<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 23, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PERSONNEL GROUP OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7363 56-1930691
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
6302 FAIRVIEW ROAD, SUITE 201
CHARLOTTE, NORTH CAROLINA 28210
TEL: (704) 442-5100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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KEN R. BRAMLETT, JR.
SENIOR VICE PRESIDENT
6302 FAIRVIEW ROAD, SUITE 201
CHARLOTTE, NORTH CAROLINA 28210
TEL: (704) 442-5100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
<TABLE>
<C> <C>
PATRICK S. BRYANT LAURA B. HUNTER
ROBINSON, BRADSHAW & HINSON, P.A. BROBECK, PHLEGER & HARRISON LLP
1900 INDEPENDENCE CENTER 4675 MACARTHUR COURT, SUITE 1000
101 NORTH TRYON STREET NEWPORT BEACH, CALIFORNIA 92660
CHARLOTTE, NORTH CAROLINA 28246 TEL: (714) 752-7535
TEL: (704) 377-2536
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
promptly as practicable after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE(2) PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
5 3/4% Convertible Subordinated
Notes due 2004.................... $115,000,000 100% $115,000,000 $34,848.49
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Common Stock, $.01 par value........ 3,228,070 shares(1) N/A N/A N/A(3)
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</TABLE>
(1) Represents shares originally issuable upon conversion of the Notes being
registered under this Registration Statement plus an additional
indeterminate number of shares as may become issuable upon conversion of the
Notes being registered hereunder by means of adjustment in the conversion
price thereof.
(2) Estimated solely for purpose of calculating the registration fee.
(3) Pursuant to Rule 457(i), there is no filing fee with respect to the shares
of Common Stock being registered hereunder because no additional
consideration will be received in connection with the exercise of the
conversion privilege.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 23, 1997
PROSPECTUS
$115,000,000
PERSONNEL GROUP OF AMERICA, INC. [PGA LOGO]
5 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004
(INTEREST PAYABLE JULY 1 AND JANUARY 1)
3,228,070 SHARES OF COMMON STOCK
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This Prospectus relates to (i) $115,000,000 aggregate principal amount of
5 3/4% Convertible Subordinated Notes due 2004 (the "Notes") of Personnel Group
of America, Inc., a Delaware corporation ("PGA" or the "Company"), and (ii)
3,228,070 shares of the Common Stock, par value $.01 per share (the "Common
Stock"), of the Company, which are initially issuable upon conversion of the
Notes, plus such additional indeterminate number of shares of Common Stock as
may become issuable upon conversion of the Notes as a result of adjustments to
the conversion price thereunder (collectively, the "Shares"). The Notes and the
Shares that are being registered hereby are to be offered for the account of the
holders thereof (the "Selling Securityholders"). The Notes were acquired from
the Company by Smith Barney Inc., PaineWebber Incorporated, J.C. Bradford & Co.,
The Robinson-Humphrey Company, Inc., and NationsBanc Capital Markets, Inc. (the
"Initial Purchasers") in June and July 1997 in connection with a private
offering. See "Description of Notes."
The Notes are convertible into Common Stock at any time at or before
maturity, unless previously redeemed, at a conversion price of $35.625 per
share, subject to adjustment in certain events. The Common Stock of the Company
is traded on the New York Stock Exchange (the "NYSE") under the symbol "PGA." On
July 22, 1997, the closing price of the Common Stock as reported by the NYSE was
$29.75 per share.
The Notes do not provide for a sinking fund. The Notes are not redeemable by
the Company prior to July 7, 2000. Thereafter, the Notes are redeemable at the
option of the Company, in whole or in part, at the redemption prices set forth
in this Prospectus, together with accrued interest. Upon a Repurchase Event (as
defined herein), each holder of Notes shall have the right, at the holder's
option, to require the Company to repurchase such holder's Notes at a purchase
price equal to 100% of the principal amount thereof, plus accrued interest. See
"Description of Notes -- Certain Rights to Require Repurchase of Notes."
The Notes are unsecured obligations of the Company and are subordinate to
all present and future Senior Indebtedness (as defined herein) of the Company
and will be effectively subordinated to all indebtedness and liabilities of
subsidiaries of the Company. The Indenture (as defined herein) does not restrict
the incurrence of any other indebtedness or liabilities by the Company or its
subsidiaries. See "Description of Notes -- Subordination."
For a description of certain income tax consequences to holders of the
Notes, see "Certain United States Federal Income Tax Consequences."
There is no existing public market for the Notes and there can be no
assurance as to the liquidity of any markets that may develop for the Notes, the
ability of the holders to sell their Notes or what price holders of the Notes
will be able to sell their Notes. The Initial Purchasers have informed the
Company that they are making and currently intend to continue making a market in
the Notes. The Initial Purchasers, however, are not obligated to do so and any
such market making may be discontinued at any time without notice, in the sole
discretion of the Initial Purchasers. Prior to the resale of the Notes pursuant
to this Prospectus, each of the Notes was eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages Market (the "PORTAL
Market"). Notes sold pursuant to this Prospectus will no longer be eligible for
trading in the PORTAL Market. The Company does not intend to apply for listing
of the Notes on any securities exchange.
The Notes and the Shares are being registered to permit public secondary
trading of the Notes and, upon conversion, the underlying Common Stock, by the
holders thereof from time to time after the date of this Prospectus. The Company
has agreed, among other things, to bear all expenses (other than underwriting
discounts, selling commissions and fees and the expenses of counsel and other
advisors to the holders of the Notes or the underlying Common Stock) in
connection with the registration and sale of the Notes and the Shares covered by
this Prospectus.
The Company will not receive any of the proceeds from the sales of the Notes
or the Shares by the Selling Securityholders. The Notes and the Shares may be
offered in negotiated transactions or otherwise, at market prices prevailing at
the time of sale or at negotiated prices. In addition, the Shares may be offered
from time to time through ordinary brokerage transactions on the NYSE. See "Plan
of Distribution." The Selling Securityholders may be deemed to be "Underwriters"
as defined in the Securities Act of 1933, as amended (the "Securities Act"). If
any broker-dealers are used by the Selling Securityholders, any commissions paid
to broker-dealers and, if broker-dealers purchase any Notes or Shares as
principals, any profits received by such broker-dealers on the resale of the
Notes or Shares may be deemed to be underwriting discounts or commissions under
the Securities Act. In addition, any profits realized by the Selling
Securityholders may be deemed to be underwriting commissions.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE
CONSIDERED IN EVALUATING AN INVESTMENT IN THE NOTES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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July , 1997
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THIS PROSPECTUS CONTAINS SUMMARIES, BELIEVED TO BE ACCURATE, OF CERTAIN
TERMS OF CERTAIN DOCUMENTS, BUT REFERENCE IS MADE TO THE ACTUAL DOCUMENTS,
COPIES OF WHICH WILL BE MADE AVAILABLE UPON REQUEST, FOR THE COMPLETE
INFORMATION CONTAINED THEREIN. ALL SUCH SUMMARIES ARE QUALIFIED IN THEIR
ENTIRETY BY THIS REFERENCE.
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SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN OF THE MATTERS DISCUSSED UNDER THE CAPTIONS "RISK FACTORS," AND
ELSEWHERE IN THIS PROSPECTUS MAY CONSTITUTE FORWARD-LOOKING STATEMENTS FOR
PURPOSES OF THE SECURITIES ACT AND THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "EXCHANGE ACT"), AND AS SUCH MAY INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE
OR FINANCIAL CONDITION OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE
RESULTS, PERFORMANCE OR FINANCIAL CONDITION EXPRESSED OR IMPLIED BY ANY SUCH
FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE THE ACTUAL
RESULTS, PERFORMANCE OR FINANCIAL CONDITION OF THE COMPANY TO DIFFER MATERIALLY
FROM THE COMPANY'S EXPECTATIONS ARE DISCLOSED IN THIS PROSPECTUS AND THE
DOCUMENTS INCORPORATED BY REFERENCE HEREIN ("CAUTIONARY STATEMENTS"), INCLUDING,
WITHOUT LIMITATION, THOSE STATEMENTS MADE IN CONJUNCTION WITH ANY SUCH
FORWARD-LOOKING STATEMENTS, THOSE INCLUDED UNDER "RISK FACTORS" AND OTHERWISE
HEREIN AND THEREIN. ANY SUCH WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
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THE COMPANY ENDEAVORS TO PROTECT ITS INTELLECTUAL PROPERTY RIGHTS AND HAS
OBTAINED REGISTRATIONS IN THE UNITED STATES OF CERTAIN SERVICEMARKS AND
TRADENAMES THAT APPEAR IN THIS PROSPECTUS.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
These materials can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
New York, New York 10048. Copies of these materials can also be obtained from
the Commission at prescribed rates by writing to the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission and that is located at http://www.sec.gov. In addition, the Common
Stock of the Company is listed on the NYSE, and such reports, proxy statements
and other information may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus, which constitutes part of a registration statement filed
by the Company with the Commission under the Securities Act (the "Registration
Statement"), omits certain of the information contained in the Registration
Statement. Reference is made to the Registration Statement and to the exhibits
thereto for further information with respect to the Company and the Shares
offered hereby. Copies of such Registration Statement are available from the
Commission. Statements contained herein concerning the provisions of documents
filed herewith as exhibits are necessarily summaries of such documents, and each
such statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
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INCORPORATION BY REFERENCE
This Prospectus incorporates by reference the Company's: (i) Annual Report
on Form 10-K for the year ended December 29, 1996; (ii) Proxy Statement dated
April 10, 1997, relating to the Annual Meeting of Shareholders held on May 21,
1997; (iii) Current Report on Form 8-K dated March 17, 1997; (iv) Quarterly
Report on Form 10-Q for the period ended March 30, 1997; (v) Current Report on
Form 8-K dated May 22, 1997; (vi) Current Report on Form 8-K dated June 6, 1997;
(vii) Current Report on Form 8-K dated June 18, 1997; (viii) the description of
the Common Stock contained in the Company's registration statements on Form 8-A
filed pursuant to Section 12 of the Exchange Act, including any amendment or
report filed for the purpose of updating such description; and (ix) all other
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering to be made hereunder.
Any statement contained in this Prospectus or in a document incorporated by
reference in this Prospectus will be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document which is also
incorporated by reference in this Prospectus modifies or supersedes such
statement. Any statement so modified or superseded will not be deemed, except as
modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person, including a
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information that has been
incorporated by reference in the Prospectus, excluding exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the documents so incorporated. Requests for copies of such documents should be
addressed to the Company at its principal executive offices listed below,
attention: Corporate Secretary.
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THE COMPANY
Personnel Group of America, Inc. is a leading information technology and
personnel staffing services company. The Company is organized into three
divisions, Information Technology, Commercial Staffing, and Health Care
Services, and operates in strategic markets throughout the United States. The
Company's staffing services include temporary staffing, placement of full time
employees, on-site management of temporary employees, training and testing of
temporary and permanent workers and information technology consulting.
The Information Technology Division offers information technology staffing
and consulting services in a range of computer-related disciplines. The
Commercial Staffing Division offers a wide variety of temporary office and
clerical services to more than 10,000 organizations nationwide. The Commercial
Staffing Division also provides light technical and light industrial services to
its customers, but these services typically account for a small portion of the
division's total revenues. The Health Care Services Division operates
exclusively under the "Nursefinders" brand name and provides health care
personnel to patients receiving home health care services and to supplement the
staffing needs of hospitals, nursing homes and other health care facilities.
The Company's principal executive offices are located at 6302 Fairview
Road, Suite 201, Charlotte, North Carolina 28210, and its telephone number at
such address is (704) 442-5100.
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RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus, prospective investors should consider carefully the factors
listed below before purchasing the Notes and Shares offered hereby.
POSSIBLE ADVERSE EFFECT OF FLUCTUATIONS IN THE GENERAL ECONOMY
Demand for information technology and commercial staffing services is
significantly affected by the general level of economic activity in the country.
Companies use temporary staffing services to manage personnel costs and staffing
needs due to business fluctuations. When economic activity increases, temporary
employees are often added before full-time employees are hired. As economic
activity slows, many companies reduce their usage of temporary employees before
undertaking layoffs of their regular employees. During expansions, there is
intense competition among temporary services firms for qualified temporary
personnel. In addition, the Company may experience increased competitive pricing
pressures during such periods. There can be no assurance that during periods of
increased economic activity and higher general employment levels the Company
will be able to recruit and retain sufficient temporary personnel to meet the
needs of its clients, or that pricing pressures will not adversely affect the
Company's results of operations. Similarly, a slowdown in the economy may result
in decreased demand for temporary personnel, which may have an adverse effect on
the Company's financial condition and results of operations, including cash
flow. During the most recent recession, the Company's operations were adversely
affected.
Demand for the Company's health care services is influenced by trends in
public and private funding of health care, but is less directly affected by the
general level of economic activity. Changes in these funding arrangements and in
the health care industry generally could have an adverse effect on the Company's
financial condition and results of operations, including cash flow. See
"-- Government Regulation."
HIGHLY COMPETITIVE MARKET; LIMITED BARRIERS TO ENTRY
The U.S. staffing services market is highly competitive and highly
fragmented, with limited barriers to entry and more than 15,000 offices
competing in the industry as of the date of this Prospectus. Management believes
that no one firm currently has more than 11% of the national market, as measured
by revenue, although the staffing and health care staffing services industries
have been undergoing significant consolidation. The Company competes in
national, regional and local markets with full-service and specialized temporary
service agencies and health care providers. While the majority of the Company's
competitors are significantly smaller than the Company, a number of competitors
have greater marketing and financial resources than those of the Company. The
Company expects that the level of competition will remain high in the future,
which could limit the Company's ability to maintain or increase its market share
or maintain or increase gross margins, either of which could have a material
adverse effect on the Company's financial condition and results of operations,
including cash flow.
IMPACT OF PRICING PRESSURE ON MARGINS
Price competition in the staffing services industry is intense in all three
of the Company's divisions. Pricing pressure from competitors, customers and
payors is increasing. There can be no assurance that the Company will be able to
maintain or increase its current margins, the reduction of which could have a
material adverse effect on the Company's financial condition and results of
operations, including cash flow. See "-- Government Regulation."
ABILITY TO CONTROL GROWTH; ACQUISITION RISKS
The ability of the Company to continue to execute its business strategy
will depend on a number of factors, including the availability of working
capital, existing and emerging competition and the availability of attractive
acquisition opportunities. The Company has consummated a number of acquisitions
since its initial public offering in 1995. Once integrated, acquisitions may not
achieve levels of revenue, profitability or productivity comparable to those of
the Company's existing locations or may not otherwise perform as expected.
Acquisitions also involve special risks, including risks associated with
unanticipated liabilities and contingencies, diversion of management attention
and possible adverse effects on earnings resulting from increased goodwill
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amortization, increased interest costs, the issuance of additional securities
and difficulties related to the integration of the acquired business. There can
be no assurance that the Company will be able to successfully identify
additional suitable acquisition candidates, complete additional acquisitions or
integrate acquired businesses into its operations. The failure to integrate
acquired businesses into its operations could have a material adverse effect on
the Company's financial condition and results of operations, including cash
flow.
INCREASED EMPLOYEE COSTS; WORKERS' COMPENSATION
Businesses use temporary staffing in part to shift certain employment costs
and risks (e.g., workers' compensation and unemployment insurance) to temporary
personnel services companies. Accordingly, the Company is responsible for and
pays unemployment insurance premiums, workers' compensation and medical and
other employer costs for job-related injuries for its temporary employees. The
Company's workers' compensation and medical costs are based on the loss and loss
adjustment expenses as estimated by an outside administrator. Workers'
compensation costs have increased as various states have raised benefit levels
and liberalized allowable claims. Unemployment insurance premiums are set
annually by the states in which employees perform services and are subject to
increases as a result of increased unemployment and the extension of periods for
which benefits are available. The Company currently pays health insurance
premiums for all of its permanent employees but none of its temporary employees.
Historically, the Company has increased fees charged to its clients to absorb
increases in unemployment, workers' compensation, medical and other direct costs
of services. There can be no assurance that the Company will be able to continue
to increase the fees charged to its clients if expenses related to workers'
compensation or unemployment insurance increase or if employer-paid health
insurance is extended to temporary employees. Any such inability could have a
material adverse effect on the Company's financial condition and results of
operations, including cash flow.
INDUSTRY RISK OF LITIGATION AND CLAIMS
The Company is subject to litigation and claims by its employees,
customers, franchisees and other third parties. The Company is in the business
of employing people and placing them in the work place of other businesses or
the homes of persons requiring health care. Attendant risks of such activities
include possible claims by customers or patients of employee misconduct or
negligence, including malpractice, claims by employees of discrimination or
harassment (including claims relating to actions of the Company's clients),
claims related to the inadvertent employment of illegal aliens or unlicensed
personnel, payment of workers' compensation claims and other similar claims. The
Company has policies and guidelines in place to reduce its exposure to these
risks, and has insurance against certain risks in amounts which it believes to
be adequate. There can be no assurance that the Company will not experience
litigation and claims in the future which are not covered by or which exceed its
insurance, or that the Company will not incur damages, fines or other losses or
negative publicity with respect to such matters, any of which could have a
material adverse effect on the Company's business.
DEPENDENCE ON KEY PERSONNEL
The Company's operations are dependent on the continued efforts of its
executive officers and senior management. In addition, the Company is dependent
on the performance and productivity of its local branch managers and field
personnel. The loss of some of the Company's executive officers or other key
managers could have an adverse effect on the Company's operations, including the
Company's ability to establish and maintain customer relationships. The
Company's ability to attract and retain business is significantly affected by
local relationships and the quality of service rendered by branch managerial
personnel. If the Company is unable to attract and retain key employees to
perform these services, the Company's business could be adversely affected.
DEPENDENCE ON AVAILABILITY OF QUALIFIED TEMPORARY PERSONNEL
The Company depends upon its ability to attract qualified temporary
personnel who possess the skills and experience necessary to meet the staffing
requirements of its clients. The Company must continually evaluate and upgrade
its base of available qualified personnel to keep pace with changing client
needs and emerging technologies. Competition for individuals with proven
professional skills, particularly information technology consultants, home
health care providers and technologically skilled administrative employees is
intense, and demand for such individuals is expected to remain very strong for
the foreseeable future. There can be no
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assurance that qualified personnel will continue to be available to the Company
in sufficient numbers in the future.
GOVERNMENT REGULATION
The Company's Health Care Services Division is subject to extensive
government regulation under federal, state and local law, including but not
limited to, licensing requirements, certificate of need requirements, periodic
examinations by government agencies, federal and state anti-fraud, anti-abuse
and anti-kickback statutes and regulations, and federal and state laws
prohibiting physician ownership or compensation arrangements in entities,
including home health agencies, to which they refer patients for health care
services. Congress and various state legislatures have periodically proposed
legislation affecting the regulation of the health care industry. Changes in
government support of health care services, the methods by which such services
are delivered, the prices for such services, the reimbursement for such
services, or the regulations governing such services, may all have a material
adverse effect on the Company's financial condition and results of operations.
The Company's revenues are derived in part from the Medicare and Medicaid
programs, which are subject to statutory and regulatory changes, retroactive and
prospective rate adjustments and administrative rulings and funding
restrictions, all of which could have the effect of limiting or reducing
reimbursement levels for the Company's services. New instructions introduced by
the Health Care Financing Administration and implemented in 1996 relating to the
allocation of administrative costs could restrict the allocation of certain
previously reimbursable shared costs under the program going forward.
Additionally, the President's proposed fiscal year 1998 federal budget submitted
to Congress in February 1997 could have the effect of further lowering
reimbursable cost limits for home health agencies that are Medicare providers.
These and other regulations could affect the ability of the Company to collect
its fees for services provided. Any significant decrease in Medicare or Medicaid
reimbursement levels, or the imposition of significant restrictions on
participation in the Medicare and Medicaid programs, could have a material
adverse effect on the Company. In addition, certificate of need laws, which
restrict the types of care that may be provided and can limit or eliminate a
company's ability to provide certain services (including home health care
services), to establish or expand operations, and to act as a Medicare or
Medicaid provider in certain jurisdictions, may render it more difficult for the
Company to, or preclude the Company from, expanding the scope of its home health
care services. There can be no assurance that the Company will be able to
continue to obtain or maintain the required government approvals, licenses or
certificates of need, obtain reimbursement for its services or avoid compliance
or other problems under applicable laws and regulations.
FRANCHISING AND LICENSING RISKS
The Company derives a portion of its net income from franchised and
licensed operations in its Health Care Services Division. Franchisees and
licensees may terminate their agreements, resulting in a loss of revenues and
corresponding profitability. The ownership of the Company's franchises and
licenses is relatively concentrated, and the loss of one or more of those
relationships could have an adverse effect on the Company's results of
operations. Further, while the Company's agreements contain non-competition
covenants, former franchisees and licensees may nevertheless seek to compete
with the Company. The Company must comply with federal and state laws and
regulations governing the sale of franchises and licenses, and state laws
concerning the ongoing relationship with franchisees and licensees (including
the termination and non-renewal of such relationships). The Company is subject
to the risk of franchisee and licensee litigation pursuant to such laws or
otherwise.
SUBSTANTIAL INTANGIBLE ASSETS
In recent years the Company has recorded substantial excess cost over fair
value of net assets acquired in connection with the purchase of certain of its
subsidiaries and divisions. Such intangible assets may increase if additional
acquisitions are completed and will increase upon payment of contingent earnout
amounts with respect to completed acquisitions. Any impairment of such assets,
with resultant write offs, could have a material adverse effect on the Company's
financial condition and results of operations.
CERTAIN PROVISIONS RELATING TO CHANGES IN CONTROL
The Company's Certificate of Incorporation and Bylaws, as well as a
shareholder rights agreement, contain provisions that may have the effect of
discouraging, delaying or preventing a change in control of the Company,
including transactions in which the shareholders might otherwise receive a
premium for their shares over then
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current market prices, and may limit the ability of the shareholders to approve
transactions that they may deem to be in their best interests. Such provisions
in the Certificate of Incorporation and Bylaws include a classified Board of
Directors and a prohibition on shareholder action by written consent. In
addition, the Certificate of Incorporation permits the Company's Board of
Directors to issue up to 5,000,000 shares of preferred stock, $.01 par value per
share ("Preferred Stock"), and to determine the price, rights, preferences and
privileges of those shares without any further vote or action by the
shareholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any Preferred Stock
that may be issued in the future. The issuance of Preferred Stock could have the
effect of making it more difficult for a third party to acquire a majority of
the outstanding voting stock of the Company. Although the Company has no present
plans to issue shares of Preferred Stock, the Board of Directors has preapproved
the terms of a series of Preferred Stock that may be issued pursuant to the
shareholder rights plan upon the occurrence of certain triggering events. In
general, the shareholder rights agreement provides a mechanism by which the
Board of Directors and shareholders may act to substantially dilute the share
position of any takeover bidder who acquires 15% or more of the Common Stock.
See "Description of Capital Stock."
SIGNIFICANT LEVERAGE AND DEBT SERVICE
With its issuance of the Notes, the Company continued to be significantly
leveraged. In addition, subject to the restrictions in its current $125.0
million revolving credit agreement (the "Credit Agreement") and the Indenture,
the Company and its subsidiaries may incur additional indebtedness (including
additional Senior Indebtedness) from time-to-time to finance acquisitions,
capital expenditures or for general corporate purposes.
The level of the Company's indebtedness could have important consequences
to holders of the Notes, including: (i) a substantial portion of the Company's
cash flow from operations must be dedicated to debt service and contingent
earnout payments and will not be available for other purposes; (ii) the
Company's ability to obtain additional debt financing in the future for other
acquisitions and for working capital may be limited; and (iii) the Company's
level of indebtedness could limit its flexibility in reacting to changes in its
industry or economic conditions generally.
The Company's ability to pay interest on the Notes and to satisfy its other
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions and financial, business and other
factors, certain of which are beyond its control, as well as the availability of
borrowing under the Credit Agreement (or any successor credit agreement). The
Company will require substantial amounts of cash to fund scheduled payments of
principal and interest on its outstanding indebtedness, contingent earnout
payments with respect to certain acquisitions, as well as future capital
expenditures and any increased working capital requirements. If the Company is
unable to meet its cash requirements out of cash flow from operations and its
available borrowings, there can be no assurance that it will be able to obtain
alternative financing or that it will be permitted to do so under the terms of
the Credit Agreement (or any successor credit agreement) or other debt
instruments. In the absence of such financing, the Company's ability to respond
to changing business and economic conditions, to make future acquisitions, to
absorb adverse operating results or to fund capital expenditures or increased
working capital requirements may be adversely affected. If the Company does not
generate sufficient increases in cash flow from operations to repay the Notes at
maturity, it could attempt to refinance the Notes; however, no assurance can be
given that such a refinancing would be available on terms acceptable to the
Company, if at all. Any failure by the Company to satisfy its obligations with
respect to the Notes at maturity (with respect to payments of principal) or
prior thereto (with respect to payments of interest or required repurchases)
would constitute a default under the Indenture and could cause a default under
agreements governing other indebtedness, if any, of the Company. In addition,
there can be no assurance that the Company will have available the financial
resources necessary to repurchase any or all Notes tendered upon a Change in
Control (as defined herein).
SUBORDINATION OF NOTES
The Notes are subordinate in right of payment to all current and future
Senior Indebtedness of the Company. Senior Indebtedness includes all secured
indebtedness of the Company for money borrowed (including any secured
indebtedness under the Company's Credit Agreement and any predecessor or
successor thereto), whether existing on or created or incurred after the date of
the issuance of the Notes, that is not made subordinate to or
9
<PAGE> 10
pari passu with the Notes by the instrument creating the indebtedness. The
Indenture does not limit the amount of additional indebtedness, including Senior
Indebtedness, which the Company can create, incur, assume or guarantee. By
reason of such subordination of the Notes, in the event of insolvency,
bankruptcy, liquidation, reorganization, dissolution or winding up of the
business of the Company or upon default in payment with respect to any Senior
Indebtedness of the Company or an event of default with respect to such
indebtedness permitting the acceleration thereof, the assets of the Company will
be available to pay the amounts due on the Notes only after all Senior
Indebtedness of the Company has been paid in full. In addition, holders of the
Notes are effectively subordinated to the claims of creditors of the Company's
subsidiaries. In the event of the insolvency, bankruptcy, liquidation,
reorganization, dissolution or winding up of the business of any subsidiary of
the Company, creditors of such subsidiary generally will have the right to be
paid in full before any distribution is made to the Company or the holders of
the Notes. See "Description of Notes."
LIMITATIONS ON REPURCHASE UPON A REPURCHASE EVENT
In the event of a Repurchase Event, which includes a Change in Control and
a Termination of Trading (as defined herein), each holder of the Notes will have
the right, at the holder's option, to require the Company to repurchase all or a
portion of such holder's Notes at a purchase price equal to 100% of the
principal amount thereof plus accrued interest to the repurchase date. The
Company's ability to repurchase the Notes upon a Repurchase Event may be limited
by the terms of the Company's Senior Indebtedness and the subordination
provisions of the Indenture. Further, the ability of the Company to repurchase
Notes upon a Repurchase Event will be dependent on the availability of
sufficient funds and compliance with applicable securities laws. Accordingly,
there can be no assurance that the Company will be able to repurchase the Notes
upon a Repurchase Event. The term "Repurchase Event" is limited to certain
specified transactions and may not include other events that might adversely
affect the financial condition of the Company or result in a downgrade of the
credit rating (if any) of the Notes nor would the requirement that the Company
offer to repurchase the Notes upon a Repurchase Event necessarily afford holders
of the Notes protection in the event of a highly leveraged reorganization,
merger or similar transaction involving the Company. See "Description of Notes."
ABSENCE OF PUBLIC MARKET
There is no existing public market for the Notes and there can be no
assurance as to the liquidity of any markets that may develop for the Notes, the
ability of the holders to sell their Notes or the price at which holders of the
Notes may be able to sell their Notes. Future trading prices of the Notes will
depend on many factors, including, among other things, prevailing interest
rates, the Company's operating results, the price of the Common Stock and the
market for similar securities. The Initial Purchasers have informed the Company
that the Initial Purchasers are making and currently intend to continue making a
market in the Notes; however, the Initial Purchasers are not obligated to do so,
and any such market making activity may be terminated at any time without notice
to the holders of the Notes, in the sole discretion of the Initial Purchasers.
Prior to the resale thereof pursuant to this Prospectus, each of the Notes was
eligible for trading in the PORTAL Market. Notes sold pursuant to this
Prospectus will no longer be eligible for trading in the PORTAL Market. The
Company does not intend to apply for listing of the Notes on any securities
exchange.
POSSIBLE VOLATILITY OF THE NOTES AND STOCK PRICE
The market price of the Notes and Common Stock could be subject to
significant fluctuations in response to various factors and events, including
variations in the Company's earnings results, changes in earnings estimates by
securities analysts, publicity regarding the Company, its competitors, the
staffing services industry or the health care industry generally, new statutes
or regulations or changes in the interpretation of existing statutes or
regulations affecting the staffing services industry in general or the health
care industry specifically, changes in the reimbursement practices or policies
of third party payors, sales of substantial amounts of Common Stock in the
public market or the perception that such sales could occur and other factors.
In addition, in recent years, the stock market has experienced broad price and
volume fluctuations that often have been unrelated to the operating performance
of particular companies. These market fluctuations also may adversely affect the
market price of the Notes and Common Stock. Volatility in the price of the
Company's Common Stock, changes in prevailing interest rates, and changes in
perception of the Company's creditworthiness may in the future adversely affect
the price of the Notes.
10
<PAGE> 11
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Notes or the
Shares offered hereby.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR(1) THREE MONTHS ENDED
-------------------------------------------- ------------------------
MARCH 31, MARCH 30,
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1.5x 5.8x 8.0x 12.8x 7.9x 10.2x 3.7x
</TABLE>
- ---------------
(1) The Company's fiscal year ends on the Sunday nearest December 31 and
quarters end on the Sunday nearest to the end of the respective calendar
quarter. Accordingly, as used herein, Fiscal Year 1992, 1993, 1994, 1995 and
1996 refer to the fiscal years ended January 3, 1993, January 2, 1994,
January 1, 1995, December 31, 1995 and December 29, 1996, respectively.
The ratio of earnings to fixed charges is computed by dividing fixed
charges into income before income taxes plus fixed charges. Fixed charges
include interest expense, amortization of debt issuance costs and the estimated
interest component of rent expense.
11
<PAGE> 12
DESCRIPTION OF NOTES
The Notes were issued under an indenture dated as of June 23, 1997 (the
"Indenture") between the Company and First Union National Bank, as trustee (the
"Trustee"). The following summaries of certain provisions of the Indenture do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all of the provisions of the Indenture, including the
definition therein of certain terms. Wherever particular sections or defined
terms of the Indenture are referred to, such sections or defined terms are
incorporated herein by reference. Copies of the Indenture are available from the
Company or the Initial Purchasers upon request.
GENERAL
The Notes are unsecured obligations of the Company, are limited to $115.0
million in aggregate principal amount (including the Initial Purchasers'
over-allotment option) and mature on July 1, 2004. The Notes bear interest at
the rate per annum shown on the front cover of this Prospectus from the date of
original issuance of Notes pursuant to the Indenture, or from the most recent
Interest Payment Date to which interest has been paid or provided for, payable
semi-annually on July 1 and January 1 of each year, commencing January 1, 1998,
to the Person in whose name the Note (or any predecessor Note) is registered at
the close of business on the preceding June 15 or December 15, as the case may
be. Interest on the Notes is paid on the basis of a 360-day year of 12 30-day
months.
Principal of, and premium, if any, and interest on, the Notes is payable
(i) in respect of Notes held of record by the Depository Trust Company ("DTC")
or its nominee in same day funds on or prior to the payment dates with respect
to such amounts and (ii) in respect of Notes held of record by holders other
than DTC or its nominee at the drop office of the Trustee in New York, New York,
and the Notes may be surrendered for transfer, exchange or conversion at the
drop office of the Trustee in New York, New York. In addition, with respect to
Notes held of record by holders other than DTC or its nominee, payment of
interest may be made at the option of the Company by check mailed to the address
of the persons entitled thereto as it appears in the Register for the Notes on
the Regular Record Date for such interest.
The Notes have been issued only in registered form, without coupons and in
denominations of $1,000 or any integral multiple thereof. No service charge will
be made for any transfer or exchange of the Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge and
any other expenses (including the fees and expenses of the Trustee) payable in
connection therewith. The Company is not required (i) to issue, register the
transfer of or exchange any Notes during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption and
ending at the close of business on the day of such mailing, (ii) to register the
transfer of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of Notes being redeemed in part or (iii) to
register the transfer or exchange of any Notes surrendered for conversion or
repurchase upon the occurrence of a Repurchase Event.
All monies paid by the Company to the Trustee or any Paying Agent for the
payment of principal of and premium and interest on any Note which remain
unclaimed for two years after such principal, premium or interest become due and
payable may be repaid to the Company. Thereafter, the Holder of such Note may,
as an unsecured general creditor, look only to the Company for payment thereof.
The Indenture does not contain any provisions that would provide protection
to Holders of the Notes against a sudden and dramatic decline in credit quality
of the Company resulting from any takeover, recapitalization or similar
restructuring, except as described below under "-- Certain Rights to Require
Repurchase of Notes."
CONVERSION RIGHTS
The Notes are convertible into Common Stock at any time prior to redemption
or final maturity, initially at the conversion price of $35.625 per share. The
right to convert Notes that have been called for redemption terminates at the
close of business on the second business day preceding the Redemption Date. See
"-- Optional Redemption" below. The right to convert Notes that have been
submitted for repurchase terminates when such Notes are submitted for
repurchase.
The conversion price is subject to adjustment upon the occurrence of any of
the following events: (i) the subdivision, combination or reclassification of
outstanding shares of Common Stock; (ii) the payment in shares of
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<PAGE> 13
Common Stock of a dividend or distribution on any class of capital stock of the
Company; (iii) the issuance of rights or warrants to all holders of Common Stock
entitling them to acquire shares of Common Stock or securities convertible into
Common Stock at a price per share less than the Current Market Price; (iv) the
distribution to holders of Common Stock of shares of capital stock other than
Common Stock, evidences of indebtedness, cash or assets (including securities,
but excluding dividends or distributions paid exclusively in cash and dividends,
distributions, rights and warrants referred to above); (v) a distribution
consisting exclusively of cash (excluding any cash distributions referred to in
(iv) above) to all holders of Common Stock in an aggregate amount that, together
with (A) all other cash distributions (excluding any cash distributions referred
to in (iv) above) made within the 12 months preceding such distribution and (B)
any cash and the fair market value of other consideration payable in respect of
any tender offer by the Company or a subsidiary of the Company for the Common
Stock consummated within the 12 months preceding such distribution, exceeds
12.5% of the Company's market capitalization (being the product of the Current
Market Price times the number of shares of Common Stock then outstanding) on the
date fixed for determining the shareholders entitled to such distribution; and
(vi) the consummation of a tender offer made by the Company or any subsidiary of
the Company for the Common Stock which involves an aggregate consideration that,
together with (X) any cash and other consideration payable in respect of any
tender offer by the Company or a subsidiary of the Company for the Common Stock
consummated within the 12 months preceding the consummation of such tender offer
and (Y) the aggregate amount of all cash distributions (excluding any cash
distributions referred to in (iv) above) to all holders of the Common Stock
within the 12 months preceding the consummation of such tender offer, exceeds
12.5% of the Company's market capitalization at the date of consummation of such
tender offer. No adjustment of the conversion price is required to be made until
cumulative adjustments amount to at least one percent of the conversion price,
as last adjusted. Any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
In addition to the foregoing adjustments, the Company is permitted to
reduce the conversion price as it considers to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock or stock
rights will not be taxable to the holders of the Common Stock or, if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event. In the case of any consolidation or merger of the Company with any
other corporation (other than one in which no change is made in the Common
Stock), or any sale or transfer of all or substantially all of the assets of the
Company, the Holder of any Note then outstanding will, with certain exceptions,
have the right thereafter to convert such Note only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock into which
such Note might have been converted immediately prior to such consolidation,
merger, sale or transfer; and adjustments will be provided for events subsequent
thereto that are as nearly equivalent as practical to the conversion price
adjustments described above.
Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based upon the then
Closing Price at the close of business on the day of conversion. If any Notes
are surrendered for conversion during the period from the close of business on
any Regular Record Date through and including the next succeeding Interest
Payment Date (except any such Notes called for redemption), such Notes when
surrendered for conversion must be accompanied by payment in New York Clearing
House Funds or other funds acceptable to the Company, of an amount equal to the
interest thereon which the registered Holder on such Regular Date is to receive.
Except as described in the preceding sentence, no interest will be payable by
the Company on converted Notes with respect to any Interest Payment Date
subsequent to the date of conversion. No other payment or adjustment for
interest or dividends is to be made upon conversion.
The Rights Agreement (as defined below) provides that upon conversion of
the Notes the Holders will receive, in addition to the Common Stock issuable
upon such conversion, the Rights (as defined below) which would have attached to
such shares of Common Stock if the Rights had not become separated from the
Common Stock pursuant to the provisions of the Rights Agreement. See
"Description of Capital Stock -- Shareholder Rights Agreement."
SUBORDINATION
The payment of the principal of and premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in right
of payment to the prior payment in full of all Senior Indebtedness. If there is
a payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization,
13
<PAGE> 14
assignment for the benefit of creditors, marshalling of assets or any
bankruptcy, insolvency or similar proceedings of the Company, the holders of all
Senior Indebtedness will be entitled to receive payment in full of all amounts
due or to become due thereon or provision for such payment in money or money's
worth before the Holders of the Notes will be entitled to receive any payment in
respect of the principal of or premium, if any, or interest on the Notes. In the
event of the acceleration of the Maturity of the Notes, the holders of all
Senior Indebtedness will first be entitled to receive payment in full in cash of
all amounts due or to become due thereon or provision for such payment in money
or money's worth before the Holders of the Notes will be entitled to receive any
payment for the principal of or premium, if any, or interest on the Notes. No
payments on account of principal of or premium, if any, or interest on the Notes
or on account of the purchase or acquisition of Notes may be made if there has
occurred and is continuing a default in any payment with respect to Senior
Indebtedness, any default permitting acceleration of the maturity of any Senior
Indebtedness has occurred and is continuing or would occur upon such payment or
if any judicial proceeding is pending with respect to any such default.
Senior Indebtedness is defined in the Indenture as the principal of and
premium, if any, and interest on (i) all secured indebtedness of the Company for
money borrowed (including any secured indebtedness under the Company's Credit
Agreement and any predecessor or successor thereto), whether outstanding on the
date of execution of the Indenture or thereafter created, incurred or assumed,
except any such other indebtedness that by the terms of the instrument or
instruments by which such indebtedness was created or incurred expressly
provides that it (a) is junior in right of payment to the Notes or (b) ranks
pari passu in right of payment with the Notes, and (ii) any amendments,
renewals, extensions, modifications, refinancings and refundings of any of the
foregoing, provided that the indebtedness continues to be secured indebtedness.
For the purposes of this definition, "indebtedness for money borrowed" when used
with respect to the Company means (i) any obligation of, or any obligation
guaranteed by, the Company for the repayment of borrowed money (including
without limitation fees, penalties and other obligations in respect thereof),
whether or not evidenced by bonds, debentures, notes or other written
instruments, (ii) any deferred payment obligation of, or any such obligation
guaranteed by, the Company for the payment of the purchase price of property or
assets evidenced by a note or similar instrument and (iii) any obligation of, or
any such obligation guaranteed by, the Company for the payment of rent or other
amounts under a lease of property or assets which obligation is required to be
classified and accounted for as a capitalized lease on the balance sheet of the
Company under generally accepted accounting principles.
The Notes are obligations exclusively of the Company. The operations of the
Company are currently conducted principally through subsidiaries, which are
separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the Notes or to make any funds
available therefor, whether by dividends, loans or other payments. In addition,
the payment of dividends and certain loans and advances to the Company by such
subsidiaries may be subject to certain statutory or contractual restrictions,
are contingent upon the earnings of such subsidiaries and are subject to various
business considerations.
The Notes are effectively subordinated to all indebtedness and other
liabilities and commitments (including trade payables and lease obligations) of
the Company's subsidiaries. Any right of the Company to receive assets of any
such subsidiary upon the liquidation or reorganization of any such subsidiary
(and the consequent right of the Holders of the Notes to participate in those
assets) is effectively subordinated to the claims of that subsidiary's
creditors, except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company.
The Indenture does not limit or prohibit the incurrence of Senior
Indebtedness or the incurrence of indebtedness, liabilities and commitments of
the Company's subsidiaries. The Company may incur Senior Indebtedness from time
to time in the future.
OPTIONAL REDEMPTION
The Notes are redeemable, at the Company's option, in whole or from time to
time in part, at any time on or after July 7, 2000, upon not less than 15 nor
more than 60 days' notice mailed to each Holder of Notes to be redeemed at its
address appearing in the Security Register and prior to Maturity at the
following Redemption Prices (expressed as percentages of the principal amount)
plus accrued interest to the Redemption Date (subject
14
<PAGE> 15
to the right of Holders of record on the relevant Regular Record Date to receive
interest due on an Interest Payment Date that is on or prior to the Redemption
Date).
If redeemed during the 12-month period beginning July 1, in the year
indicated (July 7, in the case of 2000), the redemption price shall be:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2000........................................................ 103.29%
2001........................................................ 102.46
2002........................................................ 101.64
2003........................................................ 100.82
2004........................................................ 100.00
</TABLE>
No sinking fund is provided for the Notes.
If fewer than all the Notes are to be redeemed, the Trustee will select the
Notes to be redeemed by lot or, in its discretion, on a pro rata basis. If any
Note is to be redeemed in part only, a new Note or Notes in principal amount
equal to the unredeemed principal portion thereof will be issued. If a portion
of a Holder's Notes are selected for partial redemption and such Holder converts
a portion of such Notes, such converted portion shall be deemed to be taken from
the portion selected for redemption.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, or permit any Person to consolidate with or merge into the
Company or convey, transfer or lease its properties substantially as an entirety
to the Company, unless (i) if applicable, the Person formed by such
consolidation or into which the Company is merged or the Person or corporation
which acquires the properties and assets of the Company substantially as an
entirety is a corporation, partnership or trust organized and validly existing
under the laws of the United States or any state thereof or the District of
Columbia and expressly assumes payment of the principal of and premium, if any,
and interest on the Notes and performance and observance of each obligation of
the Company under the Indenture, (ii) after consummating such consolidation,
merger, transfer or lease, no Default or Event of Default will occur and be
continuing, (iii) such consolidation, merger or acquisition does not adversely
affect the validity or enforceability of the Notes and (iv) the Company has
delivered to the Trustee an Officer's Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance, transfer or lease
complies with the provisions of the Indenture.
CERTAIN RIGHTS TO REQUIRE REPURCHASE OF NOTES
In the event of any Repurchase Event (as defined below) occurring after the
date of issuance of the Notes and on or prior to Maturity, each Holder of Notes
will have the right, at the Holder's option, to require the Company to
repurchase all or any part of the Holder's Notes on the date (the "Repurchase
Date") that is 30 days after the date the Company gives notice of the Repurchase
Event as described below at a price (the "Repurchase Price") equal to 100% of
the principal amount thereof, together with accrued and unpaid interest to the
Repurchase Date. On or prior to the Repurchase Date, the Company shall deposit
with the Trustee or a Paying Agent an amount of money sufficient to pay the
Repurchase Price of the Notes which are to be repaid on or promptly following
the Repurchase Date.
Failure by the Company to provide timely notice of a Repurchase Event, as
provided for below, or to repurchase the Notes when required under the preceding
paragraph will result in an Event of Default under the Indenture whether or not
such repurchase is permitted by the subordination provisions of the Indenture.
On or before the 15th day after the occurrence of a Repurchase Event, the
Company is obligated to mail to all Holders of Notes a notice of the occurrence
of such Repurchase Event and identifying the Repurchase Date, the date by which
the repurchase right must be exercised, the Repurchase Price for Notes and the
procedures which the Holder must follow to exercise this right. To exercise the
repurchase right, the Holder of a Note must deliver, on or before the close of
business on the Repurchase Date, written notice to the Company (or an agent
designated by the Company for such purpose) and to the Trustee of the Holder's
exercise of such right, together
15
<PAGE> 16
with the certificates evidencing the Notes with respect to which the right is
being exercised, duly endorsed for transfer.
A "Repurchase Event" shall have occurred upon the occurrence of a Change in
Control or a Termination of Trading (each as defined below).
A "Change in Control" shall occur when (i) all or substantially all of the
Company's assets are sold as an entirety to any person or related group of
persons; (ii) there shall be consummated any consolidation or merger of the
Company (a) in which the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly owned subsidiary of the
Company in which all shares of Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (b) pursuant to which the Common Stock would be converted into cash,
securities or other property, in each case other than a consolidation or merger
of the Company in which the holders of the Common Stock immediately prior to the
consolidation or merger have, directly or indirectly, at least a majority of the
total voting power of all classes of capital stock entitled to vote generally in
the election of directors of the continuing or surviving corporation immediately
after such consolidation or merger in substantially the same proportion as their
ownership of Common Stock immediately before such transaction; (iii) any person,
or any persons acting together which would constitute a "group" for purposes of
Section 13(d) of the Exchange Act, together with any affiliates thereof, shall
beneficially own (as defined in Rule 13d-3 under the Exchange Act) at least 50%
of the total voting power of all classes of capital stock of the Company
entitled to vote generally in the election of directors of the Company; (iv) at
any time during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Company was approved by
a vote of 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or (v) the
Company is liquidated or dissolved or adopts a plan of liquidation or
dissolution.
A "Termination of Trading" shall occur if the Common Stock (or other common
stock into which the Notes are then convertible) is neither listed for trading
on a U.S. national securities exchange nor approved for trading on an
established automated over-the-counter trading market in the United States.
The definition of Change in Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of Notes to require the Company to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
The Credit Agreement prohibits the Company from purchasing Notes upon the
occurrence of a Repurchase Event and provides that certain change in control
events with respect to the Company would constitute a default thereunder. Any
future credit agreements or other agreements relating to Senior Indebtedness to
which the Company becomes a party may contain similar restrictions and
provisions.
The right to require the Company to repurchase Notes as a result of the
occurrence of Repurchase Event could create an event of default under Senior
Indebtedness of the Company, as a result of which any repurchase could, absent a
waiver, be blocked by the subordination provisions of the Notes. See
"-- Subordination." Failure by the Company to repurchase the Notes when required
will result in an Event of Default with respect to the Notes whether or not such
repurchase is permitted by the subordination provisions. The Company's ability
to pay cash to the Holders of Notes upon a repurchase may be limited by certain
financial covenants contained in the Company's Senior Indebtedness.
In the event a Repurchase Event occurs and the Holders exercise their
rights to require the Company to repurchase Notes, the Company intends to comply
with applicable tender offer rules under the Exchange Act, including Rules 13e-4
and 14e-1, as then in effect, with respect to any such purchase.
16
<PAGE> 17
The foregoing provisions would not necessarily afford Holders of the Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect Holders. In addition, the foregoing provisions
may discourage open market purchases of the Common Stock or a non-negotiated
tender or exchange offer for such stock and, accordingly, may limit a
shareholder's ability to realize a premium over the market price of the Common
Stock in connection with any such transaction.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to the
Notes: (i) default in the payment of principal of or any premium on any Note
when due (even if such payment is prohibited by the subordination provisions of
the Indenture); (ii) default in the payment of any interest on any Note when
due, which default continues for 30 days (even if such payment is prohibited by
the subordination provisions of the Indenture); (iii) failure to provide timely
notice of a Repurchase Event as required by the Indenture; (iv) default in the
payment of the Repurchase Price in respect of any Note on the Repurchase Date
therefor (even if such payment is prohibited by the subordination provisions of
the Indenture); (v) default in the performance of any other covenant of the
Company in the Indenture which continues for 60 days after written notice as
provided in the Indenture; (vi) default, under one or more bonds, debentures,
notes or other evidences of indebtedness for money borrowed by the Company or
any subsidiary of the Company or under one or more mortgages, indentures or
instruments under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or any subsidiary
of the Company, whether such indebtedness now exists or shall hereafter be
created, which default individually or in the aggregate shall constitute a
failure to pay the principal of indebtedness in excess of $7.5 million when due
and payable after the expiration of any applicable grace period with respect
thereto or shall have resulted in indebtedness in excess of $7.5 million
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled, within a
period of 30 days after there shall have been given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Notes a written notice specifying
such default and requiring the Company to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled; and (vii)
certain events of bankruptcy, insolvency or reorganization of the Company or any
subsidiary of the Company.
If an Event of Default with respect to the Notes shall occur and be
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Notes then outstanding may declare the
principal of and premium, if any, on all such Notes to be due and payable
immediately, but if the Company cures all Events of Default (except the
nonpayment of interest on, premium, if any, and principal of any Notes) and
certain other conditions are met, such declaration may be canceled and past
defaults may be waived by the holders of a majority in principal amount of
Outstanding Notes. If an Event of Default shall occur as a result of an event of
bankruptcy, insolvency or reorganization of the Company or any subsidiary of the
Company, the aggregate principal amount of the Notes shall automatically become
due and payable. The Company is required to furnish to the Trustee annually a
statement as to the performance by the Company of certain of its obligations
under the Indenture and as to any default in such performance. The Indenture
provides that the Trustee may withhold notice to the Holders of the Notes of any
continuing default (except in the payment of the principal of or premium, if
any, or interest on any Notes) if the Trustee considers it in the interests of
Holders of the Notes to do so.
MODIFICATION, AMENDMENTS AND WAIVERS
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of the Holders to: (i) cause the Indenture
to be qualified under the Trust Indenture Act; (ii) evidence the succession of
another Person to the Company and the assumption by any such successor of the
covenants of the Company herein and in the Notes; (iii) add to the covenants of
the Company for the benefit of the Holders or an additional Event of Default, or
surrender any right or power conferred upon the Company; (iv) secure the Notes;
(v) make provision with respect to the conversion rights of Holders in the event
of a consolidation, merger or sale of assets involving the Company, as required
by the Indenture; (vi) evidence and provide for the acceptance of appointment by
a successor Trustee with respect to the Notes; or (vii) cure any ambiguity,
correct or supplement any provision which may be defective or inconsistent with
any other provision, or make any other provisions with
17
<PAGE> 18
respect to matters or questions arising under the Indenture which shall not be
inconsistent with the provisions of the Indenture; provided, however, that no
such modifications or amendment may adversely affect the interests of Holders in
any material respect. The Credit Agreement requires the consent of the lenders
thereunder to any modification or amendment of the Indenture.
SATISFACTION AND DISCHARGE
The Company may discharge its obligations under the Indenture while Notes
remain Outstanding if (i) all Outstanding Notes will become due and payable at
their scheduled maturity within one year or (ii) all Outstanding Notes are
scheduled for redemption within one year, and in either case the Company has
deposited with the Trustee an amount sufficient to pay and discharge all
Outstanding Notes on the date of their scheduled maturity or the scheduled date
of redemption.
FORM, DENOMINATION AND REGISTRATION
The Notes were originally issued in fully registered form, without coupons,
in denominations of $1,000 in principal amount and integral multiples thereof.
FORM
Global Note, Book-Entry Form. The Notes have been issued in fully
registered form, without coupons, in denominations of $1,000 principal amount
and multiples thereof. Notes sold by the Selling Securityholders pursuant to the
Registration Statement of which this Prospectus forms a part will be represented
by a Global Note (the "Registered Global Note"), except as set forth below under
"Certificated Notes." The Registered Global Notes will be deposited with, or on
behalf of, DTC and registered in the name of Cede & Co. ("Cede") as DTC's
nominee. Beneficial interests in the Registered Global Note will be exchangeable
for definitive certificated Notes only in accordance with the terms of the
Indenture.
Purchasers of the Notes offered hereby may hold their interests in the
Registered Global Note directly through DTC or indirectly through organizations
that are participants in DTC (the "Participants"). Transfers between
Participants will be effected in the ordinary way in accordance with DTC rules
and will be settled in same day funds.
Persons who are not Participants may beneficially own interests in the
Registered Global Note held by DTC only through Participants or certain banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"). So long as Cede, as the nominee of DTC, is
the registered owner of the Registered Global Note, Cede for all purposes will
be considered the sole holder of the Registered Global Note. Except as provided
below, owners of beneficial interests in the Registered Global Note will not be
entitled to have certificates registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form, and
will not be considered the holders thereof.
Payment of interest on and the redemption price of the Registered Global
Note will be made to Cede, the nominee for DTC, as the registered owner of the
Registered Global Note by wire transfer of immediately available funds on each
interest payment date or the redemption date, as the case may be. Neither the
Company, the Trustee nor any payment agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Registered Global Note or for
maintaining, supervision or reviewing any records relating to such beneficial
ownership interests.
The Company has been informed by DTC that, with respect to any payment of
interest on, or the redemption price of, the Registered Global Note, DTC's
practice is to credit participants' accounts on the payment date therefor with
payments in amounts proportionate to their respective beneficial interests in
the principal amount represented by the Registered Global Note as shown on the
records of DTC, unless DTC has reason to believe that it will not receive
payment on such payment date. Payments by Participants to owners of beneficial
interests in the principal amount represented by the Registered Global Note held
through such Participants will be the responsibility of such Participants, as is
now the case with securities held for the accounts of customers registered in
"street name."
18
<PAGE> 19
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in the principal amount represented by the
Registered Global Note to pledge such interest to persons or entities that do
not participate in the DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate evidencing such
interest.
Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under the Indenture) will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised the Company that it will take any action permitted
to be taken by a holder of Notes (including, without limitation, the
presentation of Notes for exchange as described below), only at the direction of
one or more Participants to whose account with DTC interests in the Registered
Global Note are credited, and only in respect of the principal amount of the
Notes represented by the Registered Global Note as to which such Participant or
Participants has or have given such direction.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes to the accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, bank, trust companies and clearing corporations and may include certain
other organizations. Certain of such Participants (or their representatives),
together with other entities, own DTC. Indirect access to the DTC system is
available to others such as banks, brokers, dealers and trust companies that
clear through, or maintain a custodial relationship with, a Participant, either
directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Registered Global Note among Participants, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days, the Company will cause Debentures to be issued in
definitive form in exchange for the Registered Global Note.
Certificated Notes. Holders of Notes may request that certificated Notes
be issued in lieu of, or in exchange for, Notes represented by the Registered
Global Note. Furthermore, certificated Notes may be issued in exchange for Notes
represented by the Registered Global Note if no successor depositary is
appointed by the Company as set forth above under "Global Note, Book-Entry
Form."
PAYMENTS OF PRINCIPAL AND INTEREST
The Indenture requires that payments in respect of the Notes (including
principal, premium, if any, and interest) held of record by DTC (including Notes
evidenced by the Global Notes) be made in same day funds. Payments in respect of
the Notes held of record by holders other than DTC may, at the option of the
Company, be made by check and mailed to such holders of record as shown on the
register for the Notes.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Pursuant to the Registration Rights Agreement between the Company and the
Initial Purchasers, the Company has filed with the Commission a registration
statement (the "Shelf Registration Statement") on Form S-3, of which this
Prospectus forms a part, to cover resales of Transfer Restricted Securities (as
defined below) by the holders thereof who satisfied certain conditions relating
to the provision of information in connection with the Shelf Registration
Statement. Notwithstanding the foregoing, the Company will be permitted to
prohibit offers and sales of Transfer Restricted Securities pursuant to the
Shelf Registration Statement under certain circumstances and subject to certain
conditions (any period during which offers and sales are prohibited being
referred to as a "Suspension Period"). "Transfer Restricted Securities" means
each Note and any underlying share of Common Stock until the date on which such
Note or underlying share of Common Stock has been effectively registered under
the Securities Act and disposed of in accordance with the Shelf Registration
Statement, the date on which such Note or underlying share of Common Stock is
distributed to the public
19
<PAGE> 20
pursuant to Rule 144 under the Securities Act or the date on which such Note or
share of Common Stock may be sold or transferred pursuant to Rule 144(k) (or any
similar provisions then in force).
