered if personally delivered; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and five (5) calendar days after
mailing if sent by registered
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<PAGE> 79
or certified mail, postage prepaid (except that a notice of change of address
shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Security holder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Security holder or any
defect in it shall not affect its sufficiency with respect to other Security
holders. If a notice or communication is mailed in the manner provided above,
it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
Security holders may communicate pursuant to TIA Section 312(b) with
other Security holders with respect to their rights under this Indenture, the
Securities or the Subsidiary Guarantees. The Company, the Trustee, the
Registrar and any other person shall have the protection of TIA Section 312(c).
SECTION 11.04. 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 at
the request of the Trustee:
(1) an Officers' Certificate, in form and substance
satisfactory to the Trustee, stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. 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 the Officers'
Certificate required by Section 4.08, shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
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<PAGE> 80
(4) a statement as to whether or not, in the opinion of each
such person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to such other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee, Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 11.07. Legal Holidays.
If a payment date is not a Business Day, payment may be made on the next
succeeding day that is a Business Day and no interest shall accrue for the
period from such Redemption Date to such succeeding Business Day.
SECTION 11.08. Governing Law.
THIS INDENTURE, THE SECURITIES AND THE SUBSIDIARY GUARANTEES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. Each
of the parties hereto agrees to submit to the non-exclusive jurisdiction of the
competent courts of the State of New York sitting in The City of New York in
any action or proceeding arising out of or relating to this Indenture or the
Securities.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
A director, officer, employee, stockholder, partner or incorporator, as
such, of the Company or any Subsidiary Guarantor whether past, present or
future shall not have any liability for any obligations of the Company or such
Subsidiary Guarantor under the Securities, this Indenture or the Subsidiary
Guarantees or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Security holder by accepting a Security
waives and releases all such liability. Such waiver and release are part of
the consideration for the issuance of the Securities.
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<PAGE> 81
SECTION 11.11. Successors.
All agreements of the Company and the Subsidiary Guarantors in this
Indenture, the Securities and the Subsidiary Guarantees, as the case may be,
shall bind their respective successors. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy or counterpart shall be an original, but all of them together shall
represent the same agreement.
SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture, in the
Securities or in the Guarantees shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions shall not in any way be affected or impaired thereby, it
being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
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<PAGE> 82
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
PACKAGED ICE, INC.
By: /s/ A.J. LEWIS, III
----------------------------------
Name:
Title:
U.S. TRUST COMPANY OF TEXAS, N.A., as
Trustee
By: /s/ BILL BARBER
----------------------------------
Name: Bill Barber
Title: Vice President
THE SUBSIDIARY GUARANTORS:
PACKAGED ICE LEASING, INC.
SOUTHCO ICE, INC.
MISSION PARTY ICE, INC.
SOUTHWEST TEXAS PACKAGED ICE, INC.
SOUTHWESTERN ICE, INC.
GOLDEN EAGLE ICE - TEXAS, INC.
PACKAGED ICE SOUTHEAST, INC.
SOUTHERN BOTTLED WATER COMPANY, INC.
REDDY ICE CORPORATION
By: /s/ A.J. LEWIS, III
----------------------------------
Name:
Title:
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<PAGE> 83
SCHEDULE I
SPECIFIED AFFILIATE TRANSACTIONS
The following are Specified Affiliate Transactions:
A. Requirements contract with Southwest Texas Equipment Distributors, Inc.
to purchase ice machines and related equipment.
B. Lease agreements for real property and improvements with A. J. Lewis
III, Liza B. Lewis and Robert G. Miller and their heirs, successors and
assigns.
C. Merger agreements and related transactions as follows:
1. Acquisition of Mission Party Ice, Inc.;
2. Acquisition of Southwest Texas Packaged Ice, Inc.; and
3. Acquisition of Southwestern Ice, Inc.
<PAGE> 84
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1993, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" ( AS DEFINED IN
RULE 144A PROMULGATED UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a)(l), (2), (3) OR (7)
PROMULGATED UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO
THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 PROMULGATED UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS,
WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
<PAGE> 85
CUSIP No.
PACKAGED ICE, INC.
9 3/4% Series A Senior Note
due February 1, 2005
No. $
PACKAGED ICE, INC., a Texas corporation (the "Company", which term
includes any successor corporation), for value received promises to pay to _____
or registered assigns, the principal sum of ______ Dollars, on February 1,
2005.
Interest Payment Dates: February 1 and August 1 commencing August 1,
1998
Record Dates: January 15 and July 15
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
PACKAGED ICE, INC.
[SEAL] By:
---------------------------------
Name:
Title:
Attest:
- ------------------------------
Secretary
[FORM OF Trustee's CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated: U.S. TRUST COMPANY OF TEXAS, N.A.
as Trustee
By
---------------------------------
Authorized Signatory
-2-
<PAGE> 86
PACKAGED ICE, INC.
9 3/4% Series A Senior Note
due February 1, 2005
1. Interest.
PACKAGED ICE, INC., a Texas corporation (the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum shown
above, which rate is subject to increase of up to 1.50% per annum in certain
circumstances described in the Registration Rights Agreement (as defined in the
Indenture, defined below). The Company will pay interest semi-annually on
February 1 and August 1 of each year (the "Interest Payment Date"), commencing
August 1, 1998. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
January 28, 1998. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment.
On each Interest Payment Date, the Company shall pay interest on the
Securities (except defaulted interest) to the persons who are the registered
Holders at the close of business on the Record Date immediately preceding such
Interest Payment Date even if the Securities are canceled on registration of
transfer or registration of exchange after such Record Date, except as provided
in Section 2.17 of the Indenture with respect to defaulted interest. Holders
must surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in New York, New York in money of the
United States that at the time of payment is legal tender for payment of public
and private debts ("U.S. Legal Tender"). However, the Company may pay
principal and interest by wire transfer in same day funds, or, in the case of
Physical Securities, by check payable in such U.S. Legal Tender.
3. Paying Agent and Registrar.
Initially, U.S. Trust Company of Texas, N.A. will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or co-
Registrar without notice to the Holders. The Company or any of its
Subsidiaries may act as Registrar or co-Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture, dated as of
January 28, 1998, as amended and restated as of April 30, 1998, among the
Company, the Subsidiary Guarantors and the Trustee, as such Indenture may be
amended or supplemented from time to time (the "Indenture"). Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and Holders of Securities are
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<PAGE> 87
referred to the Indenture and said Act for a statement of them. The Securities
are general unsecured obligations of the Company limited in aggregate principal
amount to $145,000,000 issued on the Issue Date, $125,000,000 issued on the
Second Issue Date and additional principal amounts issuable thereafter subject
to the terms of the Indenture. Payment on each Security is guaranteed on a
senior basis, jointly and severally, by the Subsidiary Guarantors pursuant to
Article Ten of the Indenture.
5. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole at
any time or in part from time to time, on and after February 1, 2002 at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the twelve-month period commencing on February 1 of the year
set forth below, plus, in each case, accrued interest thereon to the date of
redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 104.8750%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.4375%
2004 and thereafter . . . . . . . . . . . . . . . . . . . 100.0000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to February 1,
2001, the Company may redeem up to 35% of the aggregate principal amount of
Securities originally issued at a redemption price of 109.75% of the principal
amount thereof, plus accrued and unpaid interest thereon, to the redemption
date with the net proceeds of any Public Equity Offering; provided that at
least 65% of the aggregate principal amount of Securities originally issued
remain outstanding immediately after the occurrence of such redemption; and
provided, further, that such redemption occurs within 90 days of the date of
the closing of such Public Equity Offering.
6. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Securities
at a purchase price equal to 101% of the aggregate principal amount thereof
plus accrued and any unpaid interest thereon, if any, to the Change of Control
Payment Date (as hereinafter defined) (the "Change of Control Payment").
Within 30 days following the occurrence of a Change of Control, the Company
shall mail a notice to each Holder describing the transaction or transactions
and setting forth the procedures governing the Change of Control Offer as
required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, the
Indenture requires that certain proceeds be used, subject to the limitations
contained therein, to make an offer to all Holders of Securities (an "Asset Sale
Offer") pursuant to Section 4.17 of the Indenture to purchase certain amounts of
Securities in accordance with the procedures set forth in the Indenture.
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<PAGE> 88
7. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at such Holder's registered address. Securities in denominations of $1,000 may
be redeemed only in whole. The Trustee may select for redemption portions
(equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. On and after the redemption date,
interest will cease to accrue on Securities or portions thereof called for
redemption.
8. Sinking Fund.
There will be no mandatory sinking fund payments for the Securities.
9. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1,000. A Holder shall register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or
similar governmental charges payable in connection not register the transfer of
or exchange any securities or portions thereof selected for redemption, except
the unredeemed portion of any security being redeemed in part.
10. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it
for all purposes.
11. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agents will repay the funds to the Company
at its request subject to terms of the Indenture. After that, all liability of
the Trustee and such Paying Agents with respect to such funds shall cease.
12. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the Indenture
and the Securities except for certain provisions thereof ("Legal Defeasance"),
and may be discharged from its obligations to comply with certain covenants
contained in the Indenture and the Securities ("Covenant Defeasance"), in each
case upon satisfaction of certain conditions specified in the Indenture.
-5-
<PAGE> 89
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may
be waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of
certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Security.
14. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and its Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to issue preferred or other
capital stock of subsidiaries, to sell assets, to permit restrictions on
dividends and other payments by subsidiaries to the Company, to consolidate,
merge or sell all or substantially all of its assets, to engage in transactions
with affiliates or to engage in certain businesses. The limitations are
subject to a number of important qualifications and exceptions. The Company
must annually report to the Trustee on compliance with such limitations.
15. Defaults and Remedies.
Events of Default are set forth in the Indenture. If an Event of
Default (other than an Event of Default pursuant to Sections 6.01(6) or (7) of
the Indenture with respect to the Company) occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of
Securities then outstanding may declare all the Securities to be due and
payable immediately in the manner and with the effect provided in the
Indenture. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee is not obligated
to enforce the Indenture or the Securities unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of any
continuing Default or Event of Default (except a Default in payment of
principal or interest, including an accelerated payment) if it determines that
withholding notice is in their interest.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
-6-
<PAGE> 90
17. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Company shall have any liability for any obligation of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
18. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
19. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities immediately prior to the qualification of the
Indenture under the TIA as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture. Requests may be made to:
Packaged Ice, Inc., 8572 Katy Freeway, Suite 101, Houston, Texas 77024, Attn:
President.
-7-
<PAGE> 91
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
The Subsidiary Guarantors (as defined in the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed and each
hereinafter referred to as a "Subsidiary Guarantor," which term includes any
successor Person under the Indenture) have unconditionally guaranteed on a
senior basis (such guarantee by each Subsidiary Guarantor being referred to
herein as the "Guarantee") (i) the due and punctual payment of the principal of
and interest on the Securities, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
and interest, if any, on the Securities, to the extent lawful, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee all in accordance with the terms set forth in Article Ten of the
Indenture and (ii) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
No stockholder, officer, director or incorporator, as such, past,
present or future, of any Subsidiary Guarantor shall have any liability under
the Guarantee by reason of his or its status as such stockholder, officer,
director or incorporator.
The Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Securities upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
SUBSIDIARY GUARANTORS:
PACKAGED ICE LEASING, INC.
SOUTHCO ICE, INC.
MISSION PARTY ICE, INC.
SOUTHWEST TEXAS PACKAGED ICE, INC.
SOUTHWESTERN ICE, INC.
GOLDEN EAGLE ICE - TEXAS, INC.
PACKAGED ICE SOUTHEAST, INC.
SOUTHERN BOTTLED WATER COMPANY, INC.
REDDY ICE CORPORATION
By:
-------------------------------------
Name:
Title:
-8-
<PAGE> 92
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Security (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) October 16, 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that:
[Check One]
[ ] (a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule
thereunder.
or
[ ] (b) this Security is being transferred other than in accordance with
(a) above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.15 of the Indenture shall have
been satisfied.
Dated: Signed:
--------------------------- -------------------------------
(Sign exactly as name appears
on the other side of this
Security)
Signature Guarantee:
-----------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
-9-
<PAGE> 93
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
---------------------- ----------------------------------------
NOTICE: To be executed by an executive
officer
-10-
<PAGE> 94
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Sections 4.16 or 4.17 of the Indenture, check the appropriate box:
Section 4.16 [ ] Section 4.17 [ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Sections 4.16 or 4.17 of the Indenture, state the amount:
$ _______________________
(multiple of $1,000)
Date: Your Signature:
---------------------- ------------------------------
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee:
-----------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
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<PAGE> 95
EXHIBIT A-2
[FORM OF SERIES B SECURITY]
PACKAGED ICE, INC. CUSIP No. 695148 AL 0
9 3/4% Series B Senior Note
due February 1, 2005
No. $
PACKAGED ICE, INC., a Texas corporation (the "Company", which term
includes any successor corporation), for value received promises to pay to
or registered assigns, the principal sum of
Dollars, on February 1, 2005.
Interest Payment Dates: February 1 and August 1 commencing August 1,
1998
Record Dates: January 15 and July 15
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
PACKAGED ICE, INC.
[SEAL] By:
---------------------------------
Name:
Attest: Title:
- ------------------------------
Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated: U.S. TRUST COMPANY OF TEXAS, N.A.
as Trustee
By
---------------------------------
Authorized Signatory
<PAGE> 96
PACKAGED ICE, INC.
9 3/4% Series B Senior Note
due February 1, 2005
1. Interest.
PACKAGED ICE, INC., a Texas corporation (the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum shown
above. The Company will pay interest semi-annually on February 1 and August 1
of each year (the "Interest Payment Date"), commencing August 1, 1998.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from January 28, 1998.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment.
On each Interest Payment Date, the Company shall pay interest on the
Securities (except defaulted interest) to the persons who are the registered
Holders at the close of business on the Record Date immediately preceding such
Interest Payment Date even if the Securities are canceled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in New York, New York in money of the
United States that at the time of payment is legal tender for payment of public
and private debts ("U.S. Legal Tender"). However, the Company may pay
principal and interest by wire transfer in same day funds, or, in the case of
Physical Securities, by check payable in such U.S. Legal Tender.
3. Paying Agent and Registrar.
Initially, U.S. Trust Company of Texas, N.A. will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or co-
Registrar without notice to the Holders. The Company or any of its
Subsidiaries may act as Registrar or co-Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture, dated as of
January 28, 1998, as amended and restated as of April 30, 1998, among the
Company, the Subsidiary Guarantors and the Trustee, as such Indenture may be
amended or supplemented from time to time (the "Indenture"). Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Section 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are general
unsecured obligations of the Company limited in aggregate principal amount to
$145,000,000 issued on the Issue Date, $125,000,000 issued on the Second Issue
Date, and additional principal amounts issuable
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<PAGE> 97
thereafter subject to the terms of the Indenture. Payment on each Security is
guaranteed on a senior basis, jointly and severally, by the Subsidiary
Guarantors pursuant to Article Ten of the Indenture.
5. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole at
any time or in part from time to time, on and after February 1, 2002 at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the twelve-month period commencing on February 1 of the year
set forth below, plus, in each case, accrued interest thereon to the date of
redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 104.8750%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.4375%
2004 and thereafter . . . . . . . . . . . . . . . . . . . 100.0000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to February 1,
2001, the Company may redeem up to 35% of the aggregate principal amount of
Securities originally issued at a redemption price of 109.75% of the principal
amount thereof, plus accrued and unpaid interest thereon, to the redemption
date with the net proceeds of any Public Equity Offering; provided that at
least 65% of the aggregate principal amount of Securities originally issued
remain outstanding immediately after the occurrence of such redemption; and
provided, further, that such redemption occurs within 90 days of the date of
the closing of such Public Equity Offering.
6. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Securities
at a purchase price equal to 101% of the aggregate principal amount thereof
plus accrued and any unpaid interest thereon, if any, to the Change of Control
Payment Date (as hereinafter defined) (the "Change of Control Payment").
Within 30 days following the occurrence of a Change of Control, the Company
shall mail a notice to each Holder describing the transaction or transactions
and setting forth the procedures governing the Change of Control Offer as
required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, the
Indenture requires that certain proceeds be used, subject to the limitations
contained therein, to make an offer to all Holders of Securities (an "Asset Sale
Offer") pursuant to Section 4.17 of the Indenture to purchase certain amounts of
Securities in accordance with the procedures set forth in the Indenture.
7. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at such Holder's registered address. Securities in denominations of $1,000 may
be redeemed only in whole. The Trustee may select for
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<PAGE> 98
redemption portions (equal to $1,000 or any integral multiple thereof) of the
principal of Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. On and after the redemption date,
interest will cease to accrue on Securities or portions thereof called for
redemption.
8. Sinking Fund.
There will be no mandatory sinking fund payments for the Securities.
9. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1,000. A Holder shall register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or
similar governmental charges payable in connection not register the transfer of
or exchange any securities or portions thereof selected for redemption, except
the unredeemed portion of any security being redeemed in part.
10. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it
for all purposes.
11. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agents will repay the funds to the Company
at its request subject to terms of the Indenture. After that, all liability of
the Trustee and such Paying Agents with respect to such funds shall cease.
12. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the Indenture
and the Securities except for certain provisions thereof ("Legal Defeasance"),
and may be discharged from its obligations to comply with certain covenants
contained in the Indenture and the Securities ("Covenant Defeasance"), in each
case upon satisfaction of certain conditions specified in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal
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<PAGE> 99
amount of the Securities then outstanding, and any existing Default or Event of
Default or compliance with any provision may be waived with the consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, defect or inconsistency, provide for uncertificated
Securities in addition to or in place of certificated Securities or comply with
any requirements of the SEC in connection with the qualification of the
Indenture under the TIA, or make any other change that does not materially
adversely affect the rights of any Holder of a Security.
14. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and its Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to issue preferred or other
capital stock of subsidiaries, to sell assets, to permit restrictions on
dividends and other payments by subsidiaries to the Company, to consolidate,
merge or sell all or substantially all of its assets, to engage in transactions
with affiliates or to engage in certain businesses. The limitations are
subject to a number of important qualifications and exceptions. The Company
must annually report to the Trustee on compliance with such limitations.
15. Defaults and Remedies.
Events of Default are set forth in the Indenture. If an Event of
Default (other than an Event of Default pursuant to Sections 6.01(6) or (7) of
the Indenture with respect to the Company) occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of
Securities then outstanding may declare all the Securities to be due and
payable immediately in the manner and with the effect provided in the
Indenture. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee is not obligated
to enforce the Indenture or the Securities unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of any
continuing Default or Event of Default (except a Default in payment of
principal or interest, including an accelerated payment) if it determines that
withholding notice is in their interest.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
17. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Company shall have any liability for any obligation of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a
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<PAGE> 100
Security by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities.
18. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
19. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities immediately prior to the qualification of the
Indenture under the TIA as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture. Requests may be made to:
Packaged Ice, Inc., 8572 Katy Freeway, Suite 101, Houston, Texas 77024, Attn:
President.
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<PAGE> 101
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
The Subsidiary Guarantors (as defined in the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed and each
hereinafter referred to as a "Subsidiary Guarantor," which term includes any
successor Person under the Indenture) have unconditionally guaranteed on a
senior basis (such guarantee by each Subsidiary Guarantor being referred to
herein as the "Guarantee") (i) the due and punctual payment of the principal of
and interest on the Securities, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
and interest, if any, on the Securities, to the extent lawful, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee all in accordance with the terms set forth in Article Ten of the
Indenture and (ii) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
No stockholder, officer, director or incorporator, as such, past,
present or future, of any Subsidiary Guarantor shall have any liability under
the Guarantee by reason of his or its status as such stockholder, officer,
director or incorporator.
The Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Securities upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
SUBSIDIARY GUARANTORS:
PACKAGED ICE LEASING, INC.
SOUTHCO ICE, INC.
MISSION PARTY ICE, INC.
SOUTHWEST TEXAS PACKAGED ICE, INC.
SOUTHWESTERN ICE, INC.
GOLDEN EAGLE ICE - TEXAS, INC.
PACKAGED ICE SOUTHEAST, INC.
SOUTHERN BOTTLED WATER COMPANY, INC.
REDDY ICE CORPORATION
By:
---------------------------------------
Name:
Title:
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<PAGE> 102
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
-------------------------- -----------------------------
(Sign exactly as name appears
on the other side of this
Security)
Signature Guarantee:
-----------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
-8-
<PAGE> 103
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Sections 4.16 or 4.17 of the Indenture, check the appropriate box:
Section 4.16 [ ] Section 4.17 [ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Sections 4.16 or 4.17 of the Indenture, state the amount:
$
Date: Your Signature:
-------------------- -------------------------------------
(Sign exactly as your name appears on
the other side of this Security)
Signature Guarantee:
-----------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
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<PAGE> 104
EXHIBIT B
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE,
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
<PAGE> 105
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 9 3/4% Senior Notes due February 1, 2005, (the "Securities") of Packaged
Ice, Inc.
This Certificate relates to _____ Securities held in* _____ book-entry
or* _____ certificated form by _____ (the "Transferor" ) .
The Transferor:*
[ ] has requested that the Registrar by written order to deliver in
exchange for its beneficial interest in the Global Security held by the
Depositary a Security or Securities in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
[ ] has requested that the Registrar by written order to exchange or
register the transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Indenture relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 2.15 of such
Indenture, and that the transfer of this Securities does not require
registration under the Securities Act of 1933, as amended (the "Act")
because[*]:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.15(a)(II)(A) or Section
2.15(d)(i)(A) of the Indenture).
[ ] Such Security is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Act), in reliance on Rule 144A or in
accordance with Regulation S under the Act.
[ ] Such Security is being transferred in accordance with Rule 144
under the Act.
[ ] Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act,
other than Rule 144A or Rule 144 or Regulation S under the Act. An opinion of
counsel to the effect that such transfer does not require registration under
the Act accompanies this Certificate.
----------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------------
Date:
-----------------------------
*Check applicable box.
<PAGE> 106
EXHIBIT D
Transferee Letter of Representation
Packaged Ice, Inc.
8572 Katy Freeway
Suite 101
Houston, Texas 77024
Ladies and Gentlemen:
In connection with our proposed purchase of 9 3/4% Senior Notes due
February 1, 2005, (the "Securities") of Packaged Ice, Inc. (the "Company") we
confirm that:
1. We understand that the Securities have not been registered
under the Securities Act of 1933, as amended (the "Securities Act") and,
unless so registered, may not be sold except as permitted in the
following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Securities to offer, sell
or otherwise transfer such Securities prior to the date which is two
years after the later of the date of original issue and the last date on
which the Company or any affiliate of the Company was the owner of such
Securities, or any predecessor thereto (the "Resale Restriction
Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the
Securities Act, (c) so long as the Securities are eligible for resale
pursuant to Rule 144A, under the Securities Act, to a person we
reasonably believe is a qualified institutional buyer under Rule 144A (a
"QIB") that purchases for its own account or for the account of a QIB
and to whom notice is given that the transfer is being made in reliance
on Rule 144A, (d) pursuant to offers and sales that occur outside the
United States within the meaning of Regulation S under the Securities
Act, (e) to an institutional "accredited investor" within the meaning of
subparagraph (a)(l), (2), (3) or (7) of Rule 501 under the Securities
Act that is purchasing for his own account or for the account of such an
institutional "accredited investor," or (f) pursuant to any other
available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law
that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and to
compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the
Securities is proposed to be made pursuant to clause (e) above prior to
the Resale Restriction Termination Date, the transferor shall deliver a
letter from the transferee substantially in the form of this letter to
the registrar under the Indenture pursuant to which the Securities were
issued (the "Registrar") which shall provide, among other things, that
the transferee is an institutional "accredited investor" within the
meaning of subparagraph (a)(l), (2), (3) or (7) of Rule 501 under the
Securities Act and that it is acquiring such Securities for investment
purposes and not for distribution in violation of the Securities Act.
The Registrar and the Company reserve the right prior to any offer, sale
or other transfer prior to the Resale Restriction Termination Date of
the Securities pursuant to clause (e) or (f) above to require the
delivery of a written opinion of counsel, certifications, and or other
information satisfactory to the Company and the Registrar.
<PAGE> 107
2. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) purchasing for our own account or for the account of such an
institutional "accredited investor," and we are acquiring the Securities
for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act and
we have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in
the Securities, and we and any accounts for which we are acting are each
able to bear the economic risk of our or its investment for an
indefinite period.
3. We are acquiring the Securities purchased by us for our
own account or for one or more accounts as to each of which we exercise
sole investment discretion.
4. You and your counsel are entitled to rely upon this letter
and you are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding
or official inquiry with respect to the matters covered hereby.
Very truly yours,
-----------------------------------
(Name of Purchaser)
By:
--------------------------------
Date:
------------------------------
Upon transfer the Securities would be registered in the name of the new
beneficial owner as follows:
Name:
-----------------------------
Address:
--------------------------
Taxpayer ID Number:
---------------
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<PAGE> 1
EXHIBIT 4.2
PACKAGED ICE, INC.
Consisting of
$125,000,000
9 3/4% Senior Notes due February 1, 2005
PURCHASE AGREEMENT
April 23, 1998
JEFFERIES & COMPANY, INC.
11100 Santa Monica Blvd.
10th Floor
Los Angeles, California 90025
Ladies and Gentlemen:
Packaged Ice, Inc., a Texas corporation (the "Company"), and the
Subsidiary Guarantors (as defined below) hereby confirm their agreement with you
(the "Initial Purchaser"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchaser
$125,000,000 aggregate principal amount of its 9 3/4% Series A Senior Notes due
February 1, 2005 (the "Senior Notes"). The Senior Notes are to be issued under
the indenture (the "Indenture") dated as of January 28, 1998, to be amended and
restated as of April 30, 1998, by and among the Company, the Subsidiary
Guarantors and U.S. Trust Company of Texas, N.A., as Trustee (the "Trustee").
The Senior Notes will be unconditionally guaranteed (the "Guarantees") on a
joint and several basis by Packaged Ice Leasing, Inc., a Nevada corporation,
Southco Ice, Inc., a Texas corporation, Mission Party Ice, Inc. a Texas
corporation, Southwest Texas Packaged Ice, Inc., a Texas corporation,
Southwestern Ice, Inc., a Texas corporation, Golden Eagle Ice " Texas, Inc., a
Texas corporation, and Packaged Ice Southeast, Inc., a Texas corporation, and
Southern Bottled Water Company, Inc., a Texas corporation and, upon the Closing
Date (as defined in Section 3), Reddy Ice Corporation, a Delaware corporation
(collectively, the "Subsidiary Guarantors"). The Senior Notes and the Guarantees
are collectively referred to herein as the "Securities."
The Securities will be offered and sold to the Initial Purchaser
without Registration under the Securities Act of 1933, as amended (the "Act"),
in reliance on an exemption pursuant to Section 4(2) under the Act.
In connection with the sale of the Securities, the Company has prepared
a preliminary offering circular dated April 22, 1998 (the "Preliminary
Circular") and a final offering circular
<PAGE> 2
dated April 23, 1998 (the "Final Circular"), setting forth or including a
description of the terms of the Securities, the terms of the offering of the
Securities, and a description of the business of the Company and the Subsidiary
Guarantors. The Preliminary Circular and the Final Circular are each referred to
herein as a "Circular." Any references herein to the Preliminary Circular and
the Final Circular shall be deemed to include all amendments and supplements
thereto.
The Initial Purchaser and its direct and indirect transferees of the
Securities will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company and the
Subsidiary Guarantors shall agree, among other things, (i) to file a
registration statement (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") registering the Senior Notes or the
Exchange Notes (as defined in the Registration Rights Agreement) under the Act.
2. Representations and Warranties. The Company and the Subsidiary
Guarantors, jointly and severally, represent and warrant to and agree with the
Initial Purchaser that:
(a) The Preliminary Circular and the Final Circular with respect to the
Securities have been prepared by the Company for use by the Initial Purchaser in
connection with resales of the Securities. No order or decree preventing the use
of either Circular, or any order asserting that the transactions contemplated by
this Agreement are subject to the registration requirements of the Act, has been
issued and no proceeding for that purpose has commenced or is pending or, to the
knowledge of the Company and the Subsidiary Guarantors, is contemplated.
(b) The Preliminary Circular and the Final Circular as of their
respective dates and the Final Circular as of the Closing Date (as defined in
Section 3 below) did not or will not at any time contain an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this Section 2(b) do not apply to statements or omissions made in reliance
upon and in conformity with information relating to the Initial Purchaser
furnished to the Company or the Subsidiary Guarantors in writing by the Initial
Purchaser expressly for use in the Preliminary Circular or the Final Circular.
(c) The Company has the authorized capitalization set forth in the
Final Circular (or, if the Final Circular is not in existence, the most recent
Circular); all of the outstanding shares of capital stock of the Company and the
Subsidiary Guarantors have been, and as of the Closing Date will be, duly
authorized and validly issued, are fully paid and nonassessable and were not
issued in violation of any preemptive or similar rights; except as set forth in
the Final Circular, all of the outstanding shares of capital stock of each of
the Subsidiary Guarantors are, and as of the Closing Date will be, owned,
directly or indirectly, by the Company, free and clear of all liens,
encumbrances, equities and claims or restrictions on transferability (other than
those imposed by the Act and the securities or "Blue Sky" laws of certain
jurisdictions and except for pledged shares of Subsidiaries under the Credit
Facilities, as defined in the Indenture) or voting; except as set forth in the
Final Circular (or, if the Final Circular is not in existence, the most recent
Circular), there are no outstanding (i) options, warrants or other rights to
purchase from
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<PAGE> 3
the Company or the Subsidiary Guarantors, (ii) agreements or other obligations
of the Company or any Subsidiary Guarantors to issue or (iii) other rights to
convert any obligation into, or exchange any securities for, in the case of each
clause (i)-(iii) shares of capital stock of the Company or any Subsidiary
Guarantor. The Company does not have any Subsidiaries (as defined in the
Indenture) except for the Subsidiary Guarantors; except for the capital stock of
the Subsidiary Guarantors and as otherwise disclosed in the Final Circular (or,
if the Final Circular is not in existence, the most recent Circular), the
Company does not own, directly or indirectly, any shares of capital stock or any
other equity or long-term debt securities or have any equity interest in any
firm, partnership, joint venture or other entity.
(d) Each of the Company and the Subsidiary Guarantors has been duly
incorporated, is validly existing and is in good standing as a corporation under
the laws of its jurisdiction of incorporation, with all requisite corporate
power and authority to own its properties and conduct its business as now
conducted, and as described in the each Circular; each of the Company and the
Subsidiary Guarantors is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions where the ownership or leasing of
its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the general affairs, management,
business, condition (financial or otherwise), prospects or results of operations
of the Company and the Subsidiary Guarantors, taken as a whole (any such event,
a "Material Adverse Effect").
(e) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Senior Notes, the
Exchange Notes and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Senior Notes, the Exchange Notes and the Private Exchange
Notes have each been duly and validly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance with the
provisions of the Indenture and, in the case of the Senior Notes, when delivered
to and paid for by the Initial Purchaser in accordance with the terms of this
Agreement, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors" rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(f) Each of the Subsidiary Guarantors has all requisite corporate power
and authority to execute, deliver and perform each of its obligations under the
Guarantees. The Guarantees to be endorsed on each of the Senior Notes, the
Exchange Notes and the Private Exchange Notes have been duly and validly
authorized by each of the Subsidiary Guarantors and, when the Senior Notes, the
Exchange Notes and the Private Exchange Notes are executed by the Company and
authenticated by the Trustee in accordance with the provisions of the Indenture
and, in the case of the Senior Notes, delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, will constitute a
valid and legally binding obligation of each of the Subsidiary Guarantors,
entitled to the benefits of the Indenture and enforceable against the Subsidiary
Guarantors in accordance with their terms, except that the enforcement thereof
may
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<PAGE> 4
be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors" rights generally
and (ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(g) The Company and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform each of
their obligations under the Indenture. The Indenture meets the requirements for
qualification under the Trust Indenture Act of 1939, as amended (the "TIA"). The
Indenture has been duly and validly authorized by the Company and each of the
Subsidiary Guarantors and, when executed and delivered by the Company and each
of the Subsidiary Guarantors a party thereto (assuming the due authorization,
execution and delivery by the Trustee if the Trustee is required to execute any
such document), each will constitute a valid and legally binding agreement of
the Company and each of the Subsidiary Guarantors, enforceable against the
Company and each of the Subsidiary Guarantors in accordance with its terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors" rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor may
be brought.
(h) The Company and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform each of
their obligations under the Registration Rights Agreement. The Registration
Rights Agreement has been duly and validly authorized by the Company and each of
the Subsidiary Guarantors and, when executed and delivered by the Company and
each of the Subsidiary Guarantors a party thereto (assuming the due
authorization, execution and delivery by the Initial Purchaser), will constitute
a valid and legally binding agreement of the Company and each such Subsidiary
Guarantor, enforceable against the Company and each such Subsidiary Guarantor in
accordance with its terms, except that (A) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors" rights generally
and (ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state securities laws and
public policy considerations.
(i) The Company and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform each of
their obligations under this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by the Company and each of the Subsidiary Guarantors. No
consent, approval, authorization or order of any court or governmental agency or
body, or third party is required for the performance of this Agreement by the
Company or the Subsidiary Guarantors or the consummation by the Company or the
Subsidiary Guarantors of the transactions contemplated hereby, except such as
have been obtained. The execution, delivery and performance by the Company and
each of the Subsidiary Guarantors of this Agreement and the consummation by the
Company and each of the Subsidiary Guarantors of the transactions contemplated
hereby, and the fulfillment of the terms hereof, will not conflict with or
constitute or result in a breach of or a default under (or an event which with
notice or passage of time or both would constitute as a default under) or
violation of any of (i) the terms or provisions of any indenture, mortgage, deed
of trust, loan agreement, note, lease, license, franchise agreement,
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<PAGE> 5
permit, certificate, contract or other agreement or instrument to which the
Company or any of the Subsidiary Guarantors is a party or to which any of them
or their respective properties or assets is subject (other than the Indenture
and the Credit Facilities, as defined in the Indenture and the collateral
documents ancillary thereto), (ii) the certificate of incorporation or bylaws
(or similar organizational document) of the Company or any of the Subsidiary
Guarantors, or (iii) (assuming the accuracy of the representations and
warranties of the Initial Purchaser in Section 8 hereof) any statute, judgment,
decree, order, rule or regulation applicable to the Company or any of the
Subsidiary Guarantors or any of their respective properties or assets.
(j) None of the Company or the Subsidiary Guarantors is (i) in
violation of its articles or certificate of incorporation or bylaws, (ii) in
breach or violation of any statute, judgment, decree, order, rule or regulation
applicable to any of them or any of their respective properties or assets,
except for any such breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect, or (iii) except as disclosed in the
Final Circular (or, if the Final Circular is not in existence, the most recent
Circular), in breach of or default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which any of them is a
party or to which any of them or their respective properties or assets is
subject, except for any such breach, default, violation or event which would
not, individually or in the aggregate, have a Material Adverse Effect.
(k) The audited consolidated financial statements of the Company and
its subsidiaries included in the Final Circular (or, if the Final Circular is
not in existence, the most recent Circular) present fairly in all material
respects the consolidated financial position, the consolidated results of their
operations and their cash flows at the dates and for the periods to which they
relate and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis, except as otherwise stated therein.
The summary and selected consolidated historical financial data in the Final
Circular (or, if the Final Circular is not in existence, the most recent
Circular) present fairly in all material respects the financial information
shown therein and have been prepared and compiled on a basis consistent with the
audited financial statements included therein, except as otherwise stated
therein. Deloitte & Touche L.L.P. and Arthur Andersen LLP (the "Independent
Accountants") are independent public accounting firms within the meaning of the
Act and the rules and regulations promulgated thereunder.
(l) The pro forma financial statements under the headings "Unaudited
Pro Forma Combined Condensed Financial Statements" and "Selected Historical and
Unaudited Pro Forma Combined Financial Data" (including the notes thereto) and
the other pro forma financial information (but excluding all projected or
forecasted financial information) included in the Final Circular (or, if the
Final Circular is not in existence, the most recent Circular), (i) comply as to
form in all material respects with the applicable requirements of Regulation S-X
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (ii) have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, and (iii) have been
properly computed on the bases described therein; the assumptions used in the
preparation of the pro forma financial data and other pro forma financial
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<PAGE> 6
information included in the Final Circular (or, if the Final Circular is not in
existence, the most recent Circular) are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or circumstances
referred to therein.
(m) Except as described in the Final Circular (or, if the Final
Circular is not in existence, the most recent Circular), there is not pending
or, to the best knowledge of the Company or any Subsidiary Guarantors,
threatened, any action, suit, proceeding, inquiry or investigation to which the
Company or any of the Subsidiary Guarantors is a party, or to which the property
or assets of the Company or any of the Subsidiary Guarantors are subject, before
or brought by any court or governmental agency or body which, if determined
adversely to the Company or the Subsidiary Guarantors, would result,
individually or in the aggregate, in any material adverse change in the general
affairs, management, business, condition (financial or otherwise), prospects or
results of operations of the Company and the Subsidiary Guarantors, taken as a
whole (any such event, a "Material Adverse Change"), or which seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the issuance or sale
of the Securities to be sold hereunder or the consummation of the other
transactions described in the Final Circular (or, if the Final Circular is not
in existence, the most recent Circular).
(n) Each of the Company and the Subsidiary Guarantors owns or possesses
adequate licenses or other rights to use all trademarks, service marks, trade
names and know-how necessary to conduct the businesses now or proposed to be
operated by it as described in the Final Circular (or, if the Final Circular is
not in existence, the most recent Circular), and since December 31, 1995, none
of the Company or the Subsidiary Guarantors has received any notice of conflict
with (or knows of any such conflict with) asserted rights of others with respect
to any trademarks, service marks, trade names or know-how which, if such
assertion of conflict were sustained, would, individually or in the aggregate,
have a Material Adverse Effect.
(o) Each of the Company and the Subsidiary Guarantors possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, presently required or
necessary to own or lease, as the case may be, and to operate its respective
properties and to carry on its respective businesses as now or proposed to be
conducted as set forth in the Final Circular (or, if the Final Circular is not
in existence, the most recent Circular), except where the failure to obtain such
licenses, permits, certificates, consents, orders, approvals and other
authorizations, or to make all declarations and filings, would not, individually
or in the aggregate, have a Material Adverse Effect, and none of the Company or
any of the Subsidiary Guarantors has received any notice of any proceeding
relating to revocation or modification of any such license, permit, certificate,
consent, order, approval or other authorization, except as described in the
Final Circular (or, if the Final Circular is not in existence, the most recent
Circular) and except where such revocation or modification would not,
individually or in the aggregate, have a Material Adverse Effect.
(p) Since the respective dates as of which information is given in the
Final Circular (or, if the Final Circular is not in existence, the most recent
Circular), except as described therein, (i) none of the Company or any of the
Subsidiary Guarantors has incurred any liabilities or
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<PAGE> 7
obligations, direct or contingent, or entered into or agreed to enter into any
transactions or contracts (written or oral) not in the ordinary course of
business and (ii) none of the Company or any of the Subsidiary Guarantors has
purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock (other than
with respect to any such Subsidiary Guarantor, the purchase of, or dividend or
distribution on, capital stock owned by the Company).
(q) Each of the Company and the Subsidiary Guarantors have filed all
necessary federal, state and foreign income and franchise tax returns, except
where the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as due
thereon; and other than tax deficiencies which the Company or any Subsidiary
Guarantor is contesting in good faith and for which the Company or such
Subsidiary Guarantor has provided adequate reserves, there is no tax deficiency
that has been asserted against the Company or any of the Subsidiary Guarantors
that would have, individually or in the aggregate, a Material Adverse Effect.
(r) The projected financial and operating data included in the Final
Circular (or, if the Final Circular is not in existence, the most recent
Circular) are based on assumptions which the Company and the Subsidiary
Guarantors believe to be reasonable in light of current circumstances.
(s) None of the Company, the Subsidiary Guarantors or any agent acting
on their behalf has taken or will take any action that might cause this
Agreement or the same of the Securities to violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System, in each case as in effect,
or as the same may hereafter be in effect, on the Closing Date.
(t) Each of the Company and the Subsidiary Guarantors has good and
defensible title to all real property and good title to all personal property
described in the Final Circular (or, if the Final Circular is not in existence,
the most recent Circular) as being owned by it and good and defensible title to
a leasehold estate in the real and personal property described in the Final
Circular (or, if the Final Circular is not in existence, the most recent
Circular) as being leased by it free and clear of all liens, charges,
encumbrances or restrictions, except as described in the Final Circular (or, if
the Final Circular is not in existence, the most recent Circular) or to the
extent the failure to have such title or the existence of such liens, charges,
encumbrances or restrictions would not, individually or in the aggregate, have a
Material Adverse Effect.
(u) There are no legal or governmental proceedings involving or
affecting the Company or any Subsidiary Guarantor or any of their respective
properties or assets which would be required to be describe in a prospectus
pursuant to the Act that are not described in the Final Circular (or, if the
Final Circular is not in existence, the most recent Circular), nor are there any
material contracts or other documents which would be required to be described in
the Final Circular (or, if the Final Circular is not in existence, the most
recent Circular) that are not so described.
(v) To the best knowledge of the Company, except as described in the
Final Circular (or, if the Final Circular is not in existence, the most recent
Circular), each of the Company and the Subsidiary Guarantors is in compliance in
all respects with all laws, rules or regulations
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<PAGE> 8
relating to pollution or protection of public or employee health or the
environment ("Environmental Law") and with the terms and conditions of any
permit, license or approval required thereunder in connection with the
ownership, operation or use of its business, property and assets except where
the failure to be in such compliance would not, individually or in the
aggregate, have a Material Adverse Effect; except as disclosed in the Final
Circular (or, if the Final Circular is not in existence, the most recent
Circular), none of the Company or the Subsidiary Guarantors is subject to any
known liability, absolute or contingent, under any Environmental Law except for
any such liability which would not, individually or in the aggregate, have a
Material Adverse Effect; except as disclosed in the Final Circular (or, if the
Final Circular is not in existence, the most recent Circular), there is no
civil, criminal or administrative action, suit, demand, hearing, notice of
violation or deficiency, investigation, proceeding or notice of potential
responsibility or demand letter or request for information pending or, to their
knowledge, threatened against the Company or any of the Subsidiary Guarantors
under any Environmental Law which, if determined adversely to the Company or any
such Subsidiary would, individually or in the aggregate, result in a Material
Adverse Effect.
(w) Each of the Company or its Subsidiaries carries insurance
(including self insurance) in such amounts and covering such risks as in its
reasonable determination is adequate for the conduct of its business and the
value of its properties.
(x) There is no strike, labor dispute, slowdown or work stoppage with
the employees of the Company or any of the Subsidiary Guarantors which is
pending or, to the best knowledge of the Company or any Subsidiary Guarantor,
threatened.
(y) None of the Company or the Subsidiary Guarantors has any liability
for any prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other plan
which is subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to which the Company or any Subsidiary Guarantor makes or
ever has made a contribution and in which any employee of the Company or any
Subsidiary Guarantor is or has ever been a participant. With respect to such
plans, the Company and each Subsidiary Guarantor is in compliance in all
material respects with all applicable provisions of ERISA.
(z) After giving effect to the offering and sale of the Securities,
neither the Company nor any of the Subsidiary Guarantors will be an "investment
company" or "promoter" or "principal underwriter" for an "investment company,"
as such terms are defined in the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder.
(aa) The Senior Notes, the Exchange Notes, the Guarantees, the
Indenture and the Registration Rights Agreement will, and this Agreement does,
conform in all material respects to the descriptions thereof in the Final
Circular (or, if the Final Circular is not in existence, the most recent
Circular).
(bb) Except as disclosed in the Final Circular (or, if the Final
Circular is not in existence, the most recent Circular), no holder of securities
of the Company or any Subsidiary Guarantor will be entitled to have such
securities registered under the registration statements
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<PAGE> 9
required to be filed by the Company pursuant to the Registration Rights
Agreement other than as expressly permitted thereby.
(cc) Immediately after the consummation of the transactions
contemplated by this Agreement, the Company believes that the fair value and
current fair saleable value of the assets of each of the Company and the
Subsidiary Guarantors (each on a consolidated basis) will exceed the sum of its
stated liabilities and identified contingent liabilities; neither the Company
nor any of the Subsidiary Guarantors (each on a consolidated basis) is, nor will
either the Company or any of the Subsidiary Guarantors (each on a consolidated
basis) be, after giving effect to the execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby,
(a) left with unreasonably small capital with which to carry on its business as
it is proposed to be conducted, (b) unable to pay its debts (contingent or
otherwise) as they mature or (c) otherwise insolvent.
(dd) Neither the Company nor any person acting on its behalf has
offered or sold the Securities by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Act or, with respect to
Securities sold outside the United States to non-U.S. persons (as defined in
Rule 902 under the Securities Act), by means of any directed selling efforts
within the meaning of Rule 902 under the Act and the Company, any affiliate of
the Company and any person acting on its or their behalf (other than the Initial
Purchaser) has complied with and will implement the "offering restriction"
within the meaning of such Rule 902.
(ee) Within the six months preceding the date hereof, neither the
Company nor any other person acting on behalf of the Company (other than the
Initial Purchaser) has offered or sold to any person any Securities, or any
securities of the same or a similar class as the Securities, other than
Securities offered or sold to the Initial Purchaser hereunder and the Original
Notes (as defined in the Preliminary Circular); and the Company will take
reasonable precautions designed to insure that any offer or sale, direct or
indirect, in the United States or to any U.S. person (as defined in Rule 902
under the Act) of any Securities or any substantially similar security issued by
the Company, within six months subsequent to the date on which the distribution
of the Securities has been completed (as notified to the Company by Jefferies &
Company, Inc.), is made under restrictions and other circumstances reasonably
designed not to affect the status of the offer and sale of the Securities in the
United States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Act;
(ff) Assuming the accuracy of the representations and warranties of the
Initial Purchaser in Section 8 hereof, it is not necessary in connection with
the offer, sale and delivery of the Securities to the Initial Purchaser in the
manner contemplated by this Agreement to register any of the Securities under
the Act or to qualify the Indenture under the TIA.
(gg) No securities of the Company or any Subsidiary Guarantor are of
the same class (within the meaning of Rule 144A under the Act) as the Securities
and listed on a national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation system.
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<PAGE> 10
(hh) None of the Company or the Subsidiary Guarantors have taken, nor
will any of them take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Securities.
Any certificate signed by any officer of the Company or any Subsidiary
Guarantor and delivered to the Initial Purchaser or to counsel for the Initial
Purchaser shall be deemed a joint and several representation and warranty by the
Company and each of the Subsidiary Guarantors to the Initial Purchaser as to the
matters covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company and the
Subsidiary Guarantors agree to issue and sell to the Initial Purchaser, and the
Initial Purchaser agrees to purchase from the Company and the Subsidiary
Guarantors $125,000,000 aggregate principal amount of Securities at a purchase
price of $985.00 per $1,000 principal amount of Securities. One or more
certificates in definitive form for the Securities that the Initial Purchaser
has agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as Jefferies & Company, Inc. requests upon
notice to the Company at least 24 hours prior to the Closing Date, shall be
delivered by or on behalf of the Company and the Subsidiary Guarantors to the
Initial Purchaser, against payment by or on behalf of the Initial Purchaser of
the purchase price therefor by wire transfer (same day funds) to such account or
accounts as the Company shall specify prior to the Closing Date. Such delivery
of and payment for the Securities shall be made at the offices of Vinson &
Elkins, L.L.P., 1001 Fannin Street, Houston, Texas, at 10:00 a.m., New York
time, on April 30,1998, or at such other place, time or date as the Initial
Purchaser, on the one hand, and the Company, on the other hand, may agree upon,
such time and date of delivery against payment being herein referred to as the
"Closing Date." The Company has requested that the Closing Date be scheduled to
occur four business days after the date of this Agreement in order to provide
sufficient time to satisfy the conditions for closing set forth in Section 7
below. With respect to Securities to be delivered in definitive certificated
form, the Company and the Subsidiary Guarantors will make certificates for such
Securities available for checking and packaging by the Initial Purchaser at the
offices of Jefferies & Company, Inc. in New York, New York, or at such other
place as Jefferies & Company, Inc. may designate, at least 24 hours prior to the
Closing Date. Securities to be represented by one or more definitive global
Securities in book-entry form will be deposited on the Closing Date, by or on
behalf of the Company, with The Depository Trust Company ("DTC") or its
designated custodian.
4. Offering by the Initial Purchaser. The Initial Purchaser proposes to
make an offering of the Securities at the price and upon the terms set forth in
the Final Circular, as soon as practicable after this Agreement is entered into
and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Company and the Subsidiary Guarantors. Each of the
Company and the Subsidiary Guarantors jointly and severally covenants and agrees
with the Initial Purchaser that:
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<PAGE> 11
(a) The Company and the Subsidiary Guarantors will not amend or
supplement the Final Circular or any amendment or supplement thereto of which
the Initial Purchaser shall not previously have been advised and furnished a
copy for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchaser shall not have given their
consent. The Company and the Subsidiary Guarantors will promptly, upon the
reasonable request of the Initial Purchaser or counsel for the Initial
Purchaser, make any amendments or supplements to the Final Circular that may be
necessary or advisable in connection with the resale of the Securities by the
Initial Purchaser.
(b) The Company and the Subsidiary Guarantors will cooperate with the
Initial Purchaser in arranging for the qualification of the Securities for
offering and sale under the securities or "Blue Sky" laws of such jurisdictions
as the Initial Purchaser may designate and will continue such qualifications in
effect for as long as may be necessary to complete the resale of the Securities;
provided, however, that in connection therewith, neither of the Company nor any
Subsidiary Guarantors shall be required to qualify as a foreign corporation or
to execute a general consent to service of process in any jurisdiction or
subject itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the initial resale by
the Initial Purchaser of the Securities to persons other than affiliates of the
Initial Purchaser (as determined by the Initial Purchaser), any event occurs as
a result of which the Final Circular as then amended or supplemented would
include any untrue statement of a material fact, or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Final Circular to comply with
applicable law, the Company and the Subsidiary Guarantors will promptly notify
the Initial Purchaser thereof and will prepare, at the expense of the Company
and the Subsidiary Guarantors, an amendment or supplement to the Final Circular
that corrects such statement or omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial Purchaser
and to counsel for the Initial Purchaser as many copies of the Preliminary
Circular and the Final Circular or any amendment or supplement thereto as the
Initial Purchaser may reasonable request.
(e) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Final Circular.
(f) For and during the period ending on the date no Securities are
outstanding, the Company will furnish to the Initial Purchaser copies of all
reports and other communications (financial or otherwise) furnished by the
Company or the Subsidiary Guarantors to the Trustee or the holders of the
Securities and, as soon as available, copies of any reports or financial
statements furnished to or filed by the Company or the Subsidiary Guarantors
with the Commission or any national securities exchange on which any class of
securities of the Company or the Subsidiary Guarantors may be listed.
(g) Prior to the Closing Date, the Company will furnish to the Initial
Purchaser, as soon as they have been prepared, if at all, a copy of any
unaudited interim financial statements of
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<PAGE> 12
the Company for any period subsequent to the period covered by the most recent
financial statements appearing in the Final Circular.
(h) None of the Company or any of its Affiliates will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale of
the Securities in a manner which would require the registration under the Act of
the Securities.
(i) The Company and the Subsidiary Guarantors will not solicit any
offer to buy or offer to sell the Securities by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act.
(j) For so long as any of the Securities remain outstanding, the
Company and the Subsidiary Guarantors will make available, upon request, to any
seller of such Securities the information specified in Rule 144A(d)(4) under the
Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange
Act.
(k) Each of the Company and the Subsidiary Guarantors will use its best
efforts to (i) permit the Securities to be designated PORTAL securities in
accordance with the rules and regulations adopted by the NASD relating to
trading in the Private Offerings, Resales and Trading through Automated Linkages
market (the "PORTAL Market") and (ii) permit the Securities to be eligible for
clearance and settlement through DTC.
(l) The Company and the Subsidiary Guarantors agree that prior to any
registration of the Securities pursuant to the Registration Rights Agreement, or
at such earlier time as may be required, the Indenture shall be qualified under
the TIA and will cause to be entered into any necessary supplemental indentures
in connection therewith.
6. Expenses. The Company and the Subsidiary Guarantors agree, jointly
and severally, to pay all costs and expenses incident to the performance of
their obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 11 hereof, including all costs and expenses incident to (i) the
printing, word processing or other production of documents with respect to the
transactions contemplated hereby, including any costs of printing the
Preliminary Circular and the Final Circular and any amendment or supplement
thereto, (ii) all arrangements relating to the delivery to the Initial Purchaser
of copies of the foregoing documents (iii) the fees and disbursements of the
counsel, the accountants and any other experts or advisors retained by the
Company, (iv) preparation, issuance and delivery to the Initial Purchaser of the
Securities, (v) the qualification of the Securities under state securities and
"Blue Sky" laws, including filing fees and fees and disbursements of counsel for
the Initial Purchaser relating thereto, (vi) the fees and expenses of counsel to
the Initial Purchaser in connection with the transactions contemplated hereby,
(vii) expenses in connection with any meetings with prospective investors in the
Securities, (viii) fees and expenses of the Trustee and the transfer agent for
the Common Stock including fees and expenses of their respective counsel, (viii)
all expenses and listing fees incurred in connection with the application for
quotation of the Securities on the PORTAL
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<PAGE> 13
Market and (ix) any fees charged by investment rating agencies for the rating of
the Securities. Notwithstanding the foregoing, the total expenses incurred by
the Initial Purchaser pursuant to the foregoing sentence which are reimbursable
by the Company and the Subsidiary Guarantors hereunder shall be limited to no
more than $250,000. The Company and the Subsidiary Guarantors agree that they
will pay in full on the Closing Date the fees and expenses referred to in clause
(vi) by delivery to counsel for the Initial Purchaser on such date a check
payable to such counsel in the requisite amount. The Company and the Subsidiary
Guarantors shall not be liable to the Initial Purchaser for loss of contemplated
profits from the transactions covered by this Agreement.
7. Conditions of the Initial Purchaser's Obligations. The obligation of
the Initial Purchaser to purchase and pay for the Securities shall, in its sole
discretion, be subject to the satisfaction or waiver of the following conditions
on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have received the
opinion, dated as of the Closing Date and addressed to the Initial Purchaser, of
Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the Company and the
Subsidiary Guarantors, in form and substance satisfactory to counsel for the
Initial Purchaser, to the effect that:
(i) Each of the Company and the Subsidiary Guarantors is duly
incorporated, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation and has all requisite
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Final Circular. Each of
the Company and the Subsidiary Guarantors is duly qualified as a
foreign corporation and in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a Material
Adverse Effect.
(ii) As of the date thereof, the Company has the authorized,
issued and outstanding capitalization set forth in the Final Circular;
all of the outstanding shares of capital stock of the Subsidiary
Guarantors are owned, directly or indirectly, by the Company, and, to
the knowledge of such counsel and except as set forth in the Final
Circular, free and clear of all liens, encumbrances, equities and
claims or restrictions on transferability or voting.
(iii) Except as set forth in the Final Circular, to the
knowledge of such counsel (A) no options, warrants or other rights to
purchase from the Company or any Subsidiary Guarantors shares of
capital stock in the Company or any Subsidiary Guarantors are
outstanding, (B) no agreements or other obligations of the Company or
any Subsidiary Guarantors to issue, or other rights to cause the
Company or any Subsidiary Guarantors to convert, any obligation into,
or exchange any securities for, shares of capital stock in the Company
or any Subsidiary Guarantors are outstanding and (C) no holder of
securities of the Company or any Subsidiary Guarantors is entitled to
have such securities registered under a registration statement filed by
the Company or any Subsidiary Guarantors under the Act with respect to
the Securities.
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<PAGE> 14
(iv) The Senior Notes have been duly and validly authorized
and executed by the Company and when delivered by the Company (assuming
the due authorization, execution, and delivery of the Indenture by the
Trustee and the due authentication of the Senior Notes by the Trustee
in accordance with the Indenture) and paid for by the Initial Purchaser
in accordance with the terms of this Agreement, will constitute the
valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors" rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(v) Each of the Subsidiary Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Guarantees. The Guarantees endorsed on each
Senior Note have been duly and validly authorized and executed by each
of the Subsidiary Guarantors and, when the Senior Notes are
authenticated by the Trustee in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchaser in
accordance with the terms of this Agreement, will constitute the valid
and legally binding obligations of each of the Subsidiary Guarantors,
enforceable against each of the Subsidiary Guarantors in accordance
with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors" rights generally and (ii) general principles of equity and
the discretion of the court before which any proceeding therefor may be
brought.
(vi) Each of the Company and each of the Subsidiary Guarantors
has all requisite corporate power and authority to execute, deliver and
perform its respective obligations under the Indenture; the Indenture
is in sufficient form for qualification under the TIA; the Indenture
has been duly and validly authorized, executed and delivered by the
Company and each of the Subsidiary Guarantors and (assuming the due
authorization, execution and delivery thereof by the Trustee),
constitutes the valid and legally binding agreement of the Company and
each of the Subsidiary Guarantors, enforceable against the Company and
the Subsidiary Guarantors in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors" rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(vii) Each of the Company and each of the Subsidiary
Guarantors has all requisite corporate power and authority to execute,
deliver and perform its obligations under the Registration Rights
Agreement; the Registration Rights Agreement has been duly and validly
authorized, executed and delivered by the Company and each of the
Subsidiary Guarantors (assuming the due authorization, execution and
delivery thereof by the Initial Purchaser), constitute the valid and
legally binding agreement of the Company and each such Subsidiary
Guarantors, enforceable against the Company and each such
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<PAGE> 15
Subsidiary Guarantors in accordance with their terms, except that (A)
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors" rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state securities
laws and public policy considerations.
(viii) Each of the Company and the Subsidiary Guarantors has
all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; the execution, delivery and
performance of this Agreement by the Company and the Subsidiary
Guarantors and the consummation by the Company and the Subsidiary
Guarantors of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of the
Company and each of the Subsidiary Guarantors. This Agreement has been
duly executed and delivered by the Company and the Subsidiary
Guarantors.
(ix) The Indenture, the Senior Notes, the Guarantees and the
Registration Rights Agreement conform in all material respects to the
descriptions thereof contained in the Final Circular.
(x) To the knowledge of such counsel, no legal or governmental
proceedings are pending or threatened to which any of the Company or
any of its Subsidiaries is a party or to which the property or assets
of the Company or any Subsidiary is subject which, if determined
adversely to the Company or the Subsidiary, would result, individually
or in the aggregate, in a Material Adverse Effect, or which seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge
the issuance or sale of the Securities to be sold hereunder or the
consummation of the other transactions described in the Final Circular
under the caption "Use of Proceeds."
(xi) The execution and delivery of the Exchange Notes and the
Private Exchange Notes by the Company have been duly authorized by all
necessary corporate action of the Company, and when the Exchange Notes
and Private Exchange Notes have been duly executed and delivered by the
Company in accordance with the terms of the Registration Rights
Agreement and the Indenture, and assuming due authentication by the
Trustee, the Exchange Notes and the Private Exchange Notes will
constitute the legal, valid, binding and enforceable obligations of the
Company, entitled to the benefits of the Indenture, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors" rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(xii) The Guarantees to be endorsed on each of the Exchange
Notes and the Private Exchange Notes by the Subsidiary Guarantors have
been duly authorized by all necessary corporate action of the
Subsidiary Guarantors, and when the Exchange Notes
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<PAGE> 16
and the Private Exchange Notes have been duly executed and delivered
by the Company and the Subsidiary Guarantors in accordance with the
terms of the Registration Rights Agreement and the Indenture, and
assuming due authentication by the Trustee, the Guarantees will
constitute the legal, valid, binding and enforceable obligations of
the Subsidiary Guarantors, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors"
rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought.
(xiii) The execution and delivery of this Agreement, the
Indenture and the Registration Rights Agreement and the consummation of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Securities to the Initial
Purchaser) will not conflict with or constitute or result in a breach
or violation of or a default under (or an event which with notice or
passage of time or both would constitute a default under) or violation
of any of (i) the terms or provisions of any indenture, mortgage, deed
of trust, loan agreement, note, lease, license, franchise agreement,
permit, certificate, contract or other agreement or instrument known to
such counsel (including in any event any of the foregoing which have
been filed by the Company with the Commission) to which the Company or
any of the Subsidiary Guarantors is a party or to which any of them or
their respective properties or assets is subject, except for any such
conflict, breach, violation, default or event which would not,
individually or in the aggregate, have a Material Adverse Effect, (ii)
the certificate of incorporation or bylaws of the Company or any of the
Subsidiary Guarantors, or (iii) (assuming the accuracy of the
representations and warranties of the Initial Purchaser in Section 8
hereof) any statute, judgment, decree, order, rule or regulation known
to such counsel to be applicable to the Company or any of the
Subsidiary Guarantors or any of their respective properties or assets,
except for any such conflict, breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect.
(xiv) To the knowledge of such counsel, no consent, approval,
authorization or order of any governmental authority is required for
the issuance and sale by the Company and the Subsidiary Guarantors of
the Securities to the Initial Purchaser or the other transactions
contemplated hereby.
(xv) No registration under the Act of the Securities is
required in connection with the sale of the Securities to the Initial
Purchaser as contemplated by this Agreement and the Final Circular or
in connection with the initial resale of the Securities by the Initial
Purchaser in accordance with Section 8 of this Agreement, and prior to
the commencement of the Exchange Offer (as defined in the Registration
Rights Agreement) or the effectiveness of the Shelf Registration
Statement (as defined in the Registration Rights Agreement), the
Indenture is not required to be qualified under the TIA, in each case
assuming (i) that the purchasers who buy such Securities in the initial
resale thereof are qualified institutional buyers as defined in Rule
144A promulgated under the Act ("QIBs" or "Qualified Institutional
Buyers"), accredited investors as defined in Rule 501(a)(1), (2), (3)
or (7) promulgated under the Act ("Accredited Investors"), or foreign
purchasers (as defined in Section 8), (ii) the accuracy of the Initial
Purchaser's
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<PAGE> 17
representations in Section 8 and those of the Company and the
Subsidiary Guarantors contained in this Agreement regarding the
absence of a general solicitation in connection with the sale of such
Securities to the Initial Purchaser and the initial resale thereof and
(iii) the due performance by the Initial Purchaser of the agreements
set forth in Section 8 hereof.
(xvi) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Securities will violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
(xvii) Neither the Company nor any of the Subsidiary
Guarantors is an "investment company" or "promoter" or "principal
underwriter" for an "investment company" as such terms are defined in
the Investment Company Act of 1946, as amended, and the rules and
regulations thereunder.
At the time the foregoing opinion is delivered, Akin, Gump, Strauss,
Hauer & Feld, L.L.P. shall additionally state that it has participated in
conferences with officers and other representatives of the Company and the
Subsidiary Guarantors, representatives of the independent public accountants for
the Company, representatives of the Initial Purchaser and counsel for the
Initial Purchaser, at which conferences the contents of the Final Circular and
related matters were discussed, and, although it has not independently verified
and is not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Final Circular
(except to the extent specified in subsection 7(a)(ii) and (ix)), no facts have
come to its attention which lead it to believe that the Circular, on the date
thereof or at the Closing Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading (it being understood that such firm need
express no opinion with respect to the financial statements and related notes
thereto and the other financial or statistical data included in the Final
Circular). The opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. described in
this subsection (a) shall be rendered to the Initial Purchaser at the request of
the Company and the Subsidiary Guarantors and shall so state therein.
(b) On the Closing Date, the Initial Purchaser shall have received the
opinion, in form and substance satisfactory to the Initial Purchaser, dated as
of the Closing Date and addressed to the Initial Purchaser, of Vinson & Elkins
L.L.P., counsel for the Initial Purchaser, with respect to certain legal matters
relating to this Agreement and such other related matters as the Initial
Purchaser may require. In rendering such opinion, Vinson & Elkins L.L.P. shall
have received and may rely upon such certificates and other documents and
information as it may reasonably request to pass upon such matters.
(c) The Initial Purchaser shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the Closing
Date, in form and substance satisfactory to the Initial Purchaser, to the effect
set forth in Exhibit B hereto.
(d) The representations and warranties of each of the Company and the
Subsidiary Guarantors contained in this Agreement shall be true and correct in
all material respects on and
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<PAGE> 18
as of the date hereof and on and as of the Closing Date as if made on and as of
the Closing Date; the statements of the Company's and the Subsidiary Guarantors"
officers made pursuant to any certificate delivered in accordance with the
provisions hereof shall be true and correct in all material respects on and as
of the date made and on and as of the Closing Date; the Company and the
Subsidiary Guarantors shall have complied in all material respects with all
agreements and satisfied hereunder at or prior to the Closing Date; and, except
as described in the Final Circular (exclusive of any amendment or supplement
thereto after the date hereof), subsequent to the date of the most recent
financial statements in such Final Circular, there shall have been no Material
Adverse Change or any development that, singly or in the aggregate, is
reasonably likely to cause a Material Adverse Change.
(e) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial statements in
the Final Circular (exclusive of any amendment or supplement thereto after the
date hereof), other than as described in such Final Circular, none of the
Company or the Subsidiary Guarantors shall have incurred any liabilities or
obligations, direct or contingent (other than in the ordinary course of
business), that are material to the Company or the Subsidiary Guarantors, taken
as a whole, or entered into any transactions not in the ordinary course of
business that are material to the business, condition (financial or other) or
results of operations or prospects of the Company or the Subsidiary Guarantors,
taken as a whole, and there shall not have been any adverse change in the
capital stock or long-term indebtedness of the Company or the Subsidiary
Guarantors that is material to the business, condition (financial or other) or
results of operations or prospects of the Company and the Subsidiary Guarantors,
taken as a whole.
(g) Subsequent to the date of the most recent financial statements in
the Final Circular (exclusive of any amendment or supplement thereto after the
date hereof), the conduct of the business and operations of the Company or the
Subsidiary Guarantors shall not have been interfered with by strike, fire,
flood, hurricane, accident or other calamity (whether or not insured) or by any
court or governmental action, order or decree, and, except as otherwise stated
therein, the properties of the Company or the Subsidiary Guarantors shall not
have sustained any loss or damage (whether or not insured) as a result of any
such occurrence, except any such interference, loss or damage which would not,
individually or in the aggregate, have a Material Adverse Effect.
(h) The Initial Purchaser shall have received certificates of the
Company and each of the Subsidiary Guarantors, dated the Closing Date, signed on
behalf of the Company and each of the Subsidiary Guarantors by their respective
Chairman of the Board and Chief Executive Officer and the President and Chief
Operating Officer, to the effect that:
(i) the representations and warranties of the Company and each of
the Subsidiary Guarantors contained in this Agreement are true and
correct in all material respects as of the date hereof and as of the
Closing Date, and the Company and each of the Subsidiary Guarantors
have performed all covenants and agreements and satisfied hereunder
all conditions on their part to be performed or satisfied hereunder at
or prior to
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<PAGE> 19
the Closing Date;
(ii) at the Closing Date, since the date hereof or since the
date of the most recent financial statements in the Final Circular
(exclusive of any amendment or supplement thereto after the date
hereof), no event or events have occurred, no information has become
known nor does any condition exist that, individually or in the
aggregate, would have a Material Adverse Effect;
(iii) since the date hereof or since the date of the most
recent financial statements in the Final Circular (exclusive of any
amendment or supplement thereto after the date hereof), none of the
Company or any of the Subsidiary Guarantors has incurred any
liabilities or obligations, direct or contingent (other than in the
ordinary course of business), that are material to the Company or the
Subsidiary Guarantors or entered into any transactions not in the
ordinary course of business that are material to the business,
condition (financial or other) or results of operations or prospects of
the Company or the Subsidiary Guarantors and there has not been any
change in the capital stock or long-term indebtedness of the Company or
the Subsidiary Guarantors that is material to the business, condition
(financial or other) or results of operations or prospects of the
Company or the Subsidiary Guarantors, taken as a whole; and
(iv) the sale of the Securities hereunder has not been
enjoined (temporarily or permanently.
(i) On the Closing Date, the Initial Purchaser shall have received the
Registration Rights Agreement executed by the Company and the Subsidiary
Guarantors a party thereto, and such agreements shall be in full force and
effect at all times from and after the Closing Date.
On or before the Closing Date, the Initial Purchaser and counsel for
the Initial Purchaser shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company and the Subsidiary
Guarantors as they shall have heretofore reasonably requested from the Company
and the Subsidiary Guarantors.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchaser and counsel for the Initial Purchaser. The Company and the
Subsidiary Guarantors shall furnish to the Initial Purchaser such conformed
copies of such documents, opinions, certificates, letters, schedules and
instruments in such quantities as the Initial Purchaser shall reasonably
request.
8. Offering of Securities; Restrictions on Transfer. The Initial
Purchaser represents and agrees (as to itself only) that it is a qualified
institutional buyer as defined in Rule 144A promulgated under the Act (a "QIB").
The Initial Purchaser agrees with the Company and the Subsidiary Guarantors that
(a) it has not and will not solicit offers for, or offer or sell, the Securities
by any form of general solicitation or general advertising (as those terms are
used in Regulation D under the Act) or in any manner involving a public offering
within the meaning of
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<PAGE> 20
Section 4(2) of the Act; and (b) it has and will solicit offers for the
Securities only from, and will offer the Securities only to (i) persons whom the
Initial Purchaser reasonably believes to be QIBs, if any such person is buying
for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to the Initial
Purchaser that each such account is a QIB, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A under the Act
("Rule 144A"), and, in each case, in transactions under Rule 144A or (ii) a
limited number of other institutional investors reasonably believed by the
Initial Purchaser to be Accredited Investors that, prior to their purchase of
the Securities, deliver to the Initial Purchaser a letter containing the
representations and agreements set forth in Appendix A to the Final Circular;
provided, however, that, in the case of this clause (b), in purchasing such
Securities such persons are deemed to have represented and agreed as provided
under the caption "Transfer Restrictions" contained in the Final Circular.
9. Indemnification and Contribution. (a) The Company and the Subsidiary
Guarantors, jointly and severally, agree to indemnify and hold harmless the
Initial Purchaser, and each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
against any losses, claims, damages or liabilities to which any Initial
Purchaser or such controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in any Circular or any amendment or supplement
thereto; or
(ii) the omission or alleged omission to state, in any
Circular or any amendment or supplement thereto, a material fact
required to be stated therein or necessary to make the statements
therein not misleading,
and will reimburse, as incurred, the Initial Purchaser and each such controlling
person for any legal or other expenses incurred by the Initial Purchaser or such
controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action in respect thereof; provided, however, the Company
and the Subsidiary Guarantors will not be liable in any such case to the extent
that any such loss, claim, damage, or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Circular or any amendment or supplement thereto in reliance upon and
in conformity with written information concerning the Initial Purchaser
furnished to the Company or the Subsidiary Guarantors by the Initial Purchaser
specifically for use therein. This indemnity agreement will be in addition to
any liability that the Company or the Subsidiary Guarantors may otherwise have
to the indemnified parties. Neither the Company nor the Subsidiary Guarantors
shall be liable under this Section 9 for any settlement of any claim or action
effected without their prior written consent, which shall not be unreasonably
withheld.
(b) The Initial Purchaser agrees to indemnify and hold harmless each of
the Company, the Subsidiary Guarantors, their directors, their officers and each
person, if any, who controls the Company or the Subsidiary Guarantors within the
meaning of Section 15 of the Act
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<PAGE> 21
or Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which the Company or the Subsidiary Guarantors or any such
director, officer or controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Circular or any amendment or supplement thereto or (ii) the omission or
the alleged omission to state therein a material fact required to be stated in
any Circular or any amendment or supplement thereto or necessary to make the
statements therein no misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon an in conformity with written
information concerning the Initial Purchaser, furnished to the Company by the
Initial Purchaser specifically for use therein; and subject to the limitation
set forth immediately preceding this clause, will reimburse, as incurred, any
legal or other expenses incurred by the Company or the Subsidiary Guarantors or
any such director, officer or controlling person in connection with
investigating or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof. This indemnity agreement will be in addition to any liability that the
Initial Purchaser may otherwise have to the indemnified parties. The Initial
Purchaser shall not be liable under this Section 9 for any settlement of any
claim or action effected without their consent, which shall not be unreasonably
withheld. None of the Company or any of the Subsidiary Guarantors shall, without
the prior written consent of the Initial Purchaser, effect any settlement or
compromise of any pending or threatened proceeding in respect of which the
Initial Purchaser is or could have been a party, or indemnity could have been
sought hereunder by the Initial Purchaser, unless such settlement (A) includes
an unconditional written release of the Initial Purchaser, in form and substance
reasonably satisfactory to the Initial Purchaser, from all liability on claims
that are the subject matter of such proceeding and (B) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of the Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this Section 9
of notice of the commencement of any action for which such indemnified party is
entitled to indemnification under this Section 9, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section 9, notify the indemnifying party of the commencement thereof in
writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
extent such failure results in the forfeiture by the indemnifying party or
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to
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<PAGE> 22
those available to the indemnifying party, or (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after receipt by the
indemnifying party of notice of the institution of such action, then, in each
such case, the indemnifying party shall not have the right to direct the defense
of such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 9 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations or circumstances,
designated by the Initial Purchaser in the case of paragraph (a) of this Section
9 or the Company or the Subsidiary Guarantors in the case of paragraph (b) of
this Section 9, representing the indemnified parties under such paragraph (a) or
paragraph (b), as the case may be, who are parties to such action or actions) or
(ii) the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the prior written consent of
the indemnifying party (which consent shall not be unreasonably withheld),
unless such indemnified party waived in writing its rights under this Section 9,
in which case the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company and the Subsidiary Guarantors on the one hand
and the Initial Purchaser on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (before deducting expenses)
received by the Company and the Subsidiary Guarantors bear to the total
discounts and commissions received by the Initial Purchaser. The relative fault
of the parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
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<PAGE> 23
alleged omission to state a material fact relates to information supplied by the
Company or the Subsidiary Guarantors on the one hand, or the Initial Purchaser
on the other, the parties" relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission or alleged
statement or omission, and any other equitable considerations appropriate in the
circumstances.
(e) The Company, the Subsidiary Guarantors and the Initial Purchaser
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of the immediately preceding paragraph (d).
Notwithstanding the provisions of this paragraph 9, no Initial Purchaser shall
be obligated to make contributions hereunder that in the aggregate exceed the
total discounts, commissions and other compensation received by the Initial
Purchaser under this Agreement, less the aggregate amount of any damages that
the Initial Purchaser has otherwise been required to pay by reason of the untrue
or alleged untrue statements or the omissions or alleged omissions to state a
material fact, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
the immediately preceding paragraph (d), each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act shall have the same rights to contribute as the Initial
Purchaser, and each director of the Company and the Subsidiary Guarantors, each
officer of the Company and the Subsidiary Guarantors and each person, if any,
who controls the Company and the Subsidiary Guarantors within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company and the Subsidiary Guarantors.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company and the
Subsidiary Guarantors, their respective officers and the Initial Purchaser set
forth in this Agreement or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company and the Subsidiary Guarantors,
any of their respective officers or directors, the Initial Purchaser or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6, 9 and 14 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchaser by notice to the Company given prior to the
Closing Date in the event that the Company or any of the Subsidiary Guarantors
shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on their respective part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Closing Date:
(i) any of the Company or the Subsidiary Guarantors shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or any legal or governmental proceeding,
which loss or interference, in the sole judgment of the Initial
Purchaser, has had nor has a
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<PAGE> 24
Material Adverse Effect, or there shall have been, in the sole
judgment of the Initial Purchaser, any Material Adverse Change, or any
event or development involving or reasonably likely to cause or result
in a Material Adverse Change (including without limitation a change in
management or control of the Company or the Subsidiary Guarantors),
except in each case as described in the Final Circular (exclusive of
any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or the Nasdaq National Market shall
have been suspended or minimum or maximum prices shall have been
established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities as contemplated by the Circular; or
(v) any securities of the Company shall have been downgraded
or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in Section
10 hereof.
12. Information Supplied by the Initial Purchaser. The statements set
forth in the last paragraph on the front cover page and in the final two
sentences of the third paragraph and in the last two paragraphs under the
heading "Plan of Distribution" in the Final Circular (to the extent such
statements relate to the Initial Purchaser) constitute the only information
furnished by the Initial Purchaser to the Company for the purposes of Sections
2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and, if
sent to the Initial Purchaser, shall be mailed or delivered or telecopied and
confirmed in writing to (i) Jefferies & Company, Inc.,11100 Santa Monica Blvd.,
10th Floor, Los Angeles, CA 90025, Attention: David J. Losito, Telecopy No.:
(310) 575-5200; and if sent to the Company or the Subsidiary Guarantors, shall
be mailed or delivered or telecopied and confirmed in writing to the Company at
8572 Katy Freeway, Suite 101, Houston, Texas 77024.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air
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<PAGE> 25
courier; and when receipt is acknowledged by the addressee, if telecopied.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchaser, the Company and the Subsidiary Guarantors
and their respective successors and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnities of the Company and the Subsidiary Guarantors contained
in Section 9 of this Agreement shall also be for the benefit of any person or
persons who control the Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act and (ii) the indemnities of the
Initial Purchaser contained in Section 9 of this Agreement shall also be for the
benefit of the directors of the Company and the Subsidiary Guarantors, their
respective officers and any person or persons who control the Company or the
Subsidiary Guarantors within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Securities from the Initial Purchaser will
be deemed a successor because of such purchase.
15. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 26
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Company,
the Subsidiary Guarantors and the Initial Purchaser.
Very truly yours,
PACKAGED ICE, INC.
By: /s/ JAMES F. STUART
----------------------------------------
James F. Stuart
Chairman of the Board and
Chief Executive Officer
PACKAGED ICE LEASING, INC.
SOUTHCO ICE, INC.
MISSION PARTY ICE, INC.
SOUTHWEST TEXAS PACKAGED ICE, INC.
SOUTHWESTERN ICE, INC.
GOLDEN EAGLE ICE TEXAS, INC.
PACKAGED ICE SOUTHEAST, INC.
SOUTHERN BOTTLED WATER COMPANY, INC.
By: /s/ JAMES F. STUART
----------------------------------------
James F. Stuart
Chairman of the Board and
Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
JEFFERIES & COMPANY, INC.
By: /s/ DAVID J. LOSITO
-----------------------------
David J. Losito
Managing Director
<PAGE> 27
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
Dated as of January 28, 1998
Amended and Restated as of April 30, 1998
by and among
PACKAGED ICE, INC.
THE SUBSIDIARY GUARANTORS
named herein
and
JEFFERIES & COMPANY, INC.,
as Initial Purchaser
-------------------------
$270,000,000
9 3/4% SERIES A SENIOR NOTES DUE FEBRUARY 1, 2005
<PAGE> 28
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions........................................................1
2. Exchange Offer.....................................................4
3. Shelf Registration.................................................7
4. Additional Interest................................................8
5. Registration Procedures...........................................10
6. Registration Expenses.............................................17
7. Indemnification...................................................18
8. Rules 144 and 144A................................................21
9. Underwritten Registrations........................................21
10. Miscellaneous.....................................................22
(a) No Inconsistent Agreements...............................22
(b) Adjustments Affecting Registrable Notes..................22
(c) Amendments and Waivers...................................22
(d) Notices..................................................22
(e) Successors and Assigns...................................23
(f) Counterparts.............................................24
(g) Headings.................................................24
(h) Governing Law............................................24
(i) Severability.............................................24
(j) Notes Held by the Issuers or Their Affiliates............24
(k) Third Party Beneficiaries................................24
(1) Entire Agreement.........................................24
</TABLE>
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<PAGE> 29
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of January 28, 1998, and is amended and restated as of April 30,
1998, by and among Packaged Ice, Inc., a Texas corporation (the "Company"), each
of the subsidiaries of the Company listed on the signature pages hereto
(collectively, the "Subsidiary Guarantors"), and Jefferies & Company, Inc. (the
"Initial Purchaser").
This Agreement is entered into in connection with the Purchase
Agreements, dated as of January 22, 1998 and April 23, 1998, by and among the
Company, the Subsidiary Guarantors and the Initial Purchaser (the "Purchase
Agreements") which provides for, among other things, the issuance and sale to
the Initial Purchaser of $270,000,000 aggregate principal amount of the
Company's 9 3/4% Series A Senior Notes due February 1, 2005 (the "Notes"). In
order to induce the Initial Purchaser to enter into the Purchase Agreements, the
Company and the Subsidiary Guarantors have agreed to provide the registration
rights set forth in this Agreement for the benefit of the Initial Purchaser and
their direct and indirect transferees and assigns. The execution and delivery of
this Agreement is a condition to the Initial Purchaser's obligation to purchase
the Notes under the Purchase Agreements. The Company and the Subsidiary
Guarantors are collectively referred to herein as the "Issuers."
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Agreement: See the first introductory paragraph to this Agreement.
Applicable Period: See Section 2(b).
Business Day: A day that is not a Saturday, a Sunday, or a day on which
banking institutions in New York, New York are required to be closed.
Company: See the first introductory paragraph to this Agreement.
Effectiveness Date: The 120th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
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<PAGE> 30
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 60th day after the Issue Date.
Holder: Any registered holder of Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of January 28, 1998, as amended and
restated as of April 30, 1998, by and among the Company, the Subsidiary
Guarantors and U.S. Trust Company of Texas, N.A., as trustee, pursuant to which
the Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchaser: See the first introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which $125,000,000 aggregate principal amount
of Notes were sold to the Initial Purchaser pursuant to the Purchase Agreement
dated as of April 23, 1998.
Issuers: See the second introductory paragraph to this Agreement.
NASD: National Association of Securities Dealers, Inc.
Notes: See the second introductory paragraph to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
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<PAGE> 31
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
Purchase Agreement: See the second introductory paragraph to this
Agreement.
Records: See Section 5(o).
Registrable Notes: Each Note upon original issuance thereof and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance thereof and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until, in the case of any such Note, Exchange Note or
Private Exchange Note, as the case may be, the earliest to occur of (i) a
Registration Statement (other than, with respect to any Exchange Note as to
which Section 2(c)(iv) hereof is applicable, the Exchange Registration
Statement) covering such Note, Exchange Note or Private Exchange Note, as the
case may be, has been declared effective by the SEC and such Note, Exchange Note
or Private Exchange Note, as the case may be, has been disposed of in accordance
with such effective Registration Statement, (ii) such Note, Exchange Note or
Private Exchange Note, as the case may be, is sold in compliance with Rule 144,
(iii) in the case of any Note, such Note has been exchanged pursuant to the
Exchange Offer for an Exchange Note or Exchange Notes which may be resold
without restriction under state and federal securities laws, or (iv) such Note,
Exchange Note or Private Exchange Note, as the case may be, ceases to be
outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the Issuers filed
with the SEC under the Securities Act, including, but not limited to, the
Exchange Registration Statement, that covers any of the Registrable Notes
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
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<PAGE> 32
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
Subsidiary Guarantors: See the first introductory paragraph to this
Agreement.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration in
which securities of one or more of the issuers are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
(a) Each of the Issuers agrees to file with the SEC no later than the
Filing Date, an offer to exchange (the "Exchange Offer") any and all of the
Registrable Notes (other than Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of the Company, guaranteed by the
Subsidiary Guarantors, which are identical in all material respects to the Notes
(the "Exchange Notes") (and which are entitled to the benefits of the Indenture
or a trust indenture which is identical in all material respects to the
Indenture (other than such changes to the Indenture or any such identical trust
indenture as are necessary to comply with any requirements of the SEC to effect
or maintain the qualification thereof under the TIA) and which, in either case,
has been qualified under the TIA), except that the Exchange Notes shall have
been registered pursuant to an effective Registration Statement under the
Securities Act and shall contain no restrictive legend thereon. The Exchange
Offer shall be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and shall comply with all applicable tender
offer rules and regulations under the Exchange Act. Each of the Issuers agrees
to use its best efforts to (x) cause the Exchange Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 30 calendar days (or longer if
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<PAGE> 33
required by applicable law) after the date that notice of the Exchange Offer is
mailed to Holders; and (z) consummate the Exchange Offer on or prior to the 45th
day following the date on which the Exchange Registration Statement is declared
effective. If after such Exchange Registration Statement is initially declared
effective by the SEC, the Exchange Offer or the issuance of the Exchange Notes
thereunder is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such Exchange
Registration Statement shall be deemed not to have become effective for purposes
of this Agreement. Each Holder who participates in the Exchange Offer will be
required to represent that any Exchange Notes received by it will be acquired in
the ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, and that such Holder is not an affiliate
of any of the Issuers within the meaning of the Securities Act. Upon
consummation of the Exchange Offer in accordance with this Section 2, the
provisions of this Agreement shall continue to apply, mutatis mutandis, solely
with respect to Registrable Notes that are Private Exchange Notes and Exchange
Notes held by Participating Broker-Dealers, and the Issuers shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes and other than in respect of any Exchange Notes as to which clause
2(c)(iv) hereof applies) pursuant to Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchaser, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in the
judgment of the Initial Purchaser, represent the prevailing views of the staff
of the SEC. Such "Plan of Distribution" section shall also allow, to the extent
permitted by applicable policies and regulations of the SEC, the use of the
Prospectus by all Persons subject to the prospectus delivery requirements of the
Securities Act, including, to the extent so permitted, all Participating
Broker-Dealers, and include a statement describing the manner in which
Participating Broker-Dealers may resell the Exchange Notes.
Each of the Issuers shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such Persons must comply with such requirements
in order to resell the Exchange Notes (the "Applicable Period").
If, upon consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Company upon the request of such Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchaser, in exchange (the "Private
Exchange") for the Notes held by such Initial Purchaser, a like principal amount
of debt securities of the Company, guaranteed by the Subsidiary Guarantors, that
are identical in all material respects
-5-
<PAGE> 34
to the Exchange Notes except for the existence of restrictions on transfer
thereof under the Securities Act and securities laws of the several states of
the U.S. (the "Private Exchange Notes") (and which are issued pursuant to the
same indenture as the Exchange Notes); provided, however, the Issuers shall not
be required to effect such exchange if, in the written opinion of counsel for
the Issuers (a copy of which shall be delivered to the Initial Purchaser and any
Holder affected thereby), such exchange cannot be effected without registration
under the Securities Act. The Private Exchange Notes shall bear the same CUSIP
number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue from (A) the later of (i) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or (ii) if the
Notes are surrendered for exchange on a date in a period which includes the
record date for an interest payment date to occur on or after the date of such
exchange and as to which interest will be paid, the date of such interest
payment date or (B) if no interest has been paid on the Notes, from the date of
the original issuance of the Notes.
In connection with the Exchange Offer, the Issuers shall:
(1) mail to each Holder a copy of the Prospectus forming part
of the Exchange Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York, which may be the Trustee or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Notes at
any time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all
applicable laws.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Registrable Notes validly tendered
and not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange, as the case may be;
(2) deliver to the Trustee for cancellation all Registrable
Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to
each Holder tendering such Registrable Notes, Exchange Notes or Private
Exchange Notes, as the case may be, equal in principal amount to the
Notes of such Holder so accepted for exchange.
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<PAGE> 35
The Exchange Offer and the Private Exchange shall be subject to the
following conditions: (i) the Exchange Offer or the Private Exchange, as the
case may be, does not violate applicable law or any applicable interpretation of
the staff of the SEC, (ii) no action or proceeding is instituted or threatened
in any court or by any governmental agency which might materially impair the
ability of the Issuers to proceed with the Exchange Offer or the Private
Exchange and no material adverse development has occurred in any existing action
or proceeding with respect to the Issuers and (iii) all governmental approvals
have been obtained, which approvals the Issuers deem necessary for the
consummation of the Exchange Offer or Private Exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that the
Exchange Notes, the Private Exchange Notes and the Notes, if any, will vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes, if any, will have the right to
vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Issuers are not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 150 days of
the Issue Date, (iii) any holder of Private Exchange Notes so requests in
writing to the Issuers within 120 days after the consummation of the Exchange
Offer or (iv) in the case of any Holder that participates in the Exchange Offer,
such Holder does not receive Exchange Notes on the date of the exchange that may
be sold without restriction under state and federal securities laws (other than
due solely to the status of such Holder as an affiliate of any of the Issuers
within the meaning of the Securities Act) and so notifies the Company within 60
days after such Holder first becomes aware of such restrictions and providing a
reasonable basis for its conclusions, in the case of each of clauses (i)-(iv),
then the Issuers shall promptly deliver to the Holders and the Trustee written
notice thereof (the "Shelf Notice") and shall file a Shelf Registration pursuant
to Section 3.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Shelf Registration. The Issuers shall as promptly as reasonably
practicable file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Notes (the "Initial Shelf Registration"). If the Issuers shall not have yet
filed the Exchange Registration Statement, each of the Issuers shall use its
best efforts to file with the SEC the Initial Shelf Registration on or prior to
the Filing Date and shall use its best efforts to cause such Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date. Otherwise, each of the Issuers shall use its best
efforts to file with the SEC the Initial Shelf Registration within 30 days of
the delivery of the Shelf Notice and shall use its best efforts to cause such
Shelf Registration to be declared effective under the Securities Act as promptly
as practicable thereafter. The Initial Shelf Registration shall be on Form S-l
or another appropriate form permitting registration of such Registrable Notes
for resale by Holders in the
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manner or manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other than
the Registrable Notes to be included in any Shelf Registration (as defined
below). The Issuers shall use their best efforts to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date
which is 36 months from the effective date of such Initial Shelf Registration
(subject to extension pursuant to the last paragraph of Section 5 hereof) (the
"Effectiveness Period"), or such shorter period ending when (i) all Registrable
Notes covered by the Initial Shelf Registration have been sold in the manner set
forth and as contemplated in the Initial Shelf Registration or (ii) a Subsequent
Shelf Registration (as defined below) covering all of the Registrable Notes has
been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), each of the Issuers shall use its best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 45 days of such cessation
of effectiveness amend such Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, each of the Issuers shall use its best efforts to cause
the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Subsequent Shelf Registration
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf Registration or any Subsequent Shelf Registrations was previously
continuously effective. As used herein the term "Shelf Registration" means the
Initial Shelf Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly supplement
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Shelf Registration or by any underwriter of such Registrable
Notes.
4. Additional Interest
(a) The Issuers and the Initial Purchaser agree that the Holders of
Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers, jointly and severally, agree to pay, as liquidated damages,
additional interest on the Notes ("Additional Interest") under the circumstances
and to the extent set forth below (each of which shall be given independent
effect):
(i) if the Exchange Registration Statement has not been filed
on or prior to the Filing Date, then commencing on the day after the
Filing Date, Additional Interest shall accrue on the Notes over and
above the stated interest at a rate of 0.50% per annum for the
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first 90 days immediately following the Filing Date, such Additional
Interest rate increasing by an additional 0.50% per annum at the
beginning of each subsequent 90-day period;
(ii) if the Exchange Registration Statement is not declared
effective on or prior to the Effectiveness Date, then commencing on the
day after the Effectiveness Date, Additional Interest shall accrue on
the Notes over and above the stated interest at a rate of 0.50% per
annum for the first 90 days immediately following the day after the
Effectiveness Date, such Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Issuers have not exchanged Exchange Notes for
all Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to the 60th day after the date on which the Exchange
Registration Statement is declared effective or (B) the Initial Shelf
Registration, if required to be filed hereunder, is not declared
effective on or prior to the 150th day after the Issue Date or (C) if
applicable, a Shelf Registration has been declared effective and such
Shelf Registration ceases to be effective at any time during the
Effectiveness Period, then Additional Interest shall accrue on the
Notes over and above the stated interest at a rate of 0.50% per annum
for the first 90 days commencing on the (x) 60th day after the date on
which the Exchange Registration Statement is declared effective, in the
case of (A) or (B) above, or (y) the day such Shelf Registration ceases
to be effective in the case of (C) above, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each
such subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.5% per annum; and provided further, that (1)
upon the filing of the Exchange Registration Statement (in the case of (i)
above), (2) upon the effectiveness of the Exchange Registration Statement (in
the case of (ii) above), or (3) upon the exchange of Exchange Notes for all
Notes tendered (in the case of (iii)(A) above), upon the effectiveness of the
Initial Shelf Registration (in the case of (iii)(B) above) or upon the
effectiveness of a Shelf Registration which had ceased to remain effective (in
the case of (iii)(C) above), Additional Interest on the Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accrue.
(b) The Issuers shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Any amounts of Additional
Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable semi-annually by wire transfer of immediately available funds or by
federal funds check on each regular interest payment date specified in the
Indenture (to the Holders of record on the regular record date therefor
(specified in the Indenture) immediately preceding such dates), commencing with
the first such regular interest payment date occurring after any such Additional
Interest commences to accrue, subject to Section 2.17 of the Indenture with
respect to defaulted interest. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes, multiplied by a fraction, the numerator of which
is the number of days such Additional Interest rate was applicable during such
period (determined on the basis of a 360-day year comprised of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed),
and the denominator of which is 360.
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5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Section 2 or 3 hereof, the Issuers shall effect such registrations to permit the
sale of such securities covered thereby in accordance with the intended method
or methods of disposition thereof, and pursuant thereto and in connection with
any Registration Statement filed by the Issuers hereunder, the Issuers shall:
(a) Prepare and file with the SEC prior to the Filing Date,
the Exchange Registration Statement or if the Exchange Registration
Statement is not filed because of the circumstances contemplated by
Section 2(c)(i), a Shelf Registration as prescribed by Section 2 or 3,
and use their best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided
that, if (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Issuers
shall, if requested, furnish to and afford the Holders of the
Registrable Notes to be registered pursuant to such Shelf Registration
or each such Participating Broker-Dealer, as the case may be, covered
by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in
each case at least five business days prior to such filing). The
Issuers shall not file any such Registration Statement or Prospectus or
any amendments or supplements thereto if the Holders of a majority in
aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the
case may be, their counsel, or the managing underwriters, if any, shall
reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of
the Securities Act and the Exchange Act applicable to it with respect
to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and
with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus. The Company
shall be deemed not to have used its best efforts to keep a
Registration Statement effective during the Applicable Period if it
voluntarily takes any action that would result in selling Holders of
the Registrable Notes covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable
Notes or such Exchange Notes during that period unless such action is
required by applicable law or unless the Company complies with
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<PAGE> 39
this Agreement, including, without limitation, the provisions of
paragraph 5(k) hereof and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period from whom the Company has
received written notice that it will be a Participating Broker-Dealer
in the Exchange Offer, notify the selling Holders of Registrable Notes,
or each such Participating Broker-Dealer, as the case may be, their
counsel and the managing underwriters, if any, promptly (but in any
event within two business days), and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement
or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be
incorporated by reference and exhibits), (ii) of the issuance by the
SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any
Prospectus or the initiation of any proceedings for that purpose, (iii)
if at any time when a prospectus is required by the Securities Act to
be delivered in connection with sales of the Registrable Notes the
representations and warranties of the Issuers contained in any
agreement (including any underwriting agreement) contemplated by
Section 5(n) hereof cease to be true and correct, (iv) of the receipt
by the Issuers of any notification with respect to the suspension of
the qualification or exemption from qualification of a Registration
Statement or any of the Registrable Notes or the Exchange Notes to be
sold by any Participating Broker-Dealer for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (v) of the happening of any event, the existence of any
condition or any information becoming known that makes any statement
made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any
changes in, or amendments or supplements to, such Registration
Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of any of the Issuers' reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use their best efforts to
prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order
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<PAGE> 40
preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the
Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any
such order is issued, to use their best efforts to obtain the
withdrawal of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Notes being
sold in connection with an underwritten offering, (i) promptly as
practicable incorporate in a prospectus supplement or post-effective
amendment such information or revisions to information therein relating
to such underwriters or selling Holders as the managing underwriters,
if any, or such Holders or their counsel reasonably request to be
included or made therein and (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as
practicable after the Issuers have received notification of the matters
to be incorporated in such prospectus supplement or post-effective
amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, furnish to each selling
Holder of Registrable Notes and to each such Participating
Broker-Dealer who so requests and to counsel and each managing
underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, deliver to each selling
Holder of Registrable Notes or each such Participating Broker-Dealer,
as the case may be, their respective counsel, and the underwriters, if
any, without charge, as many copies of the Prospectus and each
amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject
to the last paragraph of this Section 5, each Issuer hereby consents to
the use of such Prospectus and each amendment or supplement thereto by
each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters
or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such
Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, to use their
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<PAGE> 41
best efforts to register or qualify, and to cooperate with the selling
Holders of Registrable Notes or each such Participating Broker-Dealer,
as the case may be, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Notes or Exchange Notes, as the case may be, for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the
United States as any selling Holder, Participating Broker-Dealer, or
the managing underwriter or underwriters, if any, reasonably request
in writing; provided that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Issuers agree to cause their counsel to
perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h);
keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Exchange Notes held by Participating Broker-Dealers or the
Registrable Notes covered by the applicable Registration Statement;
provided that none of the Issuers shall be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
subject or (C) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so
subject.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use their best efforts to cause the Registrable Notes
covered by any Registration Statement to be registered with or approved
by such governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriters, if any, to
consummate the disposition of such Registrable Notes, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case each of the Issuers will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, upon the occurrence of any
event contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly
as practicable prepare and (subject to Section 5(a) hereof) file with
the SEC, at the joint and several expense of each of the Issuers, a
supplement or post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter
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<PAGE> 42
delivered to the purchasers of the Registrable Notes being sold
thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any
such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(l) Use their best efforts to cause the Registrable Notes
covered by a Registration Statement to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Registrable Notes covered by such
Registration Statement or the managing underwriter or underwriters, if
any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with printed certificates for the Registrable Notes in a form eligible
for deposit with The Depository Trust Company and (ii) provide a CUSIP
number for the Registrable Notes.
(n) In connection with an underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of debt securities
similar to the Notes and take all such other actions as are reasonably
requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or the disposition of such
Registrable Notes and, in such connection, (i) make such
representations, warranties to, and covenants with, the underwriters,
with respect to the business of the Issuers and their respective
subsidiaries and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein,
in each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and
confirm the same in writing if and when requested; (ii) obtain the
opinion of counsel to the Issuers and updates thereof in form and
substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
debt securities similar to the Notes and such other matters as may be
reasonably requested by underwriters; (iii) obtain "cold comfort"
letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters from the
independent certified public accountants of the Issuers (and, if
necessary, any other independent certified public accountants of any
subsidiary of any of the Issuers or of any business acquired by any of
the Issuers for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed
to each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings of debt securities
similar to the Notes and such other matters as reasonably requested by
the managing underwriter or underwriters; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing
underwriter
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<PAGE> 43
or underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each
closing under such underwriting agreement, or as and to the extent
required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Notes being sold,
or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Registrable Notes,
if any, and any attorney, accountant or other agent retained by any
such selling Holder or each such Participating Broker-Dealer, as the
case may be, or underwriter (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business hours, all
financial and other records and pertinent corporate documents of the
Issuers and their respective subsidiaries (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers,
directors and employees of the Issuers and their respective
subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement. Such Records
shall be kept confidential by each Inspector and shall not be disclosed
by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a material misstatement or omission in
such Registration Statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each selling Holder of such Registrable Notes and each
such Participating Broker-Dealer will be required to agree that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Issuers unless and until
such is made generally available to the public. Each selling Holder of
such Registrable Notes and each such Participating Broker-Dealer will
be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Issuers and allow the Issuers to
undertake appropriate action to prevent disclosure of the Records
deemed confidential at their expense.
(p) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the
Exchange Offer or the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the Registrable
Notes, to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earnings
statements satisfying the provisions of
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Section 11(a) of the Securities Act and Rule 158 thereunder (or any
similar rule promulgated under the Securities Act) no later than 45
days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Registrable Notes are sold to
underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(r) Upon consummation of the Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuers, in a form
customary for underwritten transactions, addressed to the Trustee for
the benefit of all Holders of Registrable Notes participating in the
Exchange Offer or the Private Exchange, as the case may be, that the
Exchange Notes or the Private Exchange Notes, as the case may be, and
the related indenture constitute legally valid and binding obligations
of each of the Issuers, enforceable against each of the Issuers in
accordance with their respective terms subject to customary exceptions
and qualifications.
(s) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Issuers (or to such other Person as directed by the Issuers) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Issuers shall mark, or caused to be marked, on such
Registrable Notes that such Registrable Notes are being canceled in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; in no event shall such Registrable Notes be marked as paid
or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and each underwriter, if any, participating
in the disposition of such Registrable Notes and their respective
counsel in connection with any filings required to be made with the
NASD.
(u) Use their best efforts to take all other steps reasonably
necessary to effect the registration of the Registrable Notes covered
by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude from
such registration the Registrable Notes of any seller who fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Issuers all information required to be disclosed in order to
make the information previously furnished to the Issuers by such seller not
materially misleading.
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<PAGE> 45
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Issuers of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by a Registration
Statement and such Participating Broker Dealer will forthwith discontinue
disposition of such Exchange Notes pursuant to any Prospectus and, in each case,
forthwith discontinue dissemination of such Prospectus until such Holder's or
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k), or until it is advised in
writing (the "Advice") by the Issuers that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements thereto
and, if so directed by the Issuers, such Holder or Participating Broker-Dealer,
as the case may be, will deliver to the Issuers all copies, other than permanent
file copies, then in such Holder's or Participating Broker-Dealer's possession,
of the Prospectus covering such Registrable Securities current at the time of
the receipt of such notice. In the event the Issuers shall give any such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Registrable Notes
covered by such Registration Statement or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) or
(y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers, jointly and
severally, whether or not the Exchange Offer or a Shelf Registration is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Registrable Notes or Exchange
Notes and determination of the eligibility of the Registrable Notes or Exchange
Notes for investment under the laws of such jurisdictions (x) where the holders
of Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange
Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriter or
underwriters, if any, or by the Holders of a majority in aggregate principal
amount of the Registrable Notes included in any Registration Statement or by any
Participating Broker-Dealer during the Applicable Period, as the case may be,
(iii) reasonable messenger, telephone and delivery expenses incurred in
connection with the Exchange Registration Statement and any Shelf Registration,
(iv) fees and disbursements of counsel for the Issuers and reasonable fees and
disbursements of special counsel for the sellers of Registrable Notes (subject
to the provisions of Section 6(b)), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
(including, without limitation, the
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<PAGE> 46
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), (vi) rating agency fees, (vii) Securities Act liability
insurance, if the Issuers desire such insurance, (viii) fees and expenses of all
other Persons retained by the Issuers, (ix) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties), (x) the expense
of any annual audit, (xi) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange and (xii)
the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply with this
Agreement.