The Registration Rights Agreement provides that if the Shelf Registration
Statement shall cease to be effective (without being succeeded immediately by an
additional registration statement filed and declared effective) or usable for
the offer and sale of Transfer Restricted Securities for a period of time
(including any Suspension Period) which shall exceed 60 days in the aggregate in
any of the one-year periods ending on the first and second anniversaries of the
Closing Date (30 days in the case of the one year period ending on the first
anniversary of the Closing Date), or which shall exceed 30 days in any calendar
quarter within any of such one-year periods (each such event, a "Registration
Default"), the Company will pay liquidated damages to each Holder of Transfer
Restricted Securities. The amount of liquidated damages payable during any
period during which a Registration Default shall have occurred and be continuing
is that amount which is equal to one-quarter of one percent (25 basis points)
per annum per $1,000 principal amount or $2.50 per annum per 28.0702 shares of
Common Stock (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) constituting Transfer Restricted
Securities for each 90-day period or part thereof until the applicable
registration statement is filed and the applicable registration statement is
declared effective, or the Shelf Registration Statement again becomes effective
or usable, as the case may be, up to a maximum amount of liquidated damages of
$0.25 per week per $1,000 principal amount of Notes or $12.50 per annum per
28.0702 shares of Common Stock (subject to adjustment as set forth above)
constituting Transfer Restricted Securities. All accrued liquidated damages
shall be paid to holders of Notes by wire transfer of immediately available
funds or by federal funds check by the Company on each Damages Payment Date (as
defined in the Registration Rights Agreement). Following the cure of a
Registration Default, liquidated damages will cease to accrue with respect to
such Registration Default.
The Company shall cause the Shelf Registration Statement to be effective
for a period of two years from the effective date thereof or such shorter period
that will terminate when each of the Transfer Restricted Securities covered by
the Registration Statement ceases to be a Transfer Restricted Security.
The foregoing summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the provisions of the Registration Rights
Agreement. Copies of the Registration Rights Agreement are available from the
Company or the Initial Purchasers upon request.
GOVERNING LAW
The Indenture and Notes are governed by and construed in accordance with
the laws of the State of New York, without giving effect to such state's
conflicts of laws principles.
INFORMATION CONCERNING THE TRUSTEE
The Company and its subsidiaries may maintain deposit accounts and conduct
other banking transactions with the Trustee in the ordinary course of business.
ABSENCE OF PUBLIC MARKET
There is no existing public market for the Notes and there can be no
assurance as to the liquidity of any markets that may develop for the Notes, the
ability of the holders to sell their Notes or at what price holders of the Notes
will be able to sell their Notes. Future trading prices of the Notes will depend
upon many factors including, among other things, prevailing interest rates, the
Company's operating results, the price of the Common Stock and the market for
similar securities. The Initial Purchasers have informed the Company that they
are making and currently intend to continue making a market in the Notes;
however, the Initial Purchasers are not obligated to do so and any such market
making activity may be terminated at any time without notice to the holders of
the Notes, in the sole discretion of the Initial Purchasers. Prior to the resale
of the Notes pursuant to this Prospectus, each of the Notes was eligible for
trading in the PORTAL Market. Notes sold pursuant to this Prospectus will no
longer be eligible for trading in the PORTAL market. The Company does not intend
to apply for listing of the Notes on any securities exchange.
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<PAGE> 21
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company currently consists of
95,000,000 shares of Common Stock, par value $.01 per share, and 5,000,000
shares of Preferred Stock, par value $.01 per share.
COMMON STOCK
Holders of the Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Holders of Common Stock do not
have cumulative voting rights, and therefore holders of a majority of the shares
voting for the election of directors can elect all of the directors. In such
event, the holders of the remaining shares will not be able to elect any
directors.
Holders of the Common Stock are entitled to receive such dividends as may
be declared from time to time by the Board of Directors out of funds legally
available therefor. The Company does not anticipate paying cash dividends in the
foreseeable future. In the event of the liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities.
Holders of Common Stock have no preemptive, conversion or redemption rights
and are not subject to further calls or assessments by the Company. All of the
outstanding shares of Common Stock are, and the Shares issued by the Company
upon conversion of the Notes will be, if issued, validly issued, fully paid and
nonassessable.
The Transfer Agent and Registrar for the Common Stock is The First National
Bank of Boston.
PREFERRED STOCK
The Company's Board of Directors is authorized to issue from time to time,
without shareholder authorization, in one or more designated series, any or all
of the authorized but unissued shares of Preferred Stock with such dividend,
redemption, conversion and exchange provisions as may be provided in the
particular series. Any series of Preferred Stock may possess voting, dividend,
liquidation and redemption rights superior to that of the Common Stock. The
rights of the holders of Common Stock will be subject to and may be adversely
affected by the rights of the holders of any Preferred Stock that may be issued
in the future. Issuance of a new series of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of entrenching the Company's Board of
Directors and making it more difficult for a third party to acquire, or
discouraging a third party from acquiring, a majority of the outstanding voting
stock of the Company. Although the Company has no present plans to issue any
series of Preferred Stock, the Company's Board of Directors, in connection with
the adoption of the shareholder rights agreement described below, has pre-
approved the terms of a series of Preferred Stock which may be issued upon the
occurrence of certain triggering events.
STOCK OPTION PLAN
The Company's 1995 Equity Participation Plan (the "1995 Plan") currently
has reserved for issuance at all times thereunder a number of shares equal to
15% of the Common Stock issued and outstanding from time to time.
SHAREHOLDER RIGHTS AGREEMENT
On February 6, 1996, the Company's Board of Directors declared a dividend,
payable February 27, 1996, of one right (a "Right") for each outstanding share
of the Company's Common Stock held of record at the close of business on
February 27, 1996. The Rights were issued pursuant to a Rights Agreement, dated
as of February 6, 1996, between the Company and The First National Bank of
Boston, as Rights Agent. Each Right entitles the holder to purchase from the
Company one one-hundredth of a share of Series A Junior Participating Preferred
Stock (the "Junior Participating Preferred") for an exercise price of $95.00,
subject to adjustment. Each one one-hundredth of a share of Junior Participating
Preferred, which will be created upon the occurrence of certain triggering
events, is designed to have economic and voting terms similar to those of one
share of Common Stock. The Rights will expire on the earliest of (i) the
declaration by the Board of Directors of an exchange of Rights for Common Stock,
as described below, (ii) the close of business on February 6, 2006 or (iii) the
date on which the Rights are redeemed or terminated, as described below.
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<PAGE> 22
The Rights will be evidenced by the Company's Common Stock certificates,
and no separate certificates representing the Rights will be distributed until
such time as the Rights separate from the Common Stock. In general, the Rights
will separate from the Common Stock and become exercisable upon the date (the
"Distribution Date") that is the earlier of (i) the tenth day (the "Flip-in
Date") following a public announcement that any person or group of affiliated or
associated persons other than the Company and certain Company-related entities
(an "Acquiring Person"), with certain exceptions, has acquired beneficial
ownership of 15% or more of the outstanding Common Stock or (ii) the tenth
business day (or such later date as may be determined by the Board of Directors
prior to the Distribution Date that otherwise would have occurred) following the
date on which an Acquiring Person commences a tender or exchange offer that, if
consummated, would result in such Acquiring Person becoming the beneficial owner
of 15% or more of the Company's outstanding Common Stock.
After the Distribution Date, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which thereupon become void), will
have the right to receive upon exercise of a Right, at the then current exercise
price of the Right, that number of shares of Common Stock having a market value
of two times the exercise price of the Right.
In addition, the Board of Directors has certain rights to redeem, terminate
or exchange the Rights for Common Stock. At any time prior to the close of
business on a Flip-in Date, the Board of Directors may, at its option, redeem
all of the then outstanding Rights at a price of $.01 per Right. The Board may
generally amend the Rights in any respect prior to a Flip-in Date, and may
thereafter amend Rights in any respect not materially adverse to the Rights
holders generally. At any time after a Flip-in Date and prior to the time an
Acquiring Person becomes the beneficial owner of more than 50% of the
outstanding Common Stock, the Board may elect to exchange all Rights for Common
Stock at the rate of one share of Common Stock (or one one-hundredth of a share
of the Junior Participating Preferred, or shares of a class or series of the
Company's Preferred Stock having equivalent rights, preferences and privileges)
per Right.
Until a Right is exercised, the holder of the Right, as such, will have no
rights as a shareholder of the Company, including without limitation the right
to vote or receive dividends. The issuance of the Rights could have the effect
of making it more difficult for a third party to acquire, or discourage a third
party from acquiring, a majority or substantial minority interest in the Common
Stock of the Company.
CERTAIN PROVISIONS OF DELAWARE LAW
The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law (the "Delaware Law"). In general, Section 203
currently prevents an "interested stockholder" (defined generally as a person
owning 15% or more of a corporation's outstanding voting stock) from engaging in
a "business combination" (as defined) with a Delaware corporation for three
years following the date such person became an interested stockholder unless (i)
before such person became an interested stockholder, the board of directors of
the corporation approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination, (ii) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction
commenced (excluding shares owned by persons who are both officers and directors
of the corporation and shares held by certain employee stock ownership plans),
or (iii) following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of at least two-thirds of the outstanding voting stock of
the corporation not owned by the interested stockholder.
CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION AND BYLAWS AFFECTING
SHAREHOLDERS
The Company's Certificate of Incorporation provides for a classified Board
of Directors consisting of three classes as nearly equal in size as practicable.
Each class will hold office until the third annual meeting for election of
directors following the election of such class. A majority vote of the
shareholders is required to alter, amend or repeal the foregoing provisions. The
classification of the Board of Directors may discourage a third party from
making a tender offer or otherwise attempting to gain control of the Company and
may maintain the incumbency of the Board of Directors.
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<PAGE> 23
The Company's Certificate of Incorporation also requires that any action
required or permitted by shareholders must be effected at a duly called annual
or special meeting of shareholders and may not be effected by written consent.
The Company's Bylaws set forth an advance notice procedure with regard to
shareholder nominations and business to be brought before a meeting of
shareholders.
LIMITATION OF LIABILITY AND INDEMNIFICATION AGREEMENTS
The Company's Certificate of Incorporation provides that to the fullest
extent permitted by Delaware law, a director of the Company shall not be liable
to the Company or its shareholders for monetary damages for breach of fiduciary
duty as a director. Under current Delaware law, liability of a director may not
be limited (i) for any breach of the director's duty of loyalty to the Company
or its shareholders, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) in respect
of certain unlawful dividend payments or stock redemptions or repurchases, and
(iv) for any transaction from which the director derives an improper personal
benefit. The effect of this provision of the Company's Certificate of
Incorporation is to eliminate the rights of the Company and its shareholders
(through shareholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of the fiduciary duty of care as
a director (including breaches resulting from negligent or grossly negligent
behavior), except in the situations described in clauses (i) through (iv) above.
This provision does not limit or eliminate the rights of the Company or any
shareholder to seek nonmonetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care. In addition, the Company's
Bylaws provide that the Company shall indemnify its directors and officers, and
may indemnify employees and agents, against losses incurred by any such person
by reason of the fact that such person was acting in such capacity.
The Company has entered into agreements (the "Indemnification Agreements")
with certain of the directors and officers of the Company pursuant to which the
Company has agreed to indemnify such director or officer for any damages,
judgments, fines, expenses, costs, penalties or amounts paid in settlement in
connection with any claim, action, suit or proceeding in which such director or
officer is involved as a party or otherwise by reason of the fact that he is or
was a director or officer of the Company or any other corporation or other
entity of which he served as a director or officer at the request of the Company
to the maximum extent permitted by applicable law. In addition, such director or
officer is entitled to an advance of expenses to the maximum extent authorized
or permitted by law.
To the extent that the Board of Directors or the shareholders of the
Company may in the future wish to limit or repeal the ability of the Company to
provide indemnification as set forth in the Company's Bylaws, such repeal or
limitation may not be effective as to directors and officers who are parties to
the Indemnification Agreements, because their rights to full protection would be
contractually assured by the Indemnification Agreements. It is anticipated that
similar contracts may be entered into, from time to time, with future directors
and officers of the Company.
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<PAGE> 24
SELLING SECURITYHOLDERS
The Notes were originally issued by the Company and sold by the Initial
Purchasers in a transaction exempt from the registration requirements of the
Securities Act to persons reasonably believed by such Initial Purchasers to be
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act), other institutional "accredited investors" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) or in transactions complying with the
provisions of Regulation S under the Securities Act. The Selling Securityholders
(which term includes their transferees, pledgees, donees or successors) may from
time to time offer and sell pursuant to this Prospectus any or all of the Notes
and Shares.
Set forth below are the names of each Selling Securityholder, the nature of
any position, office, or other material relationship that the Selling
Securityholder has had within the past three years with the Company or any of
its predecessors or affiliates, the principal amount of Notes that may be
offered and sold by such Selling Securityholder pursuant to this Prospectus and
(if one percent or more) the percentage of such Notes owned as of July 1, 1997,
the number of Shares that may be offered and sold by such Selling Securityholder
pursuant to this Prospectus and (if one percent or more) the percentage of
Common Stock represented by the Shares owned by each Selling Securityholder
after conversion of the Notes.
Any or all of the Notes or Shares of Common Stock listed below may be
offered for sale pursuant to this Prospectus by the Selling Securityholders from
time to time. Accordingly, no estimate can be given as to the amount of the
Notes or Shares that will be held by the Selling Securityholders upon
consummation of any such sales. In addition, the Selling Securityholders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their Notes since the date on which the information regarding their
Notes was provided, in transactions exempt from the registration requirements of
the Securities Act.
<TABLE>
<CAPTION>
SHARES THAT
PRINCIPAL MAY
AMOUNT PERCENTAGE BE SOLD PERCENTAGE OF
OF NOTES OF PURSUANT TO COMMON STOCK AFTER
THAT MAY BE NOTES THIS CONVERSION OF THE
NAME SOLD OUTSTANDING PROSPECTUS(1) NOTES(2)
- ---- ---------------- ------------- --------------- --------------------
<S> <C> <C> <C> <C>
Advest, Inc.................................... $ 50,000 * 1,403 *
The Bank of New York........................... $ 7,672,000 6.67 215,354 1.75
Bankers Trust Company.......................... $10,705,000 9.31 300,491 2.42
Bear Sterns Securities Corp.................... $ 3,250,000 2.83 91,228 *
Bank of America Personal Trust................. $ 375,000 * 10,526 *
Boatmen's Trust Company........................ $ 599,000 * 16,814 *
Boston Safe Deposit & Trust Co................. $18,350,000 15.96 515,087 4.08
Brown Brothers Harriman & Co................... $ 4,350,000 3.78 122,105 1.00
BT/Corp. - BTI................................. $ 3,000,000 2.61 84,210 *
Chase Manhattan Bank........................... $ 7,186,000 6.25 201,712 1.64
Chase Manhattan Bank/Chemical.................. $ 855,000 * 24,000 *
Citicorp Services, Inc......................... $ 3,165,000 2.75 88,842 *
Custodial Trust Company........................ $ 3,150,000 2.74 88,421 *
Daiwa Securities America, Inc.................. $ 5,850,000 5.09 164,210 1.34
Fiduciary Trust Company, International......... $ 210,000 * 5,894 *
First Tennessee Bank, N.A. (Memphis)........... $ 320,000 * 8,982 *
Firstar Trust Company.......................... $ 1,000,000 * 28,070 *
Fleet Bank of Massachusetts, N.A............... $ 36,000 * 1,010 *
The First National Bank of Maryland............ $ 165,000 * 4,631 *
First National Bank of Omaha................... $ 200,000 * 5,614 *
Investors Bank & Trust/M.F. Custody............ $ 2,294,000 1.99 64,392 *
Julius Baer Securities Inc..................... $ 300,000 * 8,421 *
Lehman Brothers, Inc........................... $ 100,000 * 2,807 *
Lehman Brothers International (Europe) - Prime
Broker (LBI)................................. $ 4,250,000 3.70 119,298 *
Mercantile, Safe Deposit and Trust Company..... $ 1,765,000 1.53 49,543 *
Merrill Lynch Professional Clearing Corp....... $ 300,000 * 8,421 *
Merrill Lynch, Pierce, Fenner & Smith
Safekeeping.................................. $ 4,000,000 3.48 112,280 *
Merrill Lynch - Debt Securities................ $ 3,075,000 2.67 86,315 *
NatWest Securities Corporation................. $ 970,000 * 27,228 *
Nomura International Trust Company
Incorporated................................. $ 1,100,000 * 30,877 *
Norwest Bank Minnesota National Association.... $ 140,000 * 3,929 *
Northern Trust Company......................... $ 2,041,000 1.77 57,291 *
PaineWebber, Inc............................... $ 150,000 * 4,210 *
PNC National Association....................... $ 1,101,000 * 30,905 *
Robertson, Stephens & Company, L.P............. $ 150,000 * 4,210 *
Sanwa Bank California.......................... $ 1,035,000 * 29,052 *
Smith Barney, Inc.............................. $ 2,625,000 2.28 73,684 *
SBC Warburg Inc................................ $ 2,000,000 1.74 56,140 *
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
SHARES THAT
PRINCIPAL MAY
AMOUNT PERCENTAGE BE SOLD PERCENTAGE OF
OF NOTES OF PURSUANT TO COMMON STOCK AFTER
THAT MAY BE NOTES THIS CONVERSION OF THE
NAME SOLD OUTSTANDING PROSPECTUS(1) NOTES(2)
- ---- ---------------- ------------- --------------- --------------------
<S> <C> <C> <C> <C>
Societe General Securities Corporation......... $ 1,000,000 * 28,070 *
SSB - Custodian................................ $14,926,000 12.98 418,975 3.35
SunTrust Bank.................................. $ 337,000 * 9,459 *
Wachovia Bank North Carolina................... $ 853,000 * 23,943 *
</TABLE>
- ---------------
* Less than one percent.
(1) Assumes conversion of the full amount of Notes held by such Selling
Securityholder at the initial conversion price of $35.625 per share; such
conversion price is subject to adjustment as described under "Description of
Notes -- Conversion Rights." Accordingly, the number of Shares issuable upon
conversion of the Notes may increase or decrease from time to time.
Fractional shares will not be issued upon conversion of the Notes; cash will
be paid in lieu of fractional shares, if any.
(2) The percentage of Common Stock after conversion of the Notes represents the
percentage of the Common Stock each Selling Securityholder will have after
treating as outstanding the number of Shares of Common Stock shown as being
issuable upon the assumed conversion by the named Selling Securityholder of
the full amount of such holder's Notes but not assuming the conversion of
the Notes of any other Selling Securityholder. These percentages are based
on 12,103,297 shares of Common Stock that were issued and outstanding as of
July 1, 1997 before taking into account any of the assumed conversions.
PLAN OF DISTRIBUTION
The Notes and the Shares are being registered to permit public secondary
trading of such securities by the holders thereof from time to time after the
date of this Prospectus. The Company has agreed, among other things, to bear all
expenses (other than underwriting discounts, selling commissions and fees and
expenses of counsel and other advisors to holders of the Notes and the Shares)
in connection with the registration and sale of the Notes and the Shares covered
by this Prospectus.
The Company will not receive any of the proceeds from the offering of the
Notes and the Shares by the Selling Securityholders. The Company has been
advised by the Selling Securityholders that the Selling Securityholders may sell
all or a portion of the Notes and Shares beneficially owned by them and offered
hereby from time to time on any exchange on which the securities are listed on
terms to be determined at the times of such sales. The Selling Securityholders
may also make private sales directly or through a broker or brokers.
Alternatively, any of the Selling Securityholders may from time to time offer
the Notes or shares of Common Stock beneficially owned by them through
underwriters, dealers or agents, who may receive compensation in the form of
underwriting discounts, commissions or concessions from the Selling
Securityholders and the purchasers of the Notes or shares or Common Stock from
whom they may act as agent. The aggregate proceeds to the Selling
Securityholders from the sale of the Notes or shares of Common Stock offered by
them hereby will be the purchase price of such Notes or shares of Common Stock
less discounts and commissions, if any.
The Notes and the Shares may be sold from time to time in one or more
transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by the holders of such securities or by agreement between such
holders and underwriters or dealers who may receive fees or commissions in
connection therewith.
The outstanding Common Stock is listed for trading on the NYSE and the
Shares will be approved for listing on the NYSE upon notice of issuance. The
Initial Purchasers have advised the Company that they are making and currently
intend to continue making a market in the Notes; however, they are not obligated
to do so and any such market-making may be discontinued at any time without
notice, in the sole discretion of the Initial Purchasers. The Company does not
intend to apply for listing of the Notes on any securities exchange.
Accordingly, no assurance can be given that any market for the Notes will be
developed or maintained. See "Risk Factors -- Absence of Public Market."
In order to comply with the securities laws of certain states, if
applicable, the Notes and Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Notes
25
<PAGE> 26
and Shares may not be sold unless they have been registered or qualified for
sale in the applicable state or they comply with an available exemption from the
applicable registration or qualification requirement.
The Selling Securityholders and any broker and any broker-dealers, agents
or underwriters that participate with the Selling Securityholders in the
distribution of the Notes or Shares may be deemed to be "underwriters" within
the meaning of the Securities Act, in which event any commissions received by
such broker-dealers, agents or underwriters and any profit on the resale of the
Notes or the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
In addition, any securities covered by this Prospectus that qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this Prospectus. There is no
assurance that any Selling Securityholder will sell any or all of the Notes or
Shares described herein, and any Selling Securityholder may transfer, devise or
gift such securities by other means not described herein.
The Notes were originally sold to Smith Barney Inc., PaineWebber
Incorporated, J.C. Bradford & Co., The Robinson-Humphrey Company, Inc. and
NationsBanc Capital Markets, Inc., the Initial Purchasers, in June and July 1997
in a private placement. The Company agreed to indemnify and hold the Initial
Purchasers harmless against certain liabilities under the Securities Act that
could arise in connection with the sale of the Notes by the Initial Purchasers.
The Company and the Selling Securityholders are obligated to indemnify each
other against certain liabilities arising under the Securities Act.
The Company will use its best efforts to cause the Registration Statement
to which this Prospectus relates to remain effective for a period of two years
from the effective date thereof, or until it is no longer required for transfer
of the Notes or the underlying Common Stock. The Company is permitted to suspend
the use of this Prospectus in connection with the sales of Notes and Shares by
holders upon the happening of an event or if there exists any fact that makes
any statement of material fact made in this Prospectus untrue or that requires
the making of additions to or changes in the Prospectus in order to make the
statements herein not misleading until such time as the Company advises the
Selling Securityholders that use of the Prospectus may be resumed, in which case
the period of time during which the Company is required to maintain the
effectiveness of this Registration Statement shall be extended. Expenses of
preparing and filing the Registration Statement and all post-effective
amendments will be borne by the Company.
26
<PAGE> 27
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summarizes certain income tax considerations relevant to
holders of the Notes. The summary is based on current provisions of the Internal
Revenue Code of 1986 (the "Code"), Treasury regulations thereunder,
administrative rulings and court decisions, all of which are subject to change
(possibly retroactively). The summary does not address state, local, or foreign
tax consequences, nor does it discuss federal income tax consequences to
categories of purchasers subject to special rules, such as tax-exempt
organizations, insurance companies, financial institutions, dealers in stocks
and securities or persons who hold the Notes or Common Stock in connection with
a straddle. The summary assumes that the holders will hold the Notes, or the
shares of Common Stock received upon conversion of the Notes, for investment
purposes only. The Company does not intend to request a ruling from the Internal
Revenue Service (the "IRS") regarding any of the federal income tax matters
discussed in this summary. Accordingly, before making an investment decision,
prospective purchasers are urged to consult their own tax advisors as to the
federal income and other tax consequences of the purchase, ownership and
disposition of the Notes (including the conversion of Notes into Common Stock)
and the Common Stock.
For the purpose of this discussion, a "Non-U.S. Holder" refers to any
holder who is not a U.S. Holder. The term "U.S. Holder" means a citizen or
resident of the United States, a corporation or partnership created or organized
in the United States or any state thereof, or an estate or trust, the income of
which is includible in income for United States income tax purposes regardless
of its source.
OWNERSHIP OF THE NOTES AND COMMON STOCK BY U.S. HOLDERS
Interest on Notes. The stated interest on a Note will be taxable to a
holder as ordinary income at the time interest is paid or accrued in accordance
with the holder's method of accounting for federal income tax purposes. The
Company expects that the Notes will not be issued with original issue discount
("OID") within the meaning of the Code.
Constructive Dividend. Certain corporate transactions, such as
distributions of assets to holders of Common Stock, may cause a deemed
distribution to the holders of the Notes if the conversion price or conversion
ratio of the Notes is adjusted to reflect such corporate transaction. Any such
deemed distributions to the holders of the Notes may be taxable as a dividend to
the extent of the Company's earnings and profits, a return of capital or capital
gain. See "Dividends on Shares of Common Stock" below.
Sale or Exchange of Notes or Shares of Common Stock. A holder of Notes
will generally recognize gain or loss on the sale, redemption, retirement or
other disposition of the Notes. The gain or loss will generally be equal to the
difference between (i) the amount of cash and the fair market value of any other
property received by the holder (excluding any amount that represents accrued
interest, which will be taxable as such) and (ii) the holder's adjusted tax
basis in the Notes. Generally, a holder's adjusted tax basis in the Notes will
equal (i) the holder's cost of the Notes, plus (ii) the amount of market
discount taken into income, if any, less (iii) the amount of bond premium
amortized by the holder, if any. A holder of Common Stock will generally
recognize gain or loss upon the sale, exchange, redemption or other disposition
of the Common Stock. The gain or loss will generally be equal to the difference
between (i) the amount of cash and the fair market value of any other property
received by the holder of Common Stock and (ii) the holder's adjusted tax basis
in the Common Stock. Subject to the market discount rules discussed below and
certain special rules that apply to redemptions of Common Stock, gain or loss
recognized by a holder will generally be long-term capital gain or loss if the
Notes or Common Stock are held as capital assets for a period in excess of one
year.
Conversion of Notes. A holder of Notes will not recognize gain or loss
upon the conversion of the Notes into shares of Common Stock of the Company. The
holder's adjusted tax basis in the shares of Common Stock will be equal to the
holder's adjusted tax basis in the Notes at the time of the conversion, less any
portion of such basis allocable to cash received in lieu of a fractional share.
Generally, the holding period of the shares of Common Stock received by the
holder upon conversion of Notes includes the period of time the Notes were held
prior to the conversion by the holder. Generally, gain or loss recognized on the
receipt of cash paid in lieu of such fractional shares will equal the difference
between the amount of cash received and the holder's adjusted tax basis
allocable to the fractional shares.
27
<PAGE> 28
Market Discount. If a Note is acquired by a subsequent purchaser at a
"market discount," some or all of the gain realized upon a disposition or
payment upon the Note's maturity may be treated as ordinary income. Subject to a
de minimis exception, "market discount" with respect to a Note will be equal to
the excess of (i) the stated redemption price at maturity of the Note over (ii)
the holder's tax basis in the Note immediately after acquisition. The amount of
market discount treated as having accrued will be determined either on a ratable
basis, or, if the holder so elects, on a constant interest method. Upon any
subsequent disposition of the Note (other than in connection with certain
nonrecognition transactions, e.g., the conversion to Common Stock), the lesser
of (i) gain on the disposition or (ii) the market discount that accrued while
the Note was held by the subsequent holder will be treated as ordinary income at
the time of the disposition. A holder may elect to include market discount in
income currently in lieu of including accrued market discount in income at the
time of disposition. A holder of a Note acquired at a market discount may be
required to defer the deduction of a portion of the interest expense on any
indebtedness incurred or maintained to purchase or carry the Note until the Note
is disposed of in a taxable transaction, unless the holder elects to include
accrued market discount in income currently. If a holder acquires a Note at a
market discount and receives Common Stock upon conversion of the Note, the
amount of accrued market discount with respect to the converted Note through the
date of conversion will be treated as ordinary income upon the disposition of
the Common Stock.
Amortizable Bond Premium. If a subsequent purchaser of a Note purchases it
at a cost that is in excess of the amount payable on maturity, the excess cost
may be treated as "amortizable bond premium" that is allocated among the
interest payments on the Note using a constant interest rate method over the
Note's remaining term. The amount allocated to each interest payment would be
applied against and offset a portion of the income from such interest payment,
with a corresponding reduction in the holder's basis. The interest offset would
be available only if an election under Section 171 of the Code is made or is in
effect and if the acquired Note is held as a capital asset. The election would
apply to all debt instruments held or subsequently acquired by the electing
holder on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS. The amount of the
premium attributable to the conversion feature of the Note must be eliminated in
determining the amount of any amortizable bond premium.
Dividends on Shares of Common Stock. Distributions on shares of Common
Stock will constitute dividends for federal income tax purposes to the extent of
current or accumulated earnings and profits of the Company. To the extent that a
holder receives a distribution on Common Stock that would otherwise constitute a
dividend but exceeds current and accumulated earnings and profits of the
Company, such distribution will be treated first as a non-taxable return of
capital reducing the holder's adjusted tax basis in the Common Stock. Any
distribution in excess of the holder's adjusted tax basis in the Common Stock
will be treated as capital gain. Dividends paid to holders that are United
States corporations may qualify for the dividends-received deduction.
OWNERSHIP OF THE NOTES BY NON-U.S. HOLDERS
Interest on Notes. Generally, interest paid on the Notes to a Non-U.S.
Holder will not be subject to federal income tax if (i) such interest is not
effectively connected with the conduct of a trade or business within the United
States by the Non-U.S. Holder; (ii) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total voting power of all classes of stock
of the Company entitled to vote and is not a controlled foreign corporation with
respect to which the Company is a "related person" within the meaning of the
Code, and (iii) the beneficial owner, under penalty of perjury, certifies that
the owner is not a U.S. Holder and provides the owner's name and address. If
certain requirements are satisfied, the certification described in paragraph
(iii) above may be provided by a securities clearing organization, a bank, or
other financial institution that holds customers' securities in the ordinary
course of its trade or business. For this purpose, the holder of Notes would be
deemed to own the Common Stock into which it could be converted. A holder that
is not exempt from tax under these rules will be subject to federal income tax
withholding at a rate of 30% unless the interest is effectively connected with
the conduct of a United States trade or business, in which case the interest
will be subject to the federal income tax on net income that applies to U.S.
Holders generally. Non-U.S. Holders should consult applicable income tax
treaties, which may provide different rules.
Sales or Exchanges of Notes or Shares of Common Stock. A Non-U.S. Holder
generally will not be subject to federal income tax on gain recognized upon the
sale or other disposition of Notes or Common Stock received upon conversion
thereof unless (i) the gain is effectively connected with the conduct of a trade
or business within
28
<PAGE> 29
the United States by the Non-U.S. Holder, or (ii) in the case of a Non-U.S.
Holder who is a nonresident alien individual and holds Notes or Common Stock as
a capital asset, such holder is present in the United States for 183 or more
days in the taxable year and certain other circumstances are present. If the
Company were a "United States real property holding corporation" (which the
Company currently is not and does not expect to be) a Non-U.S. Holder may be
subject to federal income tax with respect to gain on such disposition as if it
were effectively connected with a United States trade or business and the amount
realized may be subject to withholding at the rate of 10%. The amount withheld
pursuant to these rules will be creditable against such Non-U.S. Holder's
federal income tax liability and may entitle the Non-U.S. Holder to a refund
upon furnishing the required information to the IRS. Non-U.S. Holders should
consult applicable income tax treaties, which may provide different rules.
Conversion of Notes. A Non-U.S. Holder generally will not be subject to
federal income tax on the conversion of a Note into shares of Common Stock. To
the extent a Non-U.S. Holder receives cash in lieu of a fractional share on
conversion, such cash may give rise to gain that would be subject to the
foregoing rules with respect to the sale or exchange of a Note or Common Stock.
Dividends on Shares of Common Stock. Generally, any distribution on shares
of Common Stock to a Non-U.S. Holder will be subject to federal income tax
withholding at a rate of 30% unless the dividend is effectively connected with
the conduct of trade or business within the United States by the Non-U.S.
Holder, in which case the dividend will be subject to the federal income tax on
net income that applies to U.S. Holders generally (and, with respect to
corporate holders under certain circumstances, the branch profits tax). Non-U.S.
Holders should consult any applicable income tax treaties, which may provide for
a lower withholding or other rules different from those described above. A
Non-U.S. Holder may be required to satisfy certain certification requirements in
order to claim a reduction of or exemption from withholding under the foregoing
rules.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. Holders. Information reporting and backup withholding may apply to
payments of interest or dividends on or the proceeds from the sale or other
disposition of the Notes or shares of Common Stock with respect to certain
non-corporate U.S. Holders. Such U.S. Holders generally will be subject to
backup withholding at a rate of 31% unless the recipient of such payment
supplies a taxpayer identification number, certified under penalty of perjury,
as well as certain other information, or otherwise establishes, in the manner
prescribed by law, an exemption from back-up withholding. Any amount withheld
under the backup withholding rules is allowable as a credit against the U.S.
Holder's federal income tax, upon furnishing the required information.
Non-U.S. Holders. Generally, information reporting and backup withholding
of federal income tax at a rate of 31% may apply to payments of principal,
interest and premium (if any) to Non-U.S. Holders if the payee fails to certify
that the holder is a Non-U.S. Holder. The 31% backup withholding tax generally
will not apply to dividends paid to Non-U.S. Holders outside the United States
that are subject to 30% withholding discussed above or that are subject to a tax
treaty that reduces such withholding.
The payment of the proceeds on the disposition of Notes or shares of Common
Stock to or through the United States office of a United States or foreign
broker will be subject to information reporting and backup withholding, unless
the owner provides the certification described above or otherwise establishes an
exemption. The proceeds of the disposition by a Non-U.S. Holder of Notes or
shares of Common Stock to or through a foreign office of a broker will not be
subject to backup withholding. However, if such broker is a U.S. person, a
controlled foreign corporation for federal income tax purposes or a foreign
person 50% or more of whose gross income from all sources for certain periods is
from activities that are effectively connected with a United States trade or
business, information reporting will apply unless such broker has documentary
evidence in its files of the owner's foreign status and has no actual knowledge
to the contrary or unless the owner otherwise establishes an exemption. Both
backup withholding and information reporting will apply to the proceeds from
such dispositions if the broker has actual knowledge that the payee is a U.S.
Holder.
29
<PAGE> 30
LEGAL MATTERS
Certain legal matters with respect to the legality of the Notes and the
validity of the Shares offered hereby will be passed upon for the Company by
Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1995 and December 29, 1996 and for each of the three years in the period ended
December 29, 1996, incorporated by reference in this Prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
30
<PAGE> 31
======================================================
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 3
Incorporation by Reference............ 4
The Company........................... 5
Risk Factors.......................... 6
Use of Proceeds....................... 11
Ratio of Earnings to Fixed Charges.... 11
Description of Notes.................. 12
Description of Capital Stock.......... 21
Selling Securityholders............... 24
Plan of Distribution.................. 25
Certain United States Federal Income
Tax Consequences.................... 27
Legal Matters......................... 30
Experts............................... 30
</TABLE>
======================================================
======================================================
[PGA LOGO]
PERSONNEL GROUP OF
AMERICA, INC.
5 3/4% CONVERTIBLE
SUBORDINATED NOTES
DUE 2004
AND
3,228,070 SHARES
OF
COMMON STOCK
-------------
PROSPECTUS
JULY , 1997
-------------
======================================================
<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of the estimated expenses, other
than underwriting discounts and commissions, all of which were or will be borne
by the Company.
<TABLE>
<S> <C>
Registration fee............................................ $34,848
New York Stock Exchange listing fee......................... 11,300
Accounting fees and expenses................................ 10,000
Printing and engraving expenses............................. 15,000
Legal fees and expenses..................................... 10,000
Miscellaneous fees and expenses............................. 3,852
-------
Total............................................. $85,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
under similar standards, except that no indemnification may be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the court in
which such action or suit was brought shall determine that despite the
adjudication of liability, such person is fairly and reasonably entitled to be
indemnified for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) or in the
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director,
officer, employee or agent of the corporation against any liability asserted
against him or incurred by him in any such capacity or arising out of his status
as such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
Section 102(b)(7) of the General Corporation Law provides that a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders may eliminate or limit personal liability of
members of its board of directors or governing body for breach of a director's
fiduciary duty. However, no such provision may eliminate or limit the liability
of a director for breaching his duty of loyalty, failing to act in good faith,
engaging in intentional misconduct or knowingly violating a law, paying a
dividend or approving a stock repurchase that was illegal, or obtaining an
improper personal benefit. A provision of this type has no effect on the
availability of equitable remedies, such as injunction or rescission, for breach
of fiduciary duty.
II-1
<PAGE> 33
The Company's Certificate of Incorporation provides that, to the extent
permitted by Delaware law, each director shall not be liable for monetary
damages for breach of such director's fiduciary duty as a director to the
Company and its stockholders. In addition, the Company's bylaws provide that the
Company will indemnify, to the full extent permitted by law, its directors and
officers, and may indemnify, at the discretion of the Board of Directors,
employees and agents, against losses incurred by any such person by reason of
the fact that such person was acting in such capacity.
The Company maintains insurance for the benefit of its directors and
officers insuring against certain liabilities and expenses that may be incurred
by such director or officer in or arising out of his capacity as such, and
insuring the Company, under certain circumstances, in the event that
indemnification payments are made by the Company to such officers and directors.
The Company has also entered into individual indemnification agreements
with its officers and directors, pursuant to which the Company has agreed to
indemnify its officers and directors, and to advance expenses to such persons,
to the maximum extent permitted by applicable law.
The Purchase Agreement dated as of June 17, 1997 between the Company and
the Initial Purchasers provides that the Initial Purchasers shall indemnify each
director of the Company, each officer of the Company who signed this
Registration Statement and each person who controls the Company for certain
liabilities, including certain liabilities under the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following documents are filed as exhibits to this Registration
Statement:
<TABLE>
<CAPTION>
FILED HEREWITH (*),
NON-APPLICABLE (NA)
OR INCORPORATED BY
REFERENCE FROM
EXHIBIT PREVIOUS EXHIBIT COMPANY REG. NO.
NUMBER DESCRIPTION NUMBER OR REPORT
- ------- ----------- ------------------- ----------------
<C> <C> <S> <C> <C>
3.1 -- Restated Certificate of Incorporation of the
Company, as amended................................ *
3.2 -- Amended and Restated Bylaws of the Company......... 3.2 33-95228
4.0 -- Specimen Stock Certificate......................... 4.0 33-95228
4.1 -- Rights Agreement between the Company and The First
National Bank of Boston............................ 1 0-27792
4.2 -- Indenture between the Company and First Union
National Bank, as Trustee.......................... *
4.3 -- Form of Note Certificate for 5 3/4% Convertible
Subordinated Notes................................. *
5.1 -- Opinion of Robinson, Bradshaw & Hinson, P.A........ *
10.1 -- 1995 Equity Participation Plan, as amended......... *
10.2 -- Management Incentive Compensation Plan............. 10.2 10-Q for quarter
ended 9/30/95
10.3 -- Employee Stock Purchase Plan....................... *
10.4# -- Director and Officer Indemnification Agreement of
James V. Napier.................................... 10.3 10-K for year
ended 12/31/95
10.5 -- Administrative Services Agreement between the
Company and Adia California........................ 10.6 10-Q for quarter
ended 9/30/95
</TABLE>
II-2
<PAGE> 34
<TABLE>
<CAPTION>
FILED HEREWITH (*),
NON-APPLICABLE (NA)
OR INCORPORATED BY
REFERENCE FROM
EXHIBIT PREVIOUS EXHIBIT COMPANY REG. NO.
NUMBER DESCRIPTION NUMBER OR REPORT
- ------- ----------- ------------------- ----------------
<C> <C> <S> <C> <C>
10.6 -- Paybill Services Agreement between the Company and
Adia California.................................... 10.7 10-Q for quarter
ended 9/30/95
10.7 -- Software License Agreement between the Company and
Adia California.................................... 10.8 10-Q for quarter
ended 9/30/95
10.8 -- Employment Agreement between the Company and Edward
P. Drudge, Jr...................................... 10.9 10-Q for quarter
ended 9/30/95
10.9 -- Employment Agreement between the Company and James
C. Hunt............................................ 10.10 10-K for year
ended 12/29/96
10.10 -- Employment Agreement between Adia Delaware, PFI
Corp. and Richard L. Peranton...................... 10.13 33-95228
10.11 -- Employment Agreement between the Company and Ken R.
Bramlett, Jr....................................... 10.13 10-K for year
ended 12/29/96
10.12 -- Indemnification Agreement between the Company and
Adia Delaware...................................... 10.14 10-Q for quarter
ended 9/30/95
10.13 -- Tax-Sharing Agreement between the Company, Adia
Delaware and Adia California....................... 10.15 10-Q for quarter
ended 9/30/95
10.14 -- Amended and Restated Non-Qualified Profit-Sharing
Plan............................................... 10.16 10-K for year
ended 12/29/96
10.15 -- Amended and Restated Credit Agreement among the
Company and its subsidiaries, the Lenders party
thereto and NationsBank, N.A., as agent............ *
10.16 -- Asset Purchase Agreement between the Company and
Business Enterprise Systems and Technology, Inc.
(BEST Consulting).................................. 2 8-K dated
9/30/96
10.17 -- Registration Rights Agreement between the Company
and the Initial Purchasers......................... *
12.1 -- Statement regarding computation of ratio of
earnings to fixed charges.......................... *
21.1 -- Subsidiaries of the Company........................ *
23.1 -- Consent of Arthur Andersen LLP..................... *
23.2 -- Consent of Robinson, Bradshaw & Hinson, P.A.
(included in Exhibit 5.1).......................... *
24.1 -- Power of Attorney (included in the signature pages
to this Registration Statement).................... *
25.1 -- Statement of eligibility of trustee................ *
</TABLE>
II-3
<PAGE> 35
- ---------------
# This Exhibit is substantially identical to Director and Officer
Indemnification Agreements of the same date between the Company and the
following individuals: Edward P. Drudge, Jr., Richard L. Peranton, Kevin P.
Egan, J. Roger King, and William J. Simione, Jr.
(b) Financial Statement Schedules
Not Applicable.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Act, Personnel Group of
America, Inc. has caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in Charlotte, North Carolina, on
July 21, 1997.
PERSONNEL GROUP OF AMERICA, INC.
By: /s/ EDWARD P. DRUDGE, JR.
------------------------------------
Edward P. Drudge, Jr.
Chief Executive Officer
POWER OF ATTORNEY
Each undersigned director and officer of Personnel Group of America, Inc.
hereby constitutes and appoints Edward P. Drudge, Jr., James C. Hunt and Ken R.
Bramlett, Jr., and each of them, with full power to act without the other and
with full power of substitution and resubstitution, his true and lawful
attorneys-in-fact and agents, for him and in his name, place, and stead, in any
and all capacities, to sign on his behalf any and all amendments (including
post-effective amendments and amendments thereto) to this Registration Statement
and any related registration statement (and any amendments thereto) filed
pursuant to Rule 462(b) under the Securities Act, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Commission, and grants unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises as fully as to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that such attorneys-in-fact or agents, or any of them, or their
substitutes shall lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities on July 21, 1997.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ EDWARD P. DRUDGE, JR. Chairman, Chief Executive Officer and Director
- ----------------------------------------------------- (Principal Executive Officer)
Edward P. Drudge, Jr.
/s/ JAMES C. HUNT Chief Financial Officer, Treasurer and
- ----------------------------------------------------- Director (Principal Financial Officer and
James C. Hunt Accounting Officer)
/s/ KEVIN P. EGAN Director
- -----------------------------------------------------
Kevin P. Egan
/s/ J. ROGER KING Director
- -----------------------------------------------------
J. Roger King
/s/ JAMES V. NAPIER Director
- -----------------------------------------------------
James V. Napier
/s/ WILLIAM J. SIMIONE, JR. Director
- -----------------------------------------------------
William J. Simione, Jr.
</TABLE>
II-5
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
Personnel Group of America, Inc. a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Personnel Group of
America, Inc. resolutions were duly adopted setting forth a proposed amendment
of the Restated Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
corporation for consideration thereof. The resolution setting forth the proposed
amendment is as follows:
Resolved, that the Restated Certificate of Incorporation of this
corporation be amended by changing the Article thereof numbered
"IV(a)" so that, as amended, said Article shall be and read as
follows: "See Exhibit A attached hereto."
Second: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
Third: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
Fourth: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
<PAGE> 2
In Witness Whereof, said Personnel Group of America, Inc. has caused this
certificate to be signed by Edward P. Drudge, its President, and Ken R.
Bramlett, Jr., its Secretary, this 1st day of June, 1997.
By: Edward P. Drudge, President
-----------------------------
President
Attest: Ken R. Bramlett, Jr.
-----------------------------
Secretary
<PAGE> 3
EXHIBIT A
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
Paragraph (a) of Article IV of the Company's Restated Certificate of
Incorporation shall be amended and restated in its entirety by deleting the
current text of such paragraph (a) of Article IV and replacing it with the
following:
"(a) The Corporation is authorized to issue two classes of
shares to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the Corporation shall have
authority to issue is One Hundred Million (100,000,000) shares, and the
aggregate par value of all such shares which are to have a par value is
One Million (1,000,000). The total number of shares of Preferred Stock
which the Corporation shall have authority to issue is Five Million
(5,000,000) shares, and the par value of each share of Preferred Stock
is One Cent ($0.01). The total number of shares of Common Stock which
the Corporation shall have the authority to issue is Ninety-Five
Million (95,000,000) shares, and the par value of each share of Common
Stock is One Cent ($0.01)."
<PAGE> 4
RESTATED CERTIFICATE OF INCORPORATION
OF
PERSONNEL GROUP OF AMERICA, INC.
It is hereby certified that:
The present name of the corporation (hereinafter called the
"Corporation") is Personnel Group of America, Inc., which is the name under
which the Corporation was originally incorporated; the date of filing of the
original certificate of incorporation of the Corporation with the Secretary of
State of the State of Delaware was July 7, 1995, and the date of filing of the
original restated certificate of incorporation of the Corporation with the
Secretary of State of the State of Delaware was July 28, 1995.
FIRST: The certificate of incorporation of the Corporation is hereby
amended and restated to read as follows:
ARTICLE I
The name of the Corporation is Personnel Group of America, Inc.
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle,
and the name of its registered agent at that address is The Corporation Trust
Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
<PAGE> 5
ARTICLE IV
(a) The Corporation is authorized to issue two classes of shares to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation shall have authority to issue is Twenty-Five
Million (25,000,000) shares, and the aggregate par value of all shares which are
to have a par value is Two Hundred Fifty Thousand Dollars ($250,000). The total
number of shares of Preferred Stock which the Corporation shall have authority
to issue is Five Million (5,000,000) shares, and the par value of each share of
Preferred Stock is One Cent ($0.01). The total number of shares of Common Stock
which the Corporation shall have authority to issue is Twenty Million
(20,000,000) shares, and the par value of each share of Common Stock is One Cent
($0.01).
(b) The Preferred Stock may be issued in one or more series, each
series to be appropriately designated by a distinguishing letter or title, prior
to the issue of any shares thereof.
(c) The Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions, if any), the redemption
price or prices, the liquidation preferences, any other designations,
preferences and relative, participating, optional or other special rights, and
any qualifications, limitations or restrictions thereof, of any wholly unissued
series of Preferred Stock, and the number of shares constituting any such
unissued series and the designation thereof, or any of them; and to increase or
decrease the number of shares of any series subsequent to the issue of shares of
that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
ARTICLE V
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend and rescind Bylaws of the Corporation.
ARTICLE VI
The Board of Directors shall have that number of Directors set out in
the Bylaws of the Corporation as adopted or as set from time to time by a duly
adopted amendment thereto by the Directors or Stockholders of the Corporation.
2
<PAGE> 6
ARTICLE VII
The Board of Directors shall be and is divided into three classes,
Class I, Class II and Class III. The number of directors in each class shall be
the whole number contained in the quotient arrived at by dividing the number of
directors by three, and if a fraction is also contained in such quotient then if
such fraction is one-third (1/3) the extra director shall be a member of Class
III and if the fraction is two-thirds (2/3) one of the extra directors shall be
a member of Class III and the other shall be a member of Class II. Each director
shall serve for a term ending on the date of the third annual meeting following
the annual meeting at which such director was elected; provided, however, that
the initial directors of the Corporation shall each be assigned to a class at
the time of their election, and the directors assigned to Class I shall serve
for a term ending on the date of the first annual meeting next following
September 30, 1995, the directors assigned to Class II shall serve for a term
ending on the date of the second annual meeting next following September 30,
1995, and the directors assigned to Class III shall serve for a term ending on
the date of the third annual meeting next following September 30, 1995.
In the event of any increase or decrease in the number of directors,
(a) each director then serving as such shall nevertheless continue as a director
of the class of which he is a member until the expiration of his current term,
or his prior death, retirement, resignation or removal, and (b) the newly
created or eliminated directorships resulting from such increase or decrease
shall be apportioned by the Board of Directors to such class or classes as
shall, so far as possible, bring the number of directors in the respective
classes into conformity with the formula in this Article, as applied to the new
number of directors.
Notwithstanding any of the foregoing provisions of this Article, each
director shall serve until his successor is elected and qualified or until his
death, retirement, resignation or removal. Should a vacancy occur or be created,
the remaining directors (even though less than a quorum) may fill the vacancy
for the full term of the class in which the vacancy occurs or is created.
ARTICLE VIII
Elections of directors at an annual or special meeting of stockholders
need not be by written ballot unless the Bylaws of the Corporation shall so
provide.
ARTICLE IX
No action shall be taken by the stockholders except at an annual or
special meeting of stockholders. The stockholders may not take action by written
consent.
3
<PAGE> 7
ARTICLE X
Special meetings of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the Board of Directors, or by a
majority of the members of the Board of Directors, or by a committee of the
Board of Directors which has been duly designated by the Board of Directors and
whose powers and authority, as provided in a resolution of the Board of
Directors or in the Bylaws of the Corporation, include the power to call such
meetings, but such special meetings may not be called by any other person or
persons; provided, however, that if and to the extent that any special meeting
of stockholders may be called by any other person or persons specified in any
provisions of the Certificate of Incorporation or any amendment thereto or any
certificate filed under Section 151(g) of the Delaware General Corporation Law,
then such special meeting may also be called by the person or persons, in the
manner, at the times and for the purposes so specified.
ARTICLE XI
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
ARTICLE XII
Each reference in this Certificate of Incorporation to any provision of
the Delaware General Corporation Law refers to the specified provision of the
General Corporation Law of the State of Delaware, as the same now exists or as
it may hereafter be amended or superseded.
ARTICLE XIII
A director shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that this Article XIII shall not eliminate or limit the liability of a
director (i) for any breach of his duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) under Section
174 of the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derives an improper personal benefit.
If the General Corporation Law of the State of Delaware is hereafter
amended to authorize corporate action further limiting or eliminating the
personal liability of directors, then the liability of the director to the
Corporation shall be limited or eliminated to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended from time to
time. Any repeal or modification of this Article XIII by the stockholders of the
Corporation shall be
4
<PAGE> 8
prospective only, and shall not adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE XIV
The name and mailing address of the incorporator is:
Ilona F. Bush
LATHAM & WATKINS
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
SECOND: The amendment and restatement of the restated certificate of
incorporation herein certified have been duly adopted by the stockholders of the
Corporation in accordance with the provisions of Sections 242 and 245 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Personnel Group of America, Inc., pursuant to the
General Corporation Law of the State of Delaware, has caused this restated
certificate of incorporation to be signed by Edward P. Drudge, Jr., its Chairman
and Chief Executive Officer, on this 23rd day of August 1995.
PERSONNEL GROUP OF AMERICA, INC.
By: /s/ Edward P. Drudge Jr.
------------------------------------
Name: Edward P. Drudge, Jr.
Title: Chairman and Chief Executive Officer
5
<PAGE> 1
EXHIBIT 4.2
================================================================================
PERSONNEL GROUP OF AMERICA, INC.
and
FIRST UNION NATIONAL BANK,
as Trustee
----------
INDENTURE
Dated as of June 23, 1997
----------
$115,000,000
5 3/4% Convertible Subordinated Notes due 2004
================================================================================
<PAGE> 2
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<S> <C> <C>
ss.310 (a)(1) ........................................................ 609
(a)(2) ........................................................ 609
(a)(3) ........................................................ Not Applicable
(a)(4) ........................................................ Not Applicable
(a)(5) ........................................................ 609
(b) ........................................................ 608
ss.311 (a) ........................................................ 613
(b) ........................................................ 613
ss.312 (a) ........................................................ 701
........................................................ 702(a)
(b) ........................................................ 702(b)
(c) ........................................................ 702(c)
ss.313 (a) ........................................................ 703(a)
(b) ........................................................ 703(a)
(c) ........................................................ 703(a)
(d) ........................................................ 703(b)
ss.314 (a) ........................................................ 704
(a)(4) ........................................................ 1004
(b) ........................................................ Not Applicable
(c)(1) ........................................................ 102
(c)(2) ........................................................ 102
(c)(3) ........................................................ Not Applicable
(d) ........................................................ Not Applicable
(e) ........................................................ 102
ss.315 (a) ........................................................ 601
(b) ........................................................ 602
(c) ........................................................ 601
(d) ........................................................ 601
(e) ........................................................ 514
ss.316 (a)(1)(A)........................................................ 502
........................................................ 512
(a)(1)(B) ........................................................ 513
(a)(2) ........................................................ Not Applicable
(b) ........................................................ 508
(c) ........................................................ 104(c)
ss.317 (a)(1) ........................................................ 503
(a)(2) ........................................................ 504
(b) ........................................................ 1003
ss. 318 (a) ........................................................ 107
</TABLE>
- ------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
i
<PAGE> 3
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties................................................................................................ 1
Recitals of the Company................................................................................ 1
ARTICLE ONE
Definitions and Other Provisions
of General Application....................................... 1
Section 101. Definitions.............................................................. 1
"Act"................................................................................ 2
"Affiliate" ......................................................................... 2
"Authenticating Agent"............................................................... 2
"Beneficial Owner"................................................................... 2
"Board of Directors" ................................................................ 2
"Board Resolution"................................................................... 2
"Business Day"....................................................................... 2
"Cedel".............................................................................. 2
"Change in Control".................................................................. 2
"Closing Date"....................................................................... 2
"Commission"......................................................................... 3
"Common Stock"....................................................................... 3
"Company"............................................................................ 3
"Company Request" or "Company Order"................................................. 3
"Corporate Trust Office"............................................................. 3
"Corporation"........................................................................ 3
"Current Market Price"............................................................... 3
"DTC"................................................................................ 3
"Defaulted Interest"................................................................. 3
"Definitive Security" or "Definitive Securities"..................................... 4
"Depositary"......................................................................... 4
"Euroclear" ......................................................................... 4
"Event of Default"................................................................... 4
"Exchange Act"....................................................................... 4
"Global Security or "Global Securities".............................................. 4
"Holder"............................................................................. 4
"Indenture" ......................................................................... 4
"Initial Purchasers"................................................................. 4
"Interest Payment Date".............................................................. 4
</TABLE>
- --------
*Note: This table of contents shall not, for any purposes, be deemed to be
a part of the Indenture.
ii
<PAGE> 4
<TABLE>
<S> <C>
"Maturity," ......................................................................... 4
"Officers' Certificate".............................................................. 4
"144A Global Security"............................................................... 5
"Opinion of Counsel"................................................................. 5
"Outstanding,"....................................................................... 5
"Paying Agent"....................................................................... 6
"Person"............................................................................. 6
"Predecessor Security"............................................................... 6
"Purchase Agreement"................................................................. 6
"Record Date"........................................................................ 6
"Redemption Date,"................................................................... 6
"Redemption Price,".................................................................. 6
"Registration Rights Agreement"...................................................... 6
"Regular Record Date,"............................................................... 6
"Regulation S"....................................................................... 6
"Regulation S Global Security"....................................................... 6
"Repurchase Date".................................................................... 6
"Repurchase Event"................................................................... 6
"Repurchase Price"................................................................... 7
"Resale Restriction Termination Date"................................................ 7
"Responsible Officer"................................................................ 7
"Securities Custodian"............................................................... 7
"Security Register" and "Security Registrar"......................................... 7
"Senior Indebtedness"................................................................ 7
"Shelf Registration Statement"....................................................... 7
"Special Record Date"................................................................ 8
"Subsidiary"......................................................................... 8
"Termination of Trading"............................................................. 8
"Transfer Restricted Securities"..................................................... 8
"Trust Indenture Act"................................................................ 8
"Trustee"............................................................................ 8
"Vice President,".................................................................... 8
Section 102. Compliance Certificates and Opinions..................................... 8
Section 103. Form of Documents Delivered to Trustee................................... 9
Section 104. Acts of Holders; Record Dates............................................ 10
Section 105. Notices, Etc., to Trustee and Company.................................... 11
Section 106. Notice to Holders; Waiver................................................ 11
Section 107. Conflict with Trust Indenture Act........................................ 12
Section 108. Effect of Headings and Table of Contents................................. 12
Section 109. Successors and Assigns................................................... 12
Section 110. Separability Clause...................................................... 12
Section 111. Benefits of Indenture.................................................... 12
Section 112. Governing Law............................................................ 12
Section 113. Legal Holidays........................................................... 13
Section 114. No Security Interest Created............................................. 13
Section 115. Limitation on Individual Liability....................................... 13
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE TWO
Security Forms........................................... 14
Section 201. Forms Generally.......................................................... 14
Section 202. Form of Face of Security................................................. 15
Section 203. Form of Reverse of Global Securities and
Definitive Securities.................................................... 20
Section 204. Form of Trustee's Certificate of Authentication.......................... 30
ARTICLE THREE
The Securities........................................... 31
Section 301. Title and Terms.......................................................... 31
Section 302. Denominations............................................................ 32
Section 303. Execution, Authentication, Delivery and Dating........................... 32
Section 304. Temporary Securities..................................................... 32
Section 305. Registration, Registration of Transfer and Exchange...................... 33
Section 306. Mutilated, Destroyed, Lost and Stolen Securities......................... 43
Section 307. Payment of Interest; Interest Rights Preserved........................... 43
Section 308. Persons Deemed Owners.................................................... 45
Section 309. Cancellation............................................................. 45
Section 310. Computation of Interest.................................................. 46
ARTICLE FOUR
Satisfaction and Discharge..................................... 46
Section 401. Satisfaction and Discharge of Indenture.................................. 46
Section 402. Application of Trust Money............................................... 47
Section 403. Reinstatement............................................................ 47
ARTICLE FIVE
Remedies.............................................. 48
Section 501. Events of Default........................................................ 48
Section 502. Acceleration of Maturity; Rescission and
Annulment................................................................ 50
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee................................................... 52
Section 504. Trustee May File Proofs of Claim......................................... 52
Section 505. Trustee May Enforce Claims Without Possession of
Securities............................................................... 53
Section 506. Application of Money Collected........................................... 53
Section 507. Limitation on Suits...................................................... 54
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest and to Convert........................... 54
Section 509. Restoration of Rights and Remedies....................................... 55
Section 510. Rights and Remedies Cumulative........................................... 55
Section 511. Delay or Omission Not Waiver............................................. 55
Section 512. Control by Holders....................................................... 55
Section 513. Waiver of Past Defaults.................................................. 56
Section 514. Undertaking for Costs.................................................... 56
ARTICLE SIX
The Trustee............................................ 57
Section 601. Certain Duties and Responsibilities...................................... 57
Section 602. Notice of Defaults....................................................... 58
Section 603. Certain Rights of Trustee................................................ 58
Section 604. Not Responsible for Recitals or Issuance of
Securities............................................................... 59
Section 605. May Hold Securities...................................................... 59
Section 606. Money Held in Trust...................................................... 60
Section 607. Compensation and Reimbursement........................................... 60
Section 608. Disqualification; Conflicting Interests.................................. 61
Section 609. Corporate Trustee Required; Eligibility.................................. 61
Section 610. Resignation and Removal; Appointment of
Successor................................................................ 61
Section 611. Acceptance of Appointment by Successor................................... 63
Section 612. Merger, Conversion, Consolidation or Succession to
Business................................................................. 63
Section 613. Preferential Collection of Claims Against Company........................ 63
Section 614. Appointment of Authenticating Agent...................................... 64
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company......................... 66
Section 701. Company to Furnish Trustee Names and Addresses
of Holders............................................................... 66
Section 702. Preservation of Information; Communication to
Holders.................................................................. 66
Section 703. Reports by Trustee....................................................... 67
Section 704. Reports by Company....................................................... 67
Section 705. Rule 144A Information Requirement........................................ 67
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease........................ 68
Section 801. Company May Consolidate, Etc., Only on Certain
Terms.................................................................... 68
Section 802. Successor Substituted.................................................... 68
ARTICLE NINE
Supplemental Indentures...................................... 69
Section 901. Supplemental Indentures Without Consent of
Holders.................................................................. 69
Section 902. Supplemental Indentures with Consent of Holders.......................... 70
Section 903. Execution of Supplemental Indentures..................................... 70
Section 904. Effect of Supplemental Indentures........................................ 71
Section 905. Conformity with Trust Indenture Act...................................... 71
Section 906. Reference in Securities to Supplemental Indentures....................... 71
Section 907. Notice of Supplemental Indenture......................................... 71
ARTICLE TEN
Covenants............................................. 71
Section 1001. Payment of Principal, Premium and Interest............................... 71
Section 1002. Maintenance of Office or Agency.......................................... 72
Section 1003. Money for Security Payments to Be Held in Trust.......................... 72
Section 1004. Statement by Officers as to Default...................................... 74
Section 1005. Existence................................................................ 74
Section 1006. Waiver of Certain Covenants.............................................. 74
ARTICLE ELEVEN
Redemption of Securities...................................... 74
Section 1101. Right of Redemption...................................................... 74
Section 1102. Applicability of Article................................................. 75
Section 1103. Election to Redeem; Notice to Trustee.................................... 75
Section 1104. Selection by Trustee of Securities to be Redeemed........................ 75
Section 1105. Notice of Redemption..................................................... 76
Section 1106. Deposit of Redemption Price.............................................. 76
Section 1107. Securities Payable on Redemption Date.................................... 77
Section 1108. Securities Redeemed in Part.............................................. 77
</TABLE>
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<PAGE> 8
<TABLE>
<S> <C>
ARTICLE TWELVE
Subordination of Securities.................................... 77
Section 1201. Securities Subordinated to Senior Indebtedness........................... 77
Section 1202. Payment Over of Proceeds Upon Dissolution, Etc........................... 78
Section 1203. Prior Payment to Senior Indebtedness upon
Acceleration of Securities............................................... 79
Section 1204. No Payment When Senior Indebtedness in Default........................... 79
Section 1205. Payment Permitted If No Default.......................................... 80
Section 1206. Subrogation to Rights of Holders of Senior
Indebtedness............................................................. 80
Section 1207. Provisions Solely to Define Relative Rights.............................. 81
Section 1208. Trustee to Effectuate Subordination...................................... 81
Section 1209. No Waiver of Subordination Provisions.................................... 81
Section 1210. Notice to Trustee........................................................ 82
Section 1211. Reliance on Judicial Order or Certificate of
Liquidating Agent........................................................ 83
Section 1212. Trustee Not Fiduciary for Holders of Senior
Indebtedness............................................................. 83
Section 1213. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights......................................... 83
Section 1214. Article Applicable to Paying Agents...................................... 83
Section 1215. Certain Conversions Deemed Payment....................................... 84
Section 1216. No Suspension of Remedies................................................ 84
ARTICLE THIRTEEN
Conversion of Securities...................................... 84
Section 1301. Conversion Privilege and Conversion Price................................ 84
Section 1302. Exercise of Conversion Privilege......................................... 85
Section 1303. Fractions of Shares...................................................... 86
Section 1304. Adjustment of Conversion Price........................................... 86
Section 1305. Notice of Adjustments of Conversion Price................................ 93
Section 1306. Notice of Certain Corporate Action....................................... 93
Section 1307. Company to Reserve Common Stock.......................................... 94
Section 1308. Taxes on Conversions..................................................... 95
Section 1309. Covenant as to Common Stock.............................................. 95
Section 1310. Cancellation of Converted Securities..................................... 95
Section 1311. Provisions of Consolidation, Merger or Sale of
Assets................................................................... 95
Section 1312. Trustee's Disclaimer..................................................... 96
</TABLE>
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<TABLE>
<S> <C>
ARTICLE FOURTEEN
Right to Require Repurchase.................................... 97
Section 1401. Right to Require Repurchase.............................................. 97
Section 1402. Notice; Method of Exercising Repurchase Right............................ 97
Section 1403. Deposit of Repurchase Price.............................................. 98
Section 1404. Securities Not Repurchased on Repurchase Date............................ 98
Section 1405. Securities Repurchased in Part........................................... 98
Section 1406. Certain Definitions...................................................... 99
</TABLE>
viii
<PAGE> 10
INDENTURE, dated as of June 23, 1997, between PERSONNEL GROUP OF
AMERICA, INC., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal executive
offices at 6302 Fairview Road, Suite 201, Charlotte, North Carolina 28210, and
First Union National Bank, a national banking corporation, as Trustee (herein
called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 5
3/4% Convertible Subordinated Notes due 2004 (herein called the "Securities") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural as well
as the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly provided,
the term "generally accepted accounting principles" with respect to any
computation required and
1
<PAGE> 11
permitted hereunder shall mean such accounting principles as are generally
accepted and accepted and adopted by the Company at the date of this
Indenture; and
(4) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms used in Articles Twelve, Thirteen and Fourteen
are defined in such Articles.
"Act," when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
The term "Beneficial Owner" is determined in accordance with
Rule 13d-3, promulgated by the Commission under the Exchange Act.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New
York, New York or the city in which the Corporate Trust Office is located are
authorized or obligated to close by law or executive order.
"Cedel" means Cedel Bank societe anonyme.
"Change in Control" has the meaning specified in
Section 1406.
"Closing Date" means June 23, 1997.
2
<PAGE> 12
"Commission" means the Securities and Exchange Commission as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" includes any stock of any class of the
Company which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding-up
of the Company and which is not subject to redemption by the Company. However,
subject to the provisions of Section 1311, shares issuable on conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided, that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall principally be
administered, which office is, at the date as of which this Indenture is dated,
located at 230 South Tryon Street, Ninth Floor, Charlotte, NC 28288-1179.
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Current Market Price" has the meaning specified in
Section 1304.
"DTC" has the meaning specified in Section 305.
"Defaulted Interest" has the meaning specified in
Section 307.
3
<PAGE> 13
"Definitive Security" or "Definitive Securities" means a
Security or Securities that are in the form of the Security set forth in
Sections 202 and 203 hereof, containing the legend specified for a Definitive
Security and not including the additional language referred to in footnote 1 or
the additional schedule referred to in footnote 2.
"Depositary" has the meaning specified in Section 305.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Global Security or "Global Securities" means a Security or
Securities in the form of the Security set forth in Sections 202, 203 and 204
hereof containing the legend specified for a Global Security, the additional
language referred to in footnote 1 and the additional schedule referred to in
footnote 2.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Indenture" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means Smith Barney Inc., PaineWebber
Incorporated, J.C. Bradford & Co., The Robinson-Humphrey Company and
NationsBanc Capital Markets, Inc.
"Interest Payment Date" means the Stated Maturity of an
instalment of interest on the Securities.
"Maturity," when used with respect to any Security, means
the date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity thereof or by
declaration of acceleration, redemption or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers'
4
<PAGE> 14
Certificate given pursuant to Section 1004 shall be the principal executive or
financial or accounting officer of the Company.
"144A Global Security" has the meaning specified in Section
201.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for or an employee of the Company, and who shall be acceptable to
the Trustee.
"Outstanding," when used with respect to Securities, means,
as of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount have been
theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided, that if such Securities, or
portions thereof, are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities as to which the Trustee has actual knowledge
of such ownership shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.
5
<PAGE> 15
"Paying Agent" means any Person authorized by the Company to
pay the principal of and premium, if any, or interest on any Securities on
behalf of the Company.
"Person" means any individual, corporation, partnership,
joint venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Purchase Agreement" means that certain Purchase Agreement
dated June 17, 1997 between the Company and the Initial Purchasers.
"Record Date" means either a Regular Record Date or a
Special Record Date, as applicable.
"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security
to be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture on the applicable Redemption Date.
"Registration Rights Agreement" means that certain
Registration Rights Agreement dated as of June 23, 1997 between the Company and
the Initial Purchasers.
"Regular Record Date," for the interest payable on any
Interest Payment Date means June 15 or December 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act
of 1933, as amended.
"Regulation S Global Security" has the meaning specified in
Section 201.
"Repurchase Date" has the meaning specified in Section 1401.
"Repurchase Event" has the meaning specified in Section
1406.
6
<PAGE> 16
"Repurchase Price" has the meaning specified in Section
1401.
"Resale Restriction Termination Date" means, with respect to
any Security, the date which is two years after the later of (i) the original
issue date of such Security and (ii) the last date on which the Company or any
Affiliate of the Company was the owner of such Security (or any Predecessor
Security).
"Responsible Officer" means, when used with respect to the
Trustee, an officer of the Trustee assigned and duly authorized by the Trustee
to administer its corporate trust matters.
"Securities Custodian" means the Trustee, as custodian with
respect to the Securities in global form, or any successor entity thereto.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Senior Indebtedness" means the principal of and premium, if
any, and interest on (a) all secured indebtedness of the Company for money
borrowed (including any secured indebtedness under the Company's primary credit
facility and any predecessor or successor thereto), whether outstanding on the
date of execution of the Indenture (such as the Company's credit facility of
$125.1 million, any increase in the maximum principal amount thereof and any
predecessor or successor facilities thereto) or thereafter created, incurred or
assumed, (b) all secured indebtedness of the Company for money borrowed, whether
outstanding on the date of execution of the Indenture or thereafter created,
incurred or assumed, except any such other indebtedness that by the terms of the
instrument or instruments by which such indebtedness was created or incurred
expressly provides that it (i) is junior in right of payment to the Notes or
(ii) ranks pari passu in right of payment with the Notes, and (c) any
amendments, renewals, extensions, modifications, refinancings and refundings of
the foregoing, provided that the indebtedness continues to be secured
indebtedness. For the purposes of this definition, "indebtedness for money
borrowed" when used with respect to the Company means (i) any obligation of, or
any obligation guaranteed by, the Company for the repayment of borrowed money
(including without limitation fees, penalties or other obligations in respect
thereof), whether or not evidenced by bonds, debentures, notes or other written
instruments, (ii) any deferred payment obligation of, or any such obligation
guaranteed by, the Company for the payment of the purchase price of property or
assets evidenced by a note or similar instrument, and (iii) any obligation of,
or any such obligation guaranteed by, the Company for the payment of rent or
other amounts under a lease of property or assets which obligation is required
to be classified and accounted for as a capitalized lease on the balance sheet
of the Company under generally accepted accounting principles.
"Shelf Registration Statement" means the Registration
Statement with respect to the Notes and the Common Stock the Issuer is required
to file pursuant to the Registration Rights Agreement.
7
<PAGE> 17
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or
any instalment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such instalment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
"Termination of Trading" has the meaning specified in
Section 1406.
"Transfer Restricted Securities" means Securities that bear
or are required to bear the legend set forth in Section 305 hereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939
as in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such
date, "Trust Indenture Act" means, to the extent required by any such amendment,
the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Vice President," when used with respect to the Company
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the Company
shall furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act. Each such certificate or opinion shall be given
in the form of an Officers' Certificate, if to be given by an officer of the
Company, or an Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirement set
forth in this Indenture.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include:
8
<PAGE> 18
(1) a statement that each individual or firm signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(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 each such individual
or such firm, he has or they have made such examination or
investigation as is necessary to enable him or them to express an
informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied
with.
Section 103. Form of Documents Delivered to Trustee.
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 other matters, and any
Person may certify to give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certification or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate of public
officials or upon a certificate or opinion of, or representations by, an officer
or officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
9
<PAGE> 19
Section 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The Company may, in the circumstances permitted by the
Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted to be given or taken by Holders. If not set
by the Company prior to the first solicitation of a Holder made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided
pursuant to Section 701) prior to such first solicitation or vote, as the case
may be. With regard to any record date, only the Holders on such date (or their
duly designated proxies) shall be entitled to give or take, or vote on, the
relevant action. Notwithstanding the foregoing, the Company shall not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, any Act by the Holders pursuant to Section 501, 502 or 512.
(d) The ownership of Securities shall be proved by the
Security Register.
(e) Any Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer therefor or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
10
<PAGE> 20
(f) Without limiting the foregoing, a Holder entitled
hereunder to give or take any action hereunder with regard to any particular
Security may do so with regard to all or any part of the principal amount of
such Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any different part of such
principal amount.
Section 105. Notices, Etc., to Trustee and Company.
Any Act of Holders or other documents provided or permitted
by this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration, or at any other address previously furnished
in writing to the Holders and the Company by the Trustee; or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company, addressed to it at the address of its principal executive offices
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; two Business Days after
being deposited in the mail, registered or certified with postage prepaid, if
mailed; when answered back if telexed; when receipt acknowledged, if telecopied;
and the next Business Day after timely delivery to the courier, if sent by
nationally recognized overnight air courier guaranteeing next day delivery.
Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if made, given, mailed or otherwise furnished or filed in
writing to each Holder affected by such event, at his address as it appears in
the Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver. All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two Business Days
after being deposited in the mail, first class with postage prepaid, if mailed;
when answered back if telexed; when receipt acknowledged, if telecopied; and the
next
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<PAGE> 21
Business Day after timely delivery to the courier, if sent by nationally
recognized overnight air courier guaranteeing next day delivery.
In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
a provision of the Trust Indenture Act or another provision that would be
required or deemed under such Act to be a part of and govern this Indenture if
this Indenture were subject thereto, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company and the Trustee shall bind each of their respective successors and
assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture or in the Securities
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 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the Holders of Securities and, with respect to Article
Twelve, the holders of Senior Indebtedness, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
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<PAGE> 22
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York, without giving
any effect to such State's conflicts of laws principles.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security or the last date on which a Holder has the
right to convert his Securities shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal and premium if any, or conversion of the
Securities need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date or Redemption Date, or at the Stated Maturity, or on such last day for
conversion; provided, that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, to the next succeeding Business Day.
Section 114. No Security Interest Created.
Nothing in this Indenture or in the Securities, express or
implied, shall be construed to constitute a security interest under the Uniform
Commercial Code or similar legislation, as now or hereafter enacted and in
effect in any jurisdiction where property of the Company or its Subsidiaries is
or may be located.
Section 115. Limitation on Individual Liability.
No recourse under or upon any obligation, covenant or
agreement contained in this Indenture or in any Security, or for any claim based
thereon or otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or any successor corporation, either directly or through the Company,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, shareholders, officers or
directors, as such, of the Company or any successor Person, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any Security or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, shareholder, officer or director, as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any
Security or implied therefrom, are hereby expressly waived and released as a
condition of, and
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<PAGE> 23
as a consideration for, the execution of this Indenture and the issuance of such
Security.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
The Securities and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with any organizational document, any
applicable law or with the rules of any securities exchange on which the
Securities are listed or as may, consistently herewith, be determined by the
Company officers executing such Securities, as evidenced by their execution of
the Securities.
The Securities issued in definitive form shall be
substantially in the form set forth in Section 202 hereof.
Unless issued in definitive form, Securities issued and sold
in reliance on Rule 144A shall be issued in the form of one or more global
securities (the "144A Global Security"), the face of which shall be
substantially in the form set forth in Section 202 hereof and the reverse of
which shall be substantially in the form set forth in Section 203 hereof, which
144A Global Security shall be deposited on behalf of the holders of the
Securities represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of the nominee of the Depositary, duly
executed by the Company and authenticated as provided for herein.
Securities offered and sold outside the United States in
reliance on Regulation S shall be issued in the form of one or more global
securities (the "Regulation S Global Security"), the face of which shall be
substantially in the form set forth in Section 202 hereof and the reverse of
which shall be substantially in the form set forth in Section 203 hereof, which
Regulation S Global Security shall be deposited on behalf of the holders of the
Securities represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of a nominee of the Depositary, duly
executed by the Company and authenticated as provided herein, for credit to the
accounts of the respective depositaries for Euroclear and Cedel (or such other
accounts as they may direct). Prior to or on the 40th day after the later of the
commencement of the offering of the Securities and the Closing Date (the
"Restricted Period"), beneficial interests in the Regulation S Global Security
may only be held through Morgan Guaranty Trust Company of New York, Brussels
office, as operator of Euroclear or Cedel or another agent member of the
Euroclear System and Cedel acting for and on behalf of them, unless delivery is
made though the 144A
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<PAGE> 24
Global Security in accordance with the certification requirements hereof. During
the Restricted Period, interests in the Regulation S Global Security may be
exchanged for interests in the 144A Global Security or for Definitive Securities
only in accordance with the certification requirements described in Section 305
below.
Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee or the
Securities Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof.
The Definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
Section 202. Form of Face of Security.
LEGENDS FOR GLOBAL SECURITY:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE 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. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
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<PAGE> 25
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A)
TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON WHO IS OR WHO THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) TO AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) THAT IS AN INSTITUTIONAL INVESTOR AND THAT
PRIOR TO SUCH TRANSFER FURNISHES TO THE TRUSTEE A SIGNED LETTER, IN THE FORM OF
EXHIBIT B TO THE INDENTURE, CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY, (E)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES
PROVIDED THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY
IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND SUBJECT TO ANY
APPLICABLE STATE SECURITIES LAWS. THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION
DATE.
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<PAGE> 26
LEGENDS FOR DEFINITIVE SECURITY:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A)
TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON WHO IS OR WHO THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) TO AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) THAT IS AN INSTITUTIONAL INVESTOR AND THAT
PRIOR TO SUCH TRANSFER FURNISHES TO THE TRUSTEE A SIGNED LETTER, IN THE FORM OF
EXHIBIT B TO THE INDENTURE, CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY, (E)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES
PROVIDED THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY
IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND SUBJECT
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<PAGE> 27
TO ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS
SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE.
PERSONNEL GROUP OF AMERICA, INC.
___% Convertible Subordinated Notes due 2004
No. ________ $___________
Personnel Group of America, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the "Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________________________, or its registered assigns, the principal sum of
________________ Dollars [OR SUCH GREATER OR LESSER AMOUNT AS INDICATED ON THE
SCHEDULE OF EXCHANGES OF SECURITIES ON THE REVERSE HEREOF]* on ___________, 2004
upon surrender hereof to the Paying Agent, and to pay interest thereon from the
date of the original issuance of Securities pursuant to the Indenture or from
and including the most recent Interest Payment Date to which interest has been
paid or duly provided for, semi-annually on _______ and ___________ in each
year, commencing _______, 1998, at the rate of ___% per annum, until the
principal hereof is paid or made available for payment and promises to pay any
liquidated damages which may be payable pursuant to the Registration Rights
Agreement on the Interest Payment Dates. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the ______ or __________,
as the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture. Notice
of a Special Record Date shall be given to Holders of Securities not less than
10 days prior to such Special Record Date. Payment of the principal of and
premium, if any, and interest on this Security will be made (i) in respect of
Securities held of record by the Depositary or its nominee in same day funds on
or prior to the respective payment dates and (ii) in respect of Securities held
of record by Holders other than the Depositary or its nominee in same day funds
at the office or agency of the Company maintained for that purpose pursuant to
Section 1002 of the Indenture, in each case in such coin or currency of
- --------
* This phrase should be included only if the Security is issued in global form.
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<PAGE> 28
the United States of America as of the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest in respect of Securities held of record by
Holders other than the Depositary or its nominee may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
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<PAGE> 29
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed under its corporate seal.
Dated: _________________ PERSONNEL GROUP OF AMERICA, INC.
By
-------------------------------
Attest:
- ------------------------
Section 203. Form of Reverse of Global Securities and
Definitive Securities.
This Security is one of a duly authorized issue of
Securities of the Company designated as its ___% Convertible Subordinated Notes
due 2004 (herein called the "Securities"), limited in aggregate principal amount
to $115,000,000 (including Securities issuable pursuant to the Initial
Purchasers' over-allotment option, as provided for in the Purchase Agreement
dated June 17, 1997 between the Company and the Initial Purchasers), issued and
to be issued under an Indenture, dated as of June 23, 1997 (herein called the
"Indenture"), between the Company and First Union National Bank, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Indebtedness and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and delivered.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Security is entitled, at his option, at any time
on or before the close of business on ___________, 2004, or in case this
Security or a portion hereof is called for redemption, then in respect of this
Security or such portion hereof until and including, but (unless the Company
defaults in making the payment due upon redemption) not after, the close of
business on the second business day preceding the Redemption Date, or, in case
this Security or a portion hereof is submitted for repurchase, until, but not on
and after, the date this Security or portion hereof is submitted for repurchase,
to convert this Security (or any portion of the principal amount hereof which is
$1,000 or an integral multiple thereof), at the principal amount hereof, or of
such portion, into fully paid and non-assessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Common Stock at a conversion
price equal to $______ principal amount for each share of Common Stock (or at
the current adjusted conversion price if an adjustment has been made as provided
in the Indenture) by surrender of this Security, duly endorsed or assigned to
the Company or in blank, to the Company at its office or agency
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<PAGE> 30
maintained for that purpose pursuant to Section 1002 of the Indenture,
accompanied by written notice to the Company in the form provided in this
Security (or such other notice as is acceptable to the Company) that the Holder
hereof elects to convert this Security, or if less than the entire principal
amount hereof is to be converted, the portion hereof to be converted, and, in
case such surrender shall be made during the period from the opening of business
on any Regular Record Date next preceding any Interest Payment Date to the close
of business on such Interest Payment Date (unless this Security or the portion
thereof being converted has been called for redemption), also accompanied by
payment in funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of this Security
then being converted. Subject to the aforesaid requirement for payment and, in
the case of a conversion after the Regular Record Date next preceding any
Interest Payment Date and on or before such Interest Payment Date, to the right
of the Holder of this Security (or any Predecessor Security) of record at such
Regular Record Date to receive an instalment of interest (with certain
exceptions provided in the Indenture), no payment or adjustment is to be made
upon conversion on account of any interest accrued hereon or on account of any
dividends on the Common Stock issued upon conversion. No fractional shares or
scrip representing fractions of shares will be issued on conversion, but instead
of any fractional share the Company shall pay a cash adjustment as provided in
the Indenture. The conversion price is subject to adjustment as provided in the
Indenture. In addition, the Indenture provides that in case of certain
consolidations or mergers to which the Company is a party or the sale or
transfer of all or substantially all of the assets of the Company, the Indenture
shall be amended, without the consent of any Holders of Securities, so that this
Security, if then outstanding, will be convertible thereafter, during the period
this Security shall be convertible as specified above, only into the kind and
amount of securities, cash and other property receivable upon the consolidation,
merger, sale or transfer by a holder of the number of shares of Common Stock
into which this Security might have been converted immediately prior to such
consolidation, merger, sale or transfer (assuming such holder of Common Stock
failed to exercise any rights of election and received per share the kind and
amount received per share by a plurality of non-electing shares).
The Securities are subject to redemption upon not less than
15 and not more than 60 days' notice by mail, at any time on or after
___________, 2000, as a whole or in part, at the election of the Company, at the
Redemption Prices set forth below (expressed as percentages of the principal
amount), plus accrued interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date).
If redeemed during the 12-month period beginning
___________, in the year indicated (___________, in the case of 2000), the
redemption price shall be:
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Redemption
Year Price
- ---- ------
2000..................................................... ___%
2001..................................................... ___%
2002..................................................... ___%
2003..................................................... ___%
2004..................................................... 100.00%
In certain circumstances involving the occurrence of a
Repurchase Event (as defined in the Indenture), the Holder hereof shall have the
right to require the Company to repurchase this Security at 100% of the
principal amount hereof, together with accrued interest to the Repurchase Date,
but interest installments whose Stated Maturity is on or prior to such
Repurchase Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.
In the event of redemption or conversion of this Security in
part only, a new Security or Securities for the unredeemed or unconverted
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
The indebtedness evidenced by this Security is, in all
respects, subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided, and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the
principal of all the Securities may be declared due and payable in the manner
and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding, and, under certain limited circumstances, by
the Company and the Trustee without the consent of the Holders. The Indenture
also contains provisions permitting the Holders of specified percentages in
aggregate principal amount of the Securities at the time Outstanding, on behalf
of the Holders of all the Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such
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<PAGE> 32
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed or to convert this Security as
provided in the Indenture.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in fully registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of
transfer or exchange except as provided in the Indenture, and the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes, except as provided in this Security, whether or
not this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. The Company
will furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement.
23
<PAGE> 33
[FORM OF CONVERSION NOTICE]
TO PERSONNEL GROUP OF AMERICA, INC.
The undersigned registered owner of this Security hereby
irrevocably exercises the option to convert this Security, or the portion hereof
(which is $1,000 or a multiple thereof) designated below, into shares of Common
Stock in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for a fractional share and any
Security representing any unconverted principal amount hereof, be issued and
delivered to the registered owner hereof unless a different name has been
provided below. If this Notice is being delivered on a date after the close of
business on a Regular Record Date and prior to the close of business on the
related Interest Payment Date, this Notice is accompanied by payment in funds
acceptable to the Company, of an amount equal to the interest payable on such
Interest Payment Date on the principal of this Security to be converted (unless
this Security has been called for redemption). If shares or any portion of this
Security not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
Dated: _________________________
-------------------------
Signature(s)
Signature(s) must be guaranteed by an
eligible guarantor institution (banks,
stockbrokers, savings and loan
associations and credit unions with
membership in an approved signature
guarantee medallion program) pursuant to
S.E.C. Rule 17Ad-15, if shares of
Common Stock are to be delivered, or
Securities to be issued, other than to
and in the name of the registered owner.
- ------------------------------
Signature Guarantee
24
<PAGE> 34
Fill in for registration of shares of
Common Stock if they are to be
delivered, or Securities if they are to
be issued, other than to and in the name
of the registered owner:
- ------------------------------
(Name)
- ------------------------------
(Street Address)
- ------------------------------
(City, State and zip code)
(Please print name and address)
Register: _____ Common Stock
_____ Securities
(Check appropriate line(s)).
Principal amount to be converted (if
less than all):
$__________,000
---------------------------
Social Security or other Taxpayer
Identification Number of owner
25
<PAGE> 35
[ASSIGNMENT FORM]
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your signature:
- --------------------------------------------------------------------------------
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee:
----------------------------------------------------
The signature to this assignment should be
guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations
and credit unions with membership in an approved
signature guarantee medallion program) pursuant to
S.E.C. Rule 17Ad-15.
26
<PAGE> 36
[FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF SECURITIES]
CERTIFICATE FOR EXCHANGE OR TRANSFER
Re: 5 3/4% Convertible Subordinated Notes due 2004
This Certificate relates to $_________ principal amount of
Securities held in *____________ book-entry or *____________ definitive form by
_________ (the "Transferor").
The Transferor*:
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in a Global Security held by the Depositary a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to deliver in exchange for
its Security or Securities a beneficial interest in a Global Security held by
the Depositary in a principal amount equal to the aggregate principal amount of
such Security or Securities; or
[ ] has requested the Trustee by written order to exchange or register
the transfer of a Security or Securities.
In connection with such request and in respect of each such security,
the Transferor does hereby certify to the Company and the Trustee that
Transferor is familiar with the Indenture relating to the above captioned Notes
and, as provided in Section 305 of such Indenture, the transfer of this Security
does not require registration under the Securities Act (as defined below)
because*:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 305(b)(ii)(A) or Section
305(f)(i)(A) of the Indenture).
[ ] Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A or pursuant to an exemption
from registration in accordance with Regulation S under the Securities Act (in
satisfaction of Section 305(b)(ii)(B), Section 305(c)(i), Section 305(d)(i),
Section 305(f)(i)(B), Section 305(g)(iii) or Section 305(h)(iii) of the
Indenture). An opinion of counsel to the effect that such transfer does not
require registration under the Securities Act
- --------
* Check applicable box.
27
<PAGE> 37
accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B), Section
305(c)(i), Section 305(d)(i), Section 305(f)(i)(B), Section 305(g)(iii) or
Section 305(h)(iii) of the Indenture).
[ ] Such Security is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 305(b)(ii)(B), Section 305(f)(i)(B)
or Section 305(k)(ii) of the Indenture). If such Security is being transferred
in accordance with Rule 144 under the Securities Act, an opinion of counsel to
the effect that such transfer does not require registration under the Securities
Act accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B),
Section 305(f)(i)(B) or Section 305(k)(ii) of the Indenture).
[ ] Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, 144 or Regulation S under the Securities Act. An opinion
of counsel to the effect that such transfer does not require registration under
the Securities Act accompanies this Certificate (in satisfaction of Section
305(b)(ii)(C) or Section 305(f)(i)(C) of the Indenture).
You are entitled to rely upon this certificate and you are irrevocably
authorized to produce this certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.
-------------------------------
[INSERT NAME OF TRANSFEROR]
By:
---------------------------
Date:
----------------------------
28
<PAGE> 38
[OPTION OF HOLDER TO ELECT PURCHASE]
If you wish to have this Security purchased by the Company pursuant to
Section 1401 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Security (which is $1,000 or an
integral multiple thereof) purchased by the Company pursuant to Section 1401 of
the Indenture, state the amount you wish to have purchased:
$
--------------------
Date: Your Signature(s):
--------------------- ---------------------------
Tax Identification No.:
---------------------------
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee:
----------------------------------------------------
The signature to this option of holder to elect
purchase should be guaranteed by an eligible
guarantor institution (banks, stockbrokers, savings
and loan associations and credit unions with
membership in an approved signature guarantee
medallion program) pursuant to S.E.C. Rule 17Ad-15.
29
<PAGE> 39
[FORM OF SCHEDULE OF EXCHANGES**]
The following increases or decreases in the principal amount
of this Global Security have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Signature of
decrease in increase in Amount of this authorized
Principal Principal Global Security signatory of
Amount of this Amount of this following such Trustee or
Date of Global Global decrease (or Securities
Exchange Security Security increase) Custodian
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.
2.
3.
4.
5.
</TABLE>
Section 204. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Securities referred to in the
within-mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By ____________________________
Authorized Signatory
- --------
** This Schedule should be included only if the Security is issued in global
form.
30
<PAGE> 40
ARTICLE THREE
The Securities
Section 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $115,000,000
(including $15,000,000 aggregate principal amount of Securities that may be sold
to the Initial Purchasers by the Company upon exercise of the over-allotment
option granted pursuant to the Purchase Agreement), except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906,
1108, 1302 or 1405.
The Securities shall be known and designated as the "5 3/4%
Convertible Subordinated Notes due 2004" of the Company. Their Stated Maturity
shall be July 1, 2004 and they shall bear interest at the rate of 5 3/4% per
annum, from the date of original issuance of Securities pursuant to this
Indenture or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, as the case may be, payable semi-annually on
July 1 and January 1 commencing January 1, 1998, until the principal thereof is
paid or made available for payment.
The principal of and premium, if any, and interest on the
Securities shall be payable (i) in respect of Securities held of record by the
Depositary or its nominee in same day funds on or prior to the respective
payment dates and (ii) in respect of Securities held of record by Holders other
than the Depositary or its nominee in same day funds at the office or agency of
the Company maintained for such purpose pursuant to Section 1002; provided,
however, that at the option of the Company payment of interest to Holders of
record other than the Depositary may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register.
The Securities shall be subject to the transfer restrictions
set forth in Section 305.
The Securities shall be redeemable as provided in Article
Eleven.
The Securities shall be subordinated in right of payment to
Senior Indebtedness as provided in Article Twelve.
The Securities shall be convertible as provided in Article
Thirteen.
The Securities shall be subject to repurchase at the option
of the Holder as provided in Article Fourteen.
31
<PAGE> 41
Section 302. Denominations.
The Securities shall be issuable only in fully registered
form without coupons and only in denominations of $1,000 and any integral
multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its President or one of
its Vice Presidents, under its corporate seal or a facsimile thereof reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall either at one time or from time to time pursuant
to such instructions as may be described therein authenticate and deliver such
Securities as in this Indenture provided and not otherwise. Such Company Order
shall specify the amount of Securities to be authenticated and the date on which
the original issue of Securities is to be authenticated, and shall certify that
all conditions precedent to the issuance of such Securities contained in this
Indenture have been complied with. The aggregate principal amount of Securities
Outstanding at any time may not exceed the amount set forth above except as
provided in Section 306.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein duly executed by the Trustee by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of the Indenture. The Trustee may appoint an Authenticating Agent
pursuant to the terms of Section 614.
Section 304. Temporary Securities.
Pending the preparation of Definitive Securities, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver,
32
<PAGE> 42
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the Definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities. Every such temporary Security shall be executed by
the Company and shall be authenticated and delivered by the Trustee upon the
same conditions and in substantially the same manner, and with the same effect,
as the Definitive Security or Securities in lieu of which it is issued.
Not including Global Securities, if temporary Securities are
issued, the Company will cause Definitive Securities to be prepared without
unreasonable delay. After the preparation of Definitive Securities, the
temporary Securities shall be exchangeable for Definitive Securities upon
surrender of the temporary Securities at any office or agency of the Company
designated pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor one or more Definitive Securities of a like principal amount of
authorized denominations. Until so exchanged the temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as Definitive
Securities.
Section 305. Registration, Registration of Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained in such office
and in any other office or agency designated pursuant to Section 1002 being
herein sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided. At all reasonable
times the Security Register shall be open for inspection by the Company.
The Company initially appoints The Depository Trust Company
("DTC") to act as depositary (the "Depositary") with respect to the Global
Security(ies).
The Company initially appoints the Trustee to act as
Securities Custodian with respect to the Global Security(ies).
(b) With respect to the transfer and exchange of Definitive
Securities, when Definitive Securities are presented to the Security Registrar
with the request (x) to register the transfer of the Definitive Securities or
(y) to exchange such Definitive Securities for an equal principal amount of
Definitive Securities of other authorized denominations, the Security Registrar
shall register the transfer or make the exchange as requested if its
requirements for such transactions are met; provided,
33
<PAGE> 43
however, that the Definitive Securities presented or surrendered for register of
transfer or exchange:
(i) shall be duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to
the Security Registrar duly executed by the Holder thereof
or by its attorney, duly authorized in writing; and
(ii) shall, in the case of Transfer Restricted
Securities that are Definitive Securities, be accompanied by
the following additional information and documents, as
applicable:
(A) if such Transfer Restricted Security is
being delivered to the Security 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 A hereto); or
(B) if such Transfer Restricted Security is
being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act) in reliance on Rule 144A under the
Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or
Regulation S under the Securities Act or pursuant
to an effective registration statement under the
Securities Act, a certification to that effect (in
substantially the form of Exhibit A hereto) and, in
the case of a transfer in accordance with Rule
144A, Rule 144 or Regulation S under the Securities
Act, an Opinion of Counsel reasonably acceptable to
the Company to the effect that such transfer is in
compliance with the Securities Act; or
(C) if such Transfer Restricted 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 A hereto) and an
Opinion of Counsel reasonably acceptable to the
Company to the effect that such transfer is in
compliance with the Securities Act.
(c) The following restrictions apply to any transfer of a
Definitive Security for a beneficial interest in a 144A Global Security. A
Definitive Security may not be exchanged for a beneficial interest in a 144A
Global Security except until and upon satisfaction of the requirements set forth
below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Trustee, together with:
34
<PAGE> 44
(i) if such Definitive Security is a Transfer
Restricted Security, certification, substantially in the
form of Exhibit A hereto, that such Definitive Security is
being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in accordance
with Rule 144A and an Opinion of Counsel reasonably
acceptable to the Company to the effect that such transfer
is in compliance with the Securities Act; and
(ii) whether or not such Definitive Security
is a Transfer Restricted Security, written instructions
directing the Trustee to make, or to direct the Securities
Custodian to make, an endorsement on the 144A Global
Security to reflect an increase in the aggregate principal
amount of the Securities represented by the 144A Global
Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the 144A Global Security
to be increased accordingly. If no 144A Global Securities are then outstanding,
the Company shall execute and, upon receipt of an authentication order in the
form of a Company Order in accordance with Section 303, the Trustee shall
authenticate a new 144A Global Security in the appropriate principal amount.
(d) The following restrictions apply to any transfer of a
Definitive Security for a beneficial interest in a Regulation S Global Security.
A Definitive Security may not be exchanged for a beneficial interest in a
Regulation S Global Security except until and upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer
Restricted Security, certification, substantially in the
form of Exhibit A hereto, that such Definitive Security is
being transferred in accordance with Regulation S and an
Opinion of Counsel reasonably acceptable to the Company to
the effect that such transfer is in compliance with the
Securities Act; and
(ii) whether or not such Definitive Security
is a Transfer Restricted Security, written instructions
directing the Trustee to make, or to direct the Securities
Custodian to make, an endorsement on the Regulation S Global
Security to reflect an increase in the aggregate principal
amount of the Securities represented by the Regulation S
Global Security,
35
<PAGE> 45
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Regulation S Global
Security to be increased accordingly. If no Regulation S Global Securities are
then outstanding, the Company shall execute and, upon receipt of an
authentication order in the form of a Company Order in accordance with Section
303, the Trustee shall authenticate a new Regulation S Global Security in the
appropriate principal amount.
(e) 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.
(f) With respect to the transfer of a beneficial interest in
a 144A Global Security or a Regulation S Global Security for a Definitive
Security:
(i) Any person having a beneficial interest
in a 144A Global Security or a Regulation S Global Security
may upon request exchange such beneficial interest for a
Definitive Security. Upon receipt by the Trustee of written
instructions or such other form of instructions as is
customary for the Depositary or its nominee on behalf of any
person having a beneficial interest in a 144A Global
Security or a Regulation S Global Security constituting a
Transfer Restricted Security only, and receipt by the
Trustee of the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the person designated by the
Depositary as being the beneficial owner, a
certification from such person to that effect (in
substantially the form of Exhibit A 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 or Regulation S under
the Securities Act or pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from the transferor
(in substantially the form of Exhibit A hereto)
and, in the case of a transfer in accordance with
Rule 144A, Rule 144 or Regulation S under the
Securities Act, an Opinion of Counsel reasonably
acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act;
or
36
<PAGE> 46
(C) 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 from the
transferee or transferor (in substantially the form
of Exhibit A hereto) and an Opinion of Counsel from
the transferee or transferor reasonably acceptable
to the Company to the effect that such transfer is
in compliance with the Securities Act,
then the Trustee or the Securities Custodian, at the
direction of the Trustee, will cause, in accordance with the
standing instructions and procedures existing between the
Depositary and the Securities Custodian, the aggregate
principal amount of the Global Security to be reduced and,
following such reduction, the Company will execute and, upon
receipt of an authentication order in the form of a Company
Order in accordance with Section 303, the Trustee will
authenticate and deliver to the transferee a Definitive
Security.
(ii) Definitive Securities issued in exchange
for a beneficial interest in a 144A Global Security or a
Regulation S Global Security pursuant to this Section 305
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 the Trustee. The Trustee shall deliver such
Definitive Securities to the persons in whose names such
Securities are so registered.
(g) With respect to the transfer of a beneficial interest in
a Regulation S Global Security for a beneficial interest in a 144A Global
Security, any person having a beneficial interest in a Regulation S Global
Security may upon request exchange such beneficial interest for an interest in a
144A Global Security. Upon receipt by the Trustee of written instructions or
such other form of instructions as is customary for the Depositary or its
nominee on behalf of any person having a beneficial interest in a Regulation S
Global Security constituting a Transfer Restricted Security only, and receipt by
the Trustee of the following additional information and documents (all of which
may be submitted by facsimile):
(i) instructions given in accordance with the
procedures of Euroclear or Cedel, the Depositary and the
Securities Custodian, as the case may be, from or on behalf
of a beneficial owner of an interest in the Regulations S
Global Security directing the Trustee, as transfer agent, to
credit or cause to be credited a beneficial interest in the
144A Global Security in an amount equal to the beneficial
interest in the Regulation S Global Security to be exchanged
or transferred,
37
<PAGE> 47
(ii) a written order given in accordance with the
procedures of Euroclear or Cedel, the Depositary and the
Securities Custodian, as the case may be, containing
information regarding the account with the Depositary to be
credited with such increase and the name of such account,
and
(iii) a certification from the transferor (in
substantially the form of Exhibit A hereto) to the effect
that 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 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 Trustee, as transfer agent, shall promptly deliver appropriate
instructions to the Depositary, its nominee, or the custodian for the
Depositary, as the case may be, to reduce or reflect on its records a reduction
of the Regulation S Global Security by the aggregate principal amount of the
beneficial interest in such Regulation S Global Security to be exchanged or
transferred, and the Trustee, as transfer agent, shall promptly deliver
appropriate instructions to the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, concurrently with such reduction, increase
or reflect on its records an increase of the principal amount of the 144A Global
Security by the aggregate principal amount of the beneficial interest in the
Regulation S Global Security to be so exchanged or transferred, and to credit or
cause to be credited to the account of the person specified in such instructions
a beneficial interest in the 144A Global Security equal to the reduction in the
principal amount of the Regulation S Global Security.
(h) With respect to the transfer of a beneficial interest in
a 144A Global Security for a beneficial interest in a Regulation S Global
Security, any person having a beneficial interest in a 144A Global Security may
upon request exchange such beneficial interest for an interest in a Regulation S
Global Security. Upon receipt by the Trustee of written instructions or such
other form of instructions as is customary for the Depositary or its nominee on
behalf of any person having a beneficial interest in a 144A Global Security
constituting a Transfer Restricted Security only, and receipt by the Trustee of
the following additional information and documents (all of which may be
submitted by facsimile):
(i) instructions given in accordance with the
procedures of the Depositary and the Securities Custodian,
as the case may be, from or on behalf of a holder of a
beneficial interest in the 144A Global Security, directing
the Trustee, as transfer agent, to credit or cause to be
credited a beneficial interest in the Regulation S Global
Security in an amount equal to the beneficial interest in
the 144A Global Security to be exchanged or transferred,
38
<PAGE> 48
(ii) a written order given in accordance with the
procedures of the Depositary and the Securities Custodian,
as the case may be, containing information regarding the
Euroclear or Cedel account to be credited with such increase
and the name of such account, and
(iii) a certification from the transferor (in
substantially the form of Exhibit A hereto) to the effect
that such beneficial interest is being transferred in
accordance with Regulation S 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 Trustee, as transfer agent, shall promptly deliver appropriate
instructions to the Depositary, its nominee, or the custodian for the
Depositary, as the case may be, to reduce or reflect on its records a reduction
of the 144A Global Security by the aggregate principal amount of the beneficial
interest in such 144A Global Security to be so exchanged or transferred from the
relevant participant, and the Trustee, as transfer agent, shall promptly deliver
appropriate instructions to the Depositary, its nominee, or the custodian for
the Depositary, as the case may be, concurrently with such reduction, to
increase or reflect on its records an increase of the principal amount of such
Regulation S Global Security by the aggregate principal amount of the beneficial
interest in such 144A Global Security to be so exchanged or transferred, and to
credit or cause to be credited to the account of the person specified in such
instructions (who shall be Morgan Guaranty Trust Company of New York, Brussels
office, as operator of Euroclear or Cedel or another agent member of Euroclear
or Cedel, or both, as the case may be, acting for and on behalf of them) a
beneficial interest in such Regulation S Global Security equal to the reduction
in the principal amount of such 144A Global Security.
(i) Notwithstanding any other provisions of this Indenture
(other than the provisions set forth in subsection (j) of this Section 305), 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.
(j) The following relates to the authentication of
Definitive Securities in absence of the Depositary. If at any time: (i) the
Depositary for the Securities notifies the Company that the Depositary is
unwilling or unable to continue as Depositary for the Global Securities and a
successor Depositary for the Global Securities is not appointed by the Company
within 90 days after delivery of such notice; or (ii) the Company, at its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of Definitive Securities under this Indenture, then the Company will execute,
and the Trustee, upon receipt of a Company Order in accordance with Section 303
requesting the authentication and delivery of Definitive Securities, will
authenticate and deliver Definitive Securities in an aggregate principal amount
equal to the principal amount of the Global Securities, in exchange for such
Global Securities.
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(k) (i) Except as permitted by the following paragraph (ii),
each Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS
(A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON WHO IS OR WHO THE HOLDER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT IS
AN INSTITUTIONAL INVESTOR AND THAT PRIOR TO SUCH TRANSFER FURNISHES TO THE
TRUSTEE A SIGNED LETTER, IN THE FORM OF EXHIBIT B TO THE INDENTURE,
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY, (E) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (F) PURSUANT
TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C), (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO
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EACH OF THEM, AND IN EACH OF THE FOREGOING CASES PROVIDED THAT A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND SUBJECT TO ANY APPLICABLE
STATE SECURITIES LAWS. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE.
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer Restricted
Security represented by a Global Security) pursuant to Rule
144 under the Securities Act or an effective registration
statement under the Securities Act (including the Shelf
Registration Statement) or on or after the Resale
Restriction Termination Date:
(A) in the case of any Transfer Restricted
Security that is a Definitive Security, the
Security Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Security for a
Definitive Security that does not bear the legend
set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security;
provided, however, that with respect to a transfer
made in reliance upon Rule 144 or an effective
registration statement, the Holders thereof shall
certify in writing to the Security Registrar that
such request is being made pursuant to Rule 144 or
an effective registration statement (such
Certification to be substantially in the form of
Exhibit A hereto) and, in the case of a transfer
made in reliance upon Rule 144, shall be
accompanied by an Opinion of Counsel reasonably
acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act;
and
(B) any such Transfer Restricted Security
represented by a Global Security shall not be
subject to the provisions set forth in (i) above
(such sales or transfers being subject only to the
provisions of Section 305(e) hereof); provided,
however, that with respect to any request for an
exchange of a Transfer Restricted Security that is
represented by a Global Security for a Definitive
Security that does not bear a legend, which request
is made in reliance upon Rule 144 or an effective
registration statement, the Holder thereof shall
certify in writing to the Security Registrar that
such request is being made pursuant to Rule 144 or
an effective registration statement (such
certification to be substantially in the form of
Exhibit A hereto) and, in the case of a transfer
made in reliance upon Rule 144, shall be
accompanied by an Opinion of Counsel reasonably
acceptable
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to the Company to the effect that such transfer is
in compliance with the Securities Act.
(l) At such time as all beneficial interests in a Global
Security have either been exchanged for Definitive Securities, redeemed,
repurchased or cancelled, such Global Security shall be returned to or retained
and cancelled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Security is exchanged for Definitive Securities,
redeemed, repurchased or cancelled, the principal amount of Securities
represented by such Global Security shall be reduced and an endorsement shall be
made on such Global Security, by the Trustee or the Securities Custodian, at the
direction of the Trustee, to reflect such reduction.
(m) All Definitive Securities and Global Securities issued
upon any registration of transfer or exchange of Definitive Securities or Global
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Securities or Global Securities surrendered upon such registration of transfer
or exchange.
(n) To the extent requested by the Trustee, all Securities
the transfer, exchange and/or registration of which is effectuated pursuant to
this Section 305 shall be accompanied by an Officers' Certificate of the
Company, certifying that such transfer, exchange and/or registration is
authorized by the Company and permitted hereunder.
To permit registrations of transfer and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive Securities
and Global Securities at the Security Registrar's request.
No service charge to a Holder shall be made for any
registration of transfer or exchange of Securities except as provided in Section
306. The Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 304, 906, 1108 or 1302 not involving any transfer.
The Company or the Security Registrar shall not be required
(i) to issue, register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of Securities selected for redemption under Section 1104
and ending at the close of business on the day of such mailing, (ii) to register
the transfer of or exchange any Definitive Security or beneficial interest in
any Global Security so selected for redemption in whole or in part, except the
unredeemed portion of any Definitive Security being redeemed in part or (iii) to
register the transfer of or exchange of any Definitive Security or beneficial
interest in any Global Security surrendered for conversion pursuant to Article
Thirteen or repurchase pursuant to Article Fourteen.
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Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding. The Trustee may charge the Company for the
Trustee's expenses in replacing such Security.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest. Payment of interest will be made (i) in respect of Securities held by
the Depositary or its nominee, in same day funds on or prior to the Interest
Payment Dates with respect to such amounts and (ii) in respect of Securities
held of record by Holders other than the Depositary
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or its nominee, at the office or agency of the Trustee in New York, New York or
in Charlotte, North Carolina or at such other office or agency of the Company as
it shall maintain for that purpose pursuant to Section 1002, provided, however,
that, at the option of the Company, interest on any Security held of record by
Holders other than the Depositary or its nominee may be paid by mailing checks
to the addresses of the Holders thereof as such addresses appear in the
Securities Register.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest which shall be fixed
in the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first class with postage
prepaid, to each Holder at his address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause, such
manner of payment shall be deemed practicable by the Trustee.
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Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
In the case of any Security which is converted after any
Regular Record Date and on or prior to the next succeeding Interest Payment Date
(other than any Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date provided,
however, that Securities so surrendered for conversion shall (except in the case
of Securities or portions thereof called for redemption) be accompanied by
payment in funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount being surrendered
for conversion. Except as otherwise expressly provided in the immediately
preceding sentence, in the case of any Security which is converted, interest
whose Stated Maturity is after the date of conversion of such Security shall not
be payable.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and premium,
if any, and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer, exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be destroyed by the Trustee, unless
otherwise directed by a Company Order.
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Section 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of
a 360-day year of twelve 30-day months.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect (except as expressly provided for in this Article Four), and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 306 and (ii) Securities for
whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to
the Trustee for cancellation; or
(B) all such Securities not theretofore delivered
to the Trustee for cancellation
(i) will become due and payable at their
Stated Maturity within one year, or
(ii) 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, or
(iii) are delivered to the Trustee for
Conversion in accordance with Article Thirteen,
and the Company, in the case of (i), (ii) or (iii) above,
has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount in
cash sufficient (without consideration of any investment of
such cash) to pay and discharge the entire indebtedness on
such Securities not theretofore delivered
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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 to
the Stated Maturity or Redemption Date, as the case may be;
provided that the Trustee shall have been irrevocably
instructed to apply such amount to said payments with
respect to the Securities;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) 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.
Notwithstanding the satisfaction and discharge of this
Indenture, the following rights or obligations under the Securities and this
Indenture shall survive until otherwise terminated or discharged hereunder: (a)
Article Thirteen, Article Fourteen and the Company's obligations under Sections
304, 305, 306, 1002 and 1003, in each case with respect to any Securities
described in subclause (B) of Clause (1) of this Section, (b) this Article Four,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder,
including the obligations of the Company to the Trustee under Section 607, and
the obligations of the Trustee to any Authenticating Agent under Section 614 and
(d) if money shall have been deposited with the Trustee pursuant to subclause
(B) of Clause (1) of this Section, the rights of Holders of any Securities
described in subclause (B) of Clause (1) of this Section to receive, solely from
the trust fund described in such subclause (B), payments in respect of the
principal of, and premium (if any) and interest on, such Securities when such
payment are due.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003 and Section 506, all money deposited with the Trustee pursuant to Section
401 shall be held in trust and applied by it, in accordance with the provisions
of the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal and
premium, if any, and interest for whose payment such money has been deposited
with the Trustee. All moneys deposited with the Trustee pursuant to Section 401
(and held by it or any Paying Agent) for the payment of Securities subsequently
converted shall be returned to the Company upon Company Request.
Section 403. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any
money in accordance with this Article Four by reason of any order or judgment of
any court
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or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Four until such time as the Trustee or Paying Agent is
permitted to apply all money held in trust with respect to the Securities;
provided, however, that if the Company makes any payment of principal of or any
premium or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of the
Securities to receive such payment from the money so held in trust.
ARTICLE FIVE
Remedies
Section 501. Events of Default.