(b) In connection with any Shelf Registration hereunder, the Issuers,
jointly and severally, shall reimburse the Holders of the Registrable Notes
being registered in such registration for the fees and disbursements, not to
exceed $25,000, of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Registrable Notes to be included in such Shelf Registration and other
out-of-pocket expenses of Holders of Registrable Notes incurred in connection
with the registration and sale of Registrable Notes.
7. Indemnification
(a) Each of the Issuers, jointly and severally, agrees to indemnify and
hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the officers
and directors of each such Person, and each Person, if any, who controls any
such Person within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant"), from and against any and
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other reasonable expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted) caused by,
arising out of or based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (as amended
or supplemented if the Issuers shall have furnished any amendments or
supplements thereto) or caused by, arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Issuers shall have furnished any
amendments or supplements thereto) or caused by, arising out of or based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Issuers
in writing by or on behalf of such Participant expressly for use therein;
provided, however, that the Company will not be liable if such untrue statement
or omission or alleged untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding and any such loss,
liability, claim, damage or expense suffered or incurred by the
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<PAGE> 47
Participants resulted from any action, claim or suit by any Person who purchased
Registrable Notes or Exchange Notes which are the subject thereof from such
Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Notes or Exchange Notes sold to such Person if required by
applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Issuers, their respective directors and officers and each
Person who controls any of the Issuers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Issuers
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in the loss or compromise of any material rights or defenses by
the Indemnifying Person and the Indemnifying Person was not otherwise aware of
such action or claim). In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that, unless there
is a conflict among Indemnified Persons, the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed promptly after receipt of the invoice therefor as
they are incurred. Any such separate firm for the Participants and such control
Persons of Participants shall be designated in writing by Participants who sold
a majority in interest of Registrable Notes sold by all such Participants and
any such separate firm for the Issuers, their directors, their officers
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<PAGE> 48
and such control Persons of the Issuers shall be designated in writing by the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its prior written consent, but if settled with such
consent or if there is a final non-appealable judgment for the plaintiff for
which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, the Indemnifying Person agrees to indemnify any Indemnified Person
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for reasonable fees and expenses actually incurred by counsel as contemplated by
the third sentence of this paragraph, the Indemnifying Person agrees that it
shall be liable for any settlement of any proceeding effected without its prior
written consent if (i) such settlement is entered into more than 30 days after
receipt by such Indemnifying Person of the aforesaid request and (ii) such
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Person is contesting, in good faith, the request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such
settlement (A) includes an unconditional release of such indemnified Person, in
form and substance satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of an Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable (other than by reason of the
exceptions specifically provided therein) to, or insufficient to hold harmless,
an Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering of the Registrable
Notes or Exchange Notes, as the case may be or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the Indemnifying Person or
Persons on the one hand and the Indemnified Person or Persons on the other in
connection with the statements or omissions (or alleged statements or omissions)
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers on the one hand or by the Participants or such other
Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission and any other equitable considerations appropriate
under the circumstances.
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<PAGE> 49
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section
7 will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Each of the Issuers covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
it is not required to file such reports, it will, upon the request of any Holder
of Registrable Notes, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A. Each of the
Issuers further covenants, for so long as any Registrable Notes remain
outstanding, to make available to any Holder or beneficial owner of Registrable
Notes in connection with any sale thereof and any prospective purchaser of such
Registrable Notes from such Holder or beneficial owner, the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
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<PAGE> 50
10. Miscellaneous
(a) No Inconsistent Agreements. None of the Issuers has entered, as of
the date hereof, and none of the Issuers shall enter, after the date of this
Agreement, into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. None of the Issuers
has entered and none of the Issuers will enter into any agreement with respect
to any of its securities which will grant to any Person piggy-back rights with
respect to a Registration Statement.
(b) Adjustments Affecting Registrable Notes. Neither the Company nor
the Subsidiary Guarantors shall, directly or indirectly, take any action with
respect to the Registrable Notes as a class that would adversely affect the
ability of the Holders of Registrable Notes to include such Registrable Notes in
a registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (A) the Holders of not less than a majority in aggregate principal
amount of the then outstanding Registrable Notes and (B) in circumstances that
would adversely affect Participating Broker-Dealers, the Participating
Broker-Dealers holding not less than a majority in aggregate principal amount of
the Exchange Notes held by all Participating Broker-Dealers; provided, however,
that Section 7 and this Section 10(c) may not be amended, modified or
supplemented without the prior written consent of each Holder and each
Participating Broker-Dealer (including any Person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being tendered pursuant to the Exchange Offer or sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Notes may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Notes being tendered or being sold by such Holders
pursuant to such Registration Statement.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the
records of the registrar under the Indenture, with a copy in like
manner to the Initial Purchaser as follows:
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<PAGE> 51
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard - 10th Floor
Los Angeles, California 90025
Facsimile No.: (310) 575-5165
Attention: Corporate Finance Department
with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Facsimile No.: (713) 615-5282
Attention: Michael P. Finch
2. if to the Initial Purchaser, at the address
specified in Section 10(d)(1);
3. if to an Issuer, as follows:
Packaged Ice, Inc.
8572 Katy Freeway, Suite 101
Houston, Texas 77024
Facsimile No.: (713) 464-4681
Attention: President
with copies to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
Facsimile No.: (210) 224-2035
Attention: Alan Schoenbaum
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed, one business day after
being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto
and the Holders; provided, however,
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<PAGE> 52
that this Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a Holder unless such successor or assign holds
Registrable Notes.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Notes Held by the Issuers or Their Affiliates. Whenever the consent
or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuers or their affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchaser on the
one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
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<PAGE> 53
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PACKAGED ICE, INC.
By:
Name:
Title:
PACKAGED ICE LEASING, INC.
SOUTHCO ICE, INC.
MISSION PARTY ICE, INC.
SOUTHWEST TEXAS PACKAGED ICE, INC.
SOUTHWESTERN ICE, INC.
GOLDEN EAGLE ICE B TEXAS, INC.
PACKAGED ICE SOUTHEAST, INC.
SOUTHERN BOTTLED WATER COMPANY, INC.
REDDY ICE CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
JEFFERIES & COMPANY, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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<PAGE> 1
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
Dated as of January 28, 1998
Amended and Restated as of April 30, 1998
by and among
PACKAGED ICE, INC.
THE SUBSIDIARY GUARANTORS
named herein
and
JEFFERIES & COMPANY, INC.,
as Initial Purchaser
-----------------------------------------------------
$270,000,000
9 3/4% SERIES A SENIOR NOTES DUE FEBRUARY 1, 2005
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions..............................................................................................1
2. Exchange Offer...........................................................................................4
3. Shelf Registration.......................................................................................7
4. Additional Interest......................................................................................8
5. Registration Procedures.................................................................................10
6. Registration Expenses...................................................................................17
7. Indemnification.........................................................................................18
8. Rules 144 and 144A......................................................................................21
9. Underwritten Registrations..............................................................................21
10. Miscellaneous...........................................................................................22
(a) No Inconsistent Agreements.....................................................................22
(b) Adjustments Affecting Registrable Notes........................................................22
(c) Amendments and Waivers.........................................................................22
(d) Notices........................................................................................22
(e) Successors and Assigns.........................................................................23
(f) Counterparts...................................................................................24
(g) Headings.......................................................................................24
(h) Governing Law..................................................................................24
(i) Severability...................................................................................24
(j) Notes Held by the Issuers or Their Affiliates..................................................24
(k) Third Party Beneficiaries......................................................................24
(1) Entire Agreement...............................................................................24
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of January 28, 1998, and is amended and restated as of April 30,
1998, by and among Packaged Ice, Inc., a Texas corporation (the "Company"), each
of the subsidiaries of the Company listed on the signature pages hereto
(collectively, the "Subsidiary Guarantors"), and Jefferies & Company, Inc.
(the "Initial Purchaser").
This Agreement is entered into in connection with the Purchase
Agreements, dated as of January 22, 1998 and April 23, 1998, by and among the
Company, the Subsidiary Guarantors and the Initial Purchaser (the "Purchase
Agreements") which provides for, among other things, the issuance and sale to
the Initial Purchaser of $270,000,000 aggregate principal amount of the
Company's 9 3/4% Series A Senior Notes due February 1, 2005 (the "Notes"). In
order to induce the Initial Purchaser to enter into the Purchase Agreements, the
Company and the Subsidiary Guarantors have agreed to provide the registration
rights set forth in this Agreement for the benefit of the Initial Purchaser and
their direct and indirect transferees and assigns. The execution and delivery of
this Agreement is a condition to the Initial Purchaser's obligation to purchase
the Notes under the Purchase Agreements. The Company and the Subsidiary
Guarantors are collectively referred to herein as the "Issuers."
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Agreement: See the first introductory paragraph to this Agreement.
Applicable Period: See Section 2(b).
Business Day: A day that is not a Saturday, a Sunday, or a day on which
banking institutions in New York, New York are required to be closed.
Company: See the first introductory paragraph to this Agreement.
Effectiveness Date: The 120th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
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<PAGE> 4
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 60th day after the Issue Date.
Holder: Any registered holder of Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of January 28, 1998, as amended and
restated as of April 30, 1998, by and among the Company, the Subsidiary
Guarantors and U.S. Trust Company of Texas, N.A., as trustee, pursuant to which
the Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchaser: See the first introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which $125,000,000 aggregate principal amount
of Notes were sold to the Initial Purchaser pursuant to the Purchase Agreement
dated as of April 23, 1998.
Issuers: See the second introductory paragraph to this Agreement.
NASD: National Association of Securities Dealers, Inc.
Notes: See the second introductory paragraph to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
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Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
Purchase Agreement: See the second introductory paragraph to this
Agreement.
Records: See Section 5(o).
Registrable Notes: Each Note upon original issuance thereof and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance thereof and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until, in the case of any such Note, Exchange Note or
Private Exchange Note, as the case may be, the earliest to occur of (i) a
Registration Statement (other than, with respect to any Exchange Note as to
which Section 2(c)(iv) hereof is applicable, the Exchange Registration
Statement) covering such Note, Exchange Note or Private Exchange Note, as the
case may be, has been declared effective by the SEC and such Note, Exchange Note
or Private Exchange Note, as the case may be, has been disposed of in accordance
with such effective Registration Statement, (ii) such Note, Exchange Note or
Private Exchange Note, as the case may be, is sold in compliance with Rule 144,
(iii) in the case of any Note, such Note has been exchanged pursuant to the
Exchange Offer for an Exchange Note or Exchange Notes which may be resold
without restriction under state and federal securities laws, or (iv) such Note,
Exchange Note or Private Exchange Note, as the case may be, ceases to be
outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the Issuers filed
with the SEC under the Securities Act, including, but not limited to, the
Exchange Registration Statement, that covers any of the Registrable Notes
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
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<PAGE> 6
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
Subsidiary Guarantors: See the first introductory paragraph to this
Agreement.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration in
which securities of one or more of the issuers are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
(a) Each of the Issuers agrees to file with the SEC no later than the
Filing Date, an offer to exchange (the "Exchange Offer") any and all of the
Registrable Notes (other than Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of the Company, guaranteed by the
Subsidiary Guarantors, which are identical in all material respects to the Notes
(the "Exchange Notes") (and which are entitled to the benefits of the Indenture
or a trust indenture which is identical in all material respects to the
Indenture (other than such changes to the Indenture or any such identical trust
indenture as are necessary to comply with any requirements of the SEC to effect
or maintain the qualification thereof under the TIA) and which, in either case,
has been qualified under the TIA), except that the Exchange Notes shall have
been registered pursuant to an effective Registration Statement under the
Securities Act and shall contain no restrictive legend thereon. The Exchange
Offer shall be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and shall comply with all applicable tender
offer rules and regulations under the Exchange Act. Each of the Issuers agrees
to use its best efforts to (x) cause the Exchange Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 30 calendar days (or longer if
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<PAGE> 7
required by applicable law) after the date that notice of the Exchange Offer is
mailed to Holders; and (z) consummate the Exchange Offer on or prior to the 45th
day following the date on which the Exchange Registration Statement is declared
effective. If after such Exchange Registration Statement is initially declared
effective by the SEC, the Exchange Offer or the issuance of the Exchange Notes
thereunder is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such Exchange
Registration Statement shall be deemed not to have become effective for purposes
of this Agreement. Each Holder who participates in the Exchange Offer will be
required to represent that any Exchange Notes received by it will be acquired in
the ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, and that such Holder is not an affiliate
of any of the Issuers within the meaning of the Securities Act. Upon
consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Notes that are Private Exchange
Notes and Exchange Notes held by Participating Broker-Dealers, and the Issuers
shall have no further obligation to register Registrable Notes (other than
Private Exchange Notes and other than in respect of any Exchange Notes as to
which clause 2(c)(iv) hereof applies) pursuant to Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchaser, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in the
judgment of the Initial Purchaser, represent the prevailing views of the staff
of the SEC. Such "Plan of Distribution" section shall also allow, to the extent
permitted by applicable policies and regulations of the SEC, the use of the
Prospectus by all Persons subject to the prospectus delivery requirements of the
Securities Act, including, to the extent so permitted, all Participating
Broker-Dealers, and include a statement describing the manner in which
Participating Broker-Dealers may resell the Exchange Notes.
Each of the Issuers shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such Persons must comply with such requirements
in order to resell the Exchange Notes (the "Applicable Period").
If, upon consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Company upon the request of such Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchaser, in exchange (the "Private
Exchange") for the Notes held by such Initial Purchaser, a like principal amount
of debt securities of the Company, guaranteed by the Subsidiary Guarantors, that
are identical in all material respects
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<PAGE> 8
to the Exchange Notes except for the existence of restrictions on transfer
thereof under the Securities Act and securities laws of the several states of
the U.S. (the "Private Exchange Notes") (and which are issued pursuant to the
same indenture as the Exchange Notes); provided, however, the Issuers shall not
be required to effect such exchange if, in the written opinion of counsel for
the Issuers (a copy of which shall be delivered to the Initial Purchaser and any
Holder affected thereby), such exchange cannot be effected without registration
under the Securities Act. The Private Exchange Notes shall bear the same CUSIP
number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue from (A) the later of (i) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or (ii) if the
Notes are surrendered for exchange on a date in a period which includes the
record date for an interest payment date to occur on or after the date of such
exchange and as to which interest will be paid, the date of such interest
payment date or (B) if no interest has been paid on the Notes, from the date of
the original issuance of the Notes.
In connection with the Exchange Offer, the Issuers shall:
(1) mail to each Holder a copy of the Prospectus forming part
of the Exchange Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York, which may be the Trustee or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Notes at
any time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all
applicable laws.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Registrable Notes validly tendered
and not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange, as the case may be;
(2) deliver to the Trustee for cancellation all Registrable
Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to
each Holder tendering such Registrable Notes, Exchange Notes or Private
Exchange Notes, as the case may be, equal in principal amount to the
Notes of such Holder so accepted for exchange.
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<PAGE> 9
The Exchange Offer and the Private Exchange shall be subject to the
following conditions: (i) the Exchange Offer or the Private Exchange, as the
case may be, does not violate applicable law or any applicable interpretation of
the staff of the SEC, (ii) no action or proceeding is instituted or threatened
in any court or by any governmental agency which might materially impair the
ability of the Issuers to proceed with the Exchange Offer or the Private
Exchange and no material adverse development has occurred in any existing action
or proceeding with respect to the Issuers and (iii) all governmental approvals
have been obtained, which approvals the Issuers deem necessary for the
consummation of the Exchange Offer or Private Exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that the
Exchange Notes, the Private Exchange Notes and the Notes, if any, will vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes, if any, will have the right to
vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Issuers are not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 150 days of
the Issue Date, (iii) any holder of Private Exchange Notes so requests in
writing to the Issuers within 120 days after the consummation of the Exchange
Offer or (iv) in the case of any Holder that participates in the Exchange Offer,
such Holder does not receive Exchange Notes on the date of the exchange that may
be sold without restriction under state and federal securities laws (other than
due solely to the status of such Holder as an affiliate of any of the Issuers
within the meaning of the Securities Act) and so notifies the Company within 60
days after such Holder first becomes aware of such restrictions and providing a
reasonable basis for its conclusions, in the case of each of clauses (i)-(iv),
then the Issuers shall promptly deliver to the Holders and the Trustee written
notice thereof (the "Shelf Notice") and shall file a Shelf Registration pursuant
to Section 3.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Shelf Registration. The Issuers shall as promptly as reasonably
practicable file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Notes (the "Initial Shelf Registration"). If the Issuers shall not have yet
filed the Exchange Registration Statement, each of the Issuers shall use its
best efforts to file with the SEC the Initial Shelf Registration on or prior to
the Filing Date and shall use its best efforts to cause such Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date. Otherwise, each of the Issuers shall use its best
efforts to file with the SEC the Initial Shelf Registration within 30 days of
the delivery of the Shelf Notice and shall use its best efforts to cause such
Shelf Registration to be declared effective under the Securities Act as promptly
as practicable thereafter. The Initial Shelf Registration shall be on Form S-l
or another appropriate form permitting registration of such Registrable Notes
for resale by Holders in the
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<PAGE> 10
manner or manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other than
the Registrable Notes to be included in any Shelf Registration (as defined
below). The Issuers shall use their best efforts to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date
which is 36 months from the effective date of such Initial Shelf Registration
(subject to extension pursuant to the last paragraph of Section 5 hereof) (the
"Effectiveness Period"), or such shorter period ending when (i) all Registrable
Notes covered by the Initial Shelf Registration have been sold in the manner set
forth and as contemplated in the Initial Shelf Registration or (ii) a Subsequent
Shelf Registration (as defined below) covering all of the Registrable Notes has
been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), each of the Issuers shall use its best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 45 days of such cessation
of effectiveness amend such Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, each of the Issuers shall use its best efforts to cause
the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Subsequent Shelf Registration
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf Registration or any Subsequent Shelf Registrations was previously
continuously effective. As used herein the term "Shelf Registration" means the
Initial Shelf Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly supplement
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Shelf Registration or by any underwriter of such Registrable
Notes.
4. Additional Interest
(a) The Issuers and the Initial Purchaser agree that the Holders of
Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers, jointly and severally, agree to pay, as liquidated damages,
additional interest on the Notes ("Additional Interest") under the circumstances
and to the extent set forth below (each of which shall be given independent
effect):
(i) if the Exchange Registration Statement has not been filed
on or prior to the Filing Date, then commencing on the day after the
Filing Date, Additional Interest shall accrue on the Notes over and
above the stated interest at a rate of 0.50% per annum for the
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<PAGE> 11
first 90 days immediately following the Filing Date, such Additional
Interest rate increasing by an additional 0.50% per annum at the
beginning of each subsequent 90-day period;
(ii) if the Exchange Registration Statement is not declared
effective on or prior to the Effectiveness Date, then commencing on the
day after the Effectiveness Date, Additional Interest shall accrue on
the Notes over and above the stated interest at a rate of 0.50% per
annum for the first 90 days immediately following the day after the
Effectiveness Date, such Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Issuers have not exchanged Exchange Notes for
all Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to the 60th day after the date on which the Exchange
Registration Statement is declared effective or (B) the Initial Shelf
Registration, if required to be filed hereunder, is not declared
effective on or prior to the 150th day after the Issue Date or (C) if
applicable, a Shelf Registration has been declared effective and such
Shelf Registration ceases to be effective at any time during the
Effectiveness Period, then Additional Interest shall accrue on the
Notes over and above the stated interest at a rate of 0.50% per annum
for the first 90 days commencing on the (x) 60th day after the date on
which the Exchange Registration Statement is declared effective, in the
case of (A) or (B) above, or (y) the day such Shelf Registration ceases
to be effective in the case of (C) above, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each
such subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.5% per annum; and provided further, that (1)
upon the filing of the Exchange Registration Statement (in the case of (i)
above), (2) upon the effectiveness of the Exchange Registration Statement (in
the case of (ii) above), or (3) upon the exchange of Exchange Notes for all
Notes tendered (in the case of (iii)(A) above), upon the effectiveness of the
Initial Shelf Registration (in the case of (iii)(B) above) or upon the
effectiveness of a Shelf Registration which had ceased to remain effective (in
the case of (iii)(C) above), Additional Interest on the Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accrue.
(b) The Issuers shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Any amounts of Additional
Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable semi-annually by wire transfer of immediately available funds or by
federal funds check on each regular interest payment date specified in the
Indenture (to the Holders of record on the regular record date therefor
(specified in the Indenture) immediately preceding such dates), commencing with
the first such regular interest payment date occurring after any such Additional
Interest commences to accrue, subject to Section 2.17 of the Indenture with
respect to defaulted interest. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes, multiplied by a fraction, the numerator of which
is the number of days such Additional Interest rate was applicable during such
period (determined on the basis of a 360-day year comprised of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed),
and the denominator of which is 360.
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5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Section 2 or 3 hereof, the Issuers shall effect such registrations to permit the
sale of such securities covered thereby in accordance with the intended method
or methods of disposition thereof, and pursuant thereto and in connection with
any Registration Statement filed by the Issuers hereunder, the Issuers shall:
(a) Prepare and file with the SEC prior to the Filing Date,
the Exchange Registration Statement or if the Exchange Registration
Statement is not filed because of the circumstances contemplated by
Section 2(c)(i), a Shelf Registration as prescribed by Section 2 or 3,
and use their best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided
that, if (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Issuers
shall, if requested, furnish to and afford the Holders of the
Registrable Notes to be registered pursuant to such Shelf Registration
or each such Participating Broker-Dealer, as the case may be, covered
by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in
each case at least five business days prior to such filing). The
Issuers shall not file any such Registration Statement or Prospectus or
any amendments or supplements thereto if the Holders of a majority in
aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the
case may be, their counsel, or the managing underwriters, if any, shall
reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of
the Securities Act and the Exchange Act applicable to it with respect
to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and
with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus. The Company
shall be deemed not to have used its best efforts to keep a
Registration Statement effective during the Applicable Period if it
voluntarily takes any action that would result in selling Holders of
the Registrable Notes covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable
Notes or such Exchange Notes during that period unless such action is
required by applicable law or unless the Company complies with this
Agreement, including, without limitation, the provisions of paragraph
5(k) hereof and the last paragraph of this Section 5.
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<PAGE> 13
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period from whom the Company has
received written notice that it will be a Participating Broker-Dealer
in the Exchange Offer, notify the selling Holders of Registrable Notes,
or each such Participating Broker-Dealer, as the case may be, their
counsel and the managing underwriters, if any, promptly (but in any
event within two business days), and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement
or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be
incorporated by reference and exhibits), (ii) of the issuance by the
SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any
Prospectus or the initiation of any proceedings for that purpose, (iii)
if at any time when a prospectus is required by the Securities Act to
be delivered in connection with sales of the Registrable Notes the
representations and warranties of the Issuers contained in any
agreement (including any underwriting agreement) contemplated by
Section 5(n) hereof cease to be true and correct, (iv) of the receipt
by the Issuers of any notification with respect to the suspension of
the qualification or exemption from qualification of a Registration
Statement or any of the Registrable Notes or the Exchange Notes to be
sold by any Participating Broker-Dealer for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (v) of the happening of any event, the existence of any
condition or any information becoming known that makes any statement
made in such Registration Statement or related Prospect
us or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of
any changes in, or amendments or supplements to, such Registration
Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of any of the Issuers' reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use their best efforts to
prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order
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<PAGE> 14
preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the
Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer, for sale in any jurisdiction, and, if any such order is
issued, to use their best efforts to obtain the withdrawal of any such
order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Notes being
sold in connection with an underwritten offering, (i) promptly as
practicable incorporate in a prospectus supplement or post-effective
amendment such information or revisions to information therein relating
to such underwriters or selling Holders as the managing underwriters,
if any, or such Holders or their counsel reasonably request to be
included or made therein and (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as
practicable after the Issuers have received notification of the matters
to be incorporated in such prospectus supplement or post-effective
amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, furnish to each selling
Holder of Registrable Notes and to each such Participating
Broker-Dealer who so requests and to counsel and each managing
underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, deliver to each selling
Holder of Registrable Notes or each such Participating Broker-Dealer,
as the case may be, their respective counsel, and the underwriters, if
any, without charge, as many copies of the Prospectus and each
amendment or supplement thereto and any documents incorporated
by reference therein as such Persons may reasonably request; and,
subject to the last paragraph of this Section 5, each Issuer hereby
consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each
such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection
with the offering and sale of the Registrable Notes covered by, or the
sale by Participating Broker-Dealers of the Exchange Notes pursuant to,
such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, to use their
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<PAGE> 15
best efforts to register or qualify, and to cooperate with the selling
Holders of Registrable Notes or each such Participating Broker-Dealer,
as the case may be, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Notes or Exchange Notes, as the case may be, for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United
States as any selling Holder, Participating Broker-Dealer, or the
managing underwriter or underwriters, if any, reasonably request in
writing; provided that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Issuers agree to cause their counsel to
perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep
each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Exchange Notes held by Participating Broker-Dealers or the
Registrable Notes covered by the applicable Registration Statement;
provided that none of the Issuers shall be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or
(C) subject itself to taxation in excess of a nominal dollar amount in
any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use their best efforts to cause the Registrable Notes
covered by any Registration Statement to be registered with or approved
by such governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriters, if any, to
consummate the disposition of such Registrable Notes, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case each of the Issuers will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, upon the occurrence of any
event contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly
as practicable prepare and (subject to Section 5(a) hereof) file with
the SEC, at the joint and several expense of each of the Issuers, a
supplement or post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter
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<PAGE> 16
delivered to the purchasers of the Registrable Notes being sold
thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(l) Use their best efforts to cause the Registrable Notes
covered by a Registration Statement to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Registrable Notes covered by such
Registration Statement or the managing underwriter or underwriters, if
any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with printed certificates for the Registrable Notes in a form eligible
for deposit with The Depository Trust Company and (ii) provide a CUSIP
number for the Registrable Notes.
(n) In connection with an underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of debt securities
similar to the Notes and take all such other actions as are reasonably
requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or the disposition of such
Registrable Notes and, in such connection, (i) make such
representations, warranties to, and covenants with, the underwriters,
with respect to the business of the Issuers and their respective
subsidiaries and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein,
in each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and
confirm the same in writing if and when requested; (ii) obtain the
opinion of counsel to the Issuers and updates thereof in form and
substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
debt securities similar to the Notes and such other matters as may be
reasonably requested by underwriters; (iii) obtain "cold comfort"
letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters from the
independent certified public accountants of the Issuers (and, if
necessary, any other independent certified public accountants of any
subsidiary of any of the Issuers or of any business acquired by any of
the Issuers for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed
to each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings of debt securities
similar to the Notes and such other matters as reasonably requested by
the managing underwriter or underwriters; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing
underwriter
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<PAGE> 17
or underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each
closing under such underwriting agreement, or as and to the extent
required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Notes being sold,
or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Registrable Notes,
if any, and any attorney, accountant or other agent retained by any
such selling Holder or each such Participating Broker-Dealer, as the
case may be, or underwriter (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business hours, all
financial and other records and pertinent corporate documents of the
Issuers and their respective subsidiaries (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers,
directors and employees of the Issuers and their respective
subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement. Such Records
shall be kept confidential by each Inspector and shall not be disclosed
by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a material misstatement or omission in
such Registration Statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each selling Holder of such Registrable Notes and each
such Participating Broker-Dealer will be required to agree that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Issuers unless and until
such is made generally available to the public. Each selling Holder of
such Registrable Notes and each such Participating Broker-Dealer will
be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Issuers and allow the Issuers to
undertake appropriate action to prevent disclosure of the Records
deemed confidential at their expense.
(p) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in
Section 2(a), as the case may be, to be qualified under the TIA not
later than the effective date of the Exchange Offer or the first
Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such
indenture and the Holders of the Registrable Notes, to effect such
changes to such indenture as may be required for such indenture to be
so qualified in accordance with the terms of the TIA; and execute, and
use its best efforts to cause such trustee to execute, all documents as
may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to
be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earnings
statements satisfying the provisions of
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<PAGE> 18
Section 11(a) of the Securities Act and Rule 158 thereunder (or any
similar rule promulgated under the Securities Act) no later than 45
days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Registrable Notes are sold to
underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after the
effective date of a Registration Statement, which statements shall
cover said 12-month periods.
(r) Upon consummation of the Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuers, in a form
customary for underwritten transactions, addressed to the Trustee for
the benefit of all Holders of Registrable Notes participating in the
Exchange Offer or the Private Exchange, as the case may be, that the
Exchange Notes or the Private Exchange Notes, as the case may be, and
the related indenture constitute legally valid and binding obligations
of each of the Issuers, enforceable against each of the Issuers in
accordance with their respective terms subject to customary exceptions
and qualifications.
(s) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Issuers (or to such other Person as directed by the Issuers) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Issuers shall mark, or caused to be marked, on such
Registrable Notes that such Registrable Notes are being canceled in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; in no event shall such Registrable Notes be marked as paid
or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and each underwriter, if any, participating
in the disposition of such Registrable Notes and their respective
counsel in connection with any filings required to be made with the
NASD.
(u) Use their best efforts to take all other steps reasonably
necessary to effect the registration of the Registrable Notes covered
by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude from
such registration the Registrable Notes of any seller who fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Issuers all information required to be disclosed in order to
make the information previously furnished to the Issuers by such seller not
materially misleading.
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<PAGE> 19
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Issuers of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by a Registration
Statement and such Participating Broker Dealer will forthwith discontinue
disposition of such Exchange Notes pursuant to any Prospectus and, in each case,
forthwith discontinue dissemination of such Prospectus until such Holder's or
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k), or until it is advised in
writing (the "Advice") by the Issuers that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements thereto
and, if so directed by the Issuers, such Holder or Participating Broker-Dealer,
as the case may be, will deliver to the Issuers all copies, other than permanent
file copies, then in such Holder's or Participating Broker-Dealer's possession,
of the Prospectus covering such Registrable Securities current at the time of
the receipt of such notice. In the event the Issuers shall give any such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Registrable Notes
covered by such Registration Statement or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) or
(y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers, jointly and
severally, whether or not the Exchange Offer or a Shelf Registration is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Registrable Notes or Exchange
Notes and determination of the eligibility of the Registrable Notes or Exchange
Notes for investment under the laws of such jurisdictions (x) where the holders
of Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange
Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriter or
underwriters, if any, or by the Holders of a majority in aggregate principal
amount of the Registrable Notes included in any Registration Statement or by any
Participating Broker-Dealer during the Applicable Period, as the case may be,
(iii) reasonable messenger, telephone and delivery expenses incurred in
connection with the Exchange Registration Statement and any Shelf Registration,
(iv) fees and disbursements of counsel for the Issuers and reasonable fees and
disbursements of special counsel for the sellers of Registrable Notes (subject
to the provisions of Section 6(b)), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
(including, without limitation, the
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expenses of any special audit and "cold comfort" letters required by or incident
to such performance), (vi) rating agency fees, (vii) Securities Act liability
insurance, if the Issuers desire such insurance, (viii) fees and expenses of all
other Persons retained by the Issuers, (ix) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties), (x) the expense
of any annual audit, (xi) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange and (xii)
the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply with this
Agreement.
(b) In connection with any Shelf Registration hereunder, the Issuers,
jointly and severally, shall reimburse the Holders of the Registrable Notes
being registered in such registration for the fees and disbursements, not to
exceed $25,000, of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Registrable Notes to be included in such Shelf Registration and other
out-of-pocket expenses of Holders of Registrable Notes incurred in connection
with the registration and sale of Registrable Notes.
7. Indemnification
(a) Each of the Issuers, jointly and severally, agrees to indemnify and
hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the officers
and directors of each such Person, and each Person, if any, who controls any
such Person within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant"), from and against any and
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other reasonable expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted) caused by,
arising out of or based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (as amended
or supplemented if the Issuers shall have furnished any amendments or
supplements thereto) or caused by, arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Issuers shall have furnished any
amendments or supplements thereto) or caused by, arising out of or based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Issuers
in writing by or on behalf of such Participant expressly for use therein;
provided, however, that the Company will not be liable if such untrue statement
or omission or alleged untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding and any such loss,
liability, claim, damage or expense suffered or incurred by the
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<PAGE> 21
Participants resulted from any action, claim or suit by any Person who purchased
Registrable Notes or Exchange Notes which are the subject thereof from such
Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Notes or Exchange Notes sold to such Person if required by
applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Issuers, their respective directors and officers and each
Person who controls any of the Issuers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Issuers
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in the loss or compromise of any material rights or defenses by
the Indemnifying Person and the Indemnifying Person was not otherwise aware of
such action or claim). In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that, unless there
is a conflict among Indemnified Persons, the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed promptly after receipt of the invoice therefor as
they are incurred. Any such separate firm for the Participants and such control
Persons of Participants shall be designated in writing by Participants who sold
a majority in interest of Registrable Notes sold by all such Participants and
any such separate firm for the Issuers, their directors, their officers
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<PAGE> 22
and such control Persons of the Issuers shall be designated in writing by the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its prior written consent, but if settled with such
consent or if there is a final non-appealable judgment for the plaintiff for
which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, the Indemnifying Person agrees to indemnify any Indemnified Person
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for reasonable fees and expenses actually incurred by counsel as contemplated by
the third sentence of this paragraph, the Indemnifying Person agrees that it
shall be liable for any settlement of any proceeding effected without its prior
written consent if (i) such settlement is entered into more than 30 days after
receipt by such Indemnifying Person of the aforesaid request and (ii) such
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Person is contesting, in good faith, the request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such
settlement (A) includes an unconditional release of such indemnified Person, in
form and substance satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of an Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable (other than by reason of the
exceptions specifically provided therein) to, or insufficient to hold harmless,
an Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering of the Registrable
Notes or Exchange Notes, as the case may be or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the Indemnifying Person or
Persons on the one hand and the Indemnified Person or Persons on the other in
connection with the statements or omissions (or alleged statements or omissions)
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers on the one hand or by the Participants or such other
Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission and any other equitable considerations appropriate
under the circumstances.
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<PAGE> 23
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section
7 will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Each of the Issuers covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
it is not required to file such reports, it will, upon the request of any Holder
of Registrable Notes, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A. Each of the
Issuers further covenants, for so long as any Registrable Notes remain
outstanding, to make available to any Holder or beneficial owner of Registrable
Notes in connection with any sale thereof and any prospective purchaser of such
Registrable Notes from such Holder or beneficial owner, the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
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10. Miscellaneous
(a) No Inconsistent Agreements. None of the Issuers has entered, as of
the date hereof, and none of the Issuers shall enter, after the date of this
Agreement, into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. None of the Issuers
has entered and none of the Issuers will enter into any agreement with respect
to any of its securities which will grant to any Person piggy-back rights with
respect to a Registration Statement.
(b) Adjustments Affecting Registrable Notes. Neither the Company nor
the Subsidiary Guarantors shall, directly or indirectly, take any action with
respect to the Registrable Notes as a class that would adversely affect the
ability of the Holders of Registrable Notes to include such Registrable Notes in
a registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (A) the Holders of not less than a majority in aggregate principal
amount of the then outstanding Registrable Notes and (B) in circumstances that
would adversely affect Participating Broker-Dealers, the Participating
Broker-Dealers holding not less than a majority in aggregate principal amount of
the Exchange Notes held by all Participating Broker-Dealers; provided, however,
that Section 7 and this Section 10(c) may not be amended, modified or
supplemented without the prior written consent of each Holder and each
Participating Broker-Dealer (including any Person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being tendered pursuant to the Exchange Offer or sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Notes may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Notes being tendered or being sold by such Holders
pursuant to such Registration Statement.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the
records of the registrar under the Indenture, with a copy in like
manner to the Initial Purchaser as follows:
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<PAGE> 25
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard - 10th Floor
Los Angeles, California 90025
Facsimile No.: (310) 575-5165
Attention: Corporate Finance Department
with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Facsimile No.: (713) 615-5282
Attention: Michael P. Finch
2. if to the Initial Purchaser, at the address specified
in Section 10(d)(1);
3. if to an Issuer, as follows:
Packaged Ice, Inc.
8572 Katy Freeway, Suite 101
Houston, Texas 77024
Facsimile No.: (713) 464-4681
Attention: President
with copies to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
Facsimile No.: (210) 224-2035
Attention: Alan Schoenbaum
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed, one business day after
being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto
and the Holders; provided, however,
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<PAGE> 26
that this Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a Holder unless such successor or assign holds
Registrable Notes.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Notes Held by the Issuers or Their Affiliates. Whenever the consent
or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuers or their affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(1) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchaser on the
one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
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<PAGE> 27
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PACKAGED ICE, INC.
By: /s/ A. J. LEWIS, JR.
---------------------------------
Name: A. J. Lewis, Jr.
--------------------------------
Title: President
-------------------------------
PACKAGED ICE LEASING, INC.
SOUTHCO ICE, INC.
MISSION PARTY ICE, INC.
SOUTHWEST TEXAS PACKAGED ICE, INC.
SOUTHWESTERN ICE, INC.
GOLDEN EAGLE ICE TEXAS, INC.
PACKAGED ICE SOUTHEAST, INC.
SOUTHERN BOTTLED WATER COMPANY, INC.
REDDY ICE CORPORATION
By: /s/ A. J. LEWIS, JR.
---------------------------------
Name: A. J. Lewis, Jr.
--------------------------------
Title: President
-------------------------------
JEFFERIES & COMPANY, INC.
By: /s/ DAVID J. LOSITO
---------------------------------
Name: David J. Losito
--------------------------------
Title: Managing Director
-------------------------------
<PAGE> 1
EXHIBIT 4.4
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of the 30th day of April, 1998, between Packaged Ice, Inc., a
Texas corporation (the "COMPANY"), and the investors set forth on Schedule I
hereto (each an "INVESTOR" and collectively the "INVESTORS").
W I T N E S S E T H:
WHEREAS to obtain additional equity financing, the Company desires to
issue and sell to the Investors 400,000 shares of its 13% Exchangeable Preferred
Stock, Series A, par value $.01 per share ("13% PREFERRED STOCK"), and warrants
to purchase 975,752 shares of common stock, par value $.01 per share ("COMMON
STOCK") at an exercise price of $.01 per share (the "WARRANTS"), and the
Investors desire to purchase such 13% Preferred Stock and Warrants at the price
and on the terms and subject to the conditions as set forth in this Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained, the
parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SECURITIES
1.1 Issuance and Sale of Securities. At the Closing (as
defined below), subject to the terms and conditions of this Agreement and on the
basis of the representations and warranties set forth herein, the Company agrees
to issue and sell to the Investors, and the Investors agree, severally and not
jointly, to purchase from the Company, 400,000 shares of the 13% Preferred Stock
and the Warrants for an aggregate purchase price of $40,000,000. The 13%
Preferred Stock and the Warrants are sometimes collectively hereinafter referred
to as the "SECURITIES." The respective amounts of the Securities to be so
purchased by the several Investors are set forth opposite their names in
Schedule I hereto and the obligation to purchase such agreement shall be
several.
1.2 Delivery and Payment. At the Closing, the Company will
execute and deliver to the Investors certificates evidencing 400,000 shares of
the 13% Preferred Stock pur chased hereunder and Warrants in the form of Exhibit
A attached hereto, against payment, in immediately available funds, by the
Investors to the Company of $40,000,000 (the "Purchase Price").
<PAGE> 2
1.3 Closing. The consummation of the issuance, sale and
purchase of the Securities shall be effected on April 30, 1998 (the "CLOSING
DATE") at the offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P., 300 Convent,
1500 NationsBank Plaza, San Antonio, Texas commencing at 10:00 a.m. (the
"CLOSING"), respectively, or at such other time or place as the
Company and the Investor shall mutually agree.
1.4 Allocation of Purchase Price. The Purchase Price shall be
allocated among the 13% Preferred Stock and Warrants for all purposes
(including, but not limited to, financial accounting and tax purposes) in
accordance with the allocation schedule set forth on Appendix A hereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors as
follows:
2.1 Organization and Standing of the Company. The Company and
each of its subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation and has all
requisite corporate power and authority to issue the Securities and to own its
properties and assets and to carry on its business as now conducted and as
proposed to be conducted. The Company and each of its subsidiaries is duly
qualified to transact business and is in good standing in all jurisdictions in
which such qualification is required. The copies of the Articles of
Incorporation and Bylaws, each as amended and restated as of the date hereof, of
the Company and each of its subsidiaries delivered to the Investors prior to the
execution of this Agreement are true and complete copies of the duly and legally
adopted Articles of Incorporation and Bylaws, each as amended and restated as of
the date hereof, of the Company and its subsidiaries in effect as of the date of
this Agreement.
2.2 Capitalization of the Company. (a) The authorized capital
stock of the Company consists of 50,000,000 shares of common stock, par value
$.01 per share (the "COMMON STOCK"), of which 5,044,310 shares are issued and
outstanding and of which 298,231 shares are held as treasury stock, and
5,000,000 shares of preferred stock, par value $.01 per share. The Company's
Board of Directors (the "BOARD OF DIRECTORS") has authorized the designation of
2,750,100 shares of preferred stock as follows: 450,000 shares as the Series A
Convertible Preferred Stock (the "SERIES A PREFERRED STOCK"), of which all of
the authorized shares are issued and outstanding; 200,000 shares as the Series B
Convertible Preferred Stock (the "SERIES B PREFERRED STOCK"), of which 124,831
shares are issued and outstanding; 500,000 shares as the 10% Exchangeable
Preferred Stock (the 10% PREFERRED STOCK"), of which 250,000 shares are issued
and outstanding; 100 shares as the Series C Preferred Stock ("SERIES C PREFERRED
STOCK"), of which 100 shares are issued and outstanding; and 800,000 shares as
the 13% Preferred Stock, of which 400,000 shares will be issued and outstanding
upon the Closing; and 800,000 shares as the 13% Exchangeable Preferred Stock
Series B (the 13% SERIES B PREFERRED STOCK") which will be reserved for issues
as Exchange Securities (as defined in the
2
<PAGE> 3
Exchange Offer Registration Rights Agreement). Except as set forth on Section
2.2 of the Disclosure Schedule, attached hereto and incorporated herein by
reference (the "DISCLOSURE SCHEDULE"), at the Closing there will be no other
warrants, options, subscriptions or other rights or preferences (including
conversion or preemptive rights) outstanding to acquire capital stock of the
Company or its subsidiaries, or notes, securities or other instruments
convertible into or ex changeable for capital stock of the Company, nor any
commitments, agreements or understandings by or with the Company with respect to
the issuance thereof, nor any obligation to repurchase or redeem any capital
stock of the Company. Except as set forth on Section 2.2 of the Disclosure
Schedule, no shareholders of the Company have any right to require the
registration of any securities of the Company or to participate in any such
registration. All outstanding securities of the Company have been issued in
compliance with an exemption or exemptions from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT") and from the registration and qualification requirements of all applicable
state securities laws.
(b) Upon issuance, the 13% Preferred Stock shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up or
dissolution of the Company, rank senior to (i) all classes of common stock of
the Company and (ii) each other class of capital stock or series of Preferred
Stock of the Company now existing, including Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and the 10% Preferred
Stock.
2.3 Duly Issued. All of the issued and outstanding shares of
capital stock of the Company have been duly authorized, are validly issued,
fully paid and non-assessable. Upon issuance and delivery to the Investors of
the 13% Preferred Stock against payment of the purchase price therefor pursuant
to this Agreement, such shares will be validly issued, fully paid and
non-assessable, and free and clear of all claims, liens, pledges, options,
charges, security interests, mortgages, deeds of trust, encumbrances or rights
of any third party of any nature whatsoever. The issuance and sale of the 13%
Preferred Stock, the Warrants and the Common Stock to be issued from exercise
of the Warrants pursuant hereto will not give rise to any preemptive rights or
rights of first refusal which have not been duly waived by the holders thereof
and will not violate any laws to which the Company or any of its assets are
subject. The Company will at all times reserve and keep available out of its
authorized but unissued shares of Common Stock such number of shares of Common
Stock issuable upon exercise of the Warrants and such shares of Common Stock,
when issued upon exercise, will be duly authorized, validly issued and
outstanding, fully paid and nonassessable.
2.4 Authorization. This Agreement, the Warrants in the form
attached hereto as Exhibit A, the Exchange Offer Registration Rights Agreement
dated as of the date hereof between the Company and the Investors (the "EXCHANGE
OFFER REGISTRATION RIGHTS AGREEMENT") in the form attached hereto as Exhibit B,
the Registration Rights Agreement dated as of the date hereof between the
Company and the Investors in the form attached hereto as Exhibit C (the
"REGISTRATION RIGHTS AGREEMENT" and together with the Exchange Officer
3
<PAGE> 4
Registration Rights Agreement, the "REGISTRATION RIGHTS AGREEMENTS"), the
Preferred Stock Series Designation Certificate of Resolution of the Company,
providing for the issuance of the 13% Preferred Stock (the "CERTIFICATE OF
RESOLUTION") in the form attached hereto as Exhibit D, and each other agreement
required to be entered into by the Company pursuant to the terms and conditions
hereof, when executed and delivered by the Company, will have been duly
authorized, executed and delivered by and on behalf of the Company, and will
constitute the valid and binding agreements of the Company, enforceable in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally. The Company has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder.
2.5 Subsidiaries. Except as set forth on Section 2.5 of the
Disclosure Schedule, the Company has no subsidiaries and does not, directly or
indirectly, own any interest in any corporation, partnership, firm or other
business entity. The Company is not a participant in any joint venture,
partnership or similar agreement. Section 2.5 of the Disclosure Schedule
accurately sets forth the name of each corporation, partnership, firm or other
business entity in which the Company has an interest, the state of organization,
and the percentage ownership by the Company.
2.6 Financial Position; Absence of Undisclosed Liabilities.
(a) The Company has furnished to the Investors the
financial statements described in Section 2.6 of the Disclosure
Schedule (collectively referred to herein as the "FINANCIAL
STATEMENTS"). The Financial Statements present fairly the financial
position of the Company and its subsidiaries as of such dates,
respectively, all in conformity with generally accepted accounting
principles, consistently applied, following in the case of the
unaudited interim financial statements the Company's normal internal
accounting practices and year end adjustments. Except as set forth in
the Financial Statements or in Section 2.6(a) of the Disclosure
Schedule, neither the Company nor its subsidiaries have any
Liabilities, except for Liabilities which have arisen after February
28, 1998 in the ordinary course of business, consistent with past
practices and none of which individually or in the aggregate have a
material adverse effect on the Company. "LIABILITIES" shall include,
without limitation, any indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility,
whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated or due or
to come due.
(b) Except as set forth on Section 2.6(b) of the
Disclosure Schedule, since February 28, 1998, no event or condition has
occurred, and no event or condition is to the knowledge of the
Company's executive officers threatened which has had a materially
adverse effect, or could reasonably be expected to have a materially
adverse effect, on the Company's or any subsidiary's properties,
assets, or financial position.
4
<PAGE> 5
2.7 Tax Returns. Each of the Company and its subsidiaries has
timely filed all Tax Returns (as defined below), required by law and has paid
all Taxes required to be paid, together with any penalties and interest except
where the failure to pay would not individually or in the aggregate have a
materially adverse effect on the Company. The Tax Returns are true and correct
in all material respects. There is no pending dispute with any taxing authority
relating to any of the Company's or its subsidiaries' Tax Returns except as set
forth in Section 2.7 of the Disclosure Schedule. There is no tax audit of any
Tax Return of the Company or any subsidiaries pending or currently in process.
The Company and its subsidiaries have paid all Taxes and assessments determined
to be owing as a result of any prior audit. The Company has not elected
pursuant to the Internal Revenue Code of 1986, as amended (the "CODE"), to be
treated as an S corporation or a collapsible corporation pursuant to Section
1362(a) or Section 341(f) of the Code, nor has it made other elections that
would have a material adverse effect on the business, properties, prospects or
financial condition of the Company or its subsidiaries. The Company and its
subsidiaries have withheld or collected from each payment made to each
employee, the amount of substantially all Taxes, including, but not limited to,
federal income taxes, Federal Insurance Contribution Act taxes and Federal
Unemployment Tax Act taxes required to be withheld or collected therefrom, and
has paid the same to the proper tax receiving offices or authorized
depositories. For purposes of this Agreement, (i) the term "TAXES" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, occupation, use,
service, service use, license, payroll, franchise, transfer and recording
taxes, fees and charges imposed by the United States or any state, local or
foreign government or subdivision or agency thereof, whether computed on a
separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest, liabilities, additional amounts, penalties and
additions to tax and (ii) the term "TAX RETURN" shall mean any report, return,
information return or other document (including related or supporting
information) filed or required to be filed by the Company or its subsidiaries
with any governmental or regulatory authority or other authority in connection
with the determination, assessment or collection of any Taxes (whether or not
such Taxes are imposed on the Company or its subsidiaries) or the
administration of any law, regulation or administrative requirements relating
to any Taxes, except where the failure to file would not individually or in the
aggregate have a materially adverse effect on the Company.
2.8 Title to Properties. Except as set forth on Section 2.8 of
the Disclosure Schedule, each of the Company and its subsidiaries has good and
marketable title to, and the exclusive use of, all of its tangible properties
and assets, free and clear of all mortgages, liens, claims and encumbrances
except liens that do not materially affect the operation of the business of the
Company.
2.9 ERISA.
(a) The Company and each subsidiary have complied in
all material respects with the Employee Retirement Income Security Act
of 1974, as amended from time to time ("ERISA"), and, where applicable,
the Code, regarding each Plan.
5
<PAGE> 6
(b) Each Plan is, and has been, maintained in
substantial compliance with ERISA and, where applicable, the Code. With
respect to each Plan that is intended to meet the requirements of
Section 401(a) of the Code, the Company has applied for and received a
currently effective determination letter from the Internal Revenue
Service stating that the Plan has met such requirements. "PLAN" shall
mean any employee pension benefit plan, as defined in Section 3(2) of
ERISA, which (i) is currently or hereafter sponsored, maintained or
contributed to by the Company or any subsidiary or an ERISA Affiliate
or (ii) was at any time during the preceding six calendar years,
sponsored, maintained or contributed to, by the Company or any
subsidiary or an ERISA Affiliate.
(c) No act, omission or transaction has occurred that
could result in imposition on the Company or any subsidiary (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant
to section 502(c), (i) or (1) of ERISA or a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty
liability damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan)
or any trust created under any such Plan has been terminated since
September 2, 1974. No liability under Title IV of ERISA has been or is
expected by the Company, any subsidiary or any ERISA Affiliate to be
incurred with respect to any Plan. No ERISA Event with respect to any
Plan has occurred. "ERISA EVENT" shall mean (i) a "Reportable Event"
described in Section 4043 of ERISA and the regulations issued
thereunder, (ii) the withdrawal of the Company, any subsidiary or any
ERISA Affiliate from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, (iii)
the filing of a notice of intent to terminate a Plan or the treatment
of a Plan amendment as a termination under Section 4041 of ERISA, (iv)
the institution of proceedings to terminate a Plan by the PBGC, or (v)
any other event or condition that might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan. "ERISA AFFILIATE" shall mean each
trade or business (whether or not incorporated) which together with the
Company or any subsidiary would be deemed to be a "single employer"
within the meaning of Section 4001(b)(1) of ERISA or subsections (b),
(c), (m) or (o) of section 414 of the Code.
(e) Full payment when due has been made of all
amounts that the Company or any subsidiary is required under the terms
of each Plan or applicable law to have paid as contributions to such
Plan, and no accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists
with respect to any Plan.
(f) The actuarial present value of the benefit
liabilities under each Plan that is subject to Title IV of ERISA does
not, as of the end of the Company's most
6
<PAGE> 7
recently ended fiscal year, exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term
"actuarial present value of the benefit liabilities" shall have the
meaning specified in section 4041 of ERISA.
(g) None of the Company, any subsidiary or any ERISA
Affiliate sponsors, maintains, or contributes to an employee welfare
benefit plan, as defined in section 3(l) of ERISA, including, without
limitation, any such plan maintained to provide benefits to former
employees of such entities, that may not be terminated by the Borrower,
a subsidiary or any ERISA Affiliate in its sole discretion at any time
without any material liability. Furthermore, with respect to each such
employee welfare benefit plan, (i) the plan is, and has been,
maintained in substantial compliance with ERISA and, where applicable,
the Code, (ii) no act, omission or transaction has occurred that could
result in imposition on the Company, any subsidiary or any ERISA
Affiliate (whether directly or indirectly) of (a) either a civil
penalty assessed pursuant to Section 502(c), (i) or, (l) of ERISA or a
tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (b)
breach of fiduciary duty liability damages under Section 409 of ERISA
and (iii) full payment when due has been made of all amounts that the
Company, any subsidiary or any ERISA Affiliate is required under the
terms of each such plan or applicable law to have paid as contributions
to the plan.
(h) None of the Company, any subsidiary or any ERISA
Affiliate sponsors, maintains or contributes to, or has at any time in
the preceding six calendar years sponsored, maintained or contributed
to, any Multiemployer Plan. "MULTIEMPLOYER PLAN" shall mean a Plan
defined as such in Section 3(37) or 4001(a)(3) of ERISA.
(i) None of the Company, any subsidiary or any ERISA
Affiliate is required to provide security under Section 401(a)(29) of
the Code due to a Plan amendment that results in an increase in current
liability for the Plan.
2.10 No Default or Conflict. Neither the Company nor its
subsidiaries is in breach or default of any term or provision of their
respective Articles of Incorporation or bylaws, or any material term or
provision of any mortgage, indenture, instrument, lease, contract, commitment or
other agreement to which the Company or any of its subsidiaries is a party or by
which it is bound, or of any provision of any governmental statute, rule or
regulation applicable to or binding upon the Company or any of its subsidiaries,
except where the failure to be in compliance would not, individually or in the
aggregate, have a material adverse effect on the Company. Neither the execution
and delivery of this Agreement and the other agreements required to be executed
and delivered pursuant to the terms and conditions of this Agreement nor the
consummation of the transactions contemplated thereby will (a) conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, (i) the Articles of Incorporation or bylaws of the Company or any
of its subsidiaries, (ii) any agreement or instrument to which the Company or
any of its subsidiaries is now a party or by which any of
7
<PAGE> 8
them is bound, or (iii) any provision of any judgment, decree, order, statute,
rule or regulation applicable to or binding on the Company or any of its
subsidiaries or (b) result in the creation of any mortgage, pledge, lien,
encumbrance, or charge upon any of the properties or assets of the Company or
any of its subsidiaries. Except as contemplated by Sections 5.8 and 5.10 hereof,
neither the issuance and sale of the Securities, the execution, delivery and
performance by the Company of this Agreement, the Warrants, the Registration
Rights Agreements or the Certificate of Resolution, nor the consummation by the
Company of the transactions contemplated hereby or thereby requires any consent,
approval, authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental body, agency
or official, or any other third party.
2.11 Litigation. Except as set forth in Section 2.11 of the
Disclosure Schedule, there is no litigation or other legal, administrative or
governmental proceeding pending or, to the knowledge of the officers of the
Company, threatened against or relating to the Company, its subsidiaries, or
their respective properties or business, that if determined adversely to the
Company or its subsidiaries may reasonably be expected to have a material
adverse effect on the present or future operations or financial condition of the
Company.
2.12 Court Orders, Decrees, Etc. Except as set forth in
Section 2.12 of the Disclosure Schedule, there is no outstanding order, writ,
injunction or decree of any court, governmental agency or arbitration tribunal
against or adversely affecting the Company, its subsidiaries, or their
respective properties or business.
2.13 Franchises, Permits, and Consents. Each of the Company
and its subsidiaries possesses all material governmental franchises, licenses,
permits, consents, authorizations, exemptions and orders, required by the
Company and its subsidiaries to carry on their businesses as now being
conducted. All material registrations, designations and filings with all
governmental authorities required in the conduct of the businesses of the
Company or its subsidiaries or in connection with the consummation of the
transactions contemplated by this Agreement have been made or obtained.
2.14 Insurance. The Company and its subsidiaries have been and
are insured by financially sound and reputable insurers unaffiliated with the
Company in such amounts and against such risks as are sufficient for compliance
with law and as are adequate in the judgment of the Company to protect the
properties and businesses of the Company.
2.15 Securities Law Compliance. The offer, issuance and sale
of the Securities to be issued hereunder has been made in material compliance
with all applicable federal and state securities laws. Neither the Company nor
anyone acting on its behalf has offered any of the Securities (or similar
securities) for sale to, or solicited offers to buy any of the Securities (or
similar securities) from, any prospective purchaser, so as to make the issuance
and sale of the Securities hereunder subject to the registration requirements of
the Securities Act or applicable state securities laws.
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2.16 Finders' Fees. The Company has incurred no liability for
commissions or other fees to any finder or broker in connection with the
transactions contemplated by this Agreement.
2.17 Intellectual Property. Except as set forth on Section
2.17 of the Disclosure Schedule, to the actual knowledge of the Company's
officers:
(a) Other than as set forth on Schedule 2.17(a), the
Company and its subsidiaries own or have the right to use pursuant to
license, sublicense, public domain, agreement, or permission, without
payment (except where such payment is not material) (i) all inventions
(whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, together with all
reissuances, revisions, extensions, and reexaminations thereof, (ii)
all trademarks, service marks, trade dress, logos, trade names, and
corporate names, including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith,
(iii) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (iv) all mask
works and all applications, registrations and renewals in connection
therewith, (v) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and
marketing plans and proposals), (vi) all other proprietary rights, and
(vii) all copies and tangible embodiments thereof (in whatever form or
radius) (collectively, "INTELLECTUAL PROPERTY"), currently being used
or reasonably anticipated to be used in the operation of the Company's
business, including, without limitation, such Intellectual Property
relating to the Packaged Ice System, and such rights will not cease to
be valid rights of the Company, without payment, by reason of the
execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) None of the Company and its subsidiaries has
knowingly interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
third parties, and none of the Company's officers has ever received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation, including
any claim that any of the Company and its subsidiaries must license or
refrain from using any Intellectual Property rights of any third party.
To the knowledge of any of the officers of the Company and its
subsidiaries, no third party has interfered with, infringed upon, or
misappropriated in any material respect any Intellectual Property
rights of any of the Company or its subsidiaries.
(c) To the knowledge of any of the officers of the
Company and its subsidiaries, none of the Company or its employees,
independent contractors or agents has engaged in any conduct or omitted
to perform any act, the result of which could
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invalidate or adversely affect the validity or enforceability of any of
the Intellectual Property.
(d) Schedule 2.17(d) identifies all United States and
foreign patents, trademarks, service marks, trade names and copyrights,
and all registrations and applications for registration thereof and all
licenses thereof, owned or held by the Company or any of its
subsidiaries on the Closing Date after giving effect to the Acquisition
Transaction, and identifies the jurisdictions in which such
registrations and applications have been filed. Each patent, trademark,
service mark, trade name, copyright and license listed on Schedule
2.17(d) is in full force and effect except to the extent the failure to
be in effect will not and could not reasonably be expected to have a
material adverse effect.
2.18 Environment, Health, and Safety. (a) The Company and its
subsidiaries are in compliance in all material respects with all Environmental
Laws (as defined below) and no civil, criminal or administrative action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
is pending against any of them alleging any failure to so comply. Without
limiting the generality of the preceding sentence, each of the Company and its
subsidiaries has obtained and been in material compliance with all of the terms
and conditions of all material permits, licenses, and other authorizations that
are required under, and has complied, in all material respects, with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in the Environmental
Laws.
(b) No real property or facility now or previously owned, used,
operated, leased, managed or controlled by the Company or its subsidiaries or
any predecessor in interest is listed or proposed for listing on the National
Priorities List or the Comprehensive Environmental Response, Compensation, and
Liability Information System, both promulgated under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or on any comparable state or local list established pursuant to any
environmental law, and neither the Company nor any of its subsidiaries has
received any notification of potential or actual liability or request for
information under CERCLA or any comparable state or local Environmental Law.
(c) Except as disclosed in Section 2.18(c) of the Disclosure Schedule,
there have been no releases (i.e., any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, on site or off site) of any Hazardous Materials
by the Company or its subsidiaries or any predecessor in interest at, on, under,
from or into any facility or real property owned, operated, leased, managed or
controlled by the Company other than releases which have not had a material
adverse effect on the assets, properties, financial condition, operating
results, or business of the Company.
(d) For the purpose of this Agreement, "Environmental Laws" means the
common
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law and all Federal, state, local and foreign laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, now or hereafter in effect, relating to pollution or
protection or human health or the environment, including, without limitation,
laws relating to (i) emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
constituents, substances or wastes, including, without limitation, petroleum,
including crude oil or any fraction thereof, or any petroleum product or other
wastes, chemicals or substances regulated by any Environmental Law (collectively
referred to as "Hazardous Materials"), into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of Hazardous Materials, and
(iii) underground storage tanks, and related piping, and emissions, discharges,
releases or threatened release of Hazardous Materials therefrom.
2.19 Product Liability. Neither the Company nor its
subsidiaries has any liability (and to the actual knowledge of the Company's
officers there is no factual basis for any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by any of the Company and its subsidiaries.
2.20 Conflicts of Interest. Except as disclosed in Section
2.20 of the Disclosure Schedule, no officer, director or shareholder of the
Company or its subsidiaries or any affiliate of any such person has any direct
or indirect interest (a) in any entity that does business with the Company or
its subsidiaries or (b) in any property, asset or right that is used by the
Company or any subsidiary in the conduct of business, or (c) in any contractual
relationship with the Company or any of its subsidiaries other than as an
employee.
2.21 Company Equipment. The Company's ice bagging equipment
manufactured by Lancer Corporation has received approval by the National
Sanitation Foundation. The ice making equipment manufactured by Hoshizaki
America, Inc. has received approval by the National Sanitation Foundation.
2.22 Disclosure. The Company has not knowingly withheld from
the Investors any material facts relating to the assets, business, operations,
financial condition or prospects of the Company or its subsidiaries. The
representations and warranties contained in this Agreement and all other
agreements being entered into in connection with this Agreement do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained herein not
misleading.
2.23 SEC Documents. The Company has provided to the Investors
its Registration Statement on Form S-4 (Registration No. 333-29357) (the
"Registration Statement"), which Registration Statement has been declared
effective by the U.S. Securities and Exchange Commission (the "COMMISSION"), its
Annual Report on Form 10-K for the year ended
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December 31, 1997 ("1997 FORM 10-K", and together with the Registration
Statement, the "SEC DOCUMENTS") and its Offering Circular dated April 23, 1998,
relating to the issuance of $100,000,000 9 3/4% Senior Notes due 2005 (the
"OFFERING CIRCULAR"). As of the date of filing as to the Registration Statement
and as of the date hereof as to the 1997 Form 10-K and the Offering Circular,
and as supplemented by the Disclosure Schedule, the SEC Documents and the
Offering Circular do not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of the Company
included in the SEC Documents and the Offering Circular have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except in
the case of interim period financial information for normal year-end
adjustments). The Company has included in the SEC Documents all material
agreements, contracts and other documents that it reasonably believes are
required to be filed as exhibits to the SEC Documents. As of the date hereof,
and as supplemented by the Disclosure Schedule, to the Company's knowledge, the
Company and its subsidiaries have in all material respects substantially
performed all obligations required to be performed by them and are not in
default in any material respect under any of such agreements, contracts or other
documents to which any of them is a party or by which any of them is otherwise
bound. As of the date hereof, and as supplemented by the Disclosure Schedule, to
the Company's knowledge, all instruments referred to above are in effect and
enforceable according to their respective terms, and there is not under any of
such instruments any existing material default or event of default or event that
with notice or lapse of time or both, would constitute an event of default
thereunder. As of the date hereof, and as supplemented by the Disclosure
Schedule, to the Company's knowledge, all parties having material contractual
arrangements with the Company or any of its subsidiaries are in substantial
compliance therewith and none are in material default in any respect thereunder.
2.24 Labor Relations. There is no strike or other labor
dispute involving the Company or any of its subsidiaries pending or threatened
which could have a material adverse effect on the assets, properties, financial
condition, operating results, or business of the Company.
2.25 Margin Regulations; Use of Proceeds. No part of the
proceeds from the sale of the Securities hereunder will be used, directly or
indirectly, for the purpose of buying or carrying out any Amargin stock" within
the meaning of Regulation G of the Board of Governors of the Federal Reserve
System (12 CFR 207), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 24) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). The assets of the Company
do not include any margin stock, and the Company does not have any present
intention of acquiring any margin stock.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Each Investor severally represents and warrants to the
Company, as follows:
3.1 Authorization. This Agreement has been duly executed and
delivered by the Investor and constitutes the valid and binding agreement of the
Investor enforceable in accordance with its terms, and each other agreement
required to be entered into by the Investor pursuant to the terms and conditions
hereof, when executed and delivered by the Investor will constitute the valid
and binding agreement of the Investor enforceable in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' right generally. The Investor has all
requisite power and authority to enter into this Agreement and to perform its
obligations hereunder.
3.2 Securities Not Registered. The Investor is acquiring the
Securities for investment purposes only, for its own account and not with a view
to, or for resale in connection with, any distribution thereof in violation of
applicable securities laws. The Investor has been advised that the Securities
being purchased and issued hereunder have not been registered under the
Securities Act or applicable state securities laws and that such shares must be
held indefinitely unless the offer and sale thereof are subsequently registered
under the Securities Act or an exemption from such registration is available.
The Investor acknowledges and agrees that the certificates evidencing the
Securities will bear a restrictive legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND THEY
MAY NOT BE OFFERED FOR SALE OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT THEREUNDER OR AN OPINION OF COUNSEL REASON ABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
and that such instruments will bear such restrictive or other legends as are
required by applicable state laws.
3.3 Access to Information. The Company has made available to
the Investor the opportunity to ask questions of and to receive answers from the
Company's officers, directors and other authorized representatives concerning
the Company and its business and prospects.
3.4 Investment Experience. The Investor (i) has such
knowledge, skill and experience in financial, business and investment matters
relating to an investment of this type, that it is capable of evaluating the
merits and risks of the purchase of the Securities, (ii) is a qualified
institutional buyer as defined in Rule 144A of the Securities Act or an
"accredited
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investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D promulgated under the Securities Act, and (iii) has the ability to
bear the risk of losing its entire investment in the Securities.
3.5 Finder's Fees. The Investor has incurred no liability for
commissions or other fees to any finder or broker in connection with the
transactions contemplated by this Agreement.
ARTICLE 4
COVENANTS OF THE COMPANY
The Company covenants and agrees that, unless a written waiver
from a majority in interest of the holders of the 13% Preferred Stock and 13%
Series B Preferred Stock, taken together, in accordance with the provisions of
Section 9.2 of this Agreement is first obtained, from and after the Closing
Date, and so long as any shares of the 13% Preferred Stock, any Notes (as
defined in the Exchange Offer Registration Rights Agreement) or any Exchange
Securities (as defined in the Exchange Offer Registration Rights Agreement) are
outstanding, the Company will fully comply with each of the covenants set forth
in Sections 4.1 through 4.12 of this Article 4:
4.1 Books of Account. The Company will, and will cause each of
its subsidiaries to, keep books of record and account in which full, true and
correct entries are made of all of its and their respective dealings, business
and affairs, in accordance with generally accepted accounting principles. The
Company will employ certified public accountants selected by the Board of
Directors who are "independent" within the meaning of the accounting regulations
of the Commission and who are one of the so-called "Big Six" accounting firms,
and have annual audits made by such independent public accountants in the course
of which such accountants shall make such examinations, in accordance with
generally accepted auditing standards, as will enable them to give such reports
or opinions with respect to the financial statements of the Company and its
subsidiaries as will satisfy the requirements of the Commission in effect at
such time with respect to certificates and opinions of accountants.
4.2 Furnishing of Financial Statements and Information. The
Company will deliver to the Investors:
(a) at the request of an Investor, as soon as
practicable but in any event within 30 days after such request is made,
unaudited consolidated balance sheets of the Company and its
subsidiaries as of the end of such month, together with the related
consolidated statements of operations and cash flow for such month,
setting forth the budgeted figures of such month prepared and submitted
in connection with the Company's annual plan as required under Section
4.3 hereof, all in reasonable detail in a form consistent with prior
periods and certified by an authorized accounting officer of the
Company, subject to year-end adjustments;
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(b) as soon as practicable, but in any event within
90 days after the end of each fiscal year, a consolidated balance sheet
of the Company and its subsidiaries, as of the end of such fiscal year,
together with the related consolidated statements of operations,
shareholders' equity and cash flow for such fiscal year, setting forth
in comparative form figures for the previous fiscal year, all in
reasonable detail and duly certified by the Company's independent
public accountants, which accountants shall have given the Company an
opinion, unqualified as to the scope of the audit, regarding such
statements;
(c) promptly after the submission thereof to the
Company, copies of all reports and recommendations submitted by
independent public accountants in connection with any annual or interim
audit of the accounts of the Company or any of its subsidiaries made by
such accountants;
(d) promptly after transmission thereof, copies of
all reports, proxy statements, registration statements and
notifications filed by it with the Commission pursuant to any act
administered by the Commission or furnished to shareholders of the
Company or to any national securities exchange;
(e) with reasonable promptness, such other financial
data relating to the business, affairs and financial condition of the
Company and any subsidiaries as is available to the Company and as from
time to time an Investor may reasonably request;
(f) promptly following the issuance of any additional
shares of Common Stock or any securities convertible into Common Stock,
or any options, warrants or other rights to purchase additional shares
of Common Stock or convertible securities, written notice of the amount
of securities so issued and the total consideration received therefor;
and
(g) within 10 days after the Company learns in
writing of the commencement or threatened commencement of any material
suit, legal or equitable, or of any material administrative,
arbitration or other proceeding against the Company, any of its
subsidiaries or their respective businesses, assets or properties,
written notice of the nature and extent of such suit or proceeding.
4.3 Preparation and Approval of Budgets. At least one month
prior to the beginning of each fiscal year of the Company, the Company shall
prepare and submit to the Board of Directors, for its review and approval, an
annual plan for such year; that shall include monthly capital and operating
expense budgets, cash flow statements and profit and loss projections itemized
in such detail as the Board of Directors may reasonably request. Each annual
plan shall be modified as often as necessary in the judgment of the Board of
Directors to
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reflect changes required as a result of operating results and the other events
that occur, or may be reasonably expected to occur, during the year covered by
the annual plan and copies of each such modification shall be submitted to the
Board of Directors. The Company will, simultaneously with the submission thereof
to the Board of Directors, deliver a copy of each such annual plan and
modification thereof to the Investors.
4.4 Inspection. At Investor's expense, the Company will permit
the Investors, or any designees thereof, to visit and inspect the properties of
the Company or any of its subsidiaries, including the financial books and
records thereof, and the right to take extracts therefrom, and discuss the
affairs, finances and accounts thereof with the appropriate officers, all at
reasonable times upon reasonable notice, and as often as reasonably may be
requested.
4.5 Voting Rights. (a) Upon the accumulation of accrued and
unpaid cash dividends on the outstanding 13% Preferred Stock after May 1, 2003,
in an amount equal to four full quarterly dividends (whether or not
consecutive), the number of members of the Board of Directors will be
immediately and automatically increased by one unless there is a vacancy on the
Board of Directors, and the holders of a majority of the outstanding shares of
13% Preferred Stock, voting as a separate class, will be entitled to elect one
member to the Board of Directors of the Company.
(b) Upon each accumulation of accrued and unpaid
cash dividends in an amount equal to two full quarterly dividends (whether or
not consecutive) that occurs after the accumulation of accrued and unpaid cash
dividends contemplated in subparagraph (a) hereof, the holders of a majority of
the outstanding shares of 13% Preferred Stock, voting as a separate class, will
be entitled to elect an additional member to the Board of Directors, and the
number of members of the Board of Directors will be immediately and
automatically increased as appropriate.
4.6 Directors' and Shareholders' Meetings. Pursuant to the
terms of the 13% Preferred Stock and Section 4.5 hereof, the Investors shall in
certain circumstances have the right to elect one or more directors of the
Company. In the event that the Investors have elected a director:
(a) The Company shall reimburse the Investors for the
reasonable out-of-pocket expenses incurred by them or directors elected
by them in connection with the attending of meetings by such directors
or carrying out any other duties by such director designees that may be
specified by the Board of Directors; shall pay such director designees
the same director's fees paid to the other non-employee directors of
the Company; shall maintain as part of its Articles of Incorporation or
bylaws a provision for the indemnification of its directors to the full
extent permitted by law, and enter into indemnity agreements reasonably
satisfactory to the Investors.
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(b) In addition, the Company shall notify the
Investors' board designees of all regular meetings and special meetings
of the Board of Directors of the Company at least two business days in
advance of such meetings.
(c) The Company agrees, as a general practice, to
hold a meeting of its Board of Directors at least once every three
months, and during each year to hold its annual meeting of shareholders
within 30 days of delivery of the audited financial statements.
4.7 Use of Proceeds. The Company will use the proceeds of the
investment made by the Investors to complete the acquisition of Reddy Ice
Corporation, a wholly owned subsidiary of Suiza Foods Corporation (the
"Target"), and to pay the costs and expenses related to such acquisition.
4.8 Change of Control, Etc. Upon any event, including but not
limited to the occurrence of a Change of Control or Asset Sale (each as defined
in Section 1.01 of the Indenture (as defined in the Certificate of Resolution)),
requiring the making of an offer to repurchase the 9 3/4% Senior Notes due 2005
of the Company (the "SENIOR NOTES"), then the provisions governing such event,
including but not limited to the Change in Control Offer (set forth in Section
4.16 of the Indenture) and the Asset Proceeds Offer (set forth in Section 4.17
of the Indenture), shall apply to the 13% Preferred Stock and the Company shall
make an offer to repurchase the outstanding shares of 13% Preferred Stock at an
offer price equal to 101% of the aggregate liquidation preference thereof plus
accrued and unpaid dividends thereon to the date of purchase, and within the
time periods and on the other terms and conditions provided for in the Indenture
and such an event shall constitute an Increased Dividend Triggering Event
notwithstanding the provisos set forth in the next two sentences. Provided, that
all of the Company's repurchase obligations under the Indenture and the New
Credit Facility (as defined in the Certificate of Resolution) must be satisfied
prior to the Company making such an offer to repurchase. Provided, further, in
the event of an Asset Sale, the Company's repurchase obligations hereunder will
be subject to all restrictions contained in the Indenture and the New Credit
Facility, and amounts used for such repurchase obligations will be limited to
the Net Cash Proceeds (as defined in Section 1.01 of the Indenture) remaining
after satisfying all repurchase obligations under the Indenture and the New
Credit Facility. In the event of any amendment, modification, supplement or
termination of the Indenture, notwithstanding such amendment, modification,
supplement or termination, this Section 4.8 shall continue to apply as an
obligation of the Company as if the Indenture had not been amended, modified,
supplemented or terminated.
4.9 Other Restrictions. Except as contemplated by the
Certificate of Resolution or as disclosed in Section 4.9 of the Disclosure
Schedule, without the prior approval of the Board of Directors of the Company by
an affirmative vote of at least two-thirds of its members, neither the Company
nor its subsidiaries will do any of the following:
(a) declare or pay any dividend or make any other
distribution on any
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shares of its capital stock other than those payable solely in shares
of Common Stock and other than those payable on the 10% Preferred Stock
(which may only be payable in cash if all dividends payable on the 13%
Preferred Stock have been paid in cash) and 13% Preferred Stock as
provided in Section 4.11 hereof, or purchase, redeem or otherwise
acquire for any consideration, or set aside a sinking fund or other
fund for the redemption or repurchase of any shares of capital stock or
any warrants, rights or options to purchase shares of capital stock
(except that any subsidiary may pay dividends to the Company);
(b) grant to the holders of any securities issued or
to be issued by the Company a "demand" right to register such
securities under the Securities Act;
(c) guarantee, endorse or otherwise be or become
contingently liable, or permit any subsidiary to guarantee, endorse or
otherwise become contingently liable, in connection with obligations in
excess of one million dollars ($1,000,000) in the aggregate, securities
or dividends of any person, firm, association or corporation (other
than the Company and any 100% owned subsidiary), except that the
Company and any subsidiary may endorse negotiable instruments for
collection in the ordinary course of business;
(d) make or permit any subsidiary to make loans or
advances to any person (including without limitation to any officer,
director or shareholder of the Company or any officer or director of
any subsidiary), firm, association or corporation (other than the
Company and any 100% owned subsidiary), except advances to suppliers,
customers and employees made in the ordinary course of business;
(e) make any material change in the nature of its
business as carried on at the date of this Agreement;
(f) organize any subsidiary, joint venture,
partnership, or acquire a business (by asset purchase, stock purchase,
merger or otherwise), or acquire any assets or make any investment (all
of the foregoing being hereinafter referred to as an "Investment"),
except that:
(i) in the case of an Investment that is in
the same line of business as the Company (i.e., the
distribution of packaged ice systems and the sale of bags for
use in such systems or the traditional methods of
manufacturing and distributing ice) or to be used in or in
connection with the Company's business as currently conducted,
the Company and its subsidiaries may make such Investment to
the extent that the total expenditure for such Investment does
not exceed $500,000; and
(ii) in the case of any other Investment,
the Company and its subsidiaries may make such Investment only
to the extent permitted by the
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Indenture, as such agreements are in effect on the date
hereof, without giving effect to any amendment, modification,
or supplement thereto after the date hereof;
(g) mortgage, pledge, or create a security interest
in all or substantially all of the Company's assets as collateral;
(h) become a party to a merger, consolidation or
reorganization with any other Person as a result of which at least 51%
of the voting power of the Company will not be held, directly or
indirectly, by persons or entities who held at least 51% of the voting
power before such merger, consolidation or reorganization, or sell or
otherwise dispose of, or enter into any agreement to sell or otherwise
dispose of, all or substantially all of the assets of the Company to
any other Person. For purposes hereof, "Person" shall mean any
individual, corporation, partnership, venture or proprietorship or
other enterprise or entity; and
(i) sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or purchase any property or asset from,
or enter into any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate
(each of the foregoing, an "AFFILIATE TRANSACTION"), unless such
Affiliate Transaction is made on terms that are no less favorable to
the Company or the relevant subsidiary than those that would have been
obtained in a comparable transaction by the Company or such subsidiary
with an unrelated person. An "AFFILIATE" of the Company or its
subsidiaries shall mean any person directly or indirectly controlling
or controlled by or under direct or indirect common control with the
Company or its subsidiaries.
4.10 Compliance with the Indenture. The Company will comply
with all of the covenants contained in the Indenture, in each case as in effect
on the date hereof and without giving effect to any waiver, consent, approval,
amendment, modification, supplement or termination thereof.
4.11 Additional Preferred Stock Issuances. Except as set forth
in the Certificate of Resolution, the Company shall not issue preferred stock
that ranks senior to or on a parity with the 13% Preferred Stock as to dividend
distributions or distributions upon the liquidation, winding-up or dissolution
of the Company, or that matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the redemption of all of the
13% Preferred Stock.
4.12 No Reissuance or Further Issuance of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and 10% Preferred
Stock. The Company shall not reissue shares of its Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or 10% Preferred Stock
acquired or redeemed by the Company or issue any authorized shares of the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or 10%
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<PAGE> 20
Preferred Stock that have not been issued as of the date hereof; provided, that
the Company may issue shares of such preferred stock as necessary to pay
dividends in kind on such preferred stock issued and outstanding on the date
hereof in accordance with the terms of the respective certificates of resolution
providing for the issuance of such preferred stock.
4.13 Remedies. If an Event of Default (as defined below)
occurs, the Investors shall have the rights, in addition to and not in
abrogation of all other legal rights and remedies available to the Investors
including but not limited to rights granted under Article 7 of this Agreement,
to either (as the Investors may elect) (i) exercise the rights set forth in
Section 4.5 hereof and (ii) unless prohibited by other agreements relating to
the issuance or incurrence of debt existing as of the date hereof, to require
the Company to repurchase all outstanding shares of the 13% Preferred Stock (or
Exchange Notes, if issued) at a repurchase price equal to the aggregate
liquidation preference (or principal amount, as the case may be) thereof plus
accrued and unpaid dividends (or interest, as the case may be) thereon to the
repurchase date. For purposes hereof, an "Event of Default" shall have occurred
if (a) any of the events that constitute an Event of Default as defined in the
Indenture as in effect on the date hereof (without giving effect to any
amendment, modification, supplement or termination thereof) shall have occurred,
(b) if the Company fails to perform or observe any of the covenants set forth in
Sections 4.1 through 4.12 hereof (which failure does not otherwise constitute an
Event of Default under the foregoing clause (a)), which failure continues for a
period of 30 days after the Company receives written notice from the Investors
specifying the failure, or (c) the Company fails to perform all the provisions
set forth in the Certificate of Resolution and such failure continues for a
period of 30 days after the Company receives written notice from the Investors
specifying the failure.
ARTICLE 5
CONDITIONS TO THE OBLIGATIONS OF THE INVESTORS
The obligation of the Investors to purchase and pay for the
Securities to be delivered to them hereunder at Closing is subject to the
fulfillment by the Company, at or before Closing, or the existence or
nonexistence at or before Closing, as the case may be, of the following
conditions:
5.1 Compliance with Representations and Warranties. The
representations and warranties contained in Article 2 hereof shall be true in
all material respects on and as of the Closing Date with the same effect as
though made on and as of such date, and the Company shall have performed and
complied with all agreements and conditions contained herein required to be
performed or complied with by the Company prior to or at the Closing.
5.2 Compliance Certificate. At the Closing, the Company shall
have delivered to the Investors a certificate dated as of the Closing Date,
signed by the Company's President, certifying that the conditions in this
Article 5 required to be fulfilled prior to such Closing have been fulfilled.
20
<PAGE> 21
5.3 Stock Certificates. At the Closing, the Company shall have
delivered to the Investors stock certificates evidencing 400,000 shares of 13%
Preferred Stock.
5.4 Registration Rights Agreements. On the Closing Date, the
Company shall have executed and delivered the Registration Rights Agreements in
the forms of Exhibits B and C attached hereto.
5.5 Warrants. At the Closing, the Company shall have executed
and delivered the Warrants to purchase Common Stock in the form of Exhibit A
attached hereto.
5.6 Opinion of Counsel. On the Closing Date, the Company shall
have delivered to the Investors the opinion of Akin, Gump, Strauss, Hauer &
Feld, L.L.P. dated the Closing Date, substantially in the form of Exhibit E
attached hereto.
5.7 Waivers of Rights of First Refusal. On or before the
Closing Date, the rights of first refusal to purchase all or any part of any
issue of specified securities, which right could include the Securities, granted
by the Company to each of the shareholders set forth in Exhibit F attached
hereto, (the "CONSENTING SHAREHOLDERS"), pursuant to Article 8 of each of
certain stock purchase agreements between the Company and the Consenting
Shareholders shall have been waived by the Consenting Shareholders in accordance
with the waiver provisions set forth in the agreements granting such rights of
first refusal.
5.8 Series A Preferred Stock, Series B Preferred Stock, Series
C Stock and 10% Preferred Consents. On or before the Closing Date, the holders
of the outstanding shares of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the 10% Preferred Stock set
forth on Exhibit F attached hereto, each voting as a separate class, by
unanimous written consent or the affirmative vote given in writing or by vote at
a meeting, shall have approved the issuance of the 13% Preferred Stock and all
of its terms.
5.9 Target Acquisition Agreement. The Company, the Target,
Suiza Foods Corporation and any other appropriate parties shall have executed a
definitive acquisition agreement (the "ACQUISITION AGREEMENT") and other related
documentation relating to the acquisition of Target by the Company (the "TARGET
ACQUISITION") substantially in the form of the March 26, 1997 draft thereof
provided to Investors, and the Company shall not have waived, or materially
modified or amended any of the conditions contained in Section 9.1 of the
Acquisition Agreement.
5.10 Consummation of Target Acquisition. The consummation of
the Target Acquisition shall occur concurrently with the Closing.
5.11 Senior Notes. The Company shall have issued, or shall
issue concurrently with the Closing, in addition to the $145,000,000 aggregate
principal amount of Senior Notes issued under the Indenture on January 22, 1998,
not less than $100 million of Senior Notes under the Indenture.
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<PAGE> 22
5.12 Credit Facilities. The Company shall have entered into
the New Credit Facility with Antares Leveraged Capital Corp. in a form
reasonably satisfactory to Investor.
5.14 No Default. No Event of Default shall have occurred or be
continuing under the Indenture, and no default shall have occurred or be
continuing under any material agreement of the Company of the Company or its
subsidiaries to the extent that such default would be expected to have a
materially adverse effect on the Company or its subsidiaries.
5.15 Parallel Exit Agreement. On the Closing Date, James F.
Stuart, A.J. Lewis III, and the Investors shall have entered into the Parallel
Exit Agreement in the form attached hereto as Exhibit G.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to issue and sell the Securities
to the Investor hereunder at the Closing is subject to the fulfillment by the
Investors, at or before the Closing, of the following conditions:
6.1 Compliance with Representations and Warranties. The
representations and warranties of the Investors contained in Article 3 hereof
shall be true on and as of the Closing Date with the same effect as though made
on that date.
6.2 Performance. The Investors shall have delivered the
Purchase Price to the Company, and shall have performed and complied with all of
its covenants hereunder through the Closing Date.
ARTICLE 7
INDEMNIFICATION
The Company shall, regardless of the validity of the claim
asserted, indemnify, defend and hold harmless each Investor and its respective
Affiliates, employees, officers, directors, trustees, agents, attorneys,
consultants and any other person or entity acting for or at the direction of the
Investor (each an "INVESTOR INDEMNIFIED PARTY"), to the fullest extent lawful,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable costs of preparation and reasonable
attorneys' fees) and expenses, including expenses of any investigation, lawsuit
or legal or administrative action or proceeding (collectively "LOSSES") incurred
by any Investor Indemnified Party, arising out of or in connection with any
allegation or allegations which, if proven, could constitute a breach of any
22
<PAGE> 23
representation, warranty, covenant or agreement of the Company in this Agreement
or in any other agreement entered into pursuant to the terms and conditions of
this Agreement. The Company agrees promptly to reimburse any Investor
Indemnified Party for all such Losses as they are reasonably incurred and
disclosed to the Company in writing by such Investor Indemnified Party within
ten (10) days of receipt of written notice. The obligations of the Company to
each Investor Indemnified Party hereunder shall be separate obligations, and the
liability of the Company to any other Investor Indemnified Party hereunder shall
not be extinguished solely because any other Investor Indemnified Party is not
entitled to indemnity hereunder.
Each Investor shall, regardless of the validity of the claim
asserted, indemnify, defend and hold harmless the Company and its Affiliates,
employees, officers, directors, trustees, agents, attorneys, consultants and any
other person or entity acting for or at the direction of the Company (each a
"COMPANY INDEMNIFIED PARTY"), to the fullest extent lawful, from and against any
and all Losses incurred by any Company Indemnified Party, arising out of or in
connection with any allegation or allegations which, if proven, could constitute
a breach of any representation, warranty, covenant or agreement of such Investor
in this Agreement or in any other agreement entered into pursuant to the terms
and conditions of this Agreement. The indemnifying Investor agrees promptly to
reimburse any Company Indemnified Party for all such Losses as they are
reasonably incurred and disclosed to the Company in writing by such Company
Indemnified Party within ten (10) days of receipt of written notice. The
obligations of the indemnifying Investor to each Company Indemnified Party
hereunder shall be separate obligations, and the liability of the indemnifying
Investor to any other Company Indemnified Party hereunder shall not be
extinguished solely because any other Investor Indemnified Party is not entitled
to indemnity hereunder.
If any proceeding shall be brought or asserted against any
Investor Indemnified Party or Company Indemnified Party (hereinafter sometimes
each referred to as an "INDEMNIFIED PARTY") in respect of which indemnity may be
sought from an Investor or the Company (hereafter sometimes referred to as an
"INDEMNIFYING PARTY") hereunder, such Indemnified Party promptly shall notify
the Indemnifying Party in writing, and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel satisfactory to the
Indemnified Party and the payment of all reasonable fees and expenses incurred
in connection with the defense thereof; provided, however, that the failure of
the Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations pursuant to this Agreement except to the extent that
such failure shall have materially and adversely prejudiced the Indemnifying
Party.
Any such Indemnified Party shall have the right to employ
separate counsel in any such action, claim or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed to pay such fees and expenses; or (2) the Indemnifying Party shall
have failed (within a reasonable period of time) to employ counsel reasonably
satisfactory to such Indemnified Party in any such action, claim or proceeding;
or (3) the named parties to
23
<PAGE> 24
any such action, claim or proceeding (including any impleaded parties other than
parties impleaded by an Indemnified Party for the principal purpose of creating
a conflict of interest) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised in writing by its
counsel that a conflict of interest would exist if counsel employed by the
Indemnifying Party represents such Indemnified Party and the Indemnifying Party
(and in the case of (1), (2) or (3), if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party), it being understood, however, that the Indemnifying
Party shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such Indemnified Parties,
which firm shall be designated in writing by such Indemnified Parties. The
Indemnifying Party shall have the right to employ separate counsel in, and to
participate in the defense of, any action or proceeding with respect to which
they have no right to assume the defense, but the fees and expenses of such
counsel shall be at the expense of the Indemnifying Party. No Indemnified Party
will be subject to any liability for any settlement made without its consent.
The Indemnifying Party shall not consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release, in form and
substance reasonably satisfactory to the Indemnified Party, from all liability
in respect of such action, claim or proceeding. All fees and expenses of the
Indemnified Party (including reasonable attorneys' fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
action or proceeding) shall be paid to the Indemnified Party, as incurred, upon
written notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder).
If the indemnification provided for herein is unavailable to
any Indemnified Party in respect of any Losses, then the Indemnifying Party, in
lieu of indemnifying the Indemnified Party, shall contribute to the amount paid
or payable by the Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party, on the one hand, and the Indemnified Party, on the other, in connection
with the actions, statements or omissions which resulted in such Losses, as well
as any other relevant equitable considerations. The relative fault of the
Indemnifying Party, on the one hand, and the Indemnified Party, on the other,
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been taken by, or
relates to information supplied by, either the Indemnifying Party or the
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
24
<PAGE> 25
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this section were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The obligations of the Indemnifying Party hereunder shall
survive the payment or prepayment of the 13% Preferred Stock, at maturity, upon
redemption or otherwise, any transfer of the Securities by Investor, and any
termination of this Agreement.
ARTICLE 8
RIGHT TO PURCHASE ADDITIONAL SECURITIES
8.1 First Refusal Rights. Subject to the terms and conditions
of this Article 8, the Company hereby grants to each Investor (referred to
hereinafter in this Article collectively as the "OFFEREES") a right of first
refusal to purchase its Pro Rata Share (as defined below) of any issue of New
Securities (as defined below) that the Company (or any subsidiary whose capital
stock will not be wholly owned, directly or indirectly, by the Company upon
completion of any such issuance) may from time to time after the Closing propose
to issue.
8.2 New Securities. "NEW SECURITIES" shall mean any capital
stock, any rights, options or warrants to purchase or subscribe for capital
stock, and any securities or other instruments of any type whatsoever that are,
or may become, convertible into or exchangeable for capital stock, which are
issued for cash; provided, however, that "New Securities" shall not include: (i)
securities offered and sold by the Company pursuant to a Public Offering (as
hereinafter defined); (ii) shares of the Company's Common Stock (or related
options or rights) issued to the Company's employees and directors pursuant to a
plan adopted by the Board of Directors; (iii) Common Stock issued by the Company
upon the conversion of the Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock of the Company; and (iv) shares of the Company's
capital stock issued in connection with any existing warrant, option or right
listed on the Disclosure Schedule, stock split or stock dividend by the Company.
8.3 Notice and Allocation Periods. For purposes of this
Section 8.3, each Investor shall be deemed to own the number of shares of Common
Stock theretofore issued upon exercise of its respective Warrants plus the
number of shares of Common Stock then underlying such Warrants. If the Company
or, when applicable, its subsidiary, proposes to undertake a bona fide issuance
of New Securities, then it shall give the Offerees written notice of its
intention, describing the type of New Securities, the price, the number of
shares to be offered, and the general terms upon which such securities are
proposed to be offered. Offerees shall be given at least 20 days' prior written
notice within which to agree to purchase all or any part of its Pro Rata
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<PAGE> 26
Share (as hereinafter defined) of such issuance of New Securities for the price
and upon the general terms specified in said notice by giving written notice to
the issuer within such period and stating therein the quantity of New Securities
to be purchased by it. "PRO RATA SHARE" shall mean, with respect to each
Offeree, that portion of the number of shares of New Securities proposed to be
issued that equals the proportion that (a) the number of shares of Common Stock
held by the Offeree immediately prior to the proposed issuance, plus the number
of shares of Common Stock that would then be issuable to the Offeree assuming
that all securities of the Company convertible into or exchangeable for Common
Stock held by the Offeree had been converted or exchanged, bears to (b) the
total number of shares of Common Stock issued and outstanding immediately prior
to the proposed issuance, assuming that all securities of the Company
convertible into or exchangeable for Common Stock had been converted or
exchanged.
8.4 Right of Company to Sell New Securities. If the Offerees
fail to exercise in full their rights of first refusal within the applicable
period set forth above, then the Company or, when applicable, its subsidiary
shall have 120 days thereafter to sell the New Securities respecting that the
rights set forth herein were not exercised at a price and upon general terms no
more favorable to the purchaser thereof than specified in the notice to the
Offerees. If such New Securities have not been sold within such 120-day period,
then the Company or, when applicable, its subsidiary shall not thereafter issue
or sell any New Securities without first offering them to the Offerees in the
manner provided above.
8.5 Public Offering. Reference to the term "PUBLIC OFFERING"
in this Agreement shall mean a bona fide firm commitment underwritten public
offering of shares of the Company's Common Stock made through a nationally
recognized underwriting firm pursuant to an effective registration statement
under the Securities Act, which results in gross proceeds to the Company of not
less than $20,000,000.
8.6 Termination. This Article 8 shall continue in effect from
the date of this Agreement until the Company has completed a Public Offering.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices, requests, demands and other
communications hereunder, and each other agreement to be entered into pursuant
to the terms and conditions of this Agreement, shall be in writing and shall be
delivered by hand, overnight courier, facsimile transmission, or by United
States Mail, and shall be deemed to have been duly given when actually received,
or when mailed, first class postage prepaid, certified mail, return receipt
requested, to the addresses set forth below, or to such other address as may be
designated hereafter by prior written notice from the recipient to the sender:
26
<PAGE> 27
If to the Company: Packaged Ice, Inc.
Attention: Chief Executive Officer
8572 Katy Freeway, Suite 101
Houston, Texas 77024
With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Attention: Alan Schoenbaum
1500 NationsBank Plaza
300 Convent
San Antonio, Texas 78205
Facsimile: (210) 224-2035
If to the Investors: Ares Management, L.P.
Attn: David Sachs
1999 Avenue of the Stars
Suite 1900
Los Angeles, California 90067
Facsimile: (310) 201-4170
With a copy to: Morgan, Lewis & Bockius LLP
Attn: Peter P. Wallace, Esq.
300 S. Grand Avenue
22nd Floor
Los Angeles, CA 90071
Facsimile: (213) 612-2554
AND
S.V. Capital Partners, L.P.
Attn: Rod Sands
5121 Broadway
San Antonio, TX 78209
With a copy to: Fulbright & Jaworski LLP
Attn: Daryl L. Lansdale, Jr.
300 Convent Street
Suite 2200
Dallas, TX 78205
Facsimile: (210) 270-7205
9.2 Modification and Waiver.
(a) No amendment, modification or waiver to this
Agreement shall be made without the written approval of the Company and
Investors owning more than an
27
<PAGE> 28
aggregate of 50% of the issued and outstanding 13% Preferred Stock and
13% Series B Preferred Stock. Notwithstanding the foregoing, any
amendment to this Agreement that (i) creates any additional affirmative
obligations to be complied with by any or all of the holders of 13%
Preferred Stock or 13% Series B Preferred Stock, (ii) grants to any one
or more holders of 13% Preferred Stock or 13% Series B Preferred Stock
any rights more favorable than any rights granted to all other
similarly situated holders of 13% Preferred Stock or 13% Preferred
Stock, or (iii) otherwise treats any one or more holders of 13%
Preferred Stock or 13% Preferred Stock differently than all other
similarly situated holders of 13% Preferred Stock or 13% Preferred
Stock, must be approved by each Investor so as to be effective against
such Investor.
(b) Approval, waiver and consent by the Investors
hereunder shall be in writing and shall be delivered to the Company in
the manner provided for in Section 9.1 herein.
9.3 Conflicts. If there shall be any conflict between any
provision of this Agreement and any provision of the other agreements required
to be entered into pursuant to the terms and conditions of this Agreement, the
conflicting provision of such other agreements shall control.
9.4 Gender. Whenever herein, and in each other agreement
required to be entered into pursuant to the terms and conditions of this
Agreement, the singular number is used, the same shall include the plural, and
the masculine gender shall include the feminine and neuter genders, and vice
versa, as the context may require.
9.5 Headings. The headings contained in this Agreement, and in
each other agreement required to be entered into pursuant to the terms and
conditions of this Agreement, are for reference purposes only and shall not in
any way affect their meaning or interpretation.
9.6 Counterparts. This Agreement, and each other agreement
required to be entered into pursuant to the terms and conditions of this
Agreement, may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
9.7 Parties in Interest. This Agreement, and each other
agreement required to be entered into pursuant to the terms and conditions of
this Agreement, shall, except as may otherwise be specifically provided to the
contrary therein, inure to the benefit of and be binding upon each of the
parties hereto and thereto, as the case may be, and their respective heirs,
executors, legal representatives, successors and assigns.
9.8 Survival. All covenants, agreements, representations and
warranties made herein, and in each other agreement required to be entered into
pursuant to the terms and conditions of this Agreement, or otherwise in writing
in connection therewith, shall survive the execution and delivery thereof and
the consummation of the transactions contemplated thereby.
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<PAGE> 29
9.9 Entire Agreement. This Agreement, and each other agreement
required to be entered into pursuant to the terms and conditions of this
Agreement, embody the entire agreement and understanding between the parties
thereto, and supersede all prior agreements and understandings, written and
oral, relating to the subject matter thereof, including, without limitation, all
letter of intent and summary term sheets heretofore executed or examined by the
parties.
9.10 Governing Law. THIS AGREEMENT AND EACH OTHER AGREEMENT
REQUIRED TO BE ENTERED INTO PURSUANT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, SHALL, EXCEPT AS MAY OTHERWISE BE SPECIFICALLY PROVIDED TO THE
CONTRARY THEREIN, BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
9.11 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, including, without limitation
any claim for violation of securities laws, shall be settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, in Los Angeles, California and judgment upon the award
reentered by the arbitrator may be entered in any court having jurisdiction
thereof, and shall not be appealable.
9.12 Expenses and Attorneys' Fees. The Company shall pay the
expenses, including without limitation attorneys' fees, that are incurred by
Investors with respect to the negotiation, execution, closing, delivery and
performance of this Agreement, and each other agreement required to be entered
into pursuant to the terms and conditions of this Agreement.
9.13 Language. The language used in this Agreement, and the
other agreements required to be entered into pursuant to the terms and
conditions of this Agreement, shall be deemed to be language chosen by the
parties thereto to express their mutual intent, and no rule of strict
construction against any party shall apply to any term or condition thereof.
9.14 Severability. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid, illegal, or unenforceable provision had
never been contained herein.
9.15 Waiver. No waiver by any party of the performance of any
provision, condition or requirement herein shall be deemed to be a waiver of, or
in any manner release the other party from, performance of any other provision,
condition or requirement herein; nor deemed to be a waiver of, or in any manner
release the other party from future performance of the same provision, condition
or requirement; nor shall any delay or omission by any party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter.
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<PAGE> 30
9.16 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties and shall inure to the benefit of the
holders of the 13% Preferred Stock and any successor holders of shares of 13%
Preferred Stock as if such shares had been issued pursuant to this Agreement,
including without limitation the provisions of Article 4 hereof. Nothing
contained in this Agreement shall be construed to give any person other than the
Company and the Investors, their successors and assigns, any legal or equitable
right, remedy or claim under or with respect to this Agreement.
30
<PAGE> 31
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
PACKAGED ICE, INC.
By:
------------------------------
Name:
Title:
(INVESTOR SIGNATURE PAGES FOLLOW)
<PAGE> 32
INVESTOR:
ARES LEVERAGED INVESTMENT FUND, L.P.
By: ARES MANAGEMENT, L.P.,
its General Partner
By:
-------------------------------
Name:
Title:
<PAGE> 33
INVESTOR:
S.V. CAPITAL PARTNERS, L.P.
By: S.V. Capital Management, Inc.
its General Partner
By:
---------------------------------
Name:
Title:
<PAGE> 34
EXHIBIT A Warrants
EXHIBIT B Registration Rights Agreement
EXHIBIT C Registration Rights Agreement
EXHIBIT D Certificate of Resolution
EXHIBIT E Opinion of Akin, Gump
EXHIBIT F Consenting Shareholders (attached)
EXHIBIT G Parallel Exit Agreement
<PAGE> 35
EXHIBIT E
<TABLE>
<CAPTION>
===================================================================================================
CONSENTING SHAREHOLDERS' SHAREHOLDING
NAMES AND ADDRESSES
- ---------------------------------------------------------------------------------------------------
<S> <C>
Norwest Equity Partners V, 378,000 shares of Common Stock
a Minnesota Limited Partnership 405,000 shares of Series A Preferred Stock
2800 Piper Jaffray Tower 37,449 shares of Series B Preferred Stock
222 South Ninth St.
Minneapolis, MN 55402-3388
- ---------------------------------------------------------------------------------------------------
Food Fund II Limited Partnership 42,000 shares of Common Stock
5720 Smetana Drive, Suite 300 45,000 shares of Series A Preferred Stock
Minnetonka, MN 55343 4,161 shares of Series B Preferred Stock
- ---------------------------------------------------------------------------------------------------
Steven Rosenberg 355,202 shares of Common Stock
c/o Nutricept, Inc. 83,221 shares of Series B Preferred Stock
11220 Grader Street, Suite 100
Dallas, TX 75248
- ---------------------------------------------------------------------------------------------------
Erica Jesselson, Lucy Lang, Claire 50,000 shares of Common Stock
Strauss, Michael G. Jesselson,
Benjamin J. Jesselson Trustees
UID 12/18/80 FBO Michael G.