"Event of Default," wherever used herein, means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be occasioned by the provisions of Article Twelve or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body);
(1) default in the payment of the principal of or premium,
if any, on any Security at its Maturity, whether or not such payment
is prohibited by the provisions of Article Twelve; or
(2) default in the payment of any interest upon any Security
when it becomes due and payable, whether or not such payment is
prohibited by the provisions of Article Twelve, and continuance of
such default for a period of 30 days; or
(3) failure to provide timely notice of a Repurchase Event
as required in accordance with the provisions of Article Fourteen; or
(4) default in the payment of the Repurchase Price in
respect of any Security on the Repurchase Date therefor in accordance
with the provisions of Article Fourteen, whether or not such payment
is prohibited by the provisions of Article Twelve; or
(5) default in the performance of any covenant of the
Company in this Indenture (other than a covenant or warranty a default
in whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach
for a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default or
breach
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and requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(6) default under one or more bonds, debentures, notes or
other evidences of indebtedness for money borrowed by the Company or
any Subsidiary or under one or more mortgages, indentures or
instruments under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the
Company or any Subsidiary, whether such indebtedness now exists or
shall hereafter be created, which default individually or in the
aggregate shall constitute a failure to pay the principal of
indebtedness in excess of $7,500,000 when due and payable after the
expiration of any applicable grace period with respect thereto or
shall have resulted in indebtedness in excess of $7,500,000 becoming
or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness
having been discharged, or such acceleration having been rescinded or
annulled, within a period of 30 days after there shall have been
given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice
specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of
Default" hereunder; or
(7) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company or any
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company or any
Subsidiary a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Subsidiary under
any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part
of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of
90 consecutive days; or
(8) the commencement by the Company or any Subsidiary of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company or any Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable Federal or State law, or the consent by
it to the filing of such petition or to the
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appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Subsidiary or of any substantial part of its
property, or the making by it of a general assignment for the benefit
of creditors, or the admission by it in writing of its inability to
pay its debts generally as they become due, or the taking of corporate
action by the Company or any Subsidiary in furtherance of any such
action.
Upon receipt by the Trustee of any Notice of Default
pursuant to this Section 501, a record date shall automatically and without any
other action by any Person be set for the purpose of determining the Holders of
Outstanding Securities entitled to join in such Notice of Default, which record
date shall be the close of business on the day the Trustee receives such Notice
of Default. The Holders of Outstanding Securities on such record date (or their
duly appointed agents), and only such Persons, shall be entitled to join in such
Notice of Default, whether or not such Holders remain Holders after such record
date: provided, that unless such Notice of Default shall have become effective
by virtue of the Holders of the requisite principal amount of Outstanding
Securities on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such record date, such Notice of
Default shall automatically and without any action by any Person be canceled and
of no further force or effect.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than as specified in
subparagraph (7) or (8) of Section 501) occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities may declare the principal of all the
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal plus any interest accrued on the securities to the date of
declaration shall become immediately due and payable. If an Event of Default
specified in subparagraph (7) or (8) of Section 501 occurs and is continuing,
then the principal of, premium, if any, and accrued and unpaid interest, if any,
on all of the Securities shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder of Securities.
At any time after such a declaration of acceleration has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in principal amount of the Outstanding Securities, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
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(A) all overdue interest on all Securities,
(B) the principal of and premium, if any, on any
Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities, and
(D) all sums paid or advanced by the Trustee and
each predecessor Trustee, their respective agents and
counsel hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and each
predecessor Trustee, their respective agents and counsel;
and
(2) all Events of Default, other than the nonpayment of the
principal of, premium, if any, and interest on the Securities that has
become due solely by such declaration of acceleration, have been cured
or waived as provided in Section 513.
No such rescission and waiver shall affect any subsequent default or impair any
right consequent thereon.
Upon receipt by the Trustee of any declaration of
acceleration, or any rescission and annulment of any such declaration, pursuant
to this Section 502, a record date shall automatically and without any other
action by any Person be set for the purpose of determining the Holders of
Outstanding Securities entitled to join in such declaration, or rescission and
annulment, as the case may be, which record date shall be the close of business
on the day the Trustee receives such declaration, or rescission and annulment,
as the case may be. The Holders of Outstanding Securities on such record date
(or their duly appointed agents), and only such Persons, shall be entitled to
join in such declaration, or rescission and annulment, as the case may be,
whether or not such Holders remain Holders after such record date; provided,
that unless such declaration, or rescission and annulment, as the case may be,
shall have become effective by virtue of Holders of the requisite principal
amount of Outstanding Securities on such record date (or their duly appointed
agents) having joined therein on or prior to the 90th day after such record
date, such declaration, or rescission and annulment, as the case may be, shall
automatically and without any action by any Person be canceled and of no further
force or effect.
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Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of or
premium, if any, on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and premium, if any, and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal and premium, if any, and on any overdue interest, at the rate
borne by the Securities, and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee and
each predecessor Trustee, their respective agents and counsel, and any other
amounts due the Trustee or any predecessor Trustee under Section 607.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and unpaid
and may prosecute any such proceeding to judgment or final decree, and may
enforce the same against the Company (or any other obligor upon the Securities)
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company (or any other obligor upon the
Securities), wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company
(or any other obligor upon the Securities), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have the claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any
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custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it and each predecessor Trustee for the reasonable
compensation, expenses, disbursements and advances of the Trustee and each
predecessor Trustee and their respective agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding;
provided, however, that the Trustee may, on behalf of the Holders, vote for the
election of a trustee in bankruptcy or similar official and may be a member of
the Creditors' Committee.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee and each predecessor Trustee and their
respective agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
or premium, if any, or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid
for principal of and premium, if any, and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and premium, if
any, and interest, respectively; and
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THIRD: The balance, if any, to the Company or any other
Person or Persons determined to be entitled thereto upon provision of an
Officer's Certificate or other evidence reasonably satisfactory to the
Trustee by the Company or such other person verifying such entitlement.
Section 507. Limitation on Suits.
No Holder of any Security shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity satisfactory to it against the costs, expenses
and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest and to Convert.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and premium, if any, and
(subject to Section 307) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date or, in the case of a repurchase pursuant to Article Fourteen, on
the Repurchase Date) and to convert such Security in accordance with Article
Thirteen and to institute suit for the enforcement of any
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such payment and right to convert, and such rights shall not be impaired without
the consent of such Holder.
Section 509. 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 such 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.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee; provided, that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture; and
(2) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction; and
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(3) subject to the provisions of Section 601, the Trustee
shall have the right to decline to follow any such direction if the
Trustee in good faith shall determine that the action so directed
would involve the Trustee in personal liability or would be unduly
prejudicial to Holders not joining in such direction.
Upon receipt by the Trustee of any such direction, a record
date shall automatically and without any other action by any Person be set for
the purpose of determining the Holders of Outstanding Securities entitled to
join in such direction, which record date shall be the close of business on the
day the Trustee receives such direction. The Holders of Outstanding Securities
on such record date (or their duly appointed agents), and only such Persons,
shall be entitled to join in such direction, whether or not such Holders remain
Holders after such record date; provided, that unless such direction shall have
become effective by virtue of Holders of the requisite principal amount of
Outstanding Securities on such record date (or their duly appointed agents)
having joined therein on or prior to the 90th day after such record date, such
direction shall automatically and without any action by any Person be canceled
and of no further force or effect.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount
of the Outstanding Securities may on behalf of the Holders of all the Securities
waive any past default hereunder and its consequences, except a default
(1) in the payment of the principal of or premium, if any,
or interest on any Security, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514. 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,
suffered or omitted by it as Trustee, a court may require any party litigant in
such suit to file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent provided
in the Trust Indenture Act; provided, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company,
in any suit instituted by the Trustee, a suit by
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a Holder pursuant to Section 508, or a suit by a Holder or Holders of more than
10% in principal amount of the outstanding Securities.
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by this Indenture and the Trust Indenture Act for securities issued
pursuant to indentures qualified thereunder. Except as otherwise provided
herein, notwithstanding the foregoing, no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability or risk in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
satisfactory to it against such risk or liability is not reasonably assured to
it. Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
The Trustee shall not be liable (x) for any error of judgment made in good faith
by a Responsible Officer or Responsible Officers of the Trustee, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent facts or
(y) with respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding relating to
the time, method and place of conducting any proceeding or any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture. Prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may have occurred: (i) the
duties and obligations of the Trustee shall be determined solely by the express
provisions of this Indenture and in the Trust Indenture Act, and the Trustee
shall not be liable except for the performance of such duties and obligations as
are specifically set forth in this Indenture and in the Trust Indenture Act, and
no implied covenants or obligations shall be read in to this Indenture against
the Trustee; and (ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions therein, upon any statements, certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture and believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties; but in the case of any such
statements, certificates or options which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform on their
face to the requirements of this Indenture. If a default or an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree
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of care and skill in its exercise thereof as a prudent person would exercise or
use under the circumstances in the conduct of his own affairs.
Section 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default
hereunder of which it has actual knowledge as and to the extent provided by the
Trust Indenture Act; provided, however, that in the case of any default of the
character specified in Section 501(5), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For purposes of this
Indenture, the Trustee shall not be deemed to have knowledge of any default
other than in the payment of principal of, or interest or liquidated damages, if
any, on the Securities, unless the Trustee has received actual notice thereof
while the Trustee is serving as Paying Agent. For the purpose of this Section,
the term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may conclusively rely and shall be protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely conclusively upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
satisfactory to it against the costs,
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expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) before the Trustee acts or refrains from acting with
respect to any matter contemplated by this Indenture, it may require an
Officers' Certificate or an Opinion of Counsel, which shall conform to the
provisions of Section 102, and the Trustee shall be protected and shall not
be liable for any action it takes or omits to take in good faith in reliance
on such certificate or opinion;
(g) the Trustee shall not be required to give any bond
or surety in respect of the performance of its power and duties hereunder;
(h) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(i) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.
Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except
the Trustee's certificate of authentication, shall be taken as the statements of
the Company, and the Trustee and any Authenticating Agent assume no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. The Trustee
and any Authenticating Agent shall not be accountable for the use or application
by the Company of Securities or the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
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Section 606. Money Held in Trust.
Money held by the Trustee or any Paying Agent in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee or any Paying Agent shall be under no liability for interest
on any money received by it hereunder except as otherwise agreed with the
Company.
Section 607. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (including its
services as Security Registrar or Paying Agent, if so appointed by the
Company) as may be mutually agreed upon in writing by the Company and the
Trustee (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on
behalf of it in connection with the performance of its duties under any
provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel and all other persons
not regularly in its employ) except to the extent any such expense,
disbursement or advance may be attributable to its negligence or bad faith;
and
(3) to indemnify the Trustee and each predecessor Trustee
(each an "indemnitee") for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of
this Indenture or the trusts hereunder and its duties hereunder (including
its services as Security Registrar or Paying Agent, if so appointed by the
Company), including enforcement of this Section 607 and including the costs
and expenses of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder. The Company shall defend any claim or threatened
claim asserted against an indemnitee for which it may seek indemnity, and
the indemnitee shall cooperate in the defense unless, in the reasonable
opinion of the indemnitee's counsel, the indemnitee has an interest adverse
to the Issuer or a potential conflict of interest exists between the
indemnitee and the Company, in which case the indemnitee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel.
As security for the performance of the obligations of the
Company under this Section 607, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of particular
Securities, and the Securities are
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hereby subordinated to such prior lien. The obligations of the Company under
this Section to compensate and indemnify the Trustee and any predecessor Trustee
and to pay or reimburse the Trustee and any predecessor Trustee for expenses,
disbursements and advances, and any other amounts due the Trustee or any
predecessor Trustee under Section 607, shall constitute an additional obligation
hereunder and shall survive the satisfaction and discharge of this Indenture.
When the Trustee or any predecessor Trustee incurs expenses
or renders services in connection with the performance of its obligations
hereunder (including its services as Security Registrar or Paying Agent, if so
appointed by the Company) after an Event of Default specified in Section 501(7)
or (8) occurs, the expenses and the compensation for the services are intended
to constitute expenses of administration under any applicable bankruptcy,
insolvency or other similar federal or state law to the extent provided in
Section 503(b)(5) of Title 11 of the United States Code, as now or hereafter in
effect.
Section 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall
be a Person that (i) is eligible pursuant to the Trust Indenture Act to act as
such, (ii) has (or, in the case of a corporation included in a bank holding
company system, whose related bank holding company has) a combined capital and
surplus of at least $50,000,000 and (iii) has an office where it provides
corporate trust services, or at which it is authorized to receive notices
hereunder, in the Borough of Manhattan, The City of New York, or a designated
agent. If such Person publishes reports of conditions at least annually,
pursuant to law or to the requirements of a Federal or state supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 611.
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(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a successor
Trustee required by Section 611 shall not have been delivered to the resigning
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section
608 after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for the
last six months, or
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request
therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee and such successor Trustee shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 611 become
the successor Trustee and supersede the successor Trustee appointed by the
Company. If no successor Trustee shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security for at least
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six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be subject
to
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the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents
acceptable to and at the expense of the Company which shall be authorized to act
on behalf of the Trustee to authenticate Securities issued upon original issue
and upon exchange, registration of transfer, partial conversion or partial
redemption or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a Person organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any Person into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall
be a party, or any Person succeeding to the corporate agency or corporate trust
business of an Authenticating Agent, shall continue to be an Authenticating
Agent, provided such Person shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail notice of such
appointment by first-class mail, postage
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prepaid, to all Holders as their names and addresses appear in the Security
Register. Any successor Authenticating Agent upon acceptance of its appointment
under this Section shall become vested with all the rights, powers and duties of
its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible to act as such under the provisions of this Section.
Any Authenticating Agent by the acceptance of its
appointment shall be deemed to have represented to the Trustee that it is
eligible for appointment as Authenticating Agent under this Section and to have
agreed with the Trustee that: it will perform and carry out the duties of an
Authenticating Agent as herein set forth, including among other things the
duties to authenticate Securities when presented to it in connection with the
original issuance and with exchanges, registrations of transfer or redemptions
or conversions thereof or pursuant to Section 306; it will keep and maintain,
and furnish to the Trustee from time to time as requested by the Trustee,
appropriate records of all transactions carried out by it as Authenticating
Agent and will furnish the Trustee such other information and reports as the
Trustee may reasonably require; and it will notify the Trustee promptly if it
shall cease to be eligible to act as Authenticating Agent in accordance with the
provisions of this Section. Any Authenticating Agent by the acceptance of its
appointment shall be deemed to have agreed with the Trustee to indemnify the
Trustee against any loss, liability or expense incurred by the Trustee and to
defend any claim asserted against the Trustee by reason of any acts or failures
to act of such Authenticating Agent, but such Authenticating Agent shall have no
liability for any action taken by it in accordance with the specific written
direction of the Trustee.
The Trustee shall not be liable for any act or any failure
of the Authenticating Agent to perform any duty either required herein or
authorized herein to be performed by such person in accordance with this
Indenture.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative certificate of authentication in the following
form:
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This is one of the Securities described in the
within-mentioned Indenture.
FIRST UNION NATIONAL BANK,
As Trustee
By ________________________________
As Authenticating Agent
By _____________________________
Authorized Officer
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the
Trustee
(a) semi-annually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished.
Notwithstanding the foregoing, so long as the Trustee is the Security Registrar,
no such list shall be required to be furnished.
Section 702. Preservation of Information; Communication to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities,
and the corresponding rights and duties of the Trustee, shall be as provided
by the Trust Indenture Act.
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(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any agent of either of them shall be held accountable by
reason of any disclosure of information as to names and addresses of Holders
made pursuant to the Trust Indenture Act or otherwise in accordance with
this Indenture.
Section 703. Reports by Trustee.
(a) Not later than 60 days following each May 15, the
Trustee shall transmit to Holders such reports concerning the Trustee and
its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when the Securities are listed
on any stock exchange.
Section 704. Reports by Company.
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided, that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
Section 705. Rule 144A Information Requirement.
If at any time prior to the Resale Restriction Termination
Date the Company is no longer subject to Section 13 or 15(d) of the Exchange
Act, the Company will furnish to the Holders or beneficial holders of the
Securities and prospective purchasers of the Securities designated by the
Holders of the Securities, upon their request, information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act until the earlier
of (i) the date on which the Securities and the underlying Common Stock are
registered under the Securities Act or (ii) the Resale Restriction Termination
Date.
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any
other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and the Company shall not permit any
Person to consolidate with or merge into the Company or convey, transfer or
lease its properties substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease all or substantially all
of its properties and assets to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, all or
substantially all of the properties and assets of the Company shall be
a corporation, partnership or trust, shall be organized and validly
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of
the principal of and premium, if any, and interest on all the
Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed and
shall have provided for conversion rights in accordance with Section
1311;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing;
(3) such consolidation, merger, acquisition, conveyance,
transfer or lease does not adversely affect the validity or
enforceability of the Securities; and
(4) the Company or the successor Person has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance, transfer or lease
and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of all or
substantially all of the properties and assets of the Company in accordance with
Section 801, the successor Person formed by such consolidation or into which the
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Company is merged or to which such conveyance, transfer or lease is made shall
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
Person had been named as the Company herein, and thereafter, except in the case
of a transfer by lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution and the provisions hereunder, at any time and
from time to time, may enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for any of the following purposes:
(1) to cause this Indenture to be qualified under the Trust
Indenture Act; or
(2) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities; or
(3) to add to the covenants of the Company for the benefit
of the Holders or an additional Event of Default, or to surrender any
right or power conferred herein or in the Securities upon the Company;
or
(4) to secure the Securities; or
(5) to make provision with respect to the conversion rights
of Holders pursuant to the requirements of Section 1311; or
(6) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities; or
(7) to cure any ambiguity, to correct or supplement any
provision herein or in the Securities which may be defective or
inconsistent with any other provision herein or in the Securities, or
to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with the
provisions of this Indenture; provided, that such action pursuant to
this Clause (7) shall not adversely affect the interests of the
Holders in any material respect and the Trustee may rely upon an
opinion of counsel to that effect.
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Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority
in principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or adversely affect the right
to convert any Security as provided in Article Thirteen (except as permitted
by Section 901(5)), or modify the provisions of Article Fourteen, or the
provisions of this Indenture with respect to the subordination of the
Securities, in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section
513 or Section 1006, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided, however, that this Clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1006, or the
deletion of this proviso, in accordance with the requirements of Section
901(6).
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the
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trusts created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 601) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
which adversely affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act.
Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Company, bear a notation in form approved by the Company as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and executed by the
Company and (at the specific direction of the Company) authenticated and
delivered by the Trustee in exchange for Outstanding Securities.
Section 907. Notice of Supplemental Indenture.
Promptly after the execution by the Company and the Trustee
of any supplemental indenture pursuant to Section 902, the Company shall
transmit to the Holders a notice setting forth the substance of such
supplemental indenture.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of
and premium, if any, and interest on the Securities in accordance with the terms
of the Securities and this Indenture.
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Section 1002. Maintenance of Office or Agency.
The Company will maintain in New York, New York an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer, where Securities may
be surrendered for exchange or conversion and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The parties acknowledge the agency of the Trustee in New York as of the date of
this Indenture is a drop office which is not able to process Securities for
payment or for any other purpose, and, for so long as First Union National Bank
is Trustee hereunder, all processing will occur in Charlotte, North Carolina.
The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in New York, New York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
Section 1003. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of and premium, if
any, or interest on any of the Securities, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
and premium, if any, or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents,
it will, on or prior to 11:00 a.m. (New York City time) on each due date of the
principal of and premium, if any, or interest on any Securities, deposit with a
Paying Agent a sum in same day funds sufficient to pay the principal and any
premium and interest so becoming due, such sum to be held as provided by the
Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure so to act.
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The Company will cause each Paying Agent other than the
Trustee or the Company to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (i) comply with the provisions of
the Trust Indenture Act and this Indenture applicable to it as a Paying Agent
and hold all sums held by it for the payment of principal of or any premium or
interest on the Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided; (ii) give the Trustee written notice of any default by the
Company (or any other obligor upon the Securities) in the making of any payment
in respect of the Securities; and (iii) at any time during the continuance of
any default by the Company (or any other obligor upon the Securities) in the
making of any payment in respect of the Securities, upon the written request of
the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities, and account for any funds
disbursed.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
The Trustee shall not be liable for any act or failure to
act of any Paying Agent (other than the Trustee acting in such capacity) to
perform any duty either required herein or authorized herein to be performed by
such person in accordance with this Indenture.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of and
premium, if any, or interest on any Security and remaining unclaimed for two
years after such principal and premium, if any, or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
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Section 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company ending after the date hereof,
an Officers' Certificate stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
Section 1005. Existence.
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises and the existence,
rights (charter and statutory) and franchises of each Subsidiary; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
Section 1006. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply
with any covenant or condition set forth in Section 1005, if before the time for
such compliance the Holders of at least a majority in principal amount of the
Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Right of Redemption.
The Securities may be redeemed at the election of the
Company, in whole or from time to time in part, at any time on or after July 7,
2000, at the Redemption Prices specified in the form of Security hereinbefore
set forth, together with accrued interest, to the Redemption Date.
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Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company as
permitted by any provision of this Indenture shall be made in accordance with
such provision and this Article.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities
pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of
any redemption at the election of the Company of less than all the Securities,
the Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter period shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date and of the principal amount of
Securities to be redeemed. In case of any redemption at the election of the
Company of all of the Securities, the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter period shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date.
Section 1104. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities not
previously called for redemption, by lot, or, in the Trustee's discretion, on a
pro rata basis.
If any Security selected for partial redemption is converted
in part before termination of the conversion right with respect to the portion
of the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to be redeemed shall
be treated by the Trustee as Outstanding for the purpose of such selection. In
any case where more than one Security is registered in the same name, the
Trustee in its discretion may treat the aggregate principal amount so registered
as if it were represented by one Security.
The Trustee shall promptly notify the Company and each
Security Registrar in writing of the Securities selected for redemption and, in
the case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
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Section 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
Redemption Date, to the Trustee and to each Holder of Securities to be redeemed,
at his address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Outstanding Securities are to
be redeemed, the identification (and, in the case of partial redemption of
any Securities, the principal amounts) of the particular Securities to be
redeemed,
(d) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and that
(unless the Company shall default in payment of the Redemption Price)
interest thereon will cease to accrue on and after said date,
(e) the conversion price, the date on which the right to
convert the Securities to be redeemed will terminate and the place or places
where such Securities may be surrendered for conversion, and
(f) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request received by the Trustee at least 30 days prior to the Redemption Date,
by the Trustee in the name and at the expense of the Company.
Section 1106. Deposit of Redemption Price.
At or prior to 9:00 a.m. (New York City time) on any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003) an amount of money in same day funds
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be redeemed on that date other than any Securities
called for redemption on that date which have been converted prior to the date
of such deposit.
If any Security called for redemption is converted, any
money deposited with the Trustee or with any Paying Agent or so segregated and
held in
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trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest to the Redemption Date; provided, however, that installments of
interest whose Maturity is on or prior to the Redemption Date shall be payable
to the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
Section 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company maintained for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered.
ARTICLE TWELVE
Subordination of Securities
Section 1201. Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and agrees, that, at all
times and in all respects, the indebtedness represented by the Securities and
the payment of the principal of and premium, if any, and interest on each and
all of the Securities are
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hereby expressly made subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness.
Section 1202. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding, relative to the Company or to its creditors, as such, or to
a substantial part of its assets, or (b) any proceeding for the liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (c) any general
assignment for the benefits of creditors or any other marshalling of assets and
liabilities of the Company, then and in any such event the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Indebtedness; or provision shall be
made for such payment in money or money's worth, before the Holders of the
Securities are entitled to receive any payment or distribution of any kind or
character, whether in cash, property or securities, on account of principal of
or premium, if any, or interest on the Securities, and to that end the holders
of Senior Indebtedness shall be entitled to receive, for application to the
payment thereof, any payment or distribution of any kind or character, whether
in cash, property or securities, including any such payment or distribution
which may be payable or deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the Securities,
which may be payable or deliverable in respect of the Securities in any such
case, proceeding, dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions
of this Section, the Trustee or the Holder of any Security shall have received
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Indebtedness is paid in full or payment thereof
provided for, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or such Holder, as the case
may be, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "cash, property
or securities" shall not be deemed to include securities of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, which are subordinated
in right of payment to all Senior Indebtedness which may at the time be
outstanding to substantially the
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same extent as, or to a greater extent than, the Securities are so subordinated
as provided in this Article. The consolidation of the Company with, or the
merger of the Company into, another Person or the liquidation or dissolution of
the Company following the conveyance or transfer of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article Eight shall not be deemed a dissolution, winding up,
liquidation, reorganization, general assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Section if the Person formed by such consolidation or into which the Company is
merged or which acquires by conveyance or transfer such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight.
Section 1203. Prior Payment to Senior Indebtedness upon Acceleration of
Securities.
In the event that any Securities are declared due and
payable before their Stated Maturity, then and in such event the holders of
Senior Indebtedness outstanding at the time such Securities so become due and
payable shall be entitled to receive payment in full of all amounts due on or to
become due in respect of such Senior Indebtedness, or provision shall be made
for such payment in money or money's worth, before the Holders of the Securities
are entitled to receive any payment (including any payment which may be payable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities) by the Company on account of the
principal of or premium, if any, or interest on the Securities or on account of
the purchase or other acquisition of Securities.
In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of any Security
prohibited by the foregoing provisions of this Section, and if such fact shall,
at or prior to the time of such payment, have been made known to the Trustee or
such Holder, as the case may be, then and in such event such payment shall be
paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any
payment with respect to which Section 1202 would be applicable.
Section 1204. No Payment When Senior Indebtedness in Default.
(a) In the event and during the continuation of any default
in the payment of principal of or premium, if any, or interest on any Senior
Indebtedness beyond any applicable grace period with respect thereto, or in the
event that any default with respect to any Senior Indebtedness shall have
occurred and be continuing which permits or results in such Senior Indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, or in the event any such default would
occur upon a payment with
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respect to the Securities, unless and until such event of default shall have
been cured or waived or shall have ceased to exist and any acceleration shall
have been rescinded or annulled, or (b) in the event any judicial proceeding
shall be pending with respect to any such default in payment or event of
default, then no payment (including any payment which may be payable by reason
of the payment of any other indebtedness of the Company being subordinated to
the payment of the Securities) shall be made by the Company on account of the
principal of or premium, if any, or interest on the Securities or on account of
the purchase or other acquisition of Securities.
In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of any Security
prohibited by the foregoing provisions of this Section, and if such fact shall,
at or prior to the time of such payment, have been made known to the Trustee or
such Holder, as the case may be, then and in such event such payment shall be
paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any
payment with respect to which Section 1202 would be applicable.
Section 1205. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent (a) the Company, at any time
except during the pendency of any case, proceeding, dissolution, liquidation or
other winding up, general assignment for the benefit of creditors or other
marshalling of assets and liabilities of the Company referred to in Section 1202
or under the conditions described in Section 1203 or 1204, from making payments
at any time of principal of and premium, if any, or interest on the Securities,
or (b) the application by the Trustee of any money deposited with it hereunder
to the payment of or on account of the principal of and premium, if any, or
interest on the Securities or the retention of such payment by the Holders, if,
at the time of such application by the Trustee, it did not have knowledge that
such payment would have been prohibited by the provisions of this Article.
Section 1206. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due on or in
respect of Senior Indebtedness, the Holders of the Securities shall be
subrogated to the extent of the payments or distributions made to the holders of
such Senior Indebtedness pursuant to the provisions of this Article (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to other indebtedness of the Company to substantially the
same extent as the Securities are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of and premium, if any, and Interest on
the Securities shall be paid in full. For purposes of
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such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would otherwise be entitled except for the provisions
of this Article, and no payments over pursuant to the provisions of this Article
to the holders of Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
Section 1207. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely
for the purpose of defining the relative rights of the Holders of the Securities
on the one hand and the holders of Senior Indebtedness on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of and premium, if any,
and interest on the Securities as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of the Securities and creditors of the Company other than
the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
Section 1208. Trustee to Effectuate Subordination.
Each holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee his attorney-in-fact for any and all such
purposes.
Section 1209. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without
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incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
Section 1210. Notice to Trustee.
The Company shall give prompt written notice to the Trustee
of any fact known to the Company which would prohibit the making of any payment
to or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this Article or any other provision of this Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior Indebtedness or from any trustee
therefor; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Section 601, shall be entitled in all respects to
assume that no such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section at least four Business
Days prior to the date upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of and premium, if any, or interest on any Security), then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such money and to apply the same to the purpose
for which such money was received and shall not be affected by any notice to the
contrary which may be received by it within four Business Days prior to such
date.
Subject to the provisions of Section 601, the Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
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Section 1211. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of Section
601, and the Holders of the Securities shall be entitled to rely upon any order
or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other person making such payment or
distribution, delivered to the Trustee or to the Holders of Securities, for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article.
Section 1212. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and shall not be liable to any such holders
if it shall in good faith mistakenly pay over or distribute to Holders of
Securities or to the Company or to any other Person cash, property or securities
to which holders of Senior Indebtedness shall be entitled by virtue of this
Article or otherwise. With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Article against the Trustee.
Section 1213. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607.
Section 1214. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in
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this Article in addition to or in place of the Trustee; provided, however, that
Section 1213 shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as Paying Agent.
Section 1215. Certain Conversions Deemed Payment.
For the purposes of this Article only, (1) the issuance and
delivery of junior securities upon conversion of Securities in accordance with
Article Thirteen shall not be deemed to constitute a payment or distribution on
account of the principal of or premium or interest on Securities or on account
of the purchase or other acquisition of Securities, and (2) the payment,
issuance or delivery of cash, property or securities (other than junior
securities) upon conversion of a Security shall be deemed to constitute payment
on account of the principal of such Security. For the purposes of this Section,
the term "junior securities" means (a) shares of any class of capital stock of
the Company and (b) securities of the Company which are subordinated in right of
payment to all Senior Indebtedness which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Securities are so subordinated as provided in this
Article. Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the right, which is absolute and unconditional, of the Holder of any
Security to convert such Security in accordance with Article Thirteen.
Section 1216. No Suspension of Remedies.
Nothing contained in this Article shall limit the right of
the Trustee or the Holders of the Securities to take any action to accelerate
the maturity of the Securities pursuant to the provisions described under
Article Five and as set forth in this Indenture or to pursue any rights or
remedies hereunder or under applicable law, subject to the rights, if any, under
this Article of the holders, from time to time, of Senior Indebtedness to
receive the cash, property or securities receivable upon the exercise of such
rights or remedies.
ARTICLE THIRTEEN
Conversion of Securities
Section 1301. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this
Article, at the option of the Holder thereof, any Security or any portion of the
principal amount thereof which equals $1,000 or any integral multiple thereof
may be converted at any time prior to redemption or Stated Maturity at the
principal amount thereof, or of such portion thereof, into fully paid and
nonassessable shares (calculated as to each conversion to the nearest 1/100 of a
share) of Common Stock, at the conversion
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price, determined as hereinafter provided, in effect at the time of conversion.
Such conversion right shall expire at the close of business on July 1, 2004. In
case a Security or portion thereof is called for redemption, such conversion
right in respect of the Security or portion so called shall expire at the close
of business on the second business day preceding the applicable Redemption Date,
unless the Company defaults in making the payment due upon redemption. The right
to convert a Security or portion thereof that has been submitted for repurchase
will terminate when such Security or portion thereof has been submitted for
repurchase.
The price at which shares of Common Stock shall be delivered
upon conversion (herein called the "conversion price") shall be initially
$35.625 per share of Common Stock. The conversion price shall be adjusted in
certain instances as provided in paragraphs (a), (b), (c), (d), (e), (f) and (i)
of Section 1304.
Section 1302. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of
any Security shall surrender such Security, duly endorsed or assigned to the
Company or in blank, at any office or agency of the Company maintained pursuant
to Section 1002, accompanied by written notice to the Company in the form
provided in the Security (or such other notice as is acceptable to the Company)
at such office or agency that the Holder elects to convert such Security or, if
less than the entire principal amount thereof is to be converted, the portion
thereof to be converted. Securities surrendered for conversion during the period
from the opening of business on any Regular Record Date next preceding any
Interest Payment Date to the close of business on such Interest Payment Date
shall (except in the case of Securities or portions thereof which have been
called for redemption) be accompanied by payment in funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment Date
on the principal amount being surrendered for conversion. Except as provided in
the immediately preceding sentence and subject to the fourth paragraph of
Section 307, no payment or adjustment shall be made upon any conversion on
account of any interest accrued on the Securities surrendered for conversion or
on account of any dividends on the Common Stock issued upon conversion.
Securities shall be deemed to have been converted
immediately prior to the close of business on the day of surrender of such
Securities for conversion in accordance with the foregoing provisions, and at
such time the rights of the Holders of such Securities as Holders shall cease,
and the Person or Persons entitled to receive the Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock at and after such time. As promptly as practicable on or after
the conversion date, the Company shall issue and shall deliver at such office or
agency a certificate or certificates for the number of full shares of Common
Stock issuable upon conversion, together with payment in lieu of any fraction of
a share, as provided in Section 1303.
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In the case of any Security which is converted in part only,
upon such conversion the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the Company, a
new Security or Securities of authorized denominations in aggregate principal
amount equal to the unconverted portion of the principal amount of such
Security.
Section 1303. Fractions of Shares.
No fractional share of Common Stock shall be issued upon
conversion of Securities. If more than one Security shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall
be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the Closing Price
(as hereinafter defined) at the close of business on the day of conversion (or,
if such day is not a Trading Day (as hereafter defined), on the Trading Day
immediately preceding such day).
Section 1304. Adjustment of Conversion Price.
(a) In case the Company shall pay in shares of Common Stock
a dividend or other distribution on any class of capital stock of the Company,
the conversion price in effect at the opening of business on the day following
the date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purpose of this
paragraph (a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company shall
not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.
(b) Subject to paragraph (g) of this Section, in case the
Company shall pay or make a dividend or other distribution on the Common Stock
consisting exclusively of, or shall otherwise issue to all holders of the Common
Stock, rights or warrants entitling the holders thereof to subscribe for or
purchase shares of Common Stock, or securities convertible into Common Stock, at
a price per share less than the Current Market Price (determined as provided in
paragraph (h) of this Section) on the date fixed for the determination of
shareholders entitled to receive such rights or warrants, the conversion price
in effect at the opening of business on the day following the date fixed for
such determination shall be reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of shares
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of Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the aggregate of
the offering price of the total number of shares of Common Stock, or securities
convertible into Common Stock, so offered for subscription or purchase would
purchase at such Current Market Price and the denominator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock, or the maximum
number of shares of Common Stock into which such securities convertible into
Common Stock could be converted if such securities could be converted
immediately, so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (b), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. The Company shall not issue any
rights or warrants in respect of shares of Common Stock held in the treasury of
the Company.
(c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the conversion price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and,
conversely, in case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the conversion price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which subdivision or combination
becomes effective.
(d) Subject to the last sentence of this paragraph (d) and
to paragraph (g) of this Section, in case the Company shall, by dividend or
otherwise, distribute to all holders of the Common Stock evidences of its
indebtedness, shares of any class of its capital stock, cash or other assets
(including securities, but excluding any rights or warrants referred to in
paragraph (b) of this Section, excluding any dividend or distribution paid
exclusively in cash and excluding any dividend or distribution referred to in
paragraph (a) of this Section), the conversion price shall be reduced by
multiplying the conversion price in effect immediately prior to the close of
business on the date fixed for the determination of shareholders entitled to
such distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in paragraph (h) of this Section) on such
date less the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) on such
date of the portion of the evidences of indebtedness, shares of capital stock,
cash and other assets to be distributed applicable to one share of Common Stock
and the denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following such
date. If the Board of Directors determines the fair market value of any
distribution for purposes of this paragraph (d) by reference to the actual or
when-issued trading market for any securities comprising part or all of such
distribution, it must in doing so consider
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the prices in such market over the same period used in computing the Current
Market Price pursuant to paragraph (h) of this Section, to the extent possible.
For purposes of this paragraph (d), any dividend or distribution that includes
shares of Common Stock, rights or warrants to subscribe for or purchase shares
of Common Stock or securities convertible into or exchangeable for shares of
Common Stock shall be deemed to be (x) a dividend or distribution of the
evidences of indebtedness, cash, assets or shares of capital stock other than
such shares of Common Stock, such rights or warrants or such convertible or
exchangeable securities (making any conversion price reduction required by this
paragraph (d)) immediately followed by (y) in the case of such shares of Common
Stock or such rights or warrants, a dividend or distribution thereof (making any
further conversion price reduction required by paragraph (a) and (b) of this
Section, except any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of paragraph (a) of this
Section), or (z) in the case of such convertible or exchangeable securities, a
dividend or distribution of the number of shares of Common Stock as would then
be issuable upon the conversion or exchange thereof, whether or not the
conversion or exchange of such securities is subject to any conditions (making
any further conversion price reduction required by paragraph (a) of this
Section, except the shares deemed to constitute such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of paragraph (a) of this Section).
(e) In case the Company shall, by dividend or otherwise, at
any time distribute to all holders of the Common Stock cash (excluding any cash
that is distributed as part of a distribution referred to in paragraph (d) of
this Section or in connection with a transaction to which Section 1311 applies)
in an aggregate amount that, together with (A) the aggregate amount of any other
distributions to all holders of the Common Stock made exclusively in cash within
the 12 months preceding such distribution and in respect of which no conversion
price adjustment pursuant to this paragraph (e) has been made previously and (B)
the aggregate of any cash plus the fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution) as of such date of determination of consideration payable in respect
of any tender offer by the Company or a Subsidiary for all or any portion of the
Common Stock consummated within the 12 months preceding such distribution and in
respect of which no conversion price adjustment pursuant to paragraph (f) of
this Section has been made previously, exceeds 12.5% of the product of the
Current Market Price (determined as provided in paragraph (h) of this Section)
times the number of shares of Common Stock outstanding on the date fixed for
determining the shareholders entitled to such distribution the conversion price
shall be reduced to a conversion price determined by multiplying the conversion
price in effect immediately prior to such date fixed for determining the
shareholders entitled to such distribution by a fraction (i) the numerator of
which shall be the Current Market Price (determined as provided in paragraph (h)
of this Section) immediately prior to such date fixed for determining the
shareholders entitled to such distribution less an amount equal to the quotient
of (x) the excess of such combined amount over such 12.5% and (y) the number of
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shares of Common Stock outstanding on such date and (ii) the denominator of
which shall be such Current Market Price on such date; provided, however, that
in the event the portion of the cash so distributed applicable to one share of
Common Stock is equal to or greater than the Current Market Price of the Common
Stock on such date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Holder shall have the right to receive upon
conversion the amount of cash such Holder would have received had such Holder
converted such Security on such date. In the event that such dividend or
distribution is not so paid or made, the conversion price shall again be
adjusted to be the conversion price which would then be in effect if such
dividend or distribution had not been declared.
(f) In case a tender offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall be consummated and
such tender offer shall involve an aggregate consideration having a fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) as of the last time (the
"Expiration Time") that tenders may be made pursuant to such tender offer (as it
shall have been amended) that, together with (A) the aggregate of the cash plus
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) as of the
Expiration Time of the other consideration paid in respect of any other tender
offer by the Company or a Subsidiary for all or any portion of the Common Stock
consummated within the 12 months preceding the Expiration Time and in respect of
which no conversion price adjustment pursuant to this paragraph (f) has been
made previously and (B) the aggregate amount of any distributions to all holders
of the Common Stock made exclusively in cash within the 12 months preceding the
Expiration Time and in respect of which no conversion price adjustment pursuant
to paragraph (e) of this Section has been made previously, exceeds 12.5% of the
product of the Current Market Price (determined as provided in paragraph (h) of
this Section) immediately prior to the Expiration Time times the number of
shares of Common Stock outstanding (including any tendered shares) at the
Expiration Time, the conversion price shall be reduced by multiplying the
conversion price in effect immediately prior to the Expiration Time by a
fraction of which the numerator shall be (x) the product of the Current Market
Price (determined as provided in paragraph (h) of this Section) immediately
prior to the Expiration Time times the number of shares of Common Stock
outstanding (including any tendered shares at the Expiration Time) minus (y) the
fair market value (determined as aforesaid) of the aggregate consideration
payable to shareholders upon consummation of such tender offer and the
denominator shall be the product of (A) such Current Market Price times (B) such
number of outstanding shares at the Expiration Time minus the number of shares
accepted for payment in such tender offer (the "Purchased Shares"), such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time; provided, that if the number of Purchased
Shares or the aggregate consideration payable therefor have not been finally
determined by such opening of business, the adjustment required by this
paragraph (f) shall, pending such final determination, be made based upon the
preliminarily announced results of such tender offer, and, after such final
determination shall have been made, the
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adjustment required by this paragraph (f) shall be made based upon the number of
Purchased Shares and the aggregate consideration payable therefor as so finally
determined.
(g) The reclassification of Common Stock into securities
which include securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which Section 1311 applies)
shall be deemed to involve (i) a distribution of such securities other than
Common Stock to all holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the determination of
shareholders entitled to such distribution" within the meaning of paragraph (d)
of this Section), and (ii) a subdivision or combination, as the case may be, of
the number of shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective" or "the day
upon which such combination becomes effective," as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of paragraph (c) of this Section).
Rights or warrants issued by the Company to all holders of
the Common Stock entitling the holders thereof to subscribe for or purchase
shares of Common Stock (either initially or under certain circumstances), which
rights or warrants (i) are deemed to be transferred with such shares of Common
Stock, (ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for purposes
of this Section 1304 not be deemed issued until the occurrence of the earliest
Trigger Event. If any such rights or warrants, including any such existing
rights or warrants distributed prior to the date of this Indenture are subject
to subsequent events, upon the occurrence of each of which such rights or
warrants shall become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the occurrence of each such event shall be
deemed to be such date of issuance and record date with respect to new rights or
warrants (and a termination or expiration of the existing rights or warrants
without exercise by the holder thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger
Event with respect thereto, that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Price under this
Section 1304 was made, (1) in the case of any such rights or warrant which shall
all have been redeemed or repurchased without exercise by any holders thereof,
the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Stock with respect to
such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such redemption
or repurchase, and (2) in the case of such rights or warrants which shall have
expired or been terminated without exercise by
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any holders thereof, the Conversion Price shall be readjusted as if such rights
and warrants had not been issued.
Notwithstanding any other provision of this Section 1304 to
the contrary, rights, warrants, evidences of indebtedness, other securities,
cash or other assets (including, without limitation, any rights distributed
pursuant to any stockholder rights plan) shall be deemed not to have been
distributed for purposes of this Section 1304 if the Company makes proper
provision so that each holder of Securities who converts a Security (or any
portion thereof) after the date fixed for determination of stockholders entitled
to receive such distribution shall be entitled to receive upon such conversion,
in addition to the shares of Common Stock issuable upon such conversions, the
amount and kind of such distributions that such holder would have been entitled
to receive if such holder had, immediately prior to such determination date,
converted such Security into Common Stock.
(h) For the purpose of any computation under this paragraph
and paragraphs (b), (d) and (e) of this Section, the current market price per
share of Common Stock (the "Current Market Price") on any date shall be deemed
to be the average of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing not more than 20 Trading Days before, and
ending not later than, the date in question; provided, however, that (i) if the
"ex" date for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the conversion price pursuant to
paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the 20th
Trading Day prior to the date in question and prior to the "ex" date for the
issuance or distribution requiring such computation, the Closing Price for each
Trading Day prior to the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the same fraction by which the conversion
price is so required to be adjusted as a result of such other event, (ii) if the
"ex" date for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the conversion price pursuant to
paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after the "ex" date
for the issuance or distribution requiring such computation and on or prior to
the date in question, the Closing Price for each Trading Day on and after the
"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the reciprocal of the fraction by which the conversion price is so
required to be adjusted as a result of such other event, and (iii) if the "ex"
date for the issuance or distribution requiring such computation is on or prior
to the date in question, after taking into account any adjustment required
pursuant to clause (ii) of this proviso, the Closing Price for each Trading Day
on or after such "ex" date shall be adjusted by adding thereto the amount of any
cash and the fair market value on the date in question (as determined by the
Board of Directors in a manner consistent with any determination of such value
for purposes of paragraph (d) or (e) of this Section, whose determination shall
be conclusive and described in a Board Resolution) of the evidences of
indebtedness, shares of capital stock or assets being distributed applicable to
one share of Common Stock as of the close of business on the day before such
"ex" date. For the purpose of any computation under paragraph (f) of this
Section, the Current Market Price on any date shall be deemed to be the
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average of the daily Closing Prices for the 5 consecutive Trading Days selected
by the Company commencing on or after the latest (the "Commencement Date") of
(i) the date 20 Trading Days before the date in question, (ii) the date of
commencement of the tender offer requiring such computation and (iii) the date
of the last amendment, if any, of such tender offer involving a change in the
maximum number of shares for which tenders are sought or a change in the
consideration offered, and ending not later than the Expiration Time of such
tender offer; provided, however, that if the "ex" date for any event (other than
the tender offer requiring such computation) that requires an adjustment to the
conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f) above
occurs on or after the Commencement Date and prior to the Expiration Time for
the tender offer requiring such computation, the Closing Price for each Trading
Day prior to the "ex" date for such other event shall be adjusted by multiplying
such Closing Price by the same fraction by which the conversion price is so
required to be adjusted as a result of such other event. The closing price for
any Trading Day (the "Closing Price") shall be the last reported sales price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange or, if the Common Stock is not listed or admitted
to trading on such exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on the Nasdaq Stock
Market's National Market or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on such National Market,
the average of the closing bid and asked prices in the over-the-counter market
as furnished by any New York Stock Exchange member firm selected from time to
time by the Company for that purpose. For purposes of this paragraph, the term
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday, other
than any day on which securities are generally not traded on the applicable
securities exchange or in the applicable securities market and the term "'ex'
date," (i) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the relevant exchange
or in the relevant market from which the Closing Prices were obtained without
the right to receive such issuance or distribution, (ii) when used with respect
to any subdivision or combination of shares of Common Stock, means the first
date on which the Common Stock trades regular way on such exchange or in such
market after the time at which such subdivision or combination becomes
effective, and (iii) when used with respect to any tender offer means the first
date on which the Common Stock trades regular way on such exchange or in such
market after the last time that tenders may be made pursuant to such tender
offer (as it shall have been amended).
(i) The Company may make such reductions in the conversion
price, in addition to those required by paragraphs (a), (b), (c), (d), (e) and
(f) of this Section, as it considers to be advisable (as evidenced by a Board
Resolution) in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights shall not be taxable to the recipients or, if
that is not possible, to diminish any income taxes that are otherwise payable
because of such event.
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(j) No adjustment in the conversion price shall be required
unless such adjustment (plus any other adjustments not previously made by reason
of this paragraph (j)) would require an increase or decrease of at least 1% in
the conversion price; provided, however, that any adjustments which by reason of
this paragraph (j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(k) Notwithstanding any other provision of this Section
1304, no adjustment to the conversion price shall reduce the conversion price
below the then par value per share of the Common Stock, and any such purported
adjustment shall instead reduce the conversion price to such par value. The
Company hereby covenants not to take any action to increase the par value per
share of the Common Stock.
Section 1305. Notice of Adjustments of Conversion Price.
Whenever the conversion price is adjusted as herein
provided:
(a) the Company shall compute the adjusted conversion price
in accordance with Section 1304 and shall prepare an Officers' Certificate
signed by the Treasurer of the Company setting forth the adjusted conversion
price and showing in reasonable detail the facts upon which such adjustment
is based, and such certificate shall forthwith be filed (with a copy to the
Trustee) at each office or agency maintained for the purpose of conversion
of Securities pursuant to Section 1002; and
(b) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall forthwith be
prepared, and as soon as practicable after it is prepared, such notice shall
be mailed by the Company to all Holders at their last addresses as they
shall appear in the Security Register.
Section 1306. Notice of Certain Corporate Action.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable (i) otherwise than exclusively in
cash or (ii) exclusively in cash in an amount that would require a
conversion price adjustment pursuant to paragraph (e) of Section 1304; or
(b) the Company shall authorize the granting to the holders
of its Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights (excluding
shares of capital stock or option for capital stock issued pursuant to a
benefit plan for employees, officers or directors of the Company); or
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(c) of any reclassification of the Common Stock (other than
a subdivision or combination of the outstanding shares of Common Stock), or
of any consolidation, merger or share exchange to which the Company is a
party and for which approval of any stockholders of the Company is required,
or of the sale or transfer of all or substantially all of the assets of the
Company; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender
offer for all or a portion of the outstanding shares of Common Stock (or
shall amend any such tender offer to change the maximum number of shares
being sought or the amount or type of consideration being offered therefor);
then the Company shall cause to be filed (with a copy to the Trustee) at each
office or agency maintained pursuant to Section 1002, and shall cause to be
mailed to all Holders at their last addresses as they shall appear in the
Security Register, at least 21 days (or 11 days in any case specified in clause
(a), (b) or (e) above) prior to the applicable record, effective or expiration
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution or granting of rights
or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record who will be entitled to such dividend,
distribution, rights or warrants are to be determined, (y) the date on which
such reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the
date on which such tender offer commenced, the date on which such tender offer
is scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto). Neither
the failure to give any such notice nor any defect therein shall affect the
legality or validity of any action described in clauses (a) through (e) of this
Section 1306.
Section 1307. Company to Reserve Common Stock.
The Company shall at all times reserve and keep available,
free from preemptive rights, out of the authorized but unissued Common Stock or
out of the Common Stock held in treasury, for the purpose of effecting the
conversion of Securities, the full number of shares of Common Stock then
issuable upon the conversion of all outstanding Securities. Shares of Common
Stock issuable upon conversion of outstanding Securities shall be issued out of
the Common Stock held in Treasury to the extent available.
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Section 1308. Taxes on Conversions.
The Company will pay any and all taxes that may be payable
in respect of the issue or delivery of shares of Common Stock on conversion of
Securities pursuant hereto. The Company shall not, however, be required to pay
any tax which 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 of the Holder
of the Security or Securities to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
Section 1309. Covenant as to Common Stock.
The Company covenants that all shares of Common Stock which
may be issued upon conversion of Securities will upon issue be fully paid and
nonassessable and, except as provided in Section 1308, the Company will pay all
taxes, liens and charges with respect to the issue thereof.
Section 1310. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered
to the Trustee to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309.
Section 1311. Provisions of Consolidation, Merger or Sale of Assets.
In case of any consolidation of the Company with, or merger
of the Company into, any other Person, any merger of another Person into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock) or
any sale or transfer of all or substantially all of the assets of the Company,
the Person formed by such consolidation or resulting from such merger or which
acquires such assets, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of each Security then
Outstanding shall have the right thereafter, during the period such Security
shall be convertible as specified in Section 1301, to convert such Security only
into the kind and amount of securities, cash and other property, if any,
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock into which such Security might have been
converted immediately prior to such consolidation, merger, sale or transfer,
assuming such holder of Common Stock (i) is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer
(provided that if the kind or amount of securities, cash and other property
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receivable upon such consolidation, merger, sale or transfer is not the same for
each share of Common Stock held immediately prior to such consolidation, merger,
sale or transfer by other than a Constituent Person or an Affiliate thereof and
in respect of which such rights of election shall not have been exercised
("nonelecting share"), then for the purpose of this Section the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or transfer by each nonelecting share shall be deemed to be the
kind and amount so receivable per share by a plurality of the nonelecting
shares). Such supplemental indenture shall provide for adjustments which, for
events subsequent to the effective date of such supplemental indenture, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article. The above provisions of this Section shall similarly apply to
successive consolidations, mergers, sales or transfers.
Section 1312. Trustee's Disclaimer.
The Trustee and any other conversion agent shall not at any
time be under any duty or responsibility to any holder of Securities to
determine whether any facts exist that may require any adjustment of the
conversion price or notice thereof, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same and shall be protected in relying upon the Officers' Certificate
with respect thereto which the Company is required to file with the Trustee
pursuant to Section 1305. The Trustee and any other conversion agent shall not
be accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, that may at any
time be issued or delivered upon the conversion of any Security; and the Trustee
and any other conversion agent make no representations with respect thereto or
any actions or omission by the Company in such regard. Neither the Trustee nor
any conversion agent shall be responsible for any failure of the Company to
issue, transfer or deliver any shares of Common Stock or stock certificates or
other securities or property or cash upon the surrender of any debenture for the
purpose of conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article Thirteen.
The Trustee shall not be under any responsibility to
determine or verify the correctness of any provisions contained in any
supplemental indenture executed pursuant to Section 1311, but may accept as
conclusive evidence of the correctness thereof, and shall be protected in
relying upon, the Officers' Certificate with respect thereto which the Company
is obligated to file with the Trustee pursuant to Section 1311.
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ARTICLE FOURTEEN
Right to Require Repurchase
Section 1401. Right to Require Repurchase.
In the event that there shall occur a Repurchase Event (as
defined in Section 1406), then each Holder shall have the right, at such
Holder's option, to require the Company to purchase, and upon the exercise of
such right, the Company shall, subject to the provisions of Section 1203,
purchase, all or any part of such Holder's Securities on the date (the
"Repurchase Date") that is 30 days after the date the Company gives notice of
the Repurchase Event as contemplated in Section 1402(a) at a price (the
"Repurchase Price") equal to 100% of the principal amount thereof, together with
accrued and unpaid interest to the Repurchase Date.
Section 1402. Notice; Method of Exercising Repurchase Right.
(a) On or before the 15th day after the occurrence of a
Repurchase Event, the Company, or at the written request of the Company received
by the Trustee at least 40 days prior to the Repurchase Date, the Trustee (in
the name and at the expense of the Company), in its capacity as tender agent
(for which services it shall be reasonably compensated), shall give notice of
the occurrence of the Repurchase Event and of the repurchase right set forth
herein arising as a result thereof by first-class mail, postage prepaid, to the
Trustee and to each Holder of the Securities at such Holder's address appearing
in the Security Register. The Company shall also deliver a copy of such notice
of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the event constituting the Repurchase Event and the
date thereof,
(2) the Repurchase Date,
(3) the date by which the repurchase right must be
exercised,
(4) the Repurchase Price, and
(5) the instructions a Holder must follow to exercise a
repurchase right.
No failure of the Company to give the foregoing notice shall
limit any Holder's right to exercise a repurchase right. The Trustee shall have
no affirmative obligation to determine if there shall have occurred a Repurchase
Event.
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(b) To exercise a repurchase right, a Holder shall deliver
to the Company (or an agent designated by the Company for such purpose in the
notice referred to in (a) above) and to the Trustee on or before the close of
business on the Repurchase Date (i) written notice of the Holder's exercise of
such right, which notice shall set forth the name of the Holder, the principal
amount of the Security or Securities (or portion of a Security) to be
repurchased, and a statement that an election to exercise the repurchased right
is being made thereby, and (ii) the Security or Securities with respect to which
the repurchase right is being exercised, duly endorsed for transfer to the
Company. Such written notice shall be irrevocable. If the Repurchase Date falls
between any Regular Record Date and the next succeeding Interest Payment Date,
Securities to be repurchased must be accompanied by payment from the Holder of
an amount equal to the interest thereon which the registered Holder thereof is
to receive on such Interest Payment Date.
In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall on the Repurchase Date pay
or cause to be paid in cash to the Holder thereof the Repurchase Price of the
Security or Securities as to which the repurchase right had been exercised. In
the event that a repurchase right is exercised with respect to less than the
entire principal amount of a surrendered Security, the Company shall execute and
deliver to the Trustee and the Trustee shall authenticate for issuance in the
name of the Holder a new Security or Securities in the aggregate principal
amount of the unrepurchased portion of such surrendered security.
Section 1403. Deposit of Repurchase Price.
On or prior to the Repurchase Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust as provided in Section 1003)
an amount of money in same day funds sufficient to pay the Repurchase Price of
the Securities which are to be repaid on the Repurchase Date.
Section 1404. Securities Not Repurchased on Repurchase Date.