Jesselson
1301 Avenue of the Americas
Suite 4101
New York, NY 10019
- ---------------------------------------------------------------------------------------------------
Erica Jesselson, Lucy Lang, Claire 50,000 shares of Common Stock
Strauss, Michael G. Jesselson,
Benjamin J. Jesselson Trustees
UID 12/18/80 FBO Grandchildren
1301 Avenue of the Americas
Suite 4101
New York, NY 10019
- ---------------------------------------------------------------------------------------------------
J. Brad Fillmore 10,000 shares of Common Stock
ABS Plaza
16855 Northchase Drive
Houston, TX 77060-6008
- ---------------------------------------------------------------------------------------------------
Lancer Corporation 63,705 shares of Common Stock
235 W. Turbo
San Antonio, TX 78216
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
====================================================================================
CONSENTING SHAREHOLDERS' SHAREHOLDING
NAMES AND ADDRESSES
- ------------------------------------------------------------------------------------
<S> <C>
Southwest Texas Equipment
Distributors, Inc.
Attention: Jack Lewis III, President
1120 E. Durango 25,000 shares of Common Stock
San Antonio, TX 78210
- ------------------------------------------------------------------------------------
Jeff Hinson 5,000 shares of Common Stock
Heftel Broadcasting Corp.
100 Crescent Court, Suite 1777
Dallas, TX 75201
- ------------------------------------------------------------------------------------
Alexander Cunningham Lasater 5,000 shares of Common Stock
Grupo Commercial Santa Fe
Diego de Almagro # 105 Pte.
Col. Mirasierra
San Pedro Garza Garcia,
N.L. C.P. 66240
====================================================================================
</TABLE>
<PAGE> 37
Schedule I
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Number of Shares of Percentage of
13% Preferred Stock Warrants to be
Investor to be Purchased Purchased
- -------------------------------------------------------------------------------
<S> <C> <C>
Ares Leveraged Investment Fund, L.P. 325,000 81.25%
- -------------------------------------------------------------------------------
S.V. Capital Partners, L.P. 75,000 18.75%
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 38
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
THE COMPANY:
PACKAGE ICE, INC.
By: /s/ JAMES F. STUART
------------------------------------
Name: James F. Stuart
Title: C.E.O.
(INVESTOR SIGNATURE PAGES FOLLOW)
[Securities Purchase Agreement]
<PAGE> 39
INVESTOR:
ARES LEVERAGED INVESTMENT FUND, L.P.
By: ARES MANAGEMENT, L.P.,
its General Partner
By: /s/ DAVID A. SACHS
-------------------------------
Name:
Title:
[Securities Purchase Agreement]
<PAGE> 40
INVESTOR:
S.V. CAPITAL PARTNERS, L.P.
By: S.V. Capital Management, Inc.
its General Partner
By: /s/ R.J. SANDS
---------------------------------
Name: R.J. Sands
Title: Managing Director
[Securities Purchase Agreement]
<PAGE> 41
APPENDIX A
ALLOCATION SCHEDULE
The Purchase Price is allocated between the Preferred Stock and the
Warrants as follows:
400,000 shares of 13% Preferred Stock $35,121,240
Warrants to purchase 975,752 Stock Units $ 4,878,760
<PAGE> 1
EXHIBIT 4.5
NO. OF STOCK UNITS: 792,799 WARRANT NO. AR-1
COPY
WARRANT
TO PURCHASE COMMON STOCK OF
PACKAGED ICE, INC.,
A TEXAS CORPORATION,
THIS IS TO CERTIFY THAT the Ares Leveraged Investment Fund, L.P., or
registered assigns, is entitled to purchase from Packaged Ice, Inc. a Texas
corporation (hereinbelow called the "Issuer"), at any time on and after the
Vesting Date (as defined below), but not later than the Expiration Date (as
defined below), 792,799 Stock Units, in whole or in part, at a purchase price of
$.01 per Stock Unit (adjusted as provided below), all on the terms and
conditions hereinbelow provided.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED TRANSACTION DOES NOT
REQUIRE REGISTRATION OR QUALIFICATION UNDER FEDERAL OR STATE SECURITIES LAWS, OR
UNLESS THE PROPOSED TRANSACTION IS REGISTERED OR QUALIFIED AS REQUIRED.
Section 1. Certain Definitions. As used in this Warrant, unless the
context otherwise requires:
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common
Stock issued by the Issuer after the date hereof, other than (i) the Warrant
Stock, and (ii) Common Stock issued or issuable pursuant to the options,
warrants, convertible securities or other securities listed on Annex I.
"AFFILIATE" shall mean, with respect to a specified Person, any other
Person directly or indirectly controlling or controlled by or under common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"APPRAISED VALUE" shall mean the fair market value of a share of
Common Stock, as determined by a written appraisal (the "APPRAISAL") prepared by
an appraiser acceptable to the Issuer and the holders of Warrants evidencing 50%
in number of the total number of Stock Units at the time purchasable upon the
exercise of all then outstanding Warrants, using one or more valuation methods
that such appraiser, in its best professional judgement, determines to be most
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appropriate and giving effect to any discount (i) for any lack of liquidity of
any shares being valued, (ii) because such shares represent a minority interest
or (iii) because the Issuer does not have any class of equity security
registered under the Exchange Act. In the event that the Issuer and said holders
cannot, in good faith, agree upon an appraiser, then the Issuer, on the one
hand, and said holders, on the other hand, shall each select an appraiser, the
two appraisers so selected shall select a third appraiser who shall be directed
to prepare the Appraisal and the term Appraised Value shall mean the appraised
value set forth in the Appraisal prepared in accordance with this definition.
The Issuer shall pay for the cost of any such Appraisal. The Appraisal process
shall take no longer than 60 days.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or a
legal holiday in the state of California.
"COMMON STOCK" shall mean the Common Stock of the Issuer, $.01 par
value per share and any capital stock of any class of the Issuer hereafter
authorized which is not limited to a fixed sum or percentage of par value in
respect of the rights of the holders thereof to participate in dividends or in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Issuer.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other similar or successor agency of the United States government administering
the Securities Act.
"CONVERTIBLE SECURITIES" shall mean any securities convertible into or
exchangeable for Additional Shares of Common Stock, either immediately or upon
the arrival of a specified date or the happening of a specified event.
"CURRENT MARKET PRICE" per share of Common Stock for the purposes of
any provision of this Warrant at the date herein specified, shall be deemed to
be the price determined pursuant to the first applicable of the following
methods:
(i) If the Common Stock is traded on a national securities
exchange or is traded in the over-the-counter market, the Current Market Price
per share of Common Stock shall be deemed to be the daily market price on the
Trading Day immediately prior to such date. The market price for such Trading
Day shall be (a) if the Common Stock is traded on a national securities
exchange, its last sale price on the preceding Trading Day on such national
securities exchange or, if there was no sale on that day, the last reported sale
price on such national exchange on the next preceding Trading Day on which there
was a sale, or (b) if the principal market for the Common Stock is the
over-the-counter market, and the Common Stock is quoted on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ"), the
last sale price reported on NASDAQ on the preceding Trading Day or, if the
Common Stock is an issue for which last sale prices are not reported on NASDAQ,
the closing bid quotation on such day, but, in each of the next preceding two
cases, if the relevant NASDAQ price or quotation did not exist on such day, then
the price or quotation on the next preceding Trading Day in which there was such
a price or quotation.
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<PAGE> 3
(ii) If the Current Market Price per share of Common Stock
cannot be ascertained by any of the methods set forth in paragraph (i)
immediately above, the Current Market Price per share of outstanding Common
Stock shall be deemed to be the value most recently determined as of a date
within the six months preceding such day by the Issuer's Board of Directors;
provided, that if such determination is objected to by the holders of Warrants
evidencing a majority in number of the total number of Stock Units at the time
purchasable upon the exercise of all the then outstanding Warrants, such
determination shall be made by an independent appraiser chosen in the manner
specified in the definition of Appraised Value, at the holders' expense.
"CURRENT WARRANT PRICE" per share of Common Stock, for the purpose of
any provision of this Warrant at the date herein specified, shall mean the
amount equal to the quotient resulting from dividing the Exercise Price in
effect on such date by the number of shares (including any fractional share) of
Common Stock constituting a Stock Unit on such date.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and any similar or successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"EXERCISE PRICE" shall mean the purchase price per Stock Unit as set
forth on the first page of this Warrant on the date of original issue of this
Warrant and thereafter shall mean such dollar amount as shall result from the
adjustments specified in Section 5, if any.
"EXPIRATION DATE" shall mean the earlier to occur of (i) 5:00 p.m. Los
Angeles time on May 1, 2005 or (ii) the 10th business day following the closing
of the Issuer's initial public offering of its Common Stock].
"INDENTURE" shall mean the Indenture dated January 22, 1998, relating
to $145,000,000 of 9 3/4 Senior Notes due 2005 of the Issuer, as amended and
restated as of April 30, 1998.
"IPO PRICE" shall initially mean $20.00; provided, however, whenever
the number of shares of Common Stock constituting a Stock Unit shall be adjusted
under this Agreement, the IPO Price shall be adjusted by multiplying such IPO
Price in effect immediately prior to such adjustment by a fraction, the
numerator of which shall be the number of shares of Common Stock constituting a
Stock Unit immediately prior to such adjustment, and the denominator of which
shall be the number of shares of Common Stock constituting a Stock Unit
immediately after such adjustment.
"PERSON" shall mean a corporation, an association, a trust, a
partnership, a joint venture, an organization, a business, an individual, a
government or political subdivision thereof or a governmental body.
"PREFERRED STOCK" shall mean any stock of the Issuer of any class
which is preferred as to dividends or assets, or both, over any other class of
stock of the Issuer.
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<PAGE> 4
"RESTRICTED CERTIFICATE" shall mean a certificate for Common Stock or a
Warrant bearing the restrictive legend set forth in Section 11.
"RESTRICTED SECURITIES" shall mean Restricted Stock and Restricted
Warrants.
"RESTRICTED STOCK" shall mean Warrant Stock evidenced by a Restricted
Certificate.
"RESTRICTED WARRANT" shall mean a Warrant evidenced by a Restricted
Certificate.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SECURITIES PURCHASE AGREEMENT" shall mean the securities purchase
agreement dated as of April 30, 1998, between Issuer and the Investors named
therein.
"STOCK UNIT" shall constitute one share of Common Stock, as such Common
Stock was constituted on the date of original issue of this Warrant and
thereafter shall constitute such number of shares (including any fractional
shares) of Common Stock as shall result from the adjustments specified in
Section 5, if any.
"TRADING DAY" shall mean any day on which trading occurs on the New
York Stock Exchange.
"VESTING DATE" shall mean the earlier to occur of (i) a Change of
Control (as defined in the Indenture), (ii) an Asset Sale (as defined in the
Indenture), (iii) an Event of Default under the Securities Purchase Agreement,
(iv) the Issuer consolidates or merges with another entity or agrees to do the
foregoing, (v) the Issuer defaults under any material debt or other agreement,
(vii) an initial public offering of Issuer's Common Stock or a resolution by
Issuer's Board of Directors authorizing the foregoing, or (viii) on May 1, 2003.
"WARRANT STOCK" shall mean the shares of Common Stock purchasable by
the holder of a Warrant upon the exercise of such Warrant.
"WARRANTS" shall mean this Warrant and any other Warrant (as such term
is defined in the Securities Purchase Agreement), and all additional or new
warrants issued upon transfer, division or combination of, or in substitution
for, any thereof. All such additional or new warrants shall at all times be
identical as to terms and conditions and date, except as to the number of Stock
Units for which they may be exercised.
Section 2. Representations and Warranties. All representations and
warranties contained in Section 2 of the Securities Purchase Agreement are
incorporated herein by reference.
Section 3. Exercise of Warrant. The holder of this Warrant may, at any
time on and after
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<PAGE> 5
the Vesting Date, but not later than the Expiration Date, exercise this Warrant
in whole at any time or in part from time to time for the number of Stock Units
which such holder is then entitled to purchase hereunder.
The holder of this Warrant may exercise this Warrant, in whole or in
part by either of the following methods:
(a) The holder hereof may deliver to the Issuer at its office
maintained for such purpose pursuant to Section 17 (i) a written notice of such
holder's election to exercise this Warrant, which notice shall specify the
number of Stock Units to be purchased, (ii) this Warrant and (iii) a sum equal
to the Exercise Price therefor payable in immediately available funds or by such
other method as the Issuer and the holder may otherwise agree; or
(b) The holder of this Warrant may also exercise this Warrant,
in whole or in part, in a "cashless" or "net-issue" exercise by either of the
following methods:
(i) delivering to the Issuer at its office maintained
for such purpose pursuant to Section 17, (A) a
written notice of such holder's election to exercise
this Warrant, which notice shall specify the number
of Stock Units to be delivered to such holder and the
number of Stock Units with respect to which this
Warrant is being surrendered in payment of the
aggregate Exercise Price for the Stock Units to be
delivered to the holder, and (B) the Warrant. For
purposes of this provision, all Stock Units as to
which the Warrant is surrendered will be attributed a
value equal to the product of (x) the Current Market
Price per share of Common Stock minus the Current
Warrant Price per share of Common Stock and (y) the
number of shares of Common Stock then constituting a
Stock Unit. If the determination of Current Market
Price per share of Common Stock is to be made for a
"cashless" or Anet issue" exercise in connection with
an initial public offering of Common Stock, the
Current Market Price per share of Common Stock shall
equal the offering price without deductions for any
compensation, discounts or expenses paid or incurred
by the Issuer in connection with such offering; or
(ii) delivering to the Issuer at its office
maintained for such purpose pursuant to Section 17,
(A) a written notice of such holder's election to
exercise this Warrant, which notice shall specify the
number of Stock Units to be delivered to such holder
and the number of shares of 13% Exchangeable
Preferred Stock of the Issuer (the "13% Preferred
Stock") which are being surrendered in payment of the
aggregate Exercise Price for the Stock Units to be
delivered to the holder, and (B) the Warrant. For
purposes of this provision, each share of 13%
Preferred Stock being surrendered will be attributed
a value equal to (x) the aggregate liquidation
preference amount of all outstanding shares of 13%
Preferred Stock and all
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dividends accrued and payable in respect to the 13%
Preferred Stock divided by the number of outstanding
shares of 13% Preferred Stock minus (y) the Current
Warrant Price per share of Common Stock multiplied by
the number of shares of Common Stock then
constituting a Stock Unit.
Any notice of exercise given pursuant to this Section 3 may be in the
form of Subscription set out at the end of this Warrant. Upon delivery thereof,
the Issuer shall cause to be executed and delivered to such holder within five
Business Days a certificate or certificates representing the aggregate number of
fully-paid and nonassessable shares of Common Stock issuable upon such exercise.
The stock certificate or certificates for Warrant Stock so delivered
shall be in such denominations as may be specified in said notice and shall be
registered in the name of such holder or such other name or names as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other Person so designated to be named
therein shall be deemed to have become a holder of record of such shares,
including to the extent permitted by law the right to vote such shares or to
consent or to receive notice as a stockholder, as of the time said notice is
delivered to the Issuer as aforesaid. If this Warrant shall have been exercised
only in part, the Issuer shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant dated the date it is issued,
evidencing the rights of such holder to purchase the remaining Stock Units
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of such holder, appropriate
notation may be made on this Warrant and the Warrant shall be returned to such
holder.
Except as otherwise provided in Section 9 hereof, the Issuer shall pay
all expenses, transfer taxes and other charges payable in connection with the
preparation, issue and delivery of stock certificates under this Section 3,
except that, if such stock certificates shall be registered in a name or names
other than the name of the holder of this Warrant, funds sufficient to pay all
stock transfer taxes which shall be payable upon the issuance of such stock
certificate or certificates shall be paid by the holder hereof at the time of
delivering the notice of exercise mentioned above.
All shares of Common Stock issuable upon the exercise of this Warrant
shall be validly issued, fully paid and nonassessable and free from all liens
and other encumbrances thereon, other than liens or other encumbrances created
by the holder hereof.
The Issuer will not close its books against the transfer of this
Warrant or of any share of Warrant Stock in any manner which interferes with the
timely exercise of this Warrant. The Issuer will from time to time take all such
action as may be necessary to assure that the par value per share of the
unissued Common Stock acquirable upon exercise of this Warrant is at all times
equal to or less than the Current Warrant Price then in effect.
In lieu of delivering any certificates for fractional shares of stock
upon any exercise of this Warrant, the Issuer shall pay cash to the holder
thereof in an amount equal to the Current Market Price of such fractional share
on the date of exercise.
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Section 4. Transfer, Division and Combination. Subject to Section 11,
this Warrant is, and all rights hereunder are, transferable, in whole or in
part, on the books of the Issuer to be maintained for such purpose, upon
surrender of this Warrant at the office of the Issuer maintained for such
purpose pursuant to Section 17, together with a written assignment of this
Warrant duly executed by the holder hereof or its agent or attorney and payment
of funds sufficient to pay any stock transfer taxes payable upon the making of
such transfer. Upon such surrender and, if required, payment, the Issuer shall,
subject to Section 11, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees and in the denominations specified in such
instrument of assignment, and this Warrant shall promptly be canceled. If and
when this Warrant is assigned in blank (if the restrictions on transferability
in Section 11 shall have been terminated), the Issuer may (but shall not be
obliged to) treat the bearer hereof as the absolute owner of this Warrant for
all purposes and the Issuer shall not be affected by any notice to the contrary.
This Warrant, if properly assigned in compliance with this Section 4 and Section
11, may be exercised by an assignee for the purchase of shares of Common Stock
without having a new Warrant issued.
This Warrant may, subject to Section 11, be divided or combined with
other Warrants upon presentation at the aforesaid office of the Issuer, together
with a written notice specifying the names and denominations in which new
Warrants are to be issued, signed by the holder hereof or its agent or attorney.
Subject to compliance with the preceding paragraph and with Section 11, as to
any transfer which may be involved in such division or combination, the Issuer
shall execute and deliver a new Warrant or Warrants in exchange for the Warrant
or Warrants to be divided or combined in accordance with such notice.
The Issuer shall pay all expenses, taxes (other than stock transfer
taxes) and other charges incurred by the Issuer in the performance of its
obligations in connection with the preparation, issue and delivery of Warrants
under this Section 4.
The Issuer agrees to maintain at its aforesaid office books for the
registration and transfer of the Warrants.
Section 5. Adjustment of Stock Unit or Exercise Price. The number of
shares of Common Stock constituting a Stock Unit, or the price at which a Stock
Unit may be purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 5.
(a) Stock Dividends, Subdivisions and Combinations. If at any time or
from time to time the Issuer shall:
(1) entitle the holders of its Common Stock to receive a
dividend payable in, or other distribution of, Common Stock,
or
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(2) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(3) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the number of shares of Common Stock constituting a Stock Unit immediately
after the happening of any such event shall be adjusted so as to consist of the
number of shares of Common Stock which a record holder of the number of shares
of Common Stock constituting a Stock Unit immediately prior to the happening of
such event would own or be entitled to receive after the happening of such
event.
(b) Certain Other Dividends and Distributions. If at any time or from
time to time the Issuer shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive any dividend or other distribution
of:
(1) cash (other than a cash distribution made as a dividend
and payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Issuer); provided,
however, Issuer agree that, prior to the Expiration Date, cash
dividends or other cash distributions may be made only to the
extent that the aggregate of all such dividends paid or
declared after the date hereof does not exceed the sum of (a)
20% of the consolidated net income of the Issuer earned
subsequent to the date hereof determined in accordance with
generally accepted accounting principles consistently applied
(or if the consolidated net income shall be a deficit, minus
100% of such deficit incurred after the date hereof), plus (b)
100% of the aggregate net cash received as a contribution to
capital or as proceeds of the issue or sale after the date
hereof of capital stock of the Issuer (other than the issue or
sale of any (i) redeemable stock or (ii) capital stock of the
Issuer to any subsidiary of the Issuer) or any indebtedness or
other securities of the Issuer convertible into or exercisable
for capital stock (other than redeemable capital stock) of the
Issuer which has been converted or exercised, as the case may
be; or
(2) any evidence of its indebtedness (other than Convertible
Securities), any shares of its stock (other than Additional
Shares of Common Stock) or any other securities or property of
any nature whatsoever (other than cash and other than
Convertible Securities or Additional Shares of Common Stock);
or
(3) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness (other than Convertible
Securities), any shares of its stock (other than Additional
Shares of Common Stock) or any other securities or property of
any nature whatsoever (other than cash and other than
Convertible Securities or Additional Shares of Common Stock);
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then the number of shares of Common Stock thereafter constituting a Stock Unit
shall be adjusted to that number determined by multiplying the number of shares
of Common Stock constituting a Stock Unit immediately prior to such adjustment
by a fraction (i) the numerator of which shall be the Current Market Price per
share of Common Stock at the date of taking such record, and (ii) the
denominator of which shall be such Current Market Price per share minus the
portion applicable to one share of Common Stock of any such cash so
distributable and of the fair value of any and all such evidences of
indebtedness, shares of stock, other securities or property, or warrants or
other subscription or purchase rights, so distributable. Such fair value shall
be determined in good faith by the Board of Directors of the Issuer, provided
that if such determination is objected to by the holders of Warrants entitled to
purchase a majority of the Stock Units covered thereby, such determination shall
be made by an independent appraiser chosen in the manner specified in the
definition of Appraised Value, at the Issuer's expense. A reclassification of
the Common Stock into shares of Common Stock and shares of any other class of
stock shall be deemed a distribution by the Issuer to the holders of its Common
Stock of such shares of such other class of stock within the meaning of this
Subsection and, if the outstanding shares of Common Stock shall be changed into
a larger or smaller number of shares of Common Stock as a part of such
reclassification, shall be deemed a subdivision or combination, as the case may
be, of the outstanding shares of Common Stock within the meaning of Subsection
(a) of this Section 5.
(c) Issuance of Additional Shares of Common Stock. If at any time or
from time to time the Issuer shall (except as hereinafter provided) issue,
whether in connection with the merger of a corporation into the Issuer or
otherwise, any Additional Shares of Common Stock for a consideration per share
less than the greater of the Current Warrant Price or the Current Market Price,
then the number of shares of Common Stock thereafter constituting a Stock Unit
shall be adjusted to be that number determined by multiplying the number of
shares of Common Stock constituting a Stock Unit immediately prior to such
adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock then outstanding plus the number of such Additional
Shares of Common Stock so issued, and (y) the denominator of which shall be the
number of shares of Common Stock then outstanding plus the number of shares of
Common Stock which the aggregate consideration for the total number of such
Additional Shares of Common Stock would purchase at the greater of the Current
Warrant Price or the Current Market Price. For purposes of this Subsection (c),
the date as of which the Current Market Price shall be computed shall be the
earlier of (i) the date on which the Issuer shall enter into a firm contract for
the issuance of such Additional Shares of Common Stock (or, if such contract
specifies that the price will be determined as of a later date, then such later
date shall be used for purposes of this clause (i)), or (ii) the date of actual
issuance of such Additional Shares of Common Stock. The provisions of this
Subsection (c) shall not apply to any issuance of Additional Shares of Common
Stock for which an adjustment is provided under Subsection (a) of this Section
5. No adjustment of the number of shares of Common Stock constituting a Stock
Unit shall be made under this Subsection (c) upon the issuance of any Additional
Shares of Common Stock which are issued pursuant to the exercise of any options,
warrants or other subscription or purchase rights or pursuant to the exercise of
any conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such options,
warrants or other rights or upon the issuance of such Convertible Securities (or
upon the issuance of any option, warrant or other right therefor) pursuant to
Subsection (d) or (e) of this Section 5.
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(d) Issuance of Warrants, Options or Other Rights. If at any time or
from time to time the Issuer shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a distribution of, or shall
otherwise issue, any warrants, options or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities and
the consideration per share for which Additional Shares of Common Stock may at
any time thereafter be issuable pursuant to such warrants, options or other
rights or pursuant to the terms of such Convertible Securities shall be less
than the greater of the Current Warrant Price or the Current Market Price, then
the number of shares of Common Stock thereafter constituting a Stock Unit shall
be adjusted as provided in Subsection (c) of this Section 5 on the basis that
(i) the maximum number of Additional Shares of Common Stock issuable pursuant to
all such warrants, options or other rights or necessary to effect the conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued as of the date specified in the last sentence of this Subsection, (ii)
the aggregate consideration for such maximum number of Additional Shares of
Common Stock shall be deemed to be the minimum consideration received and
receivable by the Issuer for the issuance of such Additional Shares of Common
Stock pursuant to such warrants, options or other rights or pursuant to the
terms of such Convertible Securities and (iii) the consideration per share
received by the Issuer for such Additional Shares of Common Stock shall be that
number determined by dividing (a) the aggregate consideration for such maximum
number of Additional Shares of Common Stock (determined as set forth in clause
(ii) of this sentence) by (b) the maximum number of Additional Shares of Common
Stock issuable pursuant to all such warrants, options or other rights or
necessary to effect the conversion or exchange of all such Convertible
Securities (determined as set forth in clause (i) of this sentence).
For purposes of this Subsection, the computation date for subclause (i)
above and as of which the Current Market Price shall be computed shall be the
earliest of (x) the date on which the Issuer shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any such
warrants, options or other rights, (y) the date on which the Issuer shall
enter into a firm contract (or, if such contract specifies that the price will
be determined as of a later date, then such later date shall be used for
purposes of this clause (y)) for the issuance of such warrants, options or other
rights, and (z) the date of actual issuance of such warrants, options or other
rights.
(e) Issuance of Convertible Securities. If at any time or from time to
time the Issuer shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a distribution of, or shall otherwise
issue, any Convertible Securities and the consideration per share for which
Additional Shares of Common Stock may at any time thereafter be issuable
pursuant to the terms of such Convertible Securities shall be less than the
greater of the Current Warrant Price or the Current Market Price, then the
number of shares of Common Stock thereafter constituting a Stock Unit shall be
adjusted as provided in Subsection (c) of this Section 5 on the basis that (i)
the maximum number of Additional Shares of Common Stock necessary to effect the
conversion
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or exchange of all such Convertible Securities shall be deemed to have been
issued as of the computation date specified below in this Subsection, (ii) the
aggregate consideration for such maximum number of Additional Shares of Common
Stock shall be deemed to be the minimum consideration received and receivable by
the Issuer for the issuance of such Additional Shares of Common Stock pursuant
to the terms of such Convertible Securities and (iii) the consideration per
share received by the Issuer for such Additional Shares of Common Stock shall be
that number determined by dividing (a) the aggregate consideration for such
maximum number of Additional Shares of Common Stock (determined as set forth in
clause (ii) of this sentence) by (b) the maximum number of Additional Shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities (determined as set forth in clause (i) of this sentence).
For purposes of this Subsection, the computation date for clause (i)
above and as of which the Current Market Price shall be computed shall be the
earliest of (x) the date on which the Issuer shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any such
Convertible Securities, (y) the date on which the Issuer shall enter into a firm
contract for the issuance of such Convertible Securities (or, if such contract
specifies that the price will be determined as of a later date, then such later
date shall be used for purposes of this clause (y)), and (z) the date of actual
issuance of such Convertible Securities. No adjustment of the number of shares
of Common Stock constituting a Stock Unit shall be made under this Subsection
upon the issuance of any Convertible Securities which are issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Subsection (d) of this Section 5.
(f) Other Provisions Applicable to Adjustments Under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock constituting a Stock Unit hereinbefore provided
for in this Section 5:
(1) Treasury Stock. The sale or other disposition of any
issued shares of Common Stock owned or held by or for the
account of the Issuer shall be deemed an issuance thereof for
purposes of this Section 5.
(2) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible
Securities or any warrants, options or other rights to
subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for a cash
consideration, the consideration received by the Issuer
therefor shall be deemed to be the amount of cash received by
the Issuer therefor, or, if such Additional Shares of Common
Stock or Convertible Securities are offered by the Issuer for
subscription, the subscription price, or, if such Additional
Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a
subscription offering, the initial public offering price, in
any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends and without deduction of
any
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<PAGE> 12
compensation, discounts or expenses paid or incurred by the
Issuer for and in the underwriting of, or otherwise in
connection with, the issue thereof. To the extent that such
issuance shall be for a consideration other than solely for
cash, then, except as herein otherwise expressly provided, the
amount of such consideration shall be deemed to be the fair
value of such consideration at the time of such issuance as
determined in good faith by the Board of Directors of the
Issuer. If such determination is objected to by the holders of
Warrants evidencing a majority in number of the total number
of Stock Units at the time purchasable upon the exercise of
all then outstanding Warrants, such determination shall be
made by an independent appraiser chosen in the manner
specified in the definition of Appraised Value, with all
appraisal expenses to be borne one-half by the Issuer and
one-half by the holders requesting such appraisal. The
consideration for any Additional Shares of Common Stock
issuable pursuant to any warrants, options or other rights to
subscribe for or purchase the same shall be the consideration
received or receivable by the Issuer for issuing such
warrants, options or other rights, plus the additional
consideration payable to the Issuer upon the exercise of such
warrants, options or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the
terms of any Convertible Securities shall be the consideration
received or receivable by the Issuer for issuing any warrants,
options or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable
to the Issuer in respect of the subscription for or purchase
of such Convertible Securities, plus the additional
consideration, if any, payable to the Issuer upon the exercise
of the right of conversion or exchange in such Convertible
Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in
payment or satisfaction of any dividend upon any class of
stock other than Common Stock, the Issuer shall be deemed to
have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of
such dividend so paid or satisfied.
(3) When Adjustments to Be Made. The adjustments required by
the preceding Subsections of this Section 5 shall be made
whenever and as often as any specified event requiring an
adjustment shall occur, except that no such adjustment shall
be made except pursuant to Subsection (a) of this Section 5 if
it would decrease the number of shares of Common Stock
constituting a Stock Unit immediately prior to such
adjustment. For the purpose of any adjustment, any specified
event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(4) Fractional Interests. In computing adjustments under this
Section 5, fractional interests in Common Stock shall be taken
into account to the nearest one-thousandth of a share.
(5) When Adjustment Not Required. If the Issuer shall take a
record of the holders of its Common Stock for the purpose of
entitling them to receive a
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<PAGE> 13
dividend or distribution or subscription or purchase rights
and shall thereafter and before the distribution thereof to
shareholders abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then thereafter
no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled.
(6) Superseding Adjustments. If, at any time after any
adjustment of the number of shares constituting a Stock Unit
shall have been made pursuant to the foregoing Subsection (d)
or (e) of this Section 5 on the basis of the issuance of
warrants, options or other rights or the issuance of other
Convertible Securities, or after any new adjustment of the
number of shares constituting a Stock Unit shall have been
made pursuant to this Subsection,
(a) such warrants, options or other rights or the
right of conversion or exchange in such other
Convertible Securities shall expire, and a portion of
such warrants, options or other rights, or the right
of conversion or exchange in respect of a portion of
such other Convertible Securities, as the case may
be, shall not have been exercised, or
(b) the consideration per share, for which Additional
Shares of Common Stock are issuable pursuant to such
warrants, options or other rights or the terms of
such other Convertible Securities, shall be increased
solely by virtue of provisions therein contained for
an automatic increase in such consideration per share
upon the arrival of a specified date or the happening
of a specified event,
such previous adjustment shall be rescinded and annulled and
the Additional Shares of Common Stock which were deemed to
have been issued by virtue of the computation made in
connection with the adjustment so rescinded and annulled shall
no longer be deemed to have been issued by virtue of such
computation. Thereupon, a recomputation shall be made of the
effect of such warrants, options or other rights or other
Convertible Securities on the basis of:
(c) treating the number of Additional Shares of
Common Stock, if any, theretofore actually issued or
issuable pursuant to the previous exercise of such
warrants, options or other rights or such right of
conversion or exchange, as having been issued on the
date or dates of such issuance as determined for
purposes of such previous adjustment and for the
consideration actually received and receivable
therefor, and
(d) treating any such warrants, options or other
rights or any such other Convertible Securities which
then remain outstanding as having been granted or
issued immediately after the time of such increase of
the consideration per share for such Additional
Shares of Common Stock which are issuable under such
warrants, options or other rights or other
Convertible Securities,
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<PAGE> 14
and, if and to the extent called for by the foregoing
provisions of this Section 5 on the basis aforesaid, a new
adjustment of the number of shares constituting a Stock Unit
shall be made, which new adjustment shall supersede the
previous adjustment so rescinded and annulled.
(g) Merger, Consolidation or Disposition of Assets. The Issuer shall
provide each holder of a Warrant with timely notice of i) the merger or
consolidation of the Issuer into another corporation or the Issuer's agreement
to do the foregoing or ii) an Asset Sale (as defined in the Indenture) and the
occurrence of any such event shall be the Vesting Date of the Warrants (if they
have not previously vested) and the holders shall have the right to exercise the
Warrants in accordance with Section 3 hereof.
(h) Other Action Affecting Nonpreferred Stock. In case any time or from
time to time the Issuer shall take any action affecting its Common Stock, other
than an action described in any of the foregoing Subsections (a) to (g),
inclusive, of this Section 5, then the number of shares of Common Stock or other
stock constituting a Stock Unit, or the purchase price thereof, shall be
adjusted in such manner and at such time as the Board of Directors of the Issuer
may in good faith determine to be equitable in the circumstances.
Section 6. Notice to Warrant Holders.
(a) Notice of Adjustment of Stock Unit or Exercise Price. Whenever the
number of shares of Common Stock constituting a Stock Unit, or the price at
which a Stock Unit may be purchased upon exercise of the Warrants, shall be
adjusted pursuant to Section 5, the Issuer shall forthwith obtain a certificate
signed by the chief financial officer of the Issuer, setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated "including a statement of the fair value, as
determined by the Board of Directors of the Issuer or by appraisal (if
applicable), of any evidences of indebtedness, shares of stock, other
securities or property or warrants or other subscription or purchase rights
referred to in Section 5(b), Section 5(f)(2) or Section 5(g) and specifying the
number of shares of Common Stock constituting a Stock Unit, and (if such
adjustment was made pursuant to Section 5(g) or Section 5(h)) describing the
number and kind of any other shares of stock constituting a Stock Unit, and any
change in the Exercise Price thereof, after giving effect to such adjustment or
change. The Issuer shall promptly, and in any case within three Business Days
after the making of such adjustment, cause a signed copy of such certificate to
be delivered to each holder of a Warrant. The Issuer shall keep at its office
or agency, maintained for the purpose pursuant to Section 18, copies of all
such certificates and cause the same to be available for inspection at said
office during normal business hours by any holder of a Warrant or any
prospective purchaser of a Warrant designated by a holder thereof.
(b) Notice of Certain Corporate Action. In case the Issuer shall
propose (a) to pay any dividend payable in stock of any class to the holders of
its Common Stock or to make any other
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<PAGE> 15
distribution to the holders of its Common Stock (other than a cash dividend), or
(b) to offer to the holders of its Common Stock rights to subscribe for or to
purchase any Additional Shares of Common Stock or shares of stock of any class
or any other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision, or combination, of outstanding shares of Common Stock), or
(d) to effect any capital reorganization, or (e) to effect any consolidation,
merger or sale, organic change, transfer or other disposition of all or
substantially all of its property, assets or business, or (f) to effect the
liquidation, dissolution or winding up of the Issuer, then in each such case,
the Issuer shall give to each holder of a Warrant, in accordance with Section
18, a notice of such proposed action, which shall specify the date on which a
record is to be taken for the purposes of such stock dividend, distribution or
rights, or the date on which such reclassification, reorganization,
consolidation, merger, sale, organic change, transfer, disposition, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, and
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action on the Common Stock and the
number and kind of any other shares of stock which will comprise a Stock Unit,
and the purchase price or prices thereof, after giving effect to any adjustment
which will be required as a result of such action. Such notice shall be so given
in the case of any action covered by clause (a) or (b) above at least twenty
days prior to the record date for determining-holders of the Common Stock for
purposes of such action, and in the case of any other such action, at least
twenty days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of Common Stock, whichever shall be the
earlier.
Section 7. Reservation and Authorization of Common Stock; Registration
with or Approval of any Governmental Authority. The Issuer shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of all outstanding Warrants. The Issuer will not
amend its articles of incorporation in any respect relating to the Common Stock
other than to increase or decrease the number of shares of authorized capital
stock (subject to the provisions of the preceding sentence) or to decrease the
par value of any shares of Common Stock. All shares of Common Stock that shall
be issued upon exercise of any Warrant and payment of the exercise price
thereof to the Issuer, shall be duly and validly issued and fully-paid and
nonassessable.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price per share of Common Stock below the then par value, if
any, of the shares of Common Stock issuable upon exercise of the Warrants, the
Issuer shall take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Issuer may validly and legally issue fully-paid
and nonassessable shares of Common Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock constituting a Stock Unit or in the Current
Warrant Price per share of Common Stock, the Issuer shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
15
<PAGE> 16
If any shares of Common Stock required to be reserved for issue upon
exercise of Warrants require registration with any governmental authority under
any federal or state law before such shares may be so issued, the Issuer will in
good faith and as expeditiously as possible and at its expense endeavor to cause
such shares to be duly registered.
Section 8. Taking of Record; Stock and Warrant Transfer Books. In the
case of all dividends or other distributions by the Issuer to the holders of its
Common Stock with respect to which any provision of Section 5 refers to the
taking of a record of such holders, the Issuer will in each such case take such
a record and will take such record as of the close of business on a Business
Day. The Issuer will not at any time, except upon dissolution, liquidation or
winding up, close its stock transfer books or Warrant transfer books so as to
result in preventing or delaying the exercise or transfer of any Warrant.
Section 9. Transfer Taxes. The Issuer will pay any and all transfer
taxes that may be payable in respect of the issuance or delivery of shares of
Common Stock on exercise of this Warrant. The Issuer shall not, however, be
required to pay any tax that may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that in
which this Warrant is registered, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Issuer the
amount of any such tax, or has established, to the satisfaction of the Issuer,
that such tax has been paid.
Section 10. No Voting Rights. Except as expressly provided herein,
this Warrant shall not entitle the holder hereof to any voting rights or other
rights as a stockholder of the Issuer.
Section 11. Restrictions on Transferability. (a) The Restricted
Securities shall not be transferable except upon the conditions specified in
this Section 11; provided that, notwithstanding any other provisions of this
Section 11, the holder of the Warrant (and each other person mentioned below in
this clause) shall have the right to transfer any Restricted Securities to any
Affiliate of such holder, in each case free of the restrictions imposed by this
Section 11 other than the requirement as to the legending of the certificates
for such Restricted Securities specified in Section 11(b). Each such transferee
shall be subject to the same transfer restrictions imposed on the Warrant holder
by this Agreement.
(b) Restrictive Legend. Unless and until otherwise permitted
by this Section 11, each certificate for Warrants issued under this Agreement,
each certificate for any Warrants issued to any subsequent transferee of any
such certificate, each certificate for any Warrant Stock issued upon exercise of
any Warrant and each certificate for any Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED
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<PAGE> 17
UNLESS THE PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION
UNDER FEDERAL OR STATE SECURITIES LAWS OR UNLESS THE PROPOSED TRANSACTION IS
REGISTERED OR QUALIFIED AS REQUIRED."
(c) Notice of Proposed Transfers. The Restricted Securities are
detachable from the 13% Preferred Stock (as defined in the Securities Purchase
Agreement). Prior to any transfer or attempted transfer of any Restricted
Securities not covered by the proviso contained in the introductory paragraph to
Section 11, the holder of such Restricted Certificate shall give written notice
to the Issuer of such holder's intention to effect such transfer. Each such
notice shall describe the manner and circumstances of the proposed transfer in
sufficient detail. Upon receipt of such notice, the Issuer may request an
opinion of counsel of such holder (which counsel shall be reasonably
satisfactory to the Issuer) to the effect that such proposed transfer may be
effected without registration under the Securities Act. Upon receipt of such
opinion (which shall be in form and substance reasonably satisfactory to the
Issuer), or if the Issuer does not request such an opinion, within ten Business
Days after receiving notice of the proposed transfer, the Issuer shall, as
promptly as practicable, so notify the holder of such Restricted Certificate and
such holder shall thereupon be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by such holder to the
Issuer. Each certificate evidencing the Restricted Securities thus to be
transferred (and each certificate evidencing any untransferred balance of the
Restricted Securities evidenced by such Restricted Certificate) shall bear the
restrictive legend set forth in Section 11(b), unless in the opinion of the
Issuer or the opinion of such counsel, if requested, pursuant to Rule 144(k) of
the Securities Act, such legend is not required in order to ensure compliance
with the Securities Act.
Section 12. Limitation of Liability. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the purchase price
of the Warrant Stock or as a stockholder of the Issuer, whether such liability
is asserted by the Issuer or by creditors of the Issuer.
Section 13. Loss. Destruction of Warrant Certificates. Upon receipt of
evidence satisfactory to the Issuer of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
(the original Warrant holder's or any other institutional Warrant holder's
indemnity being satisfactory indemnity in the event of loss, theft or
destruction of any Warrant owned by such institutional holder), or, in the case
of any such mutilation, upon surrender and cancellation of such Warrant, the
Issuer will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor and representing the right to
purchase the same aggregate number of shares of Common Stock.
Section 14. Furnish Information. The Issuer agrees that it shall
deliver to the holder of record hereof promptly after their becoming available
copies of all financial statements, reports and proxy statements which the
Issuer shall have sent to its stockholders generally.
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<PAGE> 18
Section 15. Amendments. The terms of this Warrant and all other
Warrants may be amended, and the observance of any term therein may be waived,
but only with the written consent of the holders of Warrants evidencing a
majority in number of the total number of Stock Units at the time purchasable
upon the exercise of all then outstanding Warrants, provided that no such action
may change the number of shares of stock constituting a Stock Unit or the
Exercise Price, without the written consent of the holders of Warrants
evidencing 100% in number of the total number of Stock Units at the time
purchasable upon the exercise of all then outstanding Warrants. For the purposes
of determining whether the holders of outstanding Warrants entitled to purchase
a requisite number of Stock Units at any time have taken any action authorized
by this Warrant, any Warrants owned by the Issuer or any Affiliate of the Issuer
(other than an institutional investor which may be deemed an Affiliate solely by
reason of the ownership of Warrants) shall be deemed not to be outstanding.
Section 16. Office of the Issuer. So long as any of the Warrants
remains outstanding, the Issuer shall maintain an office in Washington or New
York where the Warrants may be presented for exercise, transfer, division or
combination as in this Warrant provided. Such office shall be at Packaged Ice,
Inc., 8572 Katy Freeway, Suite 101, Houston, Texas 77024 unless and until the
Issuer shall designate and maintain some other office for such purposes and
deliver written notice thereof to the holders of all outstanding Warrants.
Section 17. Notices Generally. Any notice, demand or delivery pursuant
to the provisions hereof shall be sufficiently delivered or made if sent by
first class mail, postage prepaid, addressed to any holder of a Warrant at its
last known address appearing on the books of the Issuer, or, except as herein
otherwise expressly provided, to the Issuer at its principal executive office,
Packaged Ice, Inc., 8572 Katy Freeway, Suite 101, Houston, Texas 77024, or such
other address as shall have been furnished to the party giving or making such
notice, demand or delivery.
Section 18. Successors and Assigns. This Agreement shall bind and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns, and, without limiting the generality of the foregoing,
shall inure to the benefit of and be enforceable by each person who shall from
time to time be a holder of any of the Warrants.
Section 19. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of California.
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<PAGE> 19
IN WITNESS WHEREOF, the Issuer have caused this Warrant to be signed
in its name by its President or a Vice President and its corporate seal to be
impressed hereon and attested by its Secretary or an Assistant Secretary.
Dated:
PACKAGED ICE, INC.,
a Texas corporation
By: /s/ JAMES F. STUART
------------------------
Name: James F. Stuart
-------------------
Title: C.E.O.
------------------
[Ares Warrant]
<PAGE> 20
SUBSCRIPTION FORM
(to be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases Stock Units of Packaged Ice, Inc., a Texas
corporation, purchasable with this Warrant, and herewith makes payment therefor
[(by check in the amount of $________) [(by delivery to the Issuer of _________
Stock Units with respect to which this Warrant is being surrendered in payment
of the aggregate Exercise Price for the Stock Units to be delivered to the
holder)], all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________ whose address is and, if such
Stock Units shall not include all of __________ the Stock Units issuable as
provided in this Warrant that a new Warrant of like tenor and date for the
balance of the Stock Units issuable thereunder be delivered to the undersigned.
Dated:
-------------------------------
(Signature of Registered Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
NOTICE: The signature to the subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever.
The signature to this subscription must be guaranteed by a bank or
trust company having an office or correspondent in Los Angeles,
California, or by a firm having membership on the New York Stock
Exchange.
<PAGE> 21
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
Stock Units set forth below:
No. of Stock
Name and Address of Assignee Units
---------------------------- -------------
and does hereby irrevocably constitute and appoint ___________________________
________________________________________ Attorney to make sure transfer on the
books of Packaged Ice, Inc., a Texas corporation, maintained for the purpose,
with full power of substitution in the premises.
Dated:
-------------------------
Signature
-------------------------
Witness
NOTICE: The signature to the assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever.
The signature to this assignment must be guaranteed by a bank or trust
company having an office or correspondent in Los Angeles, California,
or by a firm having membership on the New York Stock Exchange.
<PAGE> 22
ANNEX I TO WARRANT
LIST OF EXISTING WARRANTS, OPTIONS AND OTHER SECURITIES OR RIGHTS
See Section 2.2 of the Disclosure Schedule to the Securities Purchase
Agreement dated as April 30, 1998 between Ares Leveraged Investment
Fund, L.P., S.V. Capital Partners, L.P. and Packaged Ice, Inc.
<PAGE> 1
EXHIBIT 4.6
NO. OF STOCK UNITS: 182,953 WARRANT NO. SV-2
COPY
WARRANT
TO PURCHASE COMMON STOCK OF
PACKAGED ICE, INC.,
A TEXAS CORPORATION,
THIS IS TO CERTIFY THAT the S.V. Capital Partners, L.P., or
registered assigns, is entitled to purchase from Packaged Ice, Inc. a Texas
corporation (hereinbelow called the "Issuer"), at any time on and after the
Vesting Date (as defined below), but not later than the Expiration Date (as
defined below), 182,953 Stock Units, in whole or in part, at a purchase price of
$.01 per Stock Unit (adjusted as provided below), all on the terms and
conditions hereinbelow provided.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED TRANSACTION DOES NOT
REQUIRE REGISTRATION OR QUALIFICATION UNDER FEDERAL OR STATE SECURITIES LAWS, OR
UNLESS THE PROPOSED TRANSACTION IS REGISTERED OR QUALIFIED AS REQUIRED.
Section 1. Certain Definitions. As used in this Warrant, unless the
context otherwise requires:
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common
Stock issued by the Issuer after the date hereof, other than (i) the Warrant
Stock, and (ii) Common Stock issued or issuable pursuant to the options,
warrants, convertible securities or other securities listed on Annex I.
"AFFILIATE" shall mean, with respect to a specified Person, any other
Person directly or indirectly controlling or controlled by or under common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"APPRAISED VALUE" shall mean the fair market value of a share of Common
Stock, as determined by a written appraisal (the "APPRAISAL") prepared by an
appraiser acceptable to the Issuer and the holders of Warrants evidencing 50% in
number of the total number of Stock Units at the time purchasable upon the
exercise of all then outstanding Warrants, using one or more valuation methods
that such appraiser, in its best professional judgement, determines to be most
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<PAGE> 2
appropriate and giving effect to any discount (i) for any lack of liquidity of
any shares being valued, (ii) because such shares represent a minority interest
or (iii) because the Issuer does not have any class of equity security
registered under the Exchange Act. In the event that the Issuer and said holders
cannot, in good faith, agree upon an appraiser, then the Issuer, on the one
hand, and said holders, on the other hand, shall each select an appraiser, the
two appraisers so selected shall select a third appraiser who shall be directed
to prepare the Appraisal and the term Appraised Value shall mean the appraised
value set forth in the Appraisal prepared in accordance with this definition.
The Issuer shall pay for the cost of any such Appraisal. The Appraisal process
shall take no longer than 60 days.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or a
legal holiday in the state of California.
"COMMON STOCK" shall mean the Common Stock of the Issuer, $.01 par
value per share and any capital stock of any class of the Issuer hereafter
authorized which is not limited to a fixed sum or percentage of par value in
respect of the rights of the holders thereof to participate in dividends or in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Issuer.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other similar or successor agency of the United States government administering
the Securities Act.
"CONVERTIBLE SECURITIES" shall mean any securities convertible into or
exchangeable for Additional Shares of Common Stock, either immediately or upon
the arrival of a specified date or the happening of a specified event.
"CURRENT MARKET PRICE" per share of Common Stock for the purposes of
any provision of this Warrant at the date herein specified, shall be deemed to
be the price determined pursuant to the first applicable of the following
methods:
(i) If the Common Stock is traded on a national securities
exchange or is traded in the over-the-counter market, the Current Market Price
per share of Common Stock shall be deemed to be the daily market price on the
Trading Day immediately prior to such date. The market price for such Trading
Day shall be (a) if the Common Stock is traded on a national securities
exchange, its last sale price on the preceding Trading Day on such national
securities exchange or, if there was no sale on that day, the last reported sale
price on such national exchange on the next preceding Trading Day on which there
was a sale, or (b) if the principal market for the Common Stock is the
over-the-counter market, and the Common Stock is quoted on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ"), the
last sale price reported on NASDAQ on the preceding Trading Day or, if the
Common Stock is an issue for which last sale prices are not reported on NASDAQ,
the closing bid quotation on such day, but, in each of the next preceding two
cases, if the relevant NASDAQ price or quotation did not exist on such day, then
the price or quotation on the next preceding Trading Day in which there was such
a price or quotation.
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<PAGE> 3
(ii) If the Current Market Price per share of Common Stock
cannot be ascertained by any of the methods set forth in paragraph (i)
immediately above, the Current Market Price per share of outstanding Common
Stock shall be deemed to be the value most recently determined as of a date
within the six months preceding such day by the Issuer's Board of Directors;
provided, that if such determination is objected to by the holders of Warrants
evidencing a majority in number of the total number of Stock Units at the time
purchasable upon the exercise of all the then outstanding Warrants, such
determination shall be made by an independent appraiser chosen in the manner
specified in the definition of Appraised Value, at the holders' expense.
"CURRENT WARRANT PRICE" per share of Common Stock, for the purpose of
any provision of this Warrant at the date herein specified, shall mean the
amount equal to the quotient resulting from dividing the Exercise Price in
effect on such date by the number of shares (including any fractional share) of
Common Stock constituting a Stock Unit on such date.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and any similar or successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"EXERCISE PRICE" shall mean the purchase price per Stock Unit as set
forth on the first page of this Warrant on the date of original issue of this
Warrant and thereafter shall mean such dollar amount as shall result from the
adjustments specified in Section 5, if any.
"EXPIRATION DATE" shall mean the earlier to occur of (i) 5:00 p.m. Los
Angeles time on May 1, 2005 or (ii) the 10th business day following the closing
of the Issuer's initial public offering of its Common Stock].
"INDENTURE" shall mean the Indenture dated January 22, 1998, relating
to $145,000,000 of 9"% Senior Notes due 2005 of the Issuer, as amended and
restated as of April 30, 1998.
"IPO PRICE" shall initially mean $20.00; provided, however, whenever
the number of shares of Common Stock constituting a Stock Unit shall be adjusted
under this Agreement, the IPO Price shall be adjusted by multiplying such IPO
Price in effect immediately prior to such adjustment by a fraction, the
numerator of which shall be the number of shares of Common Stock constituting a
Stock Unit immediately prior to such adjustment, and the denominator of which
shall be the number of shares of Common Stock constituting a Stock Unit
immediately after such adjustment.
"PERSON" shall mean a corporation, an association, a trust, a
partnership, a joint venture, an organization, a business, an individual, a
government or political subdivision thereof or a governmental body.
"PREFERRED STOCK" shall mean any stock of the Issuer of any class which
is preferred as to dividends or assets, or both, over any other class of stock
of the Issuer.
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"RESTRICTED CERTIFICATE" shall mean a certificate for Common Stock or a
Warrant bearing the restrictive legend set forth in Section 11.
"RESTRICTED SECURITIES" shall mean Restricted Stock and Restricted
Warrants.
"RESTRICTED STOCK" shall mean Warrant Stock evidenced by a Restricted
Certificate.
"RESTRICTED WARRANT" shall mean a Warrant evidenced by a Restricted
Certificate.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SECURITIES PURCHASE AGREEMENT" shall mean the securities purchase
agreement dated as of April 30, 1998, between Issuer and the Investors named
therein.
"STOCK UNIT" shall constitute one share of Common Stock, as such Common
Stock was constituted on the date of original issue of this Warrant and
thereafter shall constitute such number of shares (including any fractional
shares) of Common Stock as shall result from the adjustments specified in
Section 5, if any.
"TRADING DAY" shall mean any day on which trading occurs on the New
York Stock Exchange.
"VESTING DATE" shall mean the earlier to occur of (i) a Change of
Control (as defined in the Indenture), (ii) an Asset Sale (as defined in the
Indenture), (iii) an Event of Default under the Securities Purchase Agreement,
(iv) the Issuer consolidates or merges with another entity or agrees to do the
foregoing, (v) the Issuer defaults under any material debt or other agreement,
(vii) an initial public offering of Issuer's Common Stock or a resolution by
Issuer's Board of Directors authorizing the foregoing, or (viii) on May 1, 2003.
"WARRANT STOCK" shall mean the shares of Common Stock purchasable by
the holder of a Warrant upon the exercise of such Warrant.
"WARRANTS" shall mean this Warrant and any other Warrant (as such term
is defined in the Securities Purchase Agreement), and all additional or new
warrants issued upon transfer, division or combination of, or in substitution
for, any thereof. All such additional or new warrants shall at all times be
identical as to terms and conditions and date, except as to the number of Stock
Units for which they may be exercised.
Section 2. Representations and Warranties. All representations and
warranties contained in Section 2 of the Securities Purchase Agreement are
incorporated herein by reference.
Section 3. Exercise of Warrant. The holder of this Warrant may, at any
time on and after
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<PAGE> 5
the Vesting Date, but not later than the Expiration Date, exercise this Warrant
in whole at any time or in part from time to time for the number of Stock Units
which such holder is then entitled to purchase hereunder.
The holder of this Warrant may exercise this Warrant, in whole or in
part by either of the following methods:
(a) The holder hereof may deliver to the Issuer at its office
maintained for such purpose pursuant to Section 17 (i) a written notice of such
holder's election to exercise this Warrant, which notice shall specify the
number of Stock Units to be purchased, (ii) this Warrant and (iii) a sum equal
to the Exercise Price therefor payable in immediately available funds or by such
other method as the Issuer and the holder may otherwise agree; or
(b) The holder of this Warrant may also exercise this Warrant,
in whole or in part, in a "cashless" or "net-issue" exercise by either of the
following methods:
(i) delivering to the Issuer at its office maintained
for such purpose pursuant to Section 17, (A) a
written notice of such holder's election to exercise
this Warrant, which notice shall specify the number
of Stock Units to be delivered to such holder and the
number of Stock Units with respect to which this
Warrant is being surrendered in payment of the
aggregate Exercise Price for the Stock Units to be
delivered to the holder, and (B) the Warrant. For
purposes of this provision, all Stock Units as to
which the Warrant is surrendered will be attributed a
value equal to the product of (x) the Current Market
Price per share of Common Stock minus the Current
Warrant Price per share of Common Stock and (y) the
number of shares of Common Stock then constituting a
Stock Unit. If the determination of Current Market
Price per share of Common Stock is to be made for a
"cashless" or "net issue" exercise in connection with
an initial public offering of Common Stock, the
Current Market Price per share of Common Stock shall
equal the offering price without deductions for any
compensation, discounts or expenses paid or incurred
by the Issuer in connection with such offering; or
(ii) delivering to the Issuer at its office
maintained for such purpose pursuant to Section 17,
(A) a written notice of such holder's election to
exercise this Warrant, which notice shall specify the
number of Stock Units to be delivered to such holder
and the number of shares of 13% Exchangeable
Preferred Stock of the Issuer (the "13% Preferred
Stock") which are being surrendered in payment of the
aggregate Exercise Price for the Stock Units to be
delivered to the holder, and (B) the Warrant. For
purposes of this provision, each share of 13%
Preferred Stock being surrendered will be attributed
a value equal to (x) the aggregate liquidation
preference amount of all outstanding shares of 13%
Preferred Stock and all
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<PAGE> 6
dividends accrued and payable in respect to the 13%
Preferred Stock divided by the number of outstanding
shares of 13% Preferred Stock minus (y) the Current
Warrant Price per share of Common Stock multiplied
by the number of shares of Common Stock then
constituting a Stock Unit.
Any notice of exercise given pursuant to this Section 3 may be
in the form of Subscription set out at the end of this Warrant. Upon delivery
thereof, the Issuer shall cause to be executed and delivered to such holder
within five Business Days a certificate or certificates representing the
aggregate number of fully-paid and nonassessable shares of Common Stock issuable
upon such exercise.
The stock certificate or certificates for Warrant Stock so
delivered shall be in such denominations as may be specified in said notice and
shall be registered in the name of such holder or such other name or names as
shall be designated in said notice. Such certificate or certificates shall be
deemed to have been issued and such holder or any other Person so designated to
be named therein shall be deemed to have become a holder of record of such
shares, including to the extent permitted by law the right to vote such shares
or to consent or to receive notice as a stockholder, as of the time said notice
is delivered to the Issuer as aforesaid. If this Warrant shall have been
exercised only in part, the Issuer shall, at the time of delivery of said
certificate or certificates, deliver to such holder a new Warrant dated the date
it is issued, evidencing the rights of such holder to purchase the remaining
Stock Units called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of such holder,
appropriate notation may be made on this Warrant and the Warrant shall be
returned to such holder.
Except as otherwise provided in Section 9 hereof, the Issuer
shall pay all expenses, transfer taxes and other charges payable in connection
with the preparation, issue and delivery of stock certificates under this
Section 3, except that, if such stock certificates shall be registered in a name
or names other than the name of the holder of this Warrant, funds sufficient to
pay all stock transfer taxes which shall be payable upon the issuance of such
stock certificate or certificates shall be paid by the holder hereof at the time
of delivering the notice of exercise mentioned above.
All shares of Common Stock issuable upon the exercise of this
Warrant shall be validly issued, fully paid and nonassessable and free from all
liens and other encumbrances thereon, other than liens or other encumbrances
created by the holder hereof.
The Issuer will not close its books against the transfer of
this Warrant or of any share of Warrant Stock in any manner which interferes
with the timely exercise of this Warrant. The Issuer will from time to time take
all such action as may be necessary to assure that the par value per share of
the unissued Common Stock acquirable upon exercise of this Warrant is at all
times equal to or less than the Current Warrant Price then in effect.
In lieu of delivering any certificates for fractional shares
of stock upon any exercise of this Warrant, the Issuer shall pay cash to the
holder thereof in an amount equal to the Current
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<PAGE> 7
Market Price of such fractional share on the date of exercise.
Section 4. Transfer, Division and Combination. Subject to Section 11,
this Warrant is, and all rights hereunder are, transferable, in whole or in
part, on the books of the Issuer to be maintained for such purpose, upon
surrender of this Warrant at the office of the Issuer maintained for such
purpose pursuant to Section 17, together with a written assignment of this
Warrant duly executed by the holder hereof or its agent or attorney and payment
of funds sufficient to pay any stock transfer taxes payable upon the making of
such transfer. Upon such surrender and, if required, payment, the Issuer shall,
subject to Section 11, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees and in the denominations specified in such
instrument of assignment, and this Warrant shall promptly be canceled. If and
when this Warrant is assigned in blank (if the restrictions on transferability
in Section 11 shall have been terminated), the Issuer may (but shall not be
obliged to) treat the bearer hereof as the absolute owner of this Warrant for
all purposes and the Issuer shall not be affected by any notice to the contrary.
This Warrant, if properly assigned in compliance with this Section 4 and Section
11, may be exercised by an assignee for the purchase of shares of Common Stock
without having a new Warrant issued.
This Warrant may, subject to Section 11, be divided or combined with
other Warrants upon presentation at the aforesaid office of the Issuer, together
with a written notice specifying the names and denominations in which new
Warrants are to be issued, signed by the holder hereof or its agent or attorney.
Subject to compliance with the preceding paragraph and with Section 11, as to
any transfer which may be involved in such division or combination, the Issuer
shall execute and deliver a new Warrant or Warrants in exchange for the Warrant
or Warrants to be divided or combined in accordance with such notice.
The Issuer shall pay all expenses, taxes (other than stock transfer
taxes) and other charges incurred by the Issuer in the performance of its
obligations in connection with the preparation, issue and delivery of Warrants
under this Section 4.
The Issuer agrees to maintain at its aforesaid office books for the
registration and transfer of the Warrants.
Section 5. Adjustment of Stock Unit or Exercise Price. The number of
shares of Common Stock constituting a Stock Unit, or the price at which a Stock
Unit may be purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 5.
(a) Stock Dividends, Subdivisions and Combinations. If at any time or
from time to time the Issuer shall:
(1) entitle the holders of its Common Stock to receive a
dividend payable in, or other distribution of, Common Stock,
or
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<PAGE> 8
(2) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(3) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the number of shares of Common Stock constituting a Stock Unit immediately
after the happening of any such event shall be adjusted so as to consist of the
number of shares of Common Stock which a record holder of the number of shares
of Common Stock constituting a Stock Unit immediately prior to the happening of
such event would own or be entitled to receive after the happening of such
event.
(b) Certain Other Dividends and Distributions. If at any time or from
time to time the Issuer shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive any dividend or other distribution
of:
(1) cash (other than a cash distribution made as a dividend
and payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Issuer); provided,
however, Issuer agree that, prior to the Expiration Date, cash
dividends or other cash distributions may be made only to the
extent that the aggregate of all such dividends paid or
declared after the date hereof does not exceed the sum of (a)
20% of the consolidated net income of the Issuer earned
subsequent to the date hereof determined in accordance with
generally accepted accounting principles consistently applied
(or if the consolidated net income shall be a deficit, minus
100% of such deficit incurred after the date hereof), plus (b)
100% of the aggregate net cash received as a contribution to
capital or as proceeds of the issue or sale after the date
hereof of capital stock of the Issuer (other than the issue or
sale of any (i) redeemable stock or (ii) capital stock of the
Issuer to any subsidiary of the Issuer) or any indebtedness or
other securities of the Issuer convertible into or exercisable
for capital stock (other than redeemable capital stock) of the
Issuer which has been converted or exercised, as the case may
be; or
(2) any evidence of its indebtedness (other than Convertible
Securities), any shares of its stock (other than Additional
Shares of Common Stock) or any other securities or property of
any nature whatsoever (other than cash and other than
Convertible Securities or Additional Shares of Common Stock);
or
(3) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness (other than Convertible
Securities), any shares of its stock (other than Additional
Shares of Common Stock) or any other securities or property of
any nature whatsoever (other than cash and other than
Convertible Securities or Additional Shares of Common Stock);
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<PAGE> 9
then the number of shares of Common Stock thereafter constituting a
Stock Unit shall be adjusted to that number determined by multiplying the number
of shares of Common Stock constituting a Stock Unit immediately prior to such
adjustment by a fraction (i) the numerator of which shall be the Current Market
Price per share of Common Stock at the date of taking such record, and (ii) the
denominator of which shall be such Current Market Price per share minus the
portion applicable to one share of Common Stock of any such cash so
distributable and of the fair value of any and all such evidences of
indebtedness, shares of stock, other securities or property, or warrants or
other subscription or purchase rights, so distributable. Such fair value shall
be determined in good faith by the Board of Directors of the Issuer, provided
that if such determination is objected to by the holders of Warrants entitled to
purchase a majority of the Stock Units covered thereby, such determination shall
be made by an independent appraiser chosen in the manner specified in the
definition of Appraised Value, at the Issuer's expense. A reclassification of
the Common Stock into shares of Common Stock and shares of any other class of
stock shall be deemed a distribution by the Issuer to the holders of its Common
Stock of such shares of such other class of stock within the meaning of this
Subsection and, if the outstanding shares of Common Stock shall be changed into
a larger or smaller number of shares of Common Stock as a part of such
reclassification, shall be deemed a subdivision or combination, as the case may
be, of the outstanding shares of Common Stock within the meaning of Subsection
(a) of this Section 5.
(c) Issuance of Additional Shares of Common Stock. If at any time or
from time to time the Issuer shall (except as hereinafter provided) issue,
whether in connection with the merger of a corporation into the Issuer or
otherwise, any Additional Shares of Common Stock for a consideration per share
less than the greater of the Current Warrant Price or the Current Market Price,
then the number of shares of Common Stock thereafter constituting a Stock Unit
shall be adjusted to be that number determined by multiplying the number of
shares of Common Stock constituting a Stock Unit immediately prior to such
adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock then outstanding plus the number of such Additional
Shares of Common Stock so issued, and (y) the denominator of which shall be the
number of shares of Common Stock then outstanding plus the number of shares of
Common Stock which the aggregate consideration for the total number of such
Additional Shares of Common Stock would purchase at the greater of the Current
Warrant Price or the Current Market Price. For purposes of this Subsection (c),
the date as of which the Current Market Price shall be computed shall be the
earlier of (i) the date on which the Issuer shall enter into a firm contract for
the issuance of such Additional Shares of Common Stock (or, if such contract
specifies that the price will be determined as of a later date, then such later
date shall be used for purposes of this clause (i)), or (ii) the date of actual
issuance of such Additional Shares of Common Stock. The provisions of this
Subsection (c) shall not apply to any issuance of Additional Shares of Common
Stock for which an adjustment is provided under Subsection (a) of this Section
5. No adjustment of the number of shares of Common Stock constituting a Stock
Unit shall be made under this Subsection (c) upon the issuance of any Additional
Shares of Common Stock which are issued pursuant to the exercise of any options,
warrants or other subscription or purchase rights or pursuant to the exercise of
any conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the
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issuance of such options, warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any option, warrant or other
right therefor) pursuant to Subsection (d) or (e) of this Section 5.
(d) Issuance of Warrants, Options or Other Rights. If at any time or
from time to time the Issuer shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a distribution of, or shall
otherwise issue, any warrants, options or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities and
the consideration per share for which Additional Shares of Common Stock may at
any time thereafter be issuable pursuant to such warrants, options or other
rights or pursuant to the terms of such Convertible Securities shall be less
than the greater of the Current Warrant Price or the Current Market Price, then
the number of shares of Common Stock thereafter constituting a Stock Unit shall
be adjusted as provided in Subsection (c) of this Section 5 on the basis that
(i) the maximum number of Additional Shares of Common Stock issuable pursuant to
all such warrants, options or other rights or necessary to effect the conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued as of the date specified in the last sentence of this Subsection, (ii)
the aggregate consideration for such maximum number of Additional Shares of
Common Stock shall be deemed to be the minimum consideration received and
receivable by the Issuer for the issuance of such Additional Shares of Common
Stock pursuant to such warrants, options or other rights or pursuant to the
terms of such Convertible Securities and (iii) the consideration per share
received by the Issuer for such Additional Shares of Common Stock shall be that
number determined by dividing (a) the aggregate consideration for such maximum
number of Additional Shares of Common Stock (determined as set forth in clause
(ii) of this sentence) by (b) the maximum number of Additional Shares of Common
Stock issuable pursuant to all such warrants, options or other rights or
necessary to effect the conversion or exchange of all such Convertible
Securities (determined as set forth in clause (i) of this sentence).
For purposes of this Subsection, the computation date for subclause (i)
above and as of which the Current Market Price shall be computed shall be the
earliest of (x) the date on which the Issuer shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any such
warrants, options or other rights, (y) the date on which the Issuer shall enter
into a firm contract (or, if such contract specifies that the price will be
determined as of a later date, then such later date shall be used for purposes
of this clause (y)) for the issuance of such warrants, options or other rights,
and (z) the date of actual issuance of such warrants, options or other rights.
(e) Issuance of Convertible Securities. If at any time or from time to
time the Issuer shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a distribution of, or shall otherwise
issue, any Convertible Securities and the consideration per share for which
Additional Shares of Common Stock may at any time thereafter be issuable
pursuant to the terms of such Convertible Securities shall be less than the
greater of the Current Warrant Price or the Current Market Price, then the
number of shares of Common Stock thereafter constituting a Stock Unit shall be
adjusted as provided in Subsection (c) of this Section 5 on the basis that (i)
the maximum number of Additional Shares of Common Stock necessary to effect the
conversion
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or exchange of all such Convertible Securities shall be deemed to have been
issued as of the computation date specified below in this Subsection, (ii) the
aggregate consideration for such maximum number of Additional Shares of Common
Stock shall be deemed to be the minimum consideration received and receivable by
the Issuer for the issuance of such Additional Shares of Common Stock pursuant
to the terms of such Convertible Securities and (iii) the consideration per
share received by the Issuer for such Additional Shares of Common Stock shall be
that number determined by dividing (a) the aggregate consideration for such
maximum number of Additional Shares of Common Stock (determined as set forth in
clause (ii) of this sentence) by (b) the maximum number of Additional Shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities (determined as set forth in clause (i) of this sentence).
For purposes of this Subsection, the computation date for clause (i)
above and as of which the Current Market Price shall be computed shall be the
earliest of (x) the date on which the Issuer shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any such
Convertible Securities, (y) the date on which the Issuer shall enter into a firm
contract for the issuance of such Convertible Securities (or, if such contract
specifies that the price will be determined as of a later date, then such later
date shall be used for purposes of this clause (y)), and (z) the date of actual
issuance of such Convertible Securities. No adjustment of the number of shares
of Common Stock constituting a Stock Unit shall be made under this Subsection
upon the issuance of any Convertible Securities which are issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Subsection (d) of this Section 5.
(f) Other Provisions Applicable to Adjustments Under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock constituting a Stock Unit hereinbefore provided
for in this Section 5:
(1) Treasury Stock. The sale or other disposition of any
issued shares of Common Stock owned or held by or for the
account of the Issuer shall be deemed an issuance thereof for
purposes of this Section 5.
(2) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible
Securities or any warrants, options or other rights to
subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for a cash
consideration, the consideration received by the Issuer
therefor shall be deemed to be the amount of cash received by
the Issuer therefor, or, if such Additional Shares of Common
Stock or Convertible Securities are offered by the Issuer for
subscription, the subscription price, or, if such Additional
Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a
subscription offering, the initial public offering price, in
any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends and without deduction of
any
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compensation, discounts or expenses paid or incurred by
the Issuer for and in the underwriting of, or otherwise in
connection with, the issue thereof. To the extent that such
issuance shall be for a consideration other than solely for
cash, then, except as herein otherwise expressly provided, the
amount of such consideration shall be deemed to be the fair
value of such consideration at the time of such issuance as
determined in good faith by the Board of Directors of the
Issuer. If such determination is objected to by the holders of
Warrants evidencing a majority in number of the total number
of Stock Units at the time purchasable upon the exercise of
all then outstanding Warrants, such determination shall be
made by an independent appraiser chosen in the manner
specified in the definition of Appraised Value, with all
appraisal expenses to be borne one-half by the Issuer and
one-half by the holders requesting such appraisal. The
consideration for any Additional Shares of Common Stock
issuable pursuant to any warrants, options or other rights to
subscribe for or purchase the same shall be the consideration
received or receivable by the Issuer for issuing such
warrants, options or other rights, plus the additional
consideration payable to the Issuer upon the exercise of such
warrants, options or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the
terms of any Convertible Securities shall be the consideration
received or receivable by the Issuer for issuing any warrants,
options or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable
to the Issuer in respect of the subscription for or purchase
of such Convertible Securities, plus the additional
consideration, if any, payable to the Issuer upon the exercise
of the right of conversion or exchange in such Convertible
Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in
payment or satisfaction of any dividend upon any class of
stock other than Common Stock, the Issuer shall be deemed to
have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of
such dividend so paid or satisfied.
(3) When Adjustments to Be Made. The adjustments required by
the preceding Subsections of this Section 5 shall be made
whenever and as often as any specified event requiring an
adjustment shall occur, except that no such adjustment shall
be made except pursuant to Subsection (a) of this Section 5 if
it would decrease the number of shares of Common Stock
constituting a Stock Unit immediately prior to such
adjustment. For the purpose of any adjustment, any specified
event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(4) Fractional Interests. In computing adjustments under this
Section 5, fractional interests in Common Stock shall be taken
into account to the nearest one-thousandth of a share.
(5) When Adjustment Not Required. If the Issuer shall take a
record of the holders of its Common Stock for the purpose of
entitling them to receive a
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dividend or distribution or subscription or purchase rights
and shall thereafter and before the distribution thereof to
shareholders abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights,
then thereafter no adjustment shall be required by reason of
the taking of such record and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
(6) Superseding Adjustments. If, at any time after any
adjustment of the number of shares constituting a Stock Unit
shall have been made pursuant to the foregoing Subsection (d)
or (e) of this Section 5 on the basis of the issuance of
warrants, options or other rights or the issuance of other
Convertible Securities, or after any new adjustment of the
number of shares constituting a Stock Unit shall have been
made pursuant to this Subsection,
(a) such warrants, options or other rights or the
right of conversion or exchange in such other
Convertible Securities shall expire, and a portion of
such warrants, options or other rights, or the right
of conversion or exchange in respect of a portion of
such other Convertible Securities, as the case may
be, shall not have been exercised, or
(b) the consideration per share, for which Additional
Shares of Common Stock are issuable pursuant to such
warrants, options or other rights or the terms of
such other Convertible Securities, shall be increased
solely by virtue of provisions therein contained for
an automatic increase in such consideration per share
upon the arrival of a specified date or the happening
of a specified event, such previous adjustment shall
be rescinded and annulled and the Additional Shares
of Common Stock which were deemed to have been issued
by virtue of the computation made in connection with
the adjustment so rescinded and annulled shall no
longer be deemed to have been issued by virtue of
such computation. Thereupon, a recomputation shall
be made of the effect of such warrants, options or
other rights or other Convertible Securities on the
basis of:
(c) treating the number of Additional Shares of
Common Stock, if any, theretofore actually issued or
issuable pursuant to the previous exercise of such
warrants, options or other rights or such right of
conversion or exchange, as having been issued on the
date or dates of such issuance as determined for
purposes of such previous adjustment and for the
consideration actually received and receivable
therefor, and
(d) treating any such warrants, options or other
rights or any such other Convertible Securities which
then remain outstanding as having been granted or
issued immediately after the time of such increase of
the consideration per share for such Additional
Shares of Common Stock which are issuable under such
warrants, options or other rights or other
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<PAGE> 14
Convertible Securities,
and, if and to the extent called for by the foregoing
provisions of this Section 5 on the basis aforesaid, a new
adjustment of the number of shares constituting a Stock Unit
shall be made, which new adjustment shall supersede the
previous adjustment so rescinded and annulled.
(g) Merger, Consolidation or Disposition of Assets. The Issuer shall
provide each holder of a Warrant with timely notice of i) the merger or
consolidation of the Issuer into another corporation or the Issuer's agreement
to do the foregoing or ii) an Asset Sale (as defined in the Indenture) and the
occurrence of any such event shall be the Vesting Date of the Warrants (if they
have not previously vested) and the holders shall have the right to exercise the
Warrants in accordance with Section 3 hereof.
(h) Other Action Affecting Nonpreferred Stock. In case any time or from
time to time the Issuer shall take any action affecting its Common Stock, other
than an action described in any of the foregoing Subsections (a) to (g),
inclusive, of this Section 5, then the number of shares of Common Stock or other
stock constituting a Stock Unit, or the purchase price thereof, shall be
adjusted in such manner and at such time as the Board of Directors of the Issuer
may in good faith determine to be equitable in the circumstances.
Section 6. Notice to Warrant Holders.
(a) Notice of Adjustment of Stock Unit or Exercise Price. Whenever the
number of shares of Common Stock constituting a Stock Unit, or the price at
which a Stock Unit may be purchased upon exercise of the Warrants, shall be
adjusted pursuant to Section 5, the Issuer shall forthwith obtain a certificate
signed by the chief financial officer of the Issuer, setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated "including a statement of the fair value, as
determined by the Board of Directors of the Issuer or by appraisal (if
applicable), of any evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights referred to in
Section 5(b), Section 5(f)(2) or Section 5(g) and specifying the number of
shares of Common Stock constituting a Stock Unit, and (if such adjustment was
made pursuant to Section 5(g) or Section 5(h)) describing the number and kind of
any other shares of stock constituting a Stock Unit, and any change in the
Exercise Price thereof, after giving effect to such adjustment or change. The
Issuer shall promptly, and in any case within three Business Days after the
making of such adjustment, cause a signed copy of such certificate to be
delivered to each holder of a Warrant. The Issuer shall keep at its office or
agency, maintained for the purpose pursuant to Section 18, copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by any holder of a Warrant or any prospective
purchaser of a Warrant designated by a holder thereof.
(b) Notice of Certain Corporate Action. In case the Issuer shall
propose (a) to pay any dividend payable in stock of any class to the holders of
its Common Stock or to make any other
14
<PAGE> 15
distribution to the holders of its Common Stock (other than a cash dividend),
or (b) to offer to the holders of its Common Stock rights to subscribe for or to
purchase any Additional Shares of Common Stock or shares of stock of any class
or any other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision, or combination, of outstanding shares of Common Stock), or
(d) to effect any capital reorganization, or (e) to effect any consolidation,
merger or sale, organic change, transfer or other disposition of all or
substantially all of its property, assets or business, or (f) to effect the
liquidation, dissolution or winding up of the Issuer, then in each such case,
the Issuer shall give to each holder of a Warrant, in accordance with Section
18, a notice of such proposed action, which shall specify the date on which a
record is to be taken for the purposes of such stock dividend, distribution or
rights, or the date on which such reclassification, reorganization,
consolidation, merger, sale, organic change, transfer, disposition, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, and
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action on the Common Stock and the
number and kind of any other shares of stock which will comprise a Stock Unit,
and the purchase price or prices thereof, after giving effect to any adjustment
which will be required as a result of such action. Such notice shall be so given
in the case of any action covered by clause (a) or (b) above at least twenty
days prior to the record date for determining-holders of the Common Stock for
purposes of such action, and in the case of any other such action, at least
twenty days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of Common Stock, whichever shall be the
earlier.
Section 7. Reservation and Authorization of Common Stock; Registration
with or Approval of any Governmental Authority. The Issuer shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of all outstanding Warrants. The Issuer will not
amend its articles of incorporation in any respect relating to the Common Stock
other than to increase or decrease the number of shares of authorized capital
stock (subject to the provisions of the preceding sentence) or to decrease the
par value of any shares of Common Stock. All shares of Common Stock that shall
be issued upon exercise of any Warrant and payment of the exercise price thereof
to the Issuer, shall be duly and validly issued and fully-paid and
nonassessable.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price per share of Common Stock below the then par value, if
any, of the shares of Common Stock issuable upon exercise of the Warrants, the
Issuer shall take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Issuer may validly and legally issue fully-paid
and nonassessable shares of Common Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock constituting a Stock Unit or in the Current
Warrant Price per share of Common Stock, the Issuer shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
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<PAGE> 16
If any shares of Common Stock required to be reserved for issue upon
exercise of Warrants require registration with any governmental authority under
any federal or state law before such shares may be so issued, the Issuer will in
good faith and as expeditiously as possible and at its expense endeavor to cause
such shares to be duly registered.
Section 8. Taking of Record; Stock and Warrant Transfer Books. In the
case of all dividends or other distributions by the Issuer to the holders of its
Common Stock with respect to which any provision of Section 5 refers to the
taking of a record of such holders, the Issuer will in each such case take such
a record and will take such record as of the close of business on a Business
Day. The Issuer will not at any time, except upon dissolution, liquidation or
winding up, close its stock transfer books or Warrant transfer books so as to
result in preventing or delaying the exercise or transfer of any Warrant.
Section 9. Transfer Taxes. The Issuer will pay any and all transfer
taxes that may be payable in respect of the issuance or delivery of shares of
Common Stock on exercise of this Warrant. The Issuer shall not, however, be
required to pay any tax that may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that in
which this Warrant is registered, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Issuer the
amount of any such tax, or has established, to the satisfaction of the Issuer,
that such tax has been paid.
Section 10. No Voting Rights. Except as expressly provided herein, this
Warrant shall not entitle the holder hereof to any voting rights or other rights
as a stockholder of the Issuer.
Section 11. Restrictions on Transferability. (a) The Restricted
Securities shall not be transferable except upon the conditions specified in
this Section 11; provided that, notwithstanding any other provisions of this
Section 11, the holder of the Warrant (and each other person mentioned below in
this clause) shall have the right to transfer any Restricted Securities to any
Affiliate of such holder, in each case free of the restrictions imposed by this
Section 11 other than the requirement as to the legending of the certificates
for such Restricted Securities specified in Section 11(b). Each such transferee
shall be subject to the same transfer restrictions imposed on the Warrant holder
by this Agreement.
(b) Restrictive Legend. Unless and until otherwise permitted
by this Section 11, each certificate for Warrants issued under this Agreement,
each certificate for any Warrants issued to any subsequent transferee of any
such certificate, each certificate for any Warrant Stock issued upon exercise of
any Warrant and each certificate for any Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED
16
<PAGE> 17
UNLESS THE PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION
UNDER FEDERAL OR STATE SECURITIES LAWS OR UNLESS THE PROPOSED TRANSACTION IS
REGISTERED OR QUALIFIED AS REQUIRED."
(c) Notice of Proposed Transfers. The Restricted Securities
are detachable from the 13% Preferred Stock (as defined in the Securities
Purchase Agreement). Prior to any transfer or attempted transfer of any
Restricted Securities not covered by the proviso contained in the introductory
paragraph to Section 11, the holder of such Restricted Certificate shall give
written notice to the Issuer of such holder's intention to effect such transfer.
Each such notice shall describe the manner and circumstances of the proposed
transfer in sufficient detail. Upon receipt of such notice, the Issuer may
request an opinion of counsel of such holder (which counsel shall be reasonably
satisfactory to the Issuer) to the effect that such proposed transfer may be
effected without registration under the Securities Act. Upon receipt of such
opinion (which shall be in form and substance reasonably satisfactory to the
Issuer), or if the Issuer does not request such an opinion, within ten Business
Days after receiving notice of the proposed transfer, the Issuer shall, as
promptly as practicable, so notify the holder of such Restricted Certificate and
such holder shall thereupon be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by such holder to the
Issuer. Each certificate evidencing the Restricted Securities thus to be
transferred (and each certificate evidencing any untransferred balance of the
Restricted Securities evidenced by such Restricted Certificate) shall bear the
restrictive legend set forth in Section 11(b), unless in the opinion of the
Issuer or the opinion of such counsel, if requested, pursuant to Rule 144(k) of
the Securities Act, such legend is not required in order to ensure compliance
with the Securities Act.
Section 12. Limitation of Liability. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the purchase price
of the Warrant Stock or as a stockholder of the Issuer, whether such liability
is asserted by the Issuer or by creditors of the Issuer.
Section 13. Loss. Destruction of Warrant Certificates. Upon receipt of
evidence satisfactory to the Issuer of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
(the original Warrant holder's or any other institutional Warrant holder's
indemnity being satisfactory indemnity in the event of loss, theft or
destruction of any Warrant owned by such institutional holder), or, in the case
of any such mutilation, upon surrender and cancellation of such Warrant, the
Issuer will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor and representing the right to
purchase the same aggregate number of shares of Common Stock.
Section 14. Furnish Information. The Issuer agrees that it shall
deliver to the holder of record hereof promptly after their becoming available
copies of all financial statements, reports and proxy statements which the
Issuer shall have sent to its stockholders generally.
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<PAGE> 18
Section 15. Amendments. The terms of this Warrant and all other
Warrants may be amended, and the observance of any term therein may be waived,
but only with the written consent of the holders of Warrants evidencing a
majority in number of the total number of Stock Units at the time purchasable
upon the exercise of all then outstanding Warrants, provided that no such action
may change the number of shares of stock constituting a Stock Unit or the
Exercise Price, without the written consent of the holders of Warrants
evidencing 100% in number of the total number of Stock Units at the time
purchasable upon the exercise of all then outstanding Warrants. For the purposes
of determining whether the holders of outstanding Warrants entitled to purchase
a requisite number of Stock Units at any time have taken any action authorized
by this Warrant, any Warrants owned by the Issuer or any Affiliate of the Issuer
(other than an institutional investor which may be deemed an Affiliate solely by
reason of the ownership of Warrants) shall be deemed not to be outstanding.
Section 16. Office of the Issuer. So long as any of the Warrants
remains outstanding, the Issuer shall maintain an office in Washington or New
York where the Warrants may be presented for exercise, transfer, division or
combination as in this Warrant provided. Such office shall be at Packaged Ice,
Inc., 8572 Katy Freeway, Suite 101, Houston, Texas 77024 unless and until the
Issuer shall designate and maintain some other office for such purposes and
deliver written notice thereof to the holders of all outstanding Warrants.
Section 17. Notices Generally. Any notice, demand or delivery pursuant
to the provisions hereof shall be sufficiently delivered or made if sent by
first class mail, postage prepaid, addressed to any holder of a Warrant at its
last known address appearing on the books of the Issuer, or, except as herein
otherwise expressly provided, to the Issuer at its principal executive office,
Packaged Ice, Inc., 8572 Katy Freeway, Suite 101, Houston, Texas 77024, or such
other address as shall have been furnished to the party giving or making such
notice, demand or delivery.
Section 18. Successors and Assigns. This Agreement shall bind and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns, and, without limiting the generality of the foregoing,
shall inure to the benefit of and be enforceable by each person who shall from
time to time be a holder of any of the Warrants.
Section 19. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of California.
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<PAGE> 19
IN WITNESS WHEREOF, the Issuer have caused this Warrant to be
signed in its name by its President or a Vice President and its corporate seal
to be impressed hereon and attested by its Secretary or an Assistant Secretary.
Dated:
PACKAGED ICE, INC.,
a Texas corporation
By: /s/ JAMES F. STUART
----------------------------------
Name: JAMES F. STUART
-------------------------------
Title:Chief Executive Officer
-------------------------------
[SV Capital Warrant]
<PAGE> 20
SUBSCRIPTION FORM
(to be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for and purchases Stock Units of Packaged Ice, Inc., a
Texas corporation, purchasable with this Warrant, and herewith makes payment
therefor [(by check in the amount of $ _________ ) [(by delivery to the Issuer
of _________ Stock Units with respect to which this Warrant is being surrendered
in payment of the aggregate Exercise Price for the Stock Units to be delivered
to the holder)], all at the price and on the terms and conditions specified in
this Warrant and requests that certificates for the shares of Common Stock
hereby purchased (and any securities or other property issuable upon such
exercise) be issued in the name of and delivered to ____________ whose address
is and, if such Stock Units shall not include all of _____________ the Stock
Units issuable as provided in this Warrant that a new Warrant of like tenor and
date for the balance of the Stock Units issuable thereunder be delivered to the
undersigned.
Dated:
-------------------------------
(Signature of Registered Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
NOTICE: The signature to the subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever.
The signature to this subscription must be guaranteed by a bank or
trust company having an office or correspondent in Los Angeles,
California, or by a firm having membership on the New York Stock
Exchange.
<PAGE> 21
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
Stock Units set forth below:
No. of Stock
Name and Address of Assignee Units
and does hereby irrevocably constitute and appoint _________________________
Attorney to make sure transfer on the books of Packaged Ice, Inc., a Texas
corporation, maintained for the purpose, with full power of substitution in the
premises.
Dated:
-------------------------------
Signature
-------------------------------
Witness
NOTICE: The signature to the assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever.
The signature to this assignment must be guaranteed by a bank or trust
company having an office or correspondent in Los Angeles, California,
or by a firm having membership on the New York Stock Exchange.
<PAGE> 22
ANNEX I TO WARRANT
LIST OF EXISTING WARRANTS, OPTIONS AND OTHER SECURITIES OR RIGHTS
See Section 2.2 of the Disclosure Schedule to the Securities Purchase
Agreement dated as April 30, 1998 between Ares Leveraged Investment
Fund, L.P., S.V. Capital Partners, L.P. and Packaged Ice, Inc.
<PAGE> 1
EXHIBIT 4.7
EXCHANGE OFFER REGISTRATION RIGHTS AGREEMENT
This Exchange Offer Registration Rights Agreement (the
"AGREEMENT") is dated as of April 30, 1998, by and among Packaged Ice, Inc., a
Texas corporation (the "COMPANY"), and the investors set forth on Schedule I
(each an "INVESTOR" and collectively the "INVESTORS").
This Agreement is entered into in connection with the
Securities Purchase Agreement, dated as of the date hereof, between the Company
and the Investors (the "PURCHASE AGREEMENT") relating to the sale by the Company
to the Investors of 400,000 shares of the Company's 13% Exchangeable Preferred
Stock, Series A (the "13% PREFERRED STOCK"). The 13% Preferred Stock is
exchangeable at the Company's option on the terms set forth in the Certificate
of Designation (as defined herein) for the Company's 13% Subordinated Exchange
Notes due 2005 (the "NOTES"). In order to induce the Investors to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement for the benefit of the holders from time to time of
the Registerable Securities (as defined herein). The execution and delivery of
this Agreement is a condition to the Investors" obligation to purchase the 13%
Preferred Stock under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Advice: See Section 5.
Affiliates: 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"
(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 though the
ownership of voting securities, by agreement or otherwise.
Applicable Period: See Section 2.
Business Day: Any day other than a Saturday, or 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.
Certificate of Resolution: The Certificate of Resolution Providing for
the Issuance of Exchangeable Preferred Stock pursuant to Article 2.13 of the
Texas Business Corporation Act and dated April 29, 1998, pursuant to which the
13% Preferred Stock is being issued, as amended from time to time in accordance
with the terms thereof.
1
<PAGE> 2
Closing Date: The Closing Date as defined in the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 150th day after the Closing Date.
Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2.
Exchange Registration Statement: See Section 2.
Exchange Securities: See Section 2.
Exchange Shares: Shares of the 13% Exchangeable Preferred Stock, Series
B, which is substantially identical to the 13% Preferred Stock, except that the
Exchange Shares shall have been registered pursuant to an effective Registration
Statement under the Securities Act and shall contain no restrictive legends
thereon.
Filing Date: The 90th day after the Closing Date.
Holder: Any holder of Registerable Securities.
Indenture: The Indenture which may be entered into in accordance with
the Certificate of Resolutions, between the Company and a national banking
association as Trustee, as amended or supplemented from time to time in
accordance with the terms thereof, in substantially the form attached hereto as
Exhibit A; provided, however, such form is subject to further review and
revision by the parties.
Initial Securities: The 13% Preferred Stock or the Notes to be issued
in exchange therefor pursuant to the Certificate of Resolution, as applicable.
Initial Shelf Registration: See Section 3.
Liquidated Damages: See Section 4.
Person: An individual, trustee, limited liability company, corporation,
partnership, joint stock company, trust, unincorporated association, union,
business association, firm or other legal entity.
2
<PAGE> 3
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registerable Securities covered by such Registration Statement, and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Registerable Securities: Each Initial Security upon original issuance
thereof and at all times subsequent thereto, until in the case of each such
Initial Security, either (i) the Initial Security is exchanged in the Exchange
Offer and the Exchange Security can be resold to the public by the Holder
thereof without complying with the prospectus delivery requirements of the
Securities Act, (ii) a Shelf Registration Statement covering such Initial
Security has been declared effective by the SEC and such Initial Security has
been disposed of in accordance with such effective Shelf Registration Statement,
or (iii) such Initial Security is sold to the public in compliance with Rule
144.
Registration Statement: Any registration statement of the Company,
including but not limited to the Exchange Registration Statement, that covers
any of the Registerable Securities pursuant to the provisions of this Agreement,
including the prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Initial Securities and the Exchange Securities.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Effectiveness Date: See Section 3.
Shelf Effectiveness Period: See Section 3.
3
<PAGE> 4
Shelf Filing Date: See Section 3.
Shelf Notice: See Section 3.
Shelf Registration: The Initial Shelf Registration and any Subsequent
Shelf Registration as such terms are defined in Section 3.
Subsequent Shelf Registration: See Section 3.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Agent: The Company's transfer agent for the 13% Preferred
Stock.
Trustee: The Trustee under the Indenture.
Underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
(a) The Company agrees to prepare and, to the extent not prohibited by
law or applicable SEC policy, file with the SEC on or prior to the Filing Date,
an offer to exchange (the "Exchange Offer") any and all of the Registerable
Securities for a like number or aggregate principal amount of securities of the
Company, which securities are substantially identical to the relevant
Registerable Securities, (and which, in the case of Notes, are entitled to the
benefits of the Indenture, which will have been qualified under the TIA) except
that they have been registered pursuant to an effective registration statement
under the Securities Act and do not contain provisions for the additional
interest or dividends contemplated in Section 4(a) below (such new securities
hereinafter called "Exchange Securities"). The Exchange Offer will be registered
under the Securities Act on the appropriate form (the "Exchange Registration
Statement") and will comply with all applicable federal and state securities
laws, including, but not limited to, the tender offer rules and regulations
under the Exchange Act.
The Company agrees to use its best efforts to:
(i) cause the Exchange Registration Statement to become
effective under the Securities Act on or before the
Effectiveness Date;
(ii) keep the Exchange Offer open for at least 30 calendar
days (or longer if required by applicable law) after
the date that the Prospectus is first sent or given
to Holders; and
(iii) consummate the Exchange Offer on or prior to the 30th
day following the
4
<PAGE> 5
date on which the Exchange Registration Statement is
declared effective. No securities other than the
Registerable Securities shall be included in the
Exchange Registration Statement.
(b) In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Registration Statement, together
with an appropriate letter of transmittal and related
documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan,
the City of New York; and
(iii) permit Holders to withdraw tendered Registerable
Securities at any time prior to the close of
business, New York time, on the last Business Day on
which the Exchange Offer shall remain open.
(c) As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange all Registerable Securities
tendered and not validly withdrawn pursuant to the
Exchange Offer;
(ii) deliver to the Transfer Agent, in the case of 13%
Preferred Stock, or to the Trustee, in the case of
Notes, for cancellation all Registerable Securities
so accepted for exchange; and
(iii) cause the Trustee or the Transfer Agent, as the case
may be, to authenticate and deliver promptly, to each
Holder that validly tendered Registerable Securities,
Exchange Securities equal in principal amount or
liquidation preference, as applicable, to the
Registerable Securities of such Holder so accepted
for exchange.
(d) Each Holder who participates in the Exchange Offer will be required
to represent that (i) any Exchange Securities received by it will be acquired in
the ordinary course of its business, (ii) at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution (within the meaning of the Securities
Act) of the Exchange Securities, and (iii) such Holder is not an Affiliate of
the Company.
(e) The Company shall use its best efforts (i) to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such Persons must comply with such requirement in
order to resell the Exchange Securities, provided that such period shall not
exceed
5
<PAGE> 6
180 days (or such longer period if extended pursuant to the last paragraph of
Section 5) (the "Applicable Period").
(f) Dividends or interest, as the case may be, plus Liquidated Damages,
if any, on the Exchange Securities will accrue from the last dividend or
interest payment date on which dividends or interest, as applicable, plus
Liquidated Damages, if any, were paid by the Company on the Registerable
Securities surrendered in exchange therefor or, if no dividends or interest, as
the case may be, have been paid on such Registerable Securities, from the date
of original issue.
(g) Any Exchange Securities issued in exchange for the 13% Preferred
Stock may be issued under a certificate of resolution substantially identical to
the Certificate of Resolution, which will provide that the Exchange Securities
will not be subject to the transfer restrictions set forth in the Certificate of
Resolution and that the Exchange Securities subject to such certificate of
resolution and the 13% Preferred Stock will vote and consent together on all
matters as one class and that neither such Exchange Securities nor the 13%
Preferred Stock will have the right to vote or consent as a separate class on
any matter.
(h) Any Exchange Securities issued in exchange for the Notes may be
issued under (i) the Indenture or (ii) an indenture substantially identical to
the Indenture, which in either event will provide that the Exchange Securities
will not be subject to the transfer restrictions set forth in the Indenture, and
that the Exchange Securities subject to such indenture will vote and consent
together on all matters as one class and that neither such Exchange Securities
nor the Notes will have the right to vote or consent as a separate class on any
matter.
3. Shelf Registration
If (i) the Company is not required to file an Exchange Registration
Statement or to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or SEC policy, or (ii) any Holder of Registerable
Securities notifies (a "Shelf Notice") the Company in writing on or prior to the
20th business day following consummation of the Exchange Offer (A) that based
upon the advice of counsel such Holder is prohibited by applicable law or SEC
policy from participating in the Exchange Offer, or (B) that based upon the
advice of counsel such Holder may not resell the Exchange Securities acquired by
it in the Exchange Offer to the public without delivering a Prospectus and that
the Prospectus contained in the Exchange Registration Statement is not
appropriate or available for such resales by such Holder, then:
a. Initial Shelf Registration. The Company shall promptly prepare and
file with the SEC a Registration Statement for an offering to be made
on a continuous basis pursuant to Rule 415 covering all such
Registerable Securities of each Holder who supplied information as
required pursuant to this Section 3 (the "Initial Shelf Registration").
The Company shall (i) file with the SEC the Initial Shelf Registration
on or prior to the earliest to occur of the following (the date of such
occurrence being referred to herein as the "Shelf Filing Date"): (A)
the 60th day after the date on which the Company reasonably determines
that it is not required
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to file the Exchange Registration Statement in accordance with this
Agreement or (B) the 180th day after the Closing Date, and (ii) use
its best efforts to cause such Initial Shelf Registration Statement to
be declared effective by the SEC on or before the 30th day after the
Shelf Filing Date (the "Shelf Effectiveness Date") and to keep the
Initial Shelf Registration continuously effective under the Securities
Act until the date which is 24 months from the Shelf Effectiveness
Date (subject to extension pursuant to the last paragraph of Section 5
hereof) (the "Shelf Effectiveness Period"), or such shorter period
ending when (1) all Registerable Securities covered by the Initial
Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration, (2) a Subsequent Shelf
Registration covering all of the Registerable Securities has been
declared effective under the Securities Act or (3) during any period
in which all Registerable Shares may be sold pursuant to Rule 144(k)
under the Securities Act.
The Initial Shelf Registration shall be on the appropriate
form permitting registration of such Registerable Securities for resale
by such Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Company
shall not permit any securities other than the Registerable Securities
to be included in the Initial Shelf Registration or any Subsequent
Shelf Registration.
No Holder of Registerable Securities may include any of its
Registerable Securities in any Shelf Registration pursuant to this
Agreement unless and until such Holder furnishes to the Company, in
writing, within 20 Business Days after receipt of a request therefor
(which request shall be given by the Company at the earliest
practicable time), such information as the Company may reasonably
request for use in connection with any Shelf Registration or Prospectus
or preliminary prospectus included therein. No Holder of Registerable
Securities shall be entitled to Liquidated Damages pursuant to Section
4 hereof unless and until such Holder shall have used its best efforts
to provide all such reasonably requested information. Each Holder as to
which any Shelf Registration is being effected agrees to furnish
promptly to the Company all information to be disclosed in order to
make the information previously furnished to the Company by such Holder
not materially misleading.
b. Subsequent Shelf Registrations. If the Initial Shelf Registration or
any Subsequent Shelf Registration ceases to be effective for any reason
at any time during the Shelf Effectiveness Period (other than because
of the sale of all of the securities registered thereunder), the
Company shall use its best efforts to obtain the prompt withdrawal of
any order suspending the effectiveness thereof, and in any event shall
within 45 days of such cessation of effectiveness amend the Shelf
Registration in a manner reasonably expected to obtain the withdrawal
of the order suspending the effectiveness thereof, or file an
additional Registration Statement pursuant to Rule 415 severing all of
the Registerable Securities (a "Subsequent
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<PAGE> 8
Shelf Registration"). If a Subsequent Shelf Registration is filed, the
Company shall use its best efforts to cause the Subsequent Shelf
Registration to be declared effective as soon as practicable after
such filing and to keep such Subsequent Registration Statement
continuously effective for a period equal to the number of days in the
Shelf Effectiveness Period less the aggregate number of days during
which the Initial Shelf Registration or any Subsequent Shelf
Registration was previously continuously effective.
c. Supplements and Amendments. The Company shall promptly supplement
and amend the Shelf Registration if required by the rules, regulations
or instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if requested by the
Holders of a majority or a majority in aggregate principal amount, as
applicable, of the Registerable Securities covered by such Registration
Statement or by any underwriter of such Registerable Securities.
4. Liquidated Damages
(a) The Company agrees that the Holders of Registerable Securities will
suffer damages if the Company fails to fulfill its obligations under Section 2
or Section 3 hereof and that ascertaining the extent of such damages with
precision could not be feasible. Accordingly, the Company agrees to pay
liquidated damages in the form of additional dividends or additional interest,
as applicable, on the Registerable Securities or Exchange Securities held by
each Holder ("Liquidated Damages"), if:
(i) any Registration Statement required by this Agreement is
not filed with the SEC on or prior to the date specified for such
filing in this Agreement,
(ii) any of such Registration Statements has not been declared
effective by the SEC on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"),
(iii) the Exchange Offer has not been consummated within 30
Business Days after the Effectiveness Target Date with respect to the
Exchange Registration Statement, or
(iv) any Registration Statement required by this Agreement is
filed and declared effective but shall thereafter cease to be effective
or fail to be usable for its intended purpose without being succeeded
immediately by a post-effective amendment to such Registration
Statement, or by a Subsequent Shelf Registration, as the case may be,
that cures such failure and that is itself immediately declared
effective;
(each such event in clauses (i) through (iv) above being referred to herein as a
"Registration Default"). Such additional dividends or interest comprising
Liquidated Damages shall be an
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<PAGE> 9
amount equal to (A) with respect to the first 90-day period immediately
following the occurrence of a Registration Default, $.05 per week per $1,000
liquidation preference or principal amount, as applicable, of the Registerable
Securities or Exchange Securities, as the case may be, held by such Holder for
each week or portion thereof that any Registration Default continues, plus (B)
an additional $.05 per week per $1,000 liquidation preference or principal
amount, as applicable, of the Registerable Securities or Exchange Securities, as
the case may be, with respect to each 90-day period subsequent to the first
90-day period, until all Registration Defaults have been cured, up to an amount
equal to $.25 per week per $1,000 liquidation preference or principal amount, as
applicable, of the Registerable Securities or Exchange Securities, as the case
may be, of such Holder.
(b) The Company shall notify the Holders or the Trustee, as applicable,
within one Business Day after each and every date on which a Registration
Default occurs. All accrued Liquidated Damages shall be paid by the Company on
or before each applicable quarterly dividend or interest payment date to Holders
of record of the Registerable Securities or Exchange Securities in the same
manner as dividends or interest are payable pursuant to the terms of the
Certificate of Resolution or the certificate of resolution provided for in
Section 2(g) hereof, or the Indenture or the indenture provided for in Section
2(h) hereof, as the case may be. Each obligation to pay Liquidated Damages shall
be deemed to accrue beginning on the day of the applicable Registration Default.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease until the next Registration Default, if any.
5. Registration Procedures.
In connection with the registration of any Registerable Securities
pursuant to Sections 2 or 3 hereof, the Company shall effect such registrations
to permit the sale of such Registerable Securities in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Company shall:
(a) Prepare and file with the SEC on or prior to the Filing Date or
Shelf Filing Date, as applicable, a Registration Statement or Registration
Statements as prescribed by Section 2 or 3, and to use its best efforts to cause
each such Registration Statement to become effective and remain effective as
provided herein, provided that if such filing is pursuant to Section 3, before
filing any Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall, if requested, furnish to and afford the Holders of
the Registerable Shares (the "Selling Holders"), as the case may be, covered by
such Registration Statement, one special counsel for the Selling Holders (the
"Holders" Counsel") and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed (at least 5 Business Days prior to such filing). The
Company shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must be
afforded an opportunity to review prior to the filing of such document, if the
Holders of a majority or a majority in aggregate principal amount, as
applicable, of the Registerable Securities covered by such Registration
Statement, the Holders' Counsel, or the
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<PAGE> 10
managing underwriters, if any, shall reasonably object in writing stating the
grounds for objection.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Shelf Effectiveness Period; cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filled pursuant to supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to it with respect to the disposition of all securities covered by
such Registration Statement as so amended or in such Prospectus as so
supplemented. The Company shall be deemed not to have used its best efforts to
keep a Registration Statement effective during the Applicable Period if it
voluntarily takes any action that would result in selling Holders of the
Registerable Securities covered thereby not being able to sell such Registerable
Securities during that period unless such action is required by applicable law.
(c) If (i) a Shelf Registration is filed pursuant to Section 3, or (ii)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act, notify the
selling Holders of Registerable Securities, the Holders" Counsel and the
managing underwriters, if any, promptly (but in any event within two Business
Days), and confirm such notice in writing, (A) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (B) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose, (C) if at any time when a Prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registerable Securities the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 5(n) hereof cease to be true and correct, (D) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of a Registration Statement or any of the
Registerable Securities or the Exchange Securities for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (E) of the happening of any event or any information becoming known
that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in such Registration Statement, Prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the Prospectus, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements
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<PAGE> 11
therein, in light of the circumstances under which they were made, not
misleading, and (F) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) If (i) a Shelf Registration is filed pursuant to Section 3, or (ii)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act, use its best
efforts to prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of a
Prospectus or suspending the qualification (or exemption from qualification) of
any of the Registerable Securities or the Exchange Securities for sale in any
jurisdiction, and, if any such order is issued, to use their best efforts to
obtain the withdrawal of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a majority or
a majority in aggregate principal amount, as applicable, of the Registerable
Securities, being sold in connection with an underwritten offering, (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, or such Holders or counsel
reasonably request to be included therein, (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment and (iii)
supplement or make amendments to such Registration Statement, provided that the
Company shall not be required to take actions that in the opinion of counsel for
the Company are in violation of applicable law.
(f) If (i) a Shelf Registration is filed pursuant to Section 3, or (ii)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act, furnish to each
selling Holder of Registerable Securities who so requests and to the Holders"
Counsel and each managing underwriter, if any, without charge, one conformed
copy of the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and schedules,
and, if requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (i) a Shelf Registration is filed pursuant to Section 3, or (ii)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act, deliver to each
selling Holder of Registerable Securities, the Holders' counsel, and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of preliminary prospectus) and each amendment
or supplement therein and any documents incorporated by reference thereto and
any documents incorporated by reference therein as such Persons may reasonably
request, and, subject to the last paragraph of this Section 5, the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registerable Securities, and the
underwriters or agents (if any), and dealers (if any), in connection with the
offering and sale of the Registerable Securities covered by such Prospectus and
any amendment or supplement thereto
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(h) Prior to any public offering of Registerable Securities or any
delivery of a Prospectus contained in the Exchange Registration Statement, to
use its best efforts to register or qualify, and to cooperate with the selling
Holders of Registerable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registerable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder or the managing
underwriters reasonably request in writing as are reasonably necessary to permit
the offer and sale of such Registerable Securities in such jurisdictions,
provided that where Exchange Securities or Registerable Securities are offered
other than through an underwritten offering, the Company agrees to cause its
counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Securities or the Registerable
Securities covered by the applicable Registration Statement, provided that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Registerable Securities and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registerable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company; and enable such Registerable
Securities to be in such share amounts or denominations and registered in such
names as the managing underwriters, if any, or Holders may reasonably request.
(j) Use its best efforts to cause the Registerable Securities covered
by the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registerable Securities, except as may be required solely as a consequence
of the nature of such selling Holder's business, in which case the Issuer will
cooperate in all reasonable respects with the filing of such Registration
Statement and the granting of such approvals.
(k) If (i) a Shelf Registration is filed pursuant to Section 3, or (ii)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act, upon the
occurrence of any event contemplated by clauses (E) or (F) of Section 5(c)
hereof, as promptly as practicable prepare and (subject to Section 5(a) hereof)
file with the SEC, at the expense of the Company, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other
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required document so that, as thereafter delivered to the purchasers of the
Registerable Securities being sold thereunder or to the purchasers of the
Exchange Securities to whom such Prospectus will be delivered; any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(l) Prior to the effective date under the Securities Act of the first
Registration Statement relating to the Registerable Securities, (i) provide the
Transfer Agent or Trustee, as the case may be, with printed certificates for
Registerable Securities in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registerable Securities.
(m) In the event of an underwritten offering of Registerable Securities
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of securities similar to the Registerable
Securities and take all such other actions as are reasonably requested by the
managing underwriters in order to expedite or facilitate the registration or the
disposition of such Registerable Securities, and in such connection, (i) make
such representations and warranties to the underwriters, with respect to the
business of the Company and its subsidiaries and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of securities similar to the Registerable
Securities, and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Company and updates thereof in form and substance reasonably
satisfactory to the managing underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by underwriters;
(iii) obtain "cold comfort" letters and updates thereof in form and substance
reasonably satisfactory to the managing underwriters from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and such other
matters as reasonably requested by underwriters; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification provisions and
procedures no less favorable than those set forth in Section 7 hereof (or such
other provisions and procedures acceptable to Holders of a majority, or a
majority in aggregate principal amount, as applicable, of Registerable
Securities covered by such Registration Statement and the managing underwriters
or agents) with respect to all parties to be indemnified pursuant to said
Section. The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder.
(n) If (i) a Shelf Registration is filed pursuant to Section 3, or (ii)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act, make available
for inspection by any selling Holder of such Registerable Securities being sold,
any underwriter participating in any such disposition of
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Registerable Securities, if any, and any attorney, accountant or other agent
retained by any such selling Holder or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable business
hours, all financial and other records, pertinent organizational documents and
properties of the Company and its respective subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Company and its subsidiaries to supply all information in each
case reasonably requested by any such Inspector in connection with such
Registration Statement. Records which the Company determines, in good faith, to
be confidential and any Records which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (A) based upon the
advice of counsel the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration Statement, (B) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or (C) the information in such Records has been
made generally available to the public other than as a result of disclosure or
failure to safeguard by such Inspector. Each selling Holder of such Registerable
Securities will be required to agree that information obtained by it as a result
of such inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Company unless
and until such information is made generally available to the public. Each
selling Holder of such Registerable Securities will be required to further agree
that it will, upon learning that disclosure of such Records is sought in a court
of competent jurisdiction, give notice to the Company and allow the Company to
undertake appropriate action to prevent disclosure of the Records deemed
confidential at the Company's expense.
(o) If applicable, provide an indenture trustee for the Registerable
Securities or the Exchange Securities, as the case may be, and cause the
Indenture or the trust indenture provided for in Section 2(h) hereof, as the
case may be, to be qualified under the TIA not later than the effective date of
the Exchange Offer or the first Registration Statement relating to the
applicable Registerable Securities; and in connection therewith, cooperate with
the trustee under any such indenture and the holders of the applicable
Registerable Securities, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its best efforts to cause such trustee to execute,
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registerable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
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(q) Upon consummation of an Exchange Offer, obtain an opinion of
counsel to the Company, addressed to the Trustee if applicable, for the benefit
of all Holders of Registerable Securities participating in the Exchange Offer
which includes an opinion that (i) the Company has duly authorized, executed and
delivered the Exchange Securities and, as applicable, the related certificate of
resolution or indenture, (ii) each of the Exchange Securities, and, as
applicable, certificate of resolution or related indenture constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its respective terms (with customary exceptions) and (iii) if
applicable, each of the Exchange Securities is entitled to the benefits the
Indenture or the indenture provided for Section 2(h) hereof.
(r) If an Exchange Offer is to be consummated, upon delivery of the
Registerable Securities by Holders to the Company (or to such other Person as
directed by the Company) in exchange for the Exchange Securities, the Company
shall mark, or cause to be marked, on such Registerable Securities that such
Registerable Securities are being canceled in exchange for the Exchange
Securities, as the case may be; in no event shall such Registerable Securities
be marked as canceled, paid or otherwise satisfied.
(s) Cooperate with each seller of Registerable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registerable Securities and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD").
(t) Use its best efforts to take all other steps necessary to effect
the registration of the Registerable Securities covered by a Registration
Statement contemplated hereby.
The Company shall not be required to list the Registerable Securities
on any stock exchange or with Nasdaq.
The Company may require each seller of Registerable Securities as to
which registration is being effected to furnish to the Company such information
regarding such seller as the Company may, from time to time, reasonably request
including, without limitation, a written representation to the Company (which
may be contained in the letter of transmittal contemplated by the Exchange
Registration Statement or Shelf Registration, as applicable) stating that (A) it
is not an Affiliate of the Company, (B) the amount of Registerable Securities
held by such Holder prior to the Exchange Offer, (C) the amount of Registerable
Securities owned by such Holder to be exchanged in the Exchange Offer and
representing that such Holder is not engaged in, and does not intend to engage
in, and has no arrangement or understanding with any Person to participate in, a
distribution of the Exchange Securities to be issued and (D) it is acquiring the
Exchange Securities in its ordinary course of business. The Company may exclude
from such registration the Registerable Securities of any seller who
unreasonably fails to furnish such information within 20 Business Days after
receiving such request. Each Seller as to which any Shelf Registration statement
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company not materially misleading.
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Each Holder of Registerable Securities or Exchange Securities agrees by
acquisition of such Registerable Securities or Exchange Securities that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in clauses (B), (D), (E) or (F) or Section 5(c) hereof, such Holder
will forthwith discontinue disposition of such Registerable Securities covered
by such Registration Statement or Prospectus or Exchange Securities, as the case
may be, and dissemination of such Prospectus until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
hereof, or until it is advised in writing (the "Advice") by the Company that the
use of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto. In the event the Company shall give any such
notice, each of the Shelf Effectiveness Period and the Applicable Period shall
be extended by the number of days during such periods from and including the
date of the giving of such notice to and including the date when each seller of
Registerable Securities covered by such Registration Statement or Exchange
Securities, as the case may be, shall have received (i) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) or (ii) the
Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company, whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of their counsel in connection
with Blue Sky qualifications of the Registerable Securities or Exchange
Securities and determination of the eligibility of the Registerable Securities
or Exchange Securities for investment under the laws of such jurisdictions where
the holders of Registerable Securities are located, (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registerable Securities or Exchange Securities in a form eligible for deposit
with The Depository Trust Company and of printing prospectuses if the printing
of prospectuses is requested by the managing underwriters, if any, or, in
respect of Registerable Securities or Exchange Securities to be sold during the
Applicable Period, by the Holders of a majority or a majority in aggregate
principal amount, as applicable, of the Registerable Securities included in any
Registration Statement, as the case may be, (iii) reasonable messenger,
telephone and delivery expenses, (iv) fees and disbursements for the Company and
reasonable fees and disbursements of the Holders" Counsel (subject to the
provisions of Section 6(b) hereof), (v) fees and all independent certified
public accountants referred to in clause (iii) of Section 5(n) (including,
without limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) the fees and expenses of any
"qualified independent underwriter" or other independent appraiser participating
in an offering pursuant to Rule 2720(c) of the National Association of
Securities Dealers, Inc., (vii) Securities Act liability insurance, if the
Company desires such insurance, (viii) fees and expenses of all other Persons
retained by the Company, (ix) internal expense of the Company (including,
without limitation, all salaries and expenses of officers and employees of the
Company performing legal or accounting
16
<PAGE> 17
duties), (x) the expense of any annual audit and (xi) the expense relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the
Company shall reimburse the Holders of the Registerable Securities being
registered in such registration for the reasonable fees and disbursements of one
Holders' Counsel chosen by the Holder of a majority or a majority in aggregate
principal amount, as applicable, of the Registerable Securities, to be included
in such Registration Statement and other out-of-pocket expenses of the Holders
of Registerable Securities incurred in connection with the registration of the
Registerable Securities.
7. Indemnification
(a) The Company agrees to indemnify and hold harmless each
Holder of Registerable Securities, the directors, officers, employees and agents
of each such Person, and each Person, if any, who controls any such Person
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (each a "Participant") from and against any and all losses, claims,
liabilities, expenses and damages (including any and all investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted), to
which they, or any of them, may become subject under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus or any amendment or supplement thereto or any preliminary prospectus
or the omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading, provided that (i) a Participant will not be entitled to any such
indemnification hereunder to the extent that such loss, claim, liability,
expense or damage arises from and is based on an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to such Participant furnished in writing to the Company by
such Participant expressly for inclusion therein and (ii) the foregoing
indemnity with respect to any untrue statement contained or in omission from a
preliminary prospectus or prospectus shall not inure to the benefit of any
Participant (or any person controlling such Participant), from whom the person
asserting any such loss, liability, claim, damage or expense purchased any of
the Registerable Securities which are the subject thereof it is finally
judicially determined that (A) such loss, liability, claim, damage or expense
relates solely to such untrue statement of material fact contained in, or such
omission of a material fact from, such preliminary prospectus or prospectus and
such Participant failed to deliver a copy of the prospectus or any amendment or
supplement thereof to such person at or prior to the confirmation of the sale of
Registerable Securities to such person and (B) the untrue statement or omission
of a material fact contained in such preliminary prospectus or prospectus was
corrected in the prospectus or any such amendment or supplement.
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<PAGE> 18
(b) Each Participant will indemnify and hold harmless the
Company, each Person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, each member
of the board of managers or directors, as applicable, of the Company and each
officer of the Company to the same extent as the foregoing indemnity from the
Company to each Participant, but only insofar as losses, claims, liabilities,
expenses or damages arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to such Participant furnished in writing to
the Company by such Participant expressly for use in any Registration Statement
or Prospectus or any amendment or supplement thereto or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of
Registerable Securities or Exchange Securities, as applicable, giving rise to
such obligations.
(c) Any party that proposes to assert the right to be
indemnified under this Section 7 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 7, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 7 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defense
by the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement the
indemnifying party elects by delivering written notice to the indemnified party
will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advise of counsel) that there may be
material legal defenses available to it that are materially different from or in
addition to those available to the indemnifying party or (3) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges or more than one
separate firm admitted to practice in such jurisdiction at any one item for all
such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as
18
<PAGE> 19
they are incurred. An indemnifying party will not be liable for any settlement
of any action or claim effected without its written consent (which consent will
not be unreasonably withheld).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or any Participant, the
Company and each Participant will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in action, suit or proceeding or any claim
asserted, but after deducting any contribution received by the Company from
Persons other than a Participant, such as Persons who control the Company within
the meaning of the Securities Act, officers of the Company and directors of the
Company, who also may be liable for contribution) to which the Company and each
Participant my be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and such
Participant, on the other, and, if such allocation is not permitted by
applicable law or indemnification is not available as provided in this Section
7, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company, on the
one hand, and such Participant, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and each
Participant, on the other hand, shall be deemed to be in the same proportion as
(i) the total proceeds from the offering of the Registerable Securities (net of
discounts but before deducting expenses) received by the Company and (ii) the
total proceeds received by such Participant upon the sale of the Registerable
Securities giving rise to such indemnification obligation. The relative fault of
the Company, on the one hand, and of any Participant, on the other hand, shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or such
Participant and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and each Participant agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section 7(d)
shall be deemed to include, for purpose of this Section 7(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), a Participant shall not be required to
contribute any amount in excess of the amount by which proceeds received by such
Participant from sales of Registerable Securities exceeds the amount of any
damages that such Participant has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
Person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 7(d), any Person who controls a party to this Agreement within the
meaning of the Securities Act will have the same rights to
19
<PAGE> 20
contribution as that party, and the respective officers, directors, managers,
partners, members, employees, representatives and agent of any party to this
Agreement will have the same rights to contribution as such party, subject in
each case to the provisions hereof. Any party entitled to contribution, promptly
after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made under this Section 7(d),
will notify any such party or parties from whom contribution may be sought, but
the omission so to notify will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section 7(d). No party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will not be
unreasonably withheld).
(e) The indemnity and contribution agreements contained in
this Section 7 will be in addition to any liability which the indemnifying
persons may otherwise have to the indemnified persons referred to above.
8. Rules 144 and 144A
The Company covenants that it will file the reports required
to be filed by them under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if any
time the Company is not required to file such reports, it will, upon the request
of any Holder of Registerable Securities, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 and Rule
144A under the Securities Act. The Company further covenants that they will take
such further action as any Holder of Registerable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registerable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 and Rule 144A
under the Securities Act, as such Rules may be amended from time to time, or (b)
any similar rule or regulation hereafter from time to time, or (b) any similar
rule or regulation hereafter adopted by the SEC. Nothing required in this
Section 8 shall require the Company to register any of its securities under the
Exchange Act.
9. Underwritten Registrations
If any of the Registerable Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority or a majority in aggregate principal
amount, as applicable, of such Registerable Securities included in such offering
and reasonably acceptable to the Company.
No Holder of Registerable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registerable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under
20
<PAGE> 21
the terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Company of any
of its obligations under this Agreement, each Holder of Registerable Securities,
in addition to being entitled to exercise all rights provided herein, in the
Indenture, if applicable, or in the Purchase Agreement or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it shall
waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not, as of the
date hereof, and shall not, after the date of this Agreement, enter into any
agreement with respect to any of its securities that is inconsistent with the
rights granted to the Holders of Registerable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not entered or
will not enter into any agreement with respect to any of its securities which
will grant to any Person piggy-back rights with respect to a Registration
Statement to be filed pursuant to the terms of this Agreement.
(c) Adjustments Affecting Registerable Securities. The Company
shall not, directly or indirectly, take any action with respect to the
applicable Registerable Securities as a class that would adversely affect the
ability of the Holders of Registerable Securities to include such Registerable
Securities in a registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of at least a majority or a majority in aggregate principal amount, as
applicable, of the then outstanding Registerable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registerable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registerable Securities may be given by Holders of at
least a majority or a majority in aggregate principal amount, as applicable, of
the Registerable Securities, being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(e) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee, if
applicable) provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day
21
<PAGE> 22
air courier or telecopier:
(i) if to a Holder of Registerable Securities, at the
most current address given by the Transfer Agent or Trustee, as
applicable, to the Company, and if Ares Leveraged Investment Fund, L.P.
is a Holder, with copies to:
Morgan, Lewis & Bockius LLP
Attention: Peter P. Wallace, Esq.
300 S. Grand Avenue
22nd Floor
Los Angeles, CA 90071
and
Fulbright & Jaworski LLP
300 Convent Street
Suite 2200
San Antonio, TX 78205
(ii) if the Company, at:
Packaged Ice, Inc.
Attention: Chief Executive Officer
8572 Katy Freeway, Suite 101
Houston, Texas 77024
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Attention: Alan Schoenbaum
1500 NationsBank Plaza
300 Convent
San Antonio, Texas 78205
Facsimile: (210) 224-2035
All such notices and communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; five Business
Days after being deposited in the postage prepaid, if mailed; one Business Day
after being timely delivered to a next-day air courier; and when receipt is
acknowledge by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture, if applicable.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and
22
<PAGE> 23
without the need for an express assignment, subsequent Holders of Registerable
Securities; provided, that, with respect to the indemnity and contribution
agreements in Section 7, each Holder of Registerable Securities subsequent to
the Investors shall be bound by the terms thereof if (i) such Holder elects to
include Registerable Securities in a Shelf Registration and (ii) such Holder is
advised expressly by the Company of the provisions contained in Section 7 and
that such Holder's election to include Registerable Securities in a Shelf
Registration shall be deemed such Holder's agreement to be bound by such
provisions.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or other wise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF CALIFORNIA, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT
TO THE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(k) Entire Agreement. This Agreement, together with the
Purchase Agreement, the Indenture and Certificate of Designations, is intended
by the parties as a final expression of their agreement, and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
(1) Notes Held by the Company or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registerable
Securities is required hereunder, Registerable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
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<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
PACKAGED ICE, INC.
By: /s/ JAMES F. STUART
-----------------------------
Its: Chief Financial Officer
---------------------------
(INVESTOR SIGNATURE PAGES FOLLOW)
[Exchange Offer Registration Rights Agreement]
<PAGE> 25
INVESTOR:
ARES LEVERAGED INVESTMENT FUND, L.P.
By: ARES MANAGEMENT, L.P.
its General Partner
By: /s/ ILLEGIBLE
----------------------
Name:
Title:
[Exchange Offer Registration Rights Agreement]
<PAGE> 26
INVESTOR:
S.V. CAPITAL PARTNERS, L.P.
By: S.V. Capital Management, Inc.
its General Partner
By: /s/ R.J. SANDS
------------------------------
Name: R.J. SANDS
Title: MANAGING DIRECTOR
[Exchange Offer Registration Rights Agreement]
<PAGE> 27
Schedule I
SCHEDULE OF INVESTORS
Ares Leveraged Investment Fund, L.P.
S.V. Capital Partners, L.P.
<PAGE> 1
EXHIBIT 4.8
REGISTRATION RIGHTS AGREEMENT
Dated as of April 30, 1998
by and among
PACKAGED ICE, INC.
and
the INVESTORS named herein
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Registration Rights . . . . . . . . . . . . . . . . . . . . . 4
2.1 (a) Demand Registration . . . . . . . . . . . . . . . . . . 4
(b) Effective Registration . . . . . . . . . . . . . . . . 5
(c) Restrictions on Sale by Holders . . . . . . . . . . . . 5
(d) Underwritten Registrations . . . . . . . . . . . . . . 5
(e) Expenses . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Priority in Demand Registration . . . . . . . . . . . . 6
2.2 (a) Piggy-Back Registration . . . . . . . . . . . . . . . . 6
(b) Priority in Piggyback Registration . . . . . . . . . . 7
2.3 Limitations, Conditions and Qualifications to Obligations
Under Registration Covenants . . . . . . . . . . . . . . . . 8
2.4 Restrictions on Sale by the Company and Others . . . . . . . . 9
2.5 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3. Registration Procedures . . . . . . . . . . . . . . . . . . 10
Section 4. Indemnification and Contribution . . . . . . . . . . . . . . 15
Section 5. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 19
(a) No Inconsistent Agreements . . . . . . . . . . . . . 19
(b) Adjustments Affecting Registerable Securities . . . . 19
(c) Amendments and Waivers . . . . . . . . . . . . . . . 19
(d) Notices . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Successors and Assigns . . . . . . . . . . . . . . . 20
(f) Counterparts . . . . . . . . . . . . . . . . . . . . 20
(g) Headings . . . . . . . . . . . . . . . . . . . . . . 20
(h) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 20
(i) Severability . . . . . . . . . . . . . . . . . . . . 21
(j) Third Party Beneficiary . . . . . . . . . . . . . . . 21
(k) Entire Agreement . . . . . . . . . . . . . . . . . . 21
(l) Securities Held by the Company or Its Affiliates . . 21
</TABLE>
i
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of April 30, 1998, by and among PACKAGED ICE, INC., a Texas
corporation (the "COMPANY"), and the investors named on Schedule I hereto (the
"INVESTORS").
This Agreement is entered into in connection with Securities Purchase
Agreements between the Company and the Investors, dated April 30, 1998 (the
"SECURITIES PURCHASE AGREEMENT"), pursuant to which the Company issued and
sold to the Investors, among other things, Warrants to purchase an aggregate of
975,752 (subject to adjustment) shares of Common Stock (collectively,
"WARRANTS").
In consideration of the foregoing, the parties hereto agree as follows:
Section 1. Definitions. As used in this Agreement, the following
defined terms shall have the following meanings:
"ADVICE" has the meaning ascribed to such term in the last
paragraph of Section 3 hereof.
"BUSINESS DAY" shall mean a day that is not a Legal Holiday.
"COMMON STOCK" shall mean the shares of common stock, par value
$.01 per share, of the Company.
"DEMAND REGISTRATION" has the meaning ascribed to such term in
Section 2.1(a) hereof.
"DEMAND RIGHT HOLDERS" means persons with "demand" registration
rights pursuant to a contractual commitment of the Company.
"DTC" has the meaning ascribed to such term in Section 3(i)
hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC
promulgated thereunder.
"HOLDER" means each of the Investors, for so long as it owns any
of the Registerable Securities, and each of its successors, assigns and
direct and indirect transferees who become registered owners of such
Registerable Securities.
"INCLUDED SECURITIES" has the meaning ascribed to such term in
Section 2.1(a) hereof.
"INDEMNIFIED PARTY" has the meaning ascribed to such term in
Section 4(c) hereof.
1
<PAGE> 4
"INDEMNIFYING PARTY" has the meaning ascribed to such term in
Section 4(c) hereof.
"INSPECTORS" has the meaning ascribed to such term in Section
3(n) hereof.
"INVESTORS" has the meaning ascribed to that term in the preamble
of this Agreement.
"LEGAL HOLIDAY" shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law,
regulation or executive order to remain closed.
"PERSON" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"PIGGY-BACK REGISTRATION" has the meaning ascribed to such term
in Section 2.2 hereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to
completion and a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities
Act), as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"PUBLIC EQUITY OFFERING" means an underwritten offer and sale of
capital stock of the Company 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).
"REGISTERABLE SECURITIES" means any of (i) the Warrant Shares
(whether or not the related Warrants have been exercised) and (ii) any
other securities issued or issuable with respect to any Warrant Shares
by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, or pursuant to the issuance of Additional Shares of
Common Stock (as defined in the Warrants) or otherwise. As to any
particular Registerable Securities, such securities shall cease to be
Registerable Securities when (i) a Registration Statement with respect
to the offering of such securities by the Holder thereof shall have been
declared effective under the Securities Act and such securities shall
have been disposed of by such Holder pursuant to such Registration
Statement, (ii) such securities are eligible for sale to the public
pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule
2
<PAGE> 5
144A) promulgated under the Securities Act, (iii) such securities shall
have been otherwise transferred by such Holder and new certificates for
such securities not bearing a legend restricting further transfer shall
have been delivered by the Company or its transfer agent and subsequent
disposition of such securities shall not require registration or
qualification under the Securities Act or any similar state law then in
force, or (iv) such securities shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean all expenses incident to the
Company's performance of or compliance with its obligations, under this
Agreement, including, without limitation, all SEC and stock exchange or
National Association of Securities Dealers, Inc. registration and filing
fees and expenses, fees and expenses of compliance with securities or
blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters in connection with blue
sky qualifications of the Registerable Securities), preparing, printing,
filing, duplicating and distributing the Registration Statement and the
related Prospectus, the cost of printing stock certificates, the cost
and charges of any transfer agent, rating agency fees, printing
expenses, messenger, telephone and delivery expenses, fees and
disbursements of counsel for the Company and all independent certified
public accountants, the fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (but not including
any underwriting discounts or commissions or transfer taxes, if any,
attributable to the sale of Registerable Securities by Selling Holders),
fees and expenses of one counsel for the Holders and other reasonable
out-of-pocket expenses of the Selling Holders.
"REGISTRATION STATEMENT" shall mean any appropriate registration
statement of the Company filed with the SEC pursuant to the Securities
Act which covers any of the Registerable Securities pursuant to the
provisions of this Agreement and all amendments and supplements to any
such Registration Statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"REQUISITE SECURITIES" shall mean a number of Registerable
Securities equal to not less than 25% of the Registerable Securities
held in the aggregate by all Holders.
"RULE 144" shall mean Rule 144 promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule
(other than Rule 144A) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance
therewith resulting in offers and sales by subsequent holders that are
not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations of the SEC
promulgated thereunder.
"SELLING HOLDER" shall mean a Holder who is selling Registerable
Securities in
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accordance with the provisions of Section 2.1 or 2.2 hereof.
"WARRANTS" has the meaning ascribed to such term in the preamble
of this Agreement.
"WARRANT SHARES" shall mean the shares of Common Stock
deliverable upon exercise of the Warrants.
"WITHDRAWAL ELECTION" has the meaning ascribed to such term in
Section 2.2(b) hereof.
Section 2. Registration Rights.
2.1 (a) Demand Registration. (i) From time to time, after 180
days following the completion by the Company of a Public Equity Offering, or
(ii) in the event that there has not been a Public Equity Offering, at any time
after the date that is five years from the date hereof, Holders owning,
individually or in the aggregate, not less than the Requisite Securities may
make a written request for registration under the Securities Act of their
Registerable Securities (a "DEMAND REGISTRATION"). Within 120 days of the
receipt of such written request for a Demand Registration, the Company shall
file with the SEC and use its best efforts to cause to become effective under
the Securities Act a Registration Statement with respect to such Registerable
Securities. Any such request will specify the number of Registerable Securities
proposed to be sold and will also specify the intended method of disposition
thereof. The Company shall give written notice of such registration request to
all other Holders of Registerable Securities within 15 days after the receipt
thereof. Within 20 days after notice of such registration request by the
Company, any Holder may request in writing that such Holder's Registerable
Securities be included in such Registration Statement and the Company shall
include in such Registration Statement the Registerable Securities of any such
Holder requested to be so included (the "INCLUDED SECURITIES"). Each such
request by such other Holders shall specify the number of Included Securities
proposed to be sold and the intended method of disposition thereof. Subject to
Section 2.1(b) hereof, the Company shall be required to register Registerable
Securities pursuant to this Section 2.1(a) on a maximum of two separate
occasions; provided, the Company shall not be required to register Registrable
Securities pursuant to this Section 2.1(a) more than once in any twelve month
period.
Subject to Section 2.1(f) hereof, no other securities of the
Company except securities held by any Holder, any Demand Right Holder, and any
Person entitled to exercise "piggy back" registration rights pursuant to
contractual commitments of the Company shall be included in a Demand
Registration.
(b) Effective Registration. A Registration Statement will not
be deemed to have been effected as a Demand Registration unless it has been
declared effective by the SEC and the Company has complied in a timely manner
and in all material respects with all of its obligations under this Agreement
with respect thereto; provided, however, that if, after such Registration
Statement has become effective, the offering of Registerable Securities
pursuant to
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<PAGE> 7
such Registration Statement is or becomes the subject of any stop order,
injunction or other order or requirement of the SEC or any other governmental
or administrative agency or court that prevents, restrains or otherwise limits
the sale of Registerable Securities pursuant to such Registration Statement for
any reason not attributable to any Holder participating in such registration
and such Registration Statement has not become effective within a reasonable
time period thereafter (not to exceed 60 days), such Registration Statement
will be deemed not to have been effected. If (i) a registration requested
pursuant to this Section 2.1 is deemed not to have been effected or (ii) a
Demand Registration does not remain effective under the Securities Act until at
least the earlier of (A) an aggregate of 90 days after the effective date
thereof or (B) the consummation of the distribution by the Holders of 80% of
the Registerable Securities covered thereby, then the Company shall continue to
be obligated to effect a Demand Registration pursuant to this Section 2.1
provided, that a Demand Registration shall not be counted as such unless the
Selling Holders have sold 80% of the Included Securities. For purposes of
calculating the 90-day period referred to in the preceding sentence, any period
of time during which such Registration Statement was not in effect shall be
excluded. The Holders of Registerable Securities shall be permitted to
withdraw all or any part of the Registerable Securities from a Demand
Registration at any time prior to the effective date of such Demand
Registration.
(c) Restrictions on Sale by Holders. Each Holder of
Registerable Securities whose Registerable Securities are covered by a
Registration Statement filed pursuant to this Section 2.1 and are to be sold
thereunder agrees, if and to the extent reasonably requested by the managing
underwriter or underwriters in an underwritten offering, not to effect any
public sale or distribution of Registerable Securities or of securities of the
Company of the same class as any securities included in such Registration
Statement, including a sale pursuant to Rule 144 (except as part of such
underwritten offering), during the 30-day period prior to, and during the
90-day period beginning on, the closing date of each underwritten offering made
pursuant to such Registration Statement, to the extent timely notified in
writing by the Company or such managing underwriter or underwriters.
The foregoing provisions of Section 2.1(c) shall not apply to any
Holder of Registerable Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement; provided, however,
that any such Holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any such public sale or distribution of
Registerable Securities or of securities of the Company of the same class as
any securities included in such Registration Statement, including a sale
pursuant to Rule 144 (except as part of such underwritten offering) during such
period, unless it has provided 45 days' prior written notice of such sale or
distribution to the underwriter or underwriters.
(d) Underwritten Registrations. If any of the Registerable
Securities covered by a Demand Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Holders of not less than
a majority of the Registerable Securities then outstanding to be sold
thereunder and will be reasonably acceptable to the Company.
No Holder of Registerable Securities may participate in any
underwritten
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<PAGE> 8
registration pursuant to a Registration Statement filed under this Agreement
unless such Holder (a) agrees to (i) sell such Holder's Registerable Securities
on the basis provided in and in compliance with any underwriting arrangements
approved by the Holders of not less than a majority of the Registerable
Securities to be sold thereunder and (ii) comply with Rules 10b-6 and 10b-7
under the Exchange Act and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
(e) Expenses. The Company will pay all Registration Expenses
in connection with the registrations requested pursuant to Section 2.1(a)
hereof. Each Holder of Registerable Securities shall pay all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registerable Securities pursuant to a Registration
Statement requested pursuant to this Section 2.1.
(f) Priority in Demand Registration. In a registration
pursuant to Section 2.1 hereof involving an underwritten offering, if the
managing underwriter or underwriters of such underwritten offering have
informed, in writing, the Company and the Selling Holders who have requested
such Demand Registration or who have sought inclusion therein that in such
underwriter's or underwriters' opinion the total number of securities which the
Selling Holders and any other Person desiring to participate in such
registration intend to include in such offering is such as to adversely affect
the success of such offering, including the price at which such securities can
be sold, then the Company will be required to include in such registration only
the amount of securities which it is so advised should be included in such
registration. In such event, securities shall be registered in such
registration in the following order of priority: (i) first, the securities
which have been requested to be included in such registration by the Holders of
Registerable Securities pursuant to this Agreement and the Demand Right Holders
(pro rata based on the amount of securities sought to be registered by such
Persons), (ii) second, provided that no securities sought to be included by the
Holders and the Demand Right Holders have been excluded from such registration,
the securities of other Persons entitled to exercise "piggy-back" registration
rights pursuant to contractual commitments of the Company (pro rata based on
the amount of securities sought to be registered by such Persons) and (iii)
third, securities the Company proposes to register.
2.2 (a) Piggy-Back Registration. If at any time after the Company
has completed a Public Equity Offering, the Company proposes to file a
Registration Statement under the Securities Act with respect to an offering by
the Company for its own account or for the account of any of its
securityholders of any class of its Common Stock in a firmly underwritten
Public Equity Offering (other than (i) a Registration Statement on Form S-4 or
S-8 (or any substitute form that may be adopted by the SEC) or (ii) a
Registration Statement filed in connection with an exchange offer or offering
of securities solely to the Company's existing securityholders), then the
Company shall give written notice of such proposed filing to the Holders of
Registerable Securities as soon as practicable (but in no event fewer than 20
days before the anticipated filing date), and such notice shall offer such
Holders the opportunity to register such number of shares of Registerable
Securities as each such Holder may request in writing within 30 days after
receipt of such written notice from the Company (which request shall
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<PAGE> 9
specify the Registerable Securities intended to be disposed of by such Selling
Holder) (a "Piggy-Back Registration"). The Company shall use its best efforts
to keep such Piggy-Back Registration continuously effective under the
Securities Act until at least the earlier of (A) the 90th day after the
effective date thereof or (B) the consummation of the distribution by the
Holders of all of the Registerable Securities covered thereby. The Company
shall use its best efforts to cause the managing underwriter or underwriters,
if any, of such proposed offering to permit the Registerable Securities
requested to be included in a Piggy-Back Registration to be included on the
same terms and conditions as any similar securities of the Company or any other
securityholder included therein and to permit the sale or other disposition of
such Registerable Securities in accordance with the intended method of
distribution thereof. Any Selling Holder shall have the right to withdraw its
request for inclusion of its Registerable Securities in any Registration
Statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw. The Company may withdraw a Piggy-Back Registration
at any time prior to the time it becomes effective or the Company may elect to
delay the registration; provided, however, that the Company shall give prompt
written notice thereof to participating Selling Holders. The Company will pay
all Registration Expenses in connection with each registration of Registerable
Securities requested pursuant to this Section 2.2, and each Holder of
Registerable Securities shall pay all underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of such
Holder's Registerable Securities pursuant to a Registration Statement effected
pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no failure
to effect a registration under this Section 2.2, shall relieve the Company of
its obligation to effect a registration upon the request of Holders of
Registerable Securities pursuant to Section 2.1 hereof, and no failure to
effect a registration under this Section 2.2 and to complete the sale of
securities registered thereunder in connection therewith shall relieve the
Company of any other obligation under this Agreement.
(b) Priority in Piggyback Registration. In a registration
pursuant to Section 2.2 hereof involving an underwritten offering, if the
managing underwriter or underwriters of such underwritten offering have
informed, in writing, the Company and the Selling Holders requesting inclusion
in such offering that in such underwriter's or underwriters' opinion the total
number of securities which the Company, the Selling Holders and any other
Persons desiring to participate in such registration intend to include in such
offering is such as to adversely affect the success of such offering, including
the price at which such securities can be sold, then the Company will be
required to include in such registration only the amount of securities which it
is so advised should be included in such registration. In such event: (x) in
cases initially involving the registration for sale of securities for the
Company's own account, securities shall be registered in such offering in the
following order of priority: (i) first, the securities which the Company
proposes to register and (ii) second, the securities which have been requested
to be included in such registration by Persons entitled to exercise "piggy-
back" registration rights pursuant to contractual commitments of the Company
(pro rata based on the amount of securities sought to be registered by such
Persons); and (y) in cases not initially involving the registration for sale of
securities for the Company's own account, securities shall be registered in
such offering in the following order of priority: (i) first, the securities of
any Person whose exercise of a "demand" registration right
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<PAGE> 10
pursuant to a contractual commitment of the Company is the basis for the
registration (provided that if such Person is a Holder of Registerable
Securities, as among Holders of Registerable Securities there shall be no
priority and Registerable Securities sought to be included by Holders of
Registerable Securities shall be included pro rata based on the amount of
securities sought to be registered by such Persons), (ii) second, securities of
other persons entitled to exercise "piggy-back" registration rights pursuant to
contractual commitments (pro rata based on the amount of securities sought to
be registered by such Persons) and (iii) third, the securities which the
Company proposes to register.
If, as a result of the provisions of this Section 2.2(b), any
Selling Holder shall not be entitled to include all Registerable Securities in
a Piggy-Back Registration that such Selling Holder has requested to be
included, such Selling Holder may elect to withdraw his request to include
Registerable Securities in such registration (a "Withdrawal Election");
provided, however, that a Withdrawal Election shall be irrevocable and, after
making a Withdrawal Election, a Selling Holder shall no longer have any right
to include Registerable Securities in the registration as to which such
Withdrawal Election was made.
2.3 Limitations, Conditions and Qualifications to Obligations Under
Registration Covenants. The obligations of the Company set forth in Sections
2.1 and 2.2 hereof are subject to each of the following limitations, conditions
and qualifications:
(a) Subject to the next sentence of this paragraph, the
Company shall be entitled to postpone, for a reasonable period of time, the
filing or effectiveness of, or suspend the rights of any Holders to make sales
pursuant to, any Registration Statement otherwise required to be prepared,
filed and made and kept effective by it hereunder; provided, however, that the
duration of such postponement or suspension may not exceed the earlier to occur
of (A) 15 days after the cessation of the circumstances described in the next
sentence of this paragraph on which such postponement or suspension is based or
(B) 120 days after the date of the determination of the Board of Directors
referred to in the next sentence, and the duration of any such postponement or
suspension shall be excluded from the calculation of the 90-day period
described in Section 2.1(b) hereof. Such postponement or suspension may only
be effected if the Board of Directors of the Company determines in good faith
that the filing or effectiveness of, or sales pursuant to, such Registration
Statement would materially impede, delay or interfere with any financing, offer
or sale of securities, acquisition, corporate reorganization or other
significant transaction involving the Company or any of its affiliates (whether
or not planned, proposed or authorized prior to an exercise of demand
registration rights hereunder or any other registration rights agreement) or
require disclosure of material information which the Company has a bona fide
business purpose for preserving as confidential. If the Company shall so
postpone the filing or effectiveness of a Registration Statement or so suspend
the rights of Holders to make sales it shall, as promptly as possible, notify
any Selling Holders of such determination, and the Selling Holders shall (y)
have the right, in the case of a postponement of the filing or effectiveness of
a Registration Statement, upon the affirmative vote of the Holders of not less
than a majority of the Registerable Securities to be included in such
Registration Statement, to withdraw the request for registration by giving
written notice to the Company within 10 days after receipt of such notice or
(z) in the case of a suspension of the right to make sales, receive an
extension of the registration
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period equal to the number of days of the suspension. Any Demand Registration
as to which the withdrawal election referred to in the preceding sentence has
been effected shall not be counted for purposes of the two Demand Registrations
the Company is required to effect pursuant to Section 2.1 hereof.
(b) The Company shall not be required by this Agreement to
include securities in a Registration Statement pursuant to Section 2.2 hereof
if (i) in the written opinion of counsel to the Company, addressed to the
Holders and delivered to them, the Holders of such securities seeking
registration would be free to sell all such securities within the current
calendar quarter, without registration, under Rule 144, which opinion may be
based in part upon the representation by such Holders, which representation
shall not be unreasonably withheld, that each such Holder is not an affiliate
of the Company within the meaning of the Securities Act and (ii) all
requirements under the Securities Act for effecting such sales are satisfied at
such time.
(c) The Company's obligations shall be subject to the
obligations of the Selling Holders, which the Selling Holders acknowledge, to
furnish all information and materials and to take any and all actions as may be
required under applicable federal and state securities laws and regulations to
permit the Company to comply with all applicable requirements of the SEC and to
obtain any acceleration of the effective date of such Registration Statement.
(d) The Company shall not be obligated to cause any special
audit to be undertaken in connection with any registration pursuant to this
Agreement unless such audit is requested by the underwriters with respect to
such registration.
2.4 Restrictions on Sale by the Company and Others. The
Company covenants and agrees that it shall not, and that it shall not cause or
permit any of its subsidiaries to, effect any public sale or distribution of
any securities of the same class as any of the Registerable Securities or any
securities convertible into or exchangeable or exercisable for such securities
(or any option or other right for such securities) during the 30-day period
prior to, and during the 90-day period beginning on, the commencement of any
underwritten offering of Registerable Securities pursuant to a Demand
Registration which has been requested pursuant to this Agreement, or a
Piggy-Back Registration.
2.5 Rule 144. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder in a timely
manner and, if at any time the Company is not required to file such reports, it
will, upon the request of any Holder of Registerable Securities, make publicly
available other information so long as necessary to permit sales pursuant to
Rule 144. Upon the request of any Holder of Registerable Securities, the
Company will in a timely manner deliver to such Holder a written statement as
to whether it has complied with such information requirements.
Section 3. Registration Procedures. In connection with the
obligations of the Company with respect to any Registration Statement pursuant
to Sections 2.1 and 2.2 hereof, the Company shall:
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(a) Prepare and file with the SEC as soon as practicable each
such Registration Statement (but in any event on or prior to the date of filing
thereof required under this Agreement) and cause each such Registration
Statement to become effective and remain effective as provided herein;
provided, however, that before filing any such Registration Statement or any
Prospectus or any amendments or supplements thereto (including documents that
would be incorporated or deemed to be incorporated therein by reference,
including such documents filed under the Exchange Act that would be
incorporated therein by reference), the Company shall afford promptly to the
Holders of the Registerable Securities covered by such Registration Statement,
their counsel and the managing underwriter or underwriters, if any, an
opportunity to review copies of all such documents proposed to be filed a
reasonable time prior to the proposed filing thereof. The Company shall not
file any Registration Statement or Prospectus or any amendments or supplements
thereto if the Holders of a majority of the Registerable Securities covered by
such Registration Statement, their counsel, or the managing underwriter or
underwriters, if any, shall reasonably object in writing, unless failure to
file any such amendment or supplement would involve a violation of the
Securities Act or other applicable law.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to such Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the time periods
prescribed hereby; cause the related Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provision then in force) promulgated under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to it with respect to the disposition of all securities covered by
such Registration Statement as so amended or such Prospectus as so
supplemented.
(c) Notify the Holders of Registerable Securities, their
counsel and the managing underwriter or underwriters, if any, promptly (but in
any event within two (2) Business Days), and confirm such notice in writing,
(i) when a Prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective (including in such
notice a written statement that any Holder may, upon request, obtain, without
charge, one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules and exhibits), (ii) of
the issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or of any order preventing or suspending the use of any
Prospectus or the initiation or threatening of any proceedings for that
purpose, (iii) if at any time when a prospectus is required by the Securities
Act to be delivered in connection with sales of the Registerable Securities the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated by Section 3(m) below cease
to be true and correct in any material respect, (iv) of the receipt by the
Company of any notification with respect to (A) the suspension of the
qualification or exemption from qualification of the Registration Statement or
any of the Registerable Securities covered thereby for offer or sale in any
jurisdiction or (B) the initiation of any proceeding for such purpose, (v) of
the happening of any event, the existence of any condition or information
becoming known that requires the
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making of any change in any Registration Statement or Prospectus so that, in
the case of such Registration Statement, it will conform in all material
respects with the requirements of the Securities Act and it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of any Prospectus, it will conform in all
material respects with the requirements of the Securities Act and it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(vi) of the Company's reasonable determination that a post-effective amendment
to such Registration Statement would be appropriate.
(d) Use every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registerable
Securities covered thereby for sale in any jurisdiction, and, if any such order
is issued, to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If requested by the managing underwriter or underwriters,
if any, or the Holders of a majority of the Registerable Securities being sold
in connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters, if any, or such Holders reasonably
request to be included therein to comply with applicable law, (ii) make all
required filings of such prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment, and (iii) supplement or make amendments to such Registration
Statement.
(f) Furnish to each Holder of Registerable Securities who so
requests and to counsel for the Holders of Registerable Securities and each
managing underwriter, if any, without charge, upon request, one conformed copy
of the Registration Statement and each post-effective amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits (including
exhibits incorporated by reference).
(g) Deliver to each Holder of Registerable Securities, their
counsel and each underwriter, if any, without charge, as many copies of each
Prospectus and each amendment or supplement thereto as such Persons may
reasonably request; and, subject to the last paragraph of this Section 3, the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the Holders of Registerable Securities and the
underwriter or underwriters or agents, if any, in connection with the offering
and sale of the Registerable Securities covered by such Prospectus and any
amendment or supplement thereto.
(h) Prior to any offering of Registerable Securities, to
register or qualify, and cooperate with the Holders of such Registerable
Securities, the managing underwriter or
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<PAGE> 14
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, such Registerable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
the managing underwriter or underwriters reasonably request in writing, or, in
the event of a non-underwritten offering, as the Holders of a majority of such
Registerable Securities may request; provided, however, that where Registerable
Securities are offered other than through an underwritten offering, the Company
agrees to cause its counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
3(h); and keep each such registration or qualification (or exemption therefrom)
effective during the period the Registration Statement relating to such
Registerable Securities is required to be kept effective pursuant to this
Agreement and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the securities covered thereby;
provided, however, that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so qualified,
(B) take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject, or (C) become subject to
taxation in any jurisdiction where it is not then so subject.
(i) Cooperate with the Holders of Registerable Securities and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registerable Securities
to be sold, which certificates shall not bear any restrictive legends
whatsoever and shall be in a form eligible for deposit with The Depository
Trust Company ("DTC"); and enable such Registerable Securities to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request at least two business
days prior to any sale of Registerable Securities in a firm commitment
underwritten public offering.
(j) Use its best efforts to cause the Registerable Securities
covered by a Registration Statement to be registered with or approved by such
other governmental agencies or authorities within the United States as may be
necessary to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registerable
Securities, except as may be required solely as a consequence of the nature of
such selling Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of the Registration Statement and the
granting of such approvals.
(k) Upon the occurrence of any event contemplated by Section
3(c)(v) or 3(c)(vi) above, as promptly as practicable prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and, subject to Section 3(a) hereof, file such with the
SEC so that, as thereafter delivered to the purchasers of Registerable
Securities being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and will otherwise
comply with law.
(l) Prior to the effective date of a Registration Statement,
(i) provide the
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registrar for the Registerable Securities with certificates for such securities
in a form eligible for deposit with DTC and (ii) provide a CUSIP number for
such securities.
(m) Enter into an underwriting agreement in form, scope and
substance as is customary in underwritten offerings and take all such other
actions as are reasonably requested by the managing underwriter or underwriters
in order to expedite or facilitate the registration or disposition of such
Registerable Securities in any underwritten offering to be made of the
Registerable Securities in accordance with this Agreement, and in such
connection, (i) make such representations and warranties to, and covenants
with, the underwriter or underwriters, with respect to the business of the
Company and the subsidiaries of the Company, and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) use reasonable efforts to obtain
opinions of counsel to the Company and updates thereof, addressed to the
underwriter or underwriters covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by underwriters; (iii) use reasonable efforts to obtain
"cold comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if applicable, the subsidiaries of the
Company) and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement, addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings and such other matters as reasonably requested by the managing
underwriter or underwriters and as permitted by the Statement of Auditing
Standards No. 72; and (iv) if an underwriting agreement is entered into, the
same shall contain customary indemnification provisions and procedures no less
favorable than those set forth in Section 5 hereof (or such other provisions
and procedures acceptable to Holders of a majority of Registerable Securities
covered by such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(n) Make available for inspection by a representative of the
Holders of Registerable Securities being sold, any underwriter participating in
any such disposition of Registerable Securities, if any, and any attorney or
accountant retained by such representative of the Holders or underwriter
(collectively, the "INSPECTORS"), at the offices where normally kept, during
reasonable business hours, all financial and other records and pertinent
corporate documents of the Company and the subsidiaries of the Company, and
cause the officers, directors and employees of the Company and the subsidiaries
of the Company to supply all information in each case reasonably requested by
any such Inspector in connection with such Registration Statement; provided,
however, that all information shall be kept confidential by such Inspector,
except to the extent that (i) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in the Registration Statement,
(ii) the release of such information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, (iii) disclosure of such
information is, in the opinion of counsel for any Inspector, necessary or
13
<PAGE> 16
advisable in connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and arising out
of, based upon, relating to or involving this Agreement or any of the
transactions contemplated hereby or arising hereunder, or (iv) such information
has been made generally available to the public. Each Selling Holder of such
Registerable Securities agrees that information obtained by it as a result of
such inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Company or of
any of its affiliates unless and until such is generally available to the
public. Each Selling Holder of such Registerable Securities further agrees
that it will, upon learning that disclosure of such information is sought in a
court of competent jurisdiction, give prompt notice to the Company and allow
the Company to undertake appropriate action to prevent disclosure of the
information deemed confidential at the Company's sole expense.
(o) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than forty-five (45) days after the end of any 12-month period (or ninety (90)
days after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registerable Securities
are sold to an underwriter or to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to an underwriter or to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of the relevant
Registration Statement, which statements shall cover said 12-month periods.
(p) Use its best efforts to cause all Registerable Securities
relating to such Registration Statement to be listed on each securities
exchange, if any, on which similar securities issued by the Company are then
listed.
(q) Cooperate with the Selling Holders of Registerable
Securities to facilitate the timely preparation and delivery of certificates
representing Registerable Securities to be sold and not bearing any restrictive
legends and registered in such names as the Selling Holders may reasonably
request at least two business days prior to the closing of any sale of
Registerable Securities.
Each seller of Registerable Securities as to which any
registration is being effected agrees, as a condition to the registration
obligations with respect to such Holder provided herein, to furnish to the
Company such information regarding such seller and the distribution of such
Registerable Securities as the Company may, from time to time, reasonably
request in writing to comply with the Securities Act and other applicable law.
The Company may exclude from such registration the Registerable Securities of
any seller who fails to furnish such information within a reasonable time after
receiving such request. If the identity of a seller of Registerable Securities
is to be disclosed in the Registration Statement, such seller shall be
permitted to include all information regarding such seller as it shall
reasonably request.
Each Holder of Registerable Securities agrees by acquisition of
such Registerable Securities that, upon receipt of any notice from the Company
of the happening of any event of the
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<PAGE> 17
kind described in Section 3(c)(ii), 3(c)(iv), 3(c)(v), or 3(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registerable Securities
covered by the Registration Statement or Prospectus until such Holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
3(k) hereof), or until it is advised in writing (the "ADVICE") by the Company
that the use of the applicable Prospectus may be resumed, and has received
copies of any amendments or supplements thereto, and, if so directed by the
Company, such Holder will deliver to the Company all copies, other than
permanent file copies, then in such Holder's possession, of the Prospectus
covering such Registerable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period of
time for which a Registration Statement is required hereunder to be effective
shall be extended by the number of days during such periods from and including
the date of the giving of such notice to and including the date when each
seller of Registerable Securities covered by such Registration Statement shall
have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof or (y) the Advice.
Section 4. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless each Holder and each Person, if any, who
controls such Holder within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, or is under common control with, or is
controlled by, such Holder, from and against any and all losses, claims,
damages and liabilities (including, without limitation, the reasonable legal
fees and other reasonable out-of-pocket expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted) caused
by, arising out of or based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or caused by any omission or alleged omission to state in any such
Prospectus a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Holder furnished to the Company in writing by such
Holder expressly for use therein; provided, however, that the Company will not
be liable if such untrue statement or omission or alleged untrue statement or
omission was contained or made in any preliminary prospectus and corrected in
the Prospectus or any amendment or supplement thereto and the Prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and any such loss, claim, damage, liability or expense suffered or
incurred by the Holders resulted from any action, claim or suit by any Person
who purchased Registerable Securities which are the subject thereof from such
Holder and it is established in the related proceeding that such Holder failed
to deliver or provide a copy of the Prospectus (as amended or supplemented) to
such Person with or prior to the confirmation of the sale of such Registerable
Securities sold to such Person if required by applicable law, unless such
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result
15
<PAGE> 18
of noncompliance by the Company with Section 5 of this Agreement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
any Registration Statement, and each Person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Holder, but only with reference to information relating to such Holder
furnished to the Company in writing by such Holder expressly for use in any
Registration Statement or any Prospectus (or any amendment or supplement
thereto) or any preliminary prospectus. The liability of any Holder under this
paragraph shall in no event exceed the proceeds received by such Holder from
sales of Registerable Securities giving rise to such obligations.
(c) In case any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
either paragraph (a) or (b) above, such Person (the "INDEMNIFIED PARTY") shall
promptly notify the Person against which such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the Indemnifying Party, upon request of
the Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred of such counsel relating to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Party shall not relieve it of any obligation or liability which it
may have hereunder or otherwise (unless and only to the extent that such
failure directly results in the loss or compromise of any material rights or
defenses by such Indemnifying Party and such Indemnifying Party was not
otherwise aware of such action or claim). In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed in writing to the contrary, (ii) the Indemnifying Party shall have
failed to retain within a reasonable period of time counsel reasonably
satisfactory to such Indemnified Party or parties, or (iii) the named parties
to any such proceeding (including any impleaded parties) include both such
Indemnified Party or Parties and the Indemnifying Parties or an affiliate of
the Indemnifying Parties or such Indemnified Parties and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that, unless there exists a
conflict among Indemnified Parties, the Indemnifying Parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all such Indemnified Parties and that
all such fees and expenses shall be reimbursed promptly after receipt of the
invoice therefore as they are incurred. Any such separate firm for the Holders
and such control Persons of the Holders shall be designated in writing by
Holders who sold a majority in interest of Registerable Securities sold by all
such Holders and any such separate firm for the Company, its directors, its
officers and such control Persons of the Company shall be designated in writing
by the Company. The Indemnifying Party shall not be liable for any
16
<PAGE> 19
settlement of any proceeding effected without its prior written consent, but if
settled with such consent or if there is a final non-appealable judgment for
the plaintiff for which the Indemnified Party is entitled to indemnification
pursuant to this Agreement, the Indemnifying Party agrees to indemnify any
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Party shall have requested an Indemnifying Party to reimburse
the Indemnified Party for reasonable fees and expenses actually incurred by
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its prior written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Party of the
aforesaid request and (ii) such Indemnifying Party shall not have reimbursed
the Indemnified Party in accordance with such request prior to the date of such
settlement; provided, however, that the Indemnifying Party shall not be liable
for any settlement effected without its consent pursuant to this sentence if
the Indemnifying Party is contesting, in good faith, the request for
reimbursement. No Indemnifying Party shall, without the prior written consent
of the Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement (1) includes an unconditional release of such
Indemnified Party in form and substance satisfactory to such Indemnified Party
from all liability on claims that are the subject matter of such proceeding and
(2) does not include any statement as to an admission of fault, culpability or
failure to act by or on behalf of any Indemnified Party.
(d) If the indemnification provided for in paragraph (a) or
(b) of this Section 4 is unavailable (other than by reason of the exceptions
specifically provided therein) to, or insufficient to hold harmless, an
Indemnified Party in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Party under such paragraphs, in
lieu of indemnifying such Indemnified Party thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and the Holders on the other
hand from the offering of such Registerable Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, not
only such relative benefits but also the relative fault of the Company on the
one hand and the Holders on the other in connection with the statements or
omissions (or alleged statements or omissions) that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and the Holders on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or by any other method of
17
<PAGE> 20
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any reasonable legal or other
expenses actually incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4, in no event shall a Holder be required to
contribute any amount in excess of the amount by which proceeds received by
such Holder from sales of Registerable Securities exceeds the amount of any
damages that such Holder has otherwise been required to pay or has paid by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in
this Section 4 will be in addition to any which the Indemnifying Parties may
otherwise have to the Indemnified Parties referred to above.
Section 5. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered
into nor will the Company on or after the date of this Agreement enter into, or
cause or permit any of its subsidiaries to enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registerable Securities
in this Agreement or otherwise conflicts with the provisions hereof.
(b) Adjustments Affecting Registerable Securities. The
Company shall not, directly or indirectly, take any action with respect to the
Registerable Securities as a class that would adversely affect the ability of
the Holders of Registerable Securities to include such Registerable Securities
in a registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the Company has
obtained the prior written consent of Holders of not less than a majority of
the outstanding Registerable Securities; provided, however, that Section 4
hereof and this Section 5(c) may not be amended, modified or supplemented
without the prior written consent of each Holder (including any Person who was
a Holder of Registerable Securities disposed of pursuant to any Registration
Statement). Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registerable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registerable
Securities may be given by the Holders of not less than a majority of the
Registerable Securities proposed to be sold by such Holders pursuant to such
Registration Statement. In addition, each such amendment,
18
<PAGE> 21
modification, supplement and waiver must be agreed to in writing by the
Company.
(d) Notices. All notices, requests, demands and other
communications hereunder, and each other agreement required to be entered into
pursuant to the terms and conditions of this Agreement, shall be in writing and
shall be delivered by hand, overnight courier, facsimile transmission, or by
United States Mail, and shall be deemed to have been duly given when actually
received, or when mailed, first class postage prepaid, certified mail, return
receipt requested, to the addresses set forth below, or to such other address
as may be designated hereafter by prior written notice from the recipient to
the sender:
If to the Company: Packaged Ice, Inc.
Attention: Chief Executive Officer
8572 Katy Freeway, Suite 101
Houston, Texas 77024
With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Attention: Alan Schoenbaum
1500 NationsBank Plaza
300 Convent
San Antonio, Texas 78205
Facsimile: (210) 224-2035
If to the Investors: Ares Leveraged Investment Fund, L.P.
Attention: David Sachs
1999 Avenue of the Stars
Suite 1900
Los Angeles, CA 90067
Facsimile: (310) 201-4170
S.V. Capital Partners, L.P.
Attention: Rod Sands
5121 Broadway
San Antonio, TX 78209
Facsimile: (210) 930-2482
With a copy to: Morgan, Lewis & Bockius LLP
Attention: Peter P. Wallace, Esq.
300 S. Grand Ave.
22nd Floor
Los Angeles, CA 90071
Facsimile: (213) 612-2554
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties hereto and the Holders;
19
<PAGE> 22
provided, however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless such successor or assign
holds Registerable Securities.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF CALIFORNIA WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Third Party Beneficiary. The Holders are intended third
party beneficiaries of this Agreement and this Agreement may be enforced by
such Persons.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of, and is intended to be a complete and
exclusive statement of, the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(l) Securities Held by the Company or Its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registerable Securities is required hereunder, Registerable Securities held by
the Company or by any of its affiliates (as such term is defined in Rule 405
under the Securities Act) shall not be counted in determining whether such
consent or approval was given by the holders of such required percentage.
20
<PAGE> 23
(SIGNATURE PAGE FOLLOWS)
21
<PAGE> 24
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE COMPANY:
PACKAGED ICE, INC.
By:
--------------------------------
Name:
Title:
THE INVESTORS:
ARES LEVERAGED INVESTMENT FUND, L.P
By: ARES MANAGEMENT, L.P.
its General Partner
By:
--------------------------------
Name:
Title:
S.V. CAPITAL PARTNERS, L.P.
By: S.V. Capital Management, Inc.
its General Partner
By:
--------------------------------
Name:
Title:
<PAGE> 1
Exhibit 4.9
REGISTRATION RIGHTS AGREEMENT
Dated as of April 30, 1998
by and among
PACKAGED ICE, INC.
and
the INVESTOR named herein
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Registration Rights . . . . . . . . . . . . . . . . . . . . 4
2.1 (a) Demand Registration . . . . . . . . . . . . . . . . . 4
(b) Effective Registration . . . . . . . . . . . . . . . 4
(c) Restrictions on Sale by Holders . . . . . . . . . . . 5
(d) Underwritten Registrations . . . . . . . . . . . . . 5
(e) Expenses . . . . . . . . . . . . . . . . . . . . . . 6
(f) Priority in Demand Registration . . . . . . . . . . . 6
2.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Limitations, Conditions and Qualifications to Obligations Under
Registration Covenants . . . . . . . . . . . . . . . . . . . 6
2.4 Restrictions on Sale by the Company and Others . . . . . . . 7
2.5 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Registration Procedures . . . . . . . . . . . . . . . . . . 8
Section 4. Indemnification and Contribution . . . . . . . . . . . . . . 13
Section 5. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 17
(a) No Inconsistent Agreements . . . . . . . . . . . . . 17
(b) Adjustments Affecting Registerable Securities . . . . 17
(c) Amendments and Waivers . . . . . . . . . . . . . . . 17
(d) Notices . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Successors and Assigns . . . . . . . . . . . . . . . 18
(f) Counterparts . . . . . . . . . . . . . . . . . . . . 18
(g) Headings . . . . . . . . . . . . . . . . . . . . . . 18
(h) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 18
(i) Severability . . . . . . . . . . . . . . . . . . . . 18
(j) Third Party Beneficiary . . . . . . . . . . . . . . . 19
(k) Entire Agreement . . . . . . . . . . . . . . . . . . 19
(l) Securities Held by the Company or Its Affiliates . . 19
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of April 30, 1998, by and among PACKAGED ICE, INC., a Texas
corporation (the "COMPANY"), and the investor named on Schedule I hereto (the
"INVESTOR").
This Agreement is entered into in connection with Securities Purchase
Agreements between the Company and the Investor, dated April 30, 1998 (the
"SECURITIES PURCHASE AGREEMENT"), pursuant to which the Company issued and
sold to the Investor, among other things, 75,000 shares of 13% Exchangeable
Preferred Stock, Series A (the "13% PREFERRED STOCK").
In consideration of the foregoing, the parties hereto agree as follows:
Section 1. Definitions. As used in this Agreement, the following
defined terms shall have the following meanings:
"ADVICE" has the meaning ascribed to such term in the last
paragraph of Section 3 hereof.
"BUSINESS DAY" shall mean a day that is not a Legal Holiday.
"COMMON STOCK" shall mean the shares of common stock, par value
$.01 per share, of the Company.
"DEMAND REGISTRATION" has the meaning ascribed to such term in
Section 2.1(a) hereof.
"DEMAND RIGHT HOLDERS" means persons with "demand" registration
rights pursuant to a contractual commitment of the Company.
"DTC" has the meaning ascribed to such term in Section 3(i)
hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC
promulgated thereunder.
"HOLDER" means the Investor, for so long as it owns any of the
Registerable Securities, and each of its successors, assigns and direct
and indirect transferees who become registered owners of such
Registerable Securities.
"INCLUDED SECURITIES" has the meaning ascribed to such term in
Section 2.1(a) hereof.
<PAGE> 4
"INDEMNIFIED PARTY" has the meaning ascribed to such term in
Section 4(c) hereof.
"INDEMNIFYING PARTY" has the meaning ascribed to such term in
Section 4(c) hereof.
"INSPECTORS" has the meaning ascribed to such term in Section
3(n) hereof.
"INVESTOR" has the meaning ascribed to that term in the preamble
of this Agreement.
"LEGAL HOLIDAY" shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law,
regulation or executive order to remain closed.
"PERSON" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to
completion and a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities
Act), as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"PUBLIC EQUITY OFFERING" means an underwritten offer and sale of
capital stock of the Company 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).
"REGISTERABLE SECURITIES" means any of (i) the 13% Preferred
Stock and (ii) any other securities issued or issuable with respect to
the 13% Preferred Stock by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise (including the
"Exchange Notes" as defined in the Certificate of Resolutions of the
Company establishing the 13% Preferred Stock). As to any particular
Registerable Securities, such securities shall cease to be Registerable
Securities when (i) a Registration Statement with respect to the
offering of such securities by the Holder thereof shall have been
declared effective under the Securities Act and such securities shall
have been disposed of by such Holder pursuant to such Registration
Statement, (ii) such securities are eligible for sale to the public
pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) promulgated under the Securities Act, (iii) such securities
shall
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<PAGE> 5
have been otherwise transferred by such Holder and new certificates for
such securities not bearing a legend restricting further transfer shall
have been delivered by the Company or its transfer agent and subsequent
disposition of such securities shall not require registration or
qualification under the Securities Act or any similar state law then in
force, or (iv) such securities shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean all expenses incident to the
Company's performance of or compliance with its obligations, under this
Agreement, including, without limitation, all SEC and stock exchange or
National Association of Securities Dealers, Inc. registration and filing
fees and expenses, fees and expenses of compliance with securities or
blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters in connection with blue
sky qualifications of the Registerable Securities), preparing, printing,
filing, duplicating and distributing the Registration Statement and the
related Prospectus, the cost of printing stock certificates, the cost
and charges of any transfer agent, rating agency fees, printing
expenses, messenger, telephone and delivery expenses, fees and
disbursements of counsel for the Company and all independent certified
public accountants, the fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (but not including
any underwriting discounts or commissions or transfer taxes, if any,
attributable to the sale of Registerable Securities by Selling Holders),
fees and expenses of one counsel for the Holders and other reasonable
out-of-pocket expenses of the Selling Holders.
"REGISTRATION STATEMENT" shall mean any appropriate registration
statement of the Company filed with the SEC pursuant to the Securities
Act which covers any of the Registerable Securities pursuant to the
provisions of this Agreement and all amendments and supplements to any
such Registration Statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"REQUISITE SECURITIES" shall mean a number of Registerable
Securities equal to not less than 25% of the Registerable Securities
held in the aggregate by all Holders.
"RULE 144" shall mean Rule 144 promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule
(other than Rule 144A) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance
therewith resulting in offers and sales by subsequent holders that are
not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
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<PAGE> 6
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations of the SEC
promulgated thereunder.
"SELLING HOLDER" shall mean a Holder who is selling Registerable
Securities in accordance with the provisions of Section 2.1 hereof.
Section 2. Registration Rights.
2.1 (a) Demand Registration. (i) From time to time, immediately
following the completion by the Company of a Public Equity Offering, or (ii) in
the event that there has not been a Public Equity Offering, at any time after
the date that is eighteen months from the date hereof, Holders owning,
individually or in the aggregate, not less than the Requisite Securities may
make a written request for registration under the Securities Act of their
Registerable Securities (a "DEMAND REGISTRATION"). Within 120 days of the
receipt of such written request for a Demand Registration, the Company shall
file with the SEC and use its best efforts to cause to become effective under
the Securities Act a Registration Statement with respect to such Registerable
Securities. Any such request will specify the number of Registerable Securities
proposed to be sold and will also specify the intended method of disposition
thereof. The Company shall give written notice of such registration request to
all other Holders of Registerable Securities within 15 days after the receipt
thereof. Within 20 days after notice of such registration request by the
Company, any Holder may request in writing that such Holder's Registerable
Securities be included in such Registration Statement and the Company shall
include in such Registration Statement the Registerable Securities of any such
Holder requested to be so included (the "INCLUDED SECURITIES"). Each such
request by such other Holders shall specify the number of Included Securities
proposed to be sold and the intended method of disposition thereof. Subject to
Section 2.1(b) hereof, the Company shall be required to register Registerable
Securities pursuant to this Section 2.1(a) on a maximum of two separate
occasions; provided, the Company shall not be required to register Registrable
Securities pursuant to this Section 2.1(a) more than once in any twelve month
period.
Subject to Section 2.1(f) hereof, no other securities of the
Company except securities held by any Holder, any Demand Right Holder, and any
Person entitled to exercise "piggy back" registration rights pursuant to
contractual commitments of the Company shall be included in a Demand
Registration.
(b) Effective Registration. A Registration Statement will not
be deemed to have been effected as a Demand Registration unless it has been
declared effective by the SEC and the Company has complied in a timely manner
and in all material respects with all of its obligations under this Agreement
with respect thereto; provided, however, that if, after such Registration
Statement has become effective, the offering of Registerable Securities
pursuant to such Registration Statement is or becomes the subject of any stop
order, injunction or other order or requirement of the SEC or any other
governmental or administrative agency or court that prevents, restrains or
otherwise limits the sale of Registerable Securities pursuant to such
Registration Statement for any reason not attributable to any Holder
participating in such
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<PAGE> 7
registration and such Registration Statement has not become effective within a
reasonable time period thereafter (not to exceed 60 days), such Registration
Statement will be deemed not to have been effected. If (i) a registration
requested pursuant to this Section 2.1 is deemed not to have been effected or
(ii) a Demand Registration does not remain effective under the Securities Act
until at least the earlier of (A) an aggregate of 90 days after the effective
date thereof or (B) the consummation of the distribution by the Holders of 80%
of the Registerable Securities covered thereby, then the Company shall continue
to be obligated to effect a Demand Registration pursuant to this Section 2.1
provided, that a Demand Registration shall not be counted as such unless the
Selling Holders have sold 80% of the Included Securities. For purposes of
calculating the 90-day period referred to in the preceding sentence, any period
of time during which such Registration Statement was not in effect shall be
excluded. The Holders of Registerable Securities shall be permitted to
withdraw all or any part of the Registerable Securities from a Demand
Registration at any time prior to the effective date of such Demand
Registration.
(c) Restrictions on Sale by Holders. Each Holder of
Registerable Securities whose Registerable Securities are covered by a
Registration Statement filed pursuant to this Section 2.1 and are to be sold
thereunder agrees, if and to the extent reasonably requested by the managing
underwriter or underwriters in an underwritten offering, not to effect any
public sale or distribution of Registerable Securities or of securities of the
Company of the same class as any securities included in such Registration
Statement, including a sale pursuant to Rule 144 (except as part of such
underwritten offering), during the 30-day period prior to, and during the
90-day period beginning on, the closing date of each underwritten offering made
pursuant to such Registration Statement, to the extent timely notified in
writing by the Company or such managing underwriter or underwriters.
The foregoing provisions of Section 2.1(c) shall not apply to any
Holder of Registerable Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement; provided, however,
that any such Holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any such public sale or distribution of
Registerable Securities or of securities of the Company of the same class as
any securities included in such Registration Statement, including a sale
pursuant to Rule 144 (except as part of such underwritten offering) during such
period, unless it has provided 45 days' prior written notice of such sale or
distribution to the underwriter or underwriters.
(d) Underwritten Registrations. If any of the Registerable
Securities covered by a Demand Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Holders of not less than
a majority of the Registerable Securities then outstanding to be sold
thereunder and will be reasonably acceptable to the Company.
No Holder of Registerable Securities may participate in any
underwritten registration pursuant to a Registration Statement filed under this
Agreement unless
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<PAGE> 8
such Holder (a) agrees to (i) sell such Holder's Registerable Securities on the
basis provided in and in compliance with any underwriting arrangements approved
by the Holders of not less than a majority of the Registerable Securities to be
sold thereunder and (ii) comply with Rules 10b-6 and 10b-7 under the Exchange
Act and (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
(e) Expenses. The Company will pay all Registration Expenses
in connection with the registrations requested pursuant to Section 2.1(a)
hereof. Each Holder of Registerable Securities shall pay all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registerable Securities pursuant to a Registration
Statement requested pursuant to this Section 2.1.
(f) Priority in Demand Registration. In a registration
pursuant to Section 2.1 hereof involving an underwritten offering, if the
managing underwriter or underwriters of such underwritten offering have
informed, in writing, the Company and the Selling Holders who have requested
such Demand Registration or who have sought inclusion therein that in such
underwriter's or underwriters' opinion the total number of securities which the
Selling Holders and any other Person desiring to participate in such
registration intend to include in such offering is such as to adversely affect
the success of such offering, including the price at which such securities can
be sold, then the Company will be required to include in such registration only
the amount of securities which it is so advised should be included in such
registration. In such event, securities shall be registered in such
registration in the following order of priority: (i) first, the securities
which have been requested to be included in such registration by the Holders of
Registerable Securities pursuant to this Agreement and the Demand Right Holders
(pro rata based on the amount of securities sought to be registered by such
Persons), (ii) second, provided that no securities sought to be included by the
Holders and the Demand Right Holders have been excluded from such registration,
the securities of other Persons entitled to exercise "piggy-back" registration
rights pursuant to contractual commitments of the Company (pro rata based on
the amount of securities sought to be registered by such Persons) and (iii)
third, securities the Company proposes to register.
2.2 INTENTIONALLY LEFT BLANK.
2.3 Limitations, Conditions and Qualifications to Obligations Under
Registration Covenants. The obligations of the Company set forth in Section
2.1 hereof are subject to each of the following limitations, conditions and
qualifications:
(a) Subject to the next sentence of this paragraph, the
Company shall be entitled to postpone, for a reasonable period of time, the
filing or effectiveness of, or suspend the rights of any Holders to make sales
pursuant to, any Registration Statement otherwise required to be prepared,
filed and made and kept effective by it hereunder; provided, however, that the
duration of such postponement or suspension
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<PAGE> 9
may not exceed the earlier to occur of (A) 15 days after the cessation of the
circumstances described in the next sentence of this paragraph on which such
postponement or suspension is based or (B) 120 days after the date of the
determination of the Board of Directors referred to in the next sentence, and
the duration of any such postponement or suspension shall be excluded from the
calculation of the 90-day period described in Section 2.1(b) hereof. Such
postponement or suspension may only be effected if the Board of Directors of
the Company determines in good faith that the filing or effectiveness of, or
sales pursuant to, such Registration Statement would materially impede, delay
or interfere with any financing, offer or sale of securities, acquisition,
corporate reorganization or other significant transaction involving the Company
or any of its affiliates (whether or not planned, proposed or authorized prior
to an exercise of demand registration rights hereunder or any other
registration rights agreement) or require disclosure of material information
which the Company has a bona fide business purpose for preserving as
confidential. If the Company shall so postpone the filing or effectiveness of
a Registration Statement or so suspend the rights of Holders to make sales it
shall, as promptly as possible, notify any Selling Holders of such
determination, and the Selling Holders shall (y) have the right, in the case of
a postponement of the filing or effectiveness of a Registration Statement, upon
the affirmative vote of the Holders of not less than a majority of the
Registerable Securities to be included in such Registration Statement, to
withdraw the request for registration by giving written notice to the Company
within 10 days after receipt of such notice or (z) in the case of a suspension
of the right to make sales, receive an extension of the registration period
equal to the number of days of the suspension. Any Demand Registration as to
which the withdrawal election referred to in the preceding sentence has been
effected shall not be counted for purposes of the two Demand Registrations the
Company is required to effect pursuant to Section 2.1 hereof.
(b) The Company's obligations shall be subject to the
obligations of the Selling Holders, which the Selling Holders acknowledge, to
furnish all information and materials and to take any and all actions as may be
required under applicable federal and state securities laws and regulations to
permit the Company to comply with all applicable requirements of the SEC and to
obtain any acceleration of the effective date of such Registration Statement.
(c) The Company shall not be obligated to cause any special
audit to be undertaken in connection with any registration pursuant to this
Agreement unless such audit is requested by the underwriters with respect to
such registration.
2.4 Restrictions on Sale by the Company and Others. The
Company covenants and agrees that it shall not, and that it shall not cause or
permit any of its subsidiaries to, effect any public sale or distribution of
any securities of the same class as any of the Registerable Securities or any
securities convertible into or exchangeable or exercisable for such securities
(or any option or other right for such securities) during the 30-day period
prior to, and during the 90-day period beginning on, the commencement of any
underwritten offering of Registerable Securities pursuant to a Demand
Registration which has been requested pursuant to this Agreement.
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<PAGE> 10
2.5 Rule 144. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder in a timely
manner and, if at any time the Company is not required to file such reports, it
will, upon the request of any Holder of Registerable Securities, make publicly
available other information so long as necessary to permit sales pursuant to
Rule 144. Upon the request of any Holder of Registerable Securities, the
Company will in a timely manner deliver to such Holder a written statement as
to whether it has complied with such information requirements.
Section 3. Registration Procedures. In connection with the
obligations of the Company with respect to any Registration Statement pursuant
to Section 2.1 hereof, the Company shall:
(a) Prepare and file with the SEC as soon as practicable each
such Registration Statement (but in any event on or prior to the date of filing
thereof required under this Agreement) and cause each such Registration
Statement to become effective and remain effective as provided herein;
provided, however, that before filing any such Registration Statement or any
Prospectus or any amendments or supplements thereto (including documents that
would be incorporated or deemed to be incorporated therein by reference,
including such documents filed under the Exchange Act that would be
incorporated therein by reference), the Company shall afford promptly to the
Holders of the Registerable Securities covered by such Registration Statement,
their counsel and the managing underwriter or underwriters, if any, an
opportunity to review copies of all such documents proposed to be filed a
reasonable time prior to the proposed filing thereof. The Company shall not
file any Registration Statement or Prospectus or any amendments or supplements
thereto if the Holders of a majority of the Registerable Securities covered by
such Registration Statement, their counsel, or the managing underwriter or
underwriters, if any, shall reasonably object in writing, unless failure to
file any such amendment or supplement would involve a violation of the
Securities Act or other applicable law.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to such Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the time periods
prescribed hereby; cause the related Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provision then in force) promulgated under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to it with respect to the disposition of all securities covered by
such Registration Statement as so amended or such Prospectus as so
supplemented.
(c) Notify the Holders of Registerable Securities, their
counsel and the managing underwriter or underwriters, if any, promptly (but in
any event within two (2) Business Days), and confirm such notice in writing,
(i) when a Prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has
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<PAGE> 11
become effective (including in such notice a written statement that any Holder
may, upon request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules and exhibits), (ii) of the issuance by the SEC of any
stop order suspending the effectiveness of such Registration Statement or of
any order preventing or suspending the use of any Prospectus or the initiation
or threatening of any proceedings for that purpose, (iii) if at any time when a
prospectus is required by the Securities Act to be delivered in connection with
sales of the Registerable Securities the representations and warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated by Section 3(m) below cease to be true and correct in any material
respect, (iv) of the receipt by the Company of any notification with respect to
(A) the suspension of the qualification or exemption from qualification of the
Registration Statement or any of the Registerable Securities covered thereby
for offer or sale in any jurisdiction or (B) the initiation of any proceeding
for such purpose, (v) of the happening of any event, the existence of any
condition or information becoming known that requires the making of any change
in any Registration Statement or Prospectus so that, in the case of such
Registration Statement, it will conform in all material respects with the
requirements of the Securities Act and it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of any Prospectus, it will conform in all material respects with the
requirements of the Securities Act and it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vi) of the
Company's reasonable determination that a post-effective amendment to such
Registration Statement would be appropriate.
(d) Use every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registerable
Securities covered thereby for sale in any jurisdiction, and, if any such order
is issued, to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If requested by the managing underwriter or underwriters,
if any, or the Holders of a majority of the Registerable Securities being sold
in connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters, if any, or such Holders reasonably
request to be included therein to comply with applicable law, (ii) make all
required filings of such prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment, and (iii) supplement or make amendments to such Registration
Statement.
(f) Furnish to each Holder of Registerable Securities who so
requests and to counsel for the Holders of Registerable Securities and each
managing
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<PAGE> 12
underwriter, if any, without charge, upon request, one conformed copy of the
Registration Statement and each post-effective amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits (including exhibits
incorporated by reference).
(g) Deliver to each Holder of Registerable Securities, their
counsel and each underwriter, if any, without charge, as many copies of each
Prospectus and each amendment or supplement thereto as such Persons may
reasonably request; and, subject to the last paragraph of this Section 3, the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the Holders of Registerable Securities and the
underwriter or underwriters or agents, if any, in connection with the offering
and sale of the Registerable Securities covered by such Prospectus and any
amendment or supplement thereto.
(h) Prior to any offering of Registerable Securities, to
register or qualify, and cooperate with the Holders of such Registerable
Securities, the managing underwriter or underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of, such Registerable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as the managing underwriter or
underwriters reasonably request in writing, or, in the event of a
non-underwritten offering, as the Holders of a majority of such Registerable
Securities may request; provided, however, that where Registerable Securities
are offered other than through an underwritten offering, the Company agrees to
cause its counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 3(h); and keep
each such registration or qualification (or exemption therefrom) effective
during the period the Registration Statement relating to such Registerable
Securities is required to be kept effective pursuant to this Agreement and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the securities covered thereby; provided,
however, that the Company will not be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject, or (C) become subject to taxation
in any jurisdiction where it is not then so subject.
(i) Cooperate with the Holders of Registerable Securities and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registerable Securities
to be sold, which certificates shall not bear any restrictive legends
whatsoever and shall be in a form eligible for deposit with The Depository
Trust Company ("DTC"); and enable such Registerable Securities to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request at least two business
days prior to any sale of Registerable Securities in a firm commitment
underwritten public offering.
(j) Use its best efforts to cause the Registerable Securities
covered by a Registration Statement to be registered with or approved by such
other governmental
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<PAGE> 13
agencies or authorities within the United States as may be necessary to enable
the seller or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registerable Securities, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case the Company will cooperate in all reasonable respects
with the filing of the Registration Statement and the granting of such
approvals.
(k) Upon the occurrence of any event contemplated by Section
3(c)(v) or 3(c)(vi) above, as promptly as practicable prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and, subject to Section 3(a) hereof, file such with the
SEC so that, as thereafter delivered to the purchasers of Registerable
Securities being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and will otherwise
comply with law.
(l) Prior to the effective date of a Registration Statement,
(i) provide the registrar for the Registerable Securities with certificates for
such securities in a form eligible for deposit with DTC and (ii) provide a
CUSIP number for such securities.
(m) Enter into an underwriting agreement in form, scope and
substance as is customary in underwritten offerings and take all such other
actions as are reasonably requested by the managing underwriter or underwriters
in order to expedite or facilitate the registration or disposition of such
Registerable Securities in any underwritten offering to be made of the
Registerable Securities in accordance with this Agreement, and in such
connection, (i) make such representations and warranties to, and covenants
with, the underwriter or underwriters, with respect to the business of the
Company and the subsidiaries of the Company, and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) use reasonable efforts to obtain
opinions of counsel to the Company and updates thereof, addressed to the
underwriter or underwriters covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by underwriters; (iii) use reasonable efforts to obtain
"cold comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if applicable, the subsidiaries of the
Company) and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement, addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings and such other matters as reasonably requested by the managing
underwriter or underwriters and as permitted by the Statement of Auditing
Standards No. 72; and (iv) if an underwriting agreement is entered into, the
same shall
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<PAGE> 14
contain customary indemnification provisions and procedures no less favorable
than those set forth in Section 5 hereof (or such other provisions and
procedures acceptable to Holders of a majority of Registerable Securities
covered by such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(n) Make available for inspection by a representative of the
Holders of Registerable Securities being sold, any underwriter participating in
any such disposition of Registerable Securities, if any, and any attorney or
accountant retained by such representative of the Holders or underwriter
(collectively, the "INSPECTORS"), at the offices where normally kept, during
reasonable business hours, all financial and other records and pertinent
corporate documents of the Company and the subsidiaries of the Company, and
cause the officers, directors and employees of the Company and the subsidiaries
of the Company to supply all information in each case reasonably requested by
any such Inspector in connection with such Registration Statement; provided,
however, that all information shall be kept confidential by such Inspector,
except to the extent that (i) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in the Registration Statement,
(ii) the release of such information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, (iii) disclosure of such
information is, in the opinion of counsel for any Inspector, necessary or
advisable in connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and arising out
of, based upon, relating to or involving this Agreement or any of the
transactions contemplated hereby or arising hereunder, or (iv) such information
has been made generally available to the public. Each Selling Holder of such
Registerable Securities agrees that information obtained by it as a result of
such inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Company or of
any of its affiliates unless and until such is generally available to the
public. Each Selling Holder of such Registerable Securities further agrees
that it will, upon learning that disclosure of such information is sought in a
court of competent jurisdiction, give prompt notice to the Company and allow
the Company to undertake appropriate action to prevent disclosure of the
information deemed confidential at the Company's sole expense.
(o) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than forty-five (45) days after the end of any 12-month period (or ninety (90)
days after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registerable Securities
are sold to an underwriter or to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to an underwriter or to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of the relevant
Registration Statement, which statements shall cover said 12-month periods.
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<PAGE> 15
(p) Use its best efforts to cause all Registerable Securities
relating to such Registration Statement to be listed on each securities
exchange, if any, on which similar securities issued by the Company are then
listed.
(q) Cooperate with the Selling Holders of Registerable
Securities to facilitate the timely preparation and delivery of certificates
representing Registerable Securities to be sold and not bearing any restrictive
legends and registered in such names as the Selling Holders may reasonably
request at least two business days prior to the closing of any sale of
Registerable Securities.
Each seller of Registerable Securities as to which any
registration is being effected agrees, as a condition to the registration
obligations with respect to such Holder provided herein, to furnish to the
Company such information regarding such seller and the distribution of such
Registerable Securities as the Company may, from time to time, reasonably
request in writing to comply with the Securities Act and other applicable law.
The Company may exclude from such registration the Registerable Securities of
any seller who fails to furnish such information within a reasonable time after
receiving such request. If the identity of a seller of Registerable Securities
is to be disclosed in the Registration Statement, such seller shall be
permitted to include all information regarding such seller as it shall
reasonably request.
Each Holder of Registerable Securities agrees by acquisition of
such Registerable Securities that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(c)(ii),
3(c)(iv), 3(c)(v), or 3(c)(vi) hereof, such Holder will forthwith discontinue
disposition of such Registerable Securities covered by the Registration
Statement or Prospectus until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(k) hereof), or
until it is advised in writing (the "ADVICE") by the Company that the use of
the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto, and, if so directed by the Company, such
Holder will deliver to the Company all copies, other than permanent file
copies, then in such Holder's possession, of the Prospectus covering such
Registerable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period of time for which a
Registration Statement is required hereunder to be effective shall be extended
by the number of days during such periods from and including the date of the
giving of such notice to and including the date when each seller of
Registerable Securities covered by such Registration Statement shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 3(k) hereof or (y) the Advice.
Section 4. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless each Holder and each Person, if any, who
controls such Holder within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, or is under common control with, or is
controlled by, such Holder, from and against any and all losses, claims,
damages and liabilities (including, without limitation, the reasonable legal
fees and other reasonable out-of-pocket expenses actually incurred in
connection with any suit, action or proceeding or any claim
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<PAGE> 16
asserted) caused by, arising out of or based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or caused by any omission or alleged
omission to state in any such Prospectus a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to any Holder furnished to the
Company in writing by such Holder expressly for use therein; provided, however,
that the Company will not be liable if such untrue statement or omission or
alleged untrue statement or omission was contained or made in any preliminary
prospectus and corrected in the Prospectus or any amendment or supplement
thereto and the Prospectus does not contain any other untrue statement or
omission or alleged untrue statement or omission of a material fact that was
the subject matter of the related proceeding and any such loss, claim, damage,
liability or expense suffered or incurred by the Holders resulted from any
action, claim or suit by any Person who purchased Registerable Securities which
are the subject thereof from such Holder and it is established in the related
proceeding that such Holder failed to deliver or provide a copy of the
Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registerable Securities sold to such Person if
required by applicable law, unless such failure to deliver or provide a copy of
the Prospectus (as amended or supplemented) was a result of noncompliance by
the Company with Section 5 of this Agreement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
any Registration Statement, and each Person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Holder, but only with reference to information relating to such Holder
furnished to the Company in writing by such Holder expressly for use in any
Registration Statement or any Prospectus (or any amendment or supplement
thereto) or any preliminary prospectus. The liability of any Holder under this
paragraph shall in no event exceed the proceeds received by such Holder from
sales of Registerable Securities giving rise to such obligations.
(c) In case any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
either paragraph (a) or (b) above, such Person (the "INDEMNIFIED PARTY") shall
promptly notify the Person against which such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the Indemnifying Party, upon request of
the Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and
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<PAGE> 17
any others the Indemnifying Party may reasonably designate in such proceeding
and shall pay the reasonable fees and expenses actually incurred of such
counsel relating to such proceeding; provided, however, that the failure to so
notify the Indemnifying Party shall not relieve it of any obligation or
liability which it may have hereunder or otherwise (unless and only to the
extent that such failure directly results in the loss or compromise of any
material rights or defenses by such Indemnifying Party and such Indemnifying
Party was not otherwise aware of such action or claim). In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Party shall have failed to retain within a reasonable period of
time counsel reasonably satisfactory to such Indemnified Party or parties, or
(iii) the named parties to any such proceeding (including any impleaded
parties) include both such Indemnified Party or Parties and the Indemnifying
Parties or an affiliate of the Indemnifying Parties or such Indemnified Parties
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that, unless there exists a conflict among Indemnified Parties, the
Indemnifying Parties shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such Indemnified Parties and that all such fees and expenses shall be
reimbursed promptly after receipt of the invoice therefore as they are
incurred. Any such separate firm for the Holders and such control Persons of
the Holders shall be designated in writing by Holders who sold a majority in
interest of Registerable Securities sold by all such Holders and any such
separate firm for the Company, its directors, its officers and such control
Persons of the Company shall be designated in writing by the Company. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its prior written consent, but if settled with such consent or
if there is a final non-appealable judgment for the plaintiff for which the
Indemnified Party is entitled to indemnification pursuant to this Agreement,
the Indemnifying Party agrees to indemnify any Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Party
shall have requested an Indemnifying Party to reimburse the Indemnified Party
for reasonable fees and expenses actually incurred by counsel as contemplated
by the third sentence of this paragraph, the Indemnifying Party agrees that it
shall be liable for any settlement of any proceeding effected without its prior
written consent if (i) such settlement is entered into more than 30 days after
receipt by such Indemnifying Party of the aforesaid request and (ii) such
Indemnifying Party shall not have reimbursed the Indemnified Party in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Party shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Party is contesting, in good faith, the request for reimbursement. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party, unless such
settlement (1) includes an unconditional release of such Indemnified Party in
form and substance satisfactory to such
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<PAGE> 18
Indemnified Party from all liability on claims that are the subject matter of
such proceeding and (2) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any Indemnified Party.
(d) If the indemnification provided for in paragraph (a) or
(b) of this Section 4 is unavailable (other than by reason of the exceptions
specifically provided therein) to, or insufficient to hold harmless, an
Indemnified Party in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Party under such paragraphs, in
lieu of indemnifying such Indemnified Party thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and the Holders on the other
hand from the offering of such Registerable Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, not
only such relative benefits but also the relative fault of the Company on the
one hand and the Holders on the other in connection with the statements or
omissions (or alleged statements or omissions) that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and the Holders on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses actually incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 4, in no event shall
a Holder be required to contribute any amount in excess of the amount by which
proceeds received by such Holder from sales of Registerable Securities exceeds
the amount of any damages that such Holder has otherwise been required to pay
or has paid by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(f) The indemnity and contribution agreements contained in
this Section 4 will be in addition to any which the Indemnifying Parties may
otherwise have to the Indemnified Parties referred to above.
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<PAGE> 19
Section 5. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered
into nor will the Company on or after the date of this Agreement enter into, or
cause or permit any of its subsidiaries to enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registerable Securities
in this Agreement or otherwise conflicts with the provisions hereof.
(b) Adjustments Affecting Registerable Securities. The
Company shall not, directly or indirectly, take any action with respect to the
Registerable Securities as a class that would adversely affect the ability of
the Holders of Registerable Securities to include such Registerable Securities
in a registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the Company has
obtained the prior written consent of Holders of not less than a majority of
the outstanding Registerable Securities; provided, however, that Section 4
hereof and this Section 5(c) may not be amended, modified or supplemented
without the prior written consent of each Holder (including any Person who was
a Holder of Registerable Securities disposed of pursuant to any Registration
Statement). Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registerable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registerable
Securities may be given by the Holders of not less than a majority of the
Registerable Securities proposed to be sold by such Holders pursuant to such
Registration Statement. In addition, each such amendment, modification,
supplement and waiver must be agreed to in writing by the Company.
(d) Notices. All notices, requests, demands and other
communications hereunder, and each other agreement required to be entered into
pursuant to the terms and conditions of this Agreement, shall be in writing and
shall be delivered by hand, overnight courier, facsimile transmission, or by
United States Mail, and shall be deemed to have been duly given when actually
received, or when mailed, first class postage prepaid, certified mail, return
receipt requested, to the addresses set forth below, or to such other address
as may be designated hereafter by prior written notice from the recipient to
the sender:
If to the Company: Packaged Ice, Inc.
Attention: Chief Executive Officer
8572 Katy Freeway, Suite 101
Houston, Texas 77024
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<PAGE> 20
With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Attention: Alan Schoenbaum
1500 NationsBank Plaza
300 Convent
San Antonio, Texas 78205
Facsimile: (210) 224-2035
If to the Investor: S.V. Capital Partners, L.P.
Attention: Rod Sands
5121 Broadway
San Antonio, TX 78209
Facsimile: (210) 930-2482
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties hereto and the Holders; provided, however, that this Agreement shall
not inure to the benefit of or be binding upon a successor or assign of a
Holder unless such successor or assign holds Registerable Securities.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF CALIFORNIA WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
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<PAGE> 21
(j) Third Party Beneficiary. The Holders are intended third
party beneficiaries of this Agreement and this Agreement may be enforced by
such Persons.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of, and is intended to be a complete and
exclusive statement of, the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(l) Securities Held by the Company or Its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registerable Securities is required hereunder, Registerable Securities held by
the Company or by any of its affiliates (as such term is defined in Rule 405
under the Securities Act) shall not be counted in determining whether such
consent or approval was given by the holders of such required percentage.
(SIGNATURE PAGE FOLLOWS)
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<PAGE> 22
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE COMPANY:
PACKAGED ICE, INC.
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
THE INVESTOR:
S.V. CAPITAL PARTNERS, L.P.
By: S.V. Capital Management, Inc.
its General Partner
By: /s/ R.J. SANDS
--------------------------------
Name: R.J. SANDS
Title: Managing Director
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<PAGE> 1
Exhibit 4.10
PREFERRED STOCK SERIES DESIGNATION
PACKAGED ICE, INC., A TEXAS CORPORATION
CERTIFICATE OF RESOLUTION
PROVIDING FOR THE ISSUANCE OF
13% EXCHANGEABLE PREFERRED STOCK SERIES A
PURSUANT TO ARTICLE 2.13 OF THE
TEXAS BUSINESS CORPORATION ACT
* * * *
PACKAGED ICE, INC., a Texas corporation (the "CORPORATION"), certifies
that pursuant to the authority contained in Article Four of its Articles of
Incorporation, and in accordance with the provisions of Article 2.13 of the
Texas Business Corporation Act, its Board of Directors adopted at a special
meeting on April 28, 1998, the following resolutions creating and providing for
the issuance of a series of shares of Preferred Stock as hereinafter described,
and further providing for the voting powers, designations, preferences, and
relative, participating, optional or other rights thereof, and the
qualifications, limitations or restrictions thereof, in addition to those set
forth in said Articles of Incorporation, all in accordance with the provisions
of Article 2.13 of the Texas Business Corporation Act (the "ACT"):
BE IT RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation under Article Four of the Articles of
Incorporation, which creates and authorizes 5,000,000 shares of preferred stock
of the par value of $.01 per share, hereinafter called the "PREFERRED STOCK,"
of which (i) 450,000 shares have been designated as the Series A Convertible
Preferred Stock (the "SERIES A PREFERRED STOCK"), (ii) 200,000 shares have been
designated as the Series B Convertible Preferred Stock (the "SERIES B PREFERRED
STOCK"), (iii) 100 shares have been designated as the Series C Preferred Stock
(the "SERIES C PREFERRED STOCK"), (iv) 500,000 shares have been designated as
the 10% Exchangeable Preferred Stock (the "10% PREFERRED STOCK"), and (v)
800,000 shares have been designated as the 13% Exchangeable Preferred Stock
Series B (the "13% SERIES B PREFERRED STOCK"), the Board of Directors hereby
provides for the issuance of a series of 800,000 shares of Preferred Stock of
the par value of $.01 per share, as follows:
<PAGE> 2
1. Designation. There is hereby created a series of Preferred Stock
of the Corporation to be designated "13% Exchangeable Preferred Stock Series A"
with a liquidation preference of $100.00 per share (hereinafter referred to as
the "13% PREFERRED STOCK") consisting of an initial issuance of 400,000 shares
of 13% Preferred Stock and such additional shares of 13% Preferred Stock that
may be issued in lieu of cash dividends thereon (and in lieu of cash dividends
on such shares that may be so issued in lieu of cash dividends) if the
Corporation elects to pay dividends in additional shares pursuant to this
Certificate, and to the extent that the designations, preferences, limitations
and relative rights of the 13% Preferred Stock are not stated in the Articles
of Incorporation of the Corporation, they are hereby fixed and herein stated,
as set forth below.
2. Dividends.
(i) Beginning on the Issue Date (this and certain other
initially capitalized terms used herein have the meanings specified in Section
10 hereof), the Holders of the outstanding shares of 13% Preferred Stock, shall
be entitled to receive, when, as and if declared by the Board of Directors, out
of funds legally available therefor, dividends on each share of 13% Preferred
Stock, at a rate per annum equal to 13% of the liquidation preference of one
share of 13% Preferred Stock, or $13.00 per whole share per annum (the
"PERMANENT DIVIDEND RATE"); provided, however, from the Issue Date until the
first anniversary of the Issue Date, dividends on each share of 13% Preferred
Stock shall accrue and be paid at a rate per annum equal to the Permanent
Dividend Rate less 1.5 percent, and from the first anniversary of the Issue
Date until the second anniversary of the Issue Date, dividends on each share of
13% Preferred Stock shall accrue and be paid at a rate per annum equal to the
Permanent Dividend Rate less .75 percent. After the second anniversary of the
Issue Date, dividends on each share of 13% Preferred Stock shall accrue and be
paid at the Permanent Dividend Rate. All dividends shall be fully cumulative
and shall accrue, whether or not earned or declared, on a daily basis from the
Issue Date and shall be payable quarterly in arrears on each Dividend Payment
Date, commencing on August 1, 1998. Any dividend on the 13% Preferred Stock
accrued and payable as provided in this Section 2 (including, without
limitation, Default Dividends (as defined below)) shall be paid either, as so
elected by the Board of Directors of the Corporation, (x) in cash or (y) by
issuing a number of additional shares (and/or fractional shares) of the 13%
Preferred Stock (the "ADDITIONAL SHARES OF 13% PREFERRED STOCK") for each such
share (or fractional share) of 13% Preferred Stock then outstanding equal to
the dividend then payable on each such share (or fractional share) of 13%
Preferred Stock for the Dividend Period then ended (or such shorter period for
which dividends are so being paid) (expressed as a dollar amount) divided by
the liquidation preference of one share of 13% Preferred Stock (expressed as a
dollar amount) or (z) in any combination thereof; provided, however, that on
each Dividend Payment Date which occurs after May 1, 2003, such dividend amount
2
<PAGE> 3
shall be paid in cash, except to the extent prohibited by the Indenture or the
New Credit Facility, each as existing as of the Issue Date.