If any Security surrendered for repurchase shall not be so
paid on the Repurchase Date, the principal shall, until paid, bear interest to
the extent permitted by applicable law from the Repurchase Date at the rate per
annum borne by such Security.
Section 1405. Securities Repurchased in Part.
Any Security which is to be repurchased only in part shall
be surrendered at any office or agency of the Company designated for that
purpose pursuant to Section 1002 (with, if the Company or the Trustee so
requires, due endorsement by, or written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall
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authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unrepurchased portion of the principal of the Security so surrendered.
Section 1406. Certain Definitions.
For purposes of this Article:
(a) A "Repurchase Event" shall have occurred upon the occurrence of a Change
in Control or Termination of Trading after the date of this Indenture and on or
prior to July 1, 2004.
(b) A "Change in Control" shall occur when:
(i) all or substantially all of the Company's assets are sold
as an entirety to any person or related group of persons (other than a
Permitted Holder);
(ii) there shall be consummated any consolidation or merger of
the Company (A) in which the Company is not the continuing or surviving
corporation (other than a consolidation or merger with a wholly owned
subsidiary of the Company in which all shares of Common Stock
outstanding immediately prior to the effectiveness thereof are changed
into or exchanged for the same consideration) or (B) pursuant to which
the Common Stock would be converted into cash, securities or other
property, in each case, other than a consolidation or merger of the
Company in which the holders of the Common Stock immediately prior to
the consolidation or merger have, directly or indirectly, at least a
majority of the total voting power of all classes of capital stock
entitled to vote generally in the election of directors of the
continuing or surviving corporation immediately after such
consolidation or merger in substantially the same proportion as their
ownership of Common Stock immediately before such transaction;
(iii) any person, or any persons acting together which would
constitute a "group" for purposes of Section 13(d) of the Exchange Act
(a "Group"), together with any Affiliates thereof, shall beneficially
own (as defined in Rule 13d-3 under the Exchange Act) at least 50% of
the total voting power of all classes of capital stock of the Company
entitled to vote generally in the election of directors of the Company;
or
(iv) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board
of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by
the stockholders of the Company was approved by a vote of 66-2/3% of
the directors then still in office who were either directors at the
beginning of such period or whose election or nomination
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for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in
office; or
(v) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
(c) A "Termination of Trading" shall occur if the Common Stock (or other
common stock into which the Securities are then convertible) is neither listed
for trading on a U.S. national securities exchange nor approved for trading on
an established automated over-the-counter trading market in the United States.
-----------------------------
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This instrument may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
PERSONNEL GROUP OF AMERICA, INC.
By /s/ James C. Hunt
-------------------------------------
Name: James C. Hunt
Title: Sr. V.P.
Attest:
/s/ Ken R. Bramlett, Jr.
- --------------------------------
FIRST UNION NATIONAL BANK,
as Trustee
By /s/ Terry W. Baker
-------------------------------------
Name: Terry W. Baker
Title: Vice President
Attest:
/s/ appropriate person to attest
- --------------------------------
<PAGE> 111
STATE OF NORTH CAROLINA )
) ss.
COUNTY OF MECKLENBURG )
On the 23rd day of June, 1997, before me personally came
James C. Hunt, to me known, who, being by me duly sworn, did depose and say
that he is Sr. V.P. of Personnel Group of America, Inc., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
/s/ Colleen Crittenden
--------------------------------
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
On the 23rd day of June, 1997, before me personally came
Terry W. Baker, to me known, who, being by me duly sworn, did depose and say
that she is Vice President of First Union National Bank, a national banking
corporation described in and which executed the foregoing instrument; that she
knows the seal of said corporation; that the seal affixed to said instrument is
such seal; that it was so affixed by authority of the Board of Directors of
said corporation; and that she signed his name thereto by like authority.
/s/ Roy M. Pettigrew
-----------------------------
/s/ My commission expires: 8/19/2001
<PAGE> 112
Exhibit A
[FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF SECURITIES]
CERTIFICATE FOR EXCHANGE OR TRANSFER
Re: 5 3/4% Convertible Subordinated Notes due 2004
This Certificate relates to $_________ principal amount of
Securities held in *____________ book-entry or *____________ definitive form by
_________ (the "Transferor").
The Transferor*:
[ ] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in a Global Security held by the Depositary a Security or
Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to deliver in exchange for its
Security or Securities a beneficial interest in a Global Security held by the
Depositary in a principal amount equal to the aggregate principal amount of such
Security or Securities; or
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with such request and in respect of each such
security, the Transferor does hereby certify to the Company and the Trustee that
Transferor is familiar with the Indenture relating to the above captioned Notes
and, as provided in Section 305 of such Indenture, the transfer of this Security
does not require registration under the Securities Act (as defined below)
because*:
[ ] Such Security is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 305(b)(ii)(A) or Section 305(f)(i)(A) of
the Indenture).
[ ] Such Security is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A or pursuant to an exemption from
registration in accordance with Regulation S under the Securities Act (in
satisfaction of Section 305(b)(ii)(B), Section 305(c)(i), Section 305(d)(i),
Section 305(f)(i)(B),
- --------
* Check applicable box.
A-1
<PAGE> 113
Section 305(g)(iii) or Section 305(h)(iii) of the Indenture). An opinion of
counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
305(b)(ii)(B), Section 305(c)(i), Section 305(d)(i), Section 305(f)(i)(B),
Section 305(g)(iii) or Section 305(h)(iii) of the Indenture).
[ ] Such Security is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 305(b)(ii)(B), Section 305(f)(i)(B)
or Section 305(k)(ii) of the Indenture). If such Security is being transferred
in accordance with Rule 144 under the Securities Act, an opinion of counsel to
the effect that such transfer does not require registration under the Securities
Act accompanies this Certificate (in satisfaction of Section 305(b)(ii)(B),
Section 305(f)(i)(B) or Section 305(k)(ii) of the Indenture).
[ ] Such Security is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, 144 or Regulation S under the Securities Act. An opinion of
counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
305(b)(ii)(C) or Section 305(f)(i)(C) of the Indenture).
You are entitled to rely upon this certificate and you are
irrevocably authorized to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
-------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
--------------------------------
Date:
--------------------------
A-2
<PAGE> 1
EXHIBIT 4.3
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
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. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY)
UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO IS OR WHO THE HOLDER
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
<PAGE> 2
SECURITIES ACT) THAT IS AN INSTITUTIONAL INVESTOR AND THAT PRIOR TO SUCH
TRANSFER FURNISHES TO THE TRUSTEE A SIGNED LETTER, IN THE FORM OF EXHIBIT B TO
THE INDENTURE, CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY, (E) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER SALE OR
TRANSFER PURSUANT TO CLAUSES (C), (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES PROVIDED THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRUSTEE AND SUBJECT TO ANY APPLICABLE STATE SECURITIES
LAWS. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE THEN HOLDER OF THIS
SECURITY AFTER THE RESALE RESTRICTION TERMINATION DATE.
2
<PAGE> 3
PERSONNEL GROUP OF AMERICA, INC.
5 3/4% Convertible Subordinated Notes due 2004
No.1 $99,215,000
CUSIP No. 715338AC3
Personnel Group of America, Inc., a corporation duly organized
and existing under the laws of the State of Delaware (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO. or its registered assigns, the principal sum of ninety-nine two hundred &
fifteen thousand Dollars or such greater or lesser amount as indicated on the
Schedule of Exchanges of Securities on the reverse hereof on July 1, 2004 upon
surrender hereof to the Paying Agent, and to pay interest thereon from the date
of original issuance of Securities pursuant to the Indenture or from and
including the most recent Interest Payment Date to which interest has been paid
or duly provided for, semi-annually on July 1 and January 1 in each year,
commencing January 1, 1998, at the rate of 5 3/4% per annum, until the principal
hereof is paid or made available for payment and promises to pay any liquidated
damages which may be payable pursuant to the Registration Rights Agreement on
the Interest Payment Dates. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the June 15 or December 15, as the case may
be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture. Notice of a Special
Record Date shall be given to Holders of Securities not less than 10 days prior
to such Special Record Date. Payment of the principal of and premium, if any,
and interest on this Security will be made (i) in respect of Securities held of
record by the Depositary or its nominee in same day funds on or prior to the
respective payment dates and (ii) in respect of Securities held of record by
Holders other than the Depositary or its nominee at the office or agency of the
Company maintained for that purpose pursuant to Section 1002 of the Indenture,
in each case in such coin or currency of the United States of America as of the
time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest in
respect of Securities held of record by Holders other than the Depositary or its
nominee may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
3
<PAGE> 4
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
4
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: June 23, 1997 PERSONNEL GROUP OF AMERICA, INC.
By /s/ James C. Hunt
---------------------------------
Sr. V.P.
Attest:
By: /s/ Ken R. Bramlett, Jr.
---------------------------------
[SEAL]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By /s/ Terry W. Baker
-----------------------------------
Authorized Signatory
<PAGE> 6
[REVERSE OF NOTE]
This Security is one of a duly authorized issue of Securities
of the Company designated as its 5 3/4% Convertible Subordinated Notes due 2004
(herein called the "Securities"), limited in aggregate principal amount to
$100,000,000 (plus up to $15,000,000 of additional Securities issuable pursuant
to the Initial Purchasers' over-allotment option, as provided for in the
Purchase Agreement dated June 17, 1997 between the Company and the Initial
Purchasers), issued and to be issued under an Indenture, dated as of June 23,
1997 (herein called the "Indenture"), between the Company and First Union
National Bank, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Indebtedness and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Security is entitled, at his option, at any time
on or before the close of business on July 1, 2004, or in case this Security or
a portion hereof is called for redemption, then in respect of this Security or
such portion hereof until and including, but (unless the Company defaults in
making the payment due upon redemption) not after, the close of business on the
second business day preceding the Redemption Date, or, in case this Security or
a portion hereof is submitted for repurchase, until, but not on and after, the
date this Security or portion hereof is submitted for repurchase, to convert
this Security (or any portion of the principal amount hereof which is $1,000 or
an integral multiple thereof), at the principal amount hereof, or of such
portion, into fully paid and non-assessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Common Stock at a conversion
price equal to $35.625 principal amount for each share of Common Stock (or at
the current adjusted conversion price if an adjustment has been made as provided
in the Indenture) by surrender of this Security, duly endorsed or assigned to
the Company or in blank, to the Company at its office or agency maintained for
that purpose pursuant to Section 1002 of the Indenture, accompanied by written
notice to the Company in the form provided in this Security (or such other
notice as is acceptable to the Company) that the Holder hereof elects to convert
this Security, or if less than the entire principal amount hereof is to be
converted, the portion hereof to be converted, and, in case such surrender shall
be made during the period from the opening of business on any Regular Record
Date next preceding any Interest Payment Date to the close of business on such
Interest Payment Date (unless this Security or the portion thereof being
converted has been called for redemption), also accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of this Security then being
converted. Subject to the aforesaid requirement for payment and, in the case of
a conversion after the Regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Security (or any Predecessor Security) of record at such Regular Record
Date to receive an installment of interest (with certain exceptions provided in
the Indenture), no payment or adjustment is to be made upon conversion on
account of any interest accrued hereon or on account of any dividends on the
Common Stock issued upon conversion. No fractional shares or scrip representing
fractions of shares will be issued on
6
<PAGE> 7
conversion, but instead of any fractional share the Company shall pay a cash
adjustment as provided in the Indenture. The conversion price is subject to
adjustment as provided in the Indenture. In addition, the Indenture provides
that in case of certain consolidations or mergers to which the Company is a
party or the sale or transfer of all or substantially all of the assets of the
Company, the Indenture shall be amended, without the consent of any Holders of
Securities, so that this Security, if then outstanding, will be convertible
thereafter, during the period this Security shall be convertible as specified
above, only into the kind and amount of securities, cash and other property
receivable upon the consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock into which this Security might have been
converted immediately prior to such consolidation, merger, sale or transfer
(assuming such holder of Common Stock failed to exercise any rights of election
and received per share the kind and amount received per share by a plurality of
non-electing shares).
The Securities are subject to redemption upon not less than 15
and not more than 60 days' notice by mail, at any time on or after July 7, 2000,
as a whole or in part at the election of the Company, at the Redemption Prices
set forth below (expressed as percentages of the principal amount), plus accrued
interest to the Redemption Date (subject to the right of Holders of record on
the relevant Regular Record Date to receive interest due on an Interest Payment
Date that is on or prior to the Redemption Date).
If redeemed during the 12-month period beginning July 1, in
the year indicated (July 7, in the case of 2000), the redemption price shall be:
Redemption
Year Price
---- -----
2000..........................................103.29%
2001..........................................102.46%
2002..........................................101.64%
2003..........................................100.82%
2004..........................................100.00%
In certain circumstances involving the occurrence of a
Repurchase Event (as defined in the Indenture), the Holder hereof shall have the
right to require the Company to repurchase this Security at 100% of the
principal amount hereof, together with accrued interest to the Repurchase Date,
but interest installments whose Stated Maturity is on or prior to such
Repurchase Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.
In the event of redemption or conversion of this Security in
part only, a new Security or Securities for the unredeemed or unconverted
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
The indebtedness evidenced by this Security is, in all
respects, subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of
7
<PAGE> 8
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
If an Event of Default shall occur and be continuing, the
principal of all the Securities may be declared due and payable in the manner
and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding, and, under certain limited circumstances, by
the Company and the Trustee without the consent of the Holders. The Indenture
also contains provisions permitting the Holders of specified percentages in
aggregate principal amount of the Securities at the time Outstanding, on behalf
of the Holders of all the Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed or to convert this Security as
provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in fully registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the Holder surrendering
the same.
8
<PAGE> 9
No service charge shall be made for any such registration of
transfer or exchange except as provided in the Indenture, and the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, except as provided in this Security, whether or not
this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. The Company
will furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement.
9
<PAGE> 10
CONVERSION NOTICE
TO PERSONNEL GROUP OF AMERICA, INC.
The undersigned registered owner of this Security hereby
irrevocably exercises the option to convert this Security, or the portion hereof
(which is $1,000 or a multiple thereof) designated below, into shares of Common
Stock in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for a fractional share and any
Security representing any unconverted principal amount hereof, be issued and
delivered to the registered owner hereof unless a different name has been
provided below. If this Notice is being delivered on a date after the close of
business on a Regular Record Date and prior to the close of business on the
related Interest Payment Date, this Notice is accompanied by payment in funds
acceptable to the Company, of an amount equal to the interest payable on such
Interest Payment Date on the principal of this Security to be converted (unless
this Security has been called for redemption). If shares or any portion of this
Security not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
Dated:
---------------------------------------
---------------------------------------
Signature(s)
Signature(s) must be guaranteed by an
eligible guarantor institution (banks,
stockbrokers, savings and loan associations
and credit unions with membership in an
approved signature guarantee medallion
program) pursuant to S.E.C. Rule 17Ad-15, if
shares of Common Stock are to be delivered,
or Securities to be issued, other than to
and in the name of the registered owner.
- -------------------------------------
Signature Guarantee
10
<PAGE> 11
Fill in for registration of shares of Common
Stock if they are to be delivered, or
Securities if they are to be issued, other
than to and in the name of the registered
owner:
- ------------------------------------------
(Name)
- ------------------------------------------
(Street Address)
- ------------------------------------------
(City, State and zip code)
(Please print name and address)
Register: ________ Common Stock
________ Securities
(Check appropriate line(s)).
Principal amount to be converted (if less
than all):
$______,000
-----------------------------
Social Security or other Taxpayer
Identification Number of owner
11
<PAGE> 12
ASSIGNMENT
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
- ------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- ----------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- ------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- ------------------------------------------------------------------------------
Date: _______________________ Your signature: __________________________________
(Sign exactly as your name appears
on the face of this Security)
Signature Guarantee:
-----------------------------------------------------
The signature to this assignment should be guaranteed
by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and
credit unions with membership in an approved
signature guarantee medallion program) pursuant to
S.E.C. Rule 17Ad-15.
12
<PAGE> 13
CERTIFICATE FOR EXCHANGE OR TRANSFER
Re. 5 3/4% Convertible Subordinated Notes due 2004
This Certificate relates to $________________ principal amount
of Securities held in *___________________ book-entry or *_________________
definitive form by ___________ (the "Transferor").
The Transferor*:
[ ] has requested the Trustee by written order to deliver in
exchange for its beneficial interest in a Global Security held by the Depositary
a Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above), or
[ ] has requested the Trustee by written order to deliver in
exchange for its Security or Securities a beneficial interest in a Global
Security held by the Depositary in a principal amount equal to the aggregate
principal amount of such Security or Securities; or
[ ] has requested the Trustee by written order to exchange or
register the transfer of a Security or Securities.
[ ] In connection with such request and in respect of each such
security, the Transferor does hereby certify to the Company and the Trustee that
Transferor is familiar with the Indenture relating to the above captioned Notes
and, as provided in Section 305 of such Indenture, the transfer of this Security
does not require registration under the Securities Act (as defined below)
because * :
[ ] Such Security is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 305(b)(ii)(A) or Section
305(f)(i)(A) of the Indenture).
[ ] Such Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) in reliance on Rule 144A or pursuant to an
exemption from registration in accordance with Regulation S under the Securities
Act (in satisfaction of Section 305(b)(ii)(B), Section 305(c)(i), Section
305(d)(i), Section 305(f)(i)(B), Section 305(g)(iii) or Section 305(h)(iii) of
the Indenture). An opinion of counsel to the effect that such transfer does not
require registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 305(b)(ii)(B), Section 305(c)(i), Section 305(d)(i),
Section 305(f)(i)(B), Section 305(g)(iii) or Section 305(h)(iii) of the
Indenture).
[ ] Such Security is being transferred in accordance with Rule 144
under the Securities Act, or pursuant to an effective registration statement
under the Securities Act (in satisfaction of Section 305(b)(ii)(B), Section
305(f)(i)(B) or Section 305(k)(ii) of the Indenture).
- ----------------
* Check applicable box.
13
<PAGE> 14
If such Security is being transferred in accordance with Rule 144 under the
Securities Act, an opinion of counsel to the effect that such transfer does not
require registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 305(b)(ii)(B), Section 305(f)(i)(B) or Section
305(k)(ii) of the Indenture).
[ ] Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A, 144 or Regulation S under the Securities
Act. An opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 305(b)(ii)(C) or Section 305(f)(i)(C) of the Indenture).
You are entitled to rely upon this certificate and you are
irrevocably authorized to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
----------------------------------------
NAME OF TRANSFEROR
By: ____________________________________
Date: ________________
14
<PAGE> 15
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company
pursuant to Section 1401 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Security (which is
$1,000 or an integral multiple thereof) purchased by the Company pursuant to
Section 1401 of the Indenture, state the amount you wish to have purchased:
$ _____________________
Date: _____________________ Your Signature(s): ____________________
Tax Identification No: ____________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee: _____________________________________________________
The signature to this option of holder to elect
purchase should be guaranteed by an eligible
guarantor institution (banks, stockbrokers, savings
and loan associations and credit unions with
membership in an approved signature guarantee
medallion program) pursuant to S.E.C. Rule 17Ad-15.
15
<PAGE> 16
SCHEDULE OF EXCHANGES
The following increases or decreases in the principal amount
of this Global Security have been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease Amount of Increase this Global Security authorized signatory
in Principal Amount in Principal Amount following such of Trustee or
of this Global of this Global decrease (or increase) Securities Custodian
Date of Exchange Security Security
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
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</TABLE>
16
<PAGE> 1
EXHIBIT 5.1
[ROBINSON, BRADSHAW & HINSON, P.A. LETTERHEAD]
July 21, 1997
Personnel Group of America, Inc.
6302 Fairview Road, Suite 201
Charlotte, North Carolina 28210
Re: Registration Statement on Form S-3 of Personnel Group of America, Inc.
Gentlemen:
We are acting as counsel for Personnel Group of America, Inc., a Delaware
corporation (the "Company") in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of the offer and sale of up to
$115,000,000 of the Company's 5 3/4% Convertible Subordinated Notes due 2004
(the "Notes") and the shares of the Company's Common Stock, par value $.01 per
share, issuable on conversion thereof (the "Shares"), to be sold from time to
time by the selling securityholders listed in a Registration Statement on Form
S-3, which we understand is expected to be filed with the Securities and
Exchange Commission (the"Commission") on or about the date hereof (as amended,
the "Registration Statement").
In reaching the conclusions expressed in this opinion we have examined and
relied on such documents, corporate records and other instruments, including the
Indenture (the "Indenture") dated as of June 23, 1997 between the Company and
First Union National Bank of North Carolina, as trustee, certificates of public
officials and certificates of officers of the Company, and made such further
investigation and inquiry as we have deemed necessary to reach the opinions
expressed herein. In making the foregoing examinations, we have assumed the
genuineness of all signatures on original documents, the authenticity, accuracy
and completeness of all documents submitted to us as originals and the
conformity to original documents of all copies submitted to us.
Based solely upon the foregoing, subject to the comments and exceptions
hereinafter stated, it is our opinion that:
1. The Notes have been validly issued and constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture and
enforceable against the Company in
<PAGE> 2
July 17, 1997
Page 2
- ----------------------------
accordance with their terms, except as such enforcement is subject to (i) any
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or other laws relating to or affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2. The Shares have been duly authorized and reserved for issuance upon
conversion of the Notes, and the Shares, when issued and delivered in
accordance with the terms of the Notes and the Indenture upon conversion of the
Notes, will be legally issued, fully paid and non-assessable.
We express no opinion as to the laws of any jurisdiction other than the
General Corporation Law of the State of Delaware and the federal laws of the
United States of America, in each case as in effect on the date hereof.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm therein under the
caption "Legal Matters." In giving this consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
ROBINSON, BRADSHAW & HINSON, P.A.
/s/ Patrick S. Bryant
Patrick S. Bryant
<PAGE> 1
EXHIBIT 10.1
THE 1995 EQUITY PARTICIPATION PLAN
OF
PERSONNEL GROUP OF AMERICA, INC.
Personnel Group of America, Inc., a Delaware corporation, has
adopted The 1995 Equity Participation Plan of Personnel Group of America, Inc.
(the "Plan"), effective September 21, 1995, for the benefit of its eligible
employees, consultants and directors. The Plan consists of two plans, one for
the benefit of key Employees (as such term is defined below) and consultants and
one for the benefit of Independent Directors (as such term is defined below).
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors, key
Employees and consultants to further the growth, development and financial
success of the Company by personally benefiting through the ownership of Company
stock and/or rights which recognize such growth, development and financial
success.
(2) To enable the Company to obtain and retain the services of
directors, key Employees and consultants considered essential to the long range
success of the Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.
ARTICLE I
DEFINITIONS
1.1 General. Wherever the following terms are used in this
Plan they shall have the meaning specified below, unless the context clearly
indicates otherwise.
1.2 Award Limit. "Award Limit" shall mean two hundred thousand
(200,000) shares of Common Stock.
1.3 Board. "Board" shall mean the Board of Directors of the
Company.
1.4 Code. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.5 Committee. "Committee" shall mean the Compensation
Committee of the Board, or a subcommittee of the Board, appointed as provided in
Section 9.1.
1.6 Common Stock. "Common Stock" shall mean the common stock
of the Company, par value $.01 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding, any warrants,
options or other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.
1.7 Company. "Company" shall mean Personnel Group of
America, Inc., a Delaware corporation.
<PAGE> 2
1.8 Deferred Stock. "Deferred Stock" shall mean Common Stock
awarded under Article VII of this Plan.
1.9 Director. "Director" shall mean a member of the Board.
1.10 Dividend Equivalent. "Dividend Equivalent" shall mean a
right to receive the equivalent value (in cash or Common Stock) of dividends
paid on Common Stock, awarded under Article VII of this Plan.
1.11 Employee. "Employee" shall mean any officer or other
employee (as defined in accordance with Section 3401(c) of the Code) of the
Company, or of any corporation which is a Subsidiary.
1.12 Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.13 Fair Market Value. "Fair Market Value" of a share of
Common Stock as of a given date shall be (i) the mean between the highest and
lowest selling price of a share of Common Stock on the principal exchange on
which shares of Common Stock are then trading, if any, on such date, or if
shares were not traded on such date, then on the closest preceding date on which
a trade occurred, or (ii) if Common Stock is not traded on an exchange, the mean
between the closing representative bid and asked prices for the Common Stock on
such date as reported by NASDAQ or, if NASDAQ is not then in existence, by its
successor quotation system; or (iii) if Common Stock is not publicly traded, the
Fair Market Value of a share of Common Stock as established by the Committee (or
the Board, in the case of Options granted to Independent Directors) acting in
good faith.
1.14 Grantee. "Grantee" shall mean an Employee or consultant
granted a Performance Award, Dividend Equivalent, Stock Payment or Stock
Appreciation Right, or an award of Deferred Stock, under this Plan.
1.15 Incentive Stock Option. "Incentive Stock Option" shall
mean an option which conforms to the applicable provisions of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Committee.
1.16 Independent Director. "Independent Director" shall mean a
member of the Board who is not an Employee of the Company.
1.17 Non-Qualified Stock Option. "Non-Qualified Stock Option"
shall mean an Option which is not designated as an Incentive Stock Option by the
Committee.
1.18 Option. "Option" shall mean a stock option granted under
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Independent Directors and
consultants shall be Non-Qualified Stock Options.
1.19 Optionee. "Optionee" shall mean an Employee, consultant
or Independent Director granted an Option under this Plan.
2
<PAGE> 3
1.20 Performance Award. "Performance Award" shall mean a cash
bonus, stock bonus or other performance or incentive award that is paid in cash,
Common Stock or a combination of both, awarded under Article VII of this Plan.
1.21 Plan. "Plan" shall mean The 1995 Equity Participation
Plan of Personnel Group of America, Inc.
1.22 Restricted Stock. "Restricted Stock" shall mean Common
Stock awarded under Article VI of this Plan.
1.23 Restricted Stockholder. "Restricted Stockholder" shall
mean an Employee or consultant granted an award of Restricted Stock under
Article VI of this Plan.
1.24 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule
16b-3 under the Exchange Act, as such Rule may be amended from time to time.
1.25 Stock Appreciation Right. "Stock Appreciation Right"
shall mean a stock appreciation right granted under Article VIII of this Plan.
1.26 Stock Payment. "Stock Payment" shall mean (i) a payment
in the form of shares of Common Stock, or (ii) an option or other right to
purchase shares of Common Stock, as part of a deferred compensation arrangement,
made in lieu of all or any portion of the compensation, including without
limitation, salary, bonuses and commissions, that would otherwise become payable
to a key Employee or consultant in cash, awarded under Article VII of this Plan.
1.27 Subsidiary. "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
1.28 Termination of Consultancy. "Termination of Consultancy"
shall mean the time when the engagement of Optionee, Grantee or Restricted
Stockholder as a Consultant to the Company or a Subsidiary is terminated for any
reason, with or without cause, including without limitation, resignation,
discharge, death or retirement; but excluding terminations where there is a
simultaneous commencement of employment with the Company or any Subsidiary. The
Committee, in its absolute discretion, shall determine the effect of all matters
and questions relating to Termination of Consultancy, including, but not by way
of limitation, the question of whether a Termination of Consultancy resulted
from a discharge for good cause, and all questions of whether particular leaves
of absence constitute Terminations of Employment. Notwithstanding any other
provision of this Plan, the Company or any Subsidiary has an absolute and
unrestricted right to terminate a consultant's service at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.
1.29 Termination of Directorship. "Termination of
Directorship" shall mean the time when an Optionee who is an Independent
Director ceases to be a Director for any reason, including, but not by way of
limitation, a termination by resignation, failure to be elected, death or
retirement. The Board, in its sole and absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Directorship.
3
<PAGE> 4
1.30 Termination of Employment. "Termination of Employment"
shall mean the time when the employee-employer relationship between the
Optionee, Grantee or Restricted Stockholder and the Company or any Subsidiary is
terminated for any reason, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding (i) terminations where there is a simultaneous reemployment,
continuing employment of an Optionee, Grantee or Restricted Stockholder by the
Company or any Subsidiary, (ii) at the discretion of the Committee, terminations
which result in a temporary severance of the employee-employer relationship, and
(iii) at the discretion of the Committee, terminations which are followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Committee, in its absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, with respect to Incentive Stock Options, a
leave of absence, change in status from an employee to an independent contractor
or other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence,
change in status or other change interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section. Notwithstanding any other provision of this Plan,
the Company or any Subsidiary has an absolute and unrestricted right to
terminate an Employee's employment at any time for any reason whatsoever, with
or without cause, except to the extent expressly provided otherwise in writing.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan.
(a) The shares of stock subject to Options, awards of
Restricted Stock, Performance Awards, Dividend Equivalents, awards of Deferred
Stock, Stock Payments or Stock Appreciation Rights shall be Common Stock,
initially shares of the Company's Common Stock, par value $.01 per share. The
aggregate number of such shares which may be issued upon exercise of such
options or rights upon any such awards under the Plan shall not exceed 15% of
the then issued and outstanding Common Stock of the Company, and the number of
shares reserved for issuance under the Plan shall automatically be adjusted from
time to time to an amount equal to 15% of the Common Stock then issued and
outstanding. The shares of Common Stock issuable upon exercise of such options
or rights or upon any such awards may be either previously authorized but
unissued shares or treasury shares.
(b) The maximum number of shares which may be subject to
Options or Stock Appreciation Rights granted under the Plan to any individual in
any calendar year shall not exceed the Award Limit. To the extent required by
Section 162(m) of the Code, shares subject to Options which are cancelled
continue to be counted against the Award Limit and if, after grant of an Option,
the price of shares subject to such Option is reduced, the transaction is
treated as a cancellation of the Option and a grant of a new Option and both the
Option deemed to be cancelled and the Option deemed to be granted are counted
against the Award Limit. Furthermore, to the extent required by Section 162(m)
of the Code, if, after grant of a Stock Appreciation Right, the base amount on
which stock appreciation is calculated is reduced to reflect a reduction in the
Fair Market Value of the Company's Common Stock, the transaction is treated as a
cancellation of the Stock Appreciation Right and a grant of a new Stock
Appreciation Right and both the Stock Appreciation Right deemed to be cancelled
and the Stock Appreciation Reheat deemed to be granted are counted against the
Award Limit.
4
<PAGE> 5
2.2 Unexercised Options and Other Rights. If any Option, or
other right to acquire shares of Common Stock under any other award under this
Plan, expires or is cancelled without having been fully exercised, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration or cancellation may again
be optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Shares of Common Stock which are withheld by the Company upon the exercise
of any Option or other award under this Plan in payment of the exercise price
thereof may again be optioned, granted or awarded hereunder, subject to the
limitations of Section 2.1.
ARTICLE III
GRANTING OF OPTIONS
3.1 Eligibility. Subject to the Award Limit, any Employee or
consultant selected by the Committee pursuant to Section 3.4(a)(i) shall be
eligible to be granted an Option. Each Independent Director of the Company shall
be eligible to be granted Options at the times and in the manner set forth in
Section 3.4(d).
3.2 Disqualification for Stock Ownership. No person may be
granted an Incentive Stock Option under this Plan if such person, at the time
the Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any then existing Subsidiary unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code.
3.3 Qualification of Incentive Stock Options. No Incentive
Stock Option shall be granted unless such Option, when granted, qualifies as an
"incentive stock option" under Section 422 of the Code. No Incentive Stock
Option shall be granted to any person who is not an Employee.
3.4 Granting of Options.
(a) The Committee shall from time to time, in its absolute
discretion, and subject to the applicable limitations of this Plan:
(i) Determine which Employees are key Employees and
select from among the key Employees or consultants (including Employees
or consultants who have previously received Options or other awards
under this Plan) such of them as in its opinion should be granted
Options;
(ii) Subject to the Award Limit, determine the
number of shares to be subject to such Options granted to the selected
key Employees or consultants;
(iii) Determine whether such Options are to be
Incentive Stock Options or Non-Qualified Stock Options and whether such
Options are to qualify as performance-based compensation as described
in Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such
Options, consistent with this Plan; provided, however, that the terms
and conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be
5
<PAGE> 6
limited to, such terms and conditions as may be necessary to
meet the applicable provisions of Section 162(m) of the Code.
(b) Upon the selection of a key Employee or consultant to be
granted an Option, the Committee shall instruct the Secretary of the Company to
issue the Option and may impose such conditions on the grant of the Option as it
deems appropriate. Without limiting the generality of the preceding sentence,
the Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to an Employee or consultant
that the Employee or consultant surrender for cancellation some or all of the
unexercised Options, awards of Restricted Stock or Deferred Stock, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments or
other rights which have been previously granted to him under this Plan or
otherwise. An Option, the grant of which is conditioned upon such surrender, may
have an option price lower (or higher) than the exercise price of such
surrendered Option or other award, may cover the same (or a lesser or greater)
number of shares as such surrendered Option or other award, may contain such
other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.
(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such option from treatment as an
"incentive stock option" under Section 422 of the Code.
(d) During the term of the Plan, each person who is an
Independent Director as of the date of the consummation of the initial public
offering of Common Stock automatically shall be granted (i) an option to
purchase six thousand two hundred fifty (6,250) shares of Common Stock (subject
to adjustment as provided in Section 10.3) on the date of such initial public
offering, (ii) an option to purchase three thousand one hundred twenty-five
(3,125) shares of Common Stock (subject to adjustment as provided in Section
10.3) on the date of each of the first and second annual meetings of
stockholders after such initial public offering at which the Independent
Director is reelected to the Board, and (iii) an option to purchase one thousand
five hundred (1,500) shares of Common Stock (subject to adjustment as provided
in Section 10.3) on the date of each annual meeting of stockholders after the
second annual meeting after such initial public offering at which the
Independent Director is reelected to the Board. During the term of the Plan
after the consummation of the initial public offering of Common Stock, a person
who is initially elected to the Board and is then an Independent Director
automatically shall be granted (i) an option to purchase six thousand two
hundred fifty (6,250) shares of Common Stock (subject to adjustment as provided
in Section 10.3) on the date of such initial election, (ii) an option to
purchase three thousand one hundred twenty-five (3,125) shares of Common Stock
(subject to adjustment as provided in Section 10.3) on the date of each of the
first and second annual meetings of stockholders after such initial election at
which the Independent Director is reelected to the Board, and (iii) an option to
purchase one thousand five hundred (1,500) shares of Common Stock (subject to
adjustment as provided in Section 10.3) on the date of each annual meeting of
stockholders after the second annual meeting after such initial election at
which the Independent Director is reelected to the Board. Members of the Board
who are employees of the Company who subsequently retire from the Company and
remain on the Board will not receive an initial Option grant pursuant to clause
(i) of the preceding sentence, but to the extent that they are otherwise
eligible, will receive, after retirement from the Company, Options as described
in the clauses (ii) and (iii) of the preceding sentence. All the foregoing
Option grants authorized by this Section 3.4(d) are subject to stockholder
approval of the Plan.
6
<PAGE> 7
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement. Each Option shall be evidenced by a
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Independent Directors) shall determine, consistent with this Plan. Stock Option
Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
4.2 Option Price. The price per share of the shares subject to
each Option shall be set by the Committee; provided, however, that (i) such
price shall be no less than the par value of a share of Common Stock, (ii) in
the case of Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, such price shall be no less than
100% of the Fair Market Value of a share of Common Stock on the date the Option
is granted, (iii) in the case of Options granted to Independent Directors, such
price shall be equal to 100% of the Fair Market Value of a share of Common Stock
on the date the Option is granted, except with respect to the Options granted to
Independent Directors pursuant to Section 3.4(d) upon the consummation of the
initial public offering of Common Stock, in which case such price shall be equal
to the public offering price, and (iv) in the case of Incentive Stock Options
such price shall not be less than the greater of: (a) 100% of the Fair Market
Value of a share of Common Stock on the date the Option is granted, or (b) 110%
of the fair market value of a share of Common Stock on the date such Option is
granted in the case of an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary.
4.3 Option Term. The term of an Option (other than an Option
granted to an Independent Director) shall be set by the Committee in its
discretion; provided, however, that, in the case of Incentive Stock Options, the
term shall not be more than ten (10) years from the date the Incentive Stock
Option is granted, or five (5) years from such date if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary. The term of an Option granted
to an Independent Director shall be ten (10) years from the date the Option is
granted, provided, however, that the Option shall expire ninety (90) days after
the Independent Director ceases to serve as a Director, except upon the
Independent Director's retirement in accordance with the Company's retirement
policy applicable to Directors. Subject to the foregoing provisions and except
as limited by requirements of Section 422 of the Code and regulations and
rulings thereunder applicable to Incentive Stock Options, the Committee may
extend the term of any outstanding Option in connection with any Termination of
Employment or Termination of Consultancy of the Optionee, or amend any other
term or condition of such Option relating to such a termination.
4.4 Option Vesting.
(a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted; provided, however, that no
7
<PAGE> 8
Option granted to a person subject to Section 16 of the Exchange Act shall be
exercisable until at least six months have elapsed from (but excluding) the date
on which the Option was granted. At any time after grant of an Option, the
Committee may, in its sole discretion and subject to whatever terms and
conditions it selects, accelerate the period during which an Option vests.
Notwithstanding the foregoing, all Options granted to Independent Directors
shall be exercisable immediately on the date of grant, without variation.
(b) No portion of an Option which is unexercisable at
Termination of Employment, Termination of Directorship or Termination of a
Consultancy, as applicable, shall thereafter become exercisable, except as may
be otherwise provided by the Committee with respect to Options granted to
Employees or consultants, either in the Stock Option Agreement or in a
resolution adopted following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
Subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.4(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.
4.5 Consideration. In consideration of the granting of an
Option, the Optionee shall agree, in the written Stock Option Agreement, to
remain in the employ of (or to consult for or to serve as an Independent
Director of, as applicable) the Company or any Subsidiary for a period of at
least one year after the Option is granted (or until the next annual meeting of
stockholders of the Company, in the case of an Independent Director). Nothing in
this Plan or in any Stock Option Agreement hereunder shall confer upon any
Optionee any right to continue in the employ of, or as a consultant for, the
Company or any Subsidiary, or as a director of the Company, or shall interfere
with or restrict in any way the rights of the Company and any Subsidiary, which
are hereby expressly reserved, to discharge any Optionee at any time for any
reason whatsoever, with or without good cause.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee (or the Board, in the case of Options
granted to Independent Directors) may require that, by the terms of the Option,
a partial exercise be with respect to a minimum number of shares.
5.2 Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his office:
(a) A written notice complying with the applicable rules
established by the Committee or the Board stating that the Option, or a portion
thereof, is exercised. The notice shall be signed by the Optionee or other
person then entitled to exercise the Option or such portion;
8
<PAGE> 9
(b) Such representations and documents as the Committee or the
Board, in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Securities Act of 1933, as
amended, and any other federal or state securities laws or regulations. The
Committee or Board may, in its absolute discretion, also take whatever
additional actions it deems appropriate to effect such compliance including,
without limitation, placing legends on share certificates and issuing
stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant
to Section 10.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, at the discretion of the Committee (or the Board, in the case of
Options granted to Independent Directors), the terms of the Option may (i) allow
a delay in payment up to thirty (30) days from the date the Option, or portion
thereof, is exercised; (ii) allow payment, in whole or in part, through the
delivery of shares of Common Stock owned by the Optionee, duly endorsed for
transfer to the Company with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof;
(iii) subject to the timing requirements of Section 5.3, allow payment, in whole
or in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration; (v)
allow payment, in whole or in part, through the delivery of a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Committee or the Board, or (vi) allow payment
through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii), (iv) and (v). In the case of a promissory note, the
Committee or the Board may also prescribe the form of such note and the security
to be given for such note. The Option may not be exercised, however, by delivery
of a promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law.
5.3 Certain Timing Requirements. At the discretion of the
Committee (or Board, in the case of Options granted to Independent Directors),
shares of Common Stock issuable to the Optionee upon exercise of the Option may
be used to satisfy the Option exercise price or the tax withholding consequences
of such exercise, in the case of persons subject to Section 16 of the Exchange
Act, only (i) during the period beginning on the third business day following
the date of release of the quarterly or annual summary statement of sales and
earnings of the Company and ending on the twelfth business day following such
date or (ii) pursuant to an irrevocable written election by the Optionee to use
shares of Common Stock issuable to the Optionee upon exercise of the Option to
pay all or part of the Option price or the withholding taxes made at least six
months prior to the payment of such Option price or withholding taxes.
5.4 Conditions to Issuance of Stock Certificates. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
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(b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee or Board shall, in its absolute discretion,
deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee or Board shall, in its
absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee or Board may establish from time to time
for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
5.5 Rights as Stockholders. The holders of Options shall not
be, nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.
5.6 Ownership and Transfer Restrictions. The Committee (or
Board, in the case of Options granted to Independent Directors), in its absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting such Option to such Employee or (ii) one
year after the transfer of such shares to such Employee. The Committee may
direct that the certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Award of Restricted Stock.
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Select from among the key Employees or
consultants (including Employees or consultants who have previously
received other awards under this Plan) such of them as in its opinion
should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other
terms and conditions applicable to such Restricted Stock, consistent
with this Plan.
(b) The Committee shall establish the purchase price, if any,
and form of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the
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Common Stock to be purchased. In all cases, legal consideration shall be
required for each issuance of Restricted Stock.
(c) Upon the selection of a key Employee or consultant to be
awarded Restricted Stock, the Committee shall instruct the Secretary of the
Company to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate.
6.2 Restricted Stock Agreement. Restricted Stock shall be
issued only pursuant to a written Restricted Stock Agreement, which shall be
executed by the selected key Employee or consultant and an authorized officer of
the Company and which shall contain such terms and conditions as the Committee
shall determine, consistent with this Plan.
6.3 Consideration. As consideration for the issuance of
Restricted Stock, in addition to payment of any purchase price, the Restricted
Stockholder shall agree, in the written Restricted Stock Agreement, to remain in
the employ of, or to consult for, the Company or any Subsidiary for a period of
at least one year after the Restricted Stock is issued. Nothing in this Plan or
in any Restricted Stock Agreement hereunder shall confer on any Restricted
Stockholder any right to continue in the employ of, or as a consultant for, the
Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Restricted Stockholder at any time for any reason whatsoever,
with or without good cause.
6.4 Rights as Stockholders. Upon delivery of the shares of
Restricted Stock to the escrow holder pursuant to Section 6.7, the Restricted
Stockholder shall have, unless otherwise provided by the Committee, all the
rights of a stockholder with respect to said shares, subject to the restrictions
in his Restricted Stock Agreement, including the right to receive all dividends
and other distributions paid or made with respect to the shares; provided,
however, that in the discretion of the Committee, any extraordinary
distributions with respect to the Common Stock shall be subject to the
restrictions set forth in Section 6.5.
6.5 Restriction. All shares of Restricted Stock issued under
this Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall, in the terms of each individual
Restricted Stock Agreement, be subject to such restrictions as the Committee
shall provide, which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions based on duration
of employment with the Company, Company performance and individual performance;
provided, however, that no share of Restricted Stock granted to a person subject
to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months have elapsed from (but excluding) the date
on which the Restricted Stock was issued, and provided, further, that by a
resolution adopted after the Restricted Stock is issued, the Committee may, on
such terms and conditions as it may determine to be appropriate, remove any or
all of the restrictions imposed by the terms of the Restricted Stock Agreement.
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. Unless provided otherwise by the Committee, if no
consideration was paid by the Restricted Stockholder upon issuance, a Restricted
Stockholder's rights in unvested Restricted Stock shall lapse upon Termination
of Employment or, if applicable, upon the termination of his consulting
relationship with the Company.
6.6 Repurchase of Restricted Stock. The Committee shall
provide in the terms of each individual Restricted Stock Agreement that the
Company shall have the right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the Restricted Stock
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Agreement immediately upon a Termination of Employment or, if applicable, upon a
termination of any consulting relationship between the Restricted Stockholder
and the Company, at a cash price per share equal to the price paid by the
Restricted Stockholder for such Restricted Stock; provided, however, that
provision may be made that no such right of repurchase shall exist in the event
of a Termination of Employment or Termination of Consultancy without cause, or
following a change in control of the Company or because of the Restricted
Stockholder's retirement, death or disability, or otherwise.
6.7 Escrow. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock Agreement with respect to the shares evidenced by
such certificate expire or shall have been removed.
6.8 Legend. In order to enforce the restrictions imposed upon
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under Restricted Stock Agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.
ARTICLE VII
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS
7.1 Performance Awards. Any key Employee or consultant
selected by the Committee may be granted one or more Performance Awards. The
value of such Performance Awards may be linked to the market value, book value,
net profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee, or may be based upon the appreciation in the market value, book
value, net profits or other measure of the value of a specified number of shares
of Common Stock over a fixed period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular key
Employee or consultant.
7.2 Dividend Equivalents. Any key Employee or consultant
selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on Common Stock, to be credited as of dividend payment dates,
during the period between the date an Option, Stock Appreciation Right, Deferred
Stock or Performance Award is granted, and the date such Option, Stock
Appreciation Right, Deferred Stock or Performance Award is exercised, vests or
expires, as determined by the Committee. Such Dividend Equivalents shall be
converted to cash or additional shares of Common Stock by such formula and at
such time and subject to such limitations as may be determined by the Committee.
7.3 Stock Payments. Any key Employee or consultant selected by
the Committee may receive Stock Payments in the manner determined from time to
time by the Committee. The number of shares shall be determined by the Committee
and may be based upon the Fair Market Value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee on the date such Stock Payment is made
or on any date thereafter.
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7.4 Deferred Stock. Any key Employee or consultant selected by
the Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the market value, book
value, net profits or other measure of the value of Common Stock or other
specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by
the Committee. Common Stock underlying a Deferred Stock award will not be issued
until the Deferred Stock award has vested, pursuant to a vesting schedule or
performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Grantee of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the award has
vested and the Common Stock underlying, the award has been issued.
7.5 Performance Award Agreement, Dividend Equivalent
Agreement, Deferred Stock Agreement, Stock Payment Agreement. Each Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall
be evidenced by a written agreement, which shall be executed by the Grantee and
an authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.
7.6 Term. The term of a Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment shall be set by the
Committee in its discretion.
7.7 Exercise Upon Termination of Employment. A Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment is
exercisable only while the Grantee is an Employee or consultant; provided that
the Committee may determine that the Performance Award, Dividend Equivalent,
award of Deferred Stock and/or Stock Payment may be exercised subsequent to
Termination of Employment or Termination of Consultancy without cause, or
following a change in control of the Company, or because of the Grantee's
retirement, death or disability, or otherwise.
7.8 Payment on Exercise. Payment of the amount determined
under Section 7.1 or 7.2 above shall be in cash, in Common Stock or a
combination of both, as determined by the Committee. To the extent any payment
under this Article VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 5.4.
7.9 Consideration. In consideration of the granting of a
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment, the Grantee shall agree, in a written agreement, to remain in the
employ of, or to consult for, the Company or any Subsidiary for a period of at
least one year after such Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment is granted. Nothing in this Plan or in any
agreement hereunder shall confer on any Grantee any right to continue in the
employ of, or as a consultant for, the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Grantee at any
time for any reason whatsoever, with or without good cause.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 Grant of Stock Appreciation Rights. Subject to the Award
Limit, a Stock Appreciation Right may be granted to any key Employee or
consultant selected by the Committee. A Stock Appreciation Right may be granted
(i) in connection and simultaneously with the grant of an Option, (ii) with
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respect to a previously granted Option, or (iii) independent of an Option. A
Stock Appreciation Right shall be subject to such terms and conditions not
inconsistent with this Plan as the Committee shall impose, and shall be
evidenced by a written Stock Appreciation Right Agreement, which shall be
executed by the Grantee and an authorized officer of the Company. The Committee,
in its discretion, may determine whether a Stock Appreciation Right is to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code and Stock Appreciation Right Agreements evidencing Stock
Appreciation Rights intended to so qualify shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section
162(m) of the Code. Without limiting the generality of the foregoing, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition of the grant of a Stock Appreciation Right to an Employee
or consultant that the Employee or consultant surrender for cancellation some or
all of the unexercised Options, awards of Restricted Stock or Deferred Stock,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, or other rights which have been previously granted to him under this
Plan or otherwise. A Stock Appreciation Right, the grant of which is conditioned
upon such surrender, may have an exercise price lower (or higher) than the
exercise price of the surrendered Option or other award, may cover the same (or
a lesser or greater) number of shares as such surrendered Option or other award,
may contain such other terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to the number of
shares, price, exercise period or any other term or condition of such
surrendered Option or other award.
8.2 Coupled Stock Appreciation Rights.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.
(b) A CSAR may be granted to the Grantee for no more than the
number of shares subject to the simultaneously or previously granted Option to
which it is coupled.
(c) A CSAR shall entitle the Grantee (or other person entitled
to exercise the Option pursuant to this Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.
8.3 Independent Stock Appreciation Rights.
(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that no ISAR granted to a person subject to
Section 16 of the Exchange Act shall be exercisable until at least six months
have elapsed from (but excluding) the date on which the Option was granted. The
exercise price per share of Common Stock subject to each ISAR shall be set by
the Committee. An ISAR is exercisable only while the Grantee is an Employee or
consultant; provided that the Committee may determine that the ISAR may be
exercised subsequent to Termination of Employment or Termination of Consultancy
without cause, or following a change in control of the Company, or because of
the Grantee's retirement, death or disability, or otherwise.
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(b) An ISAR shall entitle the Grantee (or other person
entitled to exercise the ISAR pursuant to this Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Common Stock on the date of exercise of the
ISAR by the number of shares of Common Stock with respect to which the ISAR
shall have been exercised, subject to any limitations the Committee may impose.
8.4 Payment and Limitations on Exercise.
(a) Payment of the amount determined under Section 8.2(c) and
8.3(b) above shall be in cash, in Common Stock (based on its Fair Market Value
as of the date the Stock Appreciation Right is exercised) or a combination of
both, as determined by the Committee. To the extent such payment is effected in
Common Stock it shall be made subject to satisfaction of all provisions of
Section 5.4 hereinabove pertaining to Options.
(b) Grantees of Stock Appreciation Rights who are subject to
Section 16 of the Exchange Act may, in the discretion of the Board or Committee,
be required to comply with any timing, or other restrictions under Rule 16b-3
applicable to the settlement or exercise of a Stock Appreciation Right.
8.5 Consideration. In consideration of the granting of a Stock
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the employ of, or to consult for, the Company or
any Subsidiary for a period of at least one year after the Stock Appreciation
Right is granted. Nothing in this Plan or in any Stock Appreciation Right
Agreement hereunder shall confer on any Grantee any right to continue in the
employ of, or as a consultant for, the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Grantee at any
time for any reason whatsoever, with or without good cause.
ARTICLE IX
ADMINISTRATION
9.1 Compensation Committee. The Compensation Committee (or a
subcommittee of the Board assuming the functions of the Committee under this
Plan) shall consist of two or more Independent Directors appointed by and
holding office at the pleasure of the Board, each of whom is both a
"disinterested person" as defined by Rule 16b-3 and an "outside director" for
purposes of Section 162(m) of the Code. Appointment of Committee members shall
be effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may
be filled by the Board.
9.2 Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of this Plan in accordance
with its provisions. The Committee shall have the power to interpret this Plan
and the agreements pursuant to which Options, awards of Restricted Stock or
Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments are granted or awarded, and to adopt such rules
for the administration, interpretation, and application of this Plan as are
consistent therewith and to interpret, amend or revoke any such rules.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to Options granted to Independent Directors. Any
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such grant or award under this Plan need not be the same with respect to each
Optionee, Grantee or Restricted Stockholder. Any such interpretations and rules
with respect to Incentive Stock Options shall be consistent with the provisions
of Section 422 of the Code. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under this Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code, or any regulations or rules issued thereunder,
are required to be determined in the sole discretion of the Committee.
9.3 Majority Rule. The Committee shall act by a majority of
its members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.
9.4 Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee shall receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all Optionees,
Grantees, Restricted Stockholders, the Company and all other interested persons.
No members of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, and all members of
the Committee shall be fully protected by the Company in respect of any such
action, determination or interpretation.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Not Transferable. Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution, unless and until such rights or awards have been exercised, or
the shares underlying such rights or awards have been issued, and all
restrictions applicable to such shares have lapsed. No Option, Restricted Stock
award, Deferred Stock award, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment or interest or right therein shall be
liable for the debts, contracts or engagements of the Optionee, Grantee or
Restricted Stockholder or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect.
During the lifetime of the Optionee or Grantee, only he may
exercise an Option or other right or award (or any portion thereof) granted to
him under the Plan. After the death of the Optionee or Grantee, any exercisable
portion of an Option or other right or award may, prior to the time when such
portion becomes unexercisable under the Plan or the applicable Stock Option
Agreement or other agreement, be exercised by his personal representative or by
any person empowered to do so under the deceased Optionee's or Grantee's will or
under the then applicable laws of descent and distribution.
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10.2 Amendment, Suspension or Termination of this Plan. This
Plan may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Committee. However, without
approval of the Company's stockholders given within twelve months before or
after the action by the Committee, no action of the Committee may, except as
provided in Section 10.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or modify the Award
Limit, and no action of the Committee may be taken that would otherwise require
stockholder approval as a matter of applicable law, regulation or rule.
Notwithstanding the foregoing, the provisions of this Plan relating to formula
Option grants to Independent Directors, including the amount, price and timing
thereof, shall not be amended more than once in any six-month period other than
to comport with changes in the Code, the Employee Retirement Income Security
Act, or the respective rules thereunder, No amendment, suspension or termination
of this Plan shall, without the consent of the holder of Options, Restricted
Stock awards, Deferred Stock awards, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments, alter or impair any rights or
obligations under any Options, Restricted Stock awards, Deferred Stock awards,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments theretofore granted or awarded, unless the award itself otherwise
expressly so provides. No Options, Restricted Stock, Deferred Stock, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be
granted or awarded during any period of suspension or after termination of this
Plan, and in no event may any Incentive Stock Option be granted under this Plan
after the first to occur of the following events:
(a) The expiration of ten years from the date the Plan is
adopted by the Board; or
(b) The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 10.5.
10.3 Changes in Common Stock or Assets of the Company. In the
event that the outstanding shares of Common Stock are hereafter changed into or
exchanged for cash or a different number or kind of shares or other securities
of the Company, or of another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock splitup, stock
dividend, or combination of shares, appropriate adjustments shall be made by the
Committee in the number and kind of shares for which Options, Restricted Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents,
Deferred Stock awards or Stock Payments may be granted, including adjustments of
the limitations in Section 2.1 on the maximum number and kind of shares which
may be issued and of the Award limit described in Section 1.2, and appropriate
adjustments shall be made by the Board in the number and kind of shares for the
purchase of which Options are granted to Independent Directors under Section
3.4(d).
In the event of such a change or exchange, subject to the
other provisions of this Plan, the Committee (or the Board, in the case of
Options granted to Independent Directors) shall also make an appropriate and
equitable adjustment in the number and kind of shares as to which all
outstanding Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments, or portions thereof then unexercised, shall be
exercisable and in the number and kind of shares of outstanding Restricted Stock
or Deferred Stock. Such adjustment shall be made with the intent that after the
change or exchange of shares, each Optionee's and each Grantee's and each
Restricted Stockholder's proportionate interest shall be maintained as before
the occurrence of such event. Such adjustment in an outstanding Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment may include a necessary or appropriate corresponding adjustment in
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment exercise price, but shall be
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made without change in the total price applicable to the Option, Performance
Award, Stock Appreciation Right, Dividend Equivalent or Stock Payment, or the
unexercised portion thereof (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices).
Where an adjustment of the type described above is made to an
Incentive Stock Option under this Section, the adjustment will be made in a
manner which will not be considered a "modification" under the provisions of
subsection 424(h)(3) of the Code.
In the event of a "spin-off" or other substantial distribution
of assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Company's Common Stock, the Committee (or the Board, in the
case of Options granted to Independent Directors) shall make an appropriate and
equitable adjustment to the Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment exercise price to reflect such diminution.
10.4 Merger of the Company. In the event of the merger or
consolidation of the Company with or into another corporation, the exchange of
all or substantially all of the assets of the Company for the securities of
another corporation, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company:
(a) At the discretion of the Committee (or the Board, in the
case of Options granted to Independent Directors), the terms of an Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment may provide that it cannot be exercised
after such event.
(b) In its discretion, and on such terms and conditions as it
deems appropriate, the Committee (or the Board, in the case of Options granted
to Independent Directors) may provide either by the terms of such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or by a resolution adopted prior to the occurrence of such event that,
for a specified period of time prior to such event, such Option, Performance
Award, Stock Appreciation Right, Dividend Equivalent or Stock Payment shall be
exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in this Plan or in the provisions of such Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment.
(c) In its discretion, and on such terms and conditions as it
deems appropriate, the Committee (or the Board, in the case of Options granted
to Independent Directors) may provide either by the terms of such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or by a resolution adopted prior to the occurrence of such event that
upon such event, such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment shall be assumed by the successor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices.
(d) In its discretion, and on such terms and conditions as it
deems appropriate, the Committee may provide either by the terms of a Restricted
Stock award or Deferred Stock award or by a resolution adopted prior to the
occurrence of such event that, for a specified period of time prior to such
event, the restrictions imposed under a Restricted Stock Agreement or a Deferred
Stock Agreement upon some or all shares of Restricted Stock or Deferred Stock
may be terminated, and, in the case of Restricted Stock, some or all shares of
such Restricted Stock may cease to be subject to repurchase under Section 6.6
after such event.
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(e) None of the foregoing discretionary terms of this Section
10.4 shall be permitted with respect to Options granted under Section 3.4(d) to
Independent Directors to the extent that such discretion would be inconsistent
with the requirements of Rule 16b-3.
10.5 Approval of Plan by Stockholders. This Plan will be
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board's initial adoption of this Plan. Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments may be granted and Restricted Stock or Deferred Stock may be awarded
prior to such Stockholder approval, provided that such Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments shall
not be exercisable and such Restricted Stock or Deferred Stock shall not vest
prior to the time when this Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments previously granted and all Restricted
Stock or Deferred Stock previously awarded under this Plan shall thereupon be
cancelled and become null and void.
10.6 Tax Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee,
Grantee or Restricted Stockholder of any sums required by federal, state or
local tax law to be withheld with respect to the issuance, vesting or exercise
of any Option, Restricted Stock, Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment. Subject to the timing
requirements of Section 5.3, the Committee (or the Board, in the case of Options
granted to Independent Directors) may in its discretion and in satisfaction of
the foregoing requirement allow such Optionee, Grantee or Restricted Stockholder
to elect to have the Company withhold shares of Common Stock (or allow the
return of shares of Common Stock) having a Fair Market Value equal to the sums
required to be withheld.
10.7 Loans. The Committee may, in its discretion, extend one
or more loans to key Employees in connection with the exercise or receipt of an
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment granted under this Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under this Plan. The terms and conditions of any such
loan shall be set by the Committee.
10.8 Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, any Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment granted, or Restricted Stock or Deferred Stock
awarded, to a key Employee or Director who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule, and this Plan shall be deemed amended to the
extent necessary to conform to such limitations. Furthermore, notwithstanding
any other provision of this Plan, any Option or Stock Appreciation Right
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code (including any amendment to Section 162(m)
of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the
extent necessary to conform to such requirements.
10.9 Effect of Plan Upon Options and Compensation Plans. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary.
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Nothing in this Plan shall be construed to limit the right of the Company (i) to
establish any other forms of incentives or compensation for Employees, Directors
or consultants of the Company or any Subsidiary or (ii) to grant or assume
options or other rights otherwise than under this Plan in connection with any
proper corporate purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, firm or association.
10.10 Compliance with Laws. This Plan, the granting and vesting
of Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments under this
Plan and the issuance and delivery of shares of Common Stock and the payment of
money under this Plan or under Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan,
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
10.11 Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this Plan.
10.12 Governing Law. This Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of Delaware without regard to conflicts of laws thereof.
* * *
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of Personnel Group of America, Inc. on September 21, 1995.
Executed on this 9th day of November, 1995.
/s/ Rosemary Payne-Harris
---------------------------
Secretary
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EXHIBIT 10.3
PERSONNEL GROUP OF AMERICA, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
Sec. 1.01 Statement of Purpose. The purpose of the Personnel Group of America,
Inc. Employee Stock Purchase Plan is to provide eligible employees of the
Company and its Subsidiaries, who wish to become stockholders, an opportunity to
purchase common stock of the Company. The Board of Directors of the Company
believes that employee participation in ownership will be to the mutual benefit
of both the employees and the Company.
Sec. 1.02 Internal Revenue Code Considerations. The Plan is intended to
constitute an "employee stock purchase plan" within the meaning of section 423
of the Internal Revenue Code of 1986, as amended.
ARTICLE II
DEFINITIONS
Sec. 2.01 "Board" means the Board of Directors of the Company.
Sec. 2.02 "Code" means the Internal Revenue Code of 1986, as amended.
Sec. 2.03 "Company" means Personnel Group of America, Inc., a Delaware
corporation.
Sec. 2.04 "Compensation" means the total remuneration paid, during the period of
reference, to an Employee by the Company or a Subsidiary, including regular
salary or wages, overtime payments, bonuses, commissions and vacation pay, to
which has been added (a) any elective deferral amounts by which the Employee has
had his current remuneration reduced for the purposes of funding a contribution
to any plan sponsored by the Company and satisfying the requirements of section
401(k) of the Code, and (b) any amounts by which the Employee's compensation has
been reduced pursuant to a compensation reduction agreement between the Employee
and the Company for the purpose of funding benefits through any cafeteria plan
sponsored by the Company meeting the requirements of section 125 of the Code.
There shall be excluded from "Compensation" for the purposes of the Plan,
whether or not reportable as income by the Employee, expense reimbursements of
all types, payments in lieu of expenses, the Company contributions to any
qualified retirement plan or other program of deferred compensation (except as
provided above), the Company contributions to Social Security or worker's
compensation, the costs paid by the Company in connection with fringe benefits
and relocation, including gross-ups, and any amounts accrued for the benefit of
Employee, but not paid, during the period of reference.
<PAGE> 2
Sec. 2.05 "Compensation Committee" means the Compensation Committee of the
Board.
Sec. 2.06 "Continuous Service" means the period of time during which the
Employee has been employed by the Company or a Subsidiary and during which there
has been no interruption of Employee's employment by the Company. For this
purpose, periods during which an Employee is on Temporary Inactive Status shall
not be considered to be interruptions of Continuous Service. If determined by
the Compensation Committee, periods of service with an entity prior to its
becoming a Subsidiary shall be taken into account.
Sec. 2.07 "Effective Date" shall mean July 1, 1997 if, within 12 months of that
date, the Plan is or has been approved at a meeting of the stockholders of the
Company by the affirmative vote of the holders of the majority of the
outstanding Stock of the Company.
Sec. 2.08 "Eligible Employee" means each person who:
(a) is an Employee whose customary employment is for more than 20 hours
per week and more than 5 months in any calendar year;
(b) is an Employee on the Effective Date, or otherwise has completed at
least 180 days of Continuous Service; and
(c) is not deemed for purposes of section 423 (b) (3) of the Code to
own capital stock possessing 5% or more of the total combined voting
power or value of all classes of capital stock of the Company.
Sec. 2.09 "Employee" means each person employed by the Company or a Subsidiary.
Sec. 2.10 "Exercise Date" means the last day of each Purchase Period.
Sec. 2.11 "Market Value" means, with respect to Stock, the fair market value of
such Stock, determined by such methods or procedures as shall be established
from time to time by the Compensation Committee; provided, however, that if the
Stock is listed on a national securities exchange or quoted in an interdealer
quotation system, the Market Value of such Stock on a given date shall be based
upon the last sales price or, if unavailable, the average of the closing bid and
asked prices per share of the Stock on such date (or, if there was no trading or
quotation in the Stock on such date, on the next preceding date on which there
was trading or quotation) as provided by one of such organizations.
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Sec. 2.12 "Offering" means the offering of shares of Stock under the Plan.
Sec. 2.13 "Offering Date" means the first business day of each July, October,
January and April during which the Plan is in effect, or such dates as may
otherwise be specified by the Compensation Committee.
Sec. 2.14 "Participant" means each Eligible Employee who elects to participate
in the Plan.
Sec. 2.15 "Plan" means the Personnel Group of America, Inc. Employee Stock
Purchase Plan, as the same is set forth herein and as may hereafter be amended.
Sec. 2.16 "Purchase Agreement" means the document prescribed by the Compensation
Committee pursuant to which an Eligible Employee has enrolled to be a
Participant.
Sec. 2.17 "Purchase Period" means the period beginning on an Offering Date and
ending on the business day preceding the next following Offering Date.
Sec. 2.18 "Purchase Price" means such term as it is defined in Section 4.03
hereof.
Sec. 2.19 "Stock" means the common stock, $.01 par value, of the Company.
Sec. 2.20 "Stock Purchase Account" means a noninterest bearing account
consisting of all amounts withheld from an Employee's Compensation (or otherwise
paid into the Plan) for the purpose of purchasing shares of Stock for such
employee under the Plan, reduced by all amounts applied to the purchase of Stock
for such Employee under the Plan.
Sec. 2.21 "Subsidiary" shall mean a corporation described in section 424(f) of
the Code that has, with the permission of the Board, adopted the Plan.
Sec. 2.22 "Temporary Inactive Status" shall describe the status of a former
hourly Employee whose employment was terminated upon completion of an assignment
for the Company or a Subsidiary, for so long as such former Employee (i) remains
available for future assignments with the Company or a Subsidiary, (ii) has not,
directly or indirectly, accepted an assignment from or a position with an entity
unaffiliated with the Company and its Subsidiaries, and (iii) otherwise remains
in good standing with the Company and its Subsidiaries.
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ARTICLE III
ADMISSION TO PARTICIPATION
Sec. 3.01 Initial Participation. Any Eligible Employee may elect to be a
Participant and may become a Participant by executing and filing with the
Compensation Committee a Purchase Agreement at such time in advance and on such
forms as prescribed by the Compensation Committee. The effective date of an
Eligible Employee's participation shall be the Offering Date next following the
date on which the Compensation Committee receives from the Eligible Employee a
properly executed and timely filed Purchase Agreement. Participation in the Plan
will continue automatically from one Purchase Period to another unless notice to
the contrary is given pursuant to Section 3.02.
Sec. 3.02 Voluntary Discontinuance of Participation. Any Participant may
voluntarily withdraw from the Plan by filing a Notice of Withdrawal with the
Compensation Committee at such time in advance as the Compensation Committee may
specify. Upon such withdrawal, there shall be paid to the Participant the
amount, if any, standing to his credit in his Stock Purchase Account.
Sec. 3.03 Involuntary Discontinuance of Participation. If a Participant ceases
to be an Eligible Employee, the entire amount, if any, standing to the
Participant's credit in his Stock Purchase Account shall be refunded to him.
Notwithstanding the foregoing, should a Participant cease to be an Eligible
Employee by reason of acquiring Temporary Inactive Status, such Participant may
continue to participate through the end of the Purchase Period during which such
status was acquired with respect to payroll deductions attributable to the
portion of the Purchase Period prior to the time such status was acquired.
Sec. 3.04 Readmission to Participation. Any Eligible Employee who has previously
been a Participant, who has discontinued participation, and who wishes to be
reinstated as a Participant may again become a Participant for any subsequent
Purchase Period by executing and filing with the Compensation Committee, at such
time in advance as the Compensation Committee shall determine, a new Purchase
Agreement on forms provided by the Compensation Committee. Reinstatement to
Participant status shall be effective no earlier than the Offering Date that
occurs six months following the Exercise Date for the Purchase Period in which
the Eligible Employee discontinued participation.
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ARTICLE IV
STOCK PURCHASE
Sec. 4.01 Reservation of Shares. There shall be 500,000 shares of Stock reserved
for the Plan, subject to adjustment in accordance with the antidilution
provisions hereinafter set forth. Except as provided in Section 5.02 hereof, the
aggregate number of shares that may be purchased under the Plan shall not exceed
the number of shares reserved for the Plan.
Sec. 4.02 Limitation on Shares Available. The maximum number of shares of Stock
that may be purchased for each Participant on an Exercise Date is the lower of
(a) the number of shares of Stock that can be purchased by applying the full
balance of his Stock Purchase Account to such purchase of shares at the Price
(as hereinafter determined), or (b) the Participant's proportionate part of the
maximum number of whole shares of Stock available within the limitation
established by the maximum aggregate number of such shares reserved for the
Plan, as stated in Section 4.01 hereof. Notwithstanding the foregoing, if any
person entitled to purchase shares pursuant to any offering hereunder would be
deemed for the purposes of section 423(b) (3) of the Code to own stock
(including any number of shares that such person would be entitled to purchase
hereunder) possessing 5% or more of the total combined voting power or value of
all classes of capital stock of Company, the maximum number of shares that such
person shall be entitled to purchase pursuant to the Plan shall be reduced to
that number which, when added to the number of shares of Stock that such person
is so deemed to own (excluding any number of shares that such person would be
entitled to purchase hereunder), is one less than such 5%. Any portion of a
Participant's Stock Purchase Account that cannot be applied by reason of the
foregoing limitation shall remain in the Participant's Stock Purchase Account
for application to the purchase of Stock on the next Offering Date (unless
withdrawn before that Offering Date).
Sec. 4.03 Purchase Price of Shares. The Purchase Price per share of the Stock
sold to Participants pursuant to any Offering shall be the sum of (a) 85% of the
Market Value of such share on the Offering Date on which such Offering commences
or on the Exercise Date on which such Offering expires, whichever is lower, and
(b) any transfer, excise or similar tax imposed on the transaction pursuant to
which such share of Stock is purchased. If the Exercise Date with respect to the
purchase of Stock is a day on which the Stock is selling ex-dividend but is on
or before the record date for such dividend, then for Plan purposes the Purchase
Price per share will be increased by an amount equal to the dividend per share.
In no event shall the Purchase Price be less than the par value of the Stock.
Sec. 4.04 Exercise of Purchase Privilege.
(a) Subject to the provisions of Section 4.02 above, if on the date of
the last paycheck of a Participant issued prior to any Exercise Date
there is a bank credit in the Participant's Stock Purchase Account,
there shall be purchased for the Participant at the Purchase Price of
the Purchase Period that expires on such Exercise Date the largest
number of whole shares of Stock as can be purchased with the entire
amount standing to the Participant's credit in his Stock Purchase
Account on such paycheck issue date. Each such purchase shall be deemed
to have occurred on the Exercise Date occurring at the close of the
Offering for which the purchase was made.
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(b) Any amount remaining in the Stock Purchase Account on the Exercise
Date after the purchase of the maximum number of whole shares shall
remain in the Stock Purchase Account to the credit of the Participant
and be applied to purchase additional shares of Stock on subsequent
Exercise Dates.
(c) Notwithstanding anything contained herein to the contrary, a
Participant may not during any calendar year purchase shares of Stock
having an aggregate Market Value, determined at the time of each
Offering Date during such calendar year, of more than $25,000.
Sec. 4.05 Establishment of Stock Purchase Account. Each Participant shall
authorize payroll deductions from Compensation for the purposes of funding his
Stock Purchase Account. In the Purchase Agreement, each Participant shall
authorize a deduction from each payment of his Compensation during a Purchase
Period, which deduction shall be not less than 1% nor more than 7% of the gross
amount of such payment, subject to Section 4.04 (c). Subject to Section 3.02, a
Participant may not reduce or increase his payroll deduction rate during any
Purchase Period. However, a Participant may change the deduction to any
permissible level for any subsequent Offering by filing notice thereof at such
time preceding the Offering Date on which such subsequent Offering commences as
the Compensation Committee shall determine.
Sec. 4.06 Payment for Stock. The Purchase Price for all shares of Stock
purchased by a Participant under the Plan shall be paid out of the Participant's
Stock Purchase Account. As of each Exercise Date, the entire amount standing to
the credit of each Participant in his Stock Purchase Account on the date of the
last paycheck issued to the Participant prior to the Exercise Date in the
Purchase Period that expires on such Exercise Date shall be charged with the
aggregate Purchase Price of the shares of Stock purchased by such Participant on
the Exercise Date. No interest shall be paid or payable with respect to any
amount held in the Participant's Stock Purchase Account.
Sec. 4.07 Share Ownership; Issuance of Certificates.
(a) The shares purchased by a Participant on an Exercise Date shall,
for all purposes, be deemed to have been issued and/or sold at the
close of business on such Exercise Date. Prior to that time, none of
the rights or privileges of a stockholder of the Company shall inure to
the Participant with respect to such shares. All the shares of Stock
purchased under the Plan shall be delivered by the Company in a manner
as determined by the Compensation Committee.
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<PAGE> 7
(b) The Compensation Committee, in its sole discretion, may determine
that the shares of Stock shall be delivered by the Company (i) by
issuing and delivering to the Participant a certificate for the number
of whole shares of Stock purchased by such Participant on an Exercise
Date or during a calendar year, or (ii) by issuing and delivering a
certificate or certificates for the number of shares of Stock purchased
by all Participants on an Exercise Date or during a calendar year to a
member firm of the New York Stock Exchange which is also a member of
the National Association of Securities Dealers, as selected by the
Compensation Committee from time to time, which shares shall be
maintained by such member firm in separate brokerage accounts of each
participant, or (iii) by issuing and delivering a certificate or
certificates for the number of shares of Stock purchased by all
Participants on an Exercise Date or during the calendar year to a bank
or trust company or affiliate thereof, as selected by the Compensation
Committee from time to time, which shares shall be maintained by such
bank or trust company or affiliate in separate accounts for each
Participant or, if he designates on his Stock Purchase Agreement, in
his name jointly with his spouse, with right of survivorship. A
Participant who is a resident of a jurisdiction that does not recognize
such joint tenancy may have a certificate or account in his name as
tenant in common with his spouse, without right of survivorship. Such
designation may be changed by filing a notice thereof signed by the
Participant and his spouse. Such spouse shall be bound by all of the
terms and conditions of the Plan as if such spouse were a Participant.
Sec. 4.08 Restrictions on Resale. Stock acquired under the Plan may not be sold
or otherwise disposed of for at least six months after the Exercise Date on
which the shares were acquired, except in the case of death or disability. Any
Stock certificates delivered to a Participant prior to the expiration of such
six-month period shall contain a legend to reflect such restriction.
ARTICLE V
SPECIAL ADJUSTMENTS
Sec. 5.01 Shares Unavailable. If, on any Exercise Date, the aggregate funds
available for the purchase of Stock would purchase a number of shares in excess
of the number of shares then available for purchase under the Plan, the
following events shall occur:
(a) The number of shares that would otherwise be purchased by each
Participant shall be proportionately reduced on the Exercise Date in
order to eliminate such excess;
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<PAGE> 8
(b) The Plan shall automatically terminate immediately after the
Exercise Date as of which the supply of available shares is exhausted;
and
(c) Any amount remaining in the Stock Purchase Account of each of the
Participants shall be repaid to such Participants.
Sec. 5.02 Antidilution Provisions. The aggregate number of shares of Stock
reserved for purchase under the Plan, as hereinabove provided, and the
calculation of the Purchase Price per share may be appropriately adjusted to
reflect any increase or decease in the number of issued shares of Stock
resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend, or other increase or decrease in
such shares, if effected without receipt of consideration by the Company. Any
such adjustment shall be made by the Compensation Committee acting with the
consent of, and subject to the approval of, the Board.
Sec. 5.03 Effect of Certain Transactions. Subject to any required action by the
stockholders, if the Company shall be the surviving or resulting corporation in
any merger or consolidation, or if the Company shall be merged for the purpose
of changing the jurisdiction of its incorporation, any Offering hereunder shall
pertain to and apply to the shares of stock of the Company or the survivor.
However, in the event of a dissolution or liquidation of the Company, or of a
merger or consolidation in which the Company is not the surviving or resulting
corporation, the Plan and any Offering hereunder shall terminate upon the
effective date of such dissolution, liquidation, merger or consolidation, and
the balance then standing to the credit of each Participant in his Stock
Purchase Account shall be returned to him.
ARTICLE VI
MISCELLANEOUS
Sec. 6.01 Nonalienation. The right to purchase shares of Stock under the Plan is
personal to the Participant, is exercisable only by the Participant during his
lifetime except as hereinafter set forth, and may not be assigned or otherwise
transferred by the Participant. Notwithstanding the foregoing, there shall be
delivered to the executor, administrator or other personal representative of a
deceased Participant such shares of Stock and such residual balance as may
remain in the Participant's Stock Purchase Account as of the date the
Participant's death occurs. However, such representative shall be bound by the
terms and conditions of the Plan as if such representative were a Participant.
Sec. 6.02 Administrative Costs. The Company shall pay all Administrative
expenses associated with the operation of the Plan. No Administrative charges
shall be levied against the Stock Purchase Accounts of the Participants.
Sec. 6.03 Collection of Taxes. The Company shall be entitled to require any
Participant to remit, through payroll withholding or otherwise, any tax that it
determines it is so obligated to collect with respect to the issuance of Stock
hereunder, or the subsequent sale or disposition of such Stock, and the
Compensation Committee shall institute such mechanisms as shall insure the
collection of such taxes.
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Sec. 6.04 Compensation Committee. The Compensation Committee shall have the
authority and power to administer the Plan and to make, adopt, construe and
enforce rules and regulations not inconsistent with the provisions of the Plan.
The Compensation Committee shall adopt and prescribe the contents of all forms
required in connection with the administration of the Plan, including, but not
limited to the Purchase Agreement, payroll withholding authorizations,
withdrawal documents and all other notices required hereunder. The Compensation
Committee shall have the fullest discretion permissible under law in the
discharge of its duties. The Compensation Committee's interpretations and
decisions in respect of the Plan, the rules and regulations pursuant to which it
is operated, and the rights of Participants hereunder shall be final and
conclusive.
Sec. 6.05 Amendment of the Plan. The Board may amend the Plan without the
consent of stockholders or Participants, except that any such action shall be
subject to the approval of the Company's stockholders at or before the next
annual meeting of stockholders for which the record date is after such Board
action if such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided, however, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under any award theretofore granted to him.
Sec. 6.06 Termination of the Plan. The Plan shall continue in effect unless
terminated pursuant to action by the Board, which shall have the right to
terminate the Plan at any time without prior notice to any Participant and
without liability to any Participant. Upon the termination of the Plan, the
balance, if any, then standing to the credit of each Participant in his Stock
Purchase Account shall be refunded to him.
Sec. 6.07 Repurchase of Stock. The Company shall not be required to purchase or
repurchase from any Participant any of the shares of Stock that the Participant
acquired under the Plan.
Sec. 6.08 Notice. A Purchase Agreement and any notice that a Participant files
pursuant to the Plan shall be on the form prescribed by the Compensation
Committee and shall be effective only when received by the Compensation
Committee.
Sec. 6.09 Government Regulation. The Company's obligation to sell and to deliver
the Stock under the Plan is at all times subject to all approvals of any
governmental authority required in connection with the authorization, issuance,
sale or delivery of such Stock.
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Sec. 6.10 Headings, Captions, Gender. The headings and captions herein are for
convenience of reference only and shall not be considered as part of the text.
The masculine shall include the feminine, and vice versa.
Sec. 6.11 Severability of Provisions; Prevailing Law. The provisions of the Plan
shall be deemed severable. In the event any such provision is determined to be
unlawful or unenforceable by a court of competent jurisdiction or by reason of a
change in an applicable statute, the Plan shall continue to exist as though such
provision had never been included therein (or, in the case of a change in an
applicable statute, had been deleted as of the date of such change). The Plan
shall be governed by the laws of the State of Delaware, to the extent such laws
are not in conflict with, or superseded by, federal law.
10
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EXHIBIT 10.15
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of June 23, 1997
among
PERSONNEL GROUP OF AMERICA, INC.
as Borrower,
THE SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N.A.,
as Agent
<PAGE> 2
TABLE OF CONTENTS
SECTION 1 DEFINITIONS.......................................................5
1.1 Definitions.....................................................5
1.2 Computation of Time Periods....................................26
1.3 Accounting Terms...............................................26
SECTION 2 CREDIT FACILITIES................................................27
2.1 Loans.........................................................27
2.2 Letter of Credit Subfacility..................................29
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES...................34
3.1 Default Rate...................................................34
3.2 Extension and Conversion.......................................34
3.3 Prepayments....................................................35
3.4 Termination and Reduction of Committed Amount..................35
3.5 Fees...........................................................36
3.6 Capital Adequacy...............................................37
3.7 Inability To Determine Interest Rate...........................37
3.8 Illegality.....................................................38
3.9 Requirements of Law............................................38
3.10 Taxes.........................................................39
3.11 Indemnity.....................................................41
3.12 Pro Rata Treatment............................................42
3.13 Sharing of Payments...........................................42
3.14 Payments, Computations, Etc...................................43
3.15 Evidence of Debt..............................................45
3.16 Mandatory Assignment..........................................45
SECTION 4 GUARANTY.........................................................46
4.1 The Guarantee..................................................46
4.2 Obligations Unconditional......................................46
4.3 Reinstatement..................................................47
4.4 Certain Additional Waivers.....................................48
4.5 Remedies.......................................................48
4.6 Rights of Contribution.........................................48
4.7 Continuing Guarantee...........................................49
SECTION 5 CONDITIONS.......................................................49
5.1 Closing Conditions.............................................49
5.2 Conditions to all Extensions of Credit.........................51
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SECTION 6 REPRESENTATIONS AND WARRANTIES...................................52
6.1 Financial Condition............................................52
6.2 No Change; Dividends...........................................53
6.3 Organization; Existence; Compliance with Law...................53
6.4 Power; Authorization; Enforceable Obligations..................53
6.5 No Legal Bar...................................................54
6.6 No Material Litigation.........................................54
6.7 No Default.....................................................54
6.8 Ownership of Property; Liens...................................54
6.9 Intellectual Property..........................................55
6.10 No Burdensome Restrictions....................................55
6.11 Taxes ........................................................55
6.12 ERISA ........................................................55
6.13 Governmental Regulations, Etc.................................56
6.14 Subsidiaries..................................................57
6.15 Purpose of Loans and Letters of Credit........................58
6.16 Environmental Matters.........................................58
6.17 Perfected Security Interests..................................59
6.18 Borrower's Obligations........................................59
SECTION 7 AFFIRMATIVE COVENANTS............................................59
7.1 Information Covenants..........................................59
7.2 Preservation of Existence and Franchises.......................62
7.3 Books and Records..............................................63
7.4 Compliance with Law............................................63
7.5 Payment of Taxes and Other Indebtedness........................63
7.6 Insurance......................................................63
7.7 Maintenance of Property........................................63
7.8 Performance of Obligations.....................................63
7.9 Use of Proceeds................................................64
7.10 Audits/Inspections............................................64
7.11 Financial Covenants...........................................64
7.12 Additional Credit Parties.....................................65
7.13 Ownership of Subsidiaries.....................................65
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SECTION 8 NEGATIVE COVENANTS ..............................................65
8.1 Indebtedness...................................................65
8.2 Liens..........................................................66
8.3 Nature of Business.............................................66
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc.........67
8.5 Advances, Investments, Loans, etc..............................67
8.6 Restricted Payments............................................67
8.7 Prepayments of Indebtedness, etc...............................68
8.8 Transactions with Affiliates...................................68
8.9 Fiscal Year....................................................68
8.10 Limitation on Restrictions on Subsidiary Dividends and
Other Distributions, etc......................................69
8.11 Issuance and Sale of Subsidiary Stock.........................69
8.12 Sale Leasebacks...............................................69
8.13 No Further Negative Pledges...................................69
8.14 No Foreign Subsidiaries.......................................70
SECTION 9 EVENTS OF DEFAULT................................................70
9.1 Events of Default..............................................70
9.2 Acceleration; Remedies.........................................73
SECTION 10 AGENCY PROVISIONS.74
10.1 Appointment...................................................74
10.2 Delegation of Duties..........................................74
10.3 Exculpatory Provisions........................................74
10.4 Reliance on Communications....................................75
10.5 Notice of Default.............................................75
10.6 Non-Reliance on Agent and Other Lenders.......................75
10.7 Indemnification...............................................76
10.8 Agent in its Individual Capacity..............................77
10.9 Successor Agent...............................................77
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SECTION 11 MISCELLANEOUS...................................................77
11.1 Notices.......................................................77
11.2 Right of Set-Off..............................................78
11.3 Benefit of Agreement..........................................79
11.4 No Waiver; Remedies Cumulative................................81
11.5 Payment of Expenses, etc......................................81
11.6 Amendments, Waivers and Consents..............................82
11.7 Counterparts..................................................83
11.8 Headings......................................................83
11.9 Survival......................................................83
11.10 Governing Law; Submission to Jurisdiction; Venue.............83
11.11 Severability.................................................84
11.12 Entirety.....................................................84
11.13 Binding Effect; Amendment and Restatement of
Original Credit Agreement....................................84
11.14 Confidentiality..............................................85
11.15 Source of Funds..............................................86
11.16 Conflict.....................................................86
SCHEDULES
Schedule 1.1A Investments
Schedule 1.1B Liens
Schedule 1.1C Form of Amended and Restated Pledge Agreement
Schedule 2.1(a) Lenders
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Amended, Restated and Substituted Note
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 6.4 Required Consents, Authorizations, Notices
and Filings
Schedule 6.14 Subsidiaries
Schedule 7.1(c)(i) Form of Officer's Compliance Certificate
Schedule 7.1(c)(ii) Form of Officer's Compliance Certificate
Schedule 7.12 Form of Joinder Agreement
Schedule 8.1 Indebtedness
Schedule 11.3(b) Form of Assignment and Acceptance
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<PAGE> 6
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 23, 1997
(the "Credit Agreement"), is by and among PERSONNEL GROUP OF AMERICA, INC., a
Delaware corporation (the "Borrower"), the subsidiaries of the Borrower
identified on the signature pages hereto and such other subsidiaries as may from
time to time become a party hereto (the "Guarantors"), the several lenders
identified on the signature pages hereto and such other lenders as may from time
to time become a party hereto (the "Lenders") and NATIONSBANK, N.A., as agent
for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent
entered into that certain Credit Agreement, dated as of September 30, 1996 (as
amended, the "Original Credit Agreement"), as amended by that certain Amendment
No. 1 to Credit Agreement, dated as of December 13, 1996, that certain Amendment
No. 2 to Credit Agreement, dated as of February 28, 1997, that certain Amendment
No. 3 to Credit Agreement, dated as of April 14, 1997, and that certain
Amendment No. 4 to Credit Agreement and Pledge Agreement, dated as of May 19,
1997;
WHEREAS, the parties hereto have agreed to amend and restate the
Original Credit Agreement as set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Acquisition Note" means that certain promissory note, dated
as of September 30, 1996, executed by the Borrower to the order of BEST
in the principal amount of $10,950,000, as such promissory note may be
amended, modified, restated or replaced from time to time.
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement.
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"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the equity
interest in such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Agency Services Address" means NationsBank, N.A.,
NC1-001-15-04, 101 North Tryon Street, Charlotte, North Carolina 28255,
Attn: Agency Services, or such other address as may be identified by
written notice from the Agent to the Borrower.
"Agent" shall have the meaning assigned to such term in the
heading hereof, together with any successors or assigns.
"Agent's Fee Letter" means that certain letter agreement,
dated as of May 2, 1997, between the Agent and the Borrower, as
amended, modified, supplemented or replaced from time to time.
"Agent's Fees" shall have the meaning assigned to such term in
Section 3.5(c).
"Applicable Percentage" means, for purposes of calculating the
applicable interest rate for any day for any Loan or the applicable
rate of the Unused Fee for any day for purposes of Section 3.5(a) or
the applicable rate of the Standby Letter of Credit Fee for any day for
purposes of Section 3.5(b)(i), the appropriate applicable percentage
corresponding to the Consolidated Leverage Ratio in effect as of the
most recent Calculation Date:
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<TABLE>
<CAPTION>
============================================================================================================================
Applicable Applicable
Percentage for Percentage for Applicable
Pricing Eurodollar Standby Letter of Percentage for
Level Consolidated Leverage Ratio Loans Credit Fee Unused Fee
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I Less than 1.25:1.00 0.500% 0.500% 0.150%
- ----------------------------------------------------------------------------------------------------------------------------
II Greater than or equal to 1.25:1.00, but less 0.750% 0.750% 0.200%
than 2.25:1.00
- ----------------------------------------------------------------------------------------------------------------------------
III Greater than or equal to 2.25:1.00, but less 1.000% 1.000% 0.225%
than 3.00:1.00
- ----------------------------------------------------------------------------------------------------------------------------
IV Greater than or equal to 3.00:1.00, but less 1.250% 1.250% 0.250%
than 3.50:1.00
- ----------------------------------------------------------------------------------------------------------------------------
V Greater than or equal to 3.50:1.00 1.375% 1.375% 0.350%
============================================================================================================================
</TABLE>
The Applicable Percentages shall be determined and adjusted on the date
(each a "Calculation Date") five Business Days after each date by which
the Borrower is required to provide an officer's certificate in
accordance with the provisions of Section 7.1(c); provided, however
that (i) the initial Applicable Percentages shall be determined on the
basis of the Consolidated Leverage Ratio existing as of the Closing
Date (as represented in the officer's certificate required to be
delivered in accordance with Section 5.1(i)) and shall remain at the
Pricing Level corresponding thereto until the first Calculation Date
subsequent to the Closing Date and, thereafter, the Pricing Level shall
be determined by the then current Consolidated Leverage Ratio, and (ii)
if the Borrower fails to provide any officer's certificate to the
Agency Services Address as required by Section 7.1(c), the Applicable
Percentage from such Calculation Date shall be based on Pricing Level V
until such time as an appropriate officer's certificate is provided,
whereupon the Pricing Level shall be determined by the then current
Consolidated Leverage Ratio. Each Applicable Percentage shall be
effective from one Calculation Date until the next Calculation Date.
Any adjustment in the Applicable Percentages shall be applicable to all
existing Loans as well as any new Loans made or issued.
"Asset Sale" means any sale, lease, transfer or other
disposition (including any such transaction effected by way of merger,
amalgamation or consolidation) by the Borrower or any of its
Subsidiaries subsequent to the date hereof of any asset (including
stock in Subsidiaries of the Borrower), including without limitation
any sale leaseback transaction (whether or not involving a Capital
Lease), but excluding (a) the sale of inventory in the ordinary course
of business for fair consideration, (b) the sale or disposition of
machinery and equipment no longer used or useful in the conduct of such
Person's business, and (c) the sale of any asset having a net book
value of less than $50,000.
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"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty (60)
consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they
become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such
day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for
any reason the Agent shall have determined (which determination shall
be conclusive absent manifest error) that it is unable after due
inquiry to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Base Rate shall be determined
without regard to clause (a) of the first sentence of this definition
until the circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"BEST" means Business Enterprise Systems and Technology, Inc.,
a Washington corporation.
"Borrower" means the Person identified as such in the heading
hereof, together with any permitted successors and assigns.
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<PAGE> 10
"Borrower's Obligations" means, without duplication, (i) all
of the obligations of the Borrower to the Lenders (including the
Issuing Lender) and the Agent, whenever arising, under the Credit
Agreement, the Notes or any of the other Credit Documents (including,
but not limited to, any interest accruing after the occurrence of a
Bankruptcy Event with respect to the Borrower, regardless of whether
such interest is an allowed claim under the Bankruptcy Code) and (ii)
all liabilities and obligations, whenever arising, owing from the
Borrower to any Lender, or any Affiliate of a Lender, arising under any
Hedging Agreement.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina are
authorized or required by law to close, except that, when used in
connection with a Eurodollar Loan, such day shall also be a day on
which dealings between banks are carried on in U.S. dollar deposits in
London, England, Charlotte, North Carolina and New York, New York.
"Calculation Date" has the meaning set forth in the definition
of Applicable Percentage.
"Capital Lease" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and certificates
of deposit of (i) any Lender, or (ii) any domestic commercial bank of
recognized standing (y) having capital and surplus in excess of
$500,000,000 and (z) whose short-term commercial paper rating from S&P
is at least A-1 or the equivalent thereof or from Moody's is at least
P-1 or the equivalent thereof (any such bank being an "Approved
Lender"), in each case with maturities of not more than 270 days from
the date of acquisition, (c) commercial paper and variable or fixed
rate notes issued by any Approved Lender (or by the parent company
thereof) and maturing within six months of the date of acquisition, (d)
repurchase agreements entered into by a Person with a bank or trust
company (including any of the Lenders) or recognized securities dealer
having capital and surplus in excess of $500,000,000 for direct
obligations issued by or fully guaranteed by the United States of
America in which such Person shall have a perfected first priority
security interest (subject to no other Liens) and having, on the date
of purchase thereof, a fair market value of at least 100% of the amount
of the repurchase obligations, (e) obligations of any State of the
United States or any political subdivision thereof, the interest with
respect to which is exempt from federal income taxation under Section
103 of the Code, having a long term rating of at least AA- or Aa-3 by
S&P or Moody's, respectively, and maturing within three years from the
date of acquisition thereof, (f) Investments in municipal auction
preferred stock (i) rated AAA (or the equivalent thereof) or better by
S&P or Aaa (or the equivalent thereof) or better by Moody's and (ii)
with dividends that
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<PAGE> 11
reset at least once every 365 days and (g) Investments, classified in
accordance with GAAP as current assets, in money market investment
programs registered under the Investment Company Act of 1940, as
amended, which are administered by reputable financial institutions
having capital of at least $100,000,000 and the portfolios of which are
limited to Investments of the character described in the foregoing
subdivisions (a), (b), (c), (e) and (f).
"Change of Control" means the occurrence of any of the
following events: (i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership, directly or
indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, control over,
Voting Stock of the Borrower (or other securities convertible into such
Voting Stock) representing 20% or more of the combined voting power of
all Voting Stock of the Borrower, (ii) during any period of up to 24
consecutive months, commencing after the Closing Date, individuals who
at the beginning of such 24 month period were directors of the Borrower
(together with any new director whose election by the Borrower's Board
of Directors or whose nomination for election by the Borrower's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the directors of the Borrower then in office or (iii) the
occurrence of a "Change of Control" under and as defined in either the
Subordinated Note Indenture or the Subordinated Notes. As used herein,
"beneficial ownership" shall have the meaning provided in Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange
Act of 1934.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time.
References to sections of the Code shall be construed also to refer to
any successor sections.
"Collateral" means a collective reference to the collateral
which at any time will be covered by the Collateral Documents.
"Collateral Documents" means a collective reference to the
Pledge Agreement and such other documents executed and delivered in
connection with the attachment and perfection of the Agent's security
interests and liens arising thereunder, including without limitation,
UCC financing statements.
"Commitment" means (i) with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Commitment Percentage of the
Committed Amount, (A) to make Loans in accordance with the provisions
of Section 2.1(a) and (B) to purchase participation interests in
Letters of Credit in accordance with the provisions of Section 2.2(c)
and (ii) with respect to the Issuing Lender, the LOC Commitment.
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<PAGE> 12
"Commitment Percentage" means, for any Lender, the percentage
identified as its Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Committed Amount" shall have the meaning assigned to such
term in Section 2.1(a).
"Consolidated Capital Expenditures" means, for any period, all
capital expenditures of the Borrower and its Subsidiaries on a
consolidated basis for such period, as determined in accordance with
GAAP.
"Consolidated Current Assets" means, for any date, all assets
which would, in accordance with GAAP, be classified on a consolidated
balance sheet of the Borrower and its Subsidiaries as current assets,
after deducting adequate reserves in each case where a reserve is
appropriate in accordance with GAAP.
"Consolidated Current Liabilities" means, for any date, all
liabilities of the Borrower and its Subsidiaries which would, in
accordance with GAAP, be classified on a consolidated balance sheet of
the Borrower and its Subsidiaries as current liabilities.
"Consolidated Current Ratio" means, for any date, the ratio of
(i) Consolidated Current Assets as of such date to (ii) Consolidated
Current Liabilities as of such date.
"Consolidated Earn-Outs" means, for any period, all earn-out
payments made by the Borrower and its Subsidiaries on a consolidated
basis for such period; provided that, so long as the EBITDA (as defined
in the Purchase Agreement) of BEST shall exceed $12,600,000 for the
twelve month period ending on December 31, 1997, Consolidated Earn-Outs
shall exclude the earn-out payment made by the Borrower to BEST
pursuant to Section 3.6(b) of the Purchase Agreement.
"Consolidated EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period plus (ii) an amount which, in
the determination of Consolidated Net Income for such period, has been
deducted for (A) interest expense, (B) total Federal, state, local and
foreign income, value added and similar taxes and (C) depreciation and
amortization expense, all as determined in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, as of the
last day of any fiscal quarter, the ratio of (i) Consolidated EBITDA
for the four-quarter period ending on such date minus Consolidated
Capital Expenditures for the four-quarter period ending on such date,
to (ii) Consolidated Interest Expense as determined on such date plus
Consolidated Scheduled Funded Indebtedness Payments as determined on
such date plus Consolidated Earn-Outs made during the four-quarter
period ending on such date, all as determined in accordance with GAAP.
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<PAGE> 13
"Consolidated Funded Indebtedness" means, for any date, (i)
the outstanding principal amount of all Funded Indebtedness, without
duplication, of the Borrower and its Subsidiaries as of such date less
(ii) so long as no Loans are outstanding hereunder, the aggregate
amount of cash and Cash Equivalents held by the Borrower as of such
date.
"Consolidated Interest Coverage Ratio" means, as of the last
day of any fiscal quarter, the ratio of (i) Consolidated EBITDA for the
four-quarter period ending on such date to (ii) Consolidated Interest
Expense as determined on such date.
"Consolidated Interest Expense" means, as of the last day of
any fiscal quarter, pro forma interest expense of the Borrower and its
Subsidiaries on a consolidated basis for the four-fiscal quarter period
beginning on the immediately succeeding day. Pro forma interest expense
shall be calculated using the following assumptions: (i) the
outstanding principal amount of Indebtedness shall be equal to the
outstanding principal amount of Indebtedness as at the relevant date of
determination (without giving effect to any scheduled payments of
principal to be made during such four-quarter period) and (ii) any
Indebtedness which has a floating or formula rate shall have an implied
rate of interest for such four-quarter period equal to the rate which
is or would be in effect with respect to such Indebtedness as at the
relevant date of determination.
"Consolidated Leverage Ratio" means, as of the last day of any
fiscal quarter, the ratio of (i) Consolidated Funded Indebtedness as of
such date to (ii) Consolidated EBITDA for the four-quarter period
ending on such date.
"Consolidated Net Income" means, for any period, (i) net
income after taxes for such period for the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance with
GAAP plus (ii) to the extent not included in the amount determined
pursuant to clause (i) above and as calculated on a pro forma basis,
net income after taxes for such period for any Person acquired by the
Borrower or any of its Subsidiaries during such period (after giving
effect to changes in the operating costs of any acquired Person as if
such changes were in effect for such period and are reasonably expected
to continue).
"Consolidated Net Worth" means, for any date, total
shareholders' equity of the Borrower and its Subsidiaries on a
consolidated basis as of such date, as determined in accordance with
GAAP.
"Consolidated Scheduled Funded Indebtedness Payments" means,
as of the last day of any fiscal quarter, total scheduled payments of
principal on Funded Indebtedness (including without limitation the
Acquisition Note) for the Borrower and its Subsidiaries on a
consolidated basis for the four-fiscal quarter period beginning on the
immediately succeeding day. Consolidated Scheduled Funded Indebtedness
Payments shall not include any Consolidated Earn-Outs.
"Consolidated Senior Funded Indebtedness" means, for any date,
(i) the outstanding principal amount of all Consolidated Funded
Indebtedness, without duplication, of the
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<PAGE> 14
Borrower and its Subsidiaries as of such date less (ii) the outstanding
principal amount of all Subordinated Indebtedness as of such date.
"Consolidated Senior Leverage Ratio" means, as of the last day
of any fiscal quarter, the ratio of (i) Consolidated Senior Funded
Indebtedness as of such date to (ii) Consolidated EBITDA for the
four-quarter period ending on such date.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, the LOC Documents, the Collateral Documents, each
Joinder Agreement, the Agent's Fee Letter, and all other related
agreements and documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"Equity Transaction" means any issuance by the Borrower or any
of its Subsidiaries to any Person of shares of its capital stock or
other equity interests, any shares of its capital stock or other equity
interests pursuant to the exercise of options or warrants or any shares
of its capital stock or other equity interests pursuant to the
conversion of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Credit Party within the meaning of Section 4001(a)(14)
of ERISA, or is a member of a group which includes the Borrower and
which is treated as a single employer under Sections 414(b), (c), (m),
or (o) of the Code.
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<PAGE> 15
"Eurodollar Loan" means any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate
---------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from
time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section 9.1.
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole multiple
of 1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (A) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day and (B) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to the Agent on such day
on such transactions as determined by the Agent.
"Funded Indebtedness" means, with respect to any Person,
without duplication, (i) all Indebtedness of such Person for borrowed
money, (ii) all amounts due and owing by such Person under any
contingent earn-out agreements to which such Person is a party, (iii)
all purchase money Indebtedness of such Person, including without
limitation the principal portion of all obligations of such Person
under Capital Leases, (iv) all Guaranty Obligations of such Person with
respect to Funded Indebtedness of another Person, (v) the maximum
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<PAGE> 16
available amount of all standby letters of credit or acceptances issued
or created for the account of such Person, (vi) all Funded Indebtedness
of another Person secured by a Lien on any Property of such Person,
whether or not such Funded Indebtedness has been assumed, and (vii) the
principal balance outstanding under any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product to which such Person is a party, where such
transaction is considered borrowed money indebtedness for tax purposes
but is classified as an operating lease in accordance with GAAP. The
Funded Indebtedness of any Person shall include the Funded Indebtedness
of any partnership or joint venture in which such Person is a general
partner or joint venturer.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantor" means each of those Persons identified as a
"Guarantor" on the signature pages hereto, and each Additional Credit
Party which may hereafter execute a Joinder Agreement, together with
their successors and permitted assigns.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount
of any Guaranty Obligation hereunder shall (subject to any limitations
set forth therein) be deemed to be an amount equal to the outstanding
principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement between the Borrower
and any Lender, or any Affiliate of a Lender.
"Indebtedness" of any Person means (i) all obligations of such
Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property
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<PAGE> 17
purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the
ordinary course of business), (iv) all obligations of such Person
issued or assumed as the deferred purchase price of Property or
services purchased by such Person (other than trade debt incurred in
the ordinary course of business and due within six months of the
incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (v) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(vi) 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, or payable out of the proceeds of production
from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (vii) all Guaranty
Obligations of such Person (excluding, to the extent entered in the
ordinary course of business, any Guaranty Obligations of the Borrower
with respect to Operating Leases of any Subsidiary of the Borrower),
(viii) the principal portion of all obligations of such Person under
Capital Leases, (ix) all obligations of such Person in respect of
interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest
or exchange rate or commodity price hedging agreements (including, but
not limited to, the Hedging Agreements), (x) the maximum amount of all
standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (xi) all
preferred stock issued by such Person and required by the terms thereof
to be redeemed, or for which mandatory sinking fund payments are due,
by a fixed date and (xii) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing product to which such Person is
a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP. The Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"Interbank Offered Rate" means, for the Interest Period for
each Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
(rounded upwards, if necessary, to the nearest whole multiple of 1/100
of 1%) equal to the rate of interest, determined by the Agent on the
basis of the offered rates for deposits in dollars for a period of time
corresponding to such Interest Period (and commencing on the first day
of such Interest Period), appearing on Telerate Page 3750 (or, if, for
any reason, Telerate Page 3750 is not available, the Reuters Screen
LIBO Page) as of approximately 11:00 A.M. (London time) two (2)
Business Days before the first day of such Interest Period. As used
herein, "Telerate Page 3750" means the display designated as page 3750
by Dow Jones Telerate, Inc. (or such other page as may replace such
page on that service for the purpose of displaying the British Bankers
Association London interbank offered rates) and "Reuters Screen LIBO
Page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank
offered rates of major banks).
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<PAGE> 18
"Intercompany Indebtedness" means any Indebtedness of a Credit
Party (other than the Borrower) which (i) is owing to the Borrower or
any other Credit Party and (ii) by its terms is specifically
subordinated in right of payment to the prior payment of the
obligations of the Credit Parties under this Credit Agreement and the
other Credit Documents on terms and conditions reasonably satisfactory
to the Required Lenders.
"Interest Payment Date" means (i) as to any Base Rate Loan,
the last day of each March, June, September and December, the date of
repayment of principal of such Loan and the Termination Date and (ii)
as to any Eurodollar Loan, the last day of each Interest Period for
such Loan, the date of repayment of principal of such Loan and on the
Termination Date, and in addition where the applicable Interest Period
is more than 3 months, then also on the date 3 months from the
beginning of the Interest Period, and each 3 months thereafter. If an
Interest Payment Date falls on a date which is not a Business Day, such
Interest Payment Date shall be deemed to be the next succeeding
Business Day, except that in the case of Eurodollar Loans where the
next succeeding Business Day falls in the next succeeding calendar
month, then on the next preceding Business Day.
"Interest Period" means, as to any Eurodollar Loan, a period
of one, two, three or six month's duration, as the Borrower may elect,
commencing in each case, on the date of the borrowing (including
conversions, extensions and renewals); provided, however, (A) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day),
(B) no Interest Period shall extend beyond the Termination Date, and
(c) where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last
day of such calendar month.
"Investment", in any Person, means any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any Guaranty Obligation incurred for the benefit of such
Person. In computing the amount involved in any Investment, (i)
undistributed earnings of, and interest accrued in respect of
Indebtedness owing by, any such other Person accrued after the date of
such Investment shall not be included, (ii) there shall not be deducted
from the amounts invested in any such other Person any amounts received
as earnings (in the form of dividends, interest or otherwise) on such
Investment or as loans or advances from such other Person, and (iii)
unrealized increases or decreases in value, or write-ups, write-downs
or write-offs, of Investments in any such other Person shall be
disregarded.
"Issuing Lender" means NationsBank.
"Issuing Lender Fees" shall have the meaning assigned to such
term in Section 3.5(b)(iii).
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<PAGE> 19
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Schedule 7.12 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.12.
"Lenders" means each of the Persons identified as a "Lender"
on the signature pages hereto, and each Person which may become a
Lender by way of assignment in accordance with the terms hereof,
together with their successors and permitted assigns.
"Letter of Credit" means any letter of credit issued by the
Issuing Lender for the account of the Borrower in accordance with the
terms of Section 2.2.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Loan" or "Loans" shall have the meaning assigned to such term
in Section 2.1(a).
"LOC Commitment" means the commitment of the Issuing Lender to
issue Letters of Credit in an aggregate face amount at any time
outstanding (together with the amounts of any unreimbursed drawings
thereon) of up to the LOC Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to such
term in Section 2.2.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned
or at risk or (ii) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit plus (ii) the aggregate amount of all drawings
under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets, liabilities or prospects of the Borrower and its Subsidiaries
taken as a whole, (ii) the ability of any Credit Party to perform any
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<PAGE> 20
material obligation under the Credit Documents to which it is a party
or (iii) the material rights and remedies of the Lenders under the
Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate and at least one
employer other than the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its successors.
"NationsBank Liquidity Line" means that certain $10,000,000
liquidity line provided by NationsBank to the Borrower, as evidenced by
that certain promissory note, dated as of June 2, 1997, executed by the
Borrower in favor of NationsBank.
"Net Proceeds" means cash proceeds received by the Borrower or
any of its Subsidiaries from time to time in connection with any Asset
Sale or any Equity Transaction, net of actual costs (including, without
limitation, commissions and underwriting discounts, if any) and taxes
paid by such Person in connection with and attributable to such Asset
Sale or Equity Transaction; provided, however, "Net Proceeds" shall not
include the lesser of (a) $1,000,000 and (b) aggregate cash proceeds
received by the Borrower from time to time in connection with the
issuance by the Borrower of any capital stock or other equity interests
pursuant to stock options granted under the Borrower's 1995 Equity
Participation Plan or any shares issued under the Borrower's 1997
Employee Stock Purchase Plan.
"Non-Excluded Taxes" means such term as is defined in Section
3.10.
"Note" means a promissory note of the Borrower in favor of a
Lender delivered pursuant to Section 2.1(e) and evidencing the Loans of
such Lender, as such promissory note may be amended, modified, restated
or replaced from time to time.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b)(i), as required by Section
2.1(b)(i).
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<PAGE> 21
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Schedule 3.2, as
required by Section 3.2.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Original Credit Agreement" means such term as defined in the
preamble hereto.
"Participation Interest" means, the extension of credit by a
Lender by way of a purchase of a participation in any Letters of Credit
or LOC Obligations as provided in Section 2.2(c) or in any Loans as
provided in Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Acquisitions" means:
(i) acquisitions by the Borrower or its Subsidiaries
of all or any portion of the capital stock or securities or
all, substantially all or any portion of the assets of any
Person engaged in a business or businesses substantially
similar to any business currently conducted by the Borrower or
any of its Subsidiaries, provided that (A) the purchase price
(including the fair market value of any capital stock of the
Borrower provided as a portion thereof) of any such
acquisition individually does not exceed 25% of Consolidated
Net Worth, (B) the purchase price (excluding the fair market
value of any capital stock of the Borrower provided as a
portion thereof) of any such acquisition individually does not
exceed 12.5% of Consolidated Net Worth, (C) no portion of the
purchase price of any such acquisition shall consist of any
stock other the common stock of the Borrower, (D) such
acquisition is approved by the board of directors of such
Person (if applicable or required), and (E) after giving
effect on a Pro Forma Basis to any such acquisition (including
but not limited to any Indebtedness to be incurred by the
Borrower or any of its Subsidiaries in connection therewith),
(1) no Default or Event of Default would exist hereunder, (2)
the Consolidated Leverage Ratio is less than or equal to
3.25:1.00 and (3) the Consolidated Senior Leverage Ratio is
less than or equal to 1.75:1.00; and
(ii) any merger or consolidation permitted by Section
8.4(b).
As used herein, the "purchase price" of any acquisition shall include,
without duplication, the non-contingent purchase price, all acquired
liabilities, all non-compete payments and the principal amount of any
seller financing, but shall exclude the contingent purchase price and
all fees and expenses.
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<PAGE> 22
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) accounts receivable created, acquired
or made by the Borrower or any of its Subsidiaries in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms; (iii) Investments consisting of stock,
obligations, securities or other property received by the Borrower or
any of its Subsidiaries in settlement of accounts receivable (created
in the ordinary course of business) from bankrupt obligors; (iv)
Investments existing as of the Closing Date and set forth in Schedule
1.1A, (v) Guaranty Obligations permitted by Section 8.1; (vi) Permitted
Acquisitions; (vii) transactions permitted by Section 8.8; (viii)
advances or loans to directors, officers, employees, agents, customers
or suppliers that do not exceed $250,000 in the aggregate at any one
time outstanding; (ix) Intercompany Indebtedness permitted by Section
8.1; and (x) other Investments, provided that the aggregate outstanding
amount of all such other Investments taken together shall not exceed
$3,000,000.
"Permitted Liens" means:
(i) Liens in favor of the Agent on behalf of the
Lenders;
(ii) Liens (other than Liens created or imposed under
ERISA) for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and
as to which the Property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the same
or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under
ERISA) incurred or deposits made by the Borrower and its
Subsidiaries in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of
tenders, statutory obligations, bids, leases, government
contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment
of borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the
judgments secured shall, within 30
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<PAGE> 23
days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall have been
discharged within 30 days after the expiration of any such
stay;
(vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered Property for its intended purposes;
(vii) Liens on Property securing purchase money
Indebtedness (including Capital Leases) to the extent
permitted under Section 8.1(c), provided that any such Lien
attaches to such Property concurrently with or within 90 days
after the acquisition thereof;
(viii) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository
institutions;
(ix) other Liens, provided that the aggregate amount
Indebtedness secured by such Liens shall not exceed an
aggregate principal amount of $1,000,000; and
(x) Liens existing as of the Closing Date and set
forth on Schedule 1.1B.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Pledge Agreement" means the amended and restated pledge and
security agreement dated as of the Closing Date in the form of Schedule
1.1C to be executed in favor of the Agent by each Credit Party which
owns any stock in any Subsidiary of the Borrower.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by NationsBank as its prime rate in effect
at its principal office in Charlotte, North Carolina, with each change
in the Prime Rate being effective on the date such change is publicly
announced as effective (it being understood and agreed that the Prime
Rate is a reference rate used by NationsBank in determining interest
rates on certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit by NationsBank to any
debtor).