(ii) The Permanent Dividend Rate may be increased from time to
time as hereinafter provided. Upon:
(a) the failure of the Corporation to satisfy any mandatory
redemption, Change of Control redemption or repurchase obligation with
respect to the 13% Preferred Stock on the terms and in accordance with
the provisions described below in Section 5 hereof;
(b) the failure to pay a cash dividend on a Dividend Payment
Date which occurs after May 1, 2003;
(c) the failure of the Corporation to comply with any of the
other covenants or agreements set forth in this Certificate of
Designation and the continuance of such failure for 30 consecutive days
or more; or
(d) default 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 Corporation or any of its
Subsidiaries (or the payment of which is guaranteed by the Corporation
or any of its Subsidiaries) whether such indebtedness or guarantee now
exists, or is hereafter created, which default (1) is caused by a
failure to pay principal of or premium, if any, or interest on such
indebtedness prior to the expiration of the grace period provided in
such indebtedness on the date of such default (a "PAYMENT DEFAULT") or
(2) results in the acceleration of such indebtedness prior to its
express maturity and, in each case, the principal amount of any 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 $1,000,000 or more
(each of the events described in clauses (a), (b), (c) and (d) being
referred to herein as an "INCREASED DIVIDEND TRIGGERING EVENT");
then the Permanent Dividend Rate will increase by 2% per annum from the date of
such Increased Dividend Triggering Event until such Increased Dividend
Triggering Event is cured.
(iii) If at any time dividends are not declared and paid on any
Dividend Payment Date, whether in cash or Additional Shares of 13% Preferred
Stock or any combination thereof (the "OMITTED DIVIDENDS"), the shares of 13%
Preferred Stock in respect of which such Omitted Dividends were not paid shall
3
<PAGE> 4
accrue additional dividends as though such Omitted Dividends had been paid in
Additional Shares of 13% Preferred Stock at a rate per annum equal to the
Permanent Dividend Rate multiplied by the amount of such Omitted Dividends
(expressed as a dollar amount) (the "DEFAULT DIVIDENDS"). Such Default
Dividends shall be fully cumulative and shall accrue (whether or not earned or
declared) on a daily basis and shall be deemed to constitute accrued and unpaid
dividends for all purposes hereof even if such additional dividends are not
specifically mentioned in any particular context. For purposes of this Section
2, all Default Dividends shall be considered to be in arrears at all times.
(iv) Each distribution in the form of a dividend (whether in cash
or in Additional Shares of 13% Preferred Stock) shall be payable to Holders of
record as they appear on the stock books of the Corporation on such record
dates, not less than 10 nor more than 60 days preceding the related Dividend
Payment Date, as shall be fixed by the Board of Directors. Dividends shall
cease to accumulate in respect of shares of the 13% Preferred Stock on the
Exchange Date or on the date of their earlier redemption unless the Corporation
shall have failed to issue the appropriate aggregate principal amount of
Exchange Notes in respect of the 13% Preferred Stock on the Exchange Date or
shall have failed to pay the relevant redemption price on the date fixed for
redemption.
(v) All dividends paid with respect to shares of the 13%
Preferred Stock pursuant to Section 2(i) shall be paid pro rata to the Holders
entitled thereto.
(vi) Dividends on account of arrears for any past Dividend
Period and dividends in connection with any optional redemption pursuant to
Section 5(i) may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to Holders of record on such date, not more than
45 days prior to the payment thereof, as may be fixed by the Board of
Directors.
(vii) No full dividends shall be declared by the Board of
Directors or paid or funds set apart for the payment of dividends by the
Corporation on any Parity Securities (as defined in Section 4 hereof) for any
period unless full cumulative dividends shall have been or contemporaneously
are declared and paid in full, or declared and (in the case of dividends
payable in cash) a sum in cash set apart in trust sufficient for such payment,
on the 13% Preferred Stock for all dividend periods terminating on or prior to
the date of payment of such full dividends on such Parity Securities. If any
dividends are not paid in full, as aforesaid, upon the shares of the 13%
Preferred Stock and any other Parity Securities, all dividends declared upon
shares of the 13% Preferred Stock and any other Parity Securities shall be
declared pro rata so that the amount of dividends declared per share on the 13%
Preferred Stock and such Parity Securities shall in all cases bear to each
other the same ratio
4
<PAGE> 5
that accrued dividends per share on the 13% Preferred Stock and such Parity
Securities bear to each other.
(viii) (1) Holders of shares of the 13% Preferred Stock shall be
entitled to receive the dividends provided for in Section 2(i) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities (as defined in Section 4 hereof).
(2) So long as any shares of 13% Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment
any dividend on any of the Junior Securities or make any payment on account of,
or set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or
any warrants, rights, calls or options exercisable for or convertible into any
of the Junior Securities, or make any distribution in respect thereof, either
directly or indirectly, and whether in cash, obligations or shares of the
Corporation or other property (other than dividends on Junior Securities paid
solely in additional shares of Junior Securities), and shall not permit any
person or entity directly or indirectly controlled by the Corporation to
purchase or redeem any of the Junior Securities or any such warrants, rights,
calls or options.
(3) So long as any shares of the 13% Preferred Stock are
outstanding, the Corporation shall not make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Parity Securities or any
warrants, rights, calls or options exercisable for or convertible into any of
the Parity Securities, and shall not permit any person or entity directly or
indirectly controlled by the Corporation to purchase or redeem any of the
Parity Securities or any such warrants, rights, calls or options unless the
dividends determined in accordance herewith on the 13% Preferred Stock have
been paid in full.
Notwithstanding the foregoing, these provisions do not
prohibit (a) the acquisition of Junior Securities or warrants, rights, calls or
options exercisable for or convertible into Junior Securities either (i) solely
in exchange for shares of Junior Securities or (ii) through the application of
the net proceeds of a substantially concurrent sale for cash (other than to a
person or entity directly or indirectly controlled by the Corporation) of
shares of Junior Securities or warrants, rights, calls or options to acquire
Junior Securities or (b) the acquisition of Parity Securities or warrants,
rights, calls or options exercisable for or convertible into Parity Securities
either (i) solely in exchange for shares of Junior Securities or Parity
Securities or a combination thereof or (ii) through the application of the net
proceeds of a substantially concurrent sale for cash (other than to a person or
entity directly or
5
<PAGE> 6
indirectly controlled by the Corporation) of shares of Junior Securities or
Parity Securities or warrants, rights, calls or options to acquire Junior
Securities or Parity Securities (or any combination thereof).
(ix) Dividends payable on shares of the 13% Preferred Stock for
any period less than a year shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed in the period for
which payable. If any Dividend Payment Date occurs on a day that is not a
Business Day, any accrued dividends otherwise payable on such Dividend Payment
Date shall be paid on the next succeeding Business Day.
3. Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation, dissolution
or winding-up of the affairs of the Corporation, the Holders of shares of 13%
Preferred Stock then outstanding shall be entitled to be paid, out of the
assets of the Corporation available for distribution to its stockholders,
$100.00 per share of 13% Preferred Stock, plus an amount in cash equal to all
accumulated and unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding-up (including an amount equal to a prorated dividend for
the period from the last Dividend Payment Date to the date fixed for
liquidation, dissolution or winding-up), before any payment shall be made or
any assets distributed to the holders of any of the Junior Securities,
including, without limitation, common stock of the Corporation. Except as
provided in the preceding sentence, Holders of shares of 13% Preferred Stock
shall not be entitled to any distribution in the event of liquidation,
dissolution or winding-up of the affairs of the Corporation. If the assets of
the Corporation are not sufficient to pay in full the liquidation preference
payable to the Holders of outstanding shares of the 13% Preferred Stock and all
Parity Securities, then the holders of all such shares shall share equally and
ratably in such distribution of assets of the Corporation in accordance with
the amounts which would be payable on such distribution if the amount to which
the Holders of outstanding shares of 13% Preferred Stock and the holders of
outstanding shares of all Parity Securities are entitled were paid in full.
(ii) After payment of the full amount of the liquidation
preferences and all accumulated and unpaid dividends to which they are
entitled, the holders of shares of the 13% Preferred Stock shall not be
entitled to any further participation in any distribution of assets of the
Corporation upon any such liquidation, dissolution or winding-up.
(iii) At any time, in the event of the merger or consolidation of
the Corporation into or with another corporation or the merger or consolidation
of any
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other corporation into or with the Corporation or a plan of exchange between
the Corporation and any other corporation (in which consolidation or merger or
plan of exchange any shareholders of the Corporation receive cash or securities
or other property), or the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation, then, subject to the
provisions of this section, such transaction shall be deemed, solely for
purposes of determining the amounts to be received by the holders of the 13%
Preferred Stock in such merger, consolidation, plan of exchange, sale, transfer
or other disposition, and for purposes of determining the priority of receipt
of such amounts as between the holders of the 13% Preferred Stock, the holders
of the Senior Securities and the holders of the Junior Securities, to be a
liquidation or dissolution of the Corporation if the holders of a majority of
the outstanding shares of 13% Preferred Stock so elect by giving written notice
thereof to the Corporation at least two (2) days before the effective date of
such transaction. The Corporation shall give each holder of record of 13%
Preferred Stock written notice of such impending transaction not later than
fourteen (14) days prior to the shareholders' meeting of the Corporation called
to approve such transaction, or fourteen (14) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such Holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the transaction and of this
section (including, without limiting the generality of the foregoing, a
description of the value of the consideration, if any, being offered to the
holders of the 13% Preferred Stock in the transaction and the amount to which
such holders would be entitled if such transaction were (as described above) to
be deemed to be a liquidation or dissolution of the Corporation), and the
Corporation shall thereafter give such holders prompt notice of any material
changes to such terms and conditions. The transaction shall in no event take
place sooner than fourteen (14) days after the mailing by the Corporation of
the first notice provided for herein or sooner than ten (10) days after the
mailing by the Corporation of any notice of material changes provided for
herein; provided, however, that such periods may be reduced upon the written
consent of the holders of a majority of outstanding shares of 13% Preferred
Stock.
4. Rank. The 13% Preferred Stock shall, with respect to dividend
distributions and distributions upon the liquidation, winding-up or dissolution
of the Corporation, rank senior to (i) all classes of common stock of the
Corporation and (ii) each other class of capital stock or series of Preferred
Stock of the Corporation now existing or hereafter created by the Board of
Directors (collectively referred to as "JUNIOR SECURITIES") unless otherwise
expressly agreed to by a majority of the Holders in accordance with Sections
7(iii)(1) or (2) hereof. The 13% Preferred Stock shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up or
dissolution of the Corporation, rank on a parity with any class of capital
stock or series of Preferred Stock now existing or hereafter created by the
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<PAGE> 8
Board of Directors, the terms of which expressly provide that such class or
series shall rank on a parity with the 13% Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up or dissolution
of the Corporation (collectively referred to as "PARITY SECURITIES"); provided
that any such Parity Securities that were not approved by the Holders in
accordance with paragraph Section 7(iii)(1) hereof shall be deemed to be Junior
Securities and not Parity Securities. The 13% Preferred Stock shall, with
respect to dividend distributions and distributions upon the liquidation,
winding-up or dissolution of the Corporation, rank junior to each class of
capital stock or series of Preferred Stock hereafter created which has been
approved by the Holders of the 13% Preferred Stock in accordance with Section
7(iii)(2) hereof and which expressly provides that it ranks senior to the 13%
Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding-up or dissolution of the Corporation (collectively
referred to as "SENIOR SECURITIES"). The 13% Preferred Stock will rank senior
to the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock and the 10% Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding-up or dissolution of the
Corporation and the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and the 10% Preferred Stock shall be deemed to be
Junior Securities. The 13% Preferred Stock will rank on a parity with the 13%
Series B Preferred Stock, and the 13% Series B Preferred Stock shall be deemed
to be Parity Securities.
5. Redemption.
(i) Optional Redemption. The Corporation may (subject to
contractual and other restrictions with respect thereto and to applicable
provisions of the Act and to the legal availability of funds therefor), at the
option of the Board of Directors, redeem at any time after the fourth
anniversary of the Issue Date or from time to time thereafter, in whole or in
part, in the manner provided in Section 5(vi) hereof, any or all of the shares
of the 13% Preferred Stock, at the applicable Optional Redemption Cash Price
plus an amount equal to all accumulated and unpaid dividends thereon, whether
or not earned or declared (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date) (the "OPTIONAL REDEMPTION PRICE"),
provided that no optional redemption pursuant to this Section 5(i) shall be
authorized or made unless prior thereto full unpaid cumulative dividends for
all Dividend Periods terminating on or prior to the Redemption Date and for an
amount equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the Redemption Date shall have
been or immediately prior to the Redemption Notice (as defined in Section 5(vi)
hereof), are declared and paid in cash or declared and a sum set apart
sufficient for such cash payment on the Redemption Date, on the outstanding
shares of the 13% Preferred
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Stock. The "OPTIONAL REDEMPTION CASH PRICE" shall be (a) if the redemption
occurs prior to the fifth anniversary of the Issue Date, $106.50 per share, and
(b) if the redemption occurs on or after the fifth anniversary of the Issue
Date, $100.00 per share.
(ii) Optional IPO Redemption. The Corporation may (subject to
contractual and other restrictions with respect thereto and to applicable
provisions of the Act and to the legal availability of funds therefor), at the
option of the Board of Directors, redeem at any time prior to the third
anniversary of the Issue Date using the proceeds of an Initial Public Offering
(an "IPO REDEMPTION"), in whole or in part, in the manner provided in Section
5(vi) hereof, any or all of the shares of the 13% Preferred Stock, at the
applicable IPO Redemption Cash Price plus an amount equal to all accumulated
and unpaid dividends thereon, whether or not earned or declared (including an
amount in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the Redemption Date)
(the "IPO REDEMPTION PRICE"), provided that no IPO Redemption shall be
authorized or made unless prior thereto full unpaid cumulative dividends for
all Dividend Periods terminating on or prior to the Redemption Date and for an
amount equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the Redemption Date shall have
been or immediately prior to the Redemption Notice, are declared and paid in
cash or declared and a sum set apart sufficient for such cash payment on the
Redemption Date, on the outstanding shares of the 13% Preferred Stock. The
"IPO REDEMPTION CASH PRICE" shall be $113.00 per share of 13% Preferred Stock;
provided, however, that if (a) the per share purchase price for shares of
Common Stock purchased in the Initial Public Offering is greater than the IPO
Base Price (as defined below) or (b) prior to the IPO Redemption the last
reported sales price for the Common Stock on its primary exchange or trading
market is equal to or greater than the IPO Base Price for a period of at least
five (5) consecutive days, then the IPO Redemption Cash Price shall be (x) if
the redemption occurs prior to the first anniversary of the Issue Date, $109.00
per share, and (y) if the redemption occurs on or after the first anniversary
of the Issue Date and prior to the second anniversary of the Issue Date,
$111.00 per share.
(iii) Redemption of Less than All Shares. In the event of
a redemption pursuant to Section 5(i) or 5(ii) hereof of only a portion of the
then outstanding shares of the 13% Preferred Stock, the Corporation shall
effect such redemption pro rata according to the number of shares held by each
Holder of the 13% Preferred Stock.
(iv) Change of Control Redemption. If at any time there shall
occur any Change of Control, then the Corporation shall offer to repurchase all
of the
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13% Preferred Stock, on the date that is 45 days after the date of the Change
of Control, and the redemption price per share shall be $101 per share of 13%
Preferred Stock so redeemed, plus an amount equal to all accumulated and unpaid
dividends thereon, whether or not earned or declared (including an amount in
cash equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Redemption Date to the Redemption Date) (the "CHANGE
OF CONTROL REDEMPTION PRICE"). The failure by the Corporation to repurchase
all of the 13% Preferred Stock as provided immediately above shall constitute
an Increased Dividend Triggering Event under Section 2(ii), notwithstanding the
next sentence of this Section 5(iv). The Corporation shall not repurchase or
redeem any shares of 13% Preferred Stock pursuant to this Section 5(iv) unless
(1) all obligations of the Corporation under the Indenture or New Credit
Facility with respect to a change of control have been satisfied prior to such
repurchase or redemption and (2) such repurchase or redemption does not violate
any covenant of the Indenture or New Credit Facility.
(v) Mandatory Redemption. Subject to applicable provisions of
the Act, on May 1, 2005, the Corporation shall redeem, in a manner provided in
Section 5(vi) hereof, all of the shares of the 13% Preferred Stock then
outstanding at a cash redemption price of $100.00 per share plus an amount
equal to all accumulated and unpaid dividends thereon, whether or not earned or
declared (including an amount in cash equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Redemption Date
to the Redemption Date) (the "MANDATORY REDEMPTION PRICE").
(vi) Procedures for Redemption. (1) At least 20 days and not
more than 60 days prior to the date fixed for any redemption of the 13%
Preferred Stock, written notice (the "REDEMPTION NOTICE") shall be given by
first-class mail, postage prepaid, to each Holder of record on the record date
fixed for such redemption of the 13% Preferred Stock at such Holder's address
as the same appears on the stock register of the Corporation, provided that no
failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any shares of 13% Preferred
Stock to be redeemed except as to the Holder or Holders to whom the Corporation
has failed to give said notice or except as to the Holder or Holders whose
notice was defective and except that any failure to give such notice or any
deficiency therein shall have no effect on the Corporation's obligation to
effect a mandatory redemption pursuant to Section 5(iv) or Section 5(v) hereof.
The Redemption Notice shall state:
(A) whether the redemption is pursuant to Section 5(i), 5(ii),
5(iv) or 5(v) hereof;
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(B) the Optional Redemption Price, the IPO Redemption Price,
the Change of Control Redemption Price or the Mandatory
Redemption Price, as the case may be;
(C) whether all or less than all (in the case of a redemption
pursuant to Section 5(i) or 5(ii)) the outstanding shares
of the 13% Preferred Stock are to be redeemed and the
total number of shares of the 13% Preferred Stock being
redeemed;
(D) in the case of a redemption pursuant to Section 5(i) or
5(ii), the number of shares of 13% Preferred Stock held,
as of the appropriate record date, by the Holder that the
Corporation intends to redeem;
(E) the Redemption Date;
(F) the place or places where certificates representing the
shares of 13% Preferred Stock are to be surrendered for
redemption and the manner in which such certificates are
to be surrendered;
(G) that the Holder is to surrender to the Corporation, at the
place or places referred to in clause (F) above, in the
manner designated and at the Optional Redemption Price,
the IPO Redemption Price, the Change of Control Redemption
Price or the Mandatory Redemption Price, as the case may
be, the certificate or certificates representing the
shares of 13% Preferred Stock; and
(H) that dividends on the shares of the 13% Preferred Stock to
be redeemed shall cease to accrue on such Redemption Date
unless the Corporation defaults in the payment of the
Optional Redemption Price, the IPO Redemption Price, the
Change of Control Redemption Price or the Mandatory
Redemption Price, as the case may be.
(2) Each Holder of 13% Preferred Stock shall surrender
the certificate or certificates representing such shares of 13% Preferred Stock
to the Corporation, duly endorsed, in the manner and at the place designated in
the Redemption Notice, and on the Redemption Date the full Optional Redemption
Price, IPO Redemption Price, Change of Control Redemption Price or Mandatory
Redemption Price, as the case may be, for such shares shall be payable in cash
to the Person whose name appears on such certificate or certificates as the
owner thereof,
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and each surrendered certificate shall be canceled and retired. In the event
that less than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares.
(3) Unless the Corporation defaults in the payment in
full of the applicable redemption price, dividends on the 13% Preferred Stock
called for redemption shall cease to accumulate on the Redemption Date, and the
Holders of such shares to be redeemed shall cease to have any further rights
with respect thereto on the Redemption Date, other than the right to receive
the Optional Redemption Price, IPO Redemption Price, Change of Control
Redemption Price or the Mandatory Redemption Price, as case may be, without
interest.
6. Exchange for Debt Securities.
(i) Requirements. (1) The Corporation may at its option redeem
all, but not less than all, of the then outstanding shares of 13% Preferred
Stock through the issuance of, in redemption of and in exchange for the shares
of 13% Preferred Stock, Exchange Notes in an aggregate principal amount equal
to the sum of $100.00 per share of 13% Preferred Stock to be redeemed plus the
amount of accrued and unpaid dividends thereon whether or not earned or
declared (including an amount equal to a prorated dividend for the period from
the Dividend Payment Date immediately prior to the Exchange Date to the
Exchange Date), provided that on the date of such exchange: (a) there shall be
no contractual or legal impediments to such exchange; (b) there shall be
legally available funds sufficient therefor; (c) the Corporation shall have
delivered to the Holders a written opinion of counsel of national prominence
that the Exchange Notes have been duly authorized, executed and delivered by
the Corporation, have been validly issued, have not been issued in violation of
any law, rule, regulation or agreement and constitute valid and legally binding
obligations of the Corporation enforceable (subject to customary exceptions)
against the Corporation in accordance with their terms and entitled to the
benefits of the Exchange Notes Indenture; (d) the Corporation shall have
executed and delivered to the Holders an Exchange Notes Indenture in form and
substance satisfactory to the holders of a majority of the outstanding shares
of 13% Preferred Stock and such Exchange Notes Indenture shall comply with the
definition thereof in Section 10; and (e) immediately after giving effect to
such exchange, no Default or Event of Default (each as defined in the Exchange
Notes Indenture) would exist under the Exchange Notes Indenture.
(ii) Procedures for Exchange. (1) At least 20 days and not
more than 60 days prior to the date fixed for exchange (the "EXCHANGE DATE"),
written notice (the "EXCHANGE NOTICE") shall be given by first-class mail
postage prepaid, to each Holder of record on the date fixed for such exchange
at such Holder's address as the
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same appears on the stock register of the Corporation, provided that no failure
to give such notice nor any deficiency therein shall affect the validity of the
procedure for the exchange of any shares of 13% Preferred Stock to be exchanged
except as to the Holder or Holders to whom the Corporation has failed to give
said notice or except as to the Holder or Holders whose notice was defective.
The Exchange Notice shall state:
(A) that the Corporation is exercising its option to exchange
the 13% Preferred Stock for Exchange Notes pursuant to
this Certificate of Resolution;
(B) the Exchange Date, which date shall not be less than 20
days nor more than 60 days following the date on which the
Exchange Notice is mailed (except as provided in the last
sentence of this paragraph);
(C) the place or places where certificates representing the
shares of 13% Preferred Stock are to be surrendered for
exchange and the manner in which such certificates are to
be surrendered;
(D) that the Holder is to surrender to the Corporation, at the
place or places referred to in clause (C) above, in the
manner designated, the certificate or certificates
representing the shares of 13% Preferred Stock;
(E) that dividends on the shares of 13% Preferred Stock to be
exchanged shall cease to accrue on the Exchange Date
whether or not certificates for shares of 13% Preferred
Stock are surrendered for exchange on the Exchange Date
unless the Corporation shall default in the delivery of
Exchange Notes; and
(F) that interest on the Exchange Notes shall accrue from the
Exchange Date whether or not certificates for shares of
13% Preferred Stock are surrendered for exchange on the
Exchange Date.
On the Exchange Date, if the conditions set forth in clauses (a) through (e) in
Section 6(i) are satisfied, the Corporation shall issue Exchange Notes in
exchange for the 13% Preferred Stock as provided in the next paragraph.
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(2) Upon any exchange pursuant to Section 6, Exchange
Notes shall be issued in exchange for 13% Preferred Stock, in registered form
without coupons. Exchange Notes will be issued in principal amounts of $100
and integral multiples thereof to the extent possible, and will also be issued
in principal amounts less than $1,000 so that each Holder of 13% Preferred
Stock will receive certificates representing the entire amount of Exchange
Notes to which his shares of 13% Preferred Stock entitles him, provided that
the Corporation may, at its option, pay cash in lieu of issuing Exchange Notes
in a principal amount of less than $100.
(iii) (1) On or before the date fixed for exchange, each Holder
of 13% Preferred Stock shall surrender the certificate or certificates
representing such shares of 13% Preferred Stock, in the manner and at the place
designated in the Exchange Notice. The Corporation shall cause the Exchange
Notes to be executed on or prior to the Exchange Date and, upon surrender in
accordance with the Exchange Notice of the certificates for any shares of 13%
Preferred Stock so exchanged (properly endorsed or assigned for transfer, if
the notice shall so state), such shares shall be redeemed by the Corporation in
exchange for Exchange Notes. The Corporation shall pay interest on the
Exchange Notes at the rate and on the date or dates specified therein from the
Exchange Date.
(2) If notice has been mailed as aforesaid, and if before
the Exchange Date (a) the Exchange Notes Indenture shall have been duly
executed and delivered by the Corporation and (b) all Exchange Notes necessary
for such exchange shall have been duly executed and delivered by the
Corporation, then on the Exchange Date, dividends shall cease to accrue on the
outstanding shares of 13% Preferred Stock and all of the rights of the Holders
of shares of the 13% Preferred Stock as stockholders of the Corporation shall
cease (except the right to receive Exchange Notes), and the Person or Persons
entitled to receive the Exchange Notes issuable upon exchange shall be treated
for all purposes as the registered holder or holders of such Exchange Notes as
of the Exchange Date.
7. Voting Rights.
(i) The Holders of shares of the 13% Preferred Stock, except as
otherwise required by applicable law or as set forth in this Section 7, shall
not be entitled or permitted to vote on any matter required or permitted to be
voted upon by the stockholders of the Corporation.
(ii) (1) Upon the accumulation of accrued and unpaid cash
dividends on the outstanding 13% Preferred Stock in an amount equal to four
full quarterly dividends (whether or not consecutive) after May 1, 2003, then
the number of members of the Corporation's Board of Directors will be
immediately and automatically increased by one unless there is a vacancy on the
Corporation's Board
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of Directors, and the holders of a majority of the outstanding shares of 13%
Preferred Stock, voting or consenting, as the case may be, as a separate class,
will be entitled to elect one member to the Board of Directors of the Company.
(2) Upon each accumulation of accrued and unpaid cash dividends
in an amount equal to two full quarterly dividends (whether or not consecutive)
that occurs after the accumulation of accrued and unpaid cash dividends
contemplated in subparagraph (ii)(1) hereof, the holders of a majority of the
outstanding shares of 13% Preferred Stock, voting or consenting, as the case
may be, as a separate class, will be entitled to elect an additional member to
the Board of Directors, and the number of members of the Board of Directors
will be immediately and automatically increased as appropriate.
(3) Whenever a voting right shall have vested under subparagraph
(ii)(1) or (2) hereof, such right may be exercised initially either at a
special meeting of the Holders of 13% Preferred Stock, called as hereinafter
provided, or at any annual meeting of stockholders held for the purpose of
electing directors or by written consent of the Holders of 13% Preferred Stock,
and thereafter at such annual meetings or by the written consent of the Holders
of 13% Preferred Stock. Such right of the Holders of 13% Preferred Stock to
elect a director or directors may be exercised until all cash dividends in
arrears shall have been paid in full, at which time the right of the Holders of
13% Preferred Stock to elect such director or directors shall cease, the term
of such director or directors previously elected shall thereupon terminate, and
the authorized number of directors of the Corporation shall thereupon return to
the number of authorized directors otherwise in effect, but subject always to
the same provisions for the renewal and divestment of such special voting
rights in the case of any such future dividend arrearage or defaults or any
such failure to make redemption payments.
(4) At any time when such voting right shall have vested in the
Holders of 13% Preferred Stock and if such right shall not already have been
initially exercised, a proper officer of the Corporation shall, upon the
written request of Holders of record of 50% or more of the 13% Preferred Stock
then outstanding, addressed to the Secretary of the Corporation, call a special
or annual meeting of the stockholders. If such meeting shall not be called by
the proper officers of the Corporation within 30 days after the personal
service of such written request upon the Secretary of the Corporation, or
within 30 days after mailing the same within the United States, by registered
mail, addressed to the Secretary of the Corporation at its principal office,
then the Holders of record of 50% or more of the 13% Preferred Stock then
outstanding may designate in writing a Holder of 13% Preferred Stock to call
such meeting at the expense of the Corporation, and such meeting may be called
by such person so designated upon the notice required for annual meetings of
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<PAGE> 16
stockholders and shall be held at the place for holding annual meetings of the
Corporation or, if none, at a place designated by such Holder. Any Holder of
13% Preferred Stock that would be entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of causing a
meeting of stockholders to be called pursuant to the provisions of this
Section. Notwithstanding the provisions of this paragraph, however, no such
special meeting shall be called if any such request is received less than 90
days before the date fixed for the next ensuing annual or special meeting of
stockholders. Any action required to be taken at a meeting of Holders may be
taken without a meeting, with 15 days prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of a majority of the outstanding shares of 13% Preferred
Stock.
(5) If any director so elected by the Holders of 13% Preferred
Stock shall cease to serve as a director before his term shall expire, the
Holders of 13% Preferred Stock then outstanding may, at a special meeting of
the Holders called as provided above, elect a successor to hold office for the
unexpired term of the director whose place shall be vacant.
(iii) (1) So long as any shares of the 13% Preferred Stock are
outstanding, the Corporation shall not authorize, create, issue or sell any
Parity Securities without the affirmative vote or consent of Holders of at
least a majority of the outstanding shares of 13% Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at a meeting, except that
after May 1, 2002, without the approval of Holders of the 13% Preferred Stock,
the Corporation may authorize or issue shares of Parity Securities in exchange
for, or the proceeds of which are used to redeem all (but not less than all),
shares of 13% Preferred Stock then outstanding pursuant to Section 5(i).
(2) So long as any shares of the 13% Preferred Stock are
outstanding, the Corporation shall not authorize, create, issue or sell any
Senior Securities without the affirmative vote or consent of Holders of at
least a majority of the outstanding shares of 13% Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at a meeting.
(3) So long as any shares of the 13% Preferred Stock are
outstanding, the Corporation shall not amend this Certificate of Resolution so
as to affect adversely the specified rights, preferences, privileges or voting
rights of Holders of shares of 13% Preferred Stock or to authorize the issuance
of any additional shares of 13% Preferred Stock without the affirmative vote or
consent of Holders of at least a
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majority of the outstanding shares of 13% Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at a meeting.
Notwithstanding the foregoing, any amendment to this Agreement that (a) creates
any additional affirmative obligations to be complied with by any or all of the
holders of 13% Preferred Stock, (ii) grants to any one or more holders of 13%
Preferred Stock any rights more favorable than any rights granted to all other
similarly situated holders of 13% Preferred Stock, or (iii) otherwise treats
any one or more holders of 13% Preferred Stock differently than all other
similarly situated holders of 13% Preferred Stock must be approved by each
Investor so as to be effective against such Investor.
(iv) In any case in which the Holders of shares of the 13%
Preferred Stock shall be entitled to vote pursuant to this Section 7 or
pursuant to applicable law, each Holder of shares of the 13% Preferred Stock
shall be entitled to one vote for each share of 13% Preferred Stock held.
8. Reissuance of 13% Preferred Stock. Shares of 13% Preferred Stock
that have been issued and reacquired by the Corporation or any of its
subsidiaries in any manner, including shares purchased or redeemed or
exchanged, shall be canceled and shall not be reissued.
9. Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
10. Definitions. As used in this Certificate of Resolution, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"AFFILIATE" means with respect to any person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this
definition, control when used with respect to any person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CHANGE OF CONTROL" has the meaning set forth Section 1.01 of the
Indenture.
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"DIVIDEND PAYMENT DATE" means February 1, May 1, August 1 and
November 1 of each year.
"DIVIDEND PERIOD" means the Initial Dividend Period and,
thereafter, each Quarterly Dividend Period.
"EXCHANGE DATE" means a date on which shares of 13% Preferred
Stock are exchanged by the Corporation for Exchange Notes.
"EXCHANGE NOTES" means subordinated notes of the Corporation
having an interest rate of 13% per annum, payable quarterly on February 1, May
1, August 1 and November 1 of each year, a maturity date of May 1, 2005, and
having the benefit of, and subject to the terms and conditions of, the Exchange
Notes Indenture.
"EXCHANGE NOTES INDENTURE" means the indenture in the form
attached as Exhibit A to the Exchange Offer Registration Rights Agreement.
"EXCHANGE OFFER REGISTRATION RIGHTS AGREEMENT" means that certain
agreement dated April 30, 1998, between the Corporation and certain investors
pursuant to which said investors shall have the right to exchange shares of 13%
Preferred Stock for a like number of 13% Series B Preferred Stock.
"HOLDER" means a holder of shares of 13% Preferred Stock.
"INDENTURE" means the Indenture, dated January 22, 1998, relating
to $270,000,000 of 9 3/4% Senior Notes due 2005 of the Corporation, as amended
and restated as of April 30, 1998.
"INITIAL DIVIDEND PERIOD" means the dividend period commencing on
the Issue Date and ending on the day before the first Dividend Payment Date to
occur thereafter.
"INITIAL PUBLIC OFFERING" means a bona fide firm commitment
underwritten initial public offering of shares of the Company's Common Stock
made through a nationally recognized underwriting firm pursuant to an effective
registration statement under the Securities Act, which results in gross
proceeds to the Company of not less than $20,000,000.
"IPO BASE PRICE" initially means $20.00; provided, however, that
if at any time or from time to time the Company shall (1) entitle the holders
of its
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Common Stock to receive a dividend payable in, or other distribution of, Common
Stock, (2) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock or (3) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, the IPO Base
Price shall be adjusted by multiplying such IPO Base Price in effect
immediately prior to such event by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event.
"ISSUE DATE" means the date on which the 13% Preferred Stock is
originally issued by the Corporation under this Certificate of Resolution.
"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 for the intervening period.
"NEW CREDIT FACILITY" means the senior secured credit facility
among the Corporation, its subsidiaries and Antares Leveraged Capital Corp., as
agent and lender, and the other lenders from time to time parties thereto.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"PERMITTED TRANSFEREE" means with respect to any person, (i) any
Affiliate of such person, (ii) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any such person, (iii) a
trust, the beneficiaries of which, or a corporation or partnership, the
stockholders or general or limited partners of which, include only such person
or his or her spouse or lineal descendants, in each case to whom such person
has transferred the beneficial ownership of any securities of the Corporation,
(iv) any investment account whose investment managers and investment advisors
consist solely of such person and/or Permitted Transferees of such person and
(v) any investment fund or investment entity that is a subsidiary of such
person or a Permitted Transferee of such person.
"QUARTERLY DIVIDEND PERIOD" shall mean the three-month period
commencing on each February 1, May 1, August 1 and November 1 and ending on the
day before the following Dividend Payment Date.
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"REDEMPTION DATE" with respect to any shares of 13% Preferred
Stock, means the date on which such shares of 13% Preferred Stock are to be
redeemed by the Corporation.
RESOLVED, that, before the Corporation shall issue any shares of
the 13% Preferred Stock, a certificate pursuant to Article 2.13 of the Act
shall be made, executed, acknowledged, filed and recorded in accordance with
the provisions of said Article 2.13; and the proper officers of the Corporation
are hereby authorized and directed to do all acts and things which may be
necessary or proper in their opinion to carry into effect the purposes and
intent of this and the foregoing resolutions.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, this Certificate is executed as of April 29, 1998.
PACKAGED ICE, INC.
By: /s/ A.J. LEWIS, III
---------------------------
A.J. Lewis, III
President and Secretary
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EXHIBIT 4.11
PREFERRED STOCK SERIES DESIGNATION
PACKAGED ICE, INC., A TEXAS CORPORATION
CERTIFICATE OF RESOLUTION
PROVIDING FOR THE ISSUANCE OF
13% EXCHANGEABLE PREFERRED STOCK SERIES B
PURSUANT TO ARTICLE 2.13 OF THE
TEXAS BUSINESS CORPORATION ACT
* * * *
PACKAGED ICE, INC., a Texas corporation (the "CORPORATION"), certifies
that pursuant to the authority contained in Article Four of its Articles of
Incorporation, and in accordance with the provisions of Article 2.13 of the
Texas Business Corporation Act, its Board of Directors adopted at a special
meeting on April 28, 1998, the following resolutions creating and providing for
the issuance of a series of shares of Preferred Stock as hereinafter described,
and further providing for the voting powers, designations, preferences, and
relative, participating, optional or other rights thereof, and the
qualifications, limitations or restrictions thereof, in addition to those set
forth in said Articles of Incorporation, all in accordance with the provisions
of Article 2.13 of the Texas Business Corporation Act (the "ACT"):
BE IT RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation under Article Four of the Articles of
Incorporation, which creates and authorizes 5,000,000 shares of preferred stock
of the par value of $.01 per share, hereinafter called the "PREFERRED STOCK,"
of which (i) 450,000 shares have been designated as the Series A Convertible
Preferred Stock (the "SERIES A PREFERRED STOCK"), (ii) 200,000 shares have been
designated as the Series B Convertible Preferred Stock (the "SERIES B PREFERRED
STOCK"), (iii) 100 shares have been designated as the Series C Preferred Stock
(the "SERIES C PREFERRED STOCK"), (iv) 500,000 shares have been designated as
the 10% Exchangeable Preferred Stock (the "10% PREFERRED STOCK"), and (v)
800,000 shares have been designated as the 13% Exchangeable Preferred Stock
Series A (the "13% SERIES A PREFERRED STOCK"), the Board of Directors hereby
provides for the issuance of a series of 800,000 shares of Preferred Stock of
the par value of $.01 per share, as follows:
1. Designation. There is hereby created a series of Preferred
Stock of
<PAGE> 2
the Corporation to be designated "13% Exchangeable Preferred Stock Series B"
with a liquidation preference of $100.00 per share (hereinafter referred to as
the "13% PREFERRED STOCK") to be issued in exchange for the 13% Series A
Preferred Stock upon the occurrence of an Exchange Offer pursuant to the
Exchange Offer Registration Rights Agreement and such additional shares of 13%
Preferred Stock that may be issued in lieu of cash dividends thereon (and in
lieu of cash dividends on such shares that may be so issued in lieu of cash
dividends) if the Corporation elects to pay dividends in additional shares
pursuant to this Certificate, and to the extent that the designations,
preferences, limitations and relative rights of the 13% Preferred Stock are not
stated in the Articles of Incorporation of the Corporation, they are hereby
fixed and herein stated, as set forth below.
2. Dividends.
(i) Beginning on the Issue Date (this and certain other
initially capitalized terms used herein have the meanings specified in Section
10 hereof), the Holders of the outstanding shares of 13% Preferred Stock, shall
be entitled to receive, when, as and if declared by the Board of Directors, out
of funds legally available therefor, dividends on each share of 13% Preferred
Stock, at a rate per annum equal to 13% of the liquidation preference of one
share of 13% Preferred Stock, or $13.00 per whole share per annum (the
"PERMANENT DIVIDEND RATE"); provided, however, from the Issue Date until the
first anniversary of the Issue Date, dividends on each share of 13% Preferred
Stock shall accrue and be paid at a rate per annum equal to the Permanent
Dividend Rate less 1.5 percent, and from the first anniversary of the Issue
Date until the second anniversary of the Issue Date, dividends on each share of
13% Preferred Stock shall accrue and be paid at a rate per annum equal to the
Permanent Dividend Rate less .75 percent. After the second anniversary of the
Issue Date, dividends on each share of 13% Preferred Stock shall accrue and be
paid at the Permanent Dividend Rate. All dividends shall be fully cumulative
and shall accrue, whether or not earned or declared, on a daily basis from the
Issue Date and shall be payable quarterly in arrears on each Dividend Payment
Date, commencing on August 1, 1998. Any dividend on the 13% Preferred Stock
accrued and payable as provided in this Section 2 (including, without
limitation, Default Dividends (as defined below)) shall be paid either, as so
elected by the Board of Directors of the Corporation, (x) in cash or (y) by
issuing a number of additional shares (and/or fractional shares) of the 13%
Preferred Stock (the "ADDITIONAL SHARES OF 13% PREFERRED STOCK") for each such
share (or fractional share) of 13% Preferred Stock then outstanding equal to
the dividend then payable on each such share (or fractional share) of 13%
Preferred Stock for the Dividend Period then ended (or such shorter period for
which dividends are so being paid) (expressed as a dollar amount) divided by
the liquidation preference of one share of 13% Preferred Stock (expressed as a
dollar amount) or (z) in any combination thereof; provided, however, that on
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<PAGE> 3
each Dividend Payment Date which occurs after May 1, 2003, such dividend amount
shall be paid in cash, except to the extent prohibited by the Indenture or the
New Credit Facility, each as existing as of the Issue Date.
(ii) The Permanent Dividend Rate may be increased from time
to time as hereinafter provided. Upon:
(a) the failure of the Corporation to satisfy any mandatory
redemption, Change of Control redemption or repurchase obligation with
respect to the 13% Preferred Stock on the terms and in accordance with
the provisions described below in Section 5 hereof;
(b) the failure to pay a cash dividend on a Dividend Payment
Date which occurs after May 1, 2003;
(c) the failure of the Corporation to comply with any of the
other covenants or agreements set forth in this Certificate of
Designation and the continuance of such failure for 30 consecutive
days or more; or
(d) default 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 Corporation or
any of its Subsidiaries (or the payment of which is guaranteed by the
Corporation or any of its Subsidiaries) whether such indebtedness or
guarantee now exists, or is hereafter created, which default (1) is
caused by a failure to pay principal of or premium, if any, or
interest on such indebtedness prior to the expiration of the grace
period provided in such indebtedness on the date of such default (a
"PAYMENT DEFAULT") or (2) results in the acceleration of such
indebtedness prior to its express maturity and, in each case, the
principal amount of any 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 $1,000,000 or more (each of the events described in clauses
(a), (b), (c) and (d) being referred to herein as an "INCREASED
DIVIDEND TRIGGERING EVENT");
then the Permanent Dividend Rate will increase by 2% per annum from the date of
such Increased Dividend Triggering Event until such Increased Dividend
Triggering Event is cured.
(iii) If at any time dividends are not declared and paid on
any Dividend Payment Date, whether in cash or Additional Shares of 13%
Preferred Stock or any combination thereof (the "OMITTED DIVIDENDS"), the
shares of 13%
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<PAGE> 4
Preferred Stock in respect of which such Omitted Dividends were not paid shall
accrue additional dividends as though such Omitted Dividends had been paid in
Additional Shares of 13% Preferred Stock at a rate per annum equal to the
Permanent Dividend Rate multiplied by the amount of such Omitted Dividends
(expressed as a dollar amount) (the "DEFAULT DIVIDENDS"). Such Default
Dividends shall be fully cumulative and shall accrue (whether or not earned or
declared) on a daily basis and shall be deemed to constitute accrued and unpaid
dividends for all purposes hereof even if such additional dividends are not
specifically mentioned in any particular context. For purposes of this Section
2, all Default Dividends shall be considered to be in arrears at all times.
(iv) Each distribution in the form of a dividend (whether in
cash or in Additional Shares of 13% Preferred Stock) shall be payable to
Holders of record as they appear on the stock books of the Corporation on such
record dates, not less than 10 nor more than 60 days preceding the related
Dividend Payment Date, as shall be fixed by the Board of Directors. Dividends
shall cease to accumulate in respect of shares of the 13% Preferred Stock on
the Exchange Date or on the date of their earlier redemption unless the
Corporation shall have failed to issue the appropriate aggregate principal
amount of Exchange Notes in respect of the 13% Preferred Stock on the Exchange
Date or shall have failed to pay the relevant redemption price on the date
fixed for redemption.
(v) All dividends paid with respect to shares of the 13%
Preferred Stock pursuant to Section 2(i) shall be paid pro rata to the Holders
entitled thereto.
(vi) Dividends on account of arrears for any past Dividend
Period and dividends in connection with any optional redemption pursuant to
Section 5(i) may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to Holders of record on such date, not more than
45 days prior to the payment thereof, as may be fixed by the Board of
Directors.
(vii) No full dividends shall be declared by the Board of
Directors or paid or funds set apart for the payment of dividends by the
Corporation on any Parity Securities (as defined in Section 4 hereof) for any
period unless full cumulative dividends shall have been or contemporaneously
are declared and paid in full, or declared and (in the case of dividends
payable in cash) a sum in cash set apart in trust sufficient for such payment,
on the 13% Preferred Stock for all dividend periods terminating on or prior to
the date of payment of such full dividends on such Parity Securities. If any
dividends are not paid in full, as aforesaid, upon the shares of the 13%
Preferred Stock and any other Parity Securities, all dividends declared upon
shares of the 13% Preferred Stock and any other Parity Securities shall be
declared pro rata so that the amount of dividends declared per share on the 13%
Preferred
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<PAGE> 5
Stock and such Parity Securities shall in all cases bear to each other the same
ratio that accrued dividends per share on the 13% Preferred Stock and such
Parity Securities bear to each other.
(viii) (1) Holders of shares of the 13% Preferred Stock
shall be entitled to receive the dividends provided for in Section 2(i) hereof
in preference to and in priority over any dividends upon any of the Junior
Securities (as defined in Section 4 hereof).
(2) So long as any shares of 13% Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment
any dividend on any of the Junior Securities or make any payment on account of,
or set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or
any warrants, rights, calls or options exercisable for or convertible into any
of the Junior Securities, or make any distribution in respect thereof, either
directly or indirectly, and whether in cash, obligations or shares of the
Corporation or other property (other than dividends on Junior Securities paid
solely in additional shares of Junior Securities), and shall not permit any
person or entity directly or indirectly controlled by the Corporation to
purchase or redeem any of the Junior Securities or any such warrants, rights,
calls or options.
(3) So long as any shares of the 13% Preferred Stock
are outstanding, the Corporation shall not make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Parity Securities or
any warrants, rights, calls or options exercisable for or convertible into any
of the Parity Securities, and shall not permit any person or entity directly or
indirectly controlled by the Corporation to purchase or redeem any of the
Parity Securities or any such warrants, rights, calls or options unless the
dividends determined in accordance herewith on the 13% Preferred Stock have
been paid in full.
Notwithstanding the foregoing, these provisions do
not prohibit (a) the acquisition of Junior Securities or warrants, rights,
calls or options exercisable for or convertible into Junior Securities either
(i) solely in exchange for shares of Junior Securities or (ii) through the
application of the net proceeds of a substantially concurrent sale for cash
(other than to a person or entity directly or indirectly controlled by the
Corporation) of shares of Junior Securities or warrants, rights, calls or
options to acquire Junior Securities or (b) the acquisition of Parity
Securities or warrants, rights, calls or options exercisable for or convertible
into Parity Securities either (i) solely in exchange for shares of Junior
Securities or Parity Securities or a combination thereof or (ii) through the
application of the net proceeds
5
<PAGE> 6
of a substantially concurrent sale for cash (other than to a person or entity
directly or indirectly controlled by the Corporation) of shares of Junior
Securities or Parity Securities or warrants, rights, calls or options to
acquire Junior Securities or Parity Securities (or any combination thereof).
(ix) Dividends payable on shares of the 13% Preferred Stock
for any period less than a year shall be computed on the basis of a 360-day
year of twelve 30-day months and the actual number of days elapsed in the
period for which payable. If any Dividend Payment Date occurs on a day that is
not a Business Day, any accrued dividends otherwise payable on such Dividend
Payment Date shall be paid on the next succeeding Business Day.
3. Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Corporation, the Holders of
shares of 13% Preferred Stock then outstanding shall be entitled to be paid,
out of the assets of the Corporation available for distribution to its
stockholders, $100.00 per share of 13% Preferred Stock, plus an amount in cash
equal to all accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding-up (including an amount equal to a prorated
dividend for the period from the last Dividend Payment Date to the date fixed
for liquidation, dissolution or winding-up), before any payment shall be made
or any assets distributed to the holders of any of the Junior Securities,
including, without limitation, common stock of the Corporation. Except as
provided in the preceding sentence, Holders of shares of 13% Preferred Stock
shall not be entitled to any distribution in the event of liquidation,
dissolution or winding-up of the affairs of the Corporation. If the assets of
the Corporation are not sufficient to pay in full the liquidation preference
payable to the Holders of outstanding shares of the 13% Preferred Stock and all
Parity Securities, then the holders of all such shares shall share equally and
ratably in such distribution of assets of the Corporation in accordance with
the amounts which would be payable on such distribution if the amount to which
the Holders of outstanding shares of 13% Preferred Stock and the holders of
outstanding shares of all Parity Securities are entitled were paid in full.
(ii) After payment of the full amount of the liquidation
preferences and all accumulated and unpaid dividends to which they are
entitled, the holders of shares of the 13% Preferred Stock shall not be
entitled to any further participation in any distribution of assets of the
Corporation upon any such liquidation, dissolution or winding-up.
(iii) At any time, in the event of the merger or consolidation
of the
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Corporation into or with another corporation or the merger or consolidation of
any other corporation into or with the Corporation or a plan of exchange
between the Corporation and any other corporation (in which consolidation or
merger or plan of exchange any shareholders of the Corporation receive cash or
securities or other property), or the sale, transfer or other disposition of
all or substantially all of the assets of the Corporation, then, subject to the
provisions of this section, such transaction shall be deemed, solely for
purposes of determining the amounts to be received by the holders of the 13%
Preferred Stock in such merger, consolidation, plan of exchange, sale, transfer
or other disposition, and for purposes of determining the priority of receipt
of such amounts as between the holders of the 13% Preferred Stock, the holders
of the Senior Securities and the holders of the Junior Securities, to be a
liquidation or dissolution of the Corporation if the holders of a majority of
the outstanding shares of 13% Preferred Stock so elect by giving written notice
thereof to the Corporation at least two (2) days before the effective date of
such transaction. The Corporation shall give each holder of record of 13%
Preferred Stock written notice of such impending transaction not later than
fourteen (14) days prior to the shareholders' meeting of the Corporation called
to approve such transaction, or fourteen (14) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such Holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the transaction and of this
section (including, without limiting the generality of the foregoing, a
description of the value of the consideration, if any, being offered to the
holders of the 13% Preferred Stock in the transaction and the amount to which
such holders would be entitled if such transaction were (as described above) to
be deemed to be a liquidation or dissolution of the Corporation), and the
Corporation shall thereafter give such holders prompt notice of any material
changes to such terms and conditions. The transaction shall in no event take
place sooner than fourteen (14) days after the mailing by the Corporation of
the first notice provided for herein or sooner than ten (10) days after the
mailing by the Corporation of any notice of material changes provided for
herein; provided, however, that such periods may be reduced upon the written
consent of the holders of a majority of outstanding shares of 13% Preferred
Stock.
4. Rank. The 13% Preferred Stock shall, with respect to dividend
distributions and distributions upon the liquidation, winding-up or dissolution
of the Corporation, rank senior to (i) all classes of common stock of the
Corporation and (ii) each other class of capital stock or series of Preferred
Stock of the Corporation now existing or hereafter created by the Board of
Directors (collectively referred to as "JUNIOR SECURITIES") unless otherwise
expressly agreed to by a majority of the Holders in accordance with Sections
7(iii)(1) or (2) hereof. The 13% Preferred Stock shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up or
dissolution of the Corporation, rank on a parity with any class of
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<PAGE> 8
capital stock or series of Preferred Stock now existing or hereafter created by
the Board of Directors, the terms of which expressly provide that such class or
series shall rank on a parity with the 13% Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up or dissolution
of the Corporation (collectively referred to as "PARITY SECURITIES"); provided
that any such Parity Securities that were not approved by the Holders in
accordance with paragraph Section 7(iii)(1) hereof shall be deemed to be Junior
Securities and not Parity Securities. The 13% Preferred Stock shall, with
respect to dividend distributions and distributions upon the liquidation,
winding-up or dissolution of the Corporation, rank junior to each class of
capital stock or series of Preferred Stock hereafter created which has been
approved by the Holders of the 13% Preferred Stock in accordance with Section
7(iii)(2) hereof and which expressly provides that it ranks senior to the 13%
Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding-up or dissolution of the Corporation (collectively
referred to as "SENIOR SECURITIES"). The 13% Preferred Stock will rank senior
to the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock and the 10% Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding-up or dissolution of the
Corporation and the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and the 10% Preferred Stock shall be deemed to be
Junior Securities. The 13% Preferred Stock will rank on a parity with the 13%
Series A Preferred Stock, and the 13% Series A Preferred Stock shall be deemed
to be Parity Securities.
5. Redemption.
(i) Optional Redemption. The Corporation may (subject to
contractual and other restrictions with respect thereto and to applicable
provisions of the Act and to the legal availability of funds therefor), at the
option of the Board of Directors, redeem at any time after the fourth
anniversary of the Issue Date or from time to time thereafter, in whole or in
part, in the manner provided in Section 5(vi) hereof, any or all of the shares
of the 13% Preferred Stock, at the applicable Optional Redemption Cash Price
plus an amount equal to all accumulated and unpaid dividends thereon, whether
or not earned or declared (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date) (the "OPTIONAL REDEMPTION PRICE"),
provided that no optional redemption pursuant to this Section 5(i) shall be
authorized or made unless prior thereto full unpaid cumulative dividends for
all Dividend Periods terminating on or prior to the Redemption Date and for an
amount equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the Redemption Date shall have
been or immediately prior to the Redemption Notice (as defined in Section 5(vi)
hereof), are declared and paid in cash or declared and a sum set apart
sufficient for such cash
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payment on the Redemption Date, on the outstanding shares of the 13% Preferred
Stock. The "OPTIONAL REDEMPTION CASH PRICE" shall be (a) if the redemption
occurs prior to the fifth anniversary of the Issue Date, $106.50 per share, and
(b) if the redemption occurs on or after the fifth anniversary of the Issue
Date, $100.00 per share.
(ii) Optional IPO Redemption. The Corporation may (subject
to contractual and other restrictions with respect thereto and to applicable
provisions of the Act and to the legal availability of funds therefor), at the
option of the Board of Directors, redeem at any time prior to the third
anniversary of the Issue Date using the proceeds of an Initial Public Offering
(an "IPO REDEMPTION"), in whole or in part, in the manner provided in Section
5(vi) hereof, any or all of the shares of the 13% Preferred Stock, at the
applicable IPO Redemption Cash Price plus an amount equal to all accumulated
and unpaid dividends thereon, whether or not earned or declared (including an
amount in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the Redemption Date)
(the "IPO REDEMPTION PRICE"), provided that no IPO Redemption shall be
authorized or made unless prior thereto full unpaid cumulative dividends for
all Dividend Periods terminating on or prior to the Redemption Date and for an
amount equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the Redemption Date shall have
been or immediately prior to the Redemption Notice, are declared and paid in
cash or declared and a sum set apart sufficient for such cash payment on the
Redemption Date, on the outstanding shares of the 13% Preferred Stock. The
"IPO REDEMPTION CASH PRICE" shall be $113.00 per share of 13% Preferred Stock;
provided, however, that if (a) the per share purchase price for shares of
Common Stock purchased in the Initial Public Offering is greater than the IPO
Base Price (as defined below) or (b) prior to the IPO Redemption the last
reported sales price for the Common Stock on its primary exchange or trading
market is equal to or greater than the IPO Base Price for a period of at least
five (5) consecutive days, then the IPO Redemption Cash Price shall be (x) if
the redemption occurs prior to the first anniversary of the Issue Date, $109.00
per share, and (y) if the redemption occurs on or after the first anniversary
of the Issue Date and prior to the second anniversary of the Issue Date,
$111.00 per share.
(iii) Redemption of Less than All Shares. In the event of
a redemption pursuant to Section 5(i) or 5(ii) hereof of only a portion of the
then outstanding shares of the 13% Preferred Stock, the Corporation shall
effect such redemption pro rata according to the number of shares held by each
Holder of the 13% Preferred Stock.
(iv) Change of Control Redemption. If at any time there shall
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<PAGE> 10
occur any Change of Control, then the Corporation shall offer to repurchase all
of the 13% Preferred Stock, on the date that is 45 days after the date of the
Change of Control, and the redemption price per share shall be $101 per share
of 13% Preferred Stock so redeemed, plus an amount equal to all accumulated and
unpaid dividends thereon, whether or not earned or declared (including an
amount in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the Redemption Date)
(the "CHANGE OF CONTROL REDEMPTION PRICE"). The failure by the Corporation to
repurchase all of the 13% Preferred Stock as provided immediately above shall
constitute an Increased Dividend Triggering Event under Section 2(ii),
notwithstanding the next sentence of this Section 5(iv). The Corporation shall
not repurchase or redeem any shares of 13% Preferred Stock pursuant to this
Section 5(iv) unless (1) all obligations of the Corporation under the Indenture
or New Credit Facility with respect to a change of control have been satisfied
prior to such repurchase or redemption and (2) such repurchase or redemption
does not violate any covenant of the Indenture or New Credit Facility.
(v) Mandatory Redemption. Subject to applicable
provisions of the Act, on May 1, 2005, the Corporation shall redeem, in a
manner provided in Section 5(vi) hereof, all of the shares of the 13% Preferred
Stock then outstanding at a cash redemption price of $100.00 per share plus an
amount equal to all accumulated and unpaid dividends thereon, whether or not
earned or declared (including an amount in cash equal to a prorated dividend
for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date) (the "MANDATORY REDEMPTION PRICE").
(vi) Procedures for Redemption. (1) At least 20 days and
not more than 60 days prior to the date fixed for any redemption of the 13%
Preferred Stock, written notice (the "REDEMPTION NOTICE") shall be given by
first- class mail, postage prepaid, to each Holder of record on the record date
fixed for such redemption of the 13% Preferred Stock at such Holder's address
as the same appears on the stock register of the Corporation, provided that no
failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any shares of 13% Preferred
Stock to be redeemed except as to the Holder or Holders to whom the Corporation
has failed to give said notice or except as to the Holder or Holders whose
notice was defective and except that any failure to give such notice or any
deficiency therein shall have no effect on the Corporation's obligation to
effect a mandatory redemption pursuant to Section 5(iv) or Section 5(v) hereof.
The Redemption Notice shall state:
(A) whether the redemption is pursuant to Section 5(i),
5(ii), 5(iv) or 5(v) hereof;
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(B) the Optional Redemption Price, the IPO Redemption
Price, the Change of Control Redemption Price or the
Mandatory Redemption Price, as the case may be;
(C) whether all or less than all (in the case of a
redemption pursuant to Section 5(i) or 5(ii)) the
outstanding shares of the 13% Preferred Stock are to
be redeemed and the total number of shares of the 13%
Preferred Stock being redeemed;
(D) in the case of a redemption pursuant to Section 5(i)
or 5(ii), the number of shares of 13% Preferred Stock
held, as of the appropriate record date, by the
Holder that the Corporation intends to redeem;
(E) the Redemption Date;
(F) the place or places where certificates representing
the shares of 13% Preferred Stock are to be
surrendered for redemption and the manner in which
such certificates are to be surrendered;
(G) that the Holder is to surrender to the Corporation,
at the place or places referred to in clause (F)
above, in the manner designated and at the Optional
Redemption Price, the IPO Redemption Price, the
Change of Control Redemption Price or the Mandatory
Redemption Price, as the case may be, the certificate
or certificates representing the shares of 13%
Preferred Stock; and
(H) that dividends on the shares of the 13% Preferred
Stock to be redeemed shall cease to accrue on such
Redemption Date unless the Corporation defaults in
the payment of the Optional Redemption Price, the IPO
Redemption Price, the Change of Control Redemption
Price or the Mandatory Redemption Price, as the case
may be.
(2) Each Holder of 13% Preferred Stock shall
surrender the certificate or certificates representing such shares of 13%
Preferred Stock to the Corporation, duly endorsed, in the manner and at the
place designated in the Redemption Notice, and on the Redemption Date the full
Optional Redemption Price, IPO Redemption Price, Change of Control Redemption
Price or Mandatory Redemption Price, as the case may be, for such shares shall
be payable in cash to the
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<PAGE> 12
Person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled and retired. In
the event that less than all of the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing the unredeemed
shares.
(3) Unless the Corporation defaults in the payment
in full of the applicable redemption price, dividends on the 13% Preferred
Stock called for redemption shall cease to accumulate on the Redemption Date,
and the Holders of such shares to be redeemed shall cease to have any further
rights with respect thereto on the Redemption Date, other than the right to
receive the Optional Redemption Price, IPO Redemption Price, Change of Control
Redemption Price or the Mandatory Redemption Price, as case may be, without
interest.
6. Exchange for Debt Securities.
(i) Requirements. (1) The Corporation may at its option
redeem all, but not less than all, of the then outstanding shares of 13%
Preferred Stock through the issuance of, in redemption of and in exchange for
the shares of 13% Preferred Stock, Exchange Notes in an aggregate principal
amount equal to the sum of $100.00 per share of 13% Preferred Stock to be
redeemed plus the amount of accrued and unpaid dividends thereon whether or not
earned or declared (including an amount equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Exchange Date to
the Exchange Date), provided that on the date of such exchange: (a) there
shall be no contractual or legal impediments to such exchange; (b) there shall
be legally available funds sufficient therefor; (c) the Corporation shall have
delivered to the Holders a written opinion of counsel of national prominence
that the Exchange Notes have been duly authorized, executed and delivered by
the Corporation, have been validly issued, have not been issued in violation of
any law, rule, regulation or agreement and constitute valid and legally binding
obligations of the Corporation enforceable (subject to customary exceptions)
against the Corporation in accordance with their terms and entitled to the
benefits of the Exchange Notes Indenture; (d) the Corporation shall have
executed and delivered to the Holders an Exchange Notes Indenture in form and
substance satisfactory to the holders of a majority of the outstanding shares
of 13% Preferred Stock and such Exchange Notes Indenture shall comply with the
definition thereof in Section 10; and (e) immediately after giving effect to
such exchange, no Default or Event of Default (each as defined in the Exchange
Notes Indenture) would exist under the Exchange Notes Indenture.
(ii) Procedures for Exchange. (1) At least 20 days and not
more than 60 days prior to the date fixed for exchange (the "EXCHANGE DATE"),
written notice (the "EXCHANGE NOTICE") shall be given by first-class mail
postage prepaid, to each
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Holder of record on the date fixed for such exchange at such Holder's address
as the same appears on the stock register of the Corporation, provided that no
failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the exchange of any shares of 13% Preferred Stock
to be exchanged except as to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder or Holders whose notice
was defective. The Exchange Notice shall state:
(A) that the Corporation is exercising its option to
exchange the 13% Preferred Stock for Exchange Notes
pursuant to this Certificate of Resolution;
(B) the Exchange Date, which date shall not be less than
20 days nor more than 60 days following the date on
which the Exchange Notice is mailed (except as
provided in the last sentence of this paragraph);
(C) the place or places where certificates representing
the shares of 13% Preferred Stock are to be
surrendered for exchange and the manner in which such
certificates are to be surrendered;
(D) that the Holder is to surrender to the Corporation,
at the place or places referred to in clause (C)
above, in the manner designated, the certificate or
certificates representing the shares of 13% Preferred
Stock;
(E) that dividends on the shares of 13% Preferred Stock
to be exchanged shall cease to accrue on the Exchange
Date whether or not certificates for shares of 13%
Preferred Stock are surrendered for exchange on the
Exchange Date unless the Corporation shall default in
the delivery of Exchange Notes; and
(F) that interest on the Exchange Notes shall accrue from
the Exchange Date whether or not certificates for
shares of 13% Preferred Stock are surrendered for
exchange on the Exchange Date.
On the Exchange Date, if the conditions set forth in clauses (a) through (e) in
Section 6(i) are satisfied, the Corporation shall issue Exchange Notes in
exchange for the 13% Preferred Stock as provided in the next paragraph.
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(2) Upon any exchange pursuant to Section 6,
Exchange Notes shall be issued in exchange for 13% Preferred Stock, in
registered form without coupons. Exchange Notes will be issued in principal
amounts of $100 and integral multiples thereof to the extent possible, and will
also be issued in principal amounts less than $1,000 so that each Holder of 13%
Preferred Stock will receive certificates representing the entire amount of
Exchange Notes to which his shares of 13% Preferred Stock entitles him,
provided that the Corporation may, at its option, pay cash in lieu of issuing
Exchange Notes in a principal amount of less than $100.
(iii) (1) On or before the date fixed for exchange, each
Holder of 13% Preferred Stock shall surrender the certificate or certificates
representing such shares of 13% Preferred Stock, in the manner and at the place
designated in the Exchange Notice. The Corporation shall cause the Exchange
Notes to be executed on or prior to the Exchange Date and, upon surrender in
accordance with the Exchange Notice of the certificates for any shares of 13%
Preferred Stock so exchanged (properly endorsed or assigned for transfer, if
the notice shall so state), such shares shall be redeemed by the Corporation in
exchange for Exchange Notes. The Corporation shall pay interest on the
Exchange Notes at the rate and on the date or dates specified therein from the
Exchange Date.
(2) If notice has been mailed as aforesaid, and if
before the Exchange Date (a) the Exchange Notes Indenture shall have been duly
executed and delivered by the Corporation and (b) all Exchange Notes necessary
for such exchange shall have been duly executed and delivered by the
Corporation, then on the Exchange Date, dividends shall cease to accrue on the
outstanding shares of 13% Preferred Stock and all of the rights of the Holders
of shares of the 13% Preferred Stock as stockholders of the Corporation shall
cease (except the right to receive Exchange Notes), and the Person or Persons
entitled to receive the Exchange Notes issuable upon exchange shall be treated
for all purposes as the registered holder or holders of such Exchange Notes as
of the Exchange Date.
7. Voting Rights.
(i) The Holders of shares of the 13% Preferred Stock, except
as otherwise required by applicable law or as set forth in this Section 7,
shall not be entitled or permitted to vote on any matter required or permitted
to be voted upon by the stockholders of the Corporation.
(ii) (1) Upon the accumulation of accrued and unpaid cash
dividends on the outstanding 13% Preferred Stock in an amount equal to four
full quarterly dividends (whether or not consecutive) after May 1, 2003, then
the number of members of the Corporation's Board of Directors will be
immediately and
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<PAGE> 15
automatically increased by one unless there is a vacancy on the Corporation's
Board of Directors, and the holders of a majority of the outstanding shares of
13% Preferred Stock, voting or consenting, as the case may be, as a separate
class, will be entitled to elect one member to the Board of Directors of the
Company.
(2) Upon each accumulation of accrued and unpaid cash
dividends in an amount equal to two full quarterly dividends (whether or not
consecutive) that occurs after the accumulation of accrued and unpaid cash
dividends contemplated in subparagraph (ii)(1) hereof, the holders of a
majority of the outstanding shares of 13% Preferred Stock, voting or
consenting, as the case may be, as a separate class, will be entitled to elect
an additional member to the Board of Directors, and the number of members of
the Board of Directors will be immediately and automatically increased as
appropriate.
(3) Whenever a voting right shall have vested under
subparagraph (ii)(1) or (2) hereof, such right may be exercised initially
either at a special meeting of the Holders of 13% Preferred Stock, called as
hereinafter provided, or at any annual meeting of stockholders held for the
purpose of electing directors or by written consent of the Holders of 13%
Preferred Stock, and thereafter at such annual meetings or by the written
consent of the Holders of 13% Preferred Stock. Such right of the Holders of
13% Preferred Stock to elect a director or directors may be exercised until all
cash dividends in arrears shall have been paid in full, at which time the right
of the Holders of 13% Preferred Stock to elect such director or directors shall
cease, the term of such director or directors previously elected shall
thereupon terminate, and the authorized number of directors of the Corporation
shall thereupon return to the number of authorized directors otherwise in
effect, but subject always to the same provisions for the renewal and
divestment of such special voting rights in the case of any such future
dividend arrearage or defaults or any such failure to make redemption payments.
(4) At any time when such voting right shall have vested in
the Holders of 13% Preferred Stock and if such right shall not already have
been initially exercised, a proper officer of the Corporation shall, upon the
written request of Holders of record of 50% or more of the 13% Preferred Stock
then outstanding, addressed to the Secretary of the Corporation, call a special
or annual meeting of the stockholders. If such meeting shall not be called by
the proper officers of the Corporation within 30 days after the personal
service of such written request upon the Secretary of the Corporation, or
within 30 days after mailing the same within the United States, by registered
mail, addressed to the Secretary of the Corporation at its principal office,
then the Holders of record of 50% or more of the 13% Preferred Stock then
outstanding may designate in writing a Holder of 13% Preferred Stock to call
such meeting at the expense of the Corporation, and such meeting may be called
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<PAGE> 16
by such person so designated upon the notice required for annual meetings of
stockholders and shall be held at the place for holding annual meetings of the
Corporation or, if none, at a place designated by such Holder. Any Holder of
13% Preferred Stock that would be entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of causing a
meeting of stockholders to be called pursuant to the provisions of this
Section. Notwithstanding the provisions of this paragraph, however, no such
special meeting shall be called if any such request is received less than 90
days before the date fixed for the next ensuing annual or special meeting of
stockholders. Any action required to be taken at a meeting of Holders may be
taken without a meeting, with 15 days prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of a majority of the outstanding shares of 13% Preferred
Stock.
(5) If any director so elected by the Holders of 13%
Preferred Stock shall cease to serve as a director before his term shall
expire, the Holders of 13% Preferred Stock then outstanding may, at a special
meeting of the Holders called as provided above, elect a successor to hold
office for the unexpired term of the director whose place shall be vacant.
(iii) (1) So long as any shares of the 13% Preferred Stock
are outstanding, the Corporation shall not authorize, create, issue or sell any
Parity Securities without the affirmative vote or consent of Holders of at
least a majority of the outstanding shares of 13% Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at a meeting, except that
after May 1, 2002, without the approval of Holders of the 13% Preferred Stock,
the Corporation may authorize or issue shares of Parity Securities in exchange
for, or the proceeds of which are used to redeem all (but not less than all),
shares of 13% Preferred Stock then outstanding pursuant to Section 5(i).
(2) So long as any shares of the 13% Preferred Stock are
outstanding, the Corporation shall not authorize, create, issue or sell any
Senior Securities without the affirmative vote or consent of Holders of at
least a majority of the outstanding shares of 13% Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at a meeting.
(3) So long as any shares of the 13% Preferred Stock are
outstanding, the Corporation shall not amend this Certificate of Resolution so
as to affect adversely the specified rights, preferences, privileges or voting
rights of Holders of shares of 13% Preferred Stock or to authorize the issuance
of any additional shares of
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<PAGE> 17
13% Preferred Stock without the affirmative vote or consent of Holders of at
least a majority of the outstanding shares of 13% Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at a meeting.
Notwithstanding the foregoing, any amendment to this Agreement that (a) creates
any additional affirmative obligations to be complied with by any or all of the
holders of 13% Preferred Stock, (ii) grants to any one or more holders of 13%
Preferred Stock any rights more favorable than any rights granted to all other
similarly situated holders of 13% Preferred Stock, or (iii) otherwise treats
any one or more holders of 13% Preferred Stock differently than all other
similarly situated holders of 13% Preferred Stock must be approved by each
Investor so as to be effective against such Investor.
(iv) In any case in which the Holders of shares of the 13%
Preferred Stock shall be entitled to vote pursuant to this Section 7 or
pursuant to applicable law, each Holder of shares of the 13% Preferred Stock
shall be entitled to one vote for each share of 13% Preferred Stock held.
8. Reissuance of 13% Preferred Stock. Shares of 13% Preferred Stock
that have been issued and reacquired by the Corporation or any of its
subsidiaries in any manner, including shares purchased or redeemed or
exchanged, shall be canceled and shall not be reissued.
9. Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
10. Definitions. As used in this Certificate of Resolution, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"AFFILIATE" means with respect to any person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this
definition, control when used with respect to any person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CHANGE OF CONTROL" has the meaning set forth Section 1.01 of
the Indenture.
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"DIVIDEND PAYMENT DATE" means February 1, May 1, August 1 and
November 1 of each year.
"DIVIDEND PERIOD" means the Initial Dividend Period and,
thereafter, each Quarterly Dividend Period.
"EXCHANGE DATE" means a date on which shares of 13% Preferred
Stock are exchanged by the Corporation for Exchange Notes.
"EXCHANGE NOTES" means subordinated notes of the Corporation
having an interest rate of 13% per annum, payable quarterly on February 1, May
1, August 1 and November 1 of each year, a maturity date of May 1, 2005, and
having the benefit of, and subject to the terms and conditions of, the Exchange
Notes Indenture.
"EXCHANGE NOTES INDENTURE" means the indenture in the form
attached as Exhibit A to the Exchange Offer Registration Rights Agreement.
"EXCHANGE OFFER" shall have the meaning set forth in the
Exchange Offer Registration Rights Agreement.
"EXCHANGE OFFER REGISTRATION RIGHTS AGREEMENT" means that
certain agreement dated April 30, 1998, between the Corporation and certain
investors pursuant to which said investors shall have the right to exchange
shares of 13% Series A Preferred Stock for a like number of 13% Preferred
Stock.
"HOLDER" means a holder of shares of 13% Preferred Stock.
"INDENTURE" means the Indenture, dated January 22, 1998,
relating to $270,000,000 of 9"% Senior Notes due 2005 of the Corporation, as
amended and restated as of April 30, 1998.
"INITIAL DIVIDEND PERIOD" means the dividend period commencing
on the Issue Date and ending on the day before the first Dividend Payment Date
to occur thereafter.
"INITIAL PUBLIC OFFERING" means a bona fide firm commitment
underwritten initial public offering of shares of the Company's Common Stock
made through a nationally recognized underwriting firm pursuant to an effective
registration statement under the Securities Act, which results in gross
proceeds to the
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Company of not less than $20,000,000.
"IPO BASE PRICE" initially means $20.00; provided, however,
that if at any time or from time to time the Company shall (1) entitle the
holders of its Common Stock to receive a dividend payable in, or other
distribution of, Common Stock, (2) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock or (3) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the IPO Base Price shall be adjusted by multiplying such IPO Base Price
in effect immediately prior to such event by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event.
"ISSUE DATE" means as to shares issued pursuant to the
Exchange Offer, the date on which the 13% Series A Preferred Stock were
originally issued by the Corporation, and as to shares issued after the
Exchange Offer, the date on which such shares are originally issued by the
Corporation under this Certificate of Resolution.
"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 for the intervening period.
"NEW CREDIT FACILITY" means the senior secured credit facility
among the Corporation, its subsidiaries and Antares Leveraged Capital Corp., as
agent and lender, and the other lenders from time to time parties thereto.
"PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"PERMITTED TRANSFEREE" means with respect to any person, (i)
any Affiliate of such person, (ii) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any such person, (iii) a
trust, the beneficiaries of which, or a corporation or partnership, the
stockholders or general or limited partners of which, include only such person
or his or her spouse or lineal descendants, in each case to whom such person
has transferred the beneficial ownership of any securities of the Corporation,
(iv) any investment account whose investment managers and investment advisors
consist solely of such person and/or Permitted Transferees of
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such person and (v) any investment fund or investment entity that is a
subsidiary of such person or a Permitted Transferee of such person.
"QUARTERLY DIVIDEND PERIOD" shall mean the three-month period
commencing on each February 1, May 1, August 1 and November 1 and ending on the
day before the following Dividend Payment Date.
"REDEMPTION DATE" with respect to any shares of 13% Preferred
Stock, means the date on which such shares of 13% Preferred Stock are to be
redeemed by the Corporation.
RESOLVED, that, before the Corporation shall issue any shares
of the 13% Preferred Stock, a certificate pursuant to Article 2.13 of the Act
shall be made, executed, acknowledged, filed and recorded in accordance with
the provisions of said Article 2.13; and the proper officers of the Corporation
are hereby authorized and directed to do all acts and things which may be
necessary or proper in their opinion to carry into effect the purposes and
intent of this and the foregoing resolutions.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, this Certificate is executed as of April 29, 1998.
PACKAGED ICE, INC.
By: /s/ A.J. LEWIS III
--------------------------
A.J. Lewis III,
President and Secretary
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EXHIBIT 4.12
AMENDED AND RESTATED
PREFERRED STOCK SERIES DESIGNATION
PACKAGED ICE, INC., A TEXAS CORPORATION
CERTIFICATE OF RESOLUTION
Providing for Issuance of
Exchangeable Preferred Stock
Pursuant to Article 2.13 of the
Texas Business Corporation Act
* * * *
WHEREAS, PACKAGED ICE, INC., a Texas corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Four of its
Articles of Incorporation, and in accordance with the provisions of Article 2.13
of the Texas Business Corporation Act, its Board of Directors adopted by
unanimous written consent, in lieu of a special meeting, dated November 14,
1997, the resolutions creating and providing for the issuance of a series of
shares of Preferred Stock known as the 10% Exchangeable Preferred Stock, and
further providing for the voting powers, designations, preferences, and
relative, participating, optional or other rights thereof, and the
qualifications, limitations or restrictions thereof, in addition to those set
forth in said Articles of Incorporation, all in accordance with the provisions
of Article 2.13 of the Texas Business Corporation Act (the "Act") which
resolutions were filed with the Secretary of State of Texas on December 2, 1997
("Original Preferred Stock Designation"); and
WHEREAS, the holders of the 10% Exchangeable Preferred Stock have
adopted by unanimous written consent dated April 27, 1998, all of the amendments
to the Original Preferred Stock Designation set forth herein; and
WHEREAS, the Board of Directors of the Corporation now desires to amend
and restate the Original Preferred Stock Designation establishing the 10%
Exchangeable Preferred Stock to provide for the establishment of two new series
of Senior Securities, to be known as the 13% Exchangeable Preferred Stock
(Series A) and 13% Exchangeable Preferred Stock (Series B), to extend the
mandatory redemption date, and to provide for certain restrictions imposed by
the New Credit Facility (hereinafter defined), with such amended and restated
resolutions to read in full as follows:
BE IT RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation under Article Four of the Articles of
Incorporation, which creates and authorizes 5,000,000 shares of preferred stock
of the par value of $.01 per share, hereinafter called the "Preferred Stock," of
which (i) 450,000 shares have been designated as the Series A Convertible
Preferred Stock (the "Series A Preferred Stock"), (ii) 200,000 shares have been
designated as the Series B Convertible Preferred Stock (the "Series B Preferred
Stock"), (iii) 100 shares have been designated as the Series C Preferred Stock
(the "Series C Preferred Stock"), (iv) 800,000 shares
<PAGE> 2
have been designated as the 13% Exchangeable Preferred Stock (Series A) (the
"Series A 13% Preferred Stock") and (v) 800,000 shares have been designated as
the 13% Exchangeable Preferred Stock (Series B) (the "Series B 13% Preferred
Stock" and, together with the Series A 13% Preferred Stock, the "13% Preferred
Stock"), the Board of Directors hereby provides for the issuance of a series of
500,000 shares of Preferred Stock of the par value of $0.1 per share as follows:
1. Designation. There is hereby created a series of Preferred Stock
of the Corporation to be designated "10% Exchangeable Preferred Stock" with a
liquidation preference of $100.00 per share (hereinafter referred to as the "10%
Preferred Stock") consisting of an initial issuance of 250,000 shares of 10%
Preferred Stock plus up to 250,000 shares of 10% Preferred Stock that may be
issued in lieu of cash dividends thereon (and in lieu of cash dividends on such
shares that may be so issued in lieu of cash dividends) if the Corporation
elects to pay dividends in additional shares, and to the extent that the
designations, preferences, limitations and relative rights of the 10% Preferred
Stock are not stated in the Articles of Incorporation of the Corporation, they
are hereby fixed and herein stated, as set forth below.
2. Dividends.
(i) Beginning on the Issue Date (this and certain other initially
capitalized terms used herein have the meanings specified in Section 10 hereof),
the Holders of the outstanding shares of 10% Preferred Stock, shall be entitled
to receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, dividends on each share of 10% Preferred Stock, at a
rate per annum equal to 10% of the liquidation preference of one share of 10%
Preferred Stock, or $10.0 per whole share per annum. All dividends shall be
fully cumulative and shall accrue, whether or not earned or declared, on a daily
basis from the Issue Date and shall be payable semiannually in arrears on each
Dividend Payment Dated, commencing on May 1, 1998. Any dividend on the 10%
Preferred Stock accrued and payable as provided in this Section 2 (including,
without limitation, Default Dividends (as defined below)) shall be paid either,
as so elected by the Board of Directors of the Corporation (subject, however, to
Section 2(ix) below), (x) in cash or (y) by issuing a number of additional
shares (and/or fractional shares) of the 10% Preferred Stock (the "Additional
Shares of 10% Preferred Stock") for each such share (or fractional share) of 10%
Preferred Stock then outstanding equal to the dividend then payable on each such
share (or fractional share) of 10% Preferred Stock for the Dividend Period then
ended (or such shorter period for which dividends are so being paid) (expressed
as a dollar amount) dividend by the liquidation preference of one share of 10%
Preferred Stock (expressed as a dollar amount or (z) in any combination thereof;
provided, however, that on each Dividend Payment Date which occurs after
December 2, 2001, such dividend amount shall be paid in cash except to the
extent prohibited by Section 4.22 of each of (i) the Indenture dated January 28,
1998 as amended and restated April 30, 1998, relating to $270,000,000 of 9 3/4%
Senior Notes (Series A and Series B) of the Corporation and (ii) the Exchange
Notes Indenture in the form attached as Exhibit H to the Securities Purchase
Agreement dated as of April 30, 1998 between the Corporation, Ares Leveraged
Fund, L.P. et al relating to the sale of the 13% Preferred Stock (collectively,
the "Indentures"), or by the Credit Agreement dated April 30, 1998 among the
Corporation and Antares Leveraged Capital Corp. as
2
<PAGE> 3
agent for the several financial institutions from time to time a party thereto
(the "New Credit Facility") and in each case, any amendment, modification or
supplement thereto.
(ii) If at any time dividends are not declared and paid on any
Dividend Payment Date, whether in cash or Additional Shares of 10% Preferred
Stock or any combination thereof (the "Omitted Dividends"), the shares of 10%
Preferred Stock in respect of which such Omitted Dividends were not paid shall
accrue additional dividends as though such Omitted Dividends had been paid in
Additional Shares of 10% Preferred Stock at a rate per annum of 10% multiplied
by the amount of such Omitted Dividends (expressed as a dollar amount) (the
"Default Dividends"). Such Default Dividends shall be fully cumulative and shall
accrue (whether or not earned or declared) on a daily basis and shall be deemed
to constitute accrued and unpaid dividends for all purposes hereof even if such
additional dividends are not specifically mentioned in any particular context.
For purposes of this Section 2, all Default Dividends shall be considered to be
in arrears at all times.
(iii) Each distribution in the form of dividend (whether in cash or in
Additional Shares of 10% Preferred Stock) shall be payable to Holders of record
as they appear on the stock books of the Corporation on such record dates, not
less than 10 nor more than 60 days preceding the related Dividend Payment Date,
as shall be fixed by the Board of Directors. Dividends shall cease to accumulate
in respect of shares of the 10% Preferred Stock on the Exchange Date or on the
date of their earlier redemption unless the Corporation shall have failed to
issue the appropriate aggregate principal amount of Exchange Notes in respect of
the 10% Preferred Stock on the Exchange Date or shall have failed to pay the
relevant redemption price on the date fixed for redemption.
(iv) All dividends paid with respect to shares of the 10% Preferred
Stock pursuant to Section 2(i) shall be paid pro rata to the Holders entitled
thereto.
(v) Dividends on account of arrears for any past Dividend Period and
dividends in connection with any optional redemption pursuant to Section 5(i)
may be declared and paid at any time, without reference to any regular Dividend
Payment Date, to Holders of record on such date, not more than 45 days prior to
the payment thereof, as may be fixed by the Board of Directors.
(vi) No full dividends shall be declared by the Board of Directors or
paid or funds set apart for the payment of dividends by the Corporation on any
Parity Securities (as defined in Section 4 hereof) for any period unless full
cumulative dividends shall have been or contemporaneously are declared and paid
in full, or declared and (in the case of dividends payable in cash) a sum in
cash set apart in trust sufficient for such payment on the 10% Preferred Stock
for all dividend periods terminating on or prior to the date of payment of such
full dividends on such Parity Securities. If any dividends are not paid in full,
as aforesaid, upon the shares of the 10% Preferred Stock and any other Parity
Securities, all dividends declared upon shares of the 10% Preferred Stock and
any other Parity Securities shall be declared pro rata so that the amount of
dividends declared per share on the 10% Preferred Stock and such Parity
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Securities shall in all cases bear to each other the same ratio that accrued
dividends per share on the 10% Preferred Stock and such Parity Securities bear
to each other.
(vii) (1) Holders of shares of the 10% Preferred Stock shall be
entitled to receive the dividends provided for in Section 2(i) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities (as defined in Section 4 hereof).
(2) So long as any shares of 10% Preferred Stock are outstanding,
the Corporation shall not declare, pay or set apart for payment any
dividend on any of the Junior Securities or make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or any
warrants, rights, calls or options exercisable for or convertible into any of
the Junior Securities, or make any distribution in respect thereof, either
directly or indirectly, and whether in cash, obligations or shares of the
Corporation or other property (other than dividends on Junior Securities paid
solely in additional shares of Junior Securities), and shall not permit any
person or entity directly or indirectly controlled by the Corporation to
purchase or redeem any of the Junior Securities or any such warrants, rights,
calls or options.
(3) So long as any shares of the 10% Preferred Stock are
outstanding, the Corporation shall not make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Parity Securities or any warrants,
rights, calls or options exercisable for or convertible into any of the Parity
Securities, and shall not permit any person or entity directly or indirectly
controlled by the Corporation to purchase or redeem any of the Parity Securities
or any such warrants, rights, calls or options unless the dividends determined
in accordance herewith on the 10% Preferred Stock have been paid in full.
Notwithstanding the foregoing, these provisions do not
prohibit (a) the acquisition of Junior Securities or warrants, rights, call or
options exercisable for or convertible into Junior Securities either (i) solely
in exchange for shares of Junior Securities or (ii) through the application of
the net proceeds of a substantially concurrent sale for cash (other than to a
person or entity directly or indirectly controlled by the Corporation) of shares
of Junior Securities or warrants, rights, calls or options to acquire Junior
Securities or (b) the acquisition of Parity Securities or warrants, rights,
calls or options exercisable for or convertible into Parity Securities either
(i) solely in exchange for shares of Junior Securities or Parity Securities or a
combination thereof or (ii) through the application of the net proceeds of a
substantially concurrent sale for cash (other than to a person or entity
directly or indirectly controlled by the Corporation) of shares of Junior
Securities of Parity Securities or warrants, rights, calls or options to acquire
Junior Securities or Parity Securities (or any combination thereof).
(viii) Dividends payable on shares of the 10% Preferred Stock for any
period less than a year shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed in the period for
which payable. If any Dividend Payment Date occurs on a day that is not a
Business Day, any accrued dividends otherwise payable on such Dividend Payment
Date shall be paid on the next succeeding Business Day.
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(ix) Notwithstanding anything to the contrary contained herein,
dividends payable on any Dividend Payment Date shall be paid in cash unless the
Corporation also issues to the holders of the 10% Preferred Stock, on or prior
to such Dividend Payment Date, warrants to purchase common stock of the
Corporation in accordance with Section 4.7 of each of the Securities Purchase
Agreements, dated December 2, 1997, between the Corporation and each of Culligan
Water Technologies, Inc. and Erica Jesselson.
3. Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation, dissolution
or winding-up of the affairs of the Corporation, the Holders of shares of 10%
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, $100.00 per
share of 10% preferred Stock, plus an amount in cash equal to all accumulated
and unpaid dividends thereon to the date fixed for liquidation, dissolution or
winding-up (including an amount equal to a prorated dividend for the period from
the last Dividend Payment Date to the date fixed for liquidation, dissolution or
winding-up), after any payment shall be made or any assets distributed to the
holders of any of the Senior Securities (including, without limitation, the 13%
Preferred Stock) and before any payment shall be made or any assets distributed
to the holders of any of the Junior Securities, (including, without limitation,
common stock of the Corporation). Except as provided in the preceding sentence,
Holders of shares of 10% Preferred Stock shall not be entitled to any
distribution in the event of liquidation, dissolution or winding-up of the
affairs of the Corporation. If the assets of the Corporation are not sufficient
to pay in full the liquidation preference payable to the Holders of outstanding
shares of the 10% Preferred Stock and all Parity Securities, then the holders of
all such shares shall share equally and ratably in such distribution of assets
of the Corporation in accordance with the amounts which would be payable on such
distribution of assets of the Corporation in accordance with the Holders of
outstanding shares of 10% Preferred Stock and the holders of outstanding shares
of all Securities are entitled were paid in full.
(ii) After payment of the full amount of the liquidation preferences
and all accumulated an unpaid dividends to which they are entitled, the holder
of shares of the 10% Preferred Stock shall not be entitled to any further
participation in any distribution of assets of the Corporation upon any such
liquidation, dissolution or winding-up.
(iii) At any time, in the event of the merger or consolidation of the
Corporation into or with another corporation or the merger or consolidation of
any other corporation into or with the Corporation or a plan of exchange between
the Corporation and any other corporation (in which consolidation or merger or
plan of exchange any shareholders of the Corporation receive cash or securities
or other property), or the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation, then, subject to the
provisions of this section, such transaction shall be deemed, solely for
purposes of determining the amounts to be received by the holders of the 10%
Preferred stock in such merger, consolidation, plan of exchange, sale, transfer
or other disposition, and for purposes of determining the priority of receipt of
such amounts as between the holders of the Junior Securities, to be a
liquidation or dissolution of the Corporation if the holders of a majority of
the outstanding shares of 10% Preferred Stock so elect by giving written
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notice thereof to the Corporation at least two (2) days before the effective
date of such transaction. The Corporation shall give each holder of record of
10% Preferred Stock written notice of such impending transaction not later than
fourteen (14) days prior to the shareholders' meeting of the Corporation called
to approve such transaction, or fourteen (14) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such Holders in writing
of the final approval of such transaction. The first of such notices shall
describe the material terms and conditions of the transaction and of this
section (including, without limiting the generality of the foregoing, a
description of the value of the consideration, if any, being offered to the
holders of the 10% Preferred Stock in the transaction and the amount to which
such holders would be entitled if such transaction were (as described above) to
be deemed to be a liquidation or dissolution of the Corporation), and the
Corporation shall thereafter give such holders prompt notice of any material
changes to such terms and conditions. The transaction shall in no event take
place sooner than fourteen (14) days after the mailing by the Corporation of the
first notice provided for herein or sooner than ten (10) days after the mailing
by the Corporation of any notice of material changes provided for herein;
provided, however, that such periods may be reduced upon the written consent of
the holders of a majority of outstanding shares of 10% Preferred Stock.
4. Rank. The 10% Preferred Stock shall, with respect to
redemptions, dividend distributions, and distributions upon the liquidation,
winding-up or dissolution of the Corporation, rank senior to (i) all classes of
common stock of the Corporation and (ii) each other class of capital stock or
series of Preferred Stock of the Corporation now existing or hereafter created
by the Board of Directors the terms of which do not expressly provide that it
ranks senior to or on a parity with the 10% Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up or dissolution
of the Corporation (collectively referred to with the common stock of the
Corporation as "Junior Securities"). The 10% Preferred Stock shall, with respect
to redemptions, dividend distributions, and distributions upon the liquidation,
winding-up or dissolution of the Corporation, rank on a parity with any class of
capital stock or series of Preferred Stock now existing or hereafter created by
the Board of Directors, the terms of which expressly provide that such class or
series shall rank on a parity with the 10% Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up or dissolution
of the Corporation (collectively referred to as "Parity Securities"); provided
that any such Parity Securities that were not approved by the Holders in
accordance with paragraph Section 7(ii)(1) hereof shall be deemed to be Junior
Securities and not Parity Securities. The 10% Preferred Stock shall, with
respect to redemption, dividend distributions and distributions upon the
liquidation, winding-up or dissolution of the Corporation, rank junior to each
class of capital stock or series of Preferred Stock hereafter created which has
been approved by the Holders of the 10% Preferred Stock in accordance with
Section 7(ii)(2) hereof and which expressly provides that it ranks senior to the
10% Preferred Stock as to redemption, dividend distributions or distributions
upon the liquidation, winding-up or dissolution of the Corporation (collectively
referred to as "Senior Securities"). The 10% Preferred Stock will rank senior to
the Series A Preferred Stock and the Series B Preferred Stock as to redemptions,
dividend distributions, and distributions upon the liquidation, winding-up or
dissolution of the Corporation, and the Series A Preferred Stock and the Series
B Preferred Stock shall be deemed to be Junior Securities. The 13% Preferred
Stock shall rank senior to the 10% Preferred Stock as to redemptions, dividend
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distributions, and distributions upon the liquidation, winding up or dissolution
of the Corporation, and the 13% Preferred Stock shall be deemed to be Senior
Securities.
5. Redemption.
(i) Optional Redemption. The Corporation may (subject to
contractual and other restrictions with respect thereto and to applicable
provisions of the Act and to the legal availability of funds therefor), at the
option of the Board of Directors, redeem at any time or from time to time, in
whole or in part, in the manner provided in Section 5(iv) hereof, any or all of
the shares of the 10% Preferred Stock, at a cash redemption price of $100.00 per
share plus an amount equal to all accumulated and unpaid dividends thereon,
whether or not earned or declared (including an amount in cash equal) to a
prorated dividend for the period from the Dividend Payment Date immediately
prior to the Redemption Date to the Redemption Date) (the "Optional Redemption
Price"), provided that no optional redemption pursuant to this Section 5(i)
shall be authorized or made unless prior thereto full unpaid cumulative
dividends for all Dividend Periods terminating on or prior to the Redemption
Date and for an amount equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the Redemption Date to the Redemption
Date shall have been or immediately prior to the Redemption Notice (as defined
in Section 5(iv) hereof), are declared and paid in cash or declared and a sum
set apart sufficient for such cash payment on the Redemption Date, on the
outstanding shares of the 10% Preferred Stock.
(ii) In the event of a redemption pursuant to Section 5 (i)
hereof of only a portion of the then outstanding shares of the 10% Preferred
Stock, the Corporation shall effect such redemption, pro rata according to the
number of shares held by each Holder of the 10% Preferred Stock.
(iii) Mandatory Redemption. Subject to applicable provisions
of the Act, on May 15, 2005, the Corporation shall redeem, in a manner provided
in Section 5(iv) hereof, all of the shares of the 10% Preferred Stock then
outstanding at a cash redemption price of $100.00 per share plus an amount equal
to all accumulated and unpaid dividends thereon, whether or not earned or
declared (including an amount in cash equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Redemption Date
to the Redemption Date) (the "Mandatory Redemption Price").
(iv) Procedures for Redemption. (1) At least 20 days and not
more than 60 days prior to the date fixed for any redemption of the 10%
Preferred Stock, written notice (the "Redemption Notice") shall be given by
first-class mail, postage prepaid, to each Holder of record on the record date
fixed for such redemption of the 10% Preferred Stock at such Holder's address as
the same appears on the stock register of the Corporation, provided that no
failure to give such notice nor any deficiency therein shall affect the validity
of the procedure for the redemption of any shares of 10% Preferred Stock to be
redeemed except as to the Holder or Holders to whom the Corporation has failed
to give said notice or except as to the Holder or Holders whose notice was
defective and except that any failure to give such notice or any
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deficiency therein shall have no effect on the Corporation's obligation to
effect a mandatory redemption pursuant to Section 5(iii) hereof. The Redemption
Notice shall state:
(A) whether the redemption is pursuant to Section 5(i) or
5(iii) hereof;
(B) the Optional Redemption Price or the Mandatory
Redemption Price, as the case may be;
(C) whether all or less than all (in the case of a
redemption pursuant to Section 5(i)) the outstanding
shares of the 10% Preferred Stock are to be redeemed
and the total number of shares of the 10% Preferred
Stock being redeemed.
(D) in the case of a redemption pursuant to Section 5(i),
the number of shares of 10% Preferred Stock held, as
of the appropriate record date, by the Holder that
the Corporation intends to redeem;
(E) the Redemption Date;
(F) the place or places where certificates representing
the shares of 10% Preferred Stock are to be
surrendered for redemption and the manner in which
such certificates are to be surrendered;
(G) that the Holder is to surrender to the Corporation,
at the place or places referred to in clause (F)
above, in the manner designated and at the Optional
Redemption Price or the Mandatory Redemption Price,
as the case may be, the certificate or certificates
representing the shares of 10% Preferred Stock; and
(H) that dividends on the shares of the 10% Preferred
Stock to be redeemed shall cease to accrue on such
Redemption Date unless the Corporation defaults in
the payment of the Optional Redemption Price or the
Mandatory Redemption Price, as the case may be.
(2) Each Holder of 10% Preferred Stock shall
surrender the certificate or certificates representing such shares of 10%
Preferred Stock to the Corporation, duly endorsed, in the manner and at the
place designated in the Redemption Notice, and on the Redemption Date the full
Optional Redemption Price or Mandatory Redemption Price, as the case may be, for
such shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
(3) Unless the Corporation defaults in the
payment in full of the applicable redemption price, dividends on the 10%
Preferred Stock called for redemption shall cease to accumulate on the
Redemption Date, and the Holders of such shares to be redeemed
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shall cease to have any further rights with respect thereto on the Redemption
Date, other than the right to receive the Optional Redemption Price or the
Mandatory Redemption Price, as case may be, without interest.
6. Exchange for Debt Securities.
(i) Requirements. (1) The Corporation may at its option redeem
all, but not less than all, of the then outstanding shares of 10% Preferred
Stock through the issuance, in redemption of and in exchange for the shares of
10% Preferred Stock, Exchange Notes in an aggregate principal amount equal to
the sum of $100.00 per share of 10% Preferred Stock to be redeemed plus the
amount of accrued and unpaid dividends thereon whether or not earned or declared
(including an amount equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the Exchange Date to the Exchange
Date), provided that on the date of such exchange: (a) there shall be no
contractual or legal impediments to such exchange; (b) there shall be legally
available funds sufficient therefor; (c) the Corporation shall have delivered to
the Holders a written opinion of counsel of national prominence that the
Exchange Notes have been duly authorized, executed and delivered by the
Corporation, have been validly issued, have not been issued in violation of any
law, rule, regulation or agreement and constitute valid and legally binding
obligations of the Corporation enforceable (subject to customary exceptions)
against the Corporation in accordance with their terms and entitled to the
benefits of the Exchange Notes Indenture; (d) the Corporation shall have
executed and delivered to the Holders an Exchange Notes Indenture in form and
substance satisfactory to the holders of a majority of the outstanding shares of
10% Preferred Stock and such Exchange Notes Indenture shall comply with the
definition thereof in Section 10; and (e) immediately after giving effect to
such exchange, no Default or Event of Default (each as defined in the Exchange
Notes Indenture) would exist under the Exchange Notes Indenture.
(ii) Procedures for Exchange. (1) At least 20 days and not
more than 60 days prior to the date fixed for exchange (the "Exchange Date"),
written notice (the "Exchange Notice") shall be given by first-class mail
postage prepaid, to each Holder of record on the date fixed for such exchange at
such Holder's address as the same appears on the stock register of the
Corporation, provided that no failure to give such notice nor any deficiency
therein shall affect the validity of the procedure for the exchange of any
shares of 10% Preferred Stock to be exchanged except as to the Holder or Holders
to whom the Corporation has failed to give said notice or except as to the
Holder or Holders whose notice was defective. The Exchange Notice shall state:
(A) that the Corporation is exercising its option to
exchange the 10% Preferred Stock for Exchange Notes
pursuant to this Certificate of Resolution;
(B) the date fixed for exchange (the "Exchange Date"),
which date shall not be less than 20 days nor more
than 60 days following the date on which the Exchange
Notice is mailed (except as provided in the last
sentence of this paragraph);
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(C) the place or places where certificates representing
the shares of 10% Preferred Stock are to be
surrendered for exchange and the manner in which such
certificates are to be surrendered;
(D) that the Holder is to surrender to the Corporation,
at the place or places referred to in clause (C)
above, in the manner designated, the certificate or
certificates representing the shares of 10% Preferred
Stock;
(E) that dividends on the shares of 10% Preferred Stock
to be exchanged shall cease to accrue on the Exchange
Date whether or not certificates for shares of 10%
Preferred Stock are surrendered for exchange on the
Exchange Date unless the Corporation shall default in
the delivery of Exchange Notes; and
(F) that interest on the Exchange Notes shall accrue from
the Exchange Date whether or not certificates for
shares of 10% Preferred Stock are surrendered for
exchange on the Exchange Date.
On the Exchange Date, if the conditions set forth in clauses (a) through (e) in
Section 6(i) are satisfied, the Corporation shall issue Exchange Notes in
exchange for the 10% Preferred Stock as provided in the next paragraph.
(2) Upon any exchange pursuant to Section 6, Exchange
Notes shall be issued in exchange for 10% Preferred Stock, in registered form
without coupons. Exchange Notes will be issued in principal amounts of $1,000
and integral multiples thereof to the extent possible, and will also be issued
in principal amounts less than $1,000 so that each Holder of 10% Preferred Stock
will receive certificates representing the entire amount of Exchange Notes to
which his shares of 10% Preferred Stock entitles him, provided that the
Corporation may, at its option, pay cash in lieu of issuing Exchange Notes in a
principal amount of less than $1,000.
(iii) (1) On or before the date fixed for exchange, each
Holder of 10% Preferred Stock shall surrender the certificate or certificates
representing such shares of 10% Preferred Stock, in the manner and at the place
designated in the Exchange Notice. The Corporation shall cause the Exchange
Notes to be executed on or prior to the Exchange Date and, upon surrender in
accordance with the Exchange Notice of the certificates for any shares of 10%
Preferred Stock so exchanged (properly endorsed or assigned for transfer, if the
notice shall so state), such shares shall be redeemed by the Corporation in
exchange for Exchange Notes. The Corporation shall pay interest on the Exchange
Notes. The Corporation shall pay interest on the Exchange Notes at the rate and
on the date or dates specified therein from the Exchange Date.
(2) If notice has been mailed as aforesaid, and if
before the Exchange Date (a) the Exchange Notes Indenture shall have been duly
executed and delivered by the Corporation and (b) all Exchange Notes necessary
for such exchange shall have been duly executed and delivered by the
Corporation, then on the Exchange Date, dividends shall cease to accrue on the
outstanding shares of 10% Preferred Stock and all of the rights of the Holders
of shares of the 10% Preferred Stock as stockholders of the Corporation shall
cease (except the right
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to receive Exchange Notes), and the Person or Persons entitled to receive the
Exchange Notes issuable upon exchange shall be treated for all purposes as the
registered holder or holders of such Exchange Notes as of the Exchange Date.