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<PAGE> 24
"Pro Forma Basis" means, with respect to any Pro Forma
Transaction, that such Pro Forma Transaction shall be deemed to have
occurred as of the first day of the four fiscal-quarter period ending
as of the most recent fiscal quarter end preceding the date of such Pro
Forma Transaction with respect to which the Agent and the Lenders have
received the officer's certificate in accordance with the provisions of
Section 7.1(c)(i). With respect to any incurrence, assumption or
retirement of Indebtedness as referred to in Section 8.1(g), any such
Indebtedness which has a floating or formula rate shall have an implied
rate of interest for the applicable period equal to the rate which is
or would be in effect with respect to such Indebtedness as at the
relevant date of determination.
"Pro Forma Transaction" means (i) any incurrence, assumption
or retirement of Indebtedness as referred to in Section 8.1(g) and (ii)
any acquisition as referred to in the definition of "Permitted
Acquisitions" set forth in this Section 1.1.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Purchase Agreement" means that certain asset purchase
agreement, dated as of September 20, 1996, among the Borrower, BEST,
Craig Newbold, William Adamucci, David McKee, Ron Hetland and Lester
LeRoss, as the same may be amended, modified, restated or replaced from
time to time.
"Register" shall have the meaning given such term in Section
11.3(c).
"Regulation D, G, U, or X" means Regulation D, G, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
post-event notice requirement is waived under subsections .13, .14,
.18, .19, or .20 of PBGC Reg. ss. 2615.
"Required Lenders" means, at any time, Lenders which are then
in compliance with their obligations hereunder (as determined by the
Agent) and holding in the aggregate at least 51% of (i) the Commitments
(and Participation Interests therein) or (ii) if the Commitments have
been terminated, the outstanding Loans and Participation Interests
(including the Participation Interests of the Issuing Lender in any
Letters of Credit).
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<PAGE> 25
"Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its material property is subject.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of the Borrower or any of its Subsidiaries, now or hereafter
outstanding, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock of the Borrower or any of its
Subsidiaries, now or hereafter outstanding, (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of the
Borrower or any of its Subsidiaries, now or hereafter outstanding and
(iv) any payment or prepayment of principal of, premium, if any, or
interest on, redemption, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any Subordinated Indebtedness.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
.
"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) 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 in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's Property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which such Person is engaged or is to engage, (iv) the
fair value of the Property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of such Person and (v) the present fair saleable value of
the assets 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. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Standby Letter of Credit Fee" shall have the meaning assigned
to such term in Section 3.5(b)(i).
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"Subordinated Indebtedness" means (i) any Indebtedness arising
under the Subordinated Note Documents, (ii) any Indebtedness evidenced
by the Acquisition Note and (iii) any additional Indebtedness
(including contingent earn-outs) incurred by the Borrower or any of its
Subsidiaries which by its terms is specifically subordinated in right
of payment to the prior payment of the obligations of the Credit
Parties under this Credit Agreement and the other Credit Documents on
terms and conditions satisfactory to the Agent.
"Subordinated Note" means any of the 5 3/4% Convertible
Subordinated Notes due 2004 issued by the Borrower in favor of the
Subordinated Noteholders pursuant to the Subordinated Note Indenture,
as such Subordinated Notes may be amended, modified, restated or
supplemented and in effect from time to time.
"Subordinated Note Documents" means a collective reference to
the Subordinated Note Indenture, the Subordinated Notes and all other
related agreements and documents issued or delivered thereunder or
pursuant thereto.
"Subordinated Note Indenture" means that certain Indenture,
dated as of the Closing Date, by and between the Borrower and First
Union National Bank, as trustee, as the same may be amended, modified,
restated or supplemented and in effect from time to time.
"Subordinated Noteholder" means any of the holders from time
to time of the Subordinated Notes.
"Subsidiary" means, as to any Person, (a) any corporation more
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time, any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by
such Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than 50%
equity interest at any time.
"Termination Date" means June 23, 2002.
"Termination Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a
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trustee to administer, any Plan; or (vi) the complete or partial
withdrawal of the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate from a Multiemployer Plan.
"Trade Letter of Credit Fee" shall have the meaning assigned
to such term in Section 3.5(b)(ii).
"Unused Committed Amount" means, for any period, the amount by
which (a) the then applicable Committed Amount exceeds (b) the daily
average sum for such period of (i) the outstanding aggregate principal
amount of all Loans plus (ii) the outstanding aggregate principal
amount of all LOC Obligations.
"Unused Fee" shall have the meaning assigned to such term in
Section 3.5(a).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 3.5(a).
"Voting Stock" means, with respect to any Person, capital
stock issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening of
such a contingency.
1.2 COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3 ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1
hereof (or, prior to the delivery of the first financial statements pursuant to
Section 7.1 hereof, consistent with the financial statements as at December 29,
1996); provided, however, if (a) the Borrower shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Agent or the Required Lenders shall so object in writing within 30 days
after delivery of such financial statements, then such calculations shall be
made on a basis consistent with the most recent financial statements delivered
by the Borrower to the Lenders as to which no such objection shall have been
made.
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SECTION 2
CREDIT FACILITIES
2.1 LOANS.
(a) Commitment. Subject to the terms and conditions hereof and
in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make available to the Borrower such
Lender's Commitment Percentage of revolving credit loans requested by
the Borrower in Dollars ("Loans") from time to time from the Closing
Date until the Termination Date, or such earlier date as the
Commitments shall have been terminated as provided herein for the
purposes hereinafter set forth; provided, however, that the sum of the
aggregate principal amount of outstanding Loans shall not exceed ONE
HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000) (as such aggregate
maximum amount may be reduced from time to time as provided in Section
3.4, the "Committed Amount") ; provided, further, (i) with regard to
each Lender individually, such Lender's outstanding Loans shall not
exceed such Lender's Commitment Percentage of the Committed Amount, and
(ii) with regard to the Lenders collectively, the aggregate principal
amount of outstanding Loans plus LOC Obligations outstanding shall not
exceed the Committed Amount. Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the
provisions hereof; provided, however, that no more than 7 Eurodollar
Loans shall be outstanding hereunder at any time. For purposes hereof,
Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date,
although borrowings, extensions and conversions may, in accordance with
the provisions hereof, be combined at the end of the existing Interest
Periods to constitute a new Eurodollar Loan with a single Interest
Period. Loans hereunder may be repaid and reborrowed in accordance with
the provisions hereof.
(b) Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall
request a Loan borrowing by written notice (or telephone
notice promptly confirmed in writing) to the Agent not later
than 11:00 A.M. (Charlotte, North Carolina time) on the
Business Day prior to the date of the requested borrowing in
the case of Base Rate Loans, and on the third Business Day
prior to the date of the requested borrowing in the case of
Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Loan is requested,
(B) the date of the requested borrowing (which shall be a
Business Day), (C) the aggregate principal amount to be
borrowed, and (D) whether the borrowing shall be comprised of
Base Rate Loans, Eurodollar Loans or a combination thereof,
and if Eurodollar Loans are requested, the Interest Period(s)
therefor. If the Borrower shall fail to specify in any such
Notice of Borrowing (I) an applicable Interest Period in the
case of a Eurodollar Loan, then such notice shall be deemed to
be a request for an Interest
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Period of one month, or (II) the type of Loan requested, then
such notice shall be deemed to be a request for a Base Rate
Loan hereunder. The Agent shall give notice to each affected
Lender promptly upon receipt of each Notice of Borrowing
pursuant to this Section 2.1(b)(i), the contents thereof and
each such Lender's share of any borrowing to be made pursuant
thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or
Base Rate Loan that is a Loan shall be in a minimum aggregate
principal amount of $500,000 and integral multiples of
$100,000 in excess thereof (or the remaining amount of the
Committed Amount, if less).
(iii) Advances. Each Lender will make its
Commitment Percentage of each Loan borrowing available to the
Agent for the account of the Borrower as specified in Section
3.14(a), or in such other manner as the Agent may specify in
writing, by 1:00 P.M. (Charlotte, North Carolina time) on the
date specified in the applicable Notice of Borrowing in
Dollars and in funds immediately available to the Agent. Such
borrowing will then be made available to the Borrower by the
Agent by crediting the account of the Borrower on the books of
such office with the aggregate of the amounts made available
to the Agent by the Lenders and in like funds as received by
the Agent.
(c) Repayment. The principal amount of all Loans shall be due
and payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Loans
shall be comprised in whole or in part of Base Rate Loans,
such Base Rate Loans shall bear interest at a per annum rate
equal to the Base Rate;
(ii) Eurodollar Loans. During such periods as Loans
shall be comprised in whole or in part of Eurodollar Loans,
such Eurodollar Loans shall bear interest at a per annum rate
equal to the Eurodollar Rate plus the Applicable Percentage.
Interest on Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified
herein).
(e) Notes. The Loans made by each Lender shall be evidenced by
a duly executed promissory note of the Borrower to such Lender in an
original principal amount equal to such Lender's Commitment Percentage
of the Committed Amount and in substantially the form of Schedule
2.1(e).
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2.2 LETTER OF CREDIT SUBFACILITY.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the Issuing Lender may reasonably require, the Lenders will participate
in the issuance by the Issuing Lender from time to time of such Letters
of Credit in Dollars from the Closing Date until the Termination Date
as the Borrower may request, in a form acceptable to the Issuing
Lender; provided, however, that (i) the LOC Obligations outstanding
shall not at any time exceed TEN MILLION DOLLARS ($10,000,000) (the
"LOC Committed Amount") and (ii) the sum of the aggregate principal
amount of outstanding Loans plus LOC Obligations outstanding shall not
at any time exceed the Committed Amount. No Letter of Credit shall (x)
have an original expiry date more than one year from the date of
issuance or (y) as originally issued or as extended, have an expiry
date extending beyond the Termination Date. Each Letter of Credit shall
comply with the related LOC Documents. The issuance and expiry date of
each Letter of Credit shall be a Business Day.
(b) Notice and Reports. The request for the issuance of a
Letter of Credit shall be submitted by the Borrower to the Issuing
Lender at least three (3) Business Days prior to the requested date of
issuance. The Issuing Lender will, at least quarterly and more
frequently upon request, disseminate to each of the Lenders a detailed
report specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may have
occurred since the date of the prior report, and including therein,
among other things, the beneficiary, the face amount, expiry date as
well as any payment or expirations which may have occurred.
(c) Participation. Each Lender, upon issuance of a Letter of
Credit, shall be deemed to have purchased without recourse a risk
participation from the applicable Issuing Lender in such Letter of
Credit and the obligations arising thereunder, in each case in an
amount equal to its pro rata share of the obligations under such Letter
of Credit (based on the respective Commitment Percentages of the
Lenders) and shall absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be obligated to pay to the
Issuing Lender therefor and discharge when due, its pro rata share of
the obligations arising under such Letter of Credit. Without limiting
the scope and nature of each Lender's participation in any Letter of
Credit, to the extent that the Issuing Lender has not been reimbursed
as required hereunder or under any such Letter of Credit, each such
Lender shall pay to the Issuing Lender its pro rata share of such
unreimbursed drawing in same day funds on the day of notification by
the Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) hereof. The obligation of each Lender to
so reimburse the Issuing Lender shall be absolute and unconditional and
shall not be affected by the occurrence of a Default, an Event of
Default or any other occurrence or event. Any such reimbursement shall
not relieve or otherwise impair the obligation of the Borrower to
reimburse the Issuing Lender under any Letter of Credit, together with
interest as hereinafter provided.
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(d) Reimbursement. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the Borrower.
Unless the Borrower shall immediately notify the Issuing Lender that
the Borrower intends to otherwise reimburse the Issuing Lender for such
drawing, the Borrower shall be deemed to have requested that the
Lenders make a Loan in the amount of the drawing as provided in
subsection (e) hereof on the related Letter of Credit, the proceeds of
which will be used to satisfy the related reimbursement obligations.
The Borrower promises to reimburse the Issuing Lender on the day of
drawing under any Letter of Credit (either with the proceeds of a Loan
obtained hereunder or otherwise) in same day funds. If the Borrower
shall fail to reimburse the Issuing Lender as provided hereinabove, the
unreimbursed amount of such drawing shall bear interest at a per annum
rate equal to the Base Rate plus two percent (2%). The Borrower's
reimbursement obligations hereunder shall be absolute and unconditional
under all circumstances irrespective of any rights of setoff,
counterclaim or defense to payment the Borrower may claim or have
against the Issuing Lender, the Agent, the Lenders, the beneficiary of
the Letter of Credit drawn upon or any other Person, including without
limitation any defense based on any failure of the Borrower or any
other Credit Party to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing
Lender will promptly notify the other Lenders of the amount of any
unreimbursed drawing and each Lender shall promptly pay to the Agent
for the account of the Issuing Lender in Dollars and in immediately
available funds, the amount of such Lender's pro rata share of such
unreimbursed drawing. Such payment shall be made on the day such notice
is received by such Lender from the Issuing Lender if such notice is
received at or before 2:00 P.M. (Charlotte, North Carolina time)
otherwise such payment shall be made at or before 12:00 Noon
(Charlotte, North Carolina time) on the Business Day next succeeding
the day such notice is received. If such Lender does not pay such
amount to the Issuing Lender in full upon such request, such Lender
shall, on demand, pay to the Agent for the account of the Issuing
Lender interest on the unpaid amount during the period from the date of
such drawing until such Lender pays such amount to the Issuing Lender
in full at a rate per annum equal to, if paid within two (2) Business
Days of the date that such Lender is required to make payments of such
amount pursuant to the preceding sentence, the Federal Funds Rate and
thereafter at a rate equal to the Base Rate. Each Lender's obligation
to make such payment to the Issuing Lender, and the right of the
Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and
without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default
or the acceleration of the obligations of the Borrower hereunder and
shall be made without any offset, abatement, withholding or reduction
whatsoever. Simultaneously with the making of each such payment by a
Lender to the Issuing Lender, such Lender shall, automatically and
without any further action on the part of the Issuing Lender or such
Lender, acquire a participation in an amount equal to such payment
(excluding the portion of such payment constituting interest owing to
the Issuing Lender) in the related unreimbursed drawing portion of the
LOC Obligation and in the interest thereon and in the related LOC
Documents, and shall have a claim against the Borrower with respect
thereto.
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(e) Repayment with Loans. On any day on which the Borrower
shall have requested, or been deemed to have requested, a Loan advance
to reimburse a drawing under a Letter of Credit, the Agent shall give
notice to the Lenders that a Loan has been requested or deemed
requested by the Borrower to be made in connection with a drawing under
a Letter of Credit, in which case a Loan advance comprised of Base Rate
Loans (or Eurodollar Loans to the extent the Borrower has complied with
the procedures of Section 2.1(b)(i) with respect thereto) shall be
immediately made to the Borrower by all Lenders (notwithstanding any
termination of the Commitments pursuant to Section 9.2) pro rata based
on the respective Commitment Percentages of the Lenders (determined
before giving effect to any termination of the Commitments pursuant to
Section 9.2) and the proceeds thereof shall be paid directly to the
Issuing Lender for application to the respective LOC Obligations. Each
such Lender hereby irrevocably agrees to make its pro rata share of
each such Loan immediately upon any such request or deemed request in
the amount, in the manner and on the date specified in the preceding
sentence notwithstanding (i) the amount of such borrowing may not
comply with the minimum amount for advances of Loans otherwise required
hereunder, (ii) whether any conditions specified in Section 5.2 are
then satisfied, (iii) whether a Default or an Event of Default then
exists, (iv) failure for any such request or deemed request for Loan to
be made by the time otherwise required hereunder, (v) whether the date
of such borrowing is a date on which Loans are otherwise permitted to
be made hereunder or (vi) any termination of the Commitments relating
thereto immediately prior to or contemporaneously with such borrowing.
In the event that any Loan cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code with respect
to the Borrower or any Credit Party), then each such Lender hereby
agrees that it shall forthwith purchase (as of the date such borrowing
would otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase)
from the Issuing Lender such participation in the outstanding LOC
Obligations as shall be necessary to cause each such Lender to share in
such LOC Obligations ratably (based upon the respective Commitment
Percentages of the Lenders (determined before giving effect to any
termination of the Commitments pursuant to Section 9.2)), provided that
at the time any purchase of participation pursuant to this sentence is
actually made, the purchasing Lender shall be required to pay to the
Issuing Lender, to the extent not paid to the Issuer by the Borrower in
accordance with the terms of subsection (d) hereof, interest on the
principal amount of participation purchased for each day from and
including the day upon which such borrowing would otherwise have
occurred to but excluding the date of payment for such participation,
at the rate equal to, if paid within two (2) Business Days of the date
of the Loan advance, the Federal Funds Rate, and thereafter at a rate
equal to the Base Rate.
(f) Designation of Subsidiaries as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 2.2(a) hereof, a Letter
of Credit issued hereunder may contain a statement to the effect that
such Letter of Credit is issued for the account of a Subsidiary of the
Borrower, provided that notwithstanding such statement, the Borrower
shall be the actual account party for all purposes of this Credit
Agreement for such Letter of Credit and such statement shall not
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<PAGE> 33
affect the Borrower's reimbursement obligations hereunder with respect
to such Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter
of Credit shall, for purposes hereof, be treated in all respects the
same as the issuance of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Issuing Lender may have
the Letters of Credit be subject to The Uniform Customs and Practice
for Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (the "UCP"), in which case the UCP
may be incorporated therein and deemed in all respects to be a part
thereof.
(i) Indemnification; Nature of Issuing Lender's
Duties. (i) In addition to its other obligations under this
Section 2.2, the Borrower hereby agrees to protect, indemnify,
pay and save the Issuing Lender harmless from and against any
and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees)
that the Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any
Letter of Credit or (B) the failure of the Issuing Lender to
honor a drawing under a Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present
or future de jure or de facto government or governmental
authority (all such acts or omissions, herein called
"Government Acts").
(ii) As between the Borrower and the Issuing Lender,
the Borrower shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof. The
Issuing Lender shall not be responsible: (A) for the form,
validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any party in connection with the
application for and issuance of any Letter of Credit, even if
it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) for the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (D) for any loss or delay in
the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (E) for any consequences arising from
causes beyond the control of the Issuing Lender, including,
without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of the Issuing
Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by the Issuing Lender, under or in
connection with any Letter of Credit or the related
certificates, if taken
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or omitted without gross negligence or bad faith, shall not
put such Issuing Lender under any resulting liability to the
Borrower or any other Credit Party. It is the intention of the
parties that this Credit Agreement shall be construed and
applied to protect and indemnify the Issuing Lender against
any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower
(on behalf of itself and each of the other Credit Parties),
including, without limitation, any and all Government Acts.
The Issuing Lender shall not, in any way, be liable for any
failure by the Issuing Lender or anyone else to pay any
drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the
Issuing Lender.
(iv) Nothing in this subsection (h) is intended to
limit the reimbursement obligations of the Borrower contained
in subsection (d) above. The obligations of the Borrower under
this subsection (h) shall survive the termination of this
Credit Agreement. No act or omissions of any current or prior
beneficiary of a Letter of Credit shall in any way affect or
impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (h), the Borrower shall have no
obligation to indemnify the Issuing Lender in respect of any
liability incurred by the Issuing Lender (A) arising out of
the gross negligence or willful misconduct of the Issuing
Lender, as determined by a court of competent jurisdiction, or
(B) caused by the Issuing Lender's failure to pay under any
Letter of Credit after presentation to it of a request
strictly complying with the terms and conditions of such
Letter of Credit, as determined by a court of competent
jurisdiction, unless such payment is prohibited by any law,
regulation, court order or decree.
(j) Responsibility of Issuing Lender. It is expressly
understood and agreed that the obligations of the Issuing Lender
hereunder to the Lenders are only those expressly set forth in this
Credit Agreement and that the Issuing Lender shall be entitled to
assume that the conditions precedent set forth in Section 5.2 have been
satisfied unless it shall have acquired actual knowledge that any such
condition precedent has not been satisfied; provided, however, that
nothing set forth in this Section 2.2 shall be deemed to prejudice the
right of any Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this Section
2.2 in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit
constituted gross negligence or willful misconduct on the part of the
Issuing Lender.
(k) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document (including any
letter of credit application), this Credit Agreement shall control.
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SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 DEFAULT RATE.
Upon the occurrence, and during the continuance, of an Event of
Default, the principal of and, to the extent permitted by law, interest on the
Loans and any other amounts owing hereunder or under the other Credit Documents
shall bear interest, payable on demand, at a per annum rate 2% greater than the
rate which would otherwise be applicable (or if no rate is applicable, whether
in respect of interest, fees or other amounts, then 2% greater than the Base
Rate).
3.2 EXTENSION AND CONVERSION.
Subject to the terms of Section 5.2, the Borrower shall have the
option, on any Business Day, to extend existing Loans into a subsequent
permissible Interest Period or to convert Loans into Loans of another interest
rate type; provided, however, that (i) except as provided in Section 3.8,
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
the Interest Period applicable thereto, (ii) Eurodollar Loans may be extended,
and Base Rate Loans may be converted into Eurodollar Loans, only if no Default
or Event of Default is in existence on the date of extension or conversion,
(iii) Loans extended as, or converted into, Eurodollar Loans shall be subject to
the terms of the definition of "Interest Period" set forth in Section 1.1 and
shall be in such minimum amounts as provided in Section 2.1(b)(ii), (iv) no more
than 7 Eurodollar Loans shall be outstanding hereunder at any time (it being
understood that, for purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans, even if they begin on
the same date, although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the end of existing
Interest Periods to constitute a new Eurodollar Loan with a single Interest
Period) and (v) any request for extension or conversion of a Eurodollar Loan
which shall fail to specify an Interest Period shall be deemed to be a request
for an Interest Period of one month. Each such extension or conversion shall be
effected by the Borrower by giving a Notice of Extension/Conversion (or
telephone notice promptly confirmed in writing) to the Agent prior to 11:00 A.M.
(Charlotte, North Carolina time) on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the extension of a Eurodollar Loan as, or
conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Loans to be so extended or converted, the types of Loans into
which such Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for extension or conversion
shall be irrevocable and shall constitute a representation and warranty by the
Borrower of the matters specified in subsections (ii), (iii), (iv) and (v) of
Section 5.2. In the event the Borrower fails to request extension or conversion
of any Eurodollar Loan in accordance with this Section, or any such conversion
or extension is not permitted or required by this Section, then such Eurodollar
Loan shall be automatically converted into a Base Rate Loan at the end of the
Interest Period applicable thereto. The Agent shall give each Lender notice as
promptly as practicable of any such proposed extension or conversion affecting
any Loan.
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3.3 PREPAYMENTS.
(a) Voluntary Prepayments. The Borrower shall have the right
to prepay Loans in whole or in part from time to time, subject to
Section 3.11, but otherwise without premium or penalty; provided,
however, that (i) Eurodollar Loans may only be prepaid on three
Business Days' prior written notice to the Agent and specifying the
applicable Loans to be prepaid; (ii) any prepayment of Eurodollar Loans
will be subject to Section 3.11; and (iii) each such partial prepayment
of Loans shall be in a minimum principal amount of $500,000. Subject to
the foregoing terms, amounts prepaid under this Section 3.3(a) shall be
applied as the Borrower may elect.
(b) Mandatory Prepayments.
(i) If at any time, the sum of the aggregate
principal amount of outstanding Loans plus LOC Obligations
outstanding shall exceed the Committed Amount, the Borrower
promises to prepay immediately the outstanding principal
balance on the Loans in an amount sufficient to eliminate such
excess.
(ii) Immediately upon the occurrence of any Asset
Sale, the Borrower shall prepay the Loans in an amount equal
to 100% of the Net Proceeds of the related Asset Sale.
(iii) Immediately upon the occurrence of any Equity
Transaction, the Borrower shall prepay the Loans in an amount
equal to 100% of the Net Proceeds of the related Equity
Transaction.
(c) General. All prepayments made pursuant to this Section 3.3
shall (i) be subject to Section 3.11 and (ii) unless the Borrower shall
specify otherwise, be applied first to Base Rate Loans, if any, and
then to Eurodollar Loans in direct order of Interest Period maturities.
Amounts prepaid may be reborrowed in accordance with the provisions
hereof.
3.4 TERMINATION AND REDUCTION OF COMMITTED AMOUNT.
(a) Voluntary Reductions. The Borrower may from time to time
permanently reduce or terminate the Committed Amount in whole or in
part (in minimum aggregate amounts of $5,000,000 or in integral
multiples of $1,000,000 in excess thereof (or, if less, the full
remaining amount of the then applicable Committed Amount)) upon five
Business Days' prior written notice to the Agent; provided, however, no
such termination or reduction shall be made which would cause the
aggregate principal amount of outstanding Loans plus LOC Obligations
outstanding to exceed the Committed Amount, unless, concurrently with
such termination or reduction, the Loans are repaid to the extent
necessary to eliminate such excess. The Commitments of the Lenders and
the Issuing Lender shall automatically terminate on the Termination
Date. The Agent shall promptly
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notify each affected Lender of receipt by the Agent of any notice from
the Borrower pursuant to this Section 3.4(a).
(b) Termination Date. The Commitments of the Lenders and the
LOC Commitment of the Issuing Lender shall automatically terminate on
the Termination Date.
(c) General. The Borrower shall pay to the Agent for the
account of the Lenders in accordance with the terms of Section 3.5(a),
on the date of each termination or reduction of the Committed Amount,
the Unused Fee accrued through the date of such termination or
reduction on the amount of the Committed Amount so terminated or
reduced.
3.5 FEES.
(a) Unused Fee. In consideration of the Commitments of the
Lenders hereunder, the Borrower agrees to pay to the Agent for the
account of each Lender a fee (the "Unused Fee") on the Unused Committed
Amount computed at a per annum rate for each day during the applicable
Unused Fee Calculation Period (hereinafter defined) at a rate equal to
the Applicable Percentage in effect from time to time. The Unused Fee
commenced to accrue on September 30, 1996 and is due and payable in
arrears on the last business day of each March, June, September and
December (and any date that the Committed Amount is reduced as provided
in Section 3.4(a) and the Termination Date) for the immediately
preceding quarter (or portion thereof) (each such quarter or portion
thereof for which the Unused Fee is payable hereunder being herein
referred to as an "Unused Fee Calculation Period").
(b) Letter of Credit Fees.
(i) Standby Letter of Credit Issuance Fee. In
consideration of the issuance of standby Letters of Credit
hereunder, the Borrower promises to pay to the Agent for the
account of each Lender a fee (the "Standby Letter of Credit
Fee") on such Lender's Commitment Percentage of the average
daily maximum amount available to be drawn under each such
standby Letter of Credit computed at a per annum rate for each
day from the date of issuance to the date of expiration equal
to the Applicable Percentage. The Standby Letter of Credit Fee
will be payable quarterly in arrears on the last Business Day
of each March, June, September and December for the
immediately preceding quarter (or a portion thereof).
(ii) Trade Letter of Credit Drawing Fee. In
consideration of the issuance of trade Letters of Credit
hereunder, the Borrower promises to pay to the Agent for the
account of each Lender a fee (the "Trade Letter of Credit
Fee") equal to 0.125% on such Lender's Commitment Percentage
of the amount of each drawing under any such trade Letter of
Credit. The Trade Letter of Credit Fee will be payable on each
date of drawing under a trade Letter of Credit.
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(iii) Issuing Lender Fees. In addition to the Standby
Letter of Credit Fee payable pursuant to clause (i) above and
the Trade Letter of Credit Fee payable pursuant to clause (ii)
above, the Borrower promises to pay to the Issuing Lender for
its own account without sharing by the other Lenders the
letter of credit fronting and negotiation fees agreed to by
the Borrower and the Issuing Lender from time to time and the
customary charges from time to time of the Issuing Lender with
respect to the issuance, amendment, transfer, administration,
cancellation and conversion of, and drawings under, such
Letters of Credit (collectively, the "Issuing Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to the
Agent, for its own account, the fees referred to in the Agent's Fee
Letter (collectively, the "Agent's Fees").
3.6 CAPITAL ADEQUACY.
If any Lender has determined, after the date hereof, that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower, the Borrower shall be obligated to
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction. Each determination by any such Lender of amounts
owing under this Section shall, absent manifest error, be conclusive and binding
on the parties hereto.
3.7 INABILITY TO DETERMINE INTEREST RATE.
If prior to the first day of any Interest Period, the Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, the Agent shall give telecopy or telephonic notice
thereof to the Borrower and the Lenders as soon as practicable thereafter. If
such notice is given (a) any Eurodollar Loans requested to be made on the first
day of such Interest Period shall be made as Base Rate Loans and (b) any Loans
that were to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base Rate
Loans. Until such notice has been withdrawn by the Agent, no further Eurodollar
Loans shall be made or continued as such, nor shall the Borrower have the right
to convert Base Rate Loans to Eurodollar Loans.
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3.8 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrower
and the Agent (which notice shall be withdrawn whenever such circumstances no
longer exist), (b) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert a Base Rate Loan to
Eurodollar Loans shall forthwith be canceled and, until such time as it shall no
longer be unlawful for such Lender to make or maintain Eurodollar Loans, such
Lender shall then have a commitment only to make a Base Rate Loan when a
Eurodollar Loan is requested and (c) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.11.
3.9 REQUIREMENTS OF LAW.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar Loans
made by it or its obligation to make Eurodollar Loans, or change the
basis of taxation of payments to such Lender in respect thereof (except
for (i) Non-Excluded Taxes covered by Section 3.10 (including
Non-Excluded Taxes imposed solely by reason of any failure of such
Lender to comply with its obligations under Section 3.10(b)) and (ii)
changes in taxes measured by or imposed upon the overall net income, or
franchise tax (imposed in lieu of such net income tax), of such Lender
or its applicable lending office, branch, or any affiliate thereof));
(b) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other condition (excluding
any tax of any kind whatsoever);
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and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Agent, in accordance herewith, the Borrower shall be obligated to
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable,
provided that, in any such case, the Borrower may elect to convert the
Eurodollar Loans made by such Lender hereunder to Base Rate Loans by giving the
Agent at least one Business Day's notice of such election, in which case the
Borrower shall promptly pay to such Lender, upon demand, without duplication,
such amounts, if any, as may be required pursuant to Section 3.11. If any Lender
becomes entitled to claim any additional amounts pursuant to this subsection, it
shall provide prompt notice thereof to the Borrower, through the Agent,
certifying (x) that one of the events described in this paragraph (a) has
occurred and describing in reasonable detail the nature of such event, (y) as to
the increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed explanation
of the calculation thereof. Such a certificate as to any additional amounts
payable pursuant to this subsection submitted by such Lender, through the Agent,
to the Borrower shall be conclusive and binding on the parties hereto in the
absence of manifest error. This covenant shall survive the termination of this
Credit Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.10 TAXES.
(a) Except as provided below in this subsection, all payments
made by the Borrower under this Credit Agreement and any Notes shall be
made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
court, or governmental body, agency or other official, excluding taxes
measured by or imposed upon the overall net income of any Lender or its
applicable lending office, or any branch or affiliate thereof, and all
franchise taxes, branch taxes, taxes on doing business or taxes on the
overall capital or net worth of any Lender or its applicable lending
office, or any branch or affiliate thereof, in each case imposed in
lieu of net income taxes, imposed: (i) by the jurisdiction under the
laws of which such Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such
jurisdiction is located or any political subdivision thereof; or (ii)
by reason of any connection between the jurisdiction imposing such tax
and such Lender, applicable lending office, branch or affiliate other
than a connection arising solely from such Lender having executed,
delivered or performed its obligations, or received payment under or
enforced, this Credit Agreement or any Notes. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from
any amounts payable to the Agent or any Lender hereunder or under any
Notes, (A) the amounts so payable to the Agent or such Lender shall be
increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts
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specified in this Credit Agreement and any Notes, provided, however,
that the Borrower shall be entitled to deduct and withhold any
Non-Excluded Taxes and shall not be required to increase any such
amounts payable to any Lender that is not organized under the laws of
the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this subsection
whenever any Non-Excluded Taxes are payable by the Borrower, and (B) as
promptly as possible thereafter the Borrower shall send to the Agent
for its own account or for the account of such Lender, as the case may
be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agent and the
Lenders for any incremental taxes, interest or penalties that may
become payable by the Agent or any Lender as a result of any such
failure. The agreements in this subsection shall survive the
termination of this Credit Agreement and the payment of the Loans and
all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(X) (i) on or before the date of any payment by the
Borrower under this Credit Agreement or Notes to such
Lender, deliver to the Borrower and the Agent (A) two
(2) duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, certifying that
it is entitled to receive payments under this Credit
Agreement and any Notes without deduction or
withholding of any United States federal income taxes
and (B) an Internal Revenue Service Form W-8 or W-9,
or successor applicable form, as the case may be,
certifying that it is entitled to an exemption from
United States backup withholding tax;
(ii) deliver to the Borrower and the Agent
two (2) further copies of any such form or
certification on or before the date that any such
form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change
in the most recent form previously delivered by it to
the Borrower; and
(iii) obtain such extensions of time for
filing and complete such forms or certifications as
may reasonably be requested by the Borrower or the
Agent; or
(Y) in the case of any such Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (i) represent to the Borrower (for the
benefit of the Borrower and the Agent) that it is not a bank
within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (ii) agree to furnish to the Borrower on or
before the date of any payment by the Borrower, with
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a copy to the Agent two (2) accurate and complete original
signed copies of Internal Revenue Service Form W-8, or
successor applicable form certifying to such Lender's legal
entitlement at the date of such certificate to an exemption
from U.S. withholding tax under the provisions of Section
881(c) of the Internal Revenue Code with respect to payments
to be made under this Credit Agreement and any Notes (and to
deliver to the Borrower and the Agent two (2) further copies
of such form on or before the date it expires or becomes
obsolete and after the occurrence of any event requiring a
change in the most recently provided form and, if necessary,
obtain any extensions of time reasonably requested by the
Borrower or the Agent for filing and completing such forms),
and (iii) agree, to the extent legally entitled to do so, upon
reasonable request by the Borrower, to provide to the Borrower
(for the benefit of the Borrower and the Agent) such other
forms as may be reasonably required in order to establish the
legal entitlement of such Lender to an exemption from
withholding with respect to payments under this Credit
Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it
and such Lender so advises the Borrower and the Agent. Each Person that
shall become a Lender or a participant of a Lender pursuant to
subsection 11.3 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms, certifications and statements
required pursuant to this subsection, provided that in the case of a
participant of a Lender the obligations of such participant of a Lender
pursuant to this subsection (b) shall be determined as if the
participant of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and
statements to the Lender from which the related participation shall
have been purchased.
3.11 INDEMNITY.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur (other
than through such Lender's gross negligence or willful misconduct) as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrower in making any prepayment of a Eurodollar Loan after
the Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement or (c) the making of a prepayment of Eurodollar Loans on a
day which is not the last day of an Interest Period with respect thereto. With
respect to Eurodollar Loans, such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Eurodollar Loans provided for herein (excluding, however, the
Applicable Percentage
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included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank Eurodollar market. The covenants of the Borrower set
forth in this Section 3.11 shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable hereunder.
3.12 PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or prepayment of principal
of any Loan or reimbursement obligations arising from drawings under
Letters of Credit, each payment of interest on the Loans or
reimbursement obligations arising from drawings under Letters of
Credit, each payment of Unused Fees, each payment of the Standby Letter
of Credit Fee, each payment of the Trade Letter of Credit Fee, each
reduction of the Committed Amount and each conversion or extension of
any Loan, shall be allocated pro rata among the Lenders in accordance
with the respective principal amounts of their outstanding Loans and
Participation Interests.
(b) Advances. Unless the Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not
make the amount that would constitute its ratable share of such
borrowing available to the Agent, the Agent may assume that such Lender
is making such amount available to the Agent, and the Agent may, in
reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Agent
by such Lender within the time period specified therefor hereunder,
such Lender shall pay to the Agent, on demand, such amount with
interest thereon at a rate equal to the Federal Funds Rate for the
period until such Lender makes such amount immediately available to the
Agent. A certificate of the Agent submitted to any Lender with respect
to any amounts owing under this subsection shall be conclusive in the
absence of manifest error.
3.13 SHARING OF PAYMENTS.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a participation in such Loans, LOC Obligations
and other obligations in such amounts, and make such other adjustments from time
to time, as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's
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lien, counterclaim or other event as aforesaid shall be rescinded or must
otherwise be restored, each Lender which shall have shared the benefit of such
payment shall, by repurchase of a participation theretofore sold, return its
share of that benefit (together with its share of any accrued interest payable
with respect thereto) to each Lender whose payment shall have been rescinded or
otherwise restored. The Borrower agrees that any Lender so purchasing such a
participation may, to the fullest extent permitted by law, exercise all rights
of payment, including setoff, banker's lien or counterclaim, with respect to
such participation as fully as if such Lender were a holder of such Loan, LOC
Obligations or other obligation in the amount of such participation. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or the
Agent shall fail to remit to the Agent or any other Lender an amount payable by
such Lender or the Agent to the Agent or such other Lender pursuant to this
Credit Agreement on the date when such amount is due, such payments shall be
made together with interest thereon for each date from the date such amount is
due until the date such amount is paid to the Agent or such other Lender at a
rate per annum equal to the Federal Funds Rate. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section 3.13 applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders under this Section 3.13 to
share in the benefits of any recovery on such secured claim.
3.14 PAYMENTS, COMPUTATIONS, ETC.
(a) Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Agent in dollars in immediately
available funds, without offset, deduction, counterclaim or withholding
of any kind, at the Agent's office specified in Schedule 2.1(a) not
later than 2:00 P.M. (Charlotte, North Carolina time) on the date when
due. Payments received after such time shall be deemed to have been
received on the next succeeding Business Day. The Agent may (but shall
not be obligated to) debit the amount of any such payment which is not
made by such time to any ordinary deposit account of the Borrower
maintained with the Agent (with notice to the Borrower). The Borrower
shall, at the time it makes any payment under this Credit Agreement,
specify to the Agent the Loans, LOC Obligations, Fees, interest or
other amounts payable by the Borrower hereunder to which such payment
is to be applied (and in the event that it fails so to specify, or if
such application would be inconsistent with the terms hereof, the Agent
shall distribute such payment to the Lenders in such manner as the
Agent may determine to be appropriate in respect of obligations owing
by the Borrower hereunder, subject to the terms of Section 3.12(a)).
The Agent will distribute such payments to such Lenders, if any such
payment is received prior to 12:00 Noon (Charlotte, North Carolina
time) on a Business Day in like funds as received prior to the end of
such Business Day and otherwise the Agent will distribute such payment
to such Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for
the period of such extension), except that in the case of Eurodollar
Loans, if the extension would cause the payment to be made in the next
following calendar month, then such payment shall instead be made on
the next preceding Business Day. Except as expressly provided otherwise
herein, all computations of interest and fees shall be
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made on the basis of actual number of days elapsed over a year of 360
days, except with respect to computation of interest on Base Rate Loans
which (unless the Base Rate is determined by reference to the Federal
Funds Rate) shall be calculated based on a year of 365 or 366 days, as
appropriate. Interest shall accrue from and include the date of
borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, after the occurrence and during the continuance of an Event
of Default, all amounts collected or received by the Agent or any
Lender on account of the Borrower's Obligations or any other amounts
outstanding under any of the Credit Documents or in respect of the
Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable
attorneys' fees) of the Agent in connection with enforcing the
rights of the Lenders under the Credit Documents and any
protective advances made by the Agent with respect to the
Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation, reasonable
attorneys' fees) of each of the Lenders in connection with
enforcing its rights under the Credit Documents or otherwise
with respect to the Borrower's Obligations owing to such
Lender;
FOURTH, to the payment of all of the Borrower's
Obligations consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal
amount of the Borrower's Obligations;
SIXTH, to all other Borrower's Obligations and other
obligations which shall have become due and payable under the
Credit Documents or otherwise and not repaid pursuant to
clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in
the numerical order provided until exhausted prior to application to
the next succeeding category; and (ii) each of the Lenders shall
receive an amount equal to its pro rata share (based on the proportion
that the then outstanding Loans held by such Lender bears to the
aggregate then outstanding Loans) of amounts available to be applied
pursuant to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above.
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3.15 EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts
evidencing each Loan made by such Lender to the Borrower from time to
time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Credit Agreement. Each
Lender will make reasonable efforts to maintain the accuracy of its
account or accounts and to promptly update its account or accounts from
time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section
11.3(c) hereof, and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to
each Lender hereunder and (iii) the amount of any sum received by the
Agent hereunder from or for the account of the Borrower and each
Lender's share thereof. The Agent will make reasonable efforts to
maintain the accuracy of the subaccounts referred to in the preceding
sentence and to promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if
consistent with the entries of the Agent, subsection (a)) shall be
prima facie evidence of the existence and amounts of the obligations of
the Borrower therein recorded; provided, however, that the failure of
any Lender or the Agent to maintain any such account, such Register or
such subaccount, as applicable, or any error therein, shall not in any
manner affect the obligation of the Borrower to repay the Loans made by
such Lender in accordance with the terms hereof.
3.16 MANDATORY ASSIGNMENT.
In the event any Lender delivers to the Borrower any notice in
accordance with Section 3.9, then, provided that no Default or Event of Default
has occurred and is continuing at such time, the Borrower may, at its own
expense (such expense to include any transfer fee payable to the Agent under
Section 11.3(b)), and in its sole discretion require such Lender to transfer and
assign in whole or in part, without recourse (in accordance with and subject to
the terms and conditions of Section 11.3(b)), all or part of its interests,
rights and obligations under this Credit Agreement to any assignee which shall
assume such assigned obligations, provided that (i) such assignee shall be (a)
any Lender or any Affiliate or Subsidiary of a Lender, or (b) any other
commercial bank, financial institution or "accredited investor" (as defined in
Regulation D of the Securities and Exchange Commission) reasonably acceptable to
the Agent and the Required Lenders, (ii) such assignment shall not conflict with
any law, rule or regulation or order of any court or other Governmental
Authority and (iii) the Borrower or such assignee shall have paid to the
assigning Lender in immediately available funds the principal of and interest
accrued to the date of such payment on the Loans made by it hereunder and all
other amounts owed to it hereunder (including, without limitation, any amounts
owing pursuant to Section 3.9).
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SECTION 4
GUARANTY
4.1 THE GUARANTEE.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Hedging Agreement and the
Agent as hereinafter provided the prompt payment of the Borrower's Obligations
in full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, a mandatory cash collateralization or otherwise) strictly in
accordance with the terms thereof. The Guarantors hereby further agree that if
any of the Borrower's Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as mandatory cash
collateralization or otherwise), the Guarantors will, jointly and severally,
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Borrower's
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
4.2 OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under Section 4.1 hereof are joint
and several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Borrower's Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall have no right of
subrogation, indemnity, reimbursement or contribution against the Borrower or
any other Guarantor of the Borrower's Obligations for amounts paid under this
Guaranty until such time as the Lenders (and any Affiliates of Lenders entering
into Hedging Agreements) have been paid in full, all Commitments under the
Credit Agreement have been terminated and no Person or Governmental Authority
shall have any right to request any return or reimbursement of funds from the
Lenders in connection with monies received under the Credit Documents or Hedging
Agreements. Without
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limiting the generality of the foregoing, it is agreed that, to the fullest
extent permitted by law, the occurrence of any one or more of the following
shall not alter or impair the liability of any Guarantor hereunder which shall
remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Borrower's Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any
of the Credit Documents, any Hedging Agreement or any other agreement
or instrument referred to in the Credit Documents or Hedging Agreements
shall be done or omitted;
(iii) the maturity of any of the Borrower's Obligations shall
be accelerated, or any of the Borrower's Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements
shall be waived or any other guarantee of any of the Borrower's
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any
Lender or Lenders as security for any of the Borrower's Obligations
shall fail to attach or be perfected; or
(v) any of the Borrower's Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents,
any Hedging Agreement or any other agreement or instrument referred to in the
Credit Documents or Hedging Agreements, or against any other Person under any
other guarantee of, or security for, any of the Borrower's Obligations.
4.3 REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Borrower's Obligations is rescinded
or must be otherwise restored by any holder of any of the Borrower's
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment
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constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
4.4 CERTAIN ADDITIONAL WAIVERS.
Without limiting the generality of the provisions of this Section 4,
each Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss.
26-7 through 26-9, inclusive. Each Guarantor further agrees that such Guarantor
shall have no right of recourse to security for the Borrower's Obligations,
except through the exercise of the rights of subrogation pursuant to Section
4.2.
4.5 REMEDIES.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Borrower's Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 hereof notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Borrower's
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Borrower's Obligations
being deemed to have become automatically due and payable), the Borrower's
Obligations (whether or not due and payable by any other Person) shall forthwith
become due and payable by the Guarantors for purposes of said Section 4.1.
4.6 RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree, as among themselves, that if any Guarantor
shall become an Excess Funding Guarantor (as defined below), each other
Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the
succeeding provisions of this Section 4.6), pay to such Excess Funding Guarantor
an amount equal to such Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.6 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (i) "Excess Funding Guarantor" shall mean, in respect of any obligations
arising under the other provisions of this Section 4 (hereafter, the "Guaranteed
Obligations"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of the Guaranteed Obligations; (ii) "Excess Payment" shall mean, in
respect of any Guaranteed Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations; and
(iii) "Pro Rata Share", for the purposes of this Section 4.6, shall mean, for
any Guarantor, the ratio (expressed as a percentage) of (a) the amount by which
the aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Guarantor hereunder) to (b) the
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amount by which the aggregate present fair saleable value of all assets and
other properties of the Borrower and all of the Guarantors exceeds the amount of
all of the debts and liabilities (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of the Borrower and
the Guarantors hereunder) of the Borrower and all of the Guarantors, all as of
the Closing Date (if any Guarantor becomes a party hereto subsequent to the
Closing Date, then for the purposes of this Section 4.6 such subsequent
Guarantor shall be deemed to have been a Guarantor as of the Closing Date and
the information pertaining to, and only pertaining to, such Guarantor as of the
date such Guarantor became a Guarantor shall be deemed true as of the Closing
Date).
4.7 CONTINUING GUARANTEE.
The guarantee in this Section 4 is a continuing guarantee, and shall
apply to all Borrower's Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 CLOSING CONDITIONS.
The obligation of the Lenders to enter into this Credit Agreement and
to make the initial Loans or the Issuing Lender to issue the initial Letter of
Credit, whichever shall occur first, shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):
(a) The Agent shall have received original counterparts of
this Credit Agreement executed by each of the parties hereto;
(b) The Agent shall have received an appropriate original Note
for each Lender, executed by the Borrower;
(c) The Agent shall have received original counterparts of the
Pledge Agreement executed by each Credit Party which owns any stock in
any Subsidiary of the Borrower;
(d) The Agent shall have received, in form and substance
satisfactory to the Agent, all stock certificates evidencing the stock
pledged to the Agent pursuant to the Pledge Agreement, together with
duly executed in blank undated stock powers attached thereto;
(e) The Agent shall have received all documents it may
reasonably request relating to the existence and good standing of each
of the Credit Parties, the corporate or other necessary authority for
and the validity of the Credit Documents, and any other matters
relevant thereto, all in form and substance reasonably satisfactory to
the Agent;
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(f) (i) The Borrower shall have entered into the Subordinated
Note Indenture (the form and substance of which shall be satisfactory
to the Required Lenders (the satisfaction of any Lender to be evidenced
by its execution of this Credit Agreement), (ii) the Borrower shall
have executed the Subordinated Notes, (iii) the Agent shall have
received a copy, certified by an officer of the Borrower as true and
complete, of the Subordinated Note Indenture and each of the
Subordinated Notes as originally executed and delivered, and no
amendment or modification thereof shall have been entered into on or
prior to the Closing Date which shall not have been approved by the
Required Lenders and (iv) the Borrower shall have sold Subordinated
Notes in an aggregate principal amount of not less than $100,000,000
and received the net proceeds thereof;
(g) The Agent shall have received evidence that (i) the
Borrower shall have used 100% of the net proceeds from the sale of the
Subordinated Notes to (A) terminate the NationsBank Liquidity Line and
repay all amounts owing thereunder in full and (B) repay Loans
outstanding as of the Closing Date and (ii) neither the Borrower nor
any of its Subsidiaries shall have any Funded Indebtedness other than
(A) the Indebtedness under the Credit Documents, (B) the Subordinated
Indebtedness and (C) Indebtedness of the Borrower and its Subsidiaries
set forth on Schedule 8.1;
(h) The absence of any material disruption of, or a material
adverse change in, financial, banking or capital market conditions;
(i) The Agent shall have received a certificate executed by an
officer of the Borrower as of the Closing Date stating that (i) to the
best of such officer's knowledge, there does not exist any action, suit
or proceeding, pending or threatened, in which there is a reasonable
possibility of an adverse decision, which would materially adversely
affect the ability of any Credit Party to perform its obligations under
the Credit Documents or the ability of the Lenders to exercise their
rights thereunder; (ii) no material adverse change has occurred since
December 29, 1996, with respect to the consolidated financial condition
of the Borrower and its Subsidiaries; (iii) attached are detailed
calculations of each of the financial covenants set forth in Section
7.11 immediately after giving effect to this Credit Agreement, the
other Credit Documents, the Subordinated Note Indenture, the
Subordinated Notes and all other transactions contemplated by this
Credit Agreement and the Subordinated Note Indenture to occur on such
date; and (iv) immediately after giving effect to this Credit
Agreement, the other Credit Documents, the Subordinated Note Indenture,
the Subordinated Notes and all other transactions contemplated by this
Credit Agreement and the Subordinated Note Indenture to occur on such
date, (A) each Credit Party on a consolidated basis is Solvent, (B) no
Default or Event of Default exists and (C) the representations and
warranties set forth in Section 6 are true and correct in all material
respects;
(j) The Agent shall have received a certificate executed by
the chief financial officer of the Borrower describing all Subordinated
Indebtedness outstanding as of the Closing Date, including, without
limitation, (A) the name and address of the holders thereof
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or, with respect to the Subordinated Notes, the trustee for the
Subordinated Noteholders and (B) dates on which scheduled payments are
owing with respect to such Subordinated Indebtedness.
(k) The Agent shall have received, in form and substance
satisfactory to the Agent, a legal opinion of Robinson, Bradshaw &
Hinson, P.A., counsel for the Credit Parties, dated as of the Closing
Date;
(l) The Agent shall have received, for its own account and for
the accounts of the Lenders, all fees and expenses required by this
Credit Agreement or any other Credit Document to be paid on or before
the Closing Date; and
(m) The Agent shall have received such other documents,
agreements or information which may be reasonably requested by the
Agent.
5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligations of each Lender to make, convert or extend any Loan and
of the Issuing Lender to issue or extend Letters of Credit (including the
initial Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing Date of the
conditions set forth in Section 5.1:
(i) The Borrower shall have delivered (A) in the case of any
Loan, an appropriate Notice of Borrowing or Notice of
Extension/Conversion or (B) in the case of any Letter of Credit, the
Issuing Lender shall have received an appropriate request for issuance
in accordance with the provisions of Section 2.2(b);
(ii) The representations and warranties set forth in Section 6
shall be, subject to the limitations set forth therein, true and
correct in all material respects as of such date (except for those
which expressly relate to an earlier date);
(iii) There shall not have been commenced against the Borrower
or any Guarantor an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or any
case, proceeding or other action for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
for the winding up or liquidation of its affairs, and such involuntary
case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded;
(iv) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto; and
(v) Immediately after giving effect to the making of such Loan
(and the application of the proceeds thereof) or to the issuance of
such Letter of Credit, as the case may be, (A) the sum of the aggregate
principal amount of outstanding Loans plus LOC
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Obligations outstanding shall not exceed the Committed Amount and (B)
the LOC Obligations shall not exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing, each Notice of Extension/Conversion
and each request for the issuance of a Letter of Credit pursuant to Section
2.2(b) shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (ii), (iii), (iv) and (v)
above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 FINANCIAL CONDITION.
(a) The audited consolidated balance sheet of the Borrower and
its Subsidiaries as of December 29, 1996 and the audited consolidated
statements of earnings and statements of cash flows for the years ended
December 29, 1996, December 31, 1995, January 1, 1995 and December 31,
1993 have heretofore been furnished to each Lender. Such financial
statements (including the notes thereto) (i) have been audited by
Arthur Andersen LLP, (ii) have been prepared in accordance with GAAP
consistently, applied throughout the periods covered thereby and (iii)
present fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries as of
such date and for such periods. The unaudited interim balance sheets of
the Borrower and its Subsidiaries as at the end of, and the related
unaudited interim statements of earnings and of cash flows for, each
quarterly period ended after December 29, 1996 and prior to the Closing
Date have heretofore been furnished to each Lender. Such interim
financial statements for each such quarterly period, (i) have been
prepared in accordance with Regulation S-X of the Securities and
Exchange Commission consistently applied throughout the periods covered
thereby and (ii) present fairly (on the basis disclosed in the
footnotes to such financial statements) the consolidated financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries as of such date and for such periods. During the period
from December 29, 1996 to and including the Closing Date, there has
been no sale, transfer or other disposition by the Borrower or any of
its Subsidiaries of any material part of the business or property of
the Borrower and its Subsidiaries, taken as a whole, and no purchase or
other acquisition by any of them of any business or property (including
any capital stock of any other person) material in relation to the
consolidated financial condition of the Borrower and its Subsidiaries,
taken as a whole, in each case, which is not reflected in the foregoing
financial statements or in the notes thereto and has not otherwise been
disclosed in writing to the Lenders on or prior to the Closing Date.
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(b) The projected consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as at the end of, and the
related projected statements of earnings and of cash flows for, the
years ended December 28, 1997, January 3, 1999, January 2, 2000,
December 31, 2000 and December 30, 2001 (heretofore furnished to each
Lender) are based upon reasonable assumptions made known to the Lenders
and upon information not known to be incorrect or misleading in any
material respect.
6.2 NO CHANGE; DIVIDENDS.
Since December 29, 1996, (a) there has been no development or event
relating to or affecting the Borrower or any of its Subsidiaries which has had
or would be reasonably expected to have a Material Adverse Effect and (b) except
as permitted under this Credit Agreement, no dividends or other distributions
have been declared, paid or made upon the capital stock or other equity interest
in the Borrower or any of its Subsidiaries nor, except to the extent permitted
under this Credit Agreement, has any of the capital stock or other equity
interest in the Borrower or any of its Subsidiaries been redeemed, retired,
purchased or otherwise acquired for value by such Person.