7. Voting Rights.
(i) The Holders of shares of the 10% Preferred Stock, except
as otherwise required by applicable law or as set forth in Section 7(ii) and
(iii) below, shall not be entitled or permitted to vote on any matter required
or permitted to be voted upon by the stockholders of the Corporation.
(ii) (1) So long as any shares of the 10% Preferred Stock are
outstanding, the Corporation shall not authorize, create, issue or sell any
class of Parity Securities without the affirmative vote or consent of Holders of
at least a majority of the outstanding shares of 10% Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at a meeting, except that
without the approval of Holders of the 10% Preferred Stock, the Corporation may
authorize or issue shares of Parity Securities in exchange for, or the proceeds
of which are used to redeem all (but not less than all) shares of 10% Preferred
Stock then outstanding.
(2) So long as any shares of the 10% Preferred Stock
are outstanding, the Corporation shall not authorize any class of Senior
Securities without the affirmative vote or consent of Holders of at least a
majority of the outstanding shares of 10% Preferred Stock, voting or consenting,
as the case may be, separately as one class, given in person or by proxy, either
in writing or by resolution adopted at a meeting.
(3) So long as any shares of the 10% Preferred Stock are
outstanding, the Corporation shall not amend this Certificate of Resolution so
as to affect adversely the specified rights, preferences, privileges or voting
rights of Holders of shares of 10% Preferred Stock or to authorize the issuance
of any additional shares of 10% Preferred Stock without the affirmative vote or
consent of Holders of at least a majority of the outstanding shares of 10%
Preferred Stock, voting or consenting, as the case may be, separately as one
class, given in person or by proxy, either in writing or by resolution adopted
at a meeting.
(4) Except as set forth in Section 7(ii)(1) and (2)
above, (a) the creation, authorization or issuance of any shares of any Junior
Securities, Parity Securities or Senior Securities or (b) the increase or
decrease in the amount of authorized capital stock of any class, including any
preferred stock, shall not require the consent of Holders of 10% Preferred Stock
and shall not, unless not complying with Section 7(ii)(1) and (2) above, be
deemed to affect adversely the rights, preferences, privileges or voting rights
of Holders of shares of 10% Preferred Stock.
(iii) In any case in which the Holders of shares of the 10%
Preferred Stock shall be entitled to vote pursuant to this Section 7 or pursuant
to applicable law, each Holder of shares of the 10% Preferred Stock shall be
entitled to one vote for each share of 10% Preferred Stock held.
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8. Reissuance of 10% Preferred Stock. Shares of 10% Preferred
Stock that have been issued and reacquired by the Corporation or any of its
subsidiaries in any manner, including shares purchased or redeemed or exchanged,
shall be canceled and shall not be reissued.
9. Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
10. Definitions. As used in this Certificate of Resolution, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Business Day" means any day other than a Legal Holiday.
"Dividend Payment Date" means May 1 and November 1 of each
year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Semiannual Dividend Period.
"Exchange Date" means a date on which shares of 10% Preferred
Stock are exchanged by the Corporation for Exchange Notes.
"Exchange Notes" means subordinated notes of the Corporation
having an interest rate of 10% per annum, payable semiannually on May 1 and
November 1 of each year, a maturity date of May 15, 2005, and having the benefit
of, and subject to the terms and conditions of, the Exchange Notes Indenture.
"Exchange Notes Indenture" means an indenture or other
agreement of the Corporation containing covenants, events of default, redemption
provisions and other terms substantially identical to the Indentures (except
that the interest rate, payment dates and maturity date shall be described in
the definition of "Exchange Notes" and except that subordination provisions
customary at the time of exchange for high yield securities shall be included
therein), all in form and substance reasonably acceptable to the Holders of a
majority of the 10% Preferred Stock.
"Holder" means a holder of shares of 10% Preferred Stock.
"Initial Dividend Period" means the dividend period commencing
on the Issue Date and ending on the day before the first Dividend Payment Date
to occur thereafter.
"Issue Date" means the date on which the 10% Preferred Stock
is originally issued by the Corporation under this Certificate of Resolution.
"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,
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payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Redemption Date" with respect to any shares of 10% Preferred
Stock, means the date on which such shares of 10% Preferred Stock are to be
redeemed by the Corporation.
"Semiannual Dividend Period" shall mean the six-month period
commencing on each May 1 and November 1 and ending on the day before the
following Dividend Payment Date.
RESOLVED, that, before the Corporation shall issue any shares
of the 10% Preferred Stock, a certificate pursuant to Article 2.13 of the Act
shall be made, executed, acknowledged, filed and recorded in accordance with the
provisions of said Article 2.13; and the proper officers of the Corporation are
hereby authorized and directed to do all acts and things which may be necessary
or proper in their opinion to carry into effect the purposes and intent of this
and the foregoing resolutions.
IN WITNESS WHEREOF, said PACKAGED ICE, INC. has caused this
Certificate to be duly executed by its President this 29th day of April, 1998.
PACKAGED ICE, INC.
By: /s/ A. J. LEWIS III
----------------------------------
Name: A. J. Lewis III
Title: President and Secretary
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Exhibit 4.13
PARALLEL EXIT AGREEMENT
THIS PARALLEL EXIT AGREEMENT (this "Agreement") is made and entered into
effective April 30, 1998, by and among PACKAGED ICE, INC., a Texas corporation
(the "Company"), JAMES F. STUART ("Stuart"), A.J. LEWIS III ("Lewis") and ARES
LEVERAGED INVESTMENT FUND, L.P. and S.V. CAPITAL PARTNERS, L.P. (each an
"Investor" and collectively the "Investors").
WHEREAS, the parties hereto are desirous of setting forth certain
matters with respect to the transfer of their common stock in the Company (the
"Common Stock").
NOW, THEREFORE, for and in consideration of the premises, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following defined
terms shall have the meanings as set forth hereinbelow:
"Adjusted Pro Rata Share" shall mean a fraction, the numerator of which
is the number of Fully-Diluted Shares held by a shareholder participating in a
Subject Sale, and the denominator of which is the total number of Fully-Diluted
Shares held by all shareholders participating in a Subject Sale, excluding the
number of Fully-Diluted Shares held by each of the participating shareholders
who elect not to sell their entire Pro Rata Share in a Subject Sale.
"Common Stock" shall mean the Company's $.01 par value common stock.
"Fully-Diluted Shares" shall mean the Company's outstanding Common
Stock, after giving effect to all outstanding warrants, options, rights, stock-
splits, adjustments, convertible securities, and the like.
"Insider Shareholders" shall mean Stuart and Lewis.
"Pro Rata Share" shall mean a fraction, the numerator of which is the
number of Fully-Diluted Shares held by a shareholder participating in a Subject
Sale, and the denominator of which is the total number of Fully-Diluted Shares
held by all shareholders participating in a Subject Sale.
"Subject Sale" shall mean any sale or disposition for value of Common
Stock of the Company beneficially-owned by an Insider Shareholder (other than a
sale to the general public for cash that is registered under the Securities Act
of 1933, or an unsolicited open market sale for cash effected through a
securities broker at such time as there shall exist a bona fide public market
for the Common Stock), if, immediately after giving effect to such Subject Sale
and to all other sales and dispositions of Common Stock made by said Insider
Shareholder (whether or not such sales or dispositions are
<PAGE> 2
subject to this Agreement) since and including the first day of the calendar
year in which such Subject Sale is to be made, said Insider Shareholder's
beneficial ownership of the Company's outstanding Common Stock on a fully-
diluted basis would be decreased to an amount which is less than 95% of the
amount of such ownership as of the opening of business on the first day of the
calendar year in which such Subject Sale is to be made.
2. PARALLEL EXIT.
No Insider Shareholders will participate as a seller in any Subject
Sale, including, but not limited to, a sale to the Company, without causing the
purchaser in such Subject Sale to offer each Investor the opportunity to
participate in such Subject Sale on the same terms and conditions and on a pro
rata basis as Insider Shareholders with respect to shares of Common Stock (and
rights or other securities exercisable for, or convertible or exchangeable
into, Common Stock) held by each such Investor, except that Investors shall not
be required to make any representations as to any matters concerning the
business operations of the Company. Investors shall only be required to
represent and warrant, on a several, but not joint basis, the status of title
to their respective interest in shares of their Common Stock, due authorization
to enter into any such Subject Sale and that no conflicts of interests or other
conflicting conditions exist that would prohibit Investors from making such
representations. Furthermore, neither Investor shall be required to enter into
any contract or arrangement providing for the indemnity of any other Investor
or any Insider Shareholder. Each Investor shall only be required to provide
indemnity for any breach of any representation that any Investor does make in
any such Subject Sale.
Each Investor who elects to participate in such Subject Sale shall be
entitled to sell his Pro Rata Share of the number of shares the purchaser is
willing to purchase. Provided, however, in the event a participating
shareholder chooses not to sell his entire Pro Rata Share, the other
participating shareholders shall have the right to sell their Adjusted Pro Rata
Share of the shares of Common Stock which the participating shareholder does
not choose to sell. Each Insider Shareholder shall give each Investor at least
ten (10) days prior written notice of any Subject Sale. Each Investor should
provide the Company with the number of Fully-Diluted Shares which each Investor
desires to sell as part of the Subject Sale at least two days prior to the
Subject Sale. Each Insider Shareholder participating in such sale must then
sell all shares offered by each Investor as part of the Subject Sale as a
condition to complete such Subject Sale.
3. TERMINATION. This Agreement shall continue in effect from the
date of execution until the Company has completed an initial public offering of
its Common Stock, on a firm commitment basis with a nationally recognized
underwriter, resulting in aggregate offering proceeds of $7,500,000 or more,
before deduction of underwriting discounts and expenses of sale.
4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
benefit the parties hereto and their respective successors and assigns
(including each
<PAGE> 3
transferee of any party's Common Stock); provided, however, no transferee of
Common Stock in a public offering registered under the Securities Act of 1933
or in an unsolicited open market sale effected through a securities broker
shall be bound by or entitled to the benefits of this Agreement. As used in
this Agreement, the terms "Insider Shareholders" and "Investor" shall include
any transferee of such a person, as appropriate, who is bound by and entitled
to the benefits of this Agreement under the preceding sentence.
5. LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF TEXAS.
6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall together constitute a single agreement, but
shall be effective only at such time as all parties have executed a counterpart
(but not necessarily the same counterpart) of this Agreement.
7. AMENDMENTS. This Agreement may be amended, and any provision
hereof may be waived, only by a written agreement executed by the Insider
Shareholders and the InvestorS.
8. LEGENDS. The Company will cause each certificate that evidences
any securities or stock that are subject to this Agreement to bear a legend
substantially like the following legend, which shall be typed, printed, or
stamped thereon in a conspicuous manner:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A PARALLEL EXIT
AGREEMENT DATED APRIL 30, 1998, AMONG THE COMPANY AND CERTAIN OF ITS
SHAREHOLDERS. THE COMPANY WILL FURNISH TO THE RECORD HOLDER OF THIS
CERTIFICATE (WITHOUT CHARGE) A COPY OF SUCH AGREEMENT UPON WRITTEN REQUEST
THEREFOR TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED
OFFICE."
The Company agrees that a counterpart of this Agreement shall be kept at
the principal office of the Company and shall be subject to the same right of
examination by any shareholder of the Company, in person or by agent, attorney,
or other designated representative, as are the books and records of the
Company.
9. NOTICES. Any notice or other communication provided for herein
or given hereunder to a party hereto shall be in writing and shall be deemed to
have been duly given if signed by the party giving it. Notice shall be deemed
effective upon delivery by hand, or on the third (3rd) business day after it is
deposited in the United States mail, postage prepaid (registered or certified
mail), or on the business day after it is sent by Federal Express or similar
overnight service to the addresses of the parties as set forth herein, or to
such other addresses as a party shall provide to the other parties in
accordance with this Section.
<PAGE> 4
10. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties hereto relating to the subject matter herein, and shall
supersede all previous agreements between the parties hereto relating to the
subject matter herein.
[SIGNATURE PAGE FOLLOWS]
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PACKAGED ICE, INC.
By:
----------------------------------------
Print Name:
-------------------------
Print Title:
------------------------
INSIDE SHAREHOLDERS
- ---------------------------------
JAMES F. STUART
- ---------------------------------
A.J. LEWIS III
INVESTORS:
SV CAPITAL PARTNERS, L.P.
By: SV Capital Management, Inc.
By:
----------------------------------------
Print Name:
-------------------------
Print Title:
------------------------
ARES LEVERAGED INVESTMENT FUND, L.P.
By:
----------------------------------------
Print Name:
-------------------------
Print Title:
------------------------
<PAGE> 1
Exhibit 10.1
- --------------------------------------------------------------------------------
$80,000,000 CREDIT FACILITY
CREDIT AGREEMENT
DATED AS OF APRIL 30, 1998
BY AND AMONG
PACKAGED ICE, INC.,
AS BORROWER
ANTARES LEVERAGED CAPITAL CORP.
FOR ITSELF, AS A LENDER AND AS AGENT FOR ALL LENDERS
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
AS LENDERS
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I. - THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Amounts and Terms of Commitments. . . . . . . . . . . . . . . . 1
1.2. Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4. Loan Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5. Procedure for Revolving Loan and Acquisition Loan Borrowings. . 5
1.6. Conversion and Continuation Elections. . . . . . . . . . . . . . 6
1.7. Optional Prepayments. . . . . . . . . . . . . . . . . . . . . . 7
1.8. Mandatory Prepayments of Loans. . . . . . . . . . . . . . . . . 8
1.9. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.10. Payments by the Borrower. . . . . . . . . . . . . . . . . . . . 11
1.11. Payments by the Lenders to the Agent. . . . . . . . . . . . . . 11
1.12. Disbursements of Advances; Settlements Among Agent and Lenders;
Payments of Interest and Fees; Disgorgement Obligations. . . . 12
ARTICLE II. - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 15
2.1. Conditions of Initial Loans. . . . . . . . . . . . . . . . . . . 15
2.2. Conditions to All Borrowings. . . . . . . . . . . . . . . . . . 19
2.3. Additional Conditions to Acquisition Loans. . . . . . . . . . . 20
ARTICLE III. - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 21
3.1. Corporate Existence and Power. . . . . . . . . . . . . . . . . . 21
3.2. Corporate Authorization; No Contravention. . . . . . . . . . . . 22
3.3. Governmental Authorization. . . . . . . . . . . . . . . . . . . 23
3.4. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 23
3.5. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.7. ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . . . 24
3.8. Use of Proceeds; Margin Regulations. . . . . . . . . . . . . . . 24
3.9. Title to Properties. . . . . . . . . . . . . . . . . . . . . . . 24
3.10. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.11. Financial Condition. . . . . . . . . . . . . . . . . . . . . . 24
3.12. Environmental Matters. . . . . . . . . . . . . . . . . . . . . 25
3.13. Collateral Documents. . . . . . . . . . . . . . . . . . . . . . 26
3.14. Regulated Entities. . . . . . . . . . . . . . . . . . . . . . . 26
3.15. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.16. Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . 26
3.17. Copyrights, Patents, Trademarks and Licenses, etc. . . . . . . 26
</TABLE>
<PAGE> 3
<TABLE>
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3.18. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.19. Brokers' Fees; Transaction Fees. . . . . . . . . . . . . . . . 27
3.20. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.21. Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IV. - AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 27
4.1. Financial Statements. . . . . . . . . . . . . . . . . . . . . . 28
4.2. Certificates; Borrowing Base Certificates; Other Information. . 29
4.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.4. Preservation of Corporate Existence, Etc. . . . . . . . . . . . 32
4.5. Maintenance of Property. . . . . . . . . . . . . . . . . . . . . 32
4.6. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.7. Payment of Obligations. . . . . . . . . . . . . . . . . . . . . 33
4.8. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 33
4.9. Inspection of Property and Books and Records. . . . . . . . . . 34
4.10. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 34
4.11. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.12. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V. - NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 35
5.1. Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . 35
5.2. Disposition of Assets. . . . . . . . . . . . . . . . . . . . . . 37
5.3. Consolidations and Mergers. . . . . . . . . . . . . . . . . . . 38
5.4. Loans and Investments. . . . . . . . . . . . . . . . . . . . . . 38
5.5. Limitation on Indebtedness. . . . . . . . . . . . . . . . . . . 38
5.6. Transactions with Affiliates. . . . . . . . . . . . . . . . . . 39
5.7. Management Fees and Compensation. . . . . . . . . . . . . . . . 40
5.8. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 40
5.9. Contingent Obligations. . . . . . . . . . . . . . . . . . . . . 40
5.10. Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . 40
5.11. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 41
5.12. Change in Business. . . . . . . . . . . . . . . . . . . . . . . 42
5.13. Change in Structure; Issuance of Disqualified Stock. . . . . . 42
5.14. Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . 42
5.15. Amendments to Related Agreements; Indenture. . . . . . . . . . 42
5.16. Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VI. - FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . 44
6.1. Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . 44
6.2. Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . 45
6.3. Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . . . . . 46
6.4. Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VII. - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 47
7.1. Event of Default. . . . . . . . . . . . . . . . . . . . . . . . 47
7.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.3. Rights Not Exclusive. . . . . . . . . . . . . . . . . . . . . . 50
7.4. Cash Collateral for Letters of Credit. . . . . . . . . . . . . . 50
ARTICLE VIII. - THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.1. Appointment and Authorization. . . . . . . . . . . . . . . . . . 50
8.2. Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . 50
8.3. Liability of Agent. . . . . . . . . . . . . . . . . . . . . . . 51
8.4. Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . 51
8.5. Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . 51
8.6. Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . 52
8.7. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 52
8.8. Agent in Individual Capacity. . . . . . . . . . . . . . . . . . 53
8.9. Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . 53
8.10. Collateral Matters. . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE IX. - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.1. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . 55
9.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.3. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . 56
9.4. Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . 56
9.5. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.6. Marshaling; Payments Set Aside. . . . . . . . . . . . . . . . . 59
9.7. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . 59
9.8. Assignments, Participations, etc. . . . . . . . . . . . . . . . 59
9.9. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 61
9.10. Set-off; Sharing of Payments. . . . . . . . . . . . . . . . . . 62
9.11. Notification of Addresses, Lending Offices, Etc. . . . . . . . 62
9.12. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.13. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.14. Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.15. Independence of Provisions. . . . . . . . . . . . . . . . . . . 63
9.16. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 63
9.17. No Third Parties Benefited. . . . . . . . . . . . . . . . . . . 63
9.18. Governing Law and Jurisdiction. . . . . . . . . . . . . . . . . 63
9.19. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . 64
9.20. Entire Agreement; Release. . . . . . . . . . . . . . . . . . . 65
ARTICLE X. - TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . 65
10.1. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
iii
<PAGE> 5
<TABLE>
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10.3. Increased Costs and Reduction of Return. . . . . . . . . . . . 68
10.4. Funding Losses. . . . . . . . . . . . . . . . . . . . . . . . . 69
10.5. Inability to Determine Rates. . . . . . . . . . . . . . . . . . 69
10.6. Reserves on LIBOR Rate Loans. . . . . . . . . . . . . . . . . . 70
10.7. Certificates of Lenders. . . . . . . . . . . . . . . . . . . . 70
10.8. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.9. Replacement of Lender in Respect of Increased Costs. . . . . . 70
ARTICLE XI. - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.1. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . 71
11.2. Other Interpretive Provisions. . . . . . . . . . . . . . . . . 89
11.3. Accounting Principles. . . . . . . . . . . . . . . . . . . . . 89
</TABLE>
iv
<PAGE> 6
SCHEDULES
Schedule 1.1(a) Revolving Loan Commitments
Schedule 1.1(c) Acquisition Loan Commitments
Schedule 2.1 Material Owned Facilities
Schedule 3.2 Capitalization
Schedule 3.5 Litigation
Schedule 3.7 ERISA
Schedule 3.9 Owned Real Property
Schedule 3.17 Intellectual Property
Schedule 3.19 Brokers' Fees
Schedule 5.1 Liens
Schedule 5.5 Indebtedness
Schedule 5.9 Contingent Obligations
Schedule 11.1 Prior Indebtedness
EXHIBITS
Exhibit 1.8(d) Excess Cash Flow Certificate
Exhibit 4.2(b) Compliance Certificate
Exhibit 11.1(a) Acquisition Note
Exhibit 11.1(b) Borrowing Base Certificate
Exhibit 11.1(c) Notice of Borrowing
Exhibit 11.1(d) Notice of Continuation/Conversion
Exhibit 11.1(e) Revolving Note
v
<PAGE> 7
CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement") is entered into as of April 30,
1998, by and among Packaged Ice, Inc., a Texas corporation (the "Borrower"),
Antares Leveraged Capital Corp., a Delaware corporation, as agent (the "Agent")
for the several financial institutions from time to time party to this
Agreement (collectively, the "Lenders" and individually each a "Lender") and
for itself as a Lender, and such Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower has requested, and the Lenders have agreed to make
available to the Borrower, a revolving credit facility (including a letter of
credit subfacility) and an acquisition credit facility upon and subject to the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I. - THE CREDITS
1.1. Amounts and Terms of Commitments.
(a) The Revolving Credit. Each Lender with a Revolving Loan
Commitment severally and not jointly agrees, on the terms and conditions
hereinafter set forth, to make Loans to the Borrower (each such Loan, a
"Revolving Loan") from time to time on any Business Day during the period from
the Closing Date to the Revolving Termination Date, in an aggregate amount not
to exceed at any time outstanding the amount set forth opposite the Lender's
name in Schedule 1.1(a) under the heading "Revolving Loan Commitment" (such
amount as the same may be reduced from time to time as a result of one or more
assignments pursuant to Section 9.8, being referred to herein as such Lender's
"Revolving Loan Commitment"); provided, however, that, after giving effect to
any Borrowing of Revolving Loans, the aggregate principal amount of all
outstanding Revolving Loans shall not exceed the Maximum Revolving Loan
Balance. Subject to the other terms and conditions hereof, amounts borrowed
under this subsection 1.1(a) may be repaid and reborrowed from time to time.
The "Maximum Revolving Loan Balance" from time to time will be the lesser of:
(i) the Borrowing Base at such time (as calculated pursuant to the
most recent Borrowing Base Certificate required to be delivered pursuant to
subsection 4.2(d)), less the sum of the aggregate amount of Letter of Credit
Participation Liability at such time and the aggregate principal amount of all
Acquisition Loans outstanding at such time, or
(ii) the Aggregate Revolving Loan Commitment then in effect, less the
aggregate amount of Letter of Credit Participation Liability.
<PAGE> 8
If at any time the Revolving Loans exceed the Maximum Revolving Loan
Balance, then Revolving Loans (and/or Acquisition Loans in the event the
Revolving Loans exceed the Maximum Revolving Loan Balance due to clause (i)
above) must be repaid within thirty (30) days in an amount sufficient to
eliminate such excess.
(b) Lender Letters of Credit and Letter of Credit Participation
Agreements. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower herein set forth,
the Revolving Loan Commitment may, in addition to advances under the Revolving
Loan, be utilized, upon the request of Borrower, for (i) the issuance of
letters of credit by Agent (each such letter of credit, a "Lender Letter of
Credit") or (ii) the issuance of letter of credit participation agreements by
Agent (each such letter of credit participation, a "Letter of Credit
Participation Agreement") to confirm payment to banks (whether or not such
banks are Lenders) which issue letters of credit for the account of Borrower on
behalf of each Lender having a Revolving Loan Commitment (severally and not
jointly) according to such Lender's Revolving Loan Commitment. The aggregate
amount of Letter of Credit Participation Liability with respect to all Lender
Letters of Credit and Letter of Credit Participation Agreements outstanding at
any time shall not exceed $2,000,000.
The Borrower shall be irrevocably and unconditionally obligated
forthwith without presentment, demand, protest or other formalities of any
kind, to reimburse the Agent for any amounts paid by the Agent under any Lender
Letter of Credit or Letter of Credit Participation Agreement. The Borrower
hereby authorizes and directs the Lenders with Revolving Loan Commitments, at
the Agent's option, to make a Revolving Loan in the amount of any payment made
by the Agent with respect to any Lender Letter of Credit or Letter of Credit
Participation Agreement. All amounts paid by the Agent with respect to any
Lender Letter of Credit or Letter of Credit Participation Agreement that are
not immediately repaid by Borrower with the proceeds of a Revolving Loan or
otherwise shall bear interest at the interest rate then applicable to Revolving
Loans, calculated using the Base Rate and the Applicable Margin in effect.
Each Lender agrees to fund its Commitment Percentage of any Revolving Loan made
pursuant to this subsection 1.1(b) and, if no such Revolving Loans are made,
each Lender with a Revolving Loan Commitment agrees to purchase, and shall be
deemed to have purchased, a participation in such Lender Letter of Credit or
Letter of Credit Participation Agreement in an amount equal to its ratable
share of such Lender Letter of Credit or Letter of Credit Participation
Agreement based upon the Revolving Loan Commitments then in effect and each
Lender agrees to pay to the Agent such share of any payments made by the Agent
under such Lender Letter of Credit or Letter of Credit Participation Agreement.
The obligations of each Lender under the preceding two (2) sentences shall be
absolute and unconditional and such remittance shall be made notwithstanding
the occurrence or continuation of an Event of Default or Default or the failure
to satisfy any condition set forth in Section 2.2 hereof.
In addition to all other terms and conditions set forth in this
Agreement, the issuance by Agent of any Lender Letter of Credit or Letter of
Credit Participation Agreement shall be subject to the conditions precedent
that the Lender Letter of Credit, Letter of Credit Participation
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Agreement or the letter of credit or written contract for which Borrower
requests a Letter of Credit Participation Agreement shall support a transaction
entered into by Borrower in the Ordinary Course of Business of the Borrower and
shall be in such form, be for such amount, and contain such terms as are
reasonably satisfactory to Agent.
The expiration date of each Lender Letter of Credit shall be on a date
which is the earlier of (a) one year from its date of issuance, or (b) the
thirtieth (30th) day before the Revolving Termination Date. Each Letter of
Credit Participation Agreement shall provide that the Letter of Credit
Participation Agreement terminates and all demands or claims for payment must
be presented by a date certain, which date will be the earlier of (a) one year
from its date of issuance, or (b) the thirtieth day before the Revolving
Termination Date.
Borrower shall give Agent at least ten (10) Business Days prior notice
specifying the date a Lender Letter of Credit or Letter of Credit Participation
Agreement is to be issued, identifying the beneficiary and describing the
nature of the transactions proposed to be supported thereby. The notice shall
be accompanied by the drawing terms for the Lender Letter of Credit or form of
each letter of credit or other written contract which will be supported by the
Letter of Credit Participation Agreement.
(c) The Acquisition Credit. Each Lender with an Acquisition Loan
Commitment severally and not jointly agrees, on the terms and conditions
hereinafter set forth, to make Loans to the Borrower in connection with the
financing of Acquisitions (each such Loan, an "Acquisition Loan") from time to
time on any Business Day during the period from the Closing Date to the
Acquisition Termination Date, in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite the Lender's name in Schedule 1.1(c)
under the heading "Acquisition Loan Commitment" (such amount as the same may be
reduced as a result of one or more assignments pursuant to Section 9.8, being
referred to herein as such Lender's "Acquisition Loan Commitment", provided
that from and after the Acquisition Termination Date, "Acquisition Loan
Commitment" shall refer to the outstanding amount of such Lender's Acquisition
Loans); provided, however, that after giving effect to any Borrowing of
Acquisition Loans, the aggregate principal amount of all outstanding
Acquisition Loans shall not exceed the Maximum Acquisition Loan Balance.
Subject to the other terms and conditions hereof, amounts borrowed under this
subsection 1.1(c) may be repaid and reborrowed from time to time. The "Maximum
Acquisition Loan Balance" from time to time will be the lesser of:
(i) the Borrowing Base at such time, less the sum of the
aggregate amount of Letter of Credit Participation Liability at such
time and the aggregate unpaid principal amount of all Revolving Loans
outstanding at such time, or
(ii) the Aggregate Acquisition Loan Commitment.
If at any time the Acquisition Loans exceed the Maximum Acquisition Loan
Balance, then Acquisition Loans (and/or Revolving Loans in the event the
Acquisition Loans exceed the
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Maximum Acquisition Loan Balance due to clause (i) above) must be repaid within
thirty (30) days in an amount sufficient to eliminate such excess.
1.2. Notes. The Revolving Loans made by each Lender with a Revolving
Loan Commitment shall be evidenced by a Revolving Note payable to the order of
such Lender in an amount equal to such Lender's Revolving Loan Commitment. The
Acquisition Loans made by each Lender with an Acquisition Loan Commitment shall
be evidenced by an Acquisition Note payable to the order of such Lender in an
amount equal to such Lender's Acquisition Loan Commitment.
1.3. Interest. (a) Subject to subsections 1.3(c) and 1.3(d), each
Loan shall bear interest on the outstanding principal amount thereof from the
date when made at a rate per annum equal to the LIBOR or the Base Rate, as the
case may be, plus the Applicable Margin, as the same may be adjusted pursuant
to the provisions of the definition of Applicable Margin. Commencing on June
30, 1999, and continuing thereafter, the Applicable Margin for Loans shall be
subject to adjustment as set forth in the definition of Applicable Margin. The
Agent will with reasonable promptness notify the Borrower and the Lenders of
the effective date and the amount of each such change, provided that any
failure to do so shall not relieve the Borrower of any liability hereunder or
provide the basis for any claim against the Agent. Each determination of an
interest rate by the Agent shall be conclusive and binding on the Borrower and
the Lenders in the absence of demonstrative error. All computations of fees
and interest payable under this Agreement shall be made on the basis of a 360-
day year and actual days elapsed. Interest and fees shall accrue during each
period during which interest or such fees are computed from the first day
thereof to the last day thereof.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any payment or
prepayment of Loans in full.
(c) At the election of the Agent or the Required Lenders while any
Event of Default exists, the Borrower shall pay interest (after as well as
before entry of judgment thereon to the extent permitted by law) on the
Obligations, at a rate per annum which is determined by adding two percent
(2.0%) per annum to the Applicable Margin then in effect for such Loans (plus
the LIBOR or Base Rate, as the case may be) and, in the case of Obligations not
subject to an Applicable Margin (other than the fees described in Section
1.9(c)), at a rate per annum equal to the Base Rate plus two percent (2.0%);
provided, however, that, on and after the expiration of any Interest Period
applicable to any LIBOR Rate Loan outstanding on the date of occurrence of such
Event of Default, the principal amount of such Loan shall, during the
continuation of such Event of Default, bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin plus two percent (2.0%).
(d) It is the intention of the parties hereto to comply with all
applicable usury laws, whether now existing or hereafter enacted. Accordingly,
notwithstanding any provision to the contrary in this Agreement, the Notes, the
other Loan Documents or any other document evidencing, securing, guaranteeing
or otherwise pertaining to Indebtedness of the Borrower to
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any Lender, in no contingency or event whatsoever, whether by acceleration of
the maturity of Indebtedness of the Borrower to such Lender or otherwise, shall
the interest contracted for, charged or received by such Lender exceed the
maximum amount permissible under any law applicable to such Lender. If from
any circumstances whatsoever fulfillment of any provisions of this Agreement,
the Notes, the other Loan Documents or of any other document evidencing,
securing, guaranteeing or otherwise pertaining to Indebtedness of the Borrower
to any Lender, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
and if from any such circumstances such Lender shall ever receive anything of
value as interest or deemed interest by applicable law under this Agreement,
the Notes, the other Loan Documents or any other document evidencing, securing,
guaranteeing or otherwise pertaining to Indebtedness of the Borrower to such
Lender or otherwise an amount that would exceed the highest lawful amount, such
amount that would be excessive interest shall be applied to the reduction of
the principal amount owing in connection with this Agreement or on account of
any other Indebtedness of the Borrower to such Lender, and not to the payment
of interest, or if such excessive interest exceeds the unpaid balance of
principal owing to such Lender in connection with this Agreement and such other
Indebtedness, such excess shall be refunded by such Lender to the Borrower. In
determining whether or not the interest paid or payable with respect to
Indebtedness of the Borrower to any Lender, under any specific contingency,
exceeds the maximum nonusurious rate permitted under law applicable to such
Lender, the Borrower and such Lender shall, to the maximum extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such Indebtedness so that the actual rate
of interest on account of such Indebtedness does not exceed the maximum amount
permitted by applicable law, and/or (d) allocate interest between portions of
such Indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by law. The terms and provisions of this
paragraph shall control and supersede every other conflicting provision of this
Agreement, the Notes and the other Loan Documents.
1.4. Loan Accounts. The Agent, on behalf of the Lenders, shall
record on its books and records the amount of each Loan made, the interest rate
applicable, all payments of principal and interest thereon and the principal
balance thereof from time to time outstanding. The Agent shall deliver to the
Borrower on a monthly basis a loan statement setting forth such record for the
immediately preceding month. Such record shall, absent demonstrative error, be
conclusive evidence of the amount of the Loans made by the Lenders to the
Borrower and the interest and payments thereon. Any failure to so record or
any error in doing so, or any failure to deliver such loan statement shall not,
however, limit or otherwise affect the obligation of the Borrower hereunder
(and under any Note) to pay any amount owing with respect to the Loans or
provide the basis for any claim against the Agent.
1.5. Procedure for Revolving Loan and Acquisition Loan Borrowings. (a)
Each Borrowing under the Revolving Loan or the Acquisition Loan shall be made
upon the Borrower's
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irrevocable (subject to Section 10.5 hereof) written notice delivered to the
Agent in the form of a Notice of Borrowing, which notice must be received by
the Agent prior to 10:30 a.m. (Chicago time) (i) on the requested Borrowing
date in the case of each Base Rate Loan equal to or less than $1,000,000 and in
the case of the initial Loans to be made on the Closing Date, (ii) on the date
which is one (1) Business Day prior to the requested Borrowing date of each
Base Rate Loan in excess of $1,000,000 but equal to or less than $3,000,000 and
(iii) on the day which is three (3) Business Days prior to the requested
Borrowing date in the case of each LIBOR Rate Loan and each Base Rate Loan in
excess of $3,000,000; provided, that with respect to Loans subsequent to the
initial Loans, the Borrower may give notice of the requested Borrowing to the
Agent by telephone call, with such notice confirmed not later than the
following Business Day by delivery to the Agent of a signed Notice of
Borrowing. Such Notice of Borrowing shall specify:
(I) whether the Borrowing is to be comprised of Acquisition
Loans or Revolving Loans;
(II) the amount of the Borrowing (which shall be in an
aggregate minimum principal amount of $100,000 and multiples of $50,000
in excess thereof);
(III) the requested Borrowing date, which shall be a Business
Day;
(IV) whether the Borrowing is to be comprised of LIBOR Rate
Loans or Base Rate Loans; and
(V) if the Borrowing is to be LIBOR Rate Loans, the Interest
Period applicable to such Loans.
provided, however, that with respect to the Borrowings to be made on the
Closing Date, such Borrowings will consist of Base Rate Loans only and shall
remain so for not less than three (3) Business Days. Thereafter, Borrower may
request that Revolving Loans or Acquisition Loans be made as LIBOR Rate Loans
and that Loans be converted to or continued as LIBOR Rate Loans provided only
LIBOR Rate Loans having an Interest Period of one (1) month shall be permitted
during the first sixty (60) days after the Closing Date.
(b) Upon receipt of the Notice of Borrowing, the Agent will promptly
notify each Lender with a Commitment affected thereby of such Notice and of the
amount of such Lender's Commitment Percentage of the Borrowing.
(c) Unless Agent is otherwise directed in writing by Borrower, the
proceeds of each requested Borrowing after the Closing Date will be made
available to the Borrower by the Agent by wire transfer (or ACH transfer) of
such amount to the Borrower pursuant to the wire transfer instructions
specified on the signature page hereto.
1.6. Conversion and Continuation Elections. (a) The Borrower may
upon irrevocable (subject to subsection 10.2(c) and Section 10.5) written
notice to the Agent in accordance with
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subsection 1.6(b) elect to convert on any Business Day, any Base Rate Loans
into LIBOR Rate Loans or elect to continue on the last day of the applicable
Interest Period any LIBOR Rate Loans having Interest Periods maturing on such
day, in each instance, in whole or in part in an amount not less than $100,000,
or that is in an integral multiple of $50,000 in excess thereof.
(b) The Borrower shall deliver a Notice of Conversion/Continuation to
be received by the Agent not later than 10:30 a.m. (Chicago time) at least
three (3) Business Days in advance of the requested Conversion Date or
continuation date, specifying:
(i) the proposed Conversion Date or continuation date;
(ii) the aggregate amount of Loans to be converted or renewed;
and
(iii) the duration of the requested Interest Period with respect
to the Loans to be converted or continued as LIBOR Rate Loans.
(c) If upon the expiration of any Interest Period applicable to LIBOR
Rate Loans, the Borrower has failed to select timely a new Interest Period to
be applicable to such LIBOR Rate Loans, as the case may be, or if any Event of
Default shall then exist, the Borrower shall be deemed to have elected to
convert such LIBOR Rate Loans into Base Rate Loans effective as of the
expiration date of such current Interest Period.
(d) Upon receipt of a Notice of Conversion/Continuation, the Agent
will promptly notify each Lender thereof. In addition, the Agent will, with
reasonable promptness, notify the Borrower and the Lenders of each
determination of a LIBOR Rate; provided that any failure to do so shall not
relieve the Borrower of any liability hereunder or provide the basis for any
claim against the Agent. All conversions and continuations shall be made pro
rata according to the respective outstanding principal amounts of the Loans
with respect to which the notice was given held by each Lender.
(e) Unless the Required Lenders shall otherwise agree, during the
existence of an Event of Default, the Borrower may not elect to have a Loan
converted into or continued as a LIBOR Rate Loan.
(f) Notwithstanding any other provision contained in this Agreement,
after giving effect to any Borrowing, or to any continuation or conversion of
any Loans, there shall not be more than seven (7) different Interest Periods in
effect.
1.7. Optional Prepayments. (a) Subject to Section 10.4, the
Borrower may at any time (i) upon at least one (1) Business Day's written
notice to the Agent, prepay the Loans in whole or in part in an amount greater
than $2,500,000 and (ii) prepay the Loans in part in an amount less than
$2,500,000 but greater than or equal to $100,000 without notice, in each
instance, without penalty or premium except as provided in Section 10.4.
Optional partial prepayments of the Acquisition Loans following the Acquisition
Loan Termination Date shall be applied against
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scheduled installments of the Acquisition Loans pro rata against all such
scheduled installments based upon the respective amounts thereof. Optional
prepayments in part in amounts less than $100,000 shall not be permitted.
(b) The notice of any prepayment shall not thereafter be revocable by
the Borrower and the Agent will promptly notify each Lender thereof and of such
Lender's Commitment Percentage of such prepayment. The payment amount
specified in such notice shall be due and payable on the date specified
therein, together with any amounts required to be paid in connection therewith
pursuant to Section 10.4.
1.8. Mandatory Prepayments of Loans.
(a) Revolving Loan. The Borrower shall repay to the Lenders in
full on the date specified in clause (a) of the definition of "Revolving
Termination Date" the aggregate principal amount of the Revolving Loans
outstanding on the Revolving Termination Date.
(b) Scheduled Acquisition Loan Payments. The aggregate principal
amount of the Acquisition Loans shall be paid in twelve (12) scheduled
installments on the last day of each March, June, September and December,
commencing June 30, 2000. The amount of each of the first eleven (11)
scheduled installments shall be equal to 1/12th of the aggregate principal
amount of the Acquisition Loans as of the Acquisition Termination Date. The
final scheduled installment of the Acquisition Loans shall be due and payable
on March 31, 2003 and shall be equal to the remaining aggregate unpaid
principal amount of the Acquisition Loans on such date.
(c) Asset Dispositions. If the Borrower or any of its Subsidiaries
shall at any time or from time to time:
(i) make or agree to make a Disposition; or
(ii) suffer an Event of Loss;
and the aggregate amount of the Net Proceeds received by Borrower and its
Subsidiaries in connection with such Disposition or Event of Loss and all other
Dispositions and Events of Loss occurring during the fiscal year exceeds
$1,000,000, then (A) the Borrower shall promptly notify the Agent of such
proposed Disposition or Event of Loss (including the amount of the estimated
Net Proceeds to be received by the Borrower in respect thereof) and (B)
promptly upon receipt by the Borrower or its Subsidiary of the Net Proceeds of
such Disposition or Event of Loss, the Borrower shall deliver such Net Proceeds
to the Agent for distribution to the Lenders as a prepayment of the Loans,
which prepayment shall be applied in accordance with subsection 1.8(f) hereof.
Notwithstanding the foregoing, such prepayment shall not be required if the
Borrower or any of its Subsidiaries reinvests the Net Proceeds of such
Disposition or Event of Loss, or a portion thereof, in productive assets of a
kind then used or usable in the business of the Borrower (including without
limitation pursuant to an Acquisition), within one hundred eighty (180) days
after the date of such Disposition or Event of Loss or enters into a binding
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commitment thereof within said one hundred eighty (180) day period and
subsequently makes such reinvestment within three hundred sixty (360) days
after the date of such Disposition or Event of Loss.
(d) Excess Cash Flow. Within five (5) days after the annual
financial statements for each year ending after December 31, 2000 are required
to be delivered under subsection 4.1(a) hereof, the Borrower shall deliver to
the Agent a written calculation of Excess Cash Flow of the Borrower for such
year in the form of Exhibit 1.8(d) and certified as correct on behalf of
Borrower by a Responsible Officer and concurrently therewith shall deliver to
the Agent, for distribution to the Lenders, an amount equal to 50% of such
Excess Cash Flow, for application to the Loans in accordance with the
provisions of subsection 1.8(f) hereof. Excess Cash Flow shall be calculated
in the manner set forth in Exhibit 1.8(f).
(e) Sale or Issuance of Equity Securities. If the Borrower shall at
any time or from time to time sell, in a public or private sale, or issue
capital stock or other equity securities of the Borrower (excluding (i) capital
stock of the Borrower issued to employees of the Borrower and its Subsidiaries
in the ordinary course of business pursuant to employee stock option plans and
(ii) capital stock of the Borrower issued in payment of all or a portion of the
purchase price for any Acquisition), then (i) the Borrower shall notify the
Agent of such proposed sale or issuance and (ii) promptly upon receipt by the
Borrower of the Net Issuance Proceeds of such sale or issuance, the Borrower
shall deliver such Net Issuance Proceeds to the Agent for distribution to the
Lenders as a prepayment of the Loans, which prepayment shall be applied in
accordance with subsection 1.8(f) hereof. Notwithstanding the foregoing, the
Borrower may first apply the Net Issuance Proceeds of an initial public
offering of the Borrower's common Stock to redeem shares of the Borrower's
Exchangeable Preferred Stock issued on or prior to the Closing Date and then
outstanding (including additional shares of Exchangeable Preferred Stock issued
after the Closing Date in lieu of cash dividends on such shares) in accordance
with the terms of such Exchangeable Preferred Stock so long as no Event of
Default shall have occurred and be continuing.
(f) Application of Prepayments. Any prepayments pursuant to
subsection 1.8(c) shall be applied first to prepay the Acquisition Loans (such
prepayments shall be applied to permanently reduce the Acquisition Loans
Commitments, if made prior to the Acquisition Termination Date, and shall be
applied to prepay scheduled installments of the Acquisition Loans pro rata
against all such scheduled installments based upon the respective amounts
thereof, if made following the Acquisition Termination Date) until the
Acquisition Loans shall have been repaid in full, and then to repay the
Revolving Loans (without reduction of the Revolving Loan Commitments). Any
prepayments pursuant to subsections 1.8(d) and (e), if made prior to the
Acquisition Termination Date, shall be applied to repay the Revolving Loans and
the Acquisition Loans, ratably (without reduction of the Revolving Loan
Commitments or the Acquisition Loan Commitments), and, if made following the
Acquisition Termination Date, shall be applied first to prepay scheduled
installments of the Acquisition Loans pro rata against all such scheduled
installments based upon the respective amounts thereof until the Acquisition
Loans shall have
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been repaid in full, and then to repay the Revolving Loans (without reduction
of the Revolving Loan Commitments). To the extent permitted by the foregoing
sentences, amounts prepaid shall be applied first to any Base Rate Loans then
outstanding and then to outstanding LIBOR Rate Loans with the shortest Interest
Periods remaining. Together with each prepayment under this Section 1.8, the
Borrower shall pay any amounts required pursuant to Section 10.4 hereof.
1.9. Fees.
(a) Arrangement and Agent's Fees. The Borrower shall pay to the
Agent for the Agent's own account an arrangement fee and an agent's fee in the
amounts and at the times set forth in a letter agreement between the Borrower
and the Agent dated of even date herewith.
(b) Commitment Fees.
(i) The Borrower shall pay to the Agent, for the ratable
benefit of the Lenders having Revolving Loan Commitments, a fee (the
"Revolving Commitment Fee") in an amount equal to
(i) the Aggregate Revolving Loan Commitment, less
(ii) the sum of (x) the average daily balance of all
Revolving Loans outstanding plus (y) the average daily amount of
the Letter of Credit Participation Liability, in each case,
during the preceding calendar quarter,
multiplied by one-half of one percent (0.5%) per annum, such fee to be
payable quarterly in arrears on the first day of the calendar quarter
following the Closing Date and the first day of each calendar quarter
thereafter. The Revolving Commitment Fee provided in this subsection
1.9(b)(i) shall accrue at all times from and after the Closing Date to
the Revolving Termination Date.
(ii) The Borrower shall pay to the Agent, for the ratable
benefit of the Lenders having Acquisition Loan Commitments, a fee (the
"Acquisition Commitment Fee") in an amount equal to
(i) the Aggregate Acquisition Loan Commitment, less
(ii) the average daily balance of all Acquisition Loans
during the preceding calendar quarter.
multiplied by one-half of one percent (0.5%) per annum, such fee to be
payable quarterly in arrears on the first day of the calendar quarter
following the Closing Date and the first day of each calendar quarter
thereafter. The Revolving Commitment Fee provided in this subsection
1.9(b)(ii) shall accrue at all times from and after the Closing Date to
the Acquisition Termination Date.
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(c) Letter of Credit Participation Fee. Borrower shall pay to
Agent, for the ratable benefit of the Lenders having Revolving Loan
Commitments, fees for each Lender Letter of Credit and each Letter of Credit
Participation Agreement (the "Letter of Credit Participation Fee") for the
period from and including the date of issuance of same to and excluding the
date of expiration or termination, equal to the average daily amount of Letter
of Credit Participation Liability multiplied by two and one-half of one percent
(2.50%) per annum; provided, however, at the Agent's or the Required Lenders'
option, while an Event of Default exists such percent shall be increased to
four and one-half of one percent (4.50%) per annum, such fees to be payable
quarterly in arrears on the first day of the calendar quarter following the
date hereof and the first day of each calendar quarter thereafter. The
Borrower shall also reimburse the Agent for any and all fees and expenses, if
any, paid by the Agent to the issuer of any letter of credit subject to a
Letter of Credit Participation Agreement.
1.10. Payments by the Borrower. (a) All payments (including
prepayments) to be made by the Borrower on account of principal, interest, fees
and other amounts required hereunder shall be made without set-off, recoupment
or counterclaim, shall, except as otherwise expressly provided herein, be made
to the Agent for the ratable account of the Lenders at the address for payment
specified in the signature page hereof in relation to the Agent (or such other
address as Agent may from time to time specify in accordance with Section 9.2),
and shall be made in dollars and in immediately available funds, no later than
11:00 a.m. (Chicago time) on the date due. The Agent will promptly distribute
to each Lender its Commitment Percentage (or other applicable share as
expressly provided herein) of such principal, interest, fees or other amounts,
in like funds as received. Any payment which is received by the Agent later
than 11:00 a.m. (Chicago time) shall be deemed to have been received on the
immediately succeeding Business Day and any applicable interest or fee shall
continue to accrue. The Borrower hereby authorizes the Agent and each Lender
to make a Revolving Loan (which shall be a Base Rate Loan) to pay (i) interest,
principal, agent fees, Commitment Fees and Letter of Credit Participation Fees,
in each instance, on the date due, or (ii) after five (5) days prior notice to
Borrower, other fees, costs or expenses payable by the Borrower or any of its
Subsidiaries hereunder or under the other Loan Documents.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, if any payment hereunder shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
1.11. Payments by the Lenders to the Agent. (a) Unless the Agent
shall have received notice from a Lender on the Closing Date or, with respect
to each Borrowing after the Closing Date, at least one Business Day prior to
the date of any proposed Borrowing, that such Lender will not make available to
the Agent as and when required hereunder for the account of the Borrower the
amount of that Lender's Commitment Percentage of the Borrowing, the Agent may
assume that each Lender has made such amount available to the Agent in
immediately available funds on the applicable Borrowing date and the Agent may
(but shall not be so required), in
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reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent any Lender shall not have made its
full amount available to the Agent in immediately available funds and the Agent
in such circumstances has made available to the Borrower such amount, that
Lender shall on the next Business Day following the date of such Borrowing make
such amount available to the Agent, together with interest at the Agent's cost
of funds for and determined as of each day during such period. A notice of the
Agent submitted to any Lender with respect to amounts owing under this
subsection 1.11(a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Agent shall constitute such Lender's
Loan on the date of Borrowing for all purposes of this Agreement. If such
amount is not made available to the Agent on the next Business Day following
the date of such Borrowing, the Agent shall notify the Borrower of such failure
to fund and, upon demand by the Agent, the Borrower shall pay such amount to
the Agent for the Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any date of
Borrowing shall not relieve any other Lender of any obligation hereunder to
make a Loan on the date of such Borrowing, but no Lender shall be responsible
for the failure of any other Lender to make the Loan to be made by such other
Lender on the date of any Borrowing. Without limiting the generality of the
foregoing, each Lender shall be obligated to fund its Commitment Percentage of
any Revolving Loan made after any acceleration of the Obligations with respect
to any draw on any Lender Letter of Credit or any payment made under any Letter
of Credit Participation Agreement.
1.12. Disbursements of Advances; Settlements Among Agent and Lenders;
Payments of Interest and Fees; Disgorgement Obligations. (a) The Revolving
Loan balance may fluctuate from day to day through the Agent's disbursement of
funds to, and receipt of funds from, the Borrower. In order to minimize the
frequency of transfers of funds between the Agent and each Lender, Revolving
Loan advances and payments will be settled according to the procedures
described in this Section 1.12. Notwithstanding these procedures, each
Lender's obligation to fund its portion of any advances made by the Agent to
the Borrower will commence on the date such advances are made by the Agent.
Such payments will be made by each Lender without setoff, counterclaim or
reduction of any kind.
(b) On the first Business Day of each week, or more frequently
(including daily) if the Agent so elects (each such day being a "Settlement
Date"), the Agent will advise each Lender by telephone or telecopy of the
amount of each such Lender's Commitment Percentage of the Revolving Loan
balance as of the close of business of the Business Day immediately preceding
the Settlement Date. In the event that payments are necessary to adjust the
amount of such Lender's share of the Revolving Loan balance to equal such
Lender's Commitment Percentage of the Revolving Loan Obligations as of any
Settlement Date, such Lender will pay to the Agent, or the Agent will pay to
such Lender (as applicable) the amount necessary in same day funds by
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wire transfer to the other's account not later than 2:00 p.m. Chicago time on
the Business Day following the Settlement Date.
(c) Notwithstanding the foregoing and with respect to Borrowings
requiring notice in advance of the Borrowing date, the Agent, at its option,
may elect to require that each Lender provide funds in connection with any
requested Borrowing hereunder on the scheduled Borrowing date, and in such
event the Agent shall advise each Lender by telephone or telecopy of the amount
to be funded by such Lender no later than one (1) Business Day prior to the
Borrowing date applicable thereto, and each such Lender shall pay to the Agent
such Lender's Commitment Percentage of the Borrowing in same day funds by wire
transfer to the Agent's account not later than 10:30 a.m. Chicago time on such
Borrowing date.
(d) For purposes of this subsection 1.12(d), the following terms will
have the meanings indicated:
"Acquisition Commitment Fee Ratio" means a number calculated by
dividing the total amount of Acquisition Commitment Fees received by the
Agent during the immediately preceding calendar quarter by the total
amount of Acquisition Commitment Fees due from the Borrower during the
immediately preceding calendar quarter.
"Daily Loan Balance" means, as to any Lender and any particular
Loan, an amount calculated as of the end of each calendar day by
subtracting (i) the cumulative principal amount paid by the Agent to a
Lender on such Loan from and including the Closing Date through and
including such calendar day from (ii) the cumulative principal amount on
such Loan advanced by such Lender to the Agent on that Loan from and
including the Closing Date through and including such calendar day.
"Daily Interest Rate" means, as to any Loan, an amount calculated
by dividing the interest rate payable on such Loan, determined pursuant
to Section 1.3, as of each calendar day by three hundred and sixty
(360).
"Daily Interest Amount" means, as to any Loan, an amount
calculated by multiplying the Daily Loan Balance of a Loan by the Daily
Interest Rate applicable to such Loan.
"Interest Ratio" means, as to any Loan, a number calculated by
dividing the total amount of the interest on such Loan received by the
Agent during the immediately preceding calendar quarter by the total
amount of interest on that Loan due from the Borrower during the
immediately preceding calendar quarter.
"Letter of Credit Participation Fee Ratio" means a number
calculated by dividing the total amount of Letter of Credit
Participation Fees received by the Agent during the immediately
preceding calendar quarter by the total amount of Letter of Credit
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Participation Fees due from the Borrower during the immediately
preceding calendar quarter.
"Revolving Commitment Fee Ratio" means a number calculated by
dividing the total amount of Revolving Commitment Fees received by the
Agent during the immediately preceding calendar quarter by the total
amount of Revolving Commitment Fees due from the Borrower during the
immediately preceding calendar quarter.
On the first Business Day of each calendar quarter (each, an "Interest
Settlement Date"), the Agent will advise each Lender by telephone or telecopy
of the amount of such Lender's Commitment Percentage of interest and fees on
each Loan as of the end of the last day of the immediately preceding calendar
quarter. Provided that such Lender has made all payments required to be made
by it under this Agreement, the Agent will pay to such Lender, by wire transfer
to such Lender's account (as specified by such Lender on the signature page of
this Agreement or the applicable Assignment and Acceptance) not later than 2:00
p.m. Chicago time on the next Business Day following the Interest Settlement
Date, such Lender's Commitment Percentage of:
(A) interest on each Loan in which such Lender has a
Commitment received by the Agent during the immediately preceding
calendar quarter, calculated by (1) adding together the Daily Interest
Amounts for each such Loan for each calendar day of the preceding
calendar quarter and (2) multiplying the total thereof by the Interest
Ratio for that Loan for such quarter; and
(B) Revolving Commitment Fees in respect of such Lender's
Commitment Percentage of the Revolving Loan received by the Agent during
the immediately preceding calendar quarter, calculated by (1)
multiplying the total amount of all Revolving Commitment Fees payable by
the Borrower for such calendar quarter by the Revolving Commitment Fee
Ratio for such calendar quarter, and (2) multiplying the result thereof
by the Lender's Commitment Percentage of the aggregate Revolving Loan
Commitment in effect during such immediately preceding calendar quarter;
and
(C) Acquisition Commitment Fees in respect of such Lender's
Commitment Percentage of the Acquisition Loan received by the Agent
during the immediately preceding calendar quarter, calculated by (1)
multiplying the total amount of all Acquisition Commitment Fees payable
by the Borrower for such calendar quarter by the Acquisition Commitment
Fee Ratio for such calendar quarter, and (2) multiplying the result
thereof by the Lender's Commitment Percentage of the aggregate
Acquisition Loan Commitment in effect during such immediately preceding
calendar quarter; and
(D) Letter of Credit Participation Fees in respect of such
Lender's Commitment Percentage of the Revolving Loan received by the
Agent during the immediately preceding calendar quarter, calculated by
(1) multiplying the total amount of all Letter of Credit Participation
Fees payable by the Borrower for such calendar month
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<PAGE> 21
by the Letter of Credit Participation Fee Ratio for such calendar
quarter, and (2) multiplying the result thereof by the Lender's
Commitment Percentage of the aggregate Revolving Loan Commitment in
effect during such immediately preceding calendar quarter.
(e) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full as and when required hereunder, the
Agent may assume that the Borrower has made such payment in full to the Agent
on such date in immediately available funds and the Agent may (but shall not be
so required), in reliance upon such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due such Lender. If
the Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by the Agent
from the Borrower and such related payment is not received by the Agent, the
Agent shall be entitled to recover such amount from such Lender, and each
Lender shall repay to the Agent on demand such amount, together with interest
thereon for each day from the date such amount is distributed to such Lender
until the date such Lender repays such amount to the Agent, at the Agent's cost
of funds, without setoff, counterclaim or deduction of any kind. If the Agent
determines at any time that any amount received by the Agent under this
Agreement must be returned to the Borrower or paid to any other Person pursuant
to any solvency, fraudulent conveyance or similar law or otherwise, then,
notwithstanding any other term or condition of this Agreement, the Agent will
not be required to distribute any portion of such payment to any Lender. In
addition, each Lender will repay to the Agent on demand any portion of such
amount that the Agent has distributed to such Lender, together with interest
thereon at such rate, if any, as the Agent is required to pay to the Borrower
or such other Person, without setoff, counterclaim or deduction of any kind.
ARTICLE II. - CONDITIONS PRECEDENT
2.1. Conditions of Initial Loans. The obligation of each Lender to
make its initial Loan and of the Agent to issue the initial Lender Letter of
Credit or Letter of Credit Participation Agreement hereunder is subject to the
condition that the Agent shall have received (or shall have waived receipt) on
or before the Closing Date all of the following, in form and substance
reasonably satisfactory to the Agent and (except for the Notes and any
instruments or documents which are Pledged Collateral) in sufficient
counterparts for each Lender, duly executed by all parties thereto:
(a) Credit Agreement and Notes. This Agreement executed by the
Borrower, the Agent and each of the Lenders, and the Notes executed by the
Borrower;
(b) Secretary's Certificates; Resolutions; Incumbency. A
certificate of the Secretary or Assistant Secretary of the Borrower and each
Subsidiary of the Borrower which is a party to any Loan Documents, certifying:
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(i) the names and true signatures of the officers of the
Borrower and each such Subsidiary authorized to execute, deliver and
perform, as applicable, this Agreement, and all other Loan Documents to
be delivered hereunder; and
(ii) Copies of the resolutions of the board of directors of the
Borrower and each such Subsidiary approving and authorizing the
execution, delivery and performance by the Borrower or such Subsidiary
of this Agreement and the other Loan Documents to be executed or
delivered by it hereunder;
(c) Articles of Incorporation; By-laws and Good Standing. Each of
the following documents:
(i) the Organization Documents of the Borrower and each
Subsidiary of the Borrower which is party to any Loan Documents, as such
Organization Documents are in effect on the Closing Date, certified by
the Secretary of State (or similar, applicable Governmental Authority)
of the state of incorporation of the Borrower or such Subsidiary as of a
recent date, if and as applicable, all certified by the Secretary or
Assistant Secretary of the Borrower or such Subsidiary as of the Closing
Date; and
(ii) a good standing and, if available, tax good standing
certificate for the Borrower and each Subsidiary of the Borrower from
the Secretary of State (or similar, applicable Governmental Authority)
of its state of incorporation and each state where the Borrower or such
Subsidiary is qualified to do business as a foreign corporation as of a
recent date;
(d) Collateral Documents. The Collateral Documents, executed by
the Borrower and each Subsidiary of the Borrower, as applicable, in appropriate
form for recording, where necessary, together with:
(i) acknowledgment copies of all UCC-l financing statements
filed, registered or recorded to perfect the security interests of the
Agent, for the benefit of Agent and the Lenders, granted pursuant to the
Collateral Documents, or other evidence reasonably satisfactory to the
Agent that there has been (or will be, to the Agent's satisfaction)
filed, registered or recorded all financing statements and other
filings, registrations and recordings reasonably necessary and advisable
to perfect the Liens of the Agent, for the benefit of Agent and the
Lenders, granted pursuant to the Collateral Documents, in accordance
with applicable law;
(ii) uniform commercial code financing statement, federal and
state tax lien and judgment searches as the Agent shall have reasonably
requested of the Borrower and its Subsidiaries, and such termination
statements or other documents as may be reasonably necessary to confirm
that the Collateral is subject to no other Liens in favor of any Persons
(other than Permitted Liens);
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(iii) all certificates and instruments representing the Pledged
Collateral, irrevocable proxies and stock transfer powers executed in
blank or other executed endorsements reasonably satisfactory to the
Agent;
(iv) evidence that all other actions reasonably necessary or,
in the reasonable opinion of the Agent, desirable to perfect and protect
the Liens created by the Collateral Documents have been taken;
(v) funds sufficient to pay any filing or recording tax or fee
in connection with any and all UCC-1 financing statements and, if
applicable, the Mortgages, all title insurance premiums, documentary
stamp or intangible taxes, recording fees and mortgage taxes payable in
connection with the recording of any mortgage or filing of any financing
statements or the issuance of the title insurance policies (whether due
on the Closing Date or in the future) including sums due in connection
with any future advances;
(vi) with respect to each parcel of real Property in respect of
which there is delivered a Mortgage and which is listed on Schedule 2.1,
an A.L.T.A. mortgagee policy of title insurance or a binder issued by a
title insurance company reasonably satisfactory to the Agent insuring
(or undertaking to insure, in the case of a binder) that the Mortgage
creates and constitutes a valid first Lien against such real Property in
favor of the Agent, for the benefit of Agent and the Lenders, subject
only to exceptions reasonably acceptable to the Agent, with such
endorsements and affirmative insurance as the Agent may reasonably
request;
(vii) if required by the Agent, flood insurance and earthquake
insurance on terms satisfactory to the Agent; and
(viii) such consents, estoppels, subordination agreements and
other documents and instruments executed by landlords, tenants and other
Persons party to material contracts relating to any Collateral as to
which the Agent shall be granted a Lien for the benefit of the Lenders,
as reasonably requested by the Agent;
(e) Legal Opinions. Such opinions of counsel to the Borrower and
its Subsidiaries, addressed to the Agent and the Lenders, in form and substance
reasonably satisfactory to Agent;
(f) Payment of Fees. The Borrower shall have paid all accrued and
unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, together with Attorney Costs of the Agent;
(g) Certificate. A certificate signed on behalf of Borrower by a
Responsible Officer, dated as of the Closing Date, stating that:
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(i) the representations and warranties contained in Article
III hereof are true and correct in all material respects on and as of
such date, as though made on and as of such date;
(ii) no Default or Event of Default exists or would result from
the initial Borrowing or issuance of the initial Lender Letter of Credit
or Letter of Credit Participation Agreement; and
(iii) there has occurred since December 31, 1997, no event or
circumstance that has resulted or could reasonably be expected to result
in a Material Adverse Effect;
(h) Financial Statements. Copies of all of the financial
statements of the Borrower and its Subsidiaries referred to in Section 3.11
together with a pro forma balance sheet giving effect to the transactions
contemplated hereby and by the Related Agreements, certified on behalf of
Borrower by a Responsible Officer;
(i) Insurance Policies. Standard lenders' loss payable
endorsements in favor of the Agent with respect to the insurance policies or
other instruments or documents evidencing insurance coverage on the properties
of the Borrower in accordance with Section 4.6 and endorsements to all
liability insurance policies naming the Agent and the Lenders as additional
insureds thereunder;
(j) Environmental Review. An environmental site assessment with
respect to any real Property owned or operated by Borrower or any of its
Subsidiaries, dated as of a recent date prior to the Closing Date or an earlier
date acceptable to the Agent, prepared by a qualified firm reasonably
acceptable to the Agent and the Lenders, stating, among other things, that such
real property is free from Hazardous Materials and that operations conducted
thereon are in compliance with all Environmental Laws and showing all costs
associated with performing work to remediate contamination thereat;
(k) Due Diligence. Evidence of completion to the satisfaction of
the Agent of such investigations, reviews and audits with respect to the
Borrower and the transactions contemplated by the Related Agreements as the
Agent or any Lender may deem appropriate;
(l) Accountants' Review. An accountants' review of the books and
records of the Borrower and its Subsidiaries prepared by a "Big Six" accounting
firm selected by the Agent, dated as of a recent date prior to the Closing Date
and otherwise in form and substance reasonably satisfactory to the Agent;
(m) Insurance Review. A review of the Borrower's insurance
coverages, prepared by a qualified firm reasonably acceptable to the Agent,
dated as of a recent date prior to the Closing Date and otherwise in form and
substance reasonably satisfactory to the Agent;
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(n) Borrowing Base Certificate. A duly completed Borrowing Base
Certificate setting forth the Borrowing Base as of the Closing Date, giving pro
forma effect to the Related Transactions.
(o) Related Transactions. The Related Transactions shall have
closed in the manner contemplated by the Related Agreements and shall otherwise
be in form and substance reasonably satisfactory to the Agent;
(p) Prior Indebtedness. A payoff letter from each lender of any
Prior Indebtedness in form and substance reasonably satisfactory to the Agent,
together with such UCC-3 termination statements, releases of mortgage Liens and
other instruments, documents and/or agreements necessary or appropriate to
terminate any Liens in favor of such lender securing Prior Indebtedness which
is to be paid off on the Closing Date as the Agent may reasonably request, duly
executed and in form and substance reasonably satisfactory to the Agent; and
(q) Other Documents. Such other approvals, opinions, documents or
materials as the Agent may reasonably request.
2.2. Conditions to All Borrowings. The obligation of each Lender to
make any Loan and of the Agent to issue any Lender Letter of Credit or Letter
of Credit Participation Agreement, or to continue or convert any Loan
hereunder, is subject to the satisfaction of the following conditions precedent
on the relevant Borrowing or continuation or conversion date:
(a) Notice of Borrowing or Continuation/Conversion. The Agent
shall have received (with, in the case of the initial Loan only, a copy for
each Lender) a Notice of Borrowing or a Notice of Continuation/Conversion, as
applicable, in accordance with Section 1.5 or Section 1.6;
(b) Continuation of Representations and Warranties. The
representations and warranties made by the Borrower contained in Article III
shall be true and correct in all material respects on and as of such Borrowing,
or continuation or conversion date with the same effect as if made on and as of
such Borrowing or continuation or conversion date (except to the extent such
representations and warranties (i) expressly refer to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier
date, or (ii) are not true and correct due to events or conditions, the
occurrence or existence of which are not prohibited by this Agreement or the
other Loan Documents and which do not, in and of themselves, constitute a
Default or an Event of Default);
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing or continuation or conversion;
(d) Borrowing Base Certificate. With respect to any Acquisition
Loan Borrowing, the Agent shall have received a duly completed Borrowing Base
Certificate setting forth availability under the Acquisition Loan facility as
of the date of such Borrowing and before giving effect to such Borrowing.
After giving effect to such Borrowing, the outstanding
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principal balance of the Acquisition Loans shall not exceed the Maximum
Acquisition Loan Balance; and
(e) Subsidiaries. Borrower shall have pledged (or caused its
Subsidiaries to have pledged, if applicable) the stock or other equity interest
of each of its Subsidiaries to the Agent, for the benefit of Agent and the
Lenders, and shall have delivered, or caused to be delivered, to the Agent the
items described in subsection 2.1(d)(iii) and, to the extent not previously
delivered, the items described in subsections 2.1(b) and 2.1 (c), with respect
to each such Subsidiary. In addition, each such Subsidiary shall have
guaranteed the Obligations pursuant to the Guaranty and shall have granted to
the Agent, for the benefit of Agent and the Lenders, a security interest in all
of such Subsidiary's property to secure such guaranty.
Each Notice of Borrowing and Notice of Continuation/ Conversion submitted by
the Borrower hereunder shall constitute a representation and warranty by the
Borrower hereunder, as of the date of each such notice or application and as of
the date of each Borrowing or continuation or conversion, as applicable, that
the conditions in Section 2.2 are satisfied.
2.3. Additional Conditions to Acquisition Loans. The obligation of
each Lender to make any Acquisition Loan is subject to the satisfaction of the
following additional conditions precedent on the relevant Borrowing date:
(a) Evidence of Perfected First Priority Security Interest. With
respect to the Target acquired or financed with the proceeds of such
Acquisition Loan, and prior to or simultaneously with the funding of such
Acquisition Loan, the Agent shall have been granted, for the benefit of Agent
and the Lenders, a first priority lien on and security interest in the property
of such Target, subject only to Permitted Liens, and shall have received,
without limitation, (a) the items described in subsection 2.1(d)(ii) and
Section 4.12, and (b) duly executed UCC financing statements or amendments to
existing financing statements with respect to such Target, in form and
substance reasonably satisfactory to the Agent and which, upon filing, shall
perfect the first priority security interest of the Agent, for the benefit of
Agent and the Lenders, in such property. In the event real property is being
acquired in connection with such Acquisition, prior to or simultaneously with
the funding of such Acquisition Loan, the Agent shall have received (x) in the
case of owned real property being acquired, a fully executed Mortgage, in form
and substance reasonably satisfactory to the Agent together with, in the case
of owned real property having a fair market value of at least $1,000,000 (if
requested by the Agent), an ALTA lender's title insurance policy issued by a
title insurer reasonably satisfactory to the Agent, in form and substance and
in an amount reasonably satisfactory to the Agent insuring that the Mortgage is
a valid and enforceable first priority lien on the respective property, free
and clear of all defects, encumbrances and Liens except for Permitted Liens,
and (y) an environmental site assessment prepared by a qualified firm
reasonably acceptable to the Agent, in form and substance reasonably
satisfactory to the Agent.
(b) Approval. The Agent and the Majority Lenders shall have
approved such Acquisition in accordance with Section 5.16, if such approval is
necessary;
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(c) Additional Documentation.
(i) The Agent shall have received complete executed or
conformed copies of each document, instrument and agreement executed in
connection with such Acquisition (collectively, "Acquisition
Documents"), all of which shall be subject to the Lenders' review and
the Agent's and the Majority Lenders' approval, if applicable; provided,
the Agent and the Lenders shall have no right to disapprove any
Acquisition Document to the extent the same is consistent with the
Agent's and the Majority Lenders' approval pursuant to Section 5.16;
(ii) such Acquisition Documents shall be in full force and
effect and no material term or condition thereof shall have been
amended, modified or waived after the execution thereof (other than in a
manner favorable to the Borrower or the Target or solely to extend the
date by which the Acquisition is required to occur) except with the
prior written consent of the Agent and the Majority Lenders, if
applicable;
(iii) in the case of an Acquisition requiring the consent of
Majority Lenders, none of the parties to any of such Acquisition
Documents shall have failed to perform any material obligation or
covenant required to be performed or complied with on or before the date
of such Borrowing; and
(iv) if requested by the Agent, the Agent shall have received
such opinions of counsel to the Borrower in respect of such Acquisition,
addressed to the Agent and the Lenders, in form and substance reasonably
satisfactory to the Agent.
ARTICLE III. - REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and each Lender that
the following are, and after giving effect to the Related Transactions will be,
true, correct and complete:
3.1. Corporate Existence and Power. The Borrower and each of its
Subsidiaries:
(a) is a corporation, limited liability company or limited
partnership, as applicable, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation,
as applicable;
(b) has the power and authority to own its assets, carry on its
business and execute, deliver, and perform its obligations under, the Loan
Documents and the Related Agreements to which it is a party;
(c) has all governmental licenses, authorizations, consents and
approvals to own its assets and carry on its business, and is duly qualified as
a foreign corporation, limited liability company or partnership, as applicable,
and licensed and in good standing, under the laws of each
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jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (c) or clause (d), to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
3.2. Corporate Authorization; No Contravention. (a) The execution,
delivery and performance by the Borrower of this Agreement, and the Borrower
and its Subsidiaries of any other Loan Document and Related Agreement to which
such Person is party, have been duly authorized by all necessary action, and do
not and will not:
(i) contravene the terms of any of that Person's Organization
Documents;
(ii) conflict with or result in any material breach or
contravention of, or the creation of any Lien (other than Permitted
Liens) under, any document evidencing any material Contractual
Obligation to which such Person is a party or any material order,
injunction, writ or decree of any Governmental Authority to which such
Person or its Property is subject; or
(iii) violate any material Requirement of Law in any material
respect.
(b) Schedule 3.2 sets forth the authorized equity securities of the
Borrower and its Subsidiaries. All issued and outstanding equity securities of
the Borrower and its Subsidiaries are duly authorized and validly issued, fully
paid, non-assessable, and free and clear of all Liens other than, with respect
to the equity securities of Subsidiaries of the Borrower, those in favor of
Agent, for the benefit of Agent and Lenders, and such securities were issued in
compliance with all applicable state and federal laws concerning the issuance
of securities. All of the issued and outstanding capital stock of each of the
Borrower's Subsidiaries is owned by the Borrower or a Wholly-Owned Subsidiary
of the Borrower, as set forth on Schedule 3.2. As of the Closing Date, all of
the issued and outstanding equity securities of the Borrower are owned by the
Persons and in the amounts set forth on Schedule 3.2. There are no pre-emptive
or other outstanding rights, options, warrants, conversion rights or other
similar agreements or understandings for the purchase or acquisition of any
shares of capital stock or other securities of any such entity except, in the
case of the Borrower, as set forth on Schedule 3.2. No shares of Disqualified
Stock are issued and outstanding.
3.3. Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (collectively, "Approvals") is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, the Borrower or any of its Subsidiaries of this Agreement, any other
Loan Document or Related Agreement except (a) for recordings and filings in
connection with the Liens granted to the Agent under the Collateral Documents,
(b) those obtained or made on or
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prior to the Closing Date and (c) in the case of any Related Agreement, those
which, if not obtained or made, could not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. It is
understood that continued performance by the Borrower and its Subsidiaries of
this Agreement and the other Loan Documents to which such Persons are a party
will require various Approvals, such as filings related to environmental
matters, ERISA matters, taxes and intellectual property, filings required to
maintain corporate and similar standing and existence, filings pursuant to the
UCC and other security filings and recordings, filings required with the SEC,
routine filings in the ordinary course of business, and filings required in
connection with the exercise by the Lenders and the Agent of remedies in
connection with the Loan Documents as contemplated therein.
3.4. Binding Effect. This Agreement and each other Loan Document and
Related Agreement to which the Borrower or any of its Subsidiaries is a party
constitute the legal, valid and binding obligations of the Borrower and each
Subsidiary which is a party thereto, enforceable against such Person in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
3.5. Litigation. Except as specifically disclosed in Schedule 3.5,
there are no actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Borrower, threatened or contemplated, at law, in equity,
in arbitration or before any Governmental Authority, against the Borrower, or
its Subsidiaries or any of their respective Properties which:
(a) purport to affect or pertain to this Agreement, any other
Loan Document or Related Agreement, or any of the transactions
contemplated hereby or thereby; or
(b) if determined adversely to the Borrower or any of its
Subsidiaries, could reasonably be expected to result in equitable relief
or monetary judgment(s), individually or in the aggregate, in excess of
$500,000.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin
or restrain the execution, delivery or performance of this Agreement, any other
Loan Document or any Related Agreement, or directing that the transactions
provided for herein or therein not be consummated as herein or therein
provided.
3.6. No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Borrower or the grant or
perfection of the Agent's Liens on the Collateral. Neither the Borrower nor
any of its Subsidiaries is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all such
defaults, could reasonably be expected to have a Material Adverse Effect or
that would, if such default had occurred after the Closing Date, create an
Event of Default under subsection 7.1(e).
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3.7. ERISA Compliance. (a) Schedule 3.7 lists all Qualified Plans
and Multiemployer Plans. The Borrower and each of its Subsidiaries is in
compliance in all material respects with all requirements of each Plan, and
each Plan complies in all material respects, and is operated in compliance in
all material respects, with all applicable provisions of law. Borrower is not
aware, after due inquiry, of any item of non-compliance which could potentially
result in the loss of Plan qualification or tax-exempt status, or give rise to
a material excise tax or other penalty imposed by a Governmental Authority. No
material proceeding, claim, lawsuit and/or investigation is pending concerning
any Plan. All required contributions have been and will be made in accordance
with the provisions of each Qualified Plan and Multiemployer Plan, and with
respect to Borrower or any ERISA Affiliate, there are, have been and will be no
material Unfunded Pension Liabilities or Withdrawal Liabilities.
(b) No ERISA Event has occurred or is expected to occur with respect
to any Qualified Plan, Multiemployer Plan or Plan.
(c) Members of the Controlled Group currently comply and have
complied in all material respects with the notice and continuation coverage
requirements of Section 4980B of the Code.
3.8. Use of Proceeds; Margin Regulations. The proceeds of the Loans
are intended to be and shall be used solely for the purposes set forth in and
permitted by Section 4.10, and are intended to be and shall be used in
compliance with Section 5.8. Neither the Borrower nor any of its Subsidiaries
is generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
3.9. Title to Properties. The Borrower and each of its Subsidiaries
have good title in fee simple to, or valid leasehold interests in, all real
Property necessary or used in the ordinary conduct of their respective
businesses, except for Permitted Liens. As of the Closing Date, the Property
of the Borrower and its Subsidiaries is subject to no Liens, other than
Permitted Liens. Schedule 3.9 lists all real property owned by the Borrower or
any of its Subsidiaries as of the Closing Date.
3.10. Taxes. The Borrower and its Subsidiaries have filed all
Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their Properties, income or
assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings diligently prosecuted and for which
adequate reserves have been provided in accordance with GAAP and no notice of
Lien has been filed or recorded. There is no proposed tax assessment against
the Borrower or any of its Subsidiaries which would, if the assessment were
made, have a Material Adverse Effect.
3.11. Financial Condition. (a) Each of (i) the audited consolidated
balance sheet of the Borrower and its Subsidiaries dated December 31, 1997, and
the related audited consolidated statements of income or operations,
shareholders' equity and cash flows for the fiscal year ended
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on that date, (ii) the unaudited interim consolidated balance sheet of the
Borrower and its Subsidiaries dated February 28, 1998 and the related unaudited
consolidated statements of income, shareholders' equity and cash flows for the
two months then ended, (iii) the audited balance sheet of Reddy Ice Corporation
dated December 31, 1997 and the related unaudited statements of income or
operations, shareholders' equity and cash flow for the fiscal year ended on
that date and (iv) the unaudited interim balance sheet of Reddy Ice Corporation
dated March 31, 1998 and the related unaudited statements of income,
shareholders' equity and cash flows for the three months then ended:
(x) were prepared in accordance with GAAP consistently applied
throughout the respective periods covered thereby, except as otherwise
expressly noted therein, subject to, in the case of the unaudited and/or
interim financial statements, normal year-end adjustments and/or the
lack of footnote disclosures; and
(y) present fairly in all material respects the consolidated
financial condition of such Persons as of the dates thereof and results
of operations for the periods covered thereby.
(b) Since December 31, 1997, there has been no Material Adverse
Effect.
(c) The Borrower and its Subsidiaries have no Indebtedness other than
Indebtedness permitted pursuant to Section 5.5 and have no Contingent
Obligations other than Contingent Obligations permitted pursuant to Section
5.9.
3.12. Environmental Matters. (a) The on-going operations of the
Borrower and each of its Subsidiaries comply in all respects with all
Environmental Laws, except such non-compliance which could not (if enforced in
accordance with applicable law) reasonably be expected to result in a Material
Adverse Effect.
(b) The Borrower and each of its Subsidiaries have obtained all
licenses, permits, authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for their respective
ordinary course operations, all such Environmental Permits are in good
standing, and the Borrower and each of its Subsidiaries are in compliance with
all material terms and conditions of such Environmental Permits, except where
the failure to obtain or to be in compliance with such Environmental Permits
could not reasonably be expected to result in a Material Adverse Effect.
(c) None of the Borrower, any of its Subsidiaries or any of their
respective present Property or operations, is subject to any outstanding
written order from or agreement with any Governmental Authority, nor subject to
any judicial or docketed administrative proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Material.
(d) There are no Hazardous Materials or other conditions or
circumstances existing with respect to any Property, or arising from operations
prior to the Closing Date, of the
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Borrower or any of its Subsidiaries that would reasonably be expected to result
in a Material Adverse Effect. In addition, neither the Borrower nor any of its
Subsidiaries has any underground storage tanks (i) that are not properly
registered or permitted under applicable Environmental Laws, or (ii) that are
leaking or disposing of Hazardous Materials, and that, in either case, would
reasonably be expected to result in a Material Adverse Effect.
3.13. Collateral Documents. All representations and warranties of
the Borrower, any of its Subsidiaries or any other party to any Collateral
Document (other than the Agent and/or any Lender) contained in the Collateral
Documents are true and correct in all material respects.
3.14. Regulated Entities. None of the Borrower, any Person
controlling the Borrower, or any Subsidiary of the Borrower, is (a) an
"investment company" within the meaning of the Investment Company Act of 1940;
or (b) subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other Federal or state statute or regulation limiting
its ability to incur Indebtedness.
3.15. Solvency. The Borrower and its Subsidiaries, on a consolidated
basis, are, Solvent.
3.16. Labor Relations. There are no strikes, lockouts or other labor
disputes against the Borrower or any of its Subsidiaries, or to the best of the
Borrower's knowledge, threatened against or affecting the Borrower or any of
its Subsidiaries, in any case which would reasonably be expected to have a
Material Adverse Effect and no significant unfair labor practice complaint is
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened against any of them before any
Governmental Authority in any case which could reasonably be expected to have a
Material Adverse Effect.
3.17. Copyrights, Patents, Trademarks and Licenses, etc. Schedule
3.17 identifies all United States and foreign patents, trademarks, service
marks, trade names and copyrights, and all registrations and applications for
registration thereof and all licenses thereof, owned or held by Borrower or any
of its Subsidiaries on the Closing Date after giving effect to the Related
Transactions, and identifies the jurisdictions in which such registrations and
applications have been filed. Except as otherwise disclosed in Schedule 3.17,
as of the Closing Date, Borrower and its Subsidiaries are the sole beneficial
owners of, or have the right to use, free from any restrictions, claims, rights
encumbrances or burdens, the intellectual property identified on Schedule 3.17
and all other processes, designs, formulas, computer programs, computer
software packages, trade secrets, inventions, product manufacturing
instructions, technology, research and development, know-how and all other
intellectual property that are necessary for the operation of Borrower's and
its Subsidiaries' businesses as being operated on the Closing Date after giving
effect to the Related Transactions. Each patent, trademark, service mark,
trade name, copyright and license listed on Schedule 3.17 is in full force and
effect except to the extent the failure to be in effect will not and could not
reasonably be expected to have a Material Adverse Effect. Except as set forth
in Schedule 3.17, to the best knowledge of Borrower, as of the Closing Date
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(a) none of the present or contemplated products or operations of Borrowers or
its Subsidiaries infringes any patent, trademark, service mark, trade name,
copyright, license of intellectual property or other right owned by any other
Person, and (b) there is no pending or threatened claim or litigation against
or affecting Borrower or any of its Subsidiaries contesting the right of any of
them to manufacture, process, sell or use any such product or to engage in any
such operation except for claims and/or litigation which will not and could not
reasonably be expected to have a Material Adverse Effect.
None of the trademark registrations set forth on Schedule 3.17 is an
"intent to use" registration.
3.18. Subsidiaries. The Borrower has no Subsidiaries or equity
investments in any other corporation or entity other than those specifically
disclosed in Schedule 3.2.
3.19. Brokers' Fees; Transaction Fees. Except as set forth in
Schedule 3.19, neither the Borrower nor any of its Subsidiaries has any
obligation to any Person in respect of any finder's, broker's or investment
banker's fee in connection with the transactions contemplated hereby. The fees
set forth on Schedule 3.19 will be the responsibility of, and paid on the
Closing Date by, the Persons indicated in said Schedule.
3.20. Insurance. The Properties of the Borrower and its Subsidiaries
are insured with financially sound and reputable insurance companies which are
not Affiliates of the Borrower, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar Properties in localities where the Borrower or
such Subsidiary operates. A true and complete listing of such insurance,
including issuers, coverages and deductibles, has been provided to the Agent.
3.21. Full Disclosure. None of the representations or warranties
made by the Borrower or any of its Subsidiaries in the Loan Documents as of the
date such representations and warranties are made or deemed made, and none of
the statements contained in each exhibit, report, statement or certificate
furnished by or on behalf of the Borrower or any of its Subsidiaries in
connection with the Loan Documents (including the offering and disclosure
materials, if any, delivered by or on behalf of the Borrower to the Lenders
prior to the Closing Date), contains any untrue statement of a material fact or
omits any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
ARTICLE IV. - AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Lender shall have
any Commitment hereunder, or any Loan or other Obligation (other than
contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) shall remain unpaid or unsatisfied, unless the
Required Lenders waive compliance in writing:
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4.1. Financial Statements. The Borrower shall maintain, and shall
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to permit the
preparation of financial statements in conformity with GAAP (provided that
monthly financial statements shall not be required to have footnote disclosure
and are subject to normal year-end adjustments). The Borrower shall deliver to
the Agent and each Lender in form and detail reasonably satisfactory to the
Agent and the Required Lenders:
(a) as soon as available, but not later than ninety (90) days after
the end of each fiscal year, a copy of the audited consolidated balance sheet
of the Borrower as at the end of such year and the related consolidated
statements of income or operations, shareholders' equity and cash flows for
such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of any
nationally-recognized independent public accounting firm reasonably acceptable
to the Agent which report shall state that such consolidated financial
statements present fairly in all material respects the financial position for
the periods indicated in conformity with GAAP applied on a basis consistent
with prior years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by such accountant of any material portion of
the Borrower's or any Subsidiary's records;
(b) as soon as available, but not later than forty-five (45) days
after the end of each fiscal month of each year, a copy of the unaudited
consolidated and consolidating balance sheets of the Borrower and each of its
Subsidiaries, and the related consolidated and consolidating statements of
income, shareholders' equity and cash flows as of the end of such month and for
the portion of the fiscal year then ended, all certified on behalf of the
Borrower by a Responsible Officer as fairly presenting in all material respects
the financial position and the results of operations of the Borrower and the
Subsidiaries in accordance with GAAP, subject to normal year-end adjustments
and absence of footnote disclosure; and
(c) as soon as available, but not later than forty-five (45) days
after the end of each fiscal quarter of each year, a financial summary and
leverage calculation on the form heretofore delivered by Agent to the Borrower,
all certified on behalf of the Borrower by a Responsible Officer.
(d) concurrently with the delivery of the financial statements
pursuant to subsection 4.1(b), a copy of unaudited statements of income and
cash flow as of the end of such month and for the portion of the fiscal year
then ended, on an Acquisition by Acquisition basis (with respect to
Acquisitions consummated on or within twelve months prior to the Closing Date
and after the Closing Date, but only for the first twelve (12) months after the
closing of such Acquisition), all certified by the Borrower pursuant to a
certificate executed on its behalf by a Responsible Officer as fairly
presenting in all material respects the results of operations of the Target
acquired in each such Acquisition in accordance with GAAP, subject to normal
year-end adjustments and absence of footnote disclosure.
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4.2. Certificates; Borrowing Base Certificates; Other Information. The
Borrower shall furnish to the Agent and each Lender:
(a) concurrently with the delivery of the annual financial statements
referred to in subsection 4.1(a) above, 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 the financial statements
referred to in subsections 4.1(a) and, with respect to the last month of each
fiscal quarter, 4.1(b) above, a fully and properly completed Compliance
Certificate in the form of Exhibit 4.2(b), certified on behalf of the Borrower
by a Responsible Officer;
(c) promptly after the same are sent, copies of all financial
statements and reports which the Borrower sends to its shareholders generally;
and promptly after the same are filed, copies of all financial statements and
regular, periodic or special reports which the Borrower may make to, or file
with, the Securities and Exchange Commission or any successor or similar
Governmental Authority;
(d) concurrently with (i) the delivery of the financial statements
pursuant to subsection 4.1(b) and (ii) each Acquisition Loan Borrowing, a
Borrowing Base Certificate certified by the Borrower and executed on its behalf
by a Responsible Officer, setting forth the Borrowing Base as at the end of the
most-recently ended fiscal month, in the case of clause (i) above, and as at
the date of the applicable Acquisition Loan Borrowing, in the case of clause
(ii) above;
(e) together with each delivery of financial statements pursuant to
subsection 4.1(a) and (b) (i) to the extent prepared by Borrower or its
management, a management report, in reasonable detail, signed by the chief
financial officer of the Borrower, describing the operations and financial
condition of the Borrower and its Subsidiaries for the month and the portion of
the fiscal year then ended (or for the fiscal year then ended in the case of
annual financial statements), and (ii) a report setting forth in comparative
form the corresponding figures for the corresponding periods of the previous
fiscal year and the corresponding figures from the most recent projections for
the current fiscal year delivered pursuant to subsection 4.2(f) and discussing
the reasons for any significant variations;
(f) as soon as available and in any event no later than the last day
of each fiscal year of the Borrower, projections of the Borrower's (and its
Subsidiaries') consolidated and consolidating financial performance for the
forthcoming three fiscal years on a year by year basis, and for the forthcoming
fiscal year on a month by month basis;
(g) annually, concurrently with the Borrower's delivery of the
projections under subsection 4.2(f), the Borrower shall supplement in writing
and deliver to the Agent revisions of
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and supplements to the Schedules hereto related to Article III hereof to the
extent necessary to disclose new or changed facts or circumstances after the
Closing Date; provided that delivery or receipt of such subsequent disclosure
shall not constitute a waiver by the Agent or any Lender or a cure of any
Default or Event of Default resulting in connection with the matters disclosed;
(h) promptly upon receipt thereof, copies of any reports submitted by
the Borrower's certified public accountants in connection with each annual,
interim or special audit or review of any type of the financial statements or
internal control systems of the Borrower made by such accountants, including
any comment letters submitted by such accountants to management of the Borrower
in connection with their services;
(i) at any time if a Default or an Event of Default shall have
occurred and be continuing, the Agent may, or may require the Borrower to, at
the Borrower's expense, obtain appraisals in form and substance and from
appraisers reasonably satisfactory to the Agent stating the then current fair
market value of all or any portion of the real or personal property of the
Borrower or any of its Subsidiaries; and
(j) promptly, such additional business, financial, corporate affairs
and other information as the Agent may from time to time reasonably request.
4.3. Notices. The Borrower shall promptly notify the Agent and each
Lender of any of the following, promptly (and in no event later than three (3)
Business Days after a Responsible Officer becoming aware thereof):
(a) the occurrence or existence of any Default or Event of Default,
or any event or circumstance that foreseeably will become a Default or Event of
Default;
(b) any breach or non-performance of, or any default under, any
Contractual Obligation of the Borrower or any of its Subsidiaries, or any
violation of, or non-compliance with, any Requirement of Law, which could
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect, including a description of such breach, non-
performance, default, violation or non-compliance and the steps, if any, the
Borrower or such Subsidiary has taken, is taking or proposes to take in respect
thereof;
(c) any dispute, litigation, investigation, proceeding or suspension
which may exist at any time between the Borrower or any of its Subsidiaries and
any Governmental Authority which could reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect;
(d) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary (i) in which
the amount of damages claimed is $500,000 (or its equivalent in another
currency or currencies) or more, (ii) in which injunctive or similar relief is
sought and which would reasonably be expected to be adversely determined and,
if so determined, would reasonably be expected to have a Material Adverse
Effect, or (iii) in
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which the relief sought is an injunction or other stay of the performance of
this Agreement, any Loan Document or any Related Agreement;
(e) any of the following if the same could reasonably be expected to
have a Material Adverse Effect: (i) any enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened against
the Borrower or any of its Subsidiaries or any of their respective Properties
pursuant to any applicable Environmental Laws, (ii) any other Environmental
Claims, and (iii) any environmental or similar condition on any real property
adjoining the property of the Borrower or any Subsidiary that could reasonably
be anticipated to cause Borrower's or any of its Subsidiaries' property or any
part thereof to be subject to any material restrictions on the ownership,
occupancy, transferability or use of such property under any Environmental
Laws;
(f) any of the following if the same could reasonably be expected to
have a Material Adverse Effect, together with a copy of any notice with respect
to such event that may be required to be filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Borrower or any
member or its Controlled Group with respect to such event:
(i) an ERISA Event;
(ii) the adoption of any new Qualified Plan that is subject to
Title IV of ERISA or Section 412 of the Code by any member of the
Controlled Group;
(iii) the adoption of any amendment to a Qualified Plan that is
subject to Title IV of ERISA or Section 412 of the Code, if such
amendment results in a material increase in benefits or unfunded
liabilities; or
(iv) the commencement of contributions by any member of the
Controlled Group to any Qualified Plan that is subject to Title IV of
ERISA or Section 412 of the Code;
(g) any Material Adverse Effect subsequent to the date of the most
recent audited financial statements of the Borrower delivered to the Lenders
pursuant to this Agreement;
(h) any material change in accounting policies or financial reporting
practices by the Borrower or any of its Subsidiaries;
(i) any labor controversy resulting in or threatening to result in
any strike, work stoppage, boycott, shutdown or other labor disruption against
or involving the Borrower or any of its Subsidiaries if the same could
reasonably be expected to have a Material Adverse Effect; and
(j) the creation, establishment or acquisition of any Subsidiary.
Each notice pursuant to this Section shall be accompanied by a written
statement by a Responsible Officer on behalf of Borrower setting forth details
of the occurrence referred to
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therein, and stating what action the Borrower proposes to take with respect
thereto and at what time. Each notice under subsection 4.3(a) shall describe
with particularity any and all clauses or provisions of this Agreement or other
Loan Document that have been breached or violated.
4.4. Preservation of Corporate Existence, Etc. The Borrower shall,
and shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation except, with respect to Subsidiaries, in connection with
transactions permitted by Section 5.3;
(b) preserve and maintain in full force and effect all rights,
privileges, qualifications, permits, licenses and franchises necessary in the
normal conduct of its business except in connection with transactions permitted
by Section 5.3 and sales of assets permitted by Section 5.2 and except as could
not reasonably be expected to have a Material Adverse Effect;
(c) use its reasonable efforts, in the Ordinary Course of Business,
to preserve its business organization and preserve the goodwill and business of
the customers, suppliers and others having material business relations with it,
the non-preservation of which could reasonably be expected to have a Material
Adverse Effect; and
(d) preserve or renew all of its registered trademarks, trade names
and service marks, the non-preservation of which could reasonably be expected
to have a Material Adverse Effect.
4.5. Maintenance of Property. The Borrower shall maintain, and shall
cause each of its Subsidiaries to maintain, and preserve all its Property which
is used or useful in its business in good working order and condition, ordinary
wear and tear excepted and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
4.6. Insurance. The Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its Properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons, including workers'
compensation insurance, public liability and property and casualty insurance,
which amounts shall not be reduced by the Borrower or any of its Subsidiaries
in the absence of thirty (30) days' prior notice to the Agent and business
interruption insurance in an amount not less than $2,500,000. All property
damage and casualty insurance shall name the Agent as loss payee/mortgagee, all
liability insurance shall name the Agent and the Lenders as additional insureds
and all business interruption insurance shall name the Agent as assignee. Upon
request of the Agent or any Lender, the Borrower shall furnish the Agent, with
sufficient copies for each Lender, at reasonable intervals (but not more than
once per calendar year) a certificate of a Responsible Officer on behalf of the
Borrower (and, if requested by the Agent, any insurance
32
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broker of the Borrower) setting forth the nature and extent of all insurance
maintained by the Borrower and its Subsidiaries in accordance with this Section
4.6. Unless the Borrower provides the Agent with evidence of the insurance
coverage required by this Agreement within thirty (30) days' following the
Agent's request of such evidence, or if the Agent has a reasonable basis to
believe such insurance is not in effect or will be cancelled without action by
the Borrower to prevent such cancellation, the Agent may purchase insurance at
the Borrower's expense to protect the Agent's and the Lenders' interests in the
Borrower's and its Subsidiaries' properties. This insurance may, but need not,
protect the Borrower's and its Subsidiaries' interests. The coverage that the
Agent purchases may not pay any claim that the Borrower or any Subsidiary makes
or any claim that is made against the Borrower or any Subsidiary in connection
with said property. The Borrower may later cancel any insurance purchased by
the Agent, but only after providing the Agent with evidence that the Borrower
has obtained insurance as required by this Agreement. If the Agent purchases
insurance, the Borrower will be responsible for the costs of that insurance,
including interest and any other charges the Agent may impose in connection
with the placement of insurance, until the effective date of the cancellation
or expiration of the insurance. The costs of the insurance may be added to the
Obligations. The costs of the insurance may be more than the cost of insurance
the Borrower may be able to obtain on its own.
4.7. Payment of Obligations. The Borrower shall, and shall cause its
Subsidiaries to, pay, discharge and perform as the same shall become due and
payable or required to be performed, all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings diligently prosecuted which stay the
enforcement of any Lien and for which adequate reserves in accordance with GAAP
are being maintained by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its Property unless the same are being contested in good faith by
appropriate proceedings diligently prosecuted which stay the imposition or
enforcement of the Lien and for which adequate reserves in accordance with GAAP
are being maintained by Borrower;
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained herein and/or in any instrument or agreement
evidencing such Indebtedness; and
(d) the performance of all obligations under any Contractual
Obligation to which Borrower or any of its Subsidiaries is bound, or to which
it or any of its properties is subject, including the Related Agreements,
except where the failure to perform would not reasonably be expected to have a
Material Adverse Effect.
4.8. Compliance with Laws. The Borrower shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects, with all
Requirements of Law of any Governmental Authority having jurisdiction over it
or its business (including, without limitation,
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all Environmental Laws), except (a) such as may be contested in good faith by
appropriate proceedings diligently prosecuted without risk of loss of any
Collateral, (b) as to which a bona fide dispute exists, (c) for which
appropriate reserves have been established on the Borrower's financial
statements and (d) where the failure to comply could not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
Upon the written request of the Agent or any Lender, the Borrower shall
submit and cause each of its Subsidiaries to submit, to the Agent with
sufficient copies for each Lender, at the Borrower's sole cost and expense, at
reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue
identified in any notice or report required pursuant to Section 4.3, that
could, individually or in the aggregate, result in liability in excess of
$1,000,000.
4.9. Inspection of Property and Books and Records. The Borrower
shall maintain and shall cause each of its Subsidiaries to maintain proper
books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower and
such Subsidiaries. The Borrower shall permit, and shall cause each of its
Subsidiaries to permit, representatives and independent contractors of the
Agent (at the expense of the Borrower not to exceed one (1) time per year
unless an Event of Default has occurred and is continuing), or any Lender (at
such Lender's expense unless an Event of Default shall have occurred and be
continuing), to visit and inspect any of their respective Properties, to
examine their respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and
independent public accountants, at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice
to the Borrower; provided, however, when an Event of Default exists the Agent
or any Lender may do any of the foregoing at the expense of the Borrower at any
time during normal business hours and without advance notice.
4.10. Use of Proceeds. The Borrower shall use the proceeds of (i)
the initial Acquisition Loan funded on the Closing Date solely to finance the
consummation of the Related Transactions on the Closing Date, the refinancing
of the Prior Indebtedness and the payment of fees and expenses in connection
with the foregoing, (ii) the Acquisition Loans funded after the Closing Date
solely to finance the purchase price of any Acquisition permitted hereunder
(including the repayment of prior Indebtedness of the Target in connection
therewith) and the payment of fees and expenses in connection with such
Acquisition and (iii) the Revolving Loans funded after the Closing Date solely
for working capital and other general corporate purposes not in contravention
of any Requirement of Law and not in violation of this Agreement (but excluding
any purpose set forth in clause (ii) above).
4.11. Solvency. The Borrower and its Subsidiaries, on a consolidated
basis, shall at all times be Solvent.
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4.12. Further Assurances. (a) The Borrower shall ensure that all
written information, exhibits and reports furnished to the Agent or the Lenders
do not and will not contain any untrue statement of a material fact and do not
and will not omit to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made, and will promptly disclose to the Agent and the Lenders and correct
any defect or error that may be discovered therein or in any Loan Document or
in the execution, acknowledgment or recordation thereof.
(b) Promptly upon request by the Agent, the Borrower shall (and shall
cause any of its Subsidiaries to) take such additional actions as the Agent may
reasonably require from time to time in order (i) to carry out more effectively
the purposes of this Agreement or any other Loan Document, (ii) to subject to
the Liens created by any of the Collateral Documents any of the Properties,
rights or interests covered by any of the Collateral Documents, (iii) to
perfect and maintain the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby, and (iv) to
better assure, convey, grant, assign, transfer, preserve, protect and confirm
to the Agent and Lenders the rights granted or now or hereafter intended to be
granted to the Agent and the Lenders under any Loan Document or under any other
document executed in connection therewith. Without limiting the generality of
the foregoing and except as otherwise approved in writing by the Required
Lenders, the Borrower shall cause each of its Subsidiaries to guaranty the
Obligations pursuant to the Guarantee and to grant to the Agent, for the
benefit of the Agent and the Lenders, a security interest in all of such
Subsidiary's property to secure such guaranty. Furthermore and except as
otherwise approved in writing by the Lenders, pursuant to the Pledge Agreement
(or, in the case of a Subsidiary of the Borrower which is the direct parent of
a Subsidiary, pursuant to a pledge agreement substantially in the form of the
Pledge Agreement) the Borrower (or such parent Subsidiary) shall pledge the
stock or other equity interest of each of its Subsidiaries to the Agent, for
the benefit of the Agent and the Lenders, to secure the Obligations. In
connection with each pledge of stock or other equity interests, the Borrower
shall deliver, or cause to be delivered, to Agent, the items described in
subsection 2.1(d)(iii), if applicable.
ARTICLE V. - NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that, so long as any Lender
shall have any Commitment hereunder, or any Loan or other Obligation (other
than contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) shall remain unpaid or unsatisfied, unless the
Required Lenders waive compliance in writing:
5.1. Limitation on Liens. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its Property, whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(a) any Lien existing on the Property of the Borrower or its
Subsidiaries on the Closing Date and set forth in Schedule 5.1 securing
Indebtedness outstanding on such date and
35
<PAGE> 42
permitted by subsection 5.5(c), including replacement Liens on the Property
currently subject to such Liens;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
(i) which are not delinquent or remain payable without penalty, or (ii) the
non-payment thereof is permitted by Section 4.7, provided that, in respect of
this clause (ii), all such Liens secure claims in the aggregate at any time
outstanding for Borrower and its Subsidiaries not exceeding $2,500,000;
(d) statutory Liens of carriers, warehousemen, mechanics, landlords,
materialmen or repairmen or other similar Liens arising in the Ordinary Course
of Business (and contractual landlords Liens, to the extent granted under any
lease entered into in the Ordinary Course of Business prior to the Closing Date
and so long as such Liens remain unperfected) which are not delinquent for more
than ninety (90) days or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings diligently prosecuted,
which proceedings have the effect of preventing the forfeiture or sale of the
Property subject thereto and for which adequate reserves in accordance with
GAAP are being maintained;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the Ordinary Course of Business in connection
with workers' compensation, unemployment insurance and other social security
legislation or to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeals bonds, bids, leases, governmental contract,
trade contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money) or to
secure liability to insurance carriers;
(f) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
Liens secure claims in the aggregate at any time outstanding for the Borrower
and its Subsidiaries do not exceed $1,000,000;
(g) easements, rights-of-way, zoning and other restrictions, minor
defects or other irregularities in title, and other similar encumbrances
incurred in the Ordinary Course of Business which, 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 based upon its present use or interfere
in any material respect with the ordinary conduct of the businesses of the
Borrower and its Subsidiaries;
(h) Liens on any Property acquired or held by the Borrower or its
Subsidiaries in the Ordinary Course of Business, securing Indebtedness incurred
or assumed for the purpose of financing (or refinancing) all or any part of the
cost of acquiring such Property and permitted under subsection 5.5(d); provided
that (i) any such Lien attaches to such Property concurrently with or within
twenty (20) days after the acquisition thereof, (ii) such Lien attaches solely
to the Property so acquired in such transaction (and improvements, additions
and accessions thereto)
36
<PAGE> 43
and proceeds therefrom, and (iii) the principal amount of the debt secured
thereby does not exceed 100% of the cost of such Property;
(i) Liens securing Capital Lease Obligations permitted under
subsection 5.5(d);
(j) any interest or title of a lessor or sublessor under any lease
permitted by this Agreement;
(k) Liens arising from precautionary UCC financing statements filed
under any lease permitted by this Agreement; and
(l) banker's liens in favor of any bank at which the Borrower or any
of its Subsidiaries maintain deposit accounts to the extent relating to
customary fees and expenses of such bank incurred in connection with the
maintenance of deposit accounts in the Ordinary Course of Business;
(m) Liens securing obligations under or in respect of Rate Contracts
permitted under subsection 5.9(b); and
(n) Liens consented to by the Agent and the Majority Lenders in
connection with Acquisitions permitted hereunder.
5.2. Disposition of Assets. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) any Property (including accounts and notes receivable,
with or without recourse) or enter into any agreement to do any of the
foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the Ordinary Course of Business;
(b) dispositions not otherwise permitted hereunder which are made for
fair market value and, to the extent required by Section 1.8, the mandatory
prepayment in the amount of the Net Proceeds of such disposition is made as
provided in Section 1.8; provided, that (i) at the time of any disposition, no
Event of Default shall exist or shall result from such disposition, (ii) the
aggregate sales price from such disposition shall be paid in cash or in
productive assets of a kind used or useable in the business of Borrower, and
(iii) the aggregate value of all assets so sold by the Borrower and its
Subsidiaries, together, shall not exceed in any fiscal year $5,000,000 and;
(iv) after giving effect to such disposition, Borrower is in compliance on a
pro forma basis with the covenants set forth in Article 6, recomputed for the
most recent month for which financial statements have been delivered; and
(c) Investments of cash permitted under Section 5.4.
37
<PAGE> 44
5.3. Consolidations and Mergers. The Borrower shall not, and shall
not suffer or permit any of its Subsidiaries to, merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except that (i) upon not less than one (1) Business Day's prior written notice
to Agent, any Subsidiary of the Borrower may merge with, or dissolve or
liquidate into, a Wholly-Owned Subsidiary of Borrower, provided that such
Wholly-Owned Subsidiary shall be the continuing or surviving corporation;
provided, further that no Subsidiary of the Borrower shall merge with Southco,
Inc., and neither the Borrower nor any Subsidiary of the Borrower shall convey
any of its assets to Southco, Inc., until such time as all of the capital stock
of Southco, Inc. is pledged to the Agent and the certificates evidencing such
shares are delivered to the Agent and (ii) Acquisitions may be consummated in
accordance with Section 5.16.
5.4. Loans and Investments. The Borrower shall not and shall not
suffer or permit any of its Subsidiaries to (i) purchase or acquire, or make
any commitment therefor, any capital stock, equity interest, or any obligations
or other securities of, or any interest in, any Person, including the
establishment or creation of a Subsidiary, or (ii) make or commit to make any
Acquisitions, or any other acquisition of all or substantially all of the
assets of another Person, or of any business or division of any Person,
including without limitation, by way of merger, consolidation or other
combination or (iii) make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of the Borrower (the items described in clauses (i),
(ii) and (iii) are referred to as "Investments"), except for:
(a) Investments in cash and Cash Equivalents;
(b) extensions of credit by the Borrower to any of its Wholly-Owned
Subsidiaries provided the obligations of each obligor shall be evidenced by
notes, which notes shall be pledged to Agent, for the benefit of Agent and
Lenders, and have such other terms as Agent may reasonably require;
(c) the Borrower's existing Investment in its Subsidiaries as of the
Closing Date;
(d) loans and advances to employees in the ordinary course of
business not to exceed $1,000,000 in the aggregate at any time outstanding;
(e) Rate Contracts permitted under subsection 5.9(b); and
(f) Acquisitions permitted under Section 5.16.
5.5. Limitation on Indebtedness. The Borrower shall not, and shall
not suffer or permit any of its Subsidiaries to, create, incur, assume, suffer
to exist, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
38
<PAGE> 45
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations described in
clause (i) of the definition thereof and permitted pursuant to Section 5.9;
(c) Indebtedness existing on the Closing Date and set forth in
Schedule 5.5 including extensions and refinancings thereof which do not
increase the principal amount of such Indebtedness as of the date of such
extension or refinancing;
(d) Indebtedness not to exceed $1,000,000 in the aggregate at any
time outstanding, consisting of Capital Lease Obligations or secured by Liens
permitted by subsection 5.1(h) and including refinancings and extensions
thereof which do not increase the principal amount of such Indebtedness as of
the date of such extension or refinancing and which are otherwise on terms and
conditions that taken as a whole are no less favorable to the Borrower or any
of its Subsidiaries than the terms of the Indebtedness being extended or
refinanced;
(e) unsecured intercompany Indebtedness permitted pursuant to
subsection 5.4(b);
(f) Indebtedness evidenced by the Senior Notes in an aggregate
principal amount not to exceed $270,000,000;
(g) other unsecured Indebtedness not exceeding in the aggregate at
any time outstanding $10,000,000; and
(h) Indebtedness disclosed to, and consented to by, the Agent and the
Majority Lenders, incurred or assumed in connection with Acquisitions permitted
hereunder and including refinancings and extensions thereof which do not
increase the principal amount of such Indebtedness as of the date of such
extension on refinancing and which are otherwise on terms and conditions that
taken as a whole are no less favorable to the Borrower or any of its
Subsidiaries than the terms of the Indebtedness being extended or refinanced.
5.6. Transactions with Affiliates. The Borrower shall not, and shall
not suffer or permit any of its Subsidiaries to, enter into any transaction
with any Affiliate of the Borrower or of any such Subsidiary, except:
(a) among Borrower and its Subsidiaries which are guarantors under
the Guaranty;
(b) customary directors' indemnification arrangements;
(c) as expressly permitted by this Agreement (including without
limitation, Section 5.7); or
(d) in the Ordinary Course of Business and pursuant to the reasonable
requirements of the business of the Borrower or such Subsidiary;
39
<PAGE> 46
and, in the case of clause (d), upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Borrower or such
Subsidiary and which are disclosed in writing to Agent.
5.7. Management Fees and Compensation. The Borrower shall not, and
shall not permit any of its Subsidiaries to pay any management, consulting or
similar fees to any Affiliate of the Borrower or to any officer, director or
employee of the Borrower or any of its Subsidiaries or any Affiliate of the
Borrower except (a) payment of reasonable compensation to officers and
employees for actual services rendered to Borrower and its Subsidiaries in the
Ordinary Course of Business, (b) payment of reasonable and customary directors'
fees and reimbursement of actual out-of-pocket expenses incurred in connection
with attending board of director meetings.
5.8. Use of Proceeds. The Borrower shall not and shall not suffer or
permit any of its Subsidiaries to use any portion of the Loan proceeds,
directly or indirectly, to purchase or carry Margin Stock or repay or otherwise
refinance Indebtedness of the Borrower or others incurred to purchase or carry
Margin Stock, or otherwise in any manner which is in contravention of any
Requirement of Law or in violation of this Agreement.
5.9. Contingent Obligations. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Contingent Obligations except in respect of the Obligations and
except:
(a) endorsements for collection or deposit in the Ordinary Course of
Business;
(b) Rate Contracts entered into in the Ordinary Course of Business
with the Agent's prior written consent;
(c) Contingent Obligations of the Borrower and its Subsidiaries
existing as of the Closing Date and listed in Schedule 5.9, including extension
and renewals thereof which do not increase the amount of such Contingent
Obligations as of the date of such extension or renewal;
(d) Contingent Obligations incurred in the Ordinary Course of
Business with respect to surety and appeal bonds, performance bonds and other
similar obligations;
(e) Contingent Obligations arising under indemnity agreements to
title insurers to cause such title insurers to issue to Agent title insurance
policies; and
(f) Contingent Obligations arising with respect to customary
indemnification obligations in favor of (i) sellers in connection with
Acquisitions permitted hereunder or consummated prior to the Closing Date and
(ii) purchasers in connection with dispositions permitted under subsection
5.2(b).
5.10. Compliance with ERISA. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to:
40
<PAGE> 47
(a) terminate any Plan subject to Title IV of ERISA so as to result
in any material liability to the Borrower;
(b) permit to exist any ERISA Event or any other event or condition,
which would reasonably be expected to have a Material Adverse Effect;
(c) make a complete or partial withdrawal (within the meaning of
ERISA Section 4201) from any Multiemployer Plan so as to result in any material
liability to the Borrower;
(d) enter into any new Plan or modify any existing Plan so as to
increase its obligations thereunder which would reasonably be expected to have
a Material Adverse Effect; or
(e) permit the present value of all nonforfeitable accrued benefits
under any Plan (using the actuarial assumptions utilized by the PBGC upon
termination of a Plan) materially to exceed the fair market value of Plan
assets allocable to such benefits, all determined as of the most recent
valuation date for each such Plan.
5.11. Restricted Payments. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, (i) declare or make any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of its capital stock,
partnership interests, membership interests or other equity securities, (ii)
purchase, redeem or otherwise acquire for value any shares of its capital
stock, partnership interests, membership interests or other equity securities
or any warrants, rights or options to acquire such shares, interests or
securities now or hereafter outstanding or (iii) make any payment or prepayment
of principal of, premium, if any, interest, redemption, exchange, purchase,
retirement, defeasance, sinking fund or similar payment with respect to,
Subordinated Indebtedness (the items described in clauses (i), (ii) and (iii)
are referred to as "Restricted Payments"); except that any Wholly-Owned
Subsidiary of the Borrower may declare and pay dividends to the Borrower or any
Wholly-Owned Subsidiary of the Borrower, and except that the Borrower may:
(a) declare and make dividend payments or other distributions payable
solely in its common stock or exchange shares of 13% Exchangeable Preferred
Stock (Series A) for substantially identical shares of 13% Exchangeable
Preferred Stock (Series B) pursuant to the Registration Rights Agreement
contemplated by the Securities Purchase Agreement;
(b) to the extent required by the terms of any class of Preferred
Stock, declare and make dividend payments to the holders of such class of
Preferred Stock payable solely in such class of Preferred Stock; and
(c) redeem from management stockholders shares of the Borrower's
common stock or warrants or options to acquire any such shares provided all of
the following conditions are satisfied:
41
<PAGE> 48
(i) no Default or Event of Default has occurred and is
continuing or would arise as a result of such redemption;
(ii) after giving effect to such redemption, the Borrower is in
compliance on a pro forma basis with the covenants set
forth in Article 6, recomputed for the most recent month
for which financial statements have been delivered;
(iii) the aggregate redemptions permitted in any fiscal year of
the Borrower shall not exceed $1,000,000; and
(iv) after giving effect to such redemption, the Maximum
Revolving Loan Balance exceeds the aggregate outstanding
principal balance of Revolving Loans by not less than
$2,500,000.
5.12. Change in Business. The Borrower shall not, and shall not
permit any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by it on the
date hereof.
5.13. Change in Structure; Issuance of Disqualified Stock. (a)
Except as expressly permitted under Section 5.3, the Borrower shall not and
shall not permit any of its Subsidiaries to amend its certificate of
incorporation or by-laws in any material respect or in any respect adverse to
the Agent or the Lenders. The Borrower shall not cause any Indebtedness other
than the Obligations to be designated as "Permitted Indebtedness" under clause
(vi) of the definition thereof set forth in the Indenture.
(b) Issue any shares of Disqualified Stock, or warrants or securities
convertible into or exercisable or exchangeable for Disqualified Stock, or
amend the terms of its outstanding capital stock in any respect adverse to the
Agent or the Lenders.
5.14. Accounting Changes. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change the fiscal year of the Borrower or of any of its consolidated
Subsidiaries.
5.15. Amendments to Related Agreements; Indenture. (a) The Borrower
shall not (i) amend, supplement, waive or otherwise modify any provision of,
the Related Agreements in a manner adverse to Agent or Lenders or which could
reasonably be expected to have a Material Adverse Effect, or (ii) take or fail
to take any action under the Related Agreements that could reasonably be
expected to have a Material Adverse Effect.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, prepay any sums due under the Indenture or the Senior Notes or
modify the terms of the Indenture or the Senior Notes (except pursuant to
Section 9.01 of the Indenture).
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<PAGE> 49
5.16. Acquisitions.
(a) When the Borrower or any of its Subsidiaries desires to make an
Acquisition, the Borrower shall deliver, or cause to be delivered, to the Agent
and each Lender, not less than ten (10) Business Days (three (3) Business Days
in the case of an Acquisition in respect of which the Acquisition Cost is less
than $10,000,000) prior to consummation of such Acquisition, an acquisition
summary with respect to the Target and such potential Acquisition, such summary
to include a reasonably detailed description of the Target and its business
(including financial information) and operating results (including financial
statements), the terms and conditions, including economic terms, of the
proposed Acquisition, and the Borrower's calculation of Pro Forma EBITDA of
such Target.
(b) The Borrower will not consummate and will not permit any
Subsidiary of the Borrower to consummate any Acquisition unless all of the
following conditions are satisfied:
(i) the Target must be in the same or a related line of
business as the Borrower and its Subsidiaries, and the transaction must
be structured as an asset purchase by, or merger with, a Wholly-Owned
Subsidiary or a purchase by the Borrower or a Wholly-Owned Subsidiary of
all of the capital stock and other equity interests of such Target;
(ii) the Target must not have material contingent liabilities
unless either (x) such liabilities are cash collateralized pursuant to
appropriate escrow arrangements or are covered by insurance or (y) such
liabilities, individually and when combined with contingent liabilities
of Targets theretofore acquired by the Borrower after the Closing Date,
do not exceed, in the aggregate, $1,000,000;
(iii) no Default or Event of Default shall have occurred and be
continuing or would arise as a result of such Acquisition;
(iv) on a pro forma basis after giving effect to such
Acquisition, including the incurrence or assumption of Indebtedness in
connection therewith and the funding of Loans, if any, the Leverage
Ratio on a pro forma basis shall not exceed the Maximum Leverage Ratio
set forth in Section 6.2;
(v) the aggregate purchase price (including the fair market
value of any non-cash component of such purchase price and amounts paid
to refinance prior Indebtedness of the Target) to be paid by the
Borrower or its Subsidiaries (all such items being collectively referred
to as the "Acquisition Cost") for any single Acquisition shall be less
than $10,000,000;
(vi) the Agent shall have approved the Borrower's computation
of Pro Forma EBITDA, notwithstanding that consent to the Acquisition
with respect to which Pro Forma EBITDA is being determined may not be
required; and
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<PAGE> 50
(vii) at the time and immediately after the consummation of any
such Acquisition, the Maximum Revolving Loan Balance shall exceed the
outstanding principal balance of the Revolving Loans by not less than
$2,500,000.
In the event any of the foregoing conditions has not been satisfied,
then the Agent's and the Majority Lenders' consent to the Acquisition shall be
required; provided that such consent shall not be unreasonably withheld if all
of the foregoing conditions have been satisfied other than the condition set
forth in clause (v) above.
(c) It is understood and agreed that the Agent's and each Lender's
decision to consent to an Acquisition, if required, shall be based upon the
Agent's and such Lender's evaluation and approval of the business and financial
condition of the Target and review and approval of the Acquisition Documents in
connection with the proposed Acquisition.
(d) No later than ten (10) Business Days (three (3) Business Days in
the case of an Acquisition in respect of which the Acquisition Cost is less
than $10,000,000) after the Agent's and the Lenders' receipt of the acquisition
summary, the Agent will notify the Borrower, in writing, whether or not the
Agent and the Majority Lenders consent to the proposed Acquisition on the terms
set forth in the acquisition summary, if such consent is otherwise required
hereunder. If there is any material change to the terms of the proposed
Acquisition with respect to which the consent of the Agent and the Majority
Lenders is required (or any proposed Acquisition which, due to such material
change, shall or would require the consent of the Agent and the Majority
Lenders), any adverse change in Pro Forma EBITDA or any other material adverse
change to the Target which is the subject of such proposed Acquisition, the
Borrower shall notify the Agent and the Lenders of the same and further consent
will be required, which consent will be granted or denied within ten (10)
Business Days (three (3) Business Days in the case of an Acquisition in respect
of which the Acquisition Cost is less than $10,000,000) of receipt of written
notice of such material change.
(e) The foregoing provisions do not impair, vitiate or affect the
conditions to the Lenders' obligations to fund Loans, or the Agent's
obligations to issue Lender Letters of Credit or Letter of Credit Participation
Agreements, as provided in Sections 2.1, 2.2 and 2.3 of this Agreement.
ARTICLE VI. - FINANCIAL COVENANTS
The Borrower covenants and agrees that, so long as any Lender shall have
any Commitment hereunder, or any Loan or other Obligation (other than
contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) shall remain unpaid or unsatisfied, unless the
Required Lenders waive compliance in writing:
6.1. Capital Expenditures. The Borrower and its Subsidiaries shall
not make or commit to make Capital Expenditures for any fiscal year set forth
below to exceed the amount set forth in the table below (the "Capital
Expenditure Limitation") with respect to such fiscal year:
44
<PAGE> 51
<TABLE>
<CAPTION>
Fiscal Year Capital Expenditure Limitation
----------- ------------------------------
<S> <C>
1998 $17,000,000
1999 $17,000,000
-2000 $20,000,000
2001 $22,000,000
2002 and each fiscal year thereafter $25,000,000
</TABLE>
; provided, however, in the event the Borrower and its Subsidiaries do not
expend the entire Capital Expenditure Limitation in any fiscal year, Borrower
and its Subsidiaries may carry forward to the immediately succeeding fiscal
year 50% of the unutilized portion. All Capital Expenditures shall first be
applied to reduce the applicable Capital Expenditure Limitation and then to
reduce the carry-forward from the previous fiscal year, if any. "Capital
Expenditures" shall be calculated in the manner set forth in Exhibit 4.2(b).
6.2. Leverage Ratio. The Borrower shall not permit its Leverage
Ratio determined as of each date set forth below for the twelve month period
then ended to be greater than the maximum ratio set forth in the table below
opposite such date:
<TABLE>
<CAPTION>
Date Maximum Leverage Ratio
---- ----------------------
<S> <C>
September 30, 1998 7.00
December 31, 1998 7.00
March 31, 1999 6.75
June 30, 1999 6.50
September 30, 1999 6.25
December 31, 1999 6.25
March 31, 2000 6.00
June 30, 2000 5.75
September 30, 2000 5.50
December 31, 2000 5.50
March 31, 2001 5.25
June 30, 2001 5.00
September 30, 2001 5.00
December 31, 2001 4.75
March 31, 2002 4.75
June 30, 2002 4.50
September 30, 2002 and the last day of 4.25
each fiscal quarter thereafter
</TABLE>
"Leverage Ratio" shall be calculated in the manner set forth in Exhibit 4.2(b).
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<PAGE> 52
6.3. Fixed Charge Coverage Ratio. The Borrower shall not permit its
Fixed Charge Coverage Ratio for each of the periods set forth below to be less
than the minimum ratio set forth in the table below for such period:
<TABLE>
<CAPTION>
Period Minimum Fixed Charge Coverage Ratio
------ -----------------------------------
<S> <C>
Closing Date through September 30, 1998 1.10
Closing Date through December 31, 1998 1.10
Closing Date through March 31, 1999 1.10
Twelve-month period ending June 30, 1999 1.15
Twelve-month period ending September 30, 1999 1.15
</TABLE>
The Borrower shall not permit its Fixed Charge Coverage Ratio for the
twelve-month period ending on December 31, 1999 and for the twelve-month period
ending on the last day of each fiscal quarter thereafter to be less than 1.20.
<TABLE>
<CAPTION>
Date Minimum Fixed Charge Coverage Ratio
---- -----------------------------------
<S> <C>
</TABLE>
"Fixed Charge Coverage Ratio" shall be calculated in the manner set forth in
Exhibit 4.2(b).
6.4. Interest Coverage Ratio. The Borrower shall not permit its
Interest Charge Coverage Ratio for each of the periods set forth below to be
less than the minimum ratio set forth in the table below for such period:
<TABLE>
<CAPTION>
Period Minimum Interest Charge Coverage Ratio
------ --------------------------------------
<S> <C>
Closing Date through September 30, 1998 1.50
Closing Date through December 31, 1998 1.50
Closing Date through March 31, 1999 1.50
</TABLE>
The Borrower shall not permit its Interest Coverage Ratio determined as
of each date set forth below for the twelve months then ended to be less than
the minimum ratio set forth in the table below opposite such date:
<TABLE>
<CAPTION>
Date Minimum Interest Coverage Ratio
---- -------------------------------
<S> <C>
June 30, 1999 1.50
September 30, 1999 1.50
December 31, 1999 1.60
March 31, 2000 1.60
June 30, 2000 1.75
September 30, 2000 1.75
December 31, 2000 1.75
</TABLE>
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<PAGE> 53
<TABLE>
<S> <C>
March 31, 2001 1.90
June 30, 2001 1.90
September 30, 2201 2.00
December 31, 2001 2.00
March 31, 2002 2.10
June 30, 2002 and the last day of each fiscal 2.25
quarter thereafter
</TABLE>
"Interest Coverage Ratio" shall be calculated in the manner set forth in
Exhibit 4.2(b).
ARTICLE VII. - EVENTS OF DEFAULT
7.1. Event of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. The Borrower fails to pay, (i) when and as
required to be paid herein, any amount of principal of or interest on any Loan,
including after maturity of the Loans, whether by acceleration or otherwise, or
(ii) within five (5) days after the same shall become due, any fee or any other
amount payable hereunder or pursuant to any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
the Borrower or any of its Subsidiaries made or deemed made herein, in any Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Borrower, any of its Subsidiaries, or their respective
Responsible Officers, furnished at any time under this Agreement, or in or
under any Loan Document, shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Borrower fails to perform or observe
any term, covenant or agreement contained in Sections 4.1, 4.2(b), 4.2(d),
4.9, 4.13 or the first sentence of Section 4.6 or Article V or Article VI
hereof; or
(d) Other Defaults. The Borrower or any of its Subsidiaries fails
to perform or observe any other term, covenant or agreement contained in this
Agreement or any Loan Document, and such default shall continue unremedied for
a period of thirty (30) days after the date upon which written notice thereof
is given to the Borrower by the Agent or Required Lenders; or
(e) Cross-Default. The Borrower or any of its Subsidiaries (i)
fails to make any payment in respect of the Senior Notes or any other
Indebtedness (other than the Obligations) or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $2,500,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and such
failure continues after the applicable grace or notice period, if any,
specified in the document relating thereto on the date of such failure; or (ii)
fails to perform or observe any other condition or covenant, or any
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<PAGE> 54
other event shall occur or condition exist, under any agreement or instrument
relating to any such Indebtedness or Contingent Obligation, if the effect of
such failure, event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The Borrower or any of its
Subsidiaries (i) ceases or fails to be Solvent, (ii) generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(iii) voluntarily ceases to conduct its business in the ordinary course; (iv)
commences any Insolvency Proceeding with respect to itself; or (v) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any Subsidiary of the
Borrower, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower's or
any of its Subsidiaries' Properties, and any such proceeding or petition shall
not be dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within sixty
(60) days after commencement, filing or levy; (ii) the Borrower or any of its
Subsidiaries admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or (iii) the Borrower or any of
its Subsidiaries acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
Property or business; or
(h) ERISA. (i) A member of the Controlled Group shall fail to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its Withdrawal Liability under a Multiemployer Plan;
(ii) a member of the Controlled Group shall fail to satisfy its contribution
requirements under Section 412(c)(11) of the Code, whether or not it has sought
a waiver under Section 412(d) of the Code; (iii) the occurrence of an ERISA
Event; (iv) a Plan that is intended to be qualified under Section 401(a) of the
Code shall lose its qualification; (v) any member of the Controlled Group
engages in or otherwise becomes liable for a non-exempt prohibited transaction;
(vi) a violation of section 404 or 405 of ERISA or the exclusive benefit rule
under section 401(a) of the Code; (vii) any member of the Controlled Group is
assessed a tax under section 4980B of the Code or incurs a liability under
Section 601 et seq of ERISA; and, the occurrence of any such event listed in
clauses (i) through (vii), or the occurrence of any combination of events
listed in clauses (i) through (vii) results in, or could reasonably be expected
to result in, a Material Adverse Effect or result in exposure to Borrower in an
amount in excess of $2,500,000; or
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<PAGE> 55
(i) Monetary Judgments. One or more judgments, non-interlocutory
orders, decrees or arbitration awards shall be entered against the Borrower or
any of its Subsidiaries involving in the aggregate a liability (to the extent
not covered by independent third-party insurance) as to any single or related
series of transactions, incidents or conditions, of $1,000,000 or more, and the
same shall remain unsatisfied, unvacated and unstayed pending appeal for a
period of thirty (30) days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree shall be rendered against the Borrower or any of its Subsidiaries which
does or would reasonably be expected to have a Material Adverse Effect, and
there shall be any period of ten (10) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(k) Collateral. Any material provision of any Collateral Document
shall for any reason cease to be valid and binding on or enforceable against
the Borrower or any Subsidiary of the Borrower party thereto or the Borrower or
any Subsidiary of the Borrower shall so state in writing or bring an action to
limit its obligations or liabilities thereunder; or any Collateral Document
shall for any reason (other than pursuant to the terms thereof) cease to create
a valid security interest in the Collateral purported to be covered thereby or
such security interest shall for any reason (other than the failure of the
Agent to take any action within its control) cease to be a perfected and first
priority security interest subject only to Permitted Liens; or
(l) Change in Control. A Change in Control shall occur.
7.2. Remedies. Upon the occurrence and during the continuance of any
Event of Default, the Agent may, and shall at the request of the Required
Lenders:
(a) declare all or any portion of the Commitment of each Lender to
make Loans or issue Lender Letters of Credit or Letter of Credit Participation
Agreements to be terminated, whereupon such Commitments shall forthwith be
terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest, notice of acceleration, notice of intent
to accelerate or other notice of any kind, all of which are hereby expressly
waived by the Borrower; and
(c) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in
subsections 7.1(f) and (g) above (in the case of clause (i) of paragraph (g)
upon the expiration of the 60-day period mentioned therein), the obligation of
each Lender to make Loans and the obligation of Agent to issue Lender Letters
of Credit and Letter of Credit Participation Agreements shall automatically
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<PAGE> 56
terminate and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of the Agent or any Lender and without presentment,
demand, protest, notice of acceleration, notice of intent to accelerate or
other notice of any kind, all of which are hereby expressly waived by the
Borrower.
7.3. Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
7.4. Cash Collateral for Letters of Credit. If an Event of Default
has occurred and is continuing or this Agreement shall be terminated for any
reason, then the Agent may and upon request of Lenders holdings at least sixty-
six and two-thirds percent (66 2/3%) of the Revolving Loan Commitments shall,
demand (which demand shall be deemed to have been delivered automatically upon
any acceleration of the Loans and other obligations hereunder pursuant to
Section 7.2 hereof), and Borrower shall thereupon deliver to the Agent, to be
held for the benefit of the Agent and the Lenders entitled thereto, an amount
of cash equal to the amount of Letter of Credit Participation Liability
(determined in accordance with subsection 1.1(b) hereof) as additional
collateral security for Borrower's Obligations in respect of any outstanding
Lender Letter of Credit and Letter of Credit Participation Agreement. The
Agent may at any time apply any or all of such cash and cash collateral to the
payment of any or all of Borrower's Obligations in respect of any Lender
Letters of Credit or Letter of Credit Participation Agreements. Pending such
application, the Agent may (but shall not be obligated to) invest the same in
an interest bearing account in the Agent's name, for the benefit of the Agent
and the Lenders entitled thereto, under which deposits are available for
immediate withdrawal, at such bank or financial institution as the Agent may,
in its discretion, select.
ARTICLE VIII. - THE AGENT
8.1. Appointment and Authorization. Each Lender hereby irrevocably
appoints, designates and authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have 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 the Agent.
8.2. Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The
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<PAGE> 57
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
8.3. Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or
in connection with this Agreement or any other Loan Document (except for its
own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Lenders for any recital, statement, representation or
warranty made by the Borrower or any Subsidiary or Affiliate of the Borrower,
or any officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other document referred
to or provided for in, or received by the Agent under or in connection with,
this Agreement or any other Loan Document, or for the value of any Collateral
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document, or for any failure of the Borrower
or any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall 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 the Borrower or any
of the Borrower's Subsidiaries or Affiliates.
8.4. Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile or telephone
message, statement or other document or conversation believed by it to be
genuine and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of the Lenders (or, where an action or waiver need
only be approved by the Required Lenders or the Majority Lenders, by the
Required Lenders or the Majority Lenders, as applicable) as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Lenders (or, where an action or waiver need only be
approved by the Required Lenders or the Majority Lenders, by the Required
Lenders or the Majority Lenders, as applicable) and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
8.5. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Lenders, unless the
Agent shall have received written 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 Agent
receives such a notice, the Agent shall give notice
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<PAGE> 58
thereof to the Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be requested by the Required Lenders in
accordance with Article VII; provided, however, that unless and until the Agent
shall have received any such request, the 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 or in the best interest
of the Lenders.
8.6. Credit Decision. Each Lender expressly acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it and
that no act by the Agent hereinafter taken, including any review of the affairs
of the Borrower and its Subsidiaries shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower
and its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated thereby, and made its own decision to enter into this
Agreement and extend credit to the Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon the Agent 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 investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Borrower which may come into the possession of the Agent.
8.7. Indemnification. Whether or not the transactions contemplated
hereby shall be consummated, upon demand therefor the Lenders shall indemnify
the Agent (to the extent not reimbursed by or on behalf of the Borrower and
without limiting the obligation of the Borrower to do so), ratably from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Loans and the termination or resignation of the Agent) be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any document contemplated by or referred to herein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Agent under or in connection with any of the foregoing; provided, however,
that no Lender shall be liable for the payment to the Agent of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the Agent's gross
negligence or willful misconduct. In addition, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through
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<PAGE> 59
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Borrower. Without
limiting the generality of the foregoing, if the Internal Revenue Service or
any other Governmental Authority of the United States or other jurisdiction
asserts a claim that the Agent did not properly withhold tax from amounts paid
to or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify the Agent fully for all amounts paid, directly or indirectly,
by the Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to the
Agent under this Section 8.7, together with all related costs and expenses
(including Attorney Costs). The obligation of the Lenders in this Section 8.7
shall survive the payment of all Obligations hereunder.
8.8. Agent in Individual Capacity. Antares and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory or other business with the Borrower and its
Subsidiaries and Affiliates as though Antares were not the Agent hereunder and
without notice to or consent of the Lenders. With respect to its Loans,
Antares shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" shall include Antares in its individual capacity.
8.9. Successor Agent. The Agent may resign as Agent upon thirty (30)
days' prior notice to the Lenders and to Borrower. If the Agent shall resign
as Agent under this Agreement, the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, subject to the consent of the
Borrower (not to be unreasonably withheld). If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
thereupon appoint a successor agent from among the Lenders reasonably
acceptable to Borrower. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article VIII and Sections 9.4 and 9.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is thirty (30) days following a retiring Agent's notice of
resignation (or, if later, ten (10) days after the date upon which the Agent
designates a successor agent), the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of
the duties of the Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.
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8.10. Collateral Matters.
(a) The Agent is authorized (but not required) on behalf of all the
Lenders, without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any Collateral or
the Collateral Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Agent, at its option and in
its discretion, to release any Lien granted to or held by the Agent upon any
Collateral:
(i) upon termination of the Commitments and payment in full of
all Loans and all other Obligations then payable under this Agreement
and under any other Loan Document;
(ii) constituting Property sold or to be sold or disposed of as
part of or in connection with any disposition permitted hereunder;
(iii) consisting of an instrument evidencing Indebtedness or of
any other debt instrument, if the indebtedness evidenced thereby has
been paid in full; or
(iv) if approved, authorized or ratified in writing by the
Required Lenders or all the Lenders, as the case may be, as provided in
subsection 9.1(f).
Upon request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release particular types or items of Collateral pursuant
to this subsection 8.10(b). The Borrower shall be entitled to rely on any Lien
release executed by the Agent.
(c) Each Lender agrees with and in favor of each other Lender (which
agreement shall not be for the benefit of the Borrower or any of its
Subsidiaries) that the Borrower's obligation to such Lender under this
Agreement and the other Loan Documents shall be equally and ratably secured by
any real property and/or other collateral now or hereafter securing any
obligations of the Borrower or any of its Subsidiaries to such Lender, whether
or not the same constitutes Collateral hereunder.
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ARTICLE IX. - MISCELLANEOUS
9.1. Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure by the Borrower therefrom, shall be effective unless the same
shall be in writing and signed by the Required Lenders (or, if otherwise
expressly provided for herein, the Majority Lenders), the Borrower and
acknowledged by the Agent, and then such waiver shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing
and signed by all the Lenders, the Borrower and acknowledged by the Agent, do
any of the following:
(a) increase or extend the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to subsection 7.2(a)) or subject any Lender to
any additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder
or under any Loan Document (other than any mandatory prepayment of the Loans
pursuant to subsection 1.8(c), 1.8(d) or 1.8(e));
(c) reduce the principal of, or the rate of interest specified herein
or the amount of interest payable in cash specified herein on any Loan, or of
any fees or other amounts payable hereunder or under any Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Lenders or
any of them to take any action hereunder;
(e) amend this Section 9.1 or the definition of Required Lenders or
Majority Lenders or any provision providing for consent or other action by all
Lenders; or
(f) discharge any Subsidiary from its Obligations under the Loan
Documents, or release all or substantially all of the Collateral except as
otherwise may be provided in this Agreement or the other Loan Documents;
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Lenders, the
Required Lenders or all the Lenders, as the case may be, affect the rights or
duties of the Agent under this Agreement or any other Loan Document.
9.2. Notices. (a) All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission) and mailed by
certified or registered mail, faxed or delivered by personal or overnight
delivery, to the address or facsimile number specified for notices on the
applicable signature page hereof; or, if directed to the Borrower or the Agent,
to such other address as shall be designated by such party in a written notice
to each of the other parties hereto given in
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compliance herewith, or, if directed to any other party hereto, to such other
address as shall be designated by such party in a written notice given in
compliance herewith to the Borrower and the Agent.
(b) All such notices, requests and communications shall be deemed
given (i) if delivered in person, when delivered, (ii) if delivered by
telecopy, on the date of transmission if transmitted on a Business Day before
4:00 p.m. Chicago Time, otherwise on the next Business Day, (iii) if delivered
by overnight courier, one (1) Business Day after delivery to the courier
properly addressed and (iv) if mailed, upon the third Business Day after the
date deposited into the U.S. Mail, certified or registered; except that notices
pursuant to Article I shall not be deemed given until actually received by the
Agent.
(c) The Borrower acknowledges and agrees that any agreement of the
Agent and the Lenders in Article I hereof to receive certain notices by
telephone and facsimile is solely for the convenience and at the request of the
Borrower. The Agent and the Lenders shall be entitled to rely on the authority
of any Person purporting to be a Person authorized by the Borrower to give such
notice and the Agent and the Lenders shall not have any liability to the
Borrower or other Person on account of any action taken or not taken by the
Agent or the Lenders in good faith in reliance upon such telephonic or
facsimile notice. The obligation of the Borrower to repay the Loans shall not
be affected in any way or to any extent by any failure by the Agent and the
Lenders to receive written confirmation of any telephonic or facsimile notice
or the receipt by the Agent and the Lenders of a confirmation which is at
variance with the terms understood by the Agent and the Lenders to be contained
in the telephonic or facsimile notice.
9.3. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder, 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.
9.4. Costs and Expenses. Whether or not the transactions
contemplated hereby shall be consummated, the Borrower shall pay or reimburse:
(a) Antares (in its capacity as Agent) within five (5) Business Days
after demand (except as otherwise provided in subsection 2.1(f)) for all
reasonable out-of-pocket costs and expenses incurred by Antares (in its
capacity as Agent) in connection with the development, preparation,
syndication, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the Attorney Costs
incurred by Antares (including in its capacity as Agent) with respect thereto;
(b) pay or reimburse each Lender and the Agent within five (5)
Business Days after demand for all out-of-pocket costs and expenses incurred by
them in connection with the
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enforcement, attempted enforcement, or preservation of any rights or remedies
during the existence of an Event of Default (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding) under this Agreement, any other Loan
Document, and any such other documents, including Attorney Costs incurred by
the Agent and/or any Lender (provided that the Lenders shall only be entitled
to reimbursement for the Attorney Costs of one outside legal firm, which firm
shall be selected by the Majority Lenders); and
(c) pay or reimburse Agent within five (5) Business Days after demand
for all out-of-pocket appraisal, audit, environmental inspection and review
(including the allocated cost of such internal services), search and filing
costs, fees and expenses, incurred or sustained by Agent in connection with the
matters referred to under subsections (a) and (b) of this Section 9.4.
9.5. INDEMNITY.
(A) IN ADDITION TO THE PAYMENT OF COSTS AND EXPENSES PURSUANT TO
SECTION 9.4 (AND WITHOUT OBLIGATING THE BORROWER TO REIMBURSE THE AGENT AND THE
LENDERS FOR COSTS AND EXPENSES WHICH ARE THE SUBJECT OF SECTION 9.4), WHETHER
OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE CONSUMMATED, THE BORROWER
SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS EACH LENDER, THE AGENT AND EACH OF
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL, AGENTS AND
ATTORNEYS-IN-FACT (EACH, AN "INDEMNIFIED PERSON") FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, CHARGES, EXPENSES OR DISBURSEMENTS (INCLUDING ATTORNEY COSTS):
(i) OF ANY KIND OR NATURE WHATSOEVER WITH RESPECT TO THE
EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE AND ADMINISTRATION OF THIS
AGREEMENT AND ANY OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY, AND WITH RESPECT TO ANY INVESTIGATION, LITIGATION OR
PROCEEDING (INCLUDING ANY INSOLVENCY PROCEEDING OR APPELLATE PROCEEDING)
RELATED TO THIS AGREEMENT OR THE LOANS OR THE USE OF THE PROCEEDS
THEREOF, WHETHER OR NOT ANY INDEMNIFIED PERSON IS A PARTY THERETO; AND
(ii) WHICH MAY BE INCURRED BY OR ASSERTED AGAINST SUCH
INDEMNIFIED PERSON IN CONNECTION WITH OR ARISING OUT OF ANY PENDING OR
THREATENED INVESTIGATION, LITIGATION OR PROCEEDING, OR ANY ACTION TAKEN
BY ANY PERSON, WITH RESPECT TO ANY ENVIRONMENTAL CLAIM ARISING OUT OF OR
RELATED TO ANY PROPERTY OF BORROWER OR ANY OF ITS SUBSIDIARIES;
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(ALL THE FOREGOING, COLLECTIVELY, THE "INDEMNIFIED LIABILITIES"); PROVIDED,
THAT THE BORROWER SHALL HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON
WITH RESPECT TO INDEMNIFIED LIABILITIES TO THE EXTENT ARISING FROM LEGAL
PROCEEDINGS COMMENCED AGAINST SUCH INDEMNIFIED PERSON BY ANY SHAREHOLDER OF
SUCH INDEMNIFIED PERSON.
(B) IN NO EVENT SHALL ANY SITE VISIT, OBSERVATION, OR TESTING BY THE
AGENT OR ANY LENDER (OR ANY CONTRACTEE OF THE AGENT OR ANY LENDER) BE DEEMED A
REPRESENTATION OR WARRANTY THAT HAZARDOUS MATERIALS ARE OR ARE NOT PRESENT IN,
ON, OR UNDER, THE SITE, OR THAT THERE HAS BEEN OR SHALL BE COMPLIANCE WITH ANY
ENVIRONMENTAL LAW. NEITHER THE BORROWER NOR ANY OTHER PERSON IS ENTITLED TO
RELY ON ANY SITE VISIT, OBSERVATION, OR TESTING BY THE AGENT OR ANY LENDER.
NEITHER THE AGENT NOR ANY LENDER OWES ANY DUTY OF CARE TO PROTECT THE BORROWER
OR ANY OTHER PERSON AGAINST, OR TO INFORM THE BORROWER OR ANY OTHER PARTY OF,
ANY HAZARDOUS MATERIALS OR ANY OTHER ADVERSE CONDITION AFFECTING ANY SITE OR
PROPERTY.
(C) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PERSONS
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN
OMISSION, INCLUDING, WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNIFIED PERSONS OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON
ANY ONE OR MORE OF THE INDEMNIFIED PERSONS. TO THE EXTENT THAT AN INDEMNIFIED
PERSON IS FOUND BY A FINAL, NON-APPEALABLE JUDGMENT OF A COURT OF COMPETENT
JURISDICTION OR BY AGREEMENT TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR
WILFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL
CONTINUE BUT, WITH RESPECT TO SUCH INDEMNIFIED PERSON, SHALL ONLY EXTEND TO THE
PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS OTHER
THAN THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON.
(D) THE OBLIGATIONS IN THIS SECTION 9.5 SHALL SURVIVE PAYMENT OF ALL
OTHER OBLIGATIONS. AT THE ELECTION OF ANY INDEMNIFIED PERSON, THE BORROWER
SHALL DEFEND SUCH INDEMNIFIED PERSON USING LEGAL COUNSEL SATISFACTORY TO SUCH
INDEMNIFIED PERSON IN SUCH PERSON'S SOLE DISCRETION, AT THE SOLE COST AND
EXPENSE OF THE BORROWER. ALL AMOUNTS OWING UNDER THIS SECTION 9.5 SHALL BE
PAID WITHIN THIRTY (30) DAYS AFTER DEMAND.
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9.6. Marshaling; Payments Set Aside. Neither the Agent nor any
Lender shall be under any obligation to marshal any assets in favor of the
Borrower or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Borrower makes a payment or payments to
the Agent or any Lender, or the Agent or any Lender enforces its Liens or
exercises its rights of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agent in its discretion) to be
repaid to a trustee, receiver or any other party in connection with any
Insolvency Proceeding, or otherwise, then:
(a) to the extent of such recovery the Obligations or part thereof
originally intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or
setoff had not occurred; and
(b) each Lender severally agrees to pay to the Agent upon demand its
ratable share of the total amount so recovered from or repaid by the Agent.
9.7. Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that any assignment by any Lender
shall be subject to the provisions of Section 9.8 hereof, and provided further
that the Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the Agent and each
Lender.
9.8. Assignments, Participations, etc. (a) Any Lender may, with the
written consent of Borrower, which consent shall not be unreasonably withheld,
and Agent, at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Agent or Borrower shall be required in
connection with any assignment and delegation by a Lender to an Eligible
Assignee that is an Affiliate of such Lender) (each an "Assignee") all, or any
ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Lender hereunder, in a minimum amount of $5,000,000 or, if
less, the entire Commitment of such Lender; provided, however, that the
Borrower and the Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee until:
(i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrower and the Agent by such
Lender and the Assignee;
(ii) such Lender and its Assignee shall have delivered to the
Borrower and the Agent an Assignment and Acceptance in form and
substance reasonably satisfactory to the Agent, such Lender and its
Assignee (an "Assignment and Acceptance"); and
(iii) the assignor Lender or the Assignee has paid to the Agent
a processing fee in the amount of $3,500.
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(b) From and after the date that the Agent notifies the assignor
Lender that the Agent has received and provided its consent with respect to an
executed Assignment and Acceptance and payment of the above-referenced
processing fee:
(i) the Assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under this Agreement and the other Loan
Documents; and
(ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Loan
Documents.
(c) Immediately upon the making of the processing fee payment to the
Agent in respect of the Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitment of the assigning Lender to the same extent.
(d) Any Lender may at any time sell to one or more commercial banks
or other Persons (a "Participant") participating interests in any Loans, the
Commitment of that Lender and the other interests of that Lender (the
"Originating Lender") hereunder and under the other Loan Documents; provided,
however, that:
(i) the Originating Lender shall provide written notice of
such assignment to the Borrower and the Agent;
(ii) the Originating Lender's obligations under this Agreement
shall remain unchanged;
(iii) the Originating Lender shall remain solely responsible for
the performance of such obligations;
(iv) the Borrower and the Agent shall continue to deal solely
and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the
other Loan Documents;
(v) no Lender shall transfer or grant any participating
interest under which the Participant shall have rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement
or any other Loan Document, except to the extent such amendment, consent
or waiver would require unanimous consent of the Lenders as described in
the first proviso to Section 9.1; and
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(vi) the participation shall be in a minimum amount of
$5,000,000 or, if less, the entire Commitment of such Originating
Lender.
In the case of any such participation, the Participant shall not have any
rights under this Agreement, or any of the other Loan Documents, and all
amounts payable by the Borrower hereunder shall be determined as if such Lender
had not sold such participation.
(e) Notwithstanding any other provision contained in this Agreement
or any other Loan Document to the contrary, any Lender may assign all or any
portion of the Loans held by it to any Federal Reserve Lender or the United
States Treasury as collateral security pursuant to Regulation A of the Federal
Reserve Board and any Operating Circular issued by such Federal Reserve Lender,
provided that any payment in respect of such assigned Loans made by the
Borrower to or for the account of the assigning or pledging Lender in
accordance with the terms of this Agreement shall satisfy the Borrower's
obligations hereunder in respect to such assigned Loans to the extent of such
payment. No such assignment shall release the assigning Lender from its
obligations hereunder.
9.9. Confidentiality. Each of the Agent and the Lenders shall
maintain in confidence in accordance with its customary procedures for handling
confidential information, all written information that Borrower or any of its
Subsidiaries, or any of their authorized representatives, furnishes to the
Agent or any Lender on a confidential basis clearly marked as such or that the
Agent or such Lender generally knows is confidential ("Confidential
Information"), other than any such Confidential Information that becomes
generally available to the public other than as a result of a breach by the
Agent or any Lender of its obligations hereunder or that is or becomes
available to the Agent or such Lender from a source other than Borrower or any
of its Subsidiaries, or any of their authorized representatives, and that is
not, to the actual knowledge of the recipient thereof, subject to obligations
of confidentiality with respect thereto; provided, however, that the Agent and
each Lender shall in any event have the right to deliver copies of any such
documents, and to disclose any such information, to:
(a) its directors, officers, trustees, partners, employees, agents,
attorneys and professional consultants;
(b) any other Lender and any successor Agent;
(c) any Person to which such Lender offers to sell any Loan or any
part thereof or interest or participation therein (provided such Person agrees
to keep such information confidential on the terms set forth in this Section
9.9);
(d) any federal or state regulatory authority or examiner, or any
insurance industry association, regulating or having jurisdiction over the
Agent or such Lender; and
(e) any other Person to which such delivery or disclosure may be
necessary or appropriate (i) in compliance with any applicable law, rule,
regulation or order, (ii) in response to
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any subpoena or other legal process or informal investigative demand, (iii) in
connection with any litigation to which the Agent or such Lender is a party, or
(iv) in connection with the enforcement of the rights and remedies of the Agent
or the Lenders under this Agreement and the other Loan Documents at any time
when an Event of Default shall have occurred and be continuing; provided, that
with respect to clauses (i), (ii) and (iii), the Agent or such Lenders shall
use commercially reasonable efforts to provide notice to the Borrower before
releasing Confidential Information thereunder unless advised by counsel that
such notification is prohibited by law or could reasonably be expected to
result in criminal or civil liability to the Agent or such Lenders.
9.10. Set-off; Sharing of Payments. In addition to any rights and
remedies now or hereafter granted under applicable law, and not by way of
limitation of any such rights or remedies, upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized by the
Borrower at any time and from time to time, with reasonably prompt subsequent
notice to the Borrower or to any other Person (any prior or contemporaneous
notice being hereby expressly waived by the Borrower) to set off and to
appropriate and to apply any and all
(a) balances held by such Lender at any of its offices for the
account of the Borrower or any of its Subsidiaries (regardless of whether such
balances are then due to the Borrower or any of its Subsidiaries); and
(b) other Property at any time held or owing by such Lender to or for
the credit or for the account of the Borrower or any of its Subsidiaries;
against and on account of any and all Obligations which are not paid when due;
except that no Lender shall exercise such right without the prior written
consent of the Agent. Any Lender having a right to set off shall purchase for
cash (and the other Lenders shall sell) participations in each such other
Lender's pro rata share of the Obligations as would be necessary to cause such
Lender to share the benefit of such right of set-off with each other Lender in
accordance with their respective pro rata shares of the Obligations. The
Borrower agrees, to the fullest extent permitted by law, that (i) any Lender
may exercise its right to set off with respect to amounts in excess of its pro
rata share of the Obligations and may sell participations to other Lenders, and
(ii) any Lender so purchasing a participation in the Obligations held by other
Lenders may exercise all rights of setoff, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Obligations in the amount of such participation. The
Borrower hereby grants to each Lender a security interest in all such deposits
and other Property, whether now existing or hereafter arising, held by each
Lender for the purposes set forth herein.
9.11. Notification of Addresses, Lending Offices, Etc. Each Lender
shall notify the Agent in writing of any changes in the address to which
notices to the Lender should be directed, of addresses of its Lending Office,
of payment instructions in respect of all payments to be made
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to it hereunder and of such other administrative information as the Agent shall
reasonably request.
9.12. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with each of the Borrower and the Agent.
9.13. Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
9.14. Captions. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
9.15. Independence of Provisions. The parties acknowledge that this
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
9.16. Interpretation. This Agreement is the result of negotiations
among and has been reviewed by counsel to the Agent, the Borrower and other
parties, and is the product of all parties hereto. Accordingly, this Agreement
and the other Loan Documents shall not be construed against the Lenders or the
Agent merely because of the Agent's or Lenders' involvement in the preparation
of such documents and agreements.
9.17. No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrower, the Lenders and
the Agent, and their permitted successors and assigns, and no other Person
shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents. Neither the Agent nor any Lender nor (except as
provided under Section 9.5) the Borrower shall have any obligation to any
Person not a party to this Agreement or other Loan Documents.
9.18. Governing Law and Jurisdiction.
(A) THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES; PROVIDED THAT THE
AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
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(B) BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE
OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH
COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF AGENT
OR ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY BORROWER AGAINST AGENT OR ANY LENDER
OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
(C) BORROWER DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AND
SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH IRREVOCABLY
AGREE IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING
HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED
MAIL TO BORROWER AT ITS ADDRESS PROVIDED IN SUBSECTION 9.2 EXCEPT THAT UNLESS
OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT
AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY BORROWER
REFUSES TO ACCEPT SERVICE, BORROWER HEREBY AGREES THAT SERVICE UPON IT BY MAIL
SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
9.19. Waiver of Jury Trial. THE BORROWER, THE LENDERS AND THE AGENT
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER, THE LENDERS AND THE AGENT
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY
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IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
9.20. Entire Agreement; Release. This Agreement, together with the
other Loan Documents, embodies the entire agreement and understanding among the
Borrower, the Lenders and the Agent, and supersedes all prior or
contemporaneous Agreements and understandings of such Persons, oral or written,
relating to the subject matter hereof and thereof, except for the fee letter
referenced in subsection 1.9(a), and any prior arrangements made with respect
to the payment by the Borrower of (or any indemnification for) any fees, costs
or expenses payable to or incurred (or to be incurred) by or on behalf of the
Agent or the Lenders. Execution of this Agreement by the Borrower constitutes
a full, complete and irrevocable release of any and all claims which the
Borrower may have at law or in equity in respect of all prior discussions and
understandings, oral or written, relating to the subject matter of this
Agreement and the other Loan Documents. Neither Agent nor any Lender shall be
liable to Borrower or any other Person on any theory of liability for any
special, indirect, consequential or punitive damages.
ARTICLE X. - TAXES, YIELD PROTECTION AND ILLEGALITY
10.1. Taxes. (a) Subject to subsection 10.1(g), any and all
payments by the Borrower to each Lender or the Agent under this Agreement shall
be made free and clear of, and without deduction or withholding for, any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Agent, such taxes (including income taxes or franchise
taxes) as are imposed on or measured by each Lender's overall income by the
jurisdiction under the laws of which such Lender or the Agent, as the case may
be, is organized or maintains a Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes").
(b) In addition, the Borrower shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to subsection 10.1(g), the Borrower shall indemnify and
hold harmless each Lender and the Agent for the full amount of Taxes or Other
Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 10.1) paid by the Lender or the Agent and
any liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes
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were correctly or legally asserted. Payment under this indemnification shall
be made within thirty (30) days from the date the Lender or the Agent makes
written demand therefor.
(d) If the Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then, subject to subsection 10.1(g):
(i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 10.1) such Lender or the
Agent, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made;
(ii) the Borrower shall make such deductions; and
(iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(e) Within thirty (30) days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment reasonably satisfactory to the Agent.
(f) Each Lender that 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 (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") shall deliver to
the Borrower and the Agent two copies of each U.S. Internal Revenue Service
Form 1001 or Form 4224, 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 Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a "bank"
for purposes of Section 881(c) of the Code, is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is
not a controlled foreign corporation related to the Borrower (within the
meaning of Section 864(d)(4) of the Code)), 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. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this
Agreement. In addition, each Non-U.S. Lender shall deliver such forms promptly
upon the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this subsection, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this subsection that such Non-
U.S. Lender is not legally able to deliver.
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(g) The Borrower will not be required to pay any additional amounts
in respect of United States Federal income tax pursuant to subsection 10.1(d)
to any Lender for the account of any Lending Office of such Lender:
(i) if the obligation to pay such additional amounts would not
have arisen but for a failure by such Lender to comply with its
obligations under subsection 10.1(f) in respect of such Lending Office;
(ii) if such Lender shall have delivered to the Borrower a Form
1001 and/or Form 4224 in respect of such Lending Office pursuant to
subsection 10.1(f), and such Lender shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income
tax in respect of payments by the Borrower hereunder for the account of
such Lending Office for any reason other than a change in United States
law, treaty or regulations or in the official interpretation of such law
or regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 1001 and/or Form
4224; or
(iii) if such Lender shall have delivered to the Borrower a Form
W-8 in respect of such Lending Office pursuant to Subsection 10.1(f),
and such Lender shall not at any time be entitled to exemption from
deduction or withholding of United States Federal income tax in respect
of payments by the Borrower hereunder for the account of such Lending
Office for any reason other than a change in the United States law or
regulations or any applicable tax treaty or regulations or in the
official interpretation of any such law, treaty or regulations by any
governmental authority charged with the interpretation or administration
thereof (whether or not having the force of law) after the date of
delivery of such Form W-8.
(h) If the Borrower is required to pay additional amounts to any
Lender or the Agent pursuant to subsection 10.1(d), then such Lender shall use
its reasonable best efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.
10.2. Illegality. (a) If after the date hereof any Lender shall
determine that the introduction of any Requirement of Law, or any change in any
Requirement of Law or in the interpretation or administration thereof, has made
it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its Lending Office to make
LIBOR Loans, then, on notice thereof by the Lender to the Borrower through the
Agent, the obligation of that Lender to make LIBOR Rate Loans shall be
suspended until the Lender shall have notified the Agent and the Borrower that
the circumstances giving rise to such determination no longer exists.
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(b) Subject to clause (c) below, if a Lender shall determine that it
is unlawful to maintain any LIBOR Rate Loan, the Borrower shall prepay in full
all LIBOR Rate Loans of that Lender then outstanding, together with interest
accrued thereon, either on the last day of the Interest Period thereof if the
Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if the Lender may not lawfully continue to maintain such LIBOR
Rate Loans, together with any amounts required to be paid in connection
therewith pursuant to Section 10.4.
(c) If the obligation of any Lender to make or maintain LIBOR Rate
Loans has been terminated, the Borrower may elect, by giving notice to the
Lender through the Agent that all Loans which would otherwise be made by any
such Lender as LIBOR Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent pursuant to this Section
10.2, the affected Lender shall designate a different Lending Office with
respect to its LIBOR Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Lender, be illegal or otherwise disadvantageous to the Lender.
10.3. Increased Costs and Reduction of Return. (a) If any Lender
shall determine that, due to either (i) the introduction of or any change in or
in the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) made, in the case of clause (i) or
(ii) subsequent to the date hereof, there shall be any increase in the cost to
such Lender of agreeing to make or making, funding or maintaining any LIBOR
Rate Loans, then the Borrower shall be liable for, and shall from time to time,
within 30 days of demand therefor by such Lender (with a copy of such demand to
the Agent), pay to the Agent for the account of such Lender, additional amounts
as are sufficient to compensate such Lender for such increased costs.
(b) If any Lender shall have determined that:
(i) the introduction of any Capital Adequacy Regulation;
(ii) any change in any Capital Adequacy Regulation;
(iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof; or
(iv) compliance by the Lender (or its Lending Office) or any
corporation controlling the Lender, with any Capital Adequacy
Regulation;
affects the amount of capital required or expected to be maintained by the
Lender or any corporation controlling the Lender and (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy
and such Lender's desired return on
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capital) determines that the amount of such capital is increased as a
consequence of its Commitment(s), loans, credits or obligations under this
Agreement, then, within 30 days of demand of such Lender (with a copy to the
Agent), the Borrower shall upon demand pay to the Lender, from time to time as
specified by the Lender, additional amounts sufficient to compensate the Lender
for such increase.
10.4. Funding Losses. The Borrower agrees to reimburse each Lender
and to hold each Lender harmless from any loss or expense which the Lender may
sustain or incur as a consequence of:
(a) the failure of the Borrower to make any payment or mandatory
prepayment of principal of any LIBOR Rate Loan (including payments made after
any acceleration thereof);
(b) the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/ Continuation;
(c) the failure of the Borrower to make any prepayment after the
Borrower has given a notice in accordance with Section 1.7;
(d) the prepayment (including pursuant to Section 1.8) of a LIBOR
Rate Loan on a day which is not the last day of the Interest Period with
respect thereto; or
(e) the conversion pursuant to Section 1.6 of any LIBOR Rate Loan to
a Base Rate Loan on a day that is not the last day of the applicable Interest
Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by such Lender to maintain its LIBOR Rate Loans hereunder or
from fees payable to terminate the deposits from which such funds were
obtained, but excluding any such loss or expense sustained by any Lender to the
extent arising from the gross negligence or willful misconduct of such Lender.
Solely for purposes of calculating amounts payable by the Borrower to the
Lenders under this Section 10.4 and under subsection 10.3(a): each LIBOR Rate
Loan made by a Lender (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the LIBOR used
in determining the interest rate for such LIBOR Rate Loan by a matching deposit
or other borrowing in the interbank eurodollar market for a comparable amount
and for a comparable period, whether or not such LIBOR Rate Loan is in fact so
funded.
10.5. Inability to Determine Rates. If the Agent shall have
determined in good faith that for any reason adequate and reasonable means do
not exist for ascertaining the LIBOR for any requested Interest Period with
respect to a proposed LIBOR Rate Loan or that the LIBOR applicable pursuant to
subsection 1.3(a) for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will forthwith give notice of such
determination to the Borrower
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and each Lender. Thereafter, the obligation of the Lenders to make or maintain
LIBOR Rate Loans hereunder shall be suspended until the Agent revokes such
notice in writing. Upon receipt of such notice, the Borrower may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Borrower does not revoke such notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans.
10.6. Reserves on LIBOR Rate Loans. The Borrower shall pay to each
Lender, as long as such Lender shall be required under regulations of the
Federal Reserve Board to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits (currently
known as "Eurocurrency liabilities"), additional costs on the unpaid principal
amount of each LIBOR Rate Loan equal to actual costs of such reserves allocated
to such Loan by the Lender (as determined by the Lender in good faith, which
determination shall be conclusive absent demonstrative error), payable on each
date on which interest is payable on such Loan provided the Borrower shall have
received at least fifteen (15) days' prior written notice (with a copy to the
Agent) of such additional interest from the Lender. If a Lender fails to give
notice fifteen (15) days prior to the relevant Interest Payment Date, such
additional interest shall be payable fifteen (15) days from receipt of such
notice.
10.7. Certificates of Lenders. Any Lender claiming reimbursement or
compensation pursuant to this Article X shall deliver to the Borrower (with a
copy to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Lender hereunder (which certificate shall be delivered by such
Lender within 90 days after the date such Lender first has knowledge of the
event giving rise to such Lender's right to such reimbursement or compensation
and in any event within 360 days after the date of such event) and such
certificate shall be conclusive and binding on the Borrower in the absence of
manifest error.
10.8. Survival. The agreements and obligations of the Borrower in
this Article X shall survive the payment of all other Obligations.
10.9. Replacement of Lender in Respect of Increased Costs. Within
forty-five (45) days after receipt by the Borrower of written notice and demand
from any Lender (an "Affected Lender") for payment of additional costs as
provided in subsections 10.1, 10.3 and 10.6, the Borrower may, at its option,
notify the Agent and such Affected Lender of the Borrower's intention to
obtain, at the Borrower's expense, a replacement Lender ("Replacement Lender")
for such Affected Lender, which Replacement Lender shall be reasonably
satisfactory to the Agent. In the event the Borrower obtains a Replacement
Lender within ninety (90) days following notice of its intention to do so, the
Affected Lender shall sell and assign its Loans and Commitments to such
Replacement Lender, provided that the Borrower has reimbursed such Affected
Lender for its increased costs for which it is entitled to reimbursement under
this Agreement through the date of such sale and assignment.
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ARTICLE XI. - DEFINITIONS
11.1. Defined Terms. The following terms are defined in the Sections
or subsections referenced opposite such terms:
<TABLE>
<S> <C>
"Acquisition Commitment Fee" 1.9(b)(ii)
"Acquisition Documents" 2.3(d)
"Acquisition Loan" 1.1(c)
"Acquisition Loan Commitment" 1.1(c)
"Affected Lender" 10.9
"Assignee" 9.8(a)
"Assignment and Acceptance" 9.8(a)(ii)
"Borrower" Preamble
"Commitment Fee Ratio" 1.12(d)
"Confidential Information" 9.9
"Daily Interest Amount" 1.12(d)
"Daily Interest Rate" 1.12(d)
"Daily Loan Balance" 1.12(d)
"EBITDA" Exhibit 4.2(b)
"Event of Default" 7.1
"Excess Cash Flow" Exhibit 1.8(d)
"Fixed Charge Coverage Ratio" Exhibit 4.2(b)
"Form 1001" 10.1(f)
"Form 4224" 10.1(f)
"Indemnified Person" 9.5
"Indemnified Liabilities" 9.5
"Interest Coverage Ratio" Exhibit 4.2(b)
"Interest Ratio" 1.12(d)
"Interest Settlement Date" 1.12(d)
"Lender" Preamble
"Lender Letter of Credit" 1.1(b)
"Letter of Credit Participation Agreement" 1.1(b)
"Letter of Credit Participation Fee" 1.9(b)
"Letter of Credit Participation Fee Ratio" 1.12(d)
"Leverage Ratio" Exhibit 4.2(b)
"Maximum Acquisition Loan Balance" 1.1(c)
"Maximum Revolving Loan Balance" 1.1(a)
"Originating Lender" 9.8
"Other Taxes" 10.1(b)
"Participant" 9.8(d)
"Permitted Liens" 5.1
"Replacement Lender" 10.9
"Restricted Payments" 5.11
</TABLE>
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<TABLE>
<S> <C>
"Revolving Commitment Fee" 1.9(b)(i)
"Revolving Loan Commitment" 1.1(a)
"Revolving Loan" 1.1(a)
"Settlement Date" 1.12(b)
"Taxes" 10.1(a)
</TABLE>
In addition to the terms defined elsewhere in this Agreement, the following
terms have the following meanings:
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
by any Wholly-Owned Subsidiary of all or substantially all of the assets of a
Person, or of any business or division of a Person, (b) the acquisition by the
Borrower or any Wholly-Owned Subsidiary of all of the capital stock,
partnership interests or equity of any Person or otherwise causing any Person
to become a Wholly-Owned Subsidiary, or (c) a merger or consolidation or any
other combination with another Person (other than a Person that is a
Subsidiary) provided that a Wholly-Owned Subsidiary is the surviving entity.
"Acquisition Loan Maturity Date" means March 31, 2003.
"Acquisition Note" means a promissory note of the Borrower payable to
the order of a Lender, in substantially the form of Exhibit 11.1(a) hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from the
Acquisition Loans made to the Borrower by such Lender.
"Acquisition Termination Date" means the earlier to occur of: (a) April
30, 2000; and (b) the date on which the Aggregate Acquisition Loan Commitment
shall terminate in accordance with the provisions of this Agreement.
"Adjusted EBITDA" means, as of any determination date, without
duplication, EBITDA of the Borrower and its Subsidiaries for the twelve-month
period ending on such date, except that Adjusted EBITDA for such twelve month
period shall include, without duplication, the Pro Forma EBITDA of any Target
acquired pursuant to an Acquisition permitted hereunder for the portion of such
period prior to the date of such Acquisition.
"Affiliate" means, 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. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of five percent
(5%) or more of the equity of a Person shall for the purposes of this
Agreement, be deemed to control the other Person. Notwithstanding the
foregoing, neither the Agent nor any Lender shall be deemed an "Affiliate" of
the Borrower or of any Subsidiary of the Borrower.
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"Agent" means Antares in its capacity as agent for the Lenders
hereunder, and any successor agent.
"Agent-Related Persons" means Antares and any successor agent arising
under Section 8.9, together with their respective Affiliates, and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Aggregate Acquisition Loan Commitment" means the combined Acquisition
Loan Commitments of the Lenders, which shall initially be in the amount of
$65,000,000, as such amount may be reduced from time to time pursuant to this
Agreement.
"Aggregate Commitment" means the combined Commitments of the Lenders,
which shall initially be in the amount of $80,000,000, as such amount may be
reduced from time to time pursuant to this Agreement.
"Aggregate Revolving Loan Commitment" means the combined Revolving Loan
Commitments of the Lenders, which shall initially be in the amount of
$15,000,000, as such amount may be reduced from time to time pursuant to this
Agreement.
"Antares" means Antares Leveraged Capital Corp., a Delaware corporation.
"Applicable Margin" means (a) from the Closing Date through June 30,
1999, with respect to Base Rate Loans, 1.00%, and with respect to LIBOR Rate
Loans, 2.75%, and thereafter, (b) with respect to LIBOR Rate Loans and Base
Rate Loans, respectively, the applicable LIBOR margin or Base Rate margin in
effect from time to time determined based upon the applicable Leverage Ratio
then in effect pursuant to the appropriate column under the table below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Leverage Ratio Base Rate Margin LIBOR Margin
-------------- ---------------- ------------
<S> <C> <C>
3.50 to 1.0 or greater 1.00% 2.75%
- ------------------------------------------------------------------------------------------------------
3.00 to 1.0 or greater, but less than 0.75% 2.50%
3.50 to 1.0
- ------------------------------------------------------------------------------------------------------
less than 3.00 to 1.00 0.50% 2.25%
- ------------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Margin shall be adjusted from time to time on a quarterly
basis, commencing with the quarter ending June 30, 1999, upon delivery to the
Agent of the monthly financial statements required to be delivered pursuant to
Section 4.1 hereof for the period ending on the last day of such fiscal
quarter, accompanied by a written calculation of the Leverage Ratio
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as of the end of the fiscal quarter for which such financial statements are
delivered certified on behalf of the Borrower by a Responsible Officer. If
such calculation indicates that the Applicable Margin, shall increase or
decrease, then on the first day of the month following the date of delivery of
such financial statements and written calculation, the Applicable Margin shall
be adjusted in accordance therewith; provided, however, that if the Borrower
shall fail to deliver any such financial statements for the last month of any
fiscal quarter by the date required pursuant to Section 4.1, then, effective as
of the first day of the month following the end of the fiscal month during
which such financial statements were to have been delivered, and continuing to
the first day of the month following the date (if ever) when such financial
statements and such written calculation are finally delivered, the Applicable
Margin shall be 1.00%, with respect to Base Rate Loans, and 2.75%, with respect
to LIBOR Rate Loans.
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.), as amended and in effect from time to time and
the regulations issued from time to time thereunder.
"Base Rate" means, for any day, a rate of interest equal to the rate of
interest which is identified as the "Prime Rate" and normally published in the
Money Rates section of The Wall Street Journal (or, if such rate ceases to be
so published, as quoted from such other generally available and recognizable
source as the Agent may select).
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower on the same day by the Lenders pursuant to Article I.
"Borrowing Base" means, as of any date of determination, (a) Adjusted
EBITDA (based upon the most recent monthly financial statements then required
to have been delivered to the Agent pursuant to_subsection 4.1(b) but including
the Pro Forma EBITDA of all Targets acquired following the date of such
financial statements and on or prior to such date of determination) multiplied
by the Leverage Multiple less (b) total consolidated Indebtedness of the
Borrower and its Subsidiaries as of such date of determination (excluding the
Acquisition Loans, Revolving Loans and the Letter of Credit Participation
Liability).
"Borrowing Base Certificate" means a duly completed certificate of the
Borrower, in substantially the form of Exhibit 11.1(b) hereto.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in Chicago, Illinois or New York, New York are
authorized or required by law
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to close and, if the applicable Business Day relates to any LIBOR Rate Loan, a
day on which dealings are carried on in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Lender or of any corporation controlling a Lender.
"Capital Expenditures" means, for any period and with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing of fixed or capital assets or additions to fixed
or capital assets (including replacements, capitalized repairs and improvements
during such period) that should be capitalized under GAAP on a consolidated
balance sheet of such Person and its Subsidiaries.
"Capital Lease" means any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease.
"Capital Lease Obligations" means all monetary obligations of the
Borrower or any of its Subsidiaries under any Capital Leases.
"Cash Equivalents" means: (a) securities issued or fully guaranteed or
insured by the United States Government or any agency thereof having maturities
of not more than six (6) months from the date of acquisition; (b) certificates
of deposit, time deposits, repurchase agreements, reverse repurchase
agreements, or bankers' acceptances, having in each case a tenor of not more
than six (6) months, issued by any Lender, or by any U.S. commercial bank or
any branch or agency of a non-U.S. bank licensed to conduct business in the
U.S. having combined capital and surplus of not less than $250,000,000; (c)
commercial paper of an issuer rated at least A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service Inc. and in either case having
a tenor of not more than three (3) months.
"Change of Control" means any of the following: (a) prior to the
consummation of a registered public offering of the Borrower's common stock,
the Permitted Holders shall cease to be the "beneficial owners" (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of at least 51% of the issued and outstanding shares of
capital stock of Borrower having the right to vote in the election of directors
of the Borrower under ordinary circumstances; (b) any Person or group of
persons (within the meaning of the Exchange Act) (other than the Permitted
Holders) shall acquire beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of 50% or more of the issued and outstanding shares of
capital stock of the Borrower having the right to vote for the election of
directors of the Borrower under ordinary circumstances; (c) during any period
of twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of the Borrower (together with any
new directors whose election by the board of directors of the Borrower or whose
nomination for election by the stockholders of the Borrower was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the
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beginning of such period or whose elections or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office; (d) the Borrower (or any
Wholly-Owned Subsidiary of the Borrower) shall cease to own and control all of
the economic and voting rights associated with all of the outstanding capital
stock of any of its Subsidiaries; or (e) the occurrence of any event
constituting a "Change of Control", as defined in the Indenture, shall occur.
"Closing Date" means the date on which all conditions precedent set
forth in Section 2.1 are satisfied or waived by the Agent.
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Borrower as debtor and its
Subsidiaries in or upon which a Lien now or hereafter exists in favor of any
Lender or the Agent for the benefit of the Lenders, whether under this
Agreement or under any other documents executed by any such Persons and
delivered to the Agent.
"Collateral Documents" means, collectively, the Security Agreement, the
Mortgages, the Guaranty, the Pledge Agreement and all other security
agreements, pledge agreements, mortgages, deeds of trust, patent and trademark
assignments, lease assignments, guarantees and other similar agreements, and
all amendments, restatements, modifications or supplements thereof or thereto,
by or between any one or more of the Borrower or its Subsidiaries and any
Lender or the Agent for the benefit of the Lenders now or hereafter delivered
to the Lenders or the Agent pursuant to or in connection with the transactions
contemplated hereby, and all financing statements (or comparable documents now
or hereafter filed in accordance with the UCC or comparable law) against the
Borrower or its Subsidiaries as debtor in favor of any Lender or the Agent for
the benefit of the Lenders, as secured party.
"Commitment" means, for each Lender, the sum of its Acquisition Loan
Commitment and its Revolving Loan Commitment.
"Commitment Percentage" means, as to any Lender, the percentage
equivalent of such Lender's Acquisition Loan Commitment or Revolving Loan
Commitment divided by the Aggregate Acquisition Loan Commitment or Aggregate
Revolving Loan Commitment, as applicable.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person: (i) with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with
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respect thereto; (ii) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings; (iii) under any Rate Contracts; (iv) to make take-
or-pay or similar payments if required regardless of nonperformance by any
other party or parties to an agreement; or (v) for the obligations of another
through any agreement to purchase, repurchase or otherwise acquire such
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another
Person. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed or supported.
"Contractual Obligations" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement
to which such Person is a party or by which it or any of its property is bound.
"Controlled Group" means the Borrower and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Conversion Date" means any date on which the Borrower converts a Base
Rate Loan to a LIBOR Rate Loan or a LIBOR Rate Loan to a Base Rate Loan.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Disposition" means (a) the sale, lease, conveyance or other disposition
of Property, other than sales or other dispositions expressly permitted under
subsections 5.2(a) and 5.2(c) and (b) the sale or transfer by the Borrower or
any Subsidiary of the Borrower of any equity securities issued by any
Subsidiary of the Borrower and held by such transferor Person.
"Disqualified Capital Stock" means any capital stock of the Borrower
which, by its terms (or by the terms of (i) any security into which it is
convertible or for which it is exchangeable or (ii) any agreement between the
Borrower and the holders of such capital stock), or upon the happening of any
event , matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof, in whole or in part, on or prior to February 1, 2005; provided,
however, that any capital stock of the Borrower that would constitute
Disqualified Capital Stock solely because the holders thereof have the right to
require the Borrower to repurchase or redeem such capital stock upon the
occurrence of a "Change of Control" or an "Asset Sale" (as such terms are
defined in the Indenture as in effect on the Closing Date) shall not constitute
Disqualified Capital Stock if (i) the terms of such capital stock provide that
the Borrower may not repurchase or redeem such capital stock unless such
redemption or repurchase does not violate this Agreement and (ii) such capital
stock does
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not otherwise constitute "Disqualified Capital Stock" within the meaning of the
Indenture as in effect on the date hereof.
"Dollars", "dollars" and "$" each mean lawful money of the United States
of America.
"Eligible Assignee" means any of: (a) a commercial bank organized under
the laws of the United States, or any State thereof; (b) a commercial bank
organized under the laws of any other country; or (c) a finance company,
insurance company or other financial institution or fund which is engaged in
making, purchasing or otherwise investing in commercial loans for its own
account in the ordinary course of its business.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden
or non-sudden, accidental or non-accidental, placement, spills, leaks,
discharges, emissions or releases) of any Hazardous Material at, in, or from
Property, whether or not owned by the Borrower.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters; including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation
and Recovery Act, the Toxic Substances Control Act, the Emergency Planning and
Community Right-to-Know Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b), 414(c) or 414(m) of the Code.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by the Borrower or any ERISA
Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section 4001(a)(2)
of ERISA); (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent
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to terminate, the treatment of a plan amendment as a termination under Section
4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA;
(e) a failure by the Borrower or any member of the Controlled Group to make
required contributions to a Qualified Plan or Multiemployer Plan; (f) an event
or condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Qualified Plan or Multiemployer Plan; (g) the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Plan; (i) a non-exempt prohibited transaction occurs with respect to any Plan
for which the Borrower or any Subsidiary of the Borrower may be directly or
indirectly liable; or (j) a violation of the applicable requirements of Section
404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the
Code by any fiduciary or disqualified person with respect to any Plan for which
the Borrower or any member of the Controlled Group may be directly or
indirectly liable.
"Event of Loss" means, with respect to any Property, any of the
following: (a) any loss, destruction or damage of such Property; (b) any
pending or threatened institution of any proceedings for the condemnation or
seizure of such Property or for the exercise of any right of eminent domain; or
(c) any actual condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, of such Property, or confiscation of such Property
or the requisition of the use of such Property.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"Exchangeable Preferred Stock" means, collectively, the 10% Exchangeable
Preferred Stock and the 13% Exchangeable Preferred Stock.
"10% Exchangeable Preferred Stock" means the Borrower's 10% Exchangeable
Preferred Stock, par value $.01 per share.
"13% Exchangeable Preferred Stock" means the Borrower's 13% Exchangeable
Preferred Stock, par value $.01 per share.
"13% Exchangeable Stock Documents" means the Securities Purchase
Agreement dated as of the Closing Date (the "Securities Purchase Agreement")
among the Borrower and Ares Leveraged Investment Fund, L.P. and S.V. Leveraged
Capital Partners, L.P., the shares of 13% Exchangeable Preferred Stock issued
pursuant to the Securities Purchase Agreement, the respective Registration
Rights Agreements contemplated by the Securities Purchase Agreement and the
other agreements entered into among the Borrower and the purchasers of the 13%
Exchangeable Preferred Stock pursuant to the Securities Purchase Agreement.
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"Family Member" means, when used with reference to any natural Person,
such Person's spouse, siblings, parents, children, or other lineal descendants
(whether by adoptions or consanguinity), and shall mean a trust, the primary
beneficiary of which is the Person's spouse, siblings, parents, children, or
other lineal descendants (whether by adoption or consanguinity).
"Federal Funds Rate" means, for any period, the rate per annum set forth
in the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30
p.m. Quotation") for such day under the caption "Federal Funds Effective Rate".
If on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the
accounting profession), which are applicable to the circumstances as of the
date of determination.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty" means that certain Guaranty, dated as of even date herewith,
in form and substance reasonably acceptable to the Agent and the Borrower, made
by each Subsidiary of the Borrower in favor of the Agent, for the benefit of
Agent and Lenders.
"Hazardous Materials" means all those substances which are regulated by,
or which may form the basis of liability under, any Environmental Law.
"Indebtedness" of any Person means, without duplication: (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase
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price of property or services (other than trade payables entered into in the
Ordinary Course of Business); (c) all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments; (d)
all obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses; (e) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to Property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in
the event of default are limited to repossession or sale of such property); (f)
all Capital Lease Obligations; (g) all indebtedness referred to in clauses (a)
through (f) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in Property (including accounts and contracts rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such indebtedness; and (h) all Contingent Obligations described in clause (i)
of the definition thereof in respect of indebtedness or obligations of others
of the kinds referred to in clauses (a) through (g) above.
"Indenture" means that certain Amended and Restated Indenture dated as
of April 30, 1998, among the Borrower, as Issuer, the Subsidiary Guarantors
parties thereto and U.S. Trust Company of Texas, N.A., as Trustee, relating to
the Senior Notes, as such Indenture may be amended, restated or supplemented
from time to time to the extent not prohibited hereunder.
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or
foreign law, including the Bankruptcy Code.
"Interest Payment Date" means, (a) with respect to any LIBOR Rate Loan
(other than a LIBOR Rate Loan having an Interest Period of six (6) months) the
last day of each Interest Period applicable to such Loan, (b) with respect to
any LIBOR Rate Loan having an Interest Period of six (6) months, the last day
of each three (3) month interval, and (c) with respect to Base Rate Loans, the
first day of each calendar quarter and each date a Base Rate Loan is converted
into a LIBOR Rate Loan.
"Interest Period" means, with respect to any LIBOR Rate Loan, the period
commencing on the Business Day the Loan is disbursed or continued or on the
Conversion Date on which the Loan is converted to the LIBOR Rate Loan and
ending on the date one, two, three or six months thereafter, as selected by the
Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(a) if any Interest Period pertaining to a LIBOR Rate Loan
would otherwise end on a day which is not a Business Day, that Interest
Period shall be extended to the
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next succeeding Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Business Day;
(b) any Interest Period pertaining to a LIBOR Rate Loan 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
the calendar month at the end of such Interest Period;
(c) no Interest Period for any Acquisition Loan shall extend
beyond the Acquisition Loan Maturity Date and no Interest Period for any
Revolving Loan shall extend beyond the Revolving Termination Date; and
(d) no Interest Period applicable to an Acquisition Loan or
portion thereof shall extend beyond any date upon which is due any
scheduled principal payment in respect of the Acquisition Loans, unless
the aggregate principal amount of Acquisition Loans represented by Base
Rate Loans or by LIBOR Rate Loans having Interest Periods that will
expire on or before such date is equal to or in excess of the amount of
such principal payment.
"Lending Office" means, with respect to any Lender, the office or
offices of the Lender specified as its "Lending Office" opposite its name on
the applicable signature page hereto, or such other office or offices of the
Lender as it may from time to time notify the Borrower and the Agent.
"Letter of Credit Participation Liability" means, as to each Lender
Letter of Credit and each Letter of Credit Participation Agreement, all
reimbursement obligations and all other liabilities of the Borrower or any of
its Subsidiaries to the Agent and the Lenders in connection with such Lender
Letter of Credit or, in the case of any Letter of Credit Participation
Agreement, all such obligations and liabilities of the Borrower or any of its
Subsidiaries or of the Agent to the issuer of the letter of credit for which
the Letter of Credit Participation Agreement was issued, in any such case
whether contingent or otherwise, including with respect to any letter of
credit: (a) the amount available to be drawn or which may become available to
be drawn; (b) without duplication, all amounts which have been paid or made
available by the issuing bank or by the Agent under such letter of credit or
Letter of Credit Participation Agreement in respect thereof, in each instance,
to the extent not reimbursed; and (c) all unpaid interest, fees and expenses
associated with such letter of credit .
"Leverage Multiple" means 7.00 during the period from the Closing Date
through March 30, 1999; 6.75 during the period from March 31, 1999 through June
29, 1999; 6.50 during the period from June 30, 1999 through September 29, 1999;
6.25 during the period from September 30, 1999 through March 30, 2000; 6.00
during the period from March 31, 2000 through June 29, 2000; 5.75 during the
period from June 30, 2000 through September 29, 2000; 5.50 during the period
from September 30, 2000 through March 30, 2001; 5.25 during the period from
March 31,
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2001 through June 29, 2001; 5.00 during the period from June 30, 2001 through
December 30, 2001; 4.75 during the period from December 31, 2001 through June
29, 2002; 4.50 during the period from June 30, 2002 through September 29, 2002;
and 4.25 thereafter.
"LIBOR" means, for each Interest Period, the offered rate per annum for
deposits of Dollars for the applicable Interest Period that appears on Telerate
Page 3750 as of 11:00 A.M. (London, England time) two (2) Business Days prior
to the first day in such Interest Period. If no such offered rate exists, such
rate will be the rate of interest per annum, as determined by the Agent
(rounded upwards, if necessary, to the nearest 1/16 of 1%) at which deposits of
Dollars in immediately available funds are offered at 11:00 A.M. (London,
England time) two (2) Business Days prior to the first day in such Interest
Period by major financial institutions reasonably satisfactory to the Agent in
the London interbank market for such Interest Period for the applicable
principal amount on such date of determination.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease, any financing lease
having substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to which such
lien relates as debtor, under the UCC or any comparable law) and any contingent
or other agreement to provide any of the foregoing, but not including the
interest of a lessor under a lease which is not a Capital Lease.
"Loan" means an extension of credit by a Lender to the Borrower pursuant
to Article I hereof, and may be a Base Rate Loan or a LIBOR Rate Loan.
"Loan Documents" means this Agreement, the Notes, the Collateral
Documents and all documents delivered to the Agent in connection therewith.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"Majority Lenders" means at any time (a) Lenders then holding at least
fifty-one percent (51%) of the Aggregate Commitment then in effect or (b) if
the Commitments have been terminated, Lenders then having at least fifty-one
percent (51%) of the aggregate principal amount of the Loans then outstanding.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries
taken as a whole; (b) a material impairment of (i) the ability of the Borrower
to pay any of the Loans or any of the other Obligations in accordance with the
terms of this Agreement, (ii) the ability of any Subsidiary to pay any of its
obligations and liabilities to the Agent or any Lender under the Loan Documents
or (iii) the ability of the
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Borrower to avoid any Event of Default; or (c) a material adverse effect upon
(i) the legality, validity, binding effect or enforceability of this Agreement,
any Note or any Collateral Document, or (ii) the perfection or priority of any
Lien granted to the Lenders or to the Agent for the benefit of the Lenders
under any of the Collateral Documents.
"Mortgage" means any deed of trust, mortgage or other document creating
a Lien on real property or any interest in real property.
"Multiemployer Plan" means a "multiemployer plan" (within the meaning of
Section 4001(a)(3) of ERISA) and to which Borrower or any member of the
Controlled Group makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to make,
contributions.
"Net Issuance Proceeds" means, in respect of any issuance of debt or
equity, cash proceeds and the fair market value of non-cash proceeds received
by Borrower or any of its Subsidiaries in connection therewith, net of out-of-
pocket costs and expenses paid or incurred in connection therewith in favor of
any Person not an Affiliate of the Borrower.
"Net Proceeds" means proceeds in cash, checks or other cash equivalent
financial instruments (including Cash Equivalents) as and when received by the
Person making a Disposition, net of: (a) the direct costs relating to such
Disposition excluding amounts payable to the Borrower or any Affiliate of the
Borrower, (b) sale, use or other transaction taxes paid or payable as a result
thereof, (c) amounts required to be applied to repay principal, interest and
prepayment premiums and penalties on Indebtedness secured by a Lien on the
asset which is the subject of such Disposition, and (d) appropriate amounts to
be provided by the Borrower or any of its Subsidiaries, as the case may be, as
a reserve, in accordance with GAAP, against any liabilities associated with
such Disposition and retained by the Borrower or any Subsidiary, as the case
may be, after such Disposition. "Net Proceeds" shall also include proceeds
paid on account of any Event of Loss net of (i) all money actually applied to
repair, reconstruct or replace the damaged property or property affected by the
condemnation or taking, (ii) all of the costs and expenses incurred in
connection with the collection of such proceeds, award or other payments, and
(iii) any amounts retained by or paid or payable to parties having superior
rights to such proceeds, awards or other payments.
"Note" means any Revolving Note, Acquisition Note or Term Note and
"Notes" means all such Notes.
"Notice of Borrowing" means a notice given by the Borrower to the Agent
pursuant to Section 1.5, in substantially the form of Exhibit 11.1(c) hereto.
"Notice of Conversion/Continuation" means a notice given by the Borrower
to the Agent pursuant to Section 1.6, in substantially the form of Exhibit
11.1(d) hereto.
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"Obligations" means all Loans, and other Indebtedness, advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower to any
Lender, the Agent, or any other Person required to be indemnified, that arises
under any Loan Document, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification or
in any other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired.
"Ordinary Course of Business" means, in respect of any transaction
involving the Borrower or any Subsidiary of the Borrower, the ordinary course
of such Person's business, as conducted by any such Person in accordance with
past practice and undertaken by such Person in good faith and not for purposes
of evading any covenant or restriction in any Loan Document.
"Organization Documents" means, (a) for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable resolutions
of the board of directors (or any committee thereof) of such corporation, (b)
for any partnership, the partnership agreement and, if applicable, certificate
of limited partnership or (c) for any limited liability company, the operating
agreement and articles or certificate of formation.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
"Permitted Holders" means the following Persons: Ares Leveraged
Investment Fund, L.P., Culligan Water Technologies, Inc., Erica Jesselson, SV
Capital Partners, L.P., Norwest Equity Partners V, The Food Fund II Limited
Partnership, A.J. Lewis III, Steven P. Rosenberg, and James F. Stuart, and any
of their respective Affiliates and Family Members, each of the foregoing
individually being a "Permitted Holder,"
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower or any member of the Controlled Group sponsors or
maintains or to which the Borrower or any member of the Controlled Group makes,
is making or is obligated to make contributions.
"Pledge Agreement" means the Pledge Agreement, dated as of even date
herewith, in form and substance reasonably acceptable to the Agent and the
Borrower, made by the Borrower in favor of the Agent, for the benefit of the
Lenders.
"Pledged Collateral" has the meaning specified in the Pledge Agreement.
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"Prior Indebtedness" means the indebtedness and obligations specified on
Schedule 11.1 hereto.
"Pro Forma EBITDA" means, with respect to any Target, EBITDA for such
Target for the most recent twelve (12) month period for which financial
statements are available at the time of determination thereof, adjusted by
verifiable expense reductions, including excess owner compensation, if any,
which are expected to be realized, in each case calculated by the Borrower and
approved by the Agent pursuant to Section 5.16.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
"Qualified Plan" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes,
is making or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding period covering at least five (5)
plan years, but excluding any Multiemployer Plan.
"Rate Contracts" means swap agreements (as such term is defined in
Section 101 of the Bankruptcy Code) and any other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Reddy Ice Purchase Agreement" means the Stock Purchase Agreement dated
as of March 27, 1998 between the Borrower and Suiza Foods Corporation.
"Related Agreements" means the Reddy Ice Purchase Agreement, the Senior
Notes Documents and the Preferred Stock Documents.
"Related Transactions" means the transactions contemplated by the
Related Agreements.
"Reportable Event" means, as to any Plan, (a) any of the events set
forth in Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been waived
in regulations issued by the PBGC, (b) a withdrawal from a Plan described in
Section 4063 of ERISA, or (c) a cessation of operations described in Section
4062(e) of ERISA.
"Required Lenders" means, at any time (a) Lenders then holding at least
sixty-six and two-thirds percent (66-2/3%) of the Aggregate Commitment or (b)
if the Commitments have been terminated, Lenders then having at least sixty six
and two-thirds percent (66-2/3%) of the aggregate unpaid principal amount of
the Loans then outstanding.
"Requirement of Law" means, as to any Person, any law (statutory or
common), ordinance, treaty, rule, regulation, order, policy, other legal
requirement or determination of an
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arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.
"Responsible Officer" means the chief executive officer or the president
of the Borrower, or any other officer having substantially the same authority
and responsibility; or, with respect to compliance with financial covenants or
delivery of financial information, the chief financial officer or the treasurer
of the Borrower, or any other officer having substantially the same authority
and responsibility.
"Revolving Note" means a promissory note of the Borrower payable to the
order of a Lender and otherwise substantially the form of Exhibit 11.1(e)
hereto, evidencing indebtedness of the Borrower under the Revolving Loan
Commitment of such Lender.
"Revolving Termination Date" means the earlier to occur of: (a) March
31, 2003; and (b) the date on which the Aggregate Revolving Loan Commitment
shall terminate in accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any entity
succeeding to any of its principal functions.
"Security Agreement" means the Security Agreement, dated as of even date
herewith, in form and substance reasonably satisfactory to the Agent and the
Borrower, made by the Borrower and each Subsidiary of the Borrower in favor of
the Agent for the benefit of the Lenders.
"Senior Notes" means those Series A 9 3/4% Senior Notes due February 1,
2005 in the aggregate principal amount of $270,000,000 issued on or prior to
the Closing Date pursuant to the Indenture, and any substantially identical
Series B 9 3/4% Senior Notes due February 1, 2005 which are issued under the
Indenture in exchange for such Series A 9 3/4% Senior Notes pursuant to the
Registration Rights Agreement contemplated by the Indenture.
"Senior Notes Documents" means the Indenture, the Senior Notes, the
respective Purchase Agreements dated as of January 22, 1998 and the Closing
Date between the Borrower and the initial purchaser of the Senior Notes, the
Registration Rights Agreement contemplated by the Indenture and the other
agreements executed pursuant to the foregoing.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the
Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the
Property of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured; (c) such Person is able to realize upon its Property and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they
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mature in the normal course of business; (d) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital.
"Subordinated Indebtedness" means all Indebtedness of the Borrower or
any of its Subsidiaries which is subordinated in right of payment to the
Obligations in a manner satisfactory to the Agent and the Required Lenders.
"Subsidiary" of a Person means any corporation, association, limited
liability company, partnership, joint venture or other business entity of which
more than fifty percent (50%) of the voting stock or other equity interests (in
the case of Persons other than corporations), is owned or controlled directly
or indirectly by the Person, or one or more of the Subsidiaries of the Person,
or a combination thereof.
"Target" means any other Person or business unit or asset group of any
other Person acquired or proposed to be acquired in an Acquisition.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Illinois.
"Unfinanced Capital Expenditures" means Capital Expenditures financed
with the proceeds of Indebtedness (excluding Revolving Loans).
"Unfunded Pension Liabilities" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used by the Plan's
actuaries for funding the Plan pursuant to section 412 for the applicable plan
year.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every
other class, in each case, at the time as of which any determination is being
made, is owned, beneficially and of record, by the Borrower, or by one or more
of the other Wholly-Owned Subsidiaries of the Borrower, or both.
"Withdrawal Liabilities" means, as of any determination date, the
aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA
if the Controlled Group made a complete withdrawal from all Multiemployer Plans
and any increase in contributions pursuant to Section 4243 of ERISA.
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11.2. Other Interpretive Provisions.
(a) Defined Terms. Unless otherwise specified herein or therein,
all terms defined in this Agreement shall have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto. The
meaning of defined terms shall be equally applicable to the singular and plural
forms of the defined terms. Terms (including uncapitalized terms) not
otherwise defined herein and that are defined in the UCC shall have the
meanings therein described.
(b) The Agreement. The words "hereof", "herein", "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
subsection, section, schedule and exhibit references are to this Agreement
unless otherwise specified.
(c) Certain Common Terms. The term "documents" includes any and
all instruments, documents, agreements, certificates, indentures, notices and
other writings, however evidenced. The term "including" is not limiting and
means "including without limitation."
(d) Performance; Time. Whenever any performance obligation
hereunder (other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each
mean "to but excluding", and the word "through" means "to and including." If
any provision of this Agreement refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision
shall be interpreted to encompass any and all means, direct or indirect, of
taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments, including this
Agreement and the other Loan Documents, shall be deemed to include all
subsequent amendments thereto, restatements thereof and other modifications and
supplements thereto which are in effect from time to time, but only to the
extent such amendments and other modifications are not prohibited by the terms
of any Loan Document.
(f) Laws. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.
11.3. Accounting Principles. (a) Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year", "fiscal quarter" and "fiscal
month" refer to such fiscal periods of the Borrower.
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[Balance of page intentionally left blank; signature page follows]
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<PAGE> 97
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.
PACKAGED ICE, INC.
By:
------------------------------
Title:
---------------------------
Borrower's FEIN:
----------------
Address for notices:
---------------------------------
---------------------------------
Attn:
---------------------------
Facsimile:
-----------------------
Address for Wire Transfers:
---------------------------------
---------------------------------
ANTARES LEVERAGED CAPITAL CORP.,
as Agent and as a Lender
By:
------------------------------
Title: Director
Address for notices:
311 South Wacker Drive
Suite 2725
Chicago, IL 60606
Attn: David Swanson
Facsimile: (312) 697-3998
Telephone: (312) 697-3955
Address for payments:
Antares Leveraged Capital Corp.
Account # 4070-6016
Citibank N.A., NY
ABA # 021000089
Reference: Packaged Ice, Inc.
Please advise Jim Luchansky at
(312) 697-3991 upon receipt
<PAGE> 98
SCHEDULE 1.1(a)
REVOLVING LOAN COMMITMENTS
<TABLE>
<S> <C>
Antares Leveraged Capital Corp. $15,000,000
</TABLE>
<PAGE> 99
SCHEDULE 1.1(c)
ACQUISITION LOAN COMMITMENTS
<TABLE>
<S> <C>
Antares Leveraged Capital Corp. $65,000,000
</TABLE>
2
<PAGE> 1
EXHIBIT 10.2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of April 30, 1998 among Packaged
Ice, Inc., a Texas corporation ("Debtor") and Antares Leveraged Capital Corp.,
a Delaware corporation (the "Secured Party"), as agent for the benefit of the
"Lenders" (as such term is hereinafter defined).
W I T N E S S E T H:
WHEREAS, Debtor has entered into that certain Credit Agreement of
even date herewith (the same, as it may be amended, restated, modified or
supplemented and in effect from time to time, being herein referred to as the
"Credit Agreement") with Secured Party, as agent for the benefit of all lenders
and individually as a lender (together with all other "Lenders" thereunder as
defined therein, the "Lenders"), and the other Lenders parties thereto,
providing for the Lenders to make available to Debtor certain term and
revolving credit facilities on the terms and conditions set forth therein; and
WHEREAS, to induce the Secured Party and the Lenders to enter
into the Credit Agreement and make the Loans thereunder, Debtor has agreed to
pledge and grant a security interest in the Collateral (as hereinafter defined)
as security for the Liabilities (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used herein without
definition and defined in the Credit Agreement are used herein as defined
therein. In addition, as used herein:
"Accounts" means, as at any date of determination, all "accounts"
(as such term is defined in the Uniform Commercial Code) of Debtor,
including, without limitation, the unpaid portion of the obligation of a
customer of Debtor in respect of Inventory purchased by and shipped to
such customer and/or the rendition of services by Debtor, as stated on
the respective invoice of Debtor, net of any credits, rebates or offsets
owed to such customer.
"Chattel Paper" means any "chattel paper," as such term is
defined in the Uniform Commercial Code.
"Collateral" shall have the meaning ascribed thereto in Section 3
hereof.
"Contracts" means all contracts, undertakings, or other
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under
<PAGE> 2
which Debtor may now or hereafter have any right, title or interest,
including, without limitation, with respect to an Account, any agreement
relating to the terms of payment or the terms of performance thereof.
"Copyrights" means any copyrights, rights and interests in
copyrights, works protectable by copyrights, copyright registrations and
copyright applications, including, without limitation, the copyright
registrations and applications listed on Schedule III attached hereto,
and all renewals of any of the foregoing, all income, royalties, damages
and payments now and hereafter due and/or payable under or with respect
to any of the foregoing, including, without limitation, damages and
payments for past, present and future infringements of any of the
foregoing and the right to sue for past, present and future
infringements of any of the foregoing.
"Documents" means any "documents," as such term is defined in the
Uniform Commercial Code, and shall include, without limitation, all
documents of title (as defined in the Uniform Commercial Code), bills of
lading or other receipts evidencing or representing Inventory or
Equipment.
"Equipment" means any "equipment," as such term is defined in the
Uniform Commercial Code and, in any event, shall include, Motor
Vehicles.
"Fixtures" means any "fixtures," as such term is defined in the
Uniform Commercial Code, and, in any event, shall include, without
limitation, all plant fixtures, trade fixtures, business fixtures, other
fixtures and storage facilities.
"General Intangibles" means any "general intangibles," as such
term is defined in the Uniform Commercial Code, and, in any event, shall
include, without limitation, all right, title and interest in or under
any Contract, models, drawings, materials and records, claims, literary
rights, goodwill, rights of performance, Copyrights, Trademarks,
Patents, warranties, rights under insurance policies and rights of
indemnification.
"Goods" means any "goods", as such term is defined in the Uniform
Commercial Code.
"Instruments" means any "instrument," as such term is defined in
the Uniform Commercial Code, and shall include, without limitation,
promissory notes, drafts, bills of exchange, trade acceptances, letters
of credit, and Chattel Paper.
"Inventory" means all of the "inventory" (as such term is
defined in the Uniform Commercial Code) of Debtor, including, but not
limited to, all
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<PAGE> 3
merchandise, raw materials, parts, supplies, work-in-process and
finished goods intended for sale, together with all the containers,
packing, packaging, shipping and similar materials related thereto, and
including such inventory as is temporarily out of the Debtor's custody
or possession, including inventory on the premises of others and items
in transit.
"Investment Property" means any "investment property", as such
term is defined in the Uniform Commercial Code.
"Liabilities" shall mean all obligations and liabilities of
Debtor under or in respect of this Agreement and the Credit Agreement.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers,
trucks and other like property, whether or not the title thereto is
governed by a certificate of title or ownership.
"Patents" means any patents and patent applications, including,
without limitation, the inventions and improvements described and
claimed therein, all patentable inventions and those patents and patent
applications listed on Schedule IV attached hereto, and the reissues,
divisions, continuations, renewals, extensions and continuations-in-part
of any of the foregoing, and all income, royalties, damages and payments
now or hereafter due and/or payable under or with respect to any of the
foregoing, including, without limitation, damages and payments for past,
present and future infringements of any of the foregoing and the right
to sue for past, present and future infringements of any of the
foregoing.
"Proceeds" means "proceeds," as such term is defined in the
Uniform Commercial Code and, in any event, includes, without limitation,
(a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable with respect to any of the Collateral and with respect
to any General Intangible not otherwise constituting Collateral, (b) any
and all payments (in any form whatsoever) made or due and payable from
time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral
by any governmental body, authority, bureau or agency (or any person
acting under color of governmental authority), and (c) any and all other
amounts from time to time paid or payable under, in respect of or in
connection with any of the Collateral and any General Intangible not
otherwise constituting Collateral.
"Representative" means any Person acting as agent, representative
or trustee on behalf of the Secured Party from time to time.
"Trademarks" means any trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service
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<PAGE> 4
marks, logos, other business identifiers, prints and labels on which any
of the foregoing have appeared or appear, all registrations and
recordings thereof, and all applications in connection therewith,
including, without limitation, the trademarks and applications listed in
Schedule V attached hereto and renewals thereof (but specifically
excluding all "intent to use" applications to the extent that such
applications are non-transferable under applicable law), and all income,
royalties, damages and payments now or hereafter due and/or payable
under or with respect to any of the foregoing, including, without
limitation, damages and payments for past, present and future
infringements of any of the foregoing and the right to sue for past,
present and future infringements of any of the foregoing.
"Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect from time to time in the State of Illinois.
Section 2. Representations, Warranties and Covenants of
Debtor. After giving effect to the Related Transactions, Debtor represents and
warrants to, and covenants with, the Secured Party, for the benefit of the
Secured Party and the Lenders, as follows:
(a) Debtor is the owner of the Collateral in which it purports
to grant a security interest pursuant to Section 3 hereof (subject, with
respect to after acquired Collateral, to Debtor acquiring the same) and no Lien
other than Permitted Liens exists or will exist upon such Collateral at any
time;
(b) this Agreement is effective to create in favor of Secured
Party for the benefit of the Secured Party and the Lenders a valid security
interest in and Lien upon all of Debtor's right, title and interest in and to
the Collateral, and, upon the filing of appropriate Uniform Commercial Code
financing statements in the jurisdictions listed on Schedule I attached hereto,
such security interest will be duly perfected in all the Collateral in which a
security interest can be perfected by the filing of a financing statement, and
upon delivery of the Instruments to the Secured Party or its Representative,
duly endorsed by Debtor or accompanied by appropriate instruments of transfer
duly executed by Debtor, the security interest in the Instruments will be duly
perfected;
(c) all of the Equipment, Inventory and Goods owned by Debtor
is located at the places as specified on Schedule I attached hereto. Except as
disclosed on Schedule I, none of the Collateral is in the possession of any
bailee, warehousemen, processor or consignee. The chief place of business,
chief executive office and the office where Debtor keeps its books and records
are located at the place as specified on Schedule I. Debtor (including any
Person acquired by Debtor) does not do business and has not done business
during the past five (5) years under any trade name or fictitious business name
except as disclosed on Schedule II attached hereto;
4
<PAGE> 5
(d) no Copyrights, Patents or Trademarks listed on Schedules
III, IV and V, respectively, if any, that are material to the operation of the
business of Debtor have been adjudged invalid or enforceable or have been
canceled, in whole or in part, or are not presently subsisting. Each of such
Copyrights, Patents and Trademarks that are material to the operation of the
business of Debtor is valid and enforceable. Debtor is the sole and exclusive
owner of the entire and unencumbered right, title and interest in and to each
of such Copyrights, Patents and Trademarks, identified on Schedules III, IV and
V, as applicable, as being owned by Debtor, free and clear of any liens,
charges and encumbrances, including without limitation licenses, shop rights
and covenants by Debtor not to sue third persons, other than Permitted Liens.
Debtor has adopted, used and is currently using, or has a current bona fide
intention to use, all of such Trademarks and Copyrights that are material to
the operation of the business of Debtor. Debtor has no notice of any suits or
actions commenced or threatened with reference to the Copyrights, Patents or
Trademarks owned by it.
(e) Debtor agrees to deliver to the Secured Party an updated
Schedule I, II, III, IV and/or V within five (5) days of any change thereto
with respect to Debtor.
(f) All depositary and other accounts maintained by Debtor are
described on Schedule VI hereto, which description includes for each such, the
name, address and telephone and telecopy numbers of the financial institution
at which such account is maintained, the account number and the account
officer, if any, of such account. Debtor shall not open any new accounts
unless Debtor shall have given Secured Party ten (10) Business Days' prior
written notice of its intention to open any such new accounts. Debtor shall
deliver to Secured Party a revised version of Schedule VI showing any changes
thereto within five (5) Business Days of any such change with respect to
Debtor. Debtor hereby authorizes the financial institutions at which Debtor
maintains an account to provide Secured Party with such information with
respect to such account as Secured Party from time to time reasonably may
request, and Debtor hereby consents to such information being provided to
Secured Party.
Section 3. Collateral. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Liabilities, Debtor hereby pledges and grants to the Secured
Party, for the benefit of the Secured Party and the Lenders, a Lien on and
security interest in and to all of Debtor's right, title and interest in the
following property and interests in property, whether now owned by Debtor or
hereafter acquired and whether now existing or hereafter coming into existence
and wherever located (all being collectively referred to herein as
"Collateral"):
(a) the Instruments of Debtor, together with all payments
thereon or thereunder:
(b) all Accounts;
5
<PAGE> 6
(c) all Inventory;
(d) all General Intangibles (excluding any General Intangible
as to which the grant of a security interest therein would constitute a
violation of a valid and enforceable restriction on such grant (until such time
as any required consent shall have been obtained, Debtor agreeing to use its
commercially reasonable efforts to obtain any such required consent));
(e) all Equipment;
(f) all Documents;
(g) all Contracts (excluding any General Intangible as to
which the grant of a security interest therein would constitute a violation of
a valid and enforceable restriction on such grant (until such time as any
required consent shall have been obtained, Debtor agreeing to use its
commercially reasonable efforts to obtain any such required consent));
(h) all Goods;
(i) all Fixtures;
(j) all Investment Property;
(k) the balance from time to time in all bank and depository
accounts maintained by Debtor; and
(l) all other tangible and intangible property of Debtor,
including, without limitation, all Proceeds, products, accessions, rents,
profits, income, benefits, substitutions, additions and replacements of and to
any of the property of Debtor described in the preceding clauses of this
Section 3 (including, without limitation, any proceeds of insurance thereon and
all rights, claims and benefits against any Person relating thereto and
including all Proceeds of Contracts and other General Intangibles excluded from
clauses (d) and (g) above) and all books, correspondence, files, records,
invoices and other papers, including without limitation all tapes, cards,
computer runs, computer programs, computer files and other papers, documents
and records in the possession or under the control of Debtor or any computer
bureau or service company from time to time acting for Debtor.
Section 4. Covenants; Remedies. In furtherance of the grant
of the pledge and security interest pursuant to Section 3 hereof, Debtor hereby
agrees with the Secured Party, for the benefit of Secured Party and the
Lenders, as follows:
4.1. Delivery and Other Perfection; Maintenance, etc.
(a) Delivery of Instruments. Debtor shall deliver and pledge
to the Secured Party or its Representative any and all Instruments, duly
endorsed and/or accompanied by such
6
<PAGE> 7
instruments of assignment and transfer executed by Debtor in such form and
substance as the Secured Party or its Representative may request; provided,
that so long as no Event of Default shall have occurred and be continuing,
Debtor may retain for collection in the ordinary course of business any
Instruments received by Debtor in the ordinary course of business, and the
Secured Party or its Representative shall, promptly upon request of Debtor,
make appropriate arrangements for making any other Instruments pledged by
Debtor available to Debtor for purposes of presentation, collection or renewal
(any such arrangement to be effected, to the extent deemed appropriate by the
Secured Party or its Representative, against trust receipt or like document).
(b) Other Documents and Actions. Debtor shall give, execute,
deliver, file and/or record any financing statement, notice, instrument,
document, agreement or other papers that may be necessary or desirable (in the
reasonable judgment of the Secured Party or its Representative) to create,
preserve, perfect or validate the security interest granted pursuant hereto or
to enable the Secured Party or its Representative to exercise and enforce the
rights of the Secured Party hereunder with respect to such pledge and security
interest, provided that notices to account debtors in respect of any Accounts
or Instruments shall be subject to the provisions of clause (e) below.
(c) Books and Records. Debtor shall maintain at its own cost
and expense complete and accurate books and records of the Collateral,
including, without limitation, a record of all payments received and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. Upon the occurrence and during the continuation of any Event of
Default, Debtor shall deliver and turn over any such books and records (or true
and correct copies thereof) to the Secured Party or its Representative at any
time on demand. Debtor shall permit any Representative of the Secured Party to
inspect such books and records at any time during reasonable business hours and
will provide photocopies thereof at Debtor's expense to the Secured Party upon
request of the Secured Party.
(d) Motor Vehicles. Debtor shall, promptly upon the request of
the Secured Party or its Representative, cause the Secured Party to be listed
as the lienholder on each certificate of title or ownership covering any items
of Equipment, including Motor Vehicles.
(e) Notice to Account Debtors; Verification. (i) Upon the
occurrence and during the continuance of any Event of Default, upon request of
the Secured Party or its Representative, Debtor shall promptly notify (and
Debtor hereby authorizes the Secured Party and its Representative so to notify)
each account debtor in respect of any Accounts or Instruments that such
Collateral has been assigned to the Secured Party hereunder, and that any
payments due or to become due in respect of such Collateral are to be made
directly to the Secured Party, and (ii) the Secured Party and its
Representative shall have the right at any time or times to make direct
verification with the account debtors of any and all of the Accounts.
7
<PAGE> 8
(f) Intellectual Property. Debtor represents and warrants
that the Copyrights, Patents and Trademarks listed on Schedules III, IV and V,
respectively, constitute all of the registered Copyrights and all of the
Patents and Trademarks now owned by Debtor. If Debtor shall (i) obtain rights
to any new patentable inventions, any registered Copyrights or any Patents or
Trademarks, or (ii) become entitled to the benefit of any registered Copyrights
or any Patents or Trademarks or any improvement on any Patent, the provisions
of this Agreement above shall automatically apply thereto and Debtor shall give
to Secured Party prompt written notice thereof. Debtor hereby authorizes
Secured Party to modify this Agreement by amending Exhibits III, IV and V, as
applicable, to include any such registered Copyrights or any such Patents and
Trademarks. Debtor shall have the duty (i) to prosecute diligently any patent,
trademark, or service mark applications pending as of the date hereof or
hereafter, (ii) to make application on unpatented but patentable inventions and
on trademarks, copyrights and service marks, as appropriate, (iii) to preserve
and maintain all rights in the Copyrights, Patents and Trademarks, to the
extent material to the operations of the business of Debtor and (iv) to ensure
that the Copyrights, Patents and Trademarks are and remain enforceable, to the
extent material to the operations of the business of Debtor. Any expenses
incurred in connection with Debtor's obligations under this Section 4.1(f)
shall be borne by Debtor. Debtor shall not abandon any right to file a patent,
trademark or service mark application, or abandon any pending patent,
application or any other Copyright, Patent or Trademark without the written
consent of Secured Party, which consent shall not be unreasonably withheld.
(g) Further Identification of Collateral. Debtor will, when
and as often as requested by the Secured Party or its Representative, furnish
to the Secured Party or such Representative, statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Secured Party or its Representative may reasonably
request, all in reasonable detail.
(h) Investment Property. Debtor will take any and all actions
required or requested by the Secured Party, from time to time, to (i) cause the
Secured Party to obtain exclusive control of any Investment Property owned by
Debtor in a manner acceptable to the Secured Party and (ii) obtain from any
issuers of Investment Property and such other Persons, for the benefit of the
Secured Party, written confirmation of the Secured Party's control over such
Investment Property. For purposes of this Section 4.1(h), the Secured Party
shall have exclusive control of Investment Property if (i) such Investment
Property consists of certificated securities and Debtor delivers such
certificated securities to the Secured Party (with appropriate endorsements if
such certificated securities are in registered form); (ii) such Investment
Property consists of uncertificated securities and either (x) Debtor delivers
such uncertificated securities to the Secured Party or (y) the issuer thereof
agrees, pursuant to documentation in form and substance satisfactory to the
Secured Party, that it will comply with instructions originated by the Secured
Party without further consent by Debtor, and (iii) such Investment Property
consists of security entitlements and either (x) the Secured Party becomes the
entitlement holder thereof or (y) the appropriate securities intermediary
agrees, pursuant to the documentation in form and
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<PAGE> 9
substance satisfactory to the Secured Party, that it will comply with
entitlement orders originated by the Secured Party without further consent by
Debtor.
(i) Compliance with Loan Documents. Debtor shall comply with
the provisions of the Loan Documents applicable thereto, including, without
limitation, maintenance of insurance, restrictions on dispositions, and
providing Secured Party and its representatives the right to inspections with
respect to the Collateral.
4.2. Other Liens. Debtor will not create, permit or suffer to
exist, and will defend the Collateral against and take such other action as is
necessary to remove, any Lien on the Collateral except Permitted Liens, and
will defend the right, title and interest of the Secured Party in and to the
Collateral and in and to all Proceeds thereof against the claims and demands of
all Persons whatsoever.
4.3. Preservation of Rights. Whether or not any Event of
Default has occurred or is continuing, the Secured Party and its Representative
may, but shall not be required to, after notice to Debtor in the absence of a
continuing Event of Default, take any steps the Secured Party or its
Representative deems necessary or appropriate to preserve any Collateral or any
rights against third parties to any of the Collateral, including obtaining
insurance of Collateral at any time when Debtor has failed to do so, and Debtor
shall promptly pay, or reimburse the Secured Party for, all expenses incurred
in connection therewith.
4.4. Name Change; Location; Bailees.
(a) Debtor will notify Secured Party promptly in writing prior
to any change in Debtor's name, identity or corporate structure or the proposed
use by Debtor of any tradename or fictitious business name other than any such
name set forth on Schedule II attached hereto.
(b) Except for the sale of Inventory in the ordinary course of
business and except as permitted by the Credit Agreement, Debtor will keep the
Collateral at the locations specified in Schedule I applicable to Debtor.
Debtor will give Secured Party thirty (30) day's prior written notice of any
change in Debtor's chief place of business or of any new location for any of
the Collateral.
(c) If any Collateral is at any time in the possession or
control of any warehousemen, bailee, consignee or processor, Debtor shall, upon
the request of Secured Party or its Representative, notify such warehousemen,
bailee, consignee or processor of the Lien and security interest created hereby
and shall instruct such Person to hold all such Collateral for Secured Party's
account subject to Secured Party's instructions.
4.5. Bank Accounts.
(a) At Secured Party's request, on or prior to the Closing
Date, or at any time thereafter, the Secured Party and Debtor shall enter into
a bank agency agreement ("Bank
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<PAGE> 10
Agency Agreement"), in a form specified by the Secured Party, with each
financial institution with which Debtor maintains from time to time any deposit
accounts (general or special), which financial institutions are set forth on
Schedule VI attached hereto. Pursuant to the Bank Agency Agreements and
pursuant hereto, Debtor grants and shall grant to the Secured Party a
continuing lien upon, and security interest in, all such accounts and all funds
at any time paid, deposited, credited or held in such accounts (whether for
collection, provisionally or otherwise) or otherwise in the possession of such
financial institutions, and each such financial institution shall act as the
Secured Party's agent in connection therewith. Following the Closing Date,
Debtor shall not establish any deposit account with any financial institution
unless prior thereto, at the request of Secured Party, the Secured Party and
Debtor shall have entered into a Bank Agency Agreement with such financial
institution.
(b) Upon the Secured Party's request following the occurrence
of an Event of Default, Debtor shall establish lock-box or blocked accounts
(collectively, "Blocked Accounts") in Debtor's name with such banks as are
acceptable to the Secured Party ("Collecting Banks"), subject to irrevocable
instructions in a form specified by the Secured Party, to which the obligors of
all Accounts shall directly remit all payments on Accounts and in which Debtor
will immediately deposit all cash payments for Inventory or other cash payments
constituting proceeds of Collateral in the identical form in which such payment
was made, whether by cash or check. In addition, the Secured Party may
establish one or more depository accounts at each Collecting Bank or at a
centrally located bank (collectively, the "Depository Account"). From and
after receipt by any Collecting Bank of written notice from the Secured Party
to such Collecting Bank that an Event of Default has occurred and is
continuing, all amounts held or deposited in the Blocked Accounts held by such
Collecting Bank shall be transferred to the Depository Account. Subject to the
foregoing, Debtor hereby agrees that all payments received by the Secured Party
or any Lender whether by cash, check, wire transfer or any other instrument,
made to such Blocked Accounts or otherwise received by the Secured Party or any
Lender and whether in respect of the Accounts or as proceeds of other
Collateral or otherwise will be the sole and exclusive property of the Secured
Party for the benefit of the Secured Party and the Lenders. Debtor, and any of
its Affiliates, employees, agents and other Persons acting for or in concert
with Debtor shall, acting as trustee for the Secured Party, receive, as the
sole and exclusive property of the Secured Party, any moneys, checks, notes,
drafts or other payments relating to and/or proceeds of Accounts or other
Collateral which come into the possession or under the control of Debtor or any
Affiliates, employees, agent or other Persons acting for or in concert with
Debtor, and immediately upon receipt thereof, Debtor or Persons shall deposit
the same or cause the same to be deposited in kind, in a Blocked Account.
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<PAGE> 11
4.6. Events of Default, Etc. During the period during which an
Event of Default shall have occurred and be continuing:
(a) Debtor shall, at the request of the Secured Party or its
Representative, assemble the Collateral at such place or places as may be
reasonably designated by the Secured Party or its Representative;
(b) the Secured Party or its Representative may make any
reasonable compromise or settlement deemed desirable with respect to any of the
Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, any of the Collateral;
(c) the Secured Party shall have all of the rights and
remedies with respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not said Uniform Commercial Code is in effect in
the jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted, including, without limitation, the right, to the maximum extent
permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if the Secured Party were the sole
and absolute owner thereof (and Debtor agrees to take all such action as may be
appropriate to give effect to such right);
(d) the Secured Party or its Representative in their
discretion may, in the name of the Secured Party or in the name of Debtor or
otherwise, demand, sue for, collect or receive any money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so;
(e) the Secured Party or its Representative may take immediate
possession and occupancy of any premises owned, used or leased by Debtor and
exercise all other rights and remedies of an assignee which may be available to
the Secured Party; and
(f) the Secured Party may, upon ten (10) Business Days' prior
written notice to Debtor of the time and place (which notice Debtor hereby
agree is commercially reasonable notification for purposes hereof), with
respect to the Collateral or any part thereof which shall then be or shall
thereafter come into the possession, custody or control of the Secured Party or
its Representative, sell, lease, assign or otherwise dispose of all or any part
of such Collateral, at such place or places as the Secured Party deems best,
and for cash or for credit or for future delivery (without thereby assuming any
credit risk), at public or private sale, without demand of performance or
notice of intention to effect any such disposition or of the time or place
thereof (except such notice as is required above or by applicable statute and
cannot be waived), and the Secured Party or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Collateral so disposed of at
any public sale (or, to the extent permitted by law, at any private sale) and
thereafter hold the same absolutely, free from any claim or right of whatsoever
kind, including any right or equity of redemption (statutory or otherwise), of
Debtor, any such demand, notice and right or equity being hereby expressly
waived and released. The Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be
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adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be
so adjourned.
The proceeds of each collection, sale or other disposition under
this Section 4.6 shall be applied in accordance with Section 4.9 hereof.
4.7. Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral are insufficient to cover the costs and
expenses of such realization and the payment in full of the Liabilities, Debtor
shall remain liable for any deficiency.
4.8. Private Sale. Debtor recognizes that the Secured Party may
be unable to effect a public sale of any or all of the Collateral consisting of
securities by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "Act"), and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. Debtor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Secured Party shall be under no obligation
to delay a sale of any of the Collateral to permit Debtor to register such
Collateral for public sale under the Act, or under applicable state securities
laws, even if Debtor would agree to do so. The Secured Party shall not incur
any liability as a result of the sale of any such Collateral, or any part
thereof, at any private sale provided for in this Agreement conducted in a
commercially reasonable manner, and Debtor hereby waives any claims against the
Secured Party arising by reason of the fact that the price at which the
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
amount of the Liabilities, even if the Secured Party accepts the first offer
received and does not offer the Collateral to more than one offeree.
Debtor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion
or all of any such Collateral valid and binding and in compliance with any and
all applicable laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental instrumentalities, domestic
or foreign, having jurisdiction over any such sale or sales, all at Debtor's
expense, provided that Debtor shall be under no obligation to take any action
to enable any or all of such Collateral to be registered under the provisions
of the Act. Debtor further agrees that a breach of any of the covenants
contained in this Section 4.8 will cause irreparable injury to the Secured
Party, that the Secured Party has no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained in
this Section 4.8 shall be specifically enforceable against Debtor, and Debtor
hereby waives and agrees not to
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assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred and is
continuing.
4.9. Application of Proceeds. The proceeds of any collection,
sale or other realization of all or any part of the Collateral, and any other
cash at the time held by the Secured Party under this Agreement, shall be
applied:
first, to payment of all expenses payable or reimbursable under
the Loan Documents executed by Debtor;
second, to payment of all accrued unpaid interest on the
Obligations;
third, to payment of principal of the Obligations;
fourth, to payment of any other amounts owing constituting
Obligations; and
last, any remainder shall be for the account of and paid to the
applicable Debtor.
4.10. Attorney-in-Fact. Debtor hereby irrevocably constitutes
and appoints the Secured Party, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of Debtor and in the name of Debtor or in its own name, from
time to time upon the occurrence and during the continuation of an Event of
Default, in the discretion of the Secured Party, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and,
without limiting the generality of the foregoing, hereby gives the Secured
Party the power and right, on behalf of Debtor, without notice to or assent by
Debtor, to do the following upon the occurrence and during the continuation of
any Event of Default:
(a) to ask, demand, collect, receive and give acquittance and
receipts for any and all moneys due and to become due under any Collateral and,
in the name of Debtor or its own name or otherwise, to take possession of and
endorse and collect any checks, drafts, notes, acceptances or other Instruments
for the payment of moneys due under any Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Secured Party for the purpose of collecting any and
all such moneys due under any Collateral whenever payable and to file any claim
or to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Secured Party for the purpose of collecting
any and all such moneys due under any Collateral whenever payable;
(b) to pay or discharge charges or liens levied or placed on
or threatened against the Collateral (other than the Permitted Liens), to
effect any insurance called for by the terms of this Agreement and to pay all
or any part of the premiums therefor;
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<PAGE> 14
(c) to direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due, and to become due
thereunder, directly to the Secured Party or as the Secured Party shall direct,
and to receive payment of and receipt for any and all moneys, claims and other
amounts due, and to become due at any time, in respect of or arising out of any
Collateral;
(d) to sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts and other
Documents constituting or relating to the Collateral;
(e) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral;
(f) to defend any suit, action or proceeding brought against
Debtor with respect to any Collateral;
(g) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Secured Party may deem appropriate; and
(h) generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Secured Party were the absolute owners thereof for all
purposes, and to do, at the Secured Party's option and at Debtor's expense, at
any time, or from time to time, all acts and things which the Secured Party
reasonably deems necessary to protect, preserve or realize upon the Collateral
and the Secured Party's lien therein, in order to effect the intent of this
Agreement, all as fully and effectively as Debtor might do.
Debtor hereby ratifies, to the extent permitted by law, all that
such attorneys lawfully do or cause to be done by virtue hereof. The power of
attorney granted hereunder is a power coupled with an interest and shall be
irrevocable until the Liabilities are indefeasibly paid in full and the Credit
Agreement is terminated.
Debtor also authorizes the Secured Party, at any time from and
after the occurrence and during the continuation of any Event of Default, (x)
to communicate in its own name with any party to any Contract with regard to
the assignment of the right, title and interest of Debtor in and under the
Contracts hereunder and other matters relating thereto and (y) to execute, in
connection with any sale of Collateral provided for in Section 4.5 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
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4.11. Perfection. Prior to or concurrently with the execution
and delivery of this Agreement, Debtor shall:
(a) file such financing statements, assignments for security
and other documents in such offices as may be necessary or as the Secured Party
or the Representative may request to perfect the security interests granted by
Section 3 of this Agreement; and
(b) at Secured Party's request, deliver to the Secured Party
or its Representative the originals of all Instruments together with, in the
case of Instruments constituting promissory notes, allonges attached thereto
showing such promissory notes to be payable to the order of a blank payee.
4.12. Termination. This Agreement and the Liens and security
interests granted hereunder shall not terminate until the termination of the
Credit Agreement and the full and complete performance and indefeasible
satisfaction of all the Liabilities (regardless of whether the Credit Agreement
shall have earlier terminated), whereupon the Secured Party shall forthwith
cause to be assigned, transferred and delivered, against receipt but without
any recourse, warranty or representation whatsoever, any remaining Collateral
to or on the order Debtor. The Secured Party shall also execute and deliver to
Debtor upon such termination such Uniform Commercial Code termination
statements, certificates for terminating the liens on the Motor Vehicles (if
any) and such other documentation as shall be reasonably requested by Debtor to
effect the termination and release of the Liens and security interests in favor
of the Secured Party affecting the Collateral.
4.13. Further Assurances. (a) At any time and from time to
time, upon the written request of the Secured Party or its Representative, and
at the sole expense of Debtor, Debtor will promptly and duly execute and
deliver any and all such further instruments, documents and agreements and take
such further actions as the Secured Party or its Representative may reasonably
require in order for the Secured Party to obtain the full benefits of this
Agreement and of the rights and powers herein granted in favor of the Secured
Party, including, without limitation, using Debtor's best efforts to secure all
consents and approvals necessary or appropriate for the assignment to the
Secured Party of any Collateral held by Debtor or in which Debtor has any
rights not heretofore assigned, the filing of any financing or continuation
statements under the Uniform Commercial Code with respect to the liens and
security interests granted hereby, transferring Collateral to the Secured
Party's possession (if a security interest in such Collateral can be perfected
by possession), placing the interest of the Secured Party as lienholder on the
certificate of title of any Motor Vehicle and obtaining waivers of liens from
landlords and mortgagees. Debtor also hereby authorizes the Secured Party and
its Representative to file any such financing or continuation statement without
the signature of such Debtor to the extent permitted by applicable law.
(b) Upon the request of the Secured Party, Debtor shall
procure insurers' acknowledgments of any assignments of key man life insurance
policies which may be assigned
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to the Secured Party as additional security for the Liabilities (if any) and
will take all such further action as required by any insurer or the Secured
Party in connection with any such assignment.
4.14. Limitation on Duty of Secured Party. The powers conferred
on the Secured Party under this Agreement are solely to protect the Secured
Party's interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. The Secured Party shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers
and neither the Secured Party nor its Representative nor any of their
respective officers, directors, employees or agents shall be responsible to
Debtor for any act or failure to act, except for gross negligence and willful
misconduct. Without limiting the foregoing, the Secured Party and any
Representative shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in their possession if such Collateral is
accorded treatment substantially equivalent to that which the relevant Secured
Party or any Representative, in its individual capacity, accords its own
property consisting of the type of Collateral involved, it being understood and
agreed that neither the Secured Party nor any Representative shall have any
responsibility for taking any necessary steps (other than steps taken in
accordance with the standard of care set forth above) to preserve rights
against any person with respect to any Collateral.
Also without limiting the generality of the foregoing, neither
the Secured Party nor any Representative shall have any obligation or liability
under any Contract or license by reason of or arising out of this Agreement or
the granting to the Secured Party of a security interest therein or assignment
thereof or the receipt by the Secured Party or any Representative of any
payment relating to any Contract or license pursuant hereto, nor shall the
Secured Party or any Representative be required or obligated in any manner to
perform or fulfill any of the obligations of Debtor under or pursuant to any
Contract or license, or to make any payment, or to make any inquiry as to the
nature or the sufficiency of any payment received by it or the sufficiency of
any performance by any party under any Contract or license, or to present or
file any claim, or to take any action to collect or enforce any performance or
the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.
Section 5. Miscellaneous.
5.1. No Waiver. No failure on the part of the Secured Party or
any of its Representatives to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by the
Secured Party or any of its Representatives of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive
of any rights and remedies provided by law.
5.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws and decisions of the State of
Illinois, without regard to conflict
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of law principles thereof, except to the extent that the perfection of the
security interest hereunder, or remedies hereunder, in respect of any
particular Collateral are mandatorily governed by the laws of a jurisdiction
other than the State of Illinois.
5.3. Notices. All notices, approvals, requests, demands and
other communications hereunder shall be in writing and delivered by hand or by
nationally recognized overnight courier, or sent by first class mail or sent by
telecopy (with such telecopy to be confirmed promptly in writing sent by first
class mail), sent:
(a) if to Debtor: Packaged Ice, Inc.
8572 Katy Freeway, Suite 101
Houston, Texas 77024
Attn: _______________________
Facsimile: (713) 464-4681
(b) if to Secured Party, to: Antares Leveraged Capital Corp.
311 South Wacker Drive
Chicago, IL 60606
Attn: Dave Swanson
Telephone: (312) 697-3999
Facsimile: (312) 697-3998
or to such other address or addresses or telecopy number or numbers as any
party hereto may most recently have designated in writing to the other party by
such notice. All such communications shall be deemed to have been given or
made (i) if delivered in person, when delivered, (ii) if delivered by telecopy,
on the date of transmission if transmitted on a Business Day before 4:00 p.m.
Chicago time, otherwise on the next Business Day, (iii) if delivered by
overnight courier, one (1) Business Day after delivery to the courier properly
addressed and (iv) if mailed, three (3) Business Days after deposited in the
United States mail, certified or registered.
5.4. Amendments, Etc. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by
and the Secured Party. Any such amendment or waiver shall be binding upon the
Secured Party and the Debtor and their respective successors and assigns.
5.5. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of each
of the parties hereto, provided, that Debtor shall not assign or transfer its
rights hereunder without the prior written consent of the Secured Party.
5.6. Counterparts; Headings. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one
and the same instrument and any
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of the parties hereto may execute this Agreement by signing any such
counterpart. The headings in this Agreement are for convenience of reference
only and shall not alter or otherwise affect the meaning hereof.
5.7. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (a) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the Secured
Party and its Representative in order to carry out the intentions of the
parties hereto as nearly as may be possible and (b) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
5.8. Other Loan Documents. This Agreement supplements the
other Loan Documents and nothing in this Agreement shall be deemed to limit or
supersede the rights granted to the Secured Party or the Lenders or their agent
in any other Loan Document. In the event of any conflict between this
Agreement and the Credit Agreement, the provisions of the Credit Agreement
shall govern.
5.9. SUBMISSION TO JURISDICTION; WAIVER OF VENUE. (A) DEBTOR
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND DEBTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF SECURED PARTY TO BRING PROCEEDINGS
AGAINST DEBTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL
PROCEEDING BY DEBTOR AGAINST SECURED PARTY OR ANY LENDER OR ANY AFFILIATE
THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A
COURT IN CHICAGO, ILLINOIS.
(B) DEBTOR DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AND
SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY IT WHICH IRREVOCABLY AGREES
IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY DEBTOR TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A
COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO DEBTOR
AT ITS ADDRESS PROVIDED IN THIS AGREEMENT EXCEPT THAT UNLESS
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OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT
AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY DEBTOR
REFUSES TO ACCEPT SERVICE, DEBTOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL
SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
5.10. WAIVER OF RIGHT TO TRIAL BY JURY. DEBTOR AND SECURED PARTY
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. DEBTOR AND
SECURED PARTY EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
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<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
DEBTOR:
PACKAGED ICE, INC., a Texas
corporation
By:
--------------------------------
Title:
-----------------------------
SECURED PARTY:
ANTARES LEVERAGED CAPITAL CORP., as
Agent for the benefit of Lenders
By:
--------------------------------
Title:
-----------------------------
1
<PAGE> 1
EXHIBIT 10.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of April 30, 1998 among Reddy
Ice Corporation, a Delaware corporation, Golden Eagle Ice-Texas, Inc., a Texas
corporation, Packaged Ice Southeast, Inc. f/k/a Central Arkansas Cold Storage-
Texas, Inc., a Texas corporation, Packaged Ice Leasing, Inc., a Nevada
corporation, Southco Ice, Inc., a Texas corporation, Southwest Texas Packaged
Ice, Inc., a Texas corporation, Southwestern Ice, Inc., a Texas corporation,
Southern Bottled Water Company, Inc., a Texas corporation, and Mission Party
Ice, Inc., a Texas corporation (each such corporation, together with each other
Person who becomes a party to this Agreement by execution of a joinder in the
form of Exhibit A attached hereto, is referred to individually as a "Debtor"
and, collectively, as the "Debtors") and Antares Leveraged Capital Corp., a
Delaware corporation (the "Secured Party"), as agent for the benefit of the
"Lenders" (as such term is hereinafter defined).
W I T N E S S E T H:
WHEREAS, Packaged Ice, Inc., a Texas corporation ("Borrower")
has entered into that certain Credit Agreement of even date herewith (the same,
as it may be amended, restated, modified or supplemented and in effect from
time to time, being herein referred to as the "Credit Agreement") with Secured
Party, as agent for the benefit of all lenders and individually as a lender
(together with all other "Lenders" thereunder as defined therein, the
"Lenders"), and the other Lenders parties thereto, providing for the Lenders to
make available to the Borrower certain term and revolving credit facilities on
the terms and conditions set forth therein; and
WHEREAS, Debtors are Subsidiaries of Borrower and, as such,
will derive substantial benefit and advantage from the financial accommodations
available to the Borrower set forth in the Credit Agreement, including the
loans and advances made to the Borrower thereunder, and it will be to each
Debtor's direct interest and economic benefit to assist the Borrower in
procuring such financing accommodations from the Lenders; and
WHEREAS, to induce the Secured Party and the Lenders to enter
into the Credit Agreement and make the Loans thereunder, each Debtor has agreed
to guaranty the Obligations of Borrower pursuant to that certain Guaranty of
even date herewith by Debtors to Secured Party (the same, as it may be amended,
restated, modified or supplemented and in effect from time to time, the
"Guaranty") and to pledge and grant a security interest in the Collateral (as
hereinafter defined) as security for the Liabilities (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE> 2
Section 1. Definitions. Capitalized terms used herein
without definition and defined in the Credit Agreement are used herein as
defined therein. In addition, as used herein:
"Accounts" means, as at any date of determination, all
"accounts" (as such term is defined in the Uniform Commercial Code) of
the Debtors, including, without limitation, the unpaid portion of the
obligation of a customer of the Debtors in respect of Inventory
purchased by and shipped to such customer and/or the rendition of
services by the Debtors, as stated on the respective invoice of the
Debtors, net of any credits, rebates or offsets owed to such customer.
"Chattel Paper" means any "chattel paper," as such term is
defined in the Uniform Commercial Code.
"Collateral" shall have the meaning ascribed thereto in
Section 3 hereof.
"Contracts" means all contracts, undertakings, or other
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which a Debtor may now or hereafter have any
right, title or interest, including, without limitation, with respect
to an Account, any agreement relating to the terms of payment or the
terms of performance thereof.
"Copyrights" means any copyrights, rights and interests in
copyrights, works protectable by copyrights, copyright registrations
and copyright applications, including, without limitation, the
copyright registrations and applications listed on Schedule III
attached hereto, and all renewals of any of the foregoing, all income,
royalties, damages and payments now and hereafter due and/or payable
under or with respect to any of the foregoing, including, without
limitation, damages and payments for past, present and future
infringements of any of the foregoing and the right to sue for past,
present and future infringements of any of the foregoing.
"Documents" means any "documents," as such term is defined in
the Uniform Commercial Code, and shall include, without limitation,
all documents of title (as defined in the Uniform Commercial Code),
bills of lading or other receipts evidencing or representing Inventory
or Equipment.
"Equipment" means any "equipment," as such term is defined in
the Uniform Commercial Code and, in any event, shall include, Motor
Vehicles.
"Fixtures" means any "fixtures," as such term is defined in
the Uniform Commercial Code, and, in any event, shall include, without
limitation, all plant fixtures, trade fixtures, business fixtures,
other fixtures and storage facilities.
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<PAGE> 3
"General Intangibles" means any "general intangibles," as such
term is defined in the Uniform Commercial Code, and, in any event,
shall include, without limitation, all right, title and interest in or
under any Contract, models, drawings, materials and records, claims,
literary rights, goodwill, rights of performance, Copyrights,
Trademarks, Patents, warranties, rights under insurance policies and
rights of indemnification.
"Goods" means any "goods", as such term is defined in the
Uniform Commercial Code.
"Instruments" means any "instrument," as such term is defined
in the Uniform Commercial Code, and shall include, without limitation,
promissory notes, drafts, bills of exchange, trade acceptances,
letters of credit, and Chattel Paper.
"Inventory" means all of the "inventory" (as such term is
defined in the Uniform Commercial Code) of the Debtors, including, but
not limited to, all merchandise, raw materials, parts, supplies,
work-in-process and finished goods intended for sale, together with
all the containers, packing, packaging, shipping and similar materials
related thereto, and including such inventory as is temporarily out of
the Debtors' custody or possession, including inventory on the
premises of others and items in transit.
"Investment Property" means any "investment property", as such
term is defined in the Uniform Commercial Code.
"Liabilities" shall mean all obligations and liabilities of
Debtors under or in respect of this Agreement and the Guaranty.
"Motor Vehicles" shall mean motor vehicles, tractors,
trailers, trucks and other like property, whether or not the title
thereto is governed by a certificate of title or ownership.
"Patents" means any patents and patent applications,
including, without limitation, the inventions and improvements
described and claimed therein, all patentable inventions and those
patents and patent applications listed on Schedule IV attached hereto,
and the reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing, and all income,
royalties, damages and payments now or hereafter due and/or payable
under or with respect to any of the foregoing, including, without
limitation, damages and payments for
3
<PAGE> 4
past, present and future infringements of any of the foregoing and the
right to sue for past, present and future infringements of any of the
foregoing.
"Proceeds" means "proceeds," as such term is defined in the
Uniform Commercial Code and, in any event, includes, without
limitation, (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable with respect to any of the Collateral and
with respect to any General Intangible not otherwise constituting
Collateral, (b) any and all payments (in any form whatsoever) made or
due and payable from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part
of the Collateral by any governmental body, authority, bureau or
agency (or any person acting under color of governmental authority),
and (c) any and all other amounts from time to time paid or payable
under, in respect of or in connection with any of the Collateral and
any General Intangible not otherwise constituting Collateral.
"Representative" means any Person acting as agent,
representative or trustee on behalf of the Secured Party from time to
time.
"Trademarks" means any trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos, other business identifiers, prints and
labels on which any of the foregoing have appeared or appear, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, the trademarks
and applications listed in Schedule V attached hereto and renewals
thereof (but specifically excluding all "intent to use" applications
to the extent that such applications are non-transferrable under
applicable law), and all income, royalties, damages and payments now
or hereafter due and/or payable under or with respect to any of the
foregoing, including, without limitation, damages and payments for
past, present and future infringements of any of the foregoing and the
right to sue for past, present and future infringements of any of the
foregoing.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in the State of Illinois.
Section 2. Representations, Warranties and Covenants of
Debtors. After giving effect to the Related Transactions, each Debtor
represents and warrants to, and covenants with, the Secured Party, for the
benefit of the Secured Party and the Lenders, as follows:
(a) Such Debtor is the owner of the Collateral in which
it purports to grant a security interest pursuant to Section 3 hereof (subject,
with respect to after acquired Collateral, to
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such Debtor acquiring the same) and no Lien other than Permitted Liens exists
or will exist upon such Collateral at any time;
(b) this Agreement is effective to create in favor of
Secured Party for the benefit of the Secured Party and the Lenders a valid
security interest in and Lien upon all of such Debtor's right, title and
interest in and to the Collateral, and, upon the filing of appropriate Uniform
Commercial Code financing statements in the jurisdictions listed on Schedule I
attached hereto, such security interest will be duly perfected in all the
Collateral in which a security interest can be perfected by the filing of a
financing statement, and upon delivery of the Instruments to the Secured Party
or its Representative, duly endorsed by such Debtor or accompanied by
appropriate instruments of transfer duly executed by such Debtor, the security
interest in the Instruments will be duly perfected;
(c) all of the Equipment, Inventory and Goods owned by
such Debtor is located at the places as specified on Schedule I attached
hereto. Except as disclosed on Schedule I, none of the Collateral is in the
possession of any bailee, warehousemen, processor or consignee. The chief
place of business, chief executive office and the office where such Debtor
keeps its books and records are located at the place as specified on Schedule
I. Such Debtor (including any Person acquired by such Debtor) does not do
business and has not done business during the past five (5) years under any
trade name or fictitious business name except as disclosed on Schedule II
attached hereto;
(d) no Copyrights, Patents or Trademarks listed on
Schedules III, IV and V, respectively, if any, that are material to the
operation of the business of such Debtor have been adjudged invalid or
enforceable or have been canceled, in whole or in part, or are not presently
subsisting. Each of such Copyrights, Patents and Trademarks that are material
to the operation of the business of such Debtor is valid and enforceable. Such
Debtor is the sole and exclusive owner of the entire and unencumbered right,
title and interest in and to each of such Copyrights, Patents and Trademarks,
identified on Schedules III, IV and V, as applicable, as being owned by such
Debtor, free and clear of any liens, charges and encumbrances, including
without limitation licenses, shop rights and covenants by such Debtor not to
sue third persons, other than Permitted Liens. Such Debtor has adopted, used
and is currently using, or has a current bona fide intention to use, all of
such Trademarks and Copyrights that are material to the operation of the
business of such Debtor. Such Debtor has no notice of any suits or actions
commenced or threatened with reference to the Copyrights, Patents or Trademarks
owned by it.
(e) Such Debtor agrees to deliver to the Secured Party an
updated Schedule I, II, III, IV and/or V within five (5) days of any change
thereto with respect to such Debtor.
(f) All depositary and other accounts maintained by such
Debtor are described on Schedule VI hereto, which description includes for each
such, the name, address and telephone and telecopy numbers of the financial
institution at which such account is maintained,
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the account number and the account officer, if any, of such account. Such
Debtor shall not open any new accounts unless such Debtor shall have given
Secured Party ten (10) Business Days' prior written notice of its intention to
open any such new accounts. Such Debtor shall deliver to Secured Party a
revised version of Schedule VI showing any changes thereto within five (5)
Business Days of any such change with respect to such Debtor. Such Debtor
hereby authorizes the financial institutions at which such Debtor maintains an
account to provide Secured Party with such information with respect to such
account as Secured Party from time to time reasonably may request, and such
Debtor hereby consents to such information being provided to Secured Party.
Section 3. Collateral. As collateral security for the
prompt payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Liabilities, each Debtor hereby pledges and grants to the
Secured Party, for the benefit of the Secured Party and the Lenders, a Lien on
and security interest in and to all of such Debtor's right, title and interest
in the following property and interests in property, whether now owned by such
Debtor or hereafter acquired and whether now existing or hereafter coming into
existence and wherever located (all being collectively referred to herein as
"Collateral"):
(a) the Instruments of such Debtor, together with all
payments thereon or thereunder:
(b) all Accounts;
(c) all Inventory;
(d) all General Intangibles (excluding any General
Intangible as to which the grant of a security interest therein would
constitute a violation of a valid and enforceable restriction on such grant
(until such time as any required consent shall have been obtained, such Debtor
agreeing to use its commercially reasonable efforts to obtain any such required
consent));
(e) all Equipment;
(f) all Documents;
(g) all Contracts (excluding any General Intangible as to
which the grant of a security interest therein would constitute a violation of
a valid and enforceable restriction on such grant (until such time as any
required consent shall have been obtained, such Debtor agreeing to use its
commercially reasonable efforts to obtain any such required consent));
(h) all Goods;
(i) all Fixtures;
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(j) all Investment Property;
(k) the balance from time to time in all bank and
depository accounts maintained by such Debtor; and
(l) all other tangible and intangible property of such
Debtor, including, without limitation, all Proceeds, products, accessions,
rents, profits, income, benefits, substitutions, additions and replacements of
and to any of the property of such Debtor described in the preceding clauses of
this Section 3 (including, without limitation, any proceeds of insurance
thereon and all rights, claims and benefits against any Person relating thereto
and including all Proceeds of Contracts and other General Intangibles excluded
from clauses (d) and (g) above) and all books, correspondence, files, records,
invoices and other papers, including without limitation all tapes, cards,
computer runs, computer programs, computer files and other papers, documents
and records in the possession or under the control of such Debtor or any
computer bureau or service company from time to time acting for such Debtor.
Section 4. Covenants; Remedies. In furtherance of the
grant of the pledge and security interest pursuant to Section 3 hereof, each
Debtor hereby agrees with the Secured Party, for the benefit of Secured Party
and the Lenders, as follows:
4.1. Delivery and Other Perfection; Maintenance, etc.
(a) Delivery of Instruments. Each Debtor shall deliver
and pledge to the Secured Party or its Representative any and all Instruments,
duly endorsed and/or accompanied by such instruments of assignment and transfer
executed by such Debtor in such form and substance as the Secured Party or its
Representative may request; provided, that so long as no Event of Default shall
have occurred and be continuing, each Debtor may retain for collection in the
ordinary course of business any Instruments received by such Debtor in the
ordinary course of business, and the Secured Party or its Representative shall,
promptly upon request of a Debtor, make appropriate arrangements for making any
other Instruments pledged by such Debtor available to such Debtor for purposes
of presentation, collection or renewal (any such arrangement to be effected, to
the extent deemed appropriate by the Secured Party or its Representative,
against trust receipt or like document).
(b) Other Documents and Actions. Each Debtor shall give,
execute, deliver, file and/or record any financing statement, notice,
instrument, document, agreement or other papers that may be necessary or
desirable (in the reasonable judgment of the Secured Party or its
Representative) to create, preserve, perfect or validate the security interest
granted pursuant hereto or to enable the Secured Party or its Representative to
exercise and enforce the rights of the Secured Party hereunder with respect to
such pledge and security interest, provided that
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notices to account debtors in respect of any Accounts or Instruments shall be
subject to the provisions of clause (e) below.
(c) Books and Records. Each Debtor shall maintain at its
own cost and expense complete and accurate books and records of the Collateral,
including, without limitation, a record of all payments received and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. Upon the occurrence and during the continuation of any Event of
Default, each Debtor shall deliver and turn over any such books and records (or
true and correct copies thereof) to the Secured Party or its Representative at
any time on demand. Each Debtor shall permit any Representative of the Secured
Party to inspect such books and records at any time during reasonable business
hours and will provide photocopies thereof at Debtor's expense to the Secured
Party upon request of the Secured Party.
(d) Motor Vehicles. Each Debtor shall, promptly upon the
request of the Secured Party or its Representative, cause the Secured Party to
be listed as the lienholder on each certificate of title or ownership covering
any items of Equipment, including Motor Vehicles.
(e) Notice to Account Debtors; Verification. (i) Upon
the occurrence and during the continuance of any Event of Default, upon request
of the Secured Party or its Representative, each Debtor shall promptly notify
(and each Debtor hereby authorizes the Secured Party and its Representative so
to notify) each account debtor in respect of any Accounts or Instruments that
such Collateral has been assigned to the Secured Party hereunder, and that any
payments due or to become due in respect of such Collateral are to be made
directly to the Secured Party, and (ii) the Secured Party and its
Representative shall have the right at any time or times to make direct
verification with the account debtors of any and all of the Accounts.
(f) Intellectual Property. Each Debtor represents and
warrants that the Copyrights, Patents and Trademarks listed on Schedules III,
IV and V, respectively, constitute all of the registered Copyrights and all of
the Patents and Trademarks now owned by such Debtor. If such Debtor shall (i)
obtain rights to any new patentable inventions, any registered Copyrights or
any Patents or Trademarks, or (ii) become entitled to the benefit of any
registered Copyrights or any Patents or Trademarks or any improvement on any
Patent, the provisions of this Agreement above shall automatically apply
thereto and such Debtor shall give to Secured Party prompt written notice
thereof. Each Debtor hereby authorizes Secured Party to modify this Agreement
by amending Exhibits III, IV and V, as applicable, to include any such
registered Copyrights or any such Patents and Trademarks. Each Debtor shall
have the duty (i) to prosecute diligently any patent, trademark, or service
mark applications pending as of the date hereof or hereafter, (ii) to make
application on unpatented but patentable inventions and on trademarks,
copyrights and service marks, as appropriate, (iii) to preserve and maintain
all rights in the Copyrights, Patents and Trademarks, to the extent material to
the operations of the business of such Debtor and (iv) to ensure that the
Copyrights, Patents and Trademarks are and remain enforceable, to the extent
material to the operations of the business of such Debtor. Any
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expenses incurred in connection with such Debtor's obligations under this
Section 4.1(f) shall be borne by such Debtor. No Debtor shall abandon any
right to file a patent, trademark or service mark application, or abandon any
pending patent, application or any other Copyright, Patent or Trademark without
the written consent of Secured Party, which consent shall not be unreasonably
withheld.
(g) Further Identification of Collateral. Each Debtor
will, when and as often as requested by the Secured Party or its
Representative, furnish to the Secured Party or such Representative, statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Secured Party or its
Representative may reasonably request, all in reasonable detail.
(h) Investment Property. Each Debtor will take any and
all actions required or requested by the Secured Party, from time to time, to
(i) cause the Secured Party to obtain exclusive control of any Investment
Property owned by such Debtor in a manner acceptable to the Secured Party and
(ii) obtain from any issuers of Investment Property and such other Persons, for
the benefit of the Secured Party, written confirmation of the Secured Party's
control over such Investment Property. For purposes of this Section 4.1(h),
the Secured Party shall have exclusive control of Investment Property if (i)
such Investment Property consists of certificated securities and a Debtor
delivers such certificated securities to the Secured Party (with appropriate
endorsements if such certificated securities are in registered form); (ii) such
Investment Property consists of uncertificated securities and either (x) a
Debtor delivers such uncertificated securities to the Secured Party or (y) the
issuer thereof agrees, pursuant to documentation in form and substance
satisfactory to the Secured Party, that it will comply with instructions
originated by the Secured Party without further consent by such Debtor, and
(iii) such Investment Property consists of security entitlements and either (x)
the Secured Party becomes the entitlement holder thereof or (y) the appropriate
securities intermediary agrees, pursuant to the documentation in form and
substance satisfactory to the Secured Party, that it will comply with
entitlement orders originated by the Secured Party without further consent by
any Debtor.
(i) Compliance with Loan Documents. Each Debtor shall
comply with the provisions of the Loan Documents applicable thereto, including,
without limitation, maintenance of insurance, restrictions on dispositions, and
providing Secured Party and its representatives the right to inspections with
respect to the Collateral.
4.2. Other Liens. Debtors will not create, permit or
suffer to exist, and will defend the Collateral against and take such other
action as is necessary to remove, any Lien on the Collateral except Permitted
Liens, and will defend the right, title and interest of the Secured Party in
and to the Collateral and in and to all Proceeds thereof against the claims and
demands of all Persons whatsoever.
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4.3. Preservation of Rights. Whether or not any Event of
Default has occurred or is continuing, the Secured Party and its Representative
may, but shall not be required to, after notice to Debtor in the absence of a
continuing Event of Default, take any steps the Secured Party or its
Representative deems necessary or appropriate to preserve any Collateral or any
rights against third parties to any of the Collateral, including obtaining
insurance of Collateral at any time when a Debtor has failed to do so, and
Debtors shall promptly pay, or reimburse the Secured Party for, all expenses
incurred in connection therewith.
4.4. Name Change; Location; Bailees.
(a) Each Debtor will notify Secured Party promptly in
writing prior to any change in such Debtor's name, identity or corporate
structure or the proposed use by such Debtor of any tradename or fictitious
business name other than any such name set forth on Schedule II attached
hereto.
(b) Except for the sale of Inventory in the ordinary
course of business and except as permitted by the Credit Agreement, each Debtor
will keep the Collateral at the locations specified in Schedule I applicable to
such Debtor. Each Debtor will give Secured Party thirty (30) day's prior
written notice of any change in such Debtor's chief place of business or of any
new location for any of the Collateral.
(c) If any Collateral is at any time in the possession or
control of any warehousemen, bailee, consignee or processor, such Debtor shall,
upon the request of Secured Party or its Representative, notify such
warehousemen, bailee, consignee or processor of the Lien and security interest
created hereby and shall instruct such Person to hold all such Collateral for
Secured Party's account subject to Secured Party's instructions.
4.5. Bank Accounts.
(a) At Secured Party's request, on or prior to the
Closing Date, or at any time thereafter, the Secured Party and each Debtor
shall enter into a bank agency agreement ("Bank Agency Agreement"), in a form
specified by the Secured Party, with each financial institution with which such
Debtor maintains from time to time any deposit accounts (general or special),
which financial institutions are set forth on Schedule VI attached hereto.
Pursuant to the Bank Agency Agreements and pursuant hereto, each Debtor grants
and shall grant to the Secured Party a continuing lien upon, and security
interest in, all such accounts and all funds at any time paid, deposited,
credited or held in such accounts (whether for collection, provisionally or
otherwise) or otherwise in the possession of such financial institutions, and
each such financial institution shall act as the Secured Party's agent in
connection therewith. Following the Closing Date, no Debtor shall establish
any deposit account with any financial institution unless prior thereto, at
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the request of Secured Party, the Secured Party and such Debtor shall have
entered into a Bank Agency Agreement with such financial institution.
(b) Upon the Secured Party's request following the
occurrence of an Event of Default, each Debtor shall establish lock-box or
blocked accounts (collectively, "Blocked Accounts") in such Debtor's name with
such banks as are acceptable to the Secured Party ("Collecting Banks"), subject
to irrevocable instructions in a form specified by the Secured Party, to which
the obligors of all Accounts shall directly remit all payments on Accounts and
in which such Debtor will immediately deposit all cash payments for Inventory
or other cash payments constituting proceeds of Collateral in the identical
form in which such payment was made, whether by cash or check. In addition,
the Secured Party may establish one or more depository accounts at each
Collecting Bank or at a centrally located bank (collectively, the "Depository
Account"). From and after receipt by any Collecting Bank of written notice
from the Secured Party to such Collecting Bank that an Event of Default has
occurred and is continuing, all amounts held or deposited in the Blocked
Accounts held by such Collecting Bank shall be transferred to the Depository
Account. Subject to the foregoing, each Debtor hereby agrees that all payments
received by the Secured Party or any Lender whether by cash, check, wire
transfer or any other instrument, made to such Blocked Accounts or otherwise
received by the Secured Party or any Lender and whether in respect of the
Accounts or as proceeds of other Collateral or otherwise will be the sole and
exclusive property of the Secured Party for the benefit of the Secured Party
and the Lenders. Each Debtor, and any of its Affiliates, employees, agents and
other Persons acting for or in concert with such Debtor shall, acting as
trustee for the Secured Party, receive, as the sole and exclusive property of
the Secured Party, any moneys, checks, notes, drafts or other payments relating
to and/or proceeds of Accounts or other Collateral which come into the
possession or under the control of such Debtor or any Affiliates, employees,
agent or other Persons acting for or in concert with such Debtor, and
immediately upon receipt thereof, such Debtor or Persons shall deposit the same
or cause the same to be deposited in kind, in a Blocked Account.
4.6. Events of Default, Etc. During the period during
which an Event of Default shall have occurred and be continuing:
(a) Each Debtor shall, at the request of the Secured
Party or its Representative, assemble the Collateral at such place or places as
may be reasonably designated by the Secured Party or its Representative;
(b) the Secured Party or its Representative may make any
reasonable compromise or settlement deemed desirable with respect to any of the
Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, any of the Collateral;
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(c) the Secured Party shall have all of the rights and
remedies with respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not said Uniform Commercial Code is in effect in
the jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted, including, without limitation, the right, to the maximum extent
permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if the Secured Party were the sole
and absolute owner thereof (and each Debtor agrees to take all such action as
may be appropriate to give effect to such right);
(d) the Secured Party or its Representative in their
discretion may, in the name of the Secured Party or in the name of a Debtor or
otherwise, demand, sue for, collect or receive any money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so;
(e) the Secured Party or its Representative may take
immediate possession and occupancy of any premises owned, used or leased by a
Debtor and exercise all other rights and remedies of an assignee which may be
available to the Secured Party; and
(f) the Secured Party may, upon ten (10) Business Days'
prior written notice to Debtors of the time and place (which notice Debtors
hereby agree is commercially reasonable notification for purposes hereof), with
respect to the Collateral or any part thereof which shall then be or shall
thereafter come into the possession, custody or control of the Secured Party or
its Representative, sell, lease, assign or otherwise dispose of all or any part
of such Collateral, at such place or places as the Secured Party deems best,
and for cash or for credit or for future delivery (without thereby assuming any
credit risk), at public or private sale, without demand of performance or
notice of intention to effect any such disposition or of the time or place
thereof (except such notice as is required above or by applicable statute and
cannot be waived), and the Secured Party or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Collateral so disposed of at
any public sale (or, to the extent permitted by law, at any private sale) and
thereafter hold the same absolutely, free from any claim or right of whatsoever
kind, including any right or equity of redemption (statutory or otherwise), of
Debtors, any such demand, notice and right or equity being hereby expressly
waived and released. The Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned.
The proceeds of each collection, sale or other disposition
under this Section 4.6 shall be applied in accordance with Section 4.9 hereof.
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4.7. Deficiency. If the proceeds of sale, collection or
other realization of or upon the Collateral are insufficient to cover the costs
and expenses of such realization and the payment in full of the Liabilities,
Debtors shall remain liable for any deficiency.
4.8. Private Sale. Each Debtor recognizes that the
Secured Party may be unable to effect a public sale of any or all of the
Collateral consisting of securities by reason of certain prohibitions contained
in the Securities Act of 1933, as amended (the "Act"), and applicable state
securities laws, but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such Collateral for their own account for investment
and not with a view to the distribution or resale thereof. Each Debtor
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The
Secured Party shall be under no obligation to delay a sale of any of the
Collateral to permit a Debtor to register such Collateral for public sale under
the Act, or under applicable state securities laws, even if Debtors would agree
to do so. The Secured Party shall not incur any liability as a result of the
sale of any such Collateral, or any part thereof, at any private sale provided
for in this Agreement conducted in a commercially reasonable manner, and each
Debtor hereby waives any claims against the Secured Party arising by reason of
the fact that the price at which the Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale or was less than the aggregate amount of the Liabilities, even if the
Secured Party accepts the first offer received and does not offer the
Collateral to more than one offeree.
Each Debtor further agrees to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of any
portion or all of any such Collateral valid and binding and in compliance with
any and all applicable laws, regulations, orders, writs, injunctions, decrees
or awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at
such Debtor's expense, provided that Debtors shall be under no obligation to
take any action to enable any or all of such Collateral to be registered under
the provisions of the Act. Each Debtor further agrees that a breach of any of
the covenants contained in this Section 4.8 will cause irreparable injury to
the Secured Party, that the Secured Party has no adequate remedy at law in
respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 4.8 shall be specifically enforceable
against Debtors, and each Debtor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred and is continuing.
4.9. Application of Proceeds. The proceeds of any
collection, sale or other realization of all or any part of the Collateral, and
any other cash at the time held by the Secured Party under this Agreement,
shall be applied:
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first, to payment of all expenses payable or reimbursable
under the Loan Documents executed by Debtors;
second, to payment of all accrued unpaid interest on the
Obligations;
third, to payment of principal of the Obligations;
fourth, to payment of any other amounts owing constituting
Obligations; and
last, any remainder shall be for the account of and paid to
the applicable Debtor.
4.10. Attorney-in-Fact. Each Debtor hereby irrevocably
constitutes and appoints the Secured Party, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of such Debtor and in the name of such Debtor or in its
own name, from time to time upon the occurrence and during the continuation of
an Event of Default, in the discretion of the Secured Party, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action and to execute and deliver any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement and,
without limiting the generality of the foregoing, hereby gives the Secured
Party the power and right, on behalf of such Debtor, without notice to or
assent by such Debtor, to do the following upon the occurrence and during the
continuation of any Event of Default:
(a) to ask, demand, collect, receive and give acquittance
and receipts for any and all moneys due and to become due under any Collateral
and, in the name of such Debtor or its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other Instruments for the payment of moneys due under any Collateral and to
file any claim or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Secured Party for the purpose of
collecting any and all such moneys due under any Collateral whenever payable
and to file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Secured Party for the
purpose of collecting any and all such moneys due under any Collateral whenever
payable;
(b) to pay or discharge charges or liens levied or placed
on or threatened against the Collateral (other than the Permitted Liens), to
effect any insurance called for by the terms of this Agreement and to pay all
or any part of the premiums therefor;
(c) to direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due, and to become due
thereunder, directly to the Secured Party or as the Secured Party shall direct,
and to receive payment of and receipt for any and all
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moneys, claims and other amounts due, and to become due at any time, in respect
of or arising out of any Collateral;
(d) to sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts and other
Documents constituting or relating to the Collateral;
(e) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral;
(f) to defend any suit, action or proceeding brought
against a Debtor with respect to any Collateral;
(g) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Secured Party may deem appropriate; and
(h) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Secured Party were the absolute owners thereof for
all purposes, and to do, at the Secured Party's option and at such Debtor's
expense, at any time, or from time to time, all acts and things which the
Secured Party reasonably deems necessary to protect, preserve or realize upon
the Collateral and the Secured Party's lien therein, in order to effect the
intent of this Agreement, all as fully and effectively as such Debtor might do.
Each Debtor hereby ratifies, to the extent permitted by law,
all that such attorneys lawfully do or cause to be done by virtue hereof. The
power of attorney granted hereunder is a power coupled with an interest and
shall be irrevocable until the Liabilities are indefeasibly paid in full and
the Credit Agreement is terminated.
Each Debtor also authorizes the Secured Party, at any time
from and after the occurrence and during the continuation of any Event of
Default, (x) to communicate in its own name with any party to any Contract with
regard to the assignment of the right, title and interest of such Debtor in and
under the Contracts hereunder and other matters relating thereto and (y) to
execute, in connection with any sale of Collateral provided for in Section 4.5
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
4.11. Perfection. Prior to or concurrently with the
execution and delivery of this Agreement, each Debtor shall:
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(a) file such financing statements, assignments for
security and other documents in such offices as may be necessary or as the
Secured Party or the Representative may request to perfect the security
interests granted by Section 3 of this Agreement; and
(b) at Secured Party's request, deliver to the Secured
Party or its Representative the originals of all Instruments together with, in
the case of Instruments constituting promissory notes, allonges attached
thereto showing such promissory notes to be payable to the order of a blank
payee.
4.12. Termination. This Agreement and the Liens and
security interests granted hereunder shall not terminate until the termination
of the Credit Agreement and the full and complete performance and indefeasible
satisfaction of all the Liabilities (regardless of whether the Credit Agreement
shall have earlier terminated), whereupon the Secured Party shall forthwith
cause to be assigned, transferred and delivered, against receipt but without
any recourse, warranty or representation whatsoever, any remaining Collateral
to or on the order of Debtors. The Secured Party shall also execute and
deliver to Debtors upon such termination such Uniform Commercial Code
termination statements, certificates for terminating the liens on the Motor
Vehicles (if any) and such other documentation as shall be reasonably requested
by Debtors to effect the termination and release of the Liens and security
interests in favor of the Secured Party affecting the Collateral.
4.13. Further Assurances. (a) At any time and from time to
time, upon the written request of the Secured Party or its Representative, and
at the sole expense of Debtors, Debtors will promptly and duly execute and
deliver any and all such further instruments, documents and agreements and take
such further actions as the Secured Party or its Representative may reasonably
require in order for the Secured Party to obtain the full benefits of this
Agreement and of the rights and powers herein granted in favor of the Secured
Party, including, without limitation, using Debtors' best efforts to secure all
consents and approvals necessary or appropriate for the assignment to the
Secured Party of any Collateral held by Debtors or in which a Debtor has any
rights not heretofore assigned, the filing of any financing or continuation
statements under the Uniform Commercial Code with respect to the liens and
security interests granted hereby, transferring Collateral to the Secured
Party's possession (if a security interest in such Collateral can be perfected
by possession), placing the interest of the Secured Party as lienholder on the
certificate of title of any Motor Vehicle and obtaining waivers of liens from
landlords and mortgagees. Each Debtor also hereby authorizes the Secured Party
and its Representative to file any such financing or continuation statement
without the signature of such Debtor to the extent permitted by applicable law.
(b) Upon the request of the Secured Party, each Debtor
shall procure insurers' acknowledgments of any assignments of key man life
insurance policies which may be assigned
16
<PAGE> 17
to the Secured Party as additional security for the Liabilities (if any) and
will take all such further action as required by any insurer or the Secured
Party in connection with any such assignment.
4.14. Limitation on Duty of Secured Party. The powers
conferred on the Secured Party under this Agreement are solely to protect the
Secured Party's interest in the Collateral and shall not impose any duty upon
it to exercise any such powers. The Secured Party shall be accountable only
for amounts that it actually receives as a result of the exercise of such
powers and neither the Secured Party nor its Representative nor any of their
respective officers, directors, employees or agents shall be responsible to
Debtors for any act or failure to act, except for gross negligence and willful
misconduct. Without limiting the foregoing, the Secured Party and any
Representative shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in their possession if such Collateral is
accorded treatment substantially equivalent to that which the relevant Secured
Party or any Representative, in its individual capacity, accords its own
property consisting of the type of Collateral involved, it being understood and
agreed that neither the Secured Party nor any Representative shall have any
responsibility for taking any necessary steps (other than steps taken in
accordance with the standard of care set forth above) to preserve rights
against any person with respect to any Collateral.
Also without limiting the generality of the foregoing, neither
the Secured Party nor any Representative shall have any obligation or liability
under any Contract or license by reason of or arising out of this Agreement or
the granting to the Secured Party of a security interest therein or assignment
thereof or the receipt by the Secured Party or any Representative of any
payment relating to any Contract or license pursuant hereto, nor shall the
Secured Party or any Representative be required or obligated in any manner to
perform or fulfill any of the obligations of Debtors under or pursuant to any
Contract or license, or to make any payment, or to make any inquiry as to the
nature or the sufficiency of any payment received by it or the sufficiency of
any performance by any party under any Contract or license, or to present or
file any claim, or to take any action to collect or enforce any performance or
the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.
Section 5. Miscellaneous.
5.1. No Waiver. No failure on the part of the Secured
Party or any of its Representatives to exercise, and no course of dealing with
respect to, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Secured Party or any of its Representatives of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive
of any rights and remedies provided by law.
17
<PAGE> 18
5.2. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws and decisions of the State
of Illinois, without regard to conflict of law principles thereof, except to
the extent that the perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are mandatorily governed by
the laws of a jurisdiction other than the State of Illinois.
5.3. Notices. All notices, approvals, requests, demands
and other communications hereunder shall be in writing and delivered by hand or
by nationally recognized overnight courier, or sent by first class mail or sent
by telecopy (with such telecopy to be confirmed promptly in writing sent by
first class mail), sent:
(a) if to any Debtor, to such Debtor:
---------------------------------
c/o Packaged Ice, Inc.
8572 Katy Freeway, Suite 101
Houston, TX 77024
Attn: James Hazelwood
Facsimile: 713/464-4681
(b) if to Secured Party, to: Antares Leveraged Capital Corp.
311 South Wacker Drive
Chicago, IL 60606
Attn:
----------------------------
Telephone: (312) 697-39__
Facsimile: (312) 697-3998
or to such other address or addresses or telecopy number or numbers as any
party hereto may most recently have designated in writing to the other party by
such notice. All such communications shall be deemed to have been given or
made (i) if delivered in person, when delivered, (ii) if delivered by telecopy,
on the date of transmission if transmitted on a Business Day before 4:00 p.m.
Chicago time, otherwise on the next Business Day, (iii) if delivered by
overnight courier, one (1) Business Day after delivery to the courier properly
addressed and (iv) if mailed, three (3) Business Days after deposited in the
United States mail, certified or registered.
5.4. Amendments, Etc. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by
the Debtor sought to be charged or benefited thereby and the Secured Party.
Any such amendment or waiver shall be binding upon the Secured Party and the
Debtor sought to be charged or benefited hereby and their respective successors
and assigns.
5.5. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of each of the parties hereto, provided, that
18
<PAGE> 19
no Debtor shall assign or transfer its rights hereunder without the prior
written consent of the Secured Party.
5.6. Counterparts; Headings. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart. The headings in this
Agreement are for convenience of reference only and shall not alter or
otherwise affect the meaning hereof.
5.7. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (a) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the Secured
Party and its Representative in order to carry out the intentions of the
parties hereto as nearly as may be possible and (b) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
5.8. Other Loan Documents. This Agreement supplements the
other Loan Documents and nothing in this Agreement shall be deemed to limit or
supersede the rights granted to the Secured Party or the Lenders or their agent
in any other Loan Document. In the event of any conflict between this
Agreement and the Credit Agreement, the provisions of the Credit Agreement
shall govern.
5.9. SUBMISSION TO JURISDICTION; WAIVER OF VENUE. (A)
EACH DEBTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND EACH DEBTOR
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF SECURED PARTY TO
BRING PROCEEDINGS AGAINST ANY DEBTOR IN THE COURTS OF ANY OTHER JURISDICTION.
ANY JUDICIAL PROCEEDING BY A DEBTOR AGAINST SECURED PARTY OR ANY LENDER OR ANY
AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT SHALL BE
BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
(B) EACH DEBTOR DESIGNATES AND APPOINTS CT CORPORATION
SYSTEM AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY IT
19
<PAGE> 20
WHICH IRREVOCABLY AGREES IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS
BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH
SERVICE BEING HEREBY ACKNOWLEDGED BY EACH DEBTOR TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED
BY REGISTERED MAIL TO SUCH DEBTOR AT ITS ADDRESS PROVIDED IN THIS AGREEMENT
EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL
SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT
APPOINTED BY A DEBTOR REFUSES TO ACCEPT SERVICE, SUCH DEBTOR HEREBY AGREES THAT
SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN
SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
5.10. WAIVER OF RIGHT TO TRIAL BY JURY. EACH DEBTOR AND
SECURED PARTY EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH DEBTOR AND SECURED PARTY EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
20
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed and delivered as of the day and year
first above written.
DEBTORS:
REDDY ICE CORPORATION, a Delaware
corporation
By:
-----------------------------
Title:
--------------------------
GOLDEN EAGLE ICE-TEXAS, INC., a Texas
corporation
By:
-----------------------------
Title:
--------------------------
PACKAGED ICE SOUTHEAST, INC.
f/k/a Central Arkansas Cold Storage-Texas, Inc., a
Texas corporation
By:
-----------------------------
Title:
--------------------------
PACKAGED ICE LEASING, INC., a Nevada
corporation
By:
-----------------------------
Title:
--------------------------
SOUTHCO ICE, INC., a Texas corporation
By:
-----------------------------
Title:
--------------------------
<PAGE> 22
SOUTHWEST TEXAS PACKAGED ICE, INC., a
Texas corporation
By:
-----------------------------
Title:
--------------------------
SOUTHWESTERN ICE, INC., a Texas corporation
By:
-----------------------------
Title:
--------------------------
SOUTHERN BOTTLED WATER COMPANY,
INC., a Texas corporation
By:
-----------------------------
Title:
--------------------------
MISSION PARTY ICE, INC., a Texas corporation
By:
-----------------------------
Title:
--------------------------
SECURED PARTY:
ANTARES LEVERAGED CAPITAL CORP., as
Agent for the benefit of Lenders
By:
-----------------------------
Title:
--------------------------
2
<PAGE> 23
LATHAM & WATKINS DRAFT
APRIL 16, 1998
EXHIBIT A
FORM OF JOINDER
JOINDER TO SECURITY AGREEMENT
The undersigned, ______________________________, hereby joins
in the execution of that certain Security Agreement dated as of _________ __,
1998 (the "Security Agreement") by Reddy Ice Corporation, Golden Eagle
Ice-Texas, Inc., Packaged Ice Southeast, Inc. f/k/a Central Arkansas Cold
Storage-Texas, Inc., Packaged Ice Leasing, Inc., Southco Ice, Inc., Southwest
Texas Packaged Ice, Inc., Southwestern Ice, Inc., Southern Bottled Water
Company and Mission Party Ice, Inc. and each other Person that becomes a Debtor
thereunder after the date and pursuant to the terms thereof, to and in favor of
Antares Leveraged Capital Corp., as Agent. By executing this Joinder, the
undersigned hereby agrees that it is a Debtor thereunder and agrees to be bound
by all of the terms and provisions of the Security Agreement.
The undersigned represents and warrants to Secured Party that:
(a) all of the Equipment, Inventory and Goods owned by
such Debtor is located at the places as specified on Schedule I attached
hereto;
(b) except as disclosed on Schedule I, none of such
Collateral is in the possession of any bailee, warehousemen, processor or
consignee;
(c) the chief place of business, chief executive office
and the office where such Debtor keeps its books and records are located at the
place specified on Schedule I;
(d) such Debtor (including any Person acquired by such
Debtor) does not do business or has not done business during the past five
years under any tradename or fictitious business name, except as disclosed on
Schedule II; and
(e) all Copyrights, Patents and Trademarks owned by the
undersigned are listed in Schedules III, IV and V, respectively.
, a corporation
---------------- ------
By:
-----------------------------------
Title:
--------------------------------
1
<PAGE> 1
Exhibit 10.4
GUARANTY
THIS GUARANTY is made as of this ____ day of ________, 1998,
by Reddy Ice Corporation, a _____________ corporation, Mission Party Ice, Inc.,
a Texas corporation, Southwest Texas Packaged Ice, Inc., a Texas corporation,
Southwestern Ice, Inc., a Texas corporation, Golden Eagle Ice-Texas, Inc., a
Texas corporation, Packaged Ice Southeast, Inc. f/k/a Central Arkansas Cold
Storage-Texas, Inc., a Texas corporation, Packaged Ice Leasing, Inc., a Nevada
corporation, Southco Ice, Inc., a Texas corporation, and Southern Bottled Water
Company, Inc., a Texas corporation (each such Person, together with each other
Person who becomes a party to this Agreement by execution of a joinder in the
form of Exhibit A attached hereto, is referred to individually as a "Guarantor"
and collectively as the "Guarantors") in favor of ANTARES LEVERAGED CAPITAL
CORP., a Delaware corporation, as agent ("Agent") on behalf of the Lenders (as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, Agent and Lenders have entered into a certain Credit
Agreement dated as of ________ __, 1998 (as the same may be amended, restated,
supplemented or otherwise modified and in effect from time to time, the "Credit
Agreement") with Packaged Ice, Inc., a Delaware corporation ("Borrower"); and
WHEREAS, the Borrower will become liable for the "Obligations"
(as that term is defined in the Credit Agreement) including, without limitation,
loans and other financial accommodations from the Lenders (including Agent in
its individual capacity) under the Credit Agreement and the other Loan Documents
referred to therein; and
WHEREAS, the Guarantors are Subsidiaries of Borrower and, as
such, will derive substantial benefit and advantage from the loans and other
financial accommodations available to the Borrower set forth in the Credit
Agreement, and it will be to each Guarantor's direct interest and economic
benefit to assist the Borrower in procuring said loans and other financial
accommodations from the Lenders and the Agent;
NOW, THEREFORE, for and in consideration of the premises and
in order to induce the Agent and the Lenders to enter into the Credit Agreement
and to make loans and financial accommodations to the Borrower thereunder, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Guarantors hereby agree as follows:
1. Definitions: Capitalized terms used herein which are
not otherwise defined herein are used with the meanings ascribed to such terms
in the Credit Agreement.
<PAGE> 2
2. Guaranty of Payment.
(a) Each Guarantor, jointly and severally, hereby
unconditionally and irrevocably guaranties the full and prompt payment to the
Agent and the Lenders, when due, upon demand, at maturity or by reason of
acceleration or otherwise and at all times thereafter, of any and all of the
Obligations.
(b) Each Guarantor acknowledges that valuable
consideration supports this Guaranty, including, without limitation, the
consideration set forth in the recitals above as well as any commitment to lend,
extension of credit or other financial accommodation, whether heretofore or
hereafter made by the Lenders or the Agent to the Borrower; any extension,
renewal or replacement of any of the Obligations; any forbearance with respect
to any of the Obligations or otherwise; any cancellation of an existing
guaranty; any purchase of any of the Borrower's assets by the Lenders or the
Agent; or any other valuable consideration.
(c) Each Guarantor agrees that all payments under this
Guaranty shall be made in United States currency, at the same place and in the
same manner as provided for the Obligations.
3. Costs and Expenses.
Each Guarantor, jointly and severally, agrees to pay on
demand, if not paid by the Borrower, all reasonable costs and expenses of every
kind incurred by the Agent or the Lenders: (a) in enforcing this Guaranty, (b)
in collecting any of the Obligations from the Borrower or any Guarantor, (c) in
realizing upon or protecting any collateral for this Guaranty or for payment of
any of the Obligations, and (d) for any other purpose related to the Obligations
or this Guaranty. "Costs and expenses" as used in the preceding sentence shall
include, without limitation, reasonable attorneys' fees incurred by the Agent or
any Lender in retaining counsel for advice, suit, appeal, any insolvency or
other proceedings under the Bankruptcy Code or otherwise, or for any purpose
specified in the preceding sentence.
4. Nature of Guaranty: Continuing, Absolute and
Unconditional.
(a) This Guaranty is and is intended to be a continuing
guaranty of payment of the Obligations, and not of collectibility, and is and is
intended to be independent of and in addition to any other guaranty,
indorsement, collateral or other agreement held by the Agent or the Lenders
therefor or with respect thereto, whether or not furnished by the Guarantor.
Neither Agent nor any Lender shall be required to prosecute collection,
enforcement or other remedies against Borrower, any other Guarantor or guarantor
of the Obligations or any other Person, or to enforce or resort to any of the
Collateral or other rights or remedies pertaining thereto, before calling on a
Guarantor for payment. The obligations of each Guarantor to repay the
Obligations hereunder shall be unconditional. Each Guarantor shall have no right
of subrogation with respect
2
<PAGE> 3
to any payments made by any Guarantor hereunder, and hereby waives any benefit
of, and any right to participate in, any security or collateral given to the
Agent or any Lender to secure payment of the Obligations, and each Guarantor
agrees that it will not take any action to enforce any obligations of the
Borrower to any Guarantor prior to the Obligations being finally and irrevocably
paid in full and the termination of the Commitments under the Credit Agreement,
provided that, in the event of the bankruptcy or insolvency of the Borrower, the
Agent, on behalf of the Lenders, shall be entitled notwithstanding the
foregoing, to file in the name of any Guarantor or in its own name a claim for
any and all indebtedness owing to a Guarantor by the Borrower (exclusive of this
Guaranty), vote such claim and to apply the proceeds of any such claim to the
Obligations.
(b) For the further security of the Agent and the Lenders
and without in any way diminishing the liability of the Guarantors, following
the occurrence and during the continuance of an Event of Default, all debts and
liabilities, present or future of the Borrower to the Guarantors and all monies
received from the Borrower or for its account by the Guarantors in respect
thereof shall be received in trust for the Agent and the Lenders and forthwith
upon receipt shall be paid over to the Agent, for the benefit of the Agent and
the Lenders, until all of the Obligations has been paid in full. This assignment
and postponement is independent of and severable from this Guaranty and shall
remain in full effect whether or not any Guarantor is liable for any amount
under this Guaranty.
(c) This Guaranty is absolute and unconditional and shall
not be changed or affected by any representation, oral agreement, act or thing
whatsoever, except as herein provided. This Guaranty is intended by the
Guarantors to be the final, complete and exclusive expression of the guaranty
agreement between the Guarantors and the Agent, for its own benefit and on
behalf of the Lenders. No modification or amendment of any provision of this
Guaranty shall be effective against Agent or a Guarantor unless in writing and
signed by a duly authorized officer of the Agent, individually and on behalf of
the Lenders and by such Guarantor.
(d) Prior to the Obligations being finally and
irrevocably paid in full and the termination of the Commitments under the Credit
Agreement, each Guarantor hereby agrees not to assert or enforce (whether by or
in a legal or equitable proceeding or otherwise) any "claims" (as defined in
Section 101(4) of the Bankruptcy Code), whether arising under any law,
ordinance, rule, regulation, order, policy or other requirement of any domestic
or foreign government or any instrumentality or agency thereof, having
jurisdiction over the conduct of its business or assets or otherwise, to which
the Guarantors are or would at any time be entitled by virtue of its obligations
hereunder, any payment made pursuant hereto or the exercise by Lender of its
rights with respect to the Collateral, including any such claims to which such
Guarantors may be entitled as a result of any right of subrogation, exoneration
or reimbursement.
3
<PAGE> 4
5. Certain Rights and Obligations.
(a) Each Guarantor authorizes the Agent and the Lenders,
without notice, demand or any reservation of rights against such Guarantor and
without affecting such Guarantor's obligations hereunder, from time to time:
(i) to renew, extend, increase, accelerate or
otherwise change the time for payment of, the terms of or the interest on the
Obligations or any part thereof or grant other indulgences to the Borrower or
others;
(ii) to accept from any Person and hold
collateral for the payment of the Obligations or any part thereof, and to
modify, exchange, enforce or refrain from enforcing, or release, compromise,
settle, waive, subordinate or surrender, with or without consideration, such
collateral or any part thereof;
(iii) to accept and hold any indorsement or
guaranty of payment of the Obligations or any part thereof, and to discharge,
release or substitute any such obligation of any such indorser or guarantor, or
to discharge, release or compromise any Guarantor, or any other Person who has
given any security interest in any collateral as security for the payment of the
Obligations or any part thereof, or any other Person in any way obligated to pay
the Obligations or any part thereof, and to enforce or refrain from enforcing,
or compromise or modify, the terms of any obligation of any such indorser,
guarantor, or Person;
(iv) to dispose of any and all collateral
securing the Obligations in any manner as Agent or the Lenders, in their sole
discretion, may deem appropriate, and to direct the order or manner of such
disposition and the enforcement of any and all endorsements and guaranties
relating to the Obligations or any part thereof as the Agent or the Lenders in
their sole discretion may determine;
(v) except as otherwise provided in the Credit
Agreement, to determine the manner, amount and time of application of payments
and credits, if any, to be made on all or any part of any component or
components of the Obligations (whether principal, interest, fees, costs, and
expenses, or otherwise) including, without limitation, the application of
payments received from any source to the payment of indebtedness other than the
Obligations even though Agent or the Lenders might lawfully have elected to
apply such payments to the Obligations to amounts which are not covered by this
Guaranty; and
(vi) to take advantage or refrain from taking
advantage of any security or accept or make or refrain from accepting or making
any compositions or arrangements when and in such manner as the Agent or the
Lenders, in their sole discretion, may deem appropriate;
and generally to do or refrain from doing any act or thing which might
otherwise, at law or in equity, release the liability of such Guarantor as a
guarantor or surety in whole or in part, and in no case shall the Agent or the
Lenders be responsible or shall any Guarantor be released either in whole or in
part for any act or omission in connection with the Agent or the Lenders having
sold any security at less than its value.
4
<PAGE> 5
(b) Following the occurrence and during the continuance
of an Event of Default, and upon demand by Agent, each Guarantor, jointly and
severally, hereby agrees to pay the Obligations to the extent hereinafter
provided:
(i) without deduction by reason of any setoff,
defense (other than payment) or counterclaim of the Borrower or any other
Guarantor;
(ii) without requiring presentment, protest or
notice of nonpayment, notice of default, notice of acceleration, notice of
intent to accelerate or any other notice of any kind to any Guarantor, to the
Borrower or to any other Person;
(iii) without demand for payment or proof of such
demand or filing of claims with a court in the event of receivership, bankruptcy
or reorganization of the Borrower or any other Guarantor;
(iv) without requiring the Agent or the Lenders
to resort first to the Borrower (this being a guaranty of payment and not of
collection), to any other Guarantor, or to any other guaranty or any collateral
which the Agent or the Lenders may hold;
(v) without requiring notice of acceptance
hereof or assent hereto by the Agent or the Lenders; and
(vi) without requiring notice that any of the
Obligations has been incurred, extended or continued or of the reliance by the
Agent or the Lenders upon this Guaranty;
all of which each Guarantor hereby waives.
(c) Each Guarantor's obligation hereunder shall not be
affected by any of the following, all of which such Guarantor hereby waives:
(i) any failure to perfect or continue the
perfection of any security interest in or other lien on any collateral securing
payment of any of the Obligations or any Guarantor's obligation hereunder;
(ii) the invalidity, unenforceability, propriety
of manner of enforcement of, or loss or change in priority of any Loan Document
or any such security interest or other lien or guaranty of the Obligations;
(iii) any failure to protect, preserve or insure
any such collateral;
(iv) failure of a Guarantor to receive notice of
any intended disposition of such collateral;
5
<PAGE> 6
(v) any defense arising by reason of the
cessation from any cause whatsoever of liability of the Borrower including,
without limitation, any failure, negligence or omission by the Agent or the
Lenders in enforcing their claims against the Borrower;
(vi) any release, settlement or compromise of any
obligation of the Borrower or any other Guarantor;
(vii) the invalidity or unenforceability of any of
the Obligations;
(viii) any change of ownership of the Borrower or
any other Guarantor or the insolvency, bankruptcy or any other change in the
legal status of the Borrower or any other Guarantor;
(ix) any change in, or the imposition of, any
law, decree, regulation or other governmental act which does or might impair,
delay or in any way affect the validity, enforceability or the payment when due
of the Obligations;
(x) the existence of any claim, setoff or other
rights which the Guarantor, Borrower, any other Guarantor or guarantor of the
Obligations or any other Person may have at any time against the Agent, any
Lender or the Borrower in connection herewith or any unrelated transaction;
(xi) any Lender's election, in any case
instituted under chapter 11 of the Bankruptcy Code, of the application of
section 1111(b)(2) of the Bankruptcy Code;
(xii) any use of cash collateral, or grant of a
security interest by the Borrower, as debtor in possession, under sections 363
or 364 of the Bankruptcy Code;
(xiii) the disallowance of all or any portion of
any of the Agent's or the Lenders' claims for repayment of the Obligations under
sections 502 or 506 of the Bankruptcy Code; or
(xiv) any other fact or circumstance which might
otherwise constitute grounds at law or equity for the discharge or release of a
Guarantor from its obligations hereunder, all whether or not such Guarantor
shall have had notice or knowledge of any act or omission referred to in the
foregoing clauses (i) through (xiii) of this subsection 5(c).
6. Representations and Warranties.
Each Guarantor further represents and warrants to the Agent
and the Lenders that: (a) such Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has full power, authority and legal right to own its property
and assets and to transact the business in which it is engaged; (b) such
Guarantor has full power, authority and legal right to execute and deliver, and
to perform its obligations under, this Guaranty, and has taken all necessary
action to authorize the guarantee
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<PAGE> 7
hereunder on the terms and conditions of this Guaranty and to authorize the
execution, delivery and performance of this Guaranty; and (c) this Guaranty has
been duly executed and delivered by such Guarantor and constitutes a legal,
valid and binding obligation of such Guarantor enforceable against such
Guarantor in accordance with its terms, except to the extent that such
enforceability is subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance and moratorium laws and other laws of general application
affecting enforcement of creditors' rights generally, or the availability of
equitable remedies, which are subject to the discretion of the court before
which an action may be brought.
7. Negative Covenants.
Each Guarantor covenants with the Agent and the Lenders that
such Guarantor shall not grant any security interest in or permit any lien,
claim or encumbrance upon any of its assets in favor of any Person other than
liens and security interests in favor of the Agent and the Lenders and Permitted
Liens.
8. Termination.
This Guaranty shall remain in full force and effect until all
of the Obligations shall be finally and irrevocably paid in full and the
commitments under the Credit Agreement shall have been terminated. Thereafter,
but subject to the following, the Agent shall take such action and execute such
documents as the Guarantors may request (and at the Guarantors' cost and
expense) in order to evidence the termination of this Guaranty. Payment of all
of the Obligations from time to time shall not operate as a discontinuance of
this Guaranty. Each Guarantor further agrees that, to the extent that the
Borrower makes a payment or payments to the Agent or any of the Lenders on the
Obligations, or the Agent or the Lenders receive any proceeds of collateral
securing the Obligations or any other payments with respect to the Obligations,
which payment or receipt of proceeds or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be returned or repaid to the Borrower, its estate, trustee, receiver, debtor in
possession or any other Person, including, without limitation, the Guarantors,
under any insolvency or bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment, return or repayment, the
obligation or part thereof which has been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the date
when such initial payment, reduction or satisfaction occurred, and this Guaranty
shall continue in full force notwithstanding any contrary action which may have
been taken by the Agent or the Lenders in reliance upon such payment, and any
such contrary action so taken shall be without prejudice to the Agent's or the
Lenders' rights under this Guaranty and shall be deemed to have been conditioned
upon such payment having become final and irrevocable.
9. Guaranty of Performance.
Each Guarantor also guaranties the full, prompt and
unconditional performance of all obligations and agreements of every kind owed
or hereafter to be owed by the Borrower to the
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<PAGE> 8
Agent or the Lenders under the Credit Agreement and the other Loan Documents to
which the Borrower is a party. Every provision for the benefit of the Agent or
the Lenders contained in this Guaranty shall apply to the guaranty of
performance given in this paragraph.
10. Assumption of Liens and Obligations.
To the extent that a Guarantor has received or shall hereafter
receive distributions or transfers from the Borrower of property or cash that
are subject, at the time of such contribution, to liens and security interests
in favor of the Agent or the Lenders in accordance with the Credit Agreement,
such Guarantor hereby expressly agrees that (i) it shall hold such assets
subject to such liens and security interests and subject to the terms of the
Credit Agreement, and (ii) it shall be liable for the payment of the Obligations
secured thereby. Each Guarantor's obligations under this Section 10 shall be in
addition to its obligations as set forth in other sections of this Guaranty and
not in substitution therefor or in lieu thereof.
11. Miscellaneous.
(a) The terms "Borrower" and the "Guarantor" as used in
this Guaranty shall include: (i) any successor individual or individuals,
association, partnership or corporation to which all or substantially all of the
business or assets of the Borrower or such Guarantor shall have been transferred
and (ii) any other corporation or entity into or with which the Borrower or such
Guarantor shall have been merged, consolidated, reorganized, or absorbed.
(b) Without limiting any other right of the Agent or any
of the Lenders, whenever the Agent or the Lenders have the right to declare any
of the Obligations to be immediately due and payable (whether or not it has been
so declared), Agent and the Lenders at their sole election without notice to the
undersigned may appropriate and set off against the Obligations:
(i) any and all indebtedness or other moneys due
or to become due to any Guarantor by the Agent or the Lenders in any capacity;
and
(ii) any credits or other property belonging to
any Guarantor (including all account balances, whether provisional or final and
whether or not collected or available) at any time held by or coming into the
possession of the Agent or any of the Lenders, or any affiliate of the Agent or
any of the Lenders, whether for deposit or otherwise;
whether or not the Obligations or the obligation to pay such moneys owed by the
Agent or the Lenders is then due, and the Agent or the Lenders shall be deemed
to have exercised such right of set off immediately at the time of such election
even though any charge therefor is made or entered on the Agent's or the
Lenders' records subsequent thereto. The Agent and Lender agrees to notify such
Guarantor in a reasonably practicable time of any such set-off; however, failure
to so notify such Guarantor shall not affect the validity of any set-off.
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<PAGE> 9
(c) Each Guarantor's obligation hereunder is to pay the
Obligations in full when due according to the Credit Agreement to the extent
provided herein, and shall not be affected by any stay or extension of time for
payment by the Borrower or any other Guarantor resulting from any proceeding
under the Bankruptcy Code or any similar law.
(d) No course of dealing between the Borrower or any
Guarantor and the Agent or the Lenders and no act, delay or omission by the
Agent or Lenders in exercising any right or remedy hereunder or with respect to
any of the Obligations shall operate as a waiver thereof or of any other right
or remedy, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right or remedy. The Agent
or the Lenders may remedy any default by the Borrower under any agreement with
the Borrower or with respect to any of the Obligations in any reasonable manner
without waiving the default remedied and without waiving any other prior or
subsequent default by the Borrower. All rights and remedies of the Lenders
hereunder are cumulative.
(e) This Guaranty shall inure to the benefit of the Agent
and the Lenders under the Credit Agreement, and their successors and assigns.
(f) Captions of the sections of this Guaranty are solely
for the convenience of the Agent, the Lenders and the Guarantors, and are not an
aid in the interpretation of this Guaranty and do not constitute part of the
agreement of the parties set forth herein.
(g) If any provision of this Guaranty is unenforceable in
whole or in part for any reason, the remaining provisions shall continue to be
effective.
(h) EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT
SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY AND EACH GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
AGENT TO BRING PROCEEDINGS AGAINST ANY GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY GUARANTOR AGAINST AGENT OR ANY
LENDER OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS GUARANTY SHALL BE
BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
(i) EACH GUARANTOR DESIGNATES AND APPOINTS CT CORPORATION
SYSTEM AND SUCH OTHER PERSONS AS MAY HEREAFTER BE
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<PAGE> 10
SELECTED BY SUCH GUARANTOR WHICH IRREVOCABLY AGREE IN WRITING TO SO SERVE AS ITS
AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN
ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY EACH GUARANTOR TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO
SERVED SHALL BE MAILED BY REGISTERED MAIL TO SUCH GUARANTOR AT ITS ADDRESS
PROVIDED IN SUBSECTION 11(K) EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE
LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF
PROCESS. IF ANY AGENT APPOINTED BY ANY GUARANTOR REFUSES TO ACCEPT SERVICE,
GUARANTOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT
NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
(j) THIS GUARANTY AND THE TRANSACTIONS EVIDENCED HEREBY
SHALL BE CONSTRUED UNDER THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS
PROVISIONS) AND DECISIONS OF THE STATE OF ILLINOIS.
(k) Notices. All notices, approvals, requests, demands
and other communications hereunder shall be in writing and delivered by hand or
by nationally recognized overnight courier, or sent by first class mail or sent
by telecopy (with such telecopy to be confirmed promptly in writing sent by
first class mail), sent:
(a) if to any Guarantor, to
such Guarantor:
--------------------------
c/o Packaged Ice, Inc.
--------------------------
--------------------------
Attn:
---------------------
Facsimile:
----------------
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(b) if to Agent, to: Antares Leveraged Capital
Corp.
311 South Wacker Drive
Chicago, IL 60606
Attn: Dave Swanson
Telephone: (312) 697-3999
Facsimile: (312) 697-3998
or to such other address or addresses or telecopy number or numbers as any party
hereto may most recently have designated in writing to the other party by such
notice. All such communications shall be deemed to have been given or made (i)
if delivered in person, when delivered, (ii) if delivered by telecopy, on the
date of transmission if transmitted on a Business Day before 4:00 p.m. Chicago
time, otherwise on the next Business Day, (iii) if delivered by overnight
courier, one (1) Business Day after delivery to the courier properly addressed
and (iv) if mailed, three (3) Business Days after deposited in the United States
mail, certified or registered.
12. WAIVERS.
(a) EACH GUARANTOR WAIVES THE BENEFIT OF ALL VALUATION,
APPRAISAL AND EXEMPTION LAWS.
(b) UPON THE OCCURRENCE OF A DEFAULT OR EVENT OF DEFAULT
UNDER THE CREDIT AGREEMENT, EACH GUARANTOR HEREBY WAIVES ALL RIGHTS TO NOTICE
AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE AGENT OR THE LENDERS OF
THEIR RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY,
ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. EACH
GUARANTOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH
RESPECT TO THIS TRANSACTION AND THIS GUARANTY.
(c) EACH GUARANTOR WAIVES ITS RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
GUARANTY, OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY AGENT OR ANY LENDER. EACH GUARANTOR
AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH GUARANTOR FURTHER AGREES
THAT ITS RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION
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HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY.
13. Limitation on Guaranteed Obligations.
Notwithstanding any provision herein contained to the
contrary, each Guarantor's liability hereunder shall be limited to an amount not
to exceed as of any date of determination, the maximum amount which could be
claimed by the Agent and Lenders from such Guarantor under this Guaranty without
rendering such claim voidable or avoidable under Section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute or common law after
taking into account, among other things, such Guarantor's right of contribution
and indemnification from each other Guarantor under Section 14 hereof.
14. Contribution with Respect to Guaranteed Obligations.
(a) To the extent that any Guarantor shall
make a payment under this Guaranty of all or any of the Obligations (a
"Guarantor Payment") which, taking into account all other Guarantor Payments
then previously or concurrently made by the other Guarantors, exceeds the amount
which such Guarantor would otherwise have paid if each Guarantor had paid the
aggregate Obligations satisfied by such Guarantor Payment in the same proportion
that such Guarantor's "Allocable Amount" (as defined below) (in effect
immediately prior to such Guarantor Payment) bore to the aggregate Allocable
Amounts of all of Guarantors in effect immediately prior to the making of such
Guarantor Payment, then, following irrevocable payment in full of the
Obligations and termination of the Commitments, such Guarantor shall be entitled
to receive contribution and indemnification payments from, and be reimbursed by,
each of the other Guarantors for the amount of such excess, pro rata based upon
their respective Allocable Amounts in effect immediately prior to such Guarantor
Payment.
(b) As of any date of determination, the
"Allocable Amount" of any Guarantor shall be equal to the maximum amount of the
claim which could then be recovered from such Guarantor under this Guaranty
without rendering such claim voidable or avoidable under Section 548 of Chapter
11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common
law.
(c) This Section 14 is intended only to define
the relative rights of Guarantors and nothing set forth in this Section 14 is
intended to or shall impair the obligations of Guarantors, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Guaranty.
(d) The rights of the parties under this Section
14 shall be exercisable upon the full and irrevocable payment of the Obligations
and the termination of the Credit Agreement and the other Loan Documents.
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(e) The parties hereto acknowledge that the
rights of contribution and indemnification hereunder shall constitute assets of
any Guarantor to which such contribution and indemnification is owing.
15. Texas Usury Savings Clause. Interest on the
Indebtedness evidenced by this Guaranty is expressly limited so that in no
contingency or event whatsoever, whether by acceleration of the maturity of the
Indebtedness evidenced by this Guaranty or otherwise, shall the interest
contracted for, charged or received by any Lender exceed the maximum amount
permissible under law applicable to such Lender. If from any circumstances
whatsoever fulfillment of any provisions of this Guaranty, the Loan Documents or
of any other document evidencing, securing, guaranteeing or otherwise pertaining
to the Indebtedness evidenced hereby, at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
law, then, ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any such circumstances any Lender shall ever
receive anything of value as interest or deemed interest by applicable law under
this Guaranty, the other Loan Documents or any other document evidencing,
securing, guaranteeing or otherwise pertaining to the Indebtedness evidenced
hereby or otherwise an amount that would exceed the highest lawful amount, such
amount that would be excessive interest shall be applied to the reduction of the
principal amount to such Lender owing on the Indebtedness evidenced by this
Guaranty or on account of any other Indebtedness of the applicable Guarantor to
such Lender, and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal of the Indebtedness evidenced by this
Guaranty and such other Indebtedness, such excess shall be refunded to the
applicable Guarantor. In determining whether or not the interest paid or payable
with respect to any Indebtedness of any Guarantor to any Lender, under any
specific contingency, exceeds the highest lawful rate, such Guarantor and such
Lender shall, to the maximum extent permitted by applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, (iii)
amortize, prorate, allocate and spread the total amount of interest throughout
the full term of such Indebtedness so that the actual rate of interest on
account of such Indebtedness does not exceed the maximum amount permitted by
applicable law, and/or (iv) allocate interest between portions of such
Indebtedness, to the end that no such portion shall bear interest at a rate
greater than that permitted by law. The terms and provisions of this paragraph
shall control and supersede every other conflicting provision of this Guaranty.
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IN WITNESS WHEREOF, Guarantors have executed this Guaranty as
of the date first written above.
REDDY ICE CORPORATION, a __________
corporation
By:
-------------------------------
Title:
---------------------------
MISSION PARTY ICE, INC., a Texas corporation
By:
-------------------------------
Title:
---------------------------
SOUTHWEST TEXAS PACKAGED ICE, INC., a Texas
corporation
By:
-------------------------------
Title:
---------------------------
SOUTHWESTERN ICE, INC., a Texas corporation
By:
-------------------------------
Title:
---------------------------
GOLDEN EAGLE ICE-TEXAS, INC., a Texas
corporation
By:
-------------------------------
Title:
---------------------------
PACKAGED ICE SOUTHEAST, INC.
f/k/a Central Arkansas Cold Storage-Texas,
Inc., a Texas corporation
By:
-------------------------------
Title:
---------------------------
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PACKAGED ICE LEASING, INC., a Nevada
corporation
By:
-------------------------------
Title:
---------------------------
SOUTHCO ICE, INC., a Texas corporation
By:
-------------------------------
Title:
---------------------------
SOUTHERN BOTTLED WATER COMPANY, INC., a
Texas corporation
By:
-------------------------------
Title:
---------------------------
2
<PAGE> 16
EXHIBIT A
FORM OF JOINDER
JOINDER TO GUARANTY
The undersigned, ____________________ a _____________, hereby
joins in the execution of that certain Guaranty dated as of _________ __, 1998
(the "Guaranty"), by Reddy Ice Corporation, Mission Party Ice, Inc., Southwest
Texas Packaged Ice, Inc., Southwestern Ice, Inc., Golden Eagle Ice-Texas, Inc.,
Packaged Ice Southeast, Inc. f/k/a Central Arkansas Cold Storage-Texas, Inc.,
Packaged Ice Leasing, Inc., Southern Bottled Water Company, Inc. and Southco
Ice, Inc., and each other Person that becomes a Guarantor thereunder after the
date and pursuant to the terms thereof, to and in favor of Antares Leveraged
Capital Corp., as Agent. By executing this Joinder, the undersigned hereby
agrees that it is a Guarantor thereunder with the same force and effect as if
originally named therein as a Guarantor. The undersigned agrees to be bound by
all of the terms and provisions of the Guaranty and represents and warrants that
the representations and warranties set forth in Section 6 of the Guaranty are,
with respect to the undersigned, true and correct as of the date hereof. Each
reference to a Guarantor in the Guaranty shall be deemed to include the
undersigned.
In Witness Whereof, the undersigned has executed this Joinder
this ___ day of _________, ____.
-----------------------------
By:
-----------------------------
Title:
--------------------------
1