6.3 ORGANIZATION; EXISTENCE; COMPLIANCE WITH LAW.
Each of the Borrower and its Subsidiaries (a) is a corporation duly
organized, validly existing and is in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the corporate or
other necessary power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, except to the extent that the failure
to have such legal right would not be reasonably expected to have a Material
Adverse Effect, (c) is duly qualified as a foreign entity and in good standing
under the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification, other than
in such jurisdictions where the failure to be so qualified and in good standing
would not be reasonably expected to have a Material Adverse Effect, and (d) is
in compliance with all material Requirements of Law, except to the extent that
the failure to comply therewith would not, in the aggregate, be reasonably
expected to have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents and Subordinated Note Documents to which it is a party, and in the
case of the Borrower, to borrow hereunder, and has taken all necessary corporate
action to authorize the borrowings on the terms and conditions of this Credit
Agreement and to authorize the execution, delivery and performance of the Credit
Documents and Subordinated Note Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Credit Party in connection with the Indebtedness
arising under the Subordinated Note Documents, the borrowings hereunder or with
the execution, delivery, performance, validity or enforceability of the Credit
Documents and Subordinated Note Documents to which such Credit Party is a party,
except for (i) filings to perfect
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the Liens created by the Collateral Documents and (ii) consents, authorizations,
notices and filings described in Schedule 6.4, all of which have been obtained
or made or have the status described in such Schedule 6.4. This Credit Agreement
has been, and each other Credit Document and Subordinated Note Document to which
any Credit Party is a party will be, duly executed and delivered on behalf of
the Credit Parties. This Credit Agreement constitutes and each other Credit
Document and each Subordinated Note Document to which any Credit Party is a
party when executed and delivered will constitute, a legal, valid and binding
obligation of such Credit Party enforceable against such party in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
6.5 NO LEGAL BAR.
The execution, delivery and performance of the Credit Documents and
Subordinated Note Documents by the Credit Parties, the borrowings hereunder and
the use of the proceeds thereof (a) will not violate any Requirement of Law or
contractual obligation of the Borrower or any of its Subsidiaries in any respect
that would reasonably be expected to have a Material Adverse Effect, (b) will
not result in, or require, the creation or imposition of any Lien (other than
the Liens created by the Collateral Documents) on any of the properties or
revenues of any of the Borrower or any of its Subsidiaries pursuant to any such
Requirement of Law or contractual obligation, and (c) will not violate or
conflict with any provision of any Credit Party's articles of incorporation or
by-laws.
6.6 NO MATERIAL LITIGATION.
No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the best knowledge of the Credit
Parties, threatened by or against the Borrower or any of its Subsidiaries or
against any of their respective properties or revenues which (a) relates to any
of the Credit Documents or any of the transactions contemplated hereby or
thereby, (b) relates to any of the Subordinated Note Documents or any of the
transactions contemplated thereby or (c) would be reasonably expected to have a
Material Adverse Effect.
6.7 NO DEFAULT.
Neither the Borrower nor any of its Subsidiaries is in default under or
with respect to any of their contractual obligations in any respect which would
be reasonably expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
6.8 OWNERSHIP OF PROPERTY; LIENS.
Each of the Borrower and its Subsidiaries has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in, all
its other material property, and none of such property is subject to any Lien,
except for Permitted Liens.
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6.9 INTELLECTUAL PROPERTY.
Each of the Borrower and its Subsidiaries owns, or has the legal right
to use, all United States trademarks, tradenames, copyrights, technology,
know-how and processes, if any, necessary for each of them to conduct its
business as currently conducted (the "Intellectual Property") except for those
the failure to own or have such legal right to use would not be reasonably
expected to have a Material Adverse Effect. No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does any Credit Party know of any such claim, and the use of such
Intellectual Property by the Borrower or any of its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that in the aggregate, would not be reasonably expected to have a Material
Adverse Effect.
6.10 NO BURDENSOME RESTRICTIONS.
Except as previously disclosed in writing to the Lenders on or prior to
the Closing Date, no Requirement of Law or contractual obligation of the
Borrower or any of its Subsidiaries would be reasonably expected to have a
Material Adverse Effect.
6.11 TAXES.
Each of the Borrower and its Subsidiaries has filed or caused to be
filed all United States federal income tax returns and all other material tax
returns which, to the best knowledge of the Credit Parties, are required to be
filed and has paid (a) all taxes shown to be due and payable on said returns or
(b) all taxes shown to be due and payable on any assessments of which it has
received notice made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any (i) taxes, fees or other charges with respect to which
the failure to pay, in the aggregate, would not have a Material Adverse Effect
or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested and with respect to which reserves in conformity with
GAAP have been provided on the books of such Person), and no tax Lien has been
filed, and, to the best knowledge of the Credit Parties, no claim is being
asserted, with respect to any such tax, fee or other charge.
6.12 ERISA.
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no Termination Event
has occurred, and, to the best knowledge of the Credit Parties, no
event or condition has occurred or exists as a result of which any
Termination Event could reasonably be expected to occur, with respect
to any Plan; (ii) no "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or
not waived, has occurred with respect to any Plan; (iii) each Plan has
been maintained, operated, and funded in compliance with its own terms
and in material compliance with the provisions of ERISA, the Code, and
any other applicable federal or state laws; and (iv) no lien in favor
of the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
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(b) The actuarial present value of all "benefit liabilities"
under all Single Employer Plans (determined within the meaning of
Section 401(a)(2) of the Code, utilizing the actuarial assumptions used
to fund such Plans), whether or not vested, did not, as of the last
annual valuation date prior to the date on which this representation is
made or deemed made, exceed the current value of the assets of all such
Plans.
(c) Neither the Borrower, any of the Subsidiaries of the
Borrower nor any ERISA Affiliate has incurred, or, to the best
knowledge of the Credit Parties, could be reasonably expected to incur,
any withdrawal liability under ERISA to any Multiemployer Plan or
Multiple Employer Plan. Neither the Borrower, any of the Subsidiaries
of the Borrower nor any ERISA Affiliate would become subject to any
withdrawal liability under ERISA if the Borrower, any of the
Subsidiaries of the Borrower or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made. Neither the Borrower, any of the
Subsidiaries of the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within
the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning
of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or may subject the Borrower, any of the Subsidiaries of the Borrower or
any ERISA Affiliate to any liability under Sections 406, 409, 502(i),
or 502(l) of ERISA or Section 4975 of the Code, or under any agreement
or other instrument pursuant to which the Borrower, any of the
Subsidiaries of the Borrower or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
6.13 GOVERNMENTAL REGULATIONS, ETC.
(a) No part of the proceeds of the Loans will be used,
directly or indirectly, for the purpose of purchasing or carrying any
"margin stock" within the meaning of Regulation G or Regulation U, or
for the purpose of purchasing or carrying or trading in any securities.
If requested by any Lender or the Agent, the Borrower will furnish to
the Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said
Regulation U. No indebtedness being reduced or retired out of the
proceeds of the Loans was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation
T. "Margin stock" within the meanings of Regulation U does not
constitute more than 25% of the value of the consolidated assets of the
Borrower and its Subsidiaries. None of the transactions contemplated by
this Credit Agreement (including, without limitation, the direct or
indirect use of the proceeds of the Loans) will violate or result in a
violation of the Securities Act of 1933, as amended, or the Securities
Exchange
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Act of 1934, as amended, or regulations issued pursuant thereto, or
Regulation G, T, U or X.
(b) Neither the Borrower nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act or the Investment Company Act of 1940, each
as amended. In addition, neither the Borrower nor any of its
Subsidiaries is (i) an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended, and
is not controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
(c) No director, executive officer or principal shareholder of
the Borrower or any of its Subsidiaries is a director, executive
officer or principal shareholder of any Lender. For the purposes hereof
the terms "director", "executive officer" and "principal shareholder"
(when used with reference to any Lender) have the respective meanings
assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.
(d) Each of the Borrower and its Subsidiaries has obtained all
material licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its respective Property
and to the conduct of its business.
(e) Neither the Borrower nor any of its Subsidiaries is in
violation of any applicable statute, regulation or ordinance of the
United States of America, or of any state, city, town, municipality,
county or any other jurisdiction, or of any agency thereof (including
without limitation, environmental laws and regulations), which
violation could reasonably be expected to have a Material Adverse
Effect.
(f) Each of the Borrower and its Subsidiaries is current with
all material reports and documents, if any, required to be filed with
any state or federal securities commission or similar agency and is in
full compliance in all material respects with all applicable rules and
regulations of such commissions.
6.14 SUBSIDIARIES.
Schedule 6.14 sets forth all the Subsidiaries of the Borrower at the
Closing Date, the jurisdiction of their incorporation and the direct or indirect
ownership interest of the Borrower therein. All of the outstanding capital stock
of such Subsidiaries has been validly issued, is fully paid and non-assessable
and is owned by the Borrower or one or more of its Subsidiaries free and clear
of all Liens (other than Liens in favor of the Agent, for the benefit of the
Lenders). All of the outstanding capital stock of the Borrower has been validly
issued, is fully paid and non-assessable.
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6.15 PURPOSE OF LOANS AND LETTERS OF CREDIT.
The proceeds of the Loans hereunder shall be used solely by the
Borrower for working capital and general corporate purposes of the Credit
Parties, including any Permitted Acquisitions. The Letters of Credit shall be
used only for or in connection with appeal bonds, reimbursement obligations
arising in connection with surety and reclamation bonds, reinsurance, domestic
or international trade transactions, worker's compensation bonds and obligations
not otherwise aforementioned relating to transactions entered into by the
applicable account party in the ordinary course of business.
6.16 ENVIRONMENTAL MATTERS.
(a) Each of the facilities and properties owned, leased or
operated by the Borrower or any of its Subsidiaries (the "Properties")
and all operations at the Properties are in compliance with all
applicable Environmental Laws, and there is no violation of any
Environmental Law with respect to the Properties or the businesses
operated by the Borrower or any of its Subsidiaries (the "Businesses"),
and there are no conditions relating to the Businesses or Properties
that could give rise to liability under any applicable Environmental
Laws.
(b) None of the Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or under the
Properties in amounts or concentrations that constitute or constituted
a violation of, or could give rise to liability under, Environmental
Laws.
(c) Neither the Borrower nor any of its Subsidiaries has
received any written or verbal notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard
to any of the Properties or the Businesses, nor does the Borrower or
any of its Subsidiaries have knowledge or reason to believe that any
such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties, or generated, treated,
stored or disposed of at, on or under any of the Properties or any
other location, in each case by or on behalf of the Borrower or any of
its Subsidiaries in violation of, or in a manner that would be
reasonably likely to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of any Credit Party,
threatened, under any Environmental Law to which the Borrower or any of
its Subsidiaries is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Borrower or
any of its Subsidiaries, the Properties or the Businesses.
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(f) There has been no release or, threat of release of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations (including, without
limitation, disposal) of the Borrower or any of its Subsidiaries in
connection with the Properties or otherwise in connection with the
Businesses, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws.
6.17 PERFECTED SECURITY INTERESTS.
Except as the result of or in connection with a disposition permitted
by Section 8.4(c), at all times after execution and delivery of the Collateral
Documents by the Credit Parties and satisfaction of the conditions specified
therein, the security interests created in favor of the Agent, for the benefit
of the Lenders, will constitute valid, perfected security interests in the
Collateral.
6.18 BORROWER'S OBLIGATIONS.
All of the Borrower's Obligations are "Senior Indebtedness" under and
as defined in the Subordinated Note Indenture.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
7.1 INFORMATION COVENANTS.
The Borrower will furnish, or cause to be furnished, to the Agent:
(a) Annual Financial Statements. As soon as available, and in
any event within 90 days after the close of each fiscal year of the
Borrower and its Subsidiaries, a consolidated and consolidating balance
sheet and income statement of the Borrower and its Subsidiaries, as of
the end of such fiscal year, together with related consolidated and
consolidating statements of operations and consolidated statements of
retained earnings and of cash flows for such fiscal year, setting forth
in comparative form consolidated and, if applicable, consolidating
figures for the preceding fiscal year, all such financial information
described above to be in reasonable form and detail and, and with
respect to all such consolidated financial statements, audited by
independent certified public accountants of recognized national
standing reasonably acceptable to the Agent and whose opinion shall be
to the effect that such financial statements have been prepared in
accordance with GAAP (except for changes with which such accountants
concur) and shall not be limited as to the scope of the audit or
qualified as to the status of the Borrower and its Subsidiaries as a
going concern.
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(b) Quarterly Financial Statements. As soon as available, and
in any event within 45 days after the close of each fiscal quarter of
the Borrower and its Subsidiaries (other than the fourth fiscal
quarter, in which case 90 days after the end thereof) a consolidated
and consolidating balance sheet and income statement of the Borrower
and its Subsidiaries, as of the end of such fiscal quarter, together
with related consolidated and consolidating statements of operations
and consolidated statements of retained earnings and of cash flows for
such fiscal quarter in each case setting forth in comparative form
consolidated and, if applicable, consolidating figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a certificate of
the chief financial officer of the Borrower to the effect that such
quarterly financial statements fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries and have
been prepared in accordance with GAAP, subject to changes resulting
from audit and normal year-end audit adjustments.
(c) Officer's Certificates.
(i) At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above, a
certificate of the chief financial officer of the Borrower
substantially in the form of Schedule 7.1(c)(i), (A)
demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof as of the end
of each such fiscal period and (B) stating that no Default or
Event of Default exists, or if any Default or Event of Default
does exist, specifying the nature and extent thereof and what
action the Borrower proposes to take with respect thereto.
(ii) Prior to the consummation of any Pro Forma
Transaction, a certificate of the chief financial officer of
the Borrower in the form of Schedule 7.1(c)(ii), (A)
demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof on a Pro
Forma Basis and (B) stating that, after giving effect on a Pro
Forma Basis to such Pro Forma Transaction, no Default or Event
of Default would exist.
(iii) Within 90 days after the end of each fiscal
year of the Borrower, a certificate of the chief financial
officer of the Borrower containing information regarding the
amount of all Asset Sales and Equity Transactions (other than
the issuance of stock under the Borrower's 1995 Equity
Participation Plan or under the Borrower's 1997 Employee Stock
Purchase Plan) that were made during the prior fiscal year.
(iv) Upon the issuance of any Subordinated
Indebtedness, a certificate of the chief financial officer of
the Borrower describing such Subordinated Indebtedness,
including, without limitation, (A) the name and address of the
holders thereof or, with respect to the Subordinated Notes,
the trustee for the Subordinated
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Noteholders and (B) dates on which scheduled payments are owing with
respect to such Subordinated Indebtedness.
(d) Annual Business Plan and Budgets. At least 15 days prior
to the end of each fiscal year of the Borrower, beginning with the
fiscal year ending December 28, 1997, an annual business plan and
budget of the Borrower containing, among other things, pro forma
financial statements for the next fiscal year.
(e) Accountant's Certificate. Within the period for delivery
of the annual financial statements provided in Section 7.1(a), a
certificate of the accountants conducting the annual audit stating that
they have reviewed this Credit Agreement and stating further whether,
in the course of their audit, they have become aware of any Default or
Event of Default and, if any such Default or Event of Default exists,
specifying the nature and extent thereof.
(f) Auditor's Reports. Promptly upon receipt thereof, a copy
of any other report or "management letter" submitted by independent
accountants to the Borrower or any of its Subsidiaries in connection
with any annual, interim or special audit of the books of such Person.
(g) Reports. Promptly upon transmission or receipt thereof,
(a) copies of any filings and registrations with, and reports to or
from, the Securities and Exchange Commission, or any successor agency,
and copies of all financial statements, proxy statements, notices and
reports as the Borrower or any of its Subsidiaries shall send to its
shareholders or to a holder of any Indebtedness owed by the Borrower or
any of its Subsidiaries in its capacity as such a holder and (b) upon
the request of the Agent, all reports and written information to and
from the United States Environmental Protection Agency, or any state or
local agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety
matters.
(h) Notices. Upon obtaining knowledge thereof, the Borrower
will give written notice to the Agent immediately of (a) the occurrence
of an event or condition consisting of a Default or Event of Default,
specifying the nature and existence thereof and what action the Credit
Parties propose to take with respect thereto, and (b) the occurrence of
any of the following with respect to the Borrower or any of its
Subsidiaries (i) the pendency or commencement of any litigation,
arbitral or governmental proceeding against such Person which if
adversely determined is likely to have a Material Adverse Effect, (ii)
the institution of any proceedings against such Person with respect to,
or the receipt of notice by such Person of potential liability or
responsibility for violation, or alleged violation of any federal,
state or local law, rule or regulation, including but not limited to,
Environmental Laws, the violation of which would likely have a Material
Adverse Effect, or (iii) any notice or determination concerning the
imposition of any withdrawal liability by a Multiemployer Plan against
such Person or any ERISA Affiliate, the determination that a
Multiemployer
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Plan is, or is expected to be, in reorganization within the meaning of
Title IV of ERISA or the termination of any Plan.
(i) ERISA. Upon obtaining knowledge thereof, the Borrower will
give written notice to the Agent promptly (and in any event within five
business days) of: (i) of any event or condition, including, but not
limited to, any Reportable Event, that constitutes, or might reasonably
lead to, a Termination Event; (ii) with respect to any Multiemployer
Plan, the receipt of notice as prescribed in ERISA or otherwise of any
withdrawal liability assessed against the Borrower or any of its ERISA
Affiliates, or of a determination that any Multiemployer Plan is in
reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due
date (including extensions) thereof of all amounts which the Borrower,
any of the Subsidiaries of the Borrower or any ERISA Affiliate is
required to contribute to each Plan pursuant to its terms and as
required to meet the minimum funding standard set forth in ERISA and
the Code with respect thereto; or (iv) any change in the funding status
of any Plan that could have a Material Adverse Effect, together with a
description of any such event or condition or a copy of any such notice
and a statement by the chief financial officer of the Borrower briefly
setting forth the details regarding such event, condition, or notice,
and the action, if any, which has been or is being taken or is proposed
to be taken by the Credit Parties with respect thereto. Promptly upon
request, the Borrower shall furnish the Agent and the Lenders with such
additional information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section 3(39)
of ERISA).
(j) Subordinated Indebtedness. Immediately upon obtaining
knowledge thereof, the Borrower will give written notice to each holder
of Subordinated Indebtedness (or, with respect to the Subordinated
Notes, the trustee for the Subordinated Noteholders) of the occurrence
of an event or condition consisting of a Default or Event of Default.
(k) Other Information. With reasonable promptness upon any
such request, such other information regarding the business, properties
or financial condition of the Borrower or any of its Subsidiaries as
the Agent or the Required Lenders may reasonably request.
7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4, the Borrower will, and
will cause each of its Subsidiaries to, do all things necessary to preserve and
keep in full force and effect its existence, rights, franchises and authority.
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7.3 BOOKS AND RECORDS.
The Borrower will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.4 COMPLIANCE WITH LAW.
The Borrower will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its property if
noncompliance with any such law, rule, regulation, order or restriction would
have a Material Adverse Effect.
7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Except as otherwise provided pursuant to the terms of the definition of
"Permitted Liens" set forth in Section 1.1, the Borrower will, and will cause
each of its Subsidiaries to, pay and discharge (i) all taxes, assessments and
governmental charges or levies imposed upon it, or upon its income or profits,
or upon any of its properties, before they shall become delinquent, (ii) all
lawful claims (including claims for labor, materials and supplies) which, if
unpaid, might give rise to a Lien upon any of its properties, and (iii) except
as prohibited hereunder, all of its other Indebtedness as it shall become due.
7.6 INSURANCE.
The Borrower will, and will cause each of its Subsidiaries to, at all
times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance and business
interruption insurance) in such amounts, covering such risks and liabilities and
with such deductibles or self-insurance retentions as are in accordance with
normal industry practice.
7.7 MAINTENANCE OF PROPERTY.
The Borrower will, and will cause each of its Subsidiaries to, maintain
and preserve its properties and equipment material to the conduct of its
business in good repair, working order and condition, normal wear and tear and
casualty and condemnation excepted, and will make, or cause to be made, in such
properties and equipment from time to time all repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto as may be needed or
proper, to the extent and in the manner customary for companies in similar
businesses.
7.8 PERFORMANCE OF OBLIGATIONS.
The Borrower will, and will cause each of its Subsidiaries to, perform
in all material respects all of its obligations under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound.
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7.9 USE OF PROCEEDS.
The Borrower will use the proceeds of the Loans and will use the
Letters of Credit solely for the purposes set forth in Section 6.15.
7.10 AUDITS/INSPECTIONS.
Upon reasonable notice and during normal business hours, the Borrower
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Agent, including, without limitation, independent accountants,
agents, attorneys, and appraisers to visit and inspect its property, including
its books and records, its accounts receivable and inventory, its facilities and
its other business assets, and to make photocopies or photographs thereof and to
write down and record any information such representative obtains and shall
permit the Agent or its representatives to investigate and verify the accuracy
of information provided to the Lenders and to discuss all such matters with the
officers, employees and representatives of such Person.
7.11 FINANCIAL COVENANTS.
(a) Consolidated Net Worth. Consolidated Net Worth at all
times shall be no less than $157,500,000, increased on a cumulative
basis by (i) as of the last day of each fiscal quarter (commencing with
the first of such dates to occur after the Closing Date), an amount
equal to 50% of Consolidated Net Income (without deduction for any
losses) for the fiscal quarter then ended, (ii) as of the date of any
Equity Transaction consummated on or after the Closing Date, 100% of
the Net Proceeds of such Equity Transaction and (iii) as of the date of
any conversion of Subordinated Notes into stock of the Borrower, by an
amount equal to the aggregate principal amount of Subordinated Notes so
converted.
(b) Consolidated Leverage Ratio. The Consolidated Leverage
Ratio as of the last day of each fiscal quarter shall be no greater
than:
From the Closing Date to, and including, the 4.25 : 1.00
last day of the first fiscal quarter of 1998
At all times after the last day of the first 4.00 : 1.00
fiscal quarter of 1998
(c) Consolidated Senior Leverage Ratio. The Consolidated
Senior Leverage Ratio as of the last day of each fiscal quarter shall
be no greater than 2.50:1.00.
(d) Consolidated Fixed Charge Coverage Ratio. The Consolidated
Fixed Charge Coverage Ratio as of the last day of each fiscal quarter
shall be no less than 1.25:1.00.
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(e) Consolidated Interest Coverage Ratio. The Consolidated
Interest Coverage Ratio as of the last day of each fiscal quarter shall
be no less than 3.25:1.00.
(f) Consolidated Current Ratio. The Consolidated Current Ratio
shall be no less than 1.25:1.00 at any time.
7.12 ADDITIONAL CREDIT PARTIES.
At the time that any Person becomes a Subsidiary of the Borrower, the
Borrower shall so notify the Agent and shall (a) cause such Person to execute a
Joinder Agreement in substantially the form of Schedule 7.12, (b) cause 100% of
the capital stock of such Person to be delivered to the Agent (together with
undated stock powers signed in blank) and pledged to the Agent, for the benefit
of the Lenders, pursuant to an appropriate pledge agreement(s) in substantially
the form of the Pledge Agreement and otherwise in form acceptable to the Agent
and (c) deliver such other documentation as the Agent may reasonably request in
connection with the foregoing, including, without limitation, certified
resolutions and other organizational and authorizing documents of such Person,
appropriate UCC-1 financing statements and favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above), all in form,
content and scope reasonably satisfactory to the Agent.
7.13 OWNERSHIP OF SUBSIDIARIES.
Except to the extent otherwise provided in Section 8.11, the Borrower
shall, directly or indirectly, own at all times 100% of the capital stock of
each of its Subsidiaries.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
8.1 INDEBTEDNESS.
The Borrower will not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower and any of its Subsidiaries
set forth in Schedule 8.1;
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(c) purchase money Indebtedness (including Capital Leases)
hereafter incurred by the Borrower or any of its Subsidiaries to
finance the purchase of fixed assets provided that (i) the total of all
such Indebtedness (for all such Persons taken together shall not exceed
an aggregate principal amount of $3,000,000 at any one time outstanding
(including any such Indebtedness referred to in subsection (b) above
(other than any such Indebtedness incurred in connection with
acquisitions)); (ii) such Indebtedness when incurred shall not exceed
the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing;
(d) obligations of the Borrower in respect of Hedging
Agreements entered into in order to manage existing or anticipated
interest rate or exchange rate risks and not for speculative purposes;
(e) Intercompany Indebtedness incurred in the ordinary course
of business and consistent with past practices or for cash management
purposes;
(f) Subordinated Indebtedness; and
(g) in addition to the Indebtedness otherwise permitted by
this Section 8.1, other Indebtedness hereafter incurred by the Borrower
or any of its Subsidiaries provided that (i) the loan documentation
with respect to such Indebtedness shall not contain covenants or
default provisions relating to the Borrower and its Subsidiaries that
are more restrictive than the covenants and default provisions
contained in the Credit Documents, (ii) on the date of incurrence of
such Indebtedness after giving effect on a Pro Forma Basis to the
incurrence of such Indebtedness of the Borrower or any of its
Subsidiaries, no Default or Event of Default would exist hereunder, and
(iii) the aggregate principal amount of such Indebtedness shall not
exceed $10,000,000 at any time.
8.2 LIENS.
The Borrower will not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of their Property, whether now owned or after acquired, except for Permitted
Liens.
8.3 NATURE OF BUSINESS.
The Borrower will not permit any of its Subsidiaries to substantively
alter the character or conduct of the business conducted by such Person as of
the Closing Date.
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8.4 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC.
The Borrower will not, nor will it permit any of its Subsidiaries to:
(a) except in connection with a disposition of assets
permitted by the terms of subsection (c) below, dissolve, liquidate or
wind up their affairs;
(b) enter into any transaction of merger or consolidation;
provided, however, that, (i) so long as no Default or Event of Default
would be directly or indirectly caused as a result thereof, any Credit
Party (other than the Borrower) may merge or consolidate with any other
Credit Party (other than the Borrower) and (ii) so long as the Borrower
is the continuing or surviving corporation, Thomas Staffing Services,
Inc. may merge or consolidate with the Borrower;
(c) sell, lease, transfer or otherwise dispose of any Property
of the Borrower and its Subsidiaries other than (i) the sale or
disposition of machinery and equipment no longer used or useful in the
conduct of such Person's business, (ii) other sales of assets (but not
accounts receivable, except delinquent accounts sold for collection
purposes only), provided that, after giving effect to such sale or
other disposition, the aggregate book value of assets sold or otherwise
disposed of pursuant to this clause (ii) does not exceed $500,000 in
any fiscal year, (iii) the grant of any option or other right to
purchase any asset in a transaction that would be permitted under the
provisions of the foregoing clause (ii), provided that no Default or
Event of Default has occurred and is continuing at the time of such
grant and (iv) the sale or disposition of the stock or assets of PFI
Corp. and/or any of its wholly-owned Subsidiaries existing as of the
Closing Date;
(d) acquire all or any portion of the capital stock or
securities of any other Person or purchase, lease or otherwise acquire
(in a single transaction or a series of related transactions) all or
any substantial part of the Property of any other Person, except for
Permitted Acquisitions; or
(e) become a general partner in any general or limited
partnership, joint venture or similar arrangement.
8.5 ADVANCES, INVESTMENTS, LOANS, ETC.
The Borrower will not, nor will it permit any of its Subsidiaries to,
make Investments in or to any Person, except for Permitted Investments.
8.6 RESTRICTED PAYMENTS.
The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly declare, order, make or set apart any sum for or pay any
Restricted Payment, except (i) to make dividends payable solely in the same
class of capital stock of such Person, (ii) to make dividends or other
distributions payable to the Borrower (directly or indirectly through
Subsidiaries of the
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Borrower), (iii) as permitted by Section 8.7, (iv) to make payments on
Subordinated Indebtedness (other than Indebtedness arising under the
Subordinated Note Documents) in accordance with any subordination provisions
applicable thereto and (v) provided that no Default or Event of Default has
occurred and is continuing at such time or would be directly or indirectly
caused as a result thereof, to make regularly scheduled interest payments in
respect of Indebtedness arising under the Subordinated Note Documents.
8.7 PREPAYMENTS OF INDEBTEDNESS, ETC.
The Borrower will not, nor will it permit any of its Subsidiaries to,
(i) after the issuance thereof, amend or modify (or permit the amendment or
modification of) any of the terms of any other Indebtedness (including without
limitation any Subordinated Indebtedness) if such amendment or modification
would add or change any terms in a manner materially adverse to the issuer of
such Indebtedness, or shorten the final maturity or average life to maturity or
require any payment to be made sooner than originally scheduled or increase the
interest rate applicable thereto or change any subordination provision thereof,
or (ii) (A) make (or give any notice with respect thereto) any voluntary or
optional payment or prepayment, redemption, acquisition for value or defeasance
of (including without limitation, by way of depositing money or securities with
the trustee with respect thereto before due for the purpose of paying when due),
refund, refinance or exchange of any other Funded Indebtedness (including
without limitation any Subordinated Indebtedness) or (B) amend, modify or change
its articles of incorporation (or corporate charter or other similar
organizational document) or bylaws (or other similar document) where such change
would have a Material Adverse Effect.
8.8 TRANSACTIONS WITH AFFILIATES.
The Borrower will not, nor will it permit any of its Subsidiaries to,
enter into or permit to exist any transaction or series of transactions with any
officer, director, shareholder, Subsidiary or Affiliate of such Person other
than (i) advances of working capital to any Credit Party, (ii) transfers of cash
and assets to any Credit Party, (iii) transactions permitted by Section 8.1,
Section 8.4, Section 8.5 (other than pursuant to clause (vii) of the definition
of "Permitted Investments" set forth in Section 1.1), or Section 8.6, (iv)
normal compensation and reimbursement of expenses of officers and directors and
(v) except as otherwise specifically limited in this Credit Agreement, other
transactions which are entered into in the ordinary course of such Person's
business on terms and conditions substantially as favorable to such Person as
would be obtainable by it in a comparable arms-length transaction with a Person
other than an officer, director, shareholder, Subsidiary or Affiliate.
8.9 FISCAL YEAR.
The Borrower will not, nor will it permit any of its Subsidiaries to,
change its fiscal year.
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8.10 LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS AND
OTHER DISTRIBUTIONS, ETC.
The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any such Person to (i) pay dividends or make any
other distribution on any of such Person's capital stock, (ii) subject to
subordination provisions under any Intercompany Indebtedness, pay any
Indebtedness owed to the Borrower or any other Credit Party, (iii) make loans or
advances to any other Credit Party or (iv) transfer any of its Property to any
other Credit Party, except for encumbrances or restrictions existing under or by
reason of (A) customary non-assignment provisions in any lease governing a
leasehold interest and (B) this Credit Agreement and the other Credit Documents.
8.11 ISSUANCE AND SALE OF SUBSIDIARY STOCK.
The Borrower will not, nor will it permit any of its Subsidiaries to,
except as otherwise permitted under the terms of Section 8.4(c), sell, transfer
or otherwise dispose of, any shares of capital stock of any of its Subsidiaries
or permit any of its Subsidiaries to issue, sell or otherwise dispose of, any
shares of capital stock of any of its Subsidiaries.
8.12 SALE LEASEBACKS.
The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any Property (whether real or personal or mixed), whether now owned or
hereafter acquired, (i) which such Person has sold or transferred or is to sell
or transfer to any other Person other than a Credit Party or (ii) which such
Person intends to use for substantially the same purpose as any other Property
which has been sold or is to be sold or transferred by such Person to any other
Person in connection with such lease.
8.13 NO FURTHER NEGATIVE PLEDGES.
Except (a) pursuant to this Credit Agreement and the other Credit
Documents and (b) with respect to prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular Indebtedness (which
Indebtedness relates solely to such specific Property, and improvements and
accretions thereto, and is otherwise permitted hereby) the Borrower will not,
nor will it permit any of its Subsidiaries to, enter into, assume or become
subject to any agreement prohibiting or otherwise restricting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, or requiring the grant of any security for such obligation
if security is given for some other obligation.
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8.14 NO FOREIGN SUBSIDIARIES.
Neither the Borrower nor any of its Subsidiaries will create, acquire
or permit to exist any direct or indirect Subsidiary of such Credit Party which
is not incorporated or organized under the laws of any State of the United
States or the District of Columbia.
SECTION 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal
of any of the Loans or of any reimbursement obligations
arising from drawings under Letters of Credit, or
(ii) default, and such defaults shall continue for
three (3) or more Business Days, in the payment when due of
any interest on the Loans or on any reimbursement obligations
arising from drawings under Letters of Credit, or of any Fees
or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or statement
made or deemed to be made by any Credit Party herein, in any of the
other Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue
in any material respect on the date as of which it was deemed to have
been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2,
7.9, 7.11, 7.12 or 8.1 through 8.14, inclusive, or
(ii) default in the due performance or observance by
it of any term, covenant or agreement (other than those
referred to in subsections (a), (b) or (c)(i) of this Section
9.1) contained in this Credit Agreement and such default shall
continue unremedied for a period of at least 30 days after the
earlier of a responsible officer of a Credit Party becoming
aware of such default or notice thereof by the Agent; or
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(d) Other Credit Documents. (i) Any Credit Party shall default
in the due performance or observance of any term, covenant or agreement
in any of the other Credit Documents (subject to applicable grace or
cure periods, if any), or (ii) except as the result of or in connection
with a dissolution, merger or disposition of a Subsidiary permitted
under Section 8.4, any Credit Document shall fail to be in full force
and effect or to give the Agent and/or the Lenders the Liens, rights,
powers and privileges purported to be created thereby, or any Credit
Party shall state any of the foregoing in writing; or
(e) Guaranties. Except as the result of or in connection with
a dissolution, merger or disposition of a Subsidiary permitted under
Section 8.4, the guaranty given by any Guarantor hereunder (including
any Additional Credit Party) or any material provision thereof shall
cease to be in full force and effect, or any Guarantor (including any
Additional Credit Party) hereunder or any Person acting by or on behalf
of such Guarantor shall deny or disaffirm such Guarantor's obligations
under such guaranty, or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with
respect to the Borrower or any of its Subsidiaries; or
(g) Defaults under Other Agreements.
(i) The Borrower or any of its Subsidiaries shall
default in the performance or observance (beyond the
applicable grace period with respect thereto, if any) or any
material obligation or condition of any contract or lease
material to the Borrower and its Subsidiaries taken as a
whole; or
(ii) With respect to the Acquisition Note or any
other Indebtedness (other than Indebtedness outstanding under
this Credit Agreement) in excess of $1,500,000 in the
aggregate for the Borrower and its Subsidiaries taken as a
whole, (A) the Borrower or any of its Subsidiaries shall (1)
default in any payment (beyond the applicable grace period
with respect thereto, if any) with respect to any such
Indebtedness, or (2) the occurrence and continuance of a
default in the observance or performance relating to such
Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event
or condition shall occur or condition exist, the effect of
which default or other event or condition is to cause, or
permit, the holder or holders of such Indebtedness (or trustee
or agent on behalf of such holders) to cause (determined
without regard to whether any notice or lapse of time is
required), any such Indebtedness to become due prior to its
stated maturity; or (B) any such Indebtedness shall be
declared due and payable, or required to be prepaid other than
by a regularly scheduled required prepayment, prior to the
stated maturity thereof; or
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(h) Judgments. One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries involving a
liability of $2,500,000 or more in the aggregate (to the extent not
paid or fully covered by insurance provided by a carrier who has
acknowledged coverage) and any such judgments or decrees shall not have
been vacated, discharged or stayed or bonded pending appeal within 30
days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if such
event or condition could be expected to involve possible taxes,
penalties, and other liabilities in an aggregate amount in excess of
$1,000,000: (1) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or
not waived, shall exist with respect to any Plan, or any lien shall
arise on the assets of the Borrower, any Subsidiary of the Borrower or
any ERISA Affiliate in favor of the PBGC or a Plan; (2) a Termination
Event shall occur with respect to a Single Employer Plan, which is, in
the reasonable opinion of the Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (3) a
Termination Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the
Agent, likely to result in (i) the termination of such Plan for
purposes of Title IV of ERISA, or (ii) the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency or (within the meaning
of Section 4245 of ERISA) such Plan; or (4) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the
Code) or breach of fiduciary responsibility shall occur which may
subject the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate has agreed or is required to indemnify
any person against any such liability; or
(j) Nature of Business. The Borrower shall engage in any
business, activity or operations other than owning and holding the
capital stock of its Subsidiaries and such business activities
incidental or related thereto (including acting as Borrower hereunder
and pledging its assets to the Agent, for the benefit of the Lenders,
pursuant to the Collateral Documents); or
(k) Subordinated Note Indentures. (i) There shall occur and be
continuing any Event of Default or Repurchase Event under and, in each
case, as defined in the Subordinated Note Indenture or (ii) any of the
Borrower's Obligations for any reason shall cease to be "Senior
Indebtedness" under and as defined in the Subordinated Note Indenture;
or
(l) Collateral. Any of the Borrower's Obligations for any
reason shall fail to be secured under the Collateral Documents; or
(m) Ownership. There shall occur a Change of Control.
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9.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the Required Lenders
or cured to the satisfaction of the Required Lenders (pursuant to the voting
procedures in Section 11.6), the Agent shall, upon the request and direction of
the Required Lenders, by written notice to the Credit Parties take any of the
following actions:
(i) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other
indebtedness or obligations of any and every kind owing by the Borrower
to the Agent and/or any of the Lenders hereunder to be due whereupon
the same shall be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower.
(iii) Cash Collateral. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), it will
immediately pay) to the Agent additional cash, to be held by the Agent,
for the benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of subsequent
drawings under all then outstanding Letters of Credit in an amount
equal to the maximum aggregate amount which may be drawn under all
Letters of Credits then outstanding.
(iv) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents and all
rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(f) shall occur, then the Commitments shall automatically terminate
and all Loans, all reimbursement obligations arising from drawings under Letters
of Credit, all accrued interest in respect thereof, all accrued and unpaid Fees
and other indebtedness or obligations owing to the Agent and/or any of the
Lenders hereunder automatically shall immediately become due and payable without
the giving of any notice or other action by the Agent or the Lenders.
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SECTION 10
AGENCY PROVISIONS
10.1 APPOINTMENT.
Each Lender hereby designates and appoints NationsBank, N.A. as
administrative agent (in such capacity as Agent hereunder, the "Agent") of such
Lender to act as specified herein and the other Credit Documents, and each such
Lender hereby authorizes the Agent as the agent for such Lender, to take such
action on its behalf under the provisions of this Credit Agreement and the other
Credit Documents and to exercise such powers and perform such duties as are
expressly delegated by the terms hereof and of the other Credit Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere herein and in the other
Credit Documents, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein and therein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section are solely for the benefit of
the Agent and the Lenders and none of the Credit Parties shall have any rights
as a third party beneficiary of the provisions hereof. In performing its
functions and duties under this Credit Agreement and the other Credit Documents,
the Agent shall act solely as agent of the Lenders and does not assume and shall
not be deemed to have assumed any obligation or relationship of agency or trust
with or for any Credit Party or any of their respective Affiliates.
10.2 DELEGATION OF DUTIES.
The Agent may execute any of their respective duties hereunder or under
the other Credit Documents by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
10.3 EXCULPATORY PROVISIONS.
The Agent and its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall not be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for its
or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the Credit Parties contained herein
or in any of the other Credit Documents or in any certificate, report, document,
financial statement or other written or oral statement referred to or provided
for in, or received by the Agent under or in connection herewith or in
connection with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of any Credit
Party to perform its obligations hereunder or thereunder. The Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Credit Agreement, or any
of the other Credit Documents or for
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any representations, warranties, recitals or statements made herein or therein
or made by the Borrower or any Credit Party in any written or oral statement or
in any financial or other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished or made by the
Agent to the Lenders or by or on behalf of the Credit Parties to the Agent or
any Lender or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Loans or the
use of the Letters of Credit or of the existence or possible existence of any
Default or Event of Default or to inspect the properties, books or records of
the Credit Parties or any of their respective Affiliates.
10.4 RELIANCE ON COMMUNICATIONS.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any of the Credit Parties, independent accountants and
other experts selected by the Agent with reasonable care). The Agent may deem
and treat the Lenders as the owner of their respective interests hereunder for
all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent in accordance with Section 11.3(b)
hereof. The Agent shall be fully justified in failing or refusing to take any
action under this Credit Agreement or under any of the other Credit Documents
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate or 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, hereunder
or under any of the other Credit Documents in accordance with a request of the
Required Lenders (or to the extent specifically provided in Section 11.6, all
the Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).
10.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or a Credit Party referring to the Credit
Document, 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 prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders.
10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that each of the Agent and its
officers, directors, employees, agents, attorneys-in-fact or affiliates has not
made any representations or warranties to it and that no act by the Agent or any
affiliate thereof hereinafter taken, including any review of the
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affairs of any Credit Party or any of their respective Affiliates, 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 or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Borrower, the other
Credit Parties or their respective Affiliates and made its own decision to make
its Loans hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Credit Agreement, and to
make such investigation as it deems necessary to inform itself as to the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower, the other Credit Parties and
their respective Affiliates. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, assets,
property, financial or other conditions, prospects or creditworthiness of the
Borrower, the other Credit Parties or any of their respective Affiliates which
may come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.7 INDEMNIFICATION.
The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to their respective Commitments (or if
the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interests of
the Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without limitation at
any time following the final payment of all of the obligations of the Borrower
hereunder and under the other Credit Documents) be imposed on, incurred by or
asserted against the Agent in its capacity as such in any way relating to or
arising out of this Credit Agreement or the other Credit Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section shall
survive the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder.
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10.8 AGENT IN ITS INDIVIDUAL CAPACITY.
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, its Subsidiaries
or their respective Affiliates as though the Agent were not the Agent hereunder.
With respect to the Loans made by and all obligations of the Borrower hereunder
and under the other Credit Documents, the Agent shall have the same rights and
powers under this Credit Agreement as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall include
the Agent in its individual capacity.
10.9 SUCCESSOR AGENT.
The Agent may, at any time, resign upon 20 days' written notice to the
Lenders, and be removed with or without cause by the Required Lenders upon 30
days' written notice to the Agent. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Agent; provided
that, so long as no Default or Event of Default has occurred and is continuing,
such successor Agent shall be reasonably acceptable to the Borrower. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the notice of resignation
or notice of removal, as appropriate, then the retiring Agent shall select a
successor Agent provided such successor is a Lender hereunder or a commercial
bank organized under the laws of the United States of America or of any State
thereof and has a combined capital and surplus of at least $400,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations as Agent, as
appropriate, under this Credit Agreement and the other Credit Documents and the
provisions of this Section 10.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Credit
Agreement.
SECTION 11
MISCELLANEOUS
11.1 NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out below, (iii) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (iv)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address, in the case of the Borrower, Guarantors and the Agent, set forth
below, and, in the case of the Lenders, set forth on Schedule 2.1(a), or at such
other address as such party may specify by written notice to the other parties
hereto:
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if to the Borrower or the Guarantors:
Personnel Group of America, Inc.
6302 Fairview Road
Charlotte, NC 28211
Attn: Jim Hunt
Telephone: (704) 442-5105
Telecopy: (704) 442-5135
if to the Agent:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
101 N. Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-9638
Telecopy: (704) 388-9436
with a copy to:
NationsBank, N.A.
100 North Tryon Street, 8th Floor
Charlotte, North Carolina 28255
Attn: Mark Halmrast
Telephone: (704)386-0649
Telecopy: (704)386-1270
11.2 RIGHT OF SET-OFF.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit Party against obligations and
liabilities of such Person to such Lender hereunder, under the Notes, the other
Credit Documents or otherwise, irrespective of whether such Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. Any Person purchasing a participation in the Loans and
Commitments
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hereunder pursuant to Section 3.13 or Section 11.3(d) may exercise all rights of
set-off with respect to its participation interest as fully as if such Person
were a Lender hereunder.
11.3 BENEFIT OF AGREEMENT.
(a) Generally. This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided that none of the Credit
Parties may assign or transfer any of its interests without prior
written consent of the Lenders; provided further that the rights of
each Lender to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth in this
Section 11.3, provided however that nothing herein shall prevent or
prohibit any Lender from (i) pledging its Loans hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank, or (ii) granting assignments or selling
participations in such Lender's Loans and/or Commitments hereunder to
its parent company and/or to any Affiliate or Subsidiary of such
Lender.
(b) Assignments. Each Lender may assign all or a portion of
its rights and obligations hereunder, pursuant to an assignment
agreement substantially in the form of Schedule 11.3(b), to (i) any
Lender or any Affiliate or Subsidiary of a Lender, or (ii) any other
commercial bank, financial institution or "accredited investor" (as
defined in Regulation D of the Securities and Exchange Commission)
reasonably acceptable to the Agent and, so long as no Default or Event
of Default has occurred and is continuing, the Borrower; provided that
(i) any such assignment (other than any assignment to an existing
Lender) shall be in a minimum aggregate amount of $5,000,000 (or, if
less, the remaining amount of the Commitment being assigned by such
Lender) of the Commitments and in integral multiples of $1,000,000
above such amount and (ii) each such assignment shall be of a constant,
not varying, percentage of all such Lender's rights and obligations
under this Credit Agreement. Any assignment hereunder shall be
effective upon delivery to the Agent of written notice of the
assignment together with a transfer fee of $3,500 payable to the Agent
for its own account from and after the later of (i) the effective date
specified in the applicable assignment agreement and (ii) the date of
recording of such assignment in the Register pursuant to the terms of
subsection (c) below. The assigning Lender will give prompt notice to
the Agent and the Borrower of any such assignment. Upon the
effectiveness of any such assignment (and after notice to, and (to the
extent required pursuant to the terms hereof), with the consent of, the
Borrower as provided herein), the assignee shall become a "Lender" for
all purposes of this Credit Agreement and the other Credit Documents
and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations hereunder to the extent of the Loans and
Commitment components being assigned. Along such lines the Borrower
agrees that upon notice of any such assignment and surrender of the
appropriate Note or Notes, it will promptly provide to the assigning
Lender and to the assignee separate promissory notes in the amount of
their respective interests substantially in the form of the original
Note (but with notation thereon that it is given in substitution for
and replacement of the original Note or any replacement notes thereof).
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be
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deemed to confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Lender warrants that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim; (ii) except as set forth in clause (i)
above, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement,
any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Credit Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto or the
financial condition of any Credit Party or any of their respective
Affiliates or the performance or observance by any Credit Party of any
of its obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant hereto
or thereto; (iii) such assignee represents and warrants that it is
legally authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Credit Agreement,
the other Credit Documents and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the Agent, such assigning
Lender or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Credit
Agreement and the other Credit Documents; (vi) such assignee appoints
and authorizes the Agent to take such action on its behalf and to
exercise such powers under this Credit Agreement or any other Credit
Document as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this Credit
Agreement and the other Credit Documents are required to be performed
by it as a Lender.
(c) Maintenance of Register. The Agent shall maintain at one
of its offices in Charlotte, North Carolina a copy of each Lender
assignment agreement delivered to it in accordance with the terms of
subsection (b) above and a register for the recordation of the identity
of the principal amount, type and Interest Period of each Loan
outstanding hereunder, the names, addresses and the Commitments of the
Lenders pursuant to the terms hereof from time to time (the
"Register"). The Agent will make reasonable efforts to maintain the
accuracy of the Register and to promptly update the Register from time
to time, as necessary. The entries in the Register shall be conclusive
in the absence of manifest error and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of
this Credit Agreement. The Register shall be available for inspection
by the Borrower and each Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(d) Participations. Each Lender may sell, transfer, grant or
assign participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall
remain a "Lender" for all purposes under this Credit Agreement (such
selling Lender's obligations under the Credit Documents remaining
unchanged) and the
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participant shall not constitute a Lender hereunder, (ii) no such
participant shall have, or be granted, rights to approve any amendment
or waiver relating to this Credit Agreement or the other Credit
Documents except to the extent any such amendment or waiver would (A)
reduce the principal of or rate of interest on or Fees in respect of
any Loans in which the participant is participating, (B) postpone the
date fixed for any payment of principal (including extension of the
Termination Date or the date of any mandatory prepayment), interest or
Fees in which the participant is participating or (C) except as
expressly provided in the Credit Documents, release all or
substantially all of the Collateral or release any Guarantor from its
guaranty obligations hereunder, and (iii) sub-participations by the
participant (except to an affiliate, parent company or affiliate of a
parent company of the participant) shall be prohibited. In the case of
any such participation, the participant shall not have any rights under
this Credit Agreement or the other Credit Documents (the participant's
rights against the selling Lender in respect of such participation to
be those set forth in the participation agreement with such Lender
creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such
participation, provided, however, that such participant shall be
entitled to receive additional amounts under Sections 3.6, 3.9, 3.10
and 3.11 on the same basis as if it were a Lender.
11.4 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Agent or any Lender and any of the
Credit Parties shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agent or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle the Borrower or any other
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the Lenders
to any other or further action in any circumstances without notice or demand.
11.5 PAYMENT OF EXPENSES, ETC.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses (A) of the Agent in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the other
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Moore & Van
Allen, PLLC, special counsel to the Agent) and any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit Parties under this Credit
Agreement and (B) of the Agent and the Lenders in connection with enforcement of
the Credit Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any such enforcement, the
reasonable fees and
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disbursements of counsel for the Agent and each of the Lenders); (ii) pay and
hold each of the Lenders harmless from and against any and all present and
future stamp and other similar taxes with respect to the foregoing matters and
save each of the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and (iii) indemnify each Lender,
its officers, directors, employees, representatives and agents from and hold
each of them harmless against any and all losses, liabilities, claims, damages
or expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of (A) any investigation, litigation or other
proceeding (whether or not any Lender is a party thereto) related to the
entering into and/or performance of any Credit Document or the use of proceeds
of any Loans (including other extensions of credit) hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding or (B) the presence or Release of any Materials of Environmental
Concern at, under or from any Property owned, operated or leased by the Borrower
or any of its Subsidiaries, or the failure by the Borrower or any of its
Subsidiaries to comply with any Environmental Law (but excluding, in the case of
either of clause (A) or (B) above, any such losses, liabilities, claims, damages
or expenses to the extent incurred by reason of gross negligence or willful
misconduct on the part of the Person to be indemnified).
11.6 AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided that no such amendment, change, waiver, discharge or
termination shall, without the consent of each Lender:
(i) extend the final maturity of any Loan, or any portion
thereof;
(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) on any Loan or fees hereunder;
(iii) reduce the principal amount on any Loan, or increase the
Commitments of the Lenders over the amount thereof in effect (it being
understood and agreed that a waiver of any Default or Event of Default
or of a mandatory reduction in the total commitments shall not
constitute a change in the terms of any Commitment of any Lender);
(iv) except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted under
Section 8.4, release all or substantially all of (A) the Guarantors
from the guaranty obligations hereunder or (B) the Collateral;
(v) amend, modify or waive any provision of this Section 11.6
or Section 3.6, 3.10, 3.11, 3.12, 3.13, 9.1(a), 11.2, 11.3, 11.5 or
11.9;
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(vi) reduce any percentage specified in, or otherwise modify,
the definition of "Required Lenders;" or
(vii) consent to the assignment or transfer by the Borrower
(or any Guarantor) of any of its rights and obligations under (or in
respect of) the Credit Documents to which it is a party.
No provision of Section 2.2 may be amended without the consent of the Issuing
Lender and no provision of Section 10 may be amended without the consent of the
Agent.
11.7 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
11.8 HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 SURVIVAL.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.9, 3.11, 10.7 or 11.5 shall survive the execution and delivery
of this Credit Agreement, the making of the Loans, the issuance of the Letters
of Credit, the repayment of the Loans, LOC Obligations and other obligations
under the Credit Documents and the termination of the Commitments hereunder, and
all representations and warranties made by the Credit Parties herein shall
survive delivery of the Notes and the making of the Loans hereunder.
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action or proceeding
with respect to this Credit Agreement or any other Credit Document may
be brought in the courts of the State of North Carolina in Mecklenburg
County, or of the United States for the Western District of North
Carolina, and, by execution and delivery of this Credit Agreement, each
of the Credit Parties hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. Each of the Credit Parties
further irrevocably consents
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to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the address set
out for notices pursuant to Section 11.1, such service to become
effective three (3) days after such mailing. Nothing herein shall
affect the right of the Agent to serve process in any other manner
permitted by law or to commence legal proceedings or to otherwise
proceed against any Credit Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Credit Agreement or any other Credit Document
brought in the courts referred to in subsection (a) hereof and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE
LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.11 SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 ENTIRETY.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 BINDING EFFECT; AMENDMENT AND RESTATEMENT OF ORIGINAL
CREDIT AGREEMENT.
(a) This Credit Agreement shall become effective at such time,
on or after the Closing Date, that the conditions precedent set forth
in Section 5.1 have been satisfied and when it shall have been executed
by each of the Credit Parties and the Agent, and the Agent shall have
received copies hereof (telefaxed or otherwise) which, when taken
together, bear the signatures of each Lender (including the Issuing
Lender), and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of each Credit Party,
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each Lender (including the Issuing Lender) and the Agent, together with
their permitted successors and assigns. The Credit Parties and the
Lenders (including the Issuing Lender) each hereby agrees that, at such
time as this Credit Agreement shall have become effective pursuant to
the terms of the immediately preceding sentence, (i) the Original
Credit Agreement automatically shall be deemed amended and restated in
its entirety by this Credit Agreement, and all obligations and
commitments outstanding under the Original Credit Agreement shall be
governed by the terms of this Credit Agreement (as such obligations or
commitments may be modified or amended hereunder) and (ii) all of the
promissory notes executed by the Borrower in connection with the
Original Credit Agreement automatically shall be substituted and
replaced by the amended and restated promissory notes executed in
connection with this Credit Agreement, and the Lenders agree to
promptly return such prior notes to the Borrower.
(b) Each of the Credit Parties hereby acknowledges and agrees
that it has no claims, counterclaims, offsets, or defenses to the
Credit Documents and the performance of its obligations thereunder, or
if such Credit Party has any such claims, counterclaims, offsets, or
defenses to the Credit Documents or any transaction related to the
Credit Documents, the same are hereby waived, relinquished and released
in consideration of the Lenders' execution and delivery of this Credit
Agreement.
11.14 CONFIDENTIALITY.
The Agent and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agent or any such Lender by or on behalf of any Credit Party
(whether before or after the Closing Date) which relates to the Borrower or any
of its Subsidiaries (the "Information"). Notwithstanding the foregoing, the
Agent and each Lender shall be permitted to disclose Information (i) to its
affiliates, officers, directors, employees, agents and representatives in
connection with its participation in any of the transactions evidenced by this
Credit Agreement or any other Credit Documents or the administration of this
Credit Agreement or any other Credit Documents; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process, or
requested by any Governmental Authority; (iii) to the extent such Information
(A) becomes publicly available other than as a result of a breach of this Credit
Agreement or any agreement entered into pursuant to clause (iv) below, (B)
becomes available to the Agent or such Lender on a non-confidential basis from a
source other than a Credit Party or (C) was available to the Agent or such
Lender on a non-confidential basis prior to its disclosure to the Agent or such
Lender by a Credit Party; (iv) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) first specifically agrees in a writing furnished to and
for the benefit of the Credit Parties to be bound by the terms of this Section
11.14; or (v) to the extent that the Borrower shall have consented in writing to
such disclosure. Nothing set forth in this Section 11.14 shall obligate the
Agent or any Lender to return any materials furnished by the Credit Parties.
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<PAGE> 87
11.15 SOURCE OF FUNDS.
Each of the Lenders hereby represents and warrants to the Borrower that
at least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes
assets allocated to any separate account maintained by such Lender,
such Lender has disclosed to the Borrower the name of each employee
benefit plan whose assets in such account exceed 10% of the total
assets of such account as of the date of such purchase (and, for
purposes of this subsection (b), all employee benefit plans maintained
by the same employer or employee organization are deemed to be a single
plan); or
(c) such funds constitute assets of one or more specific
benefit plans which such Lender has identified in writing to the
Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.16 CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
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<PAGE> 88
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amended and Restated Credit Agreement to be duly executed and delivered
as of the date first above written.
BORROWER: PERSONNEL GROUP OF AMERICA, INC.,
a Delaware corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Senior Vice President
GUARANTORS: STAFFPLUS, INC.,
a Delaware corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
THOMAS STAFFING SERVICES, INC.,
a California corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
PFI CORP.,
a Delaware corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
NURSEFINDERS, INC.,
a Texas corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
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<PAGE> 89
NF SERVICES, INC.,
a New York corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
B.C.P., INC.,
a Hawaii corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
INFOTECH SERVICES, INC.,
a North Carolina corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
BROUGHTON SYSTEMS, INC.,
a Virginia corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
WORD PROCESSING PROFESSIONALS, INC.,
a New York corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
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LLOYD-RITTER CONSULTING, INC.,
a California corporation
By /s/ James C. Hunt
-----------------------------------
Name James C. Hunt
Title Vice President
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<PAGE> 91
LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Agent
By /s/ Mark D. Halmrast
-----------------------------------
Name Mark D. Halmrast
Title Vice President
BANK OF AMERICA ILLINOIS
By /s/ Michael J. McKenney
-----------------------------------
Name Michael J. McKenney
Title Vice President
BANQUE PARIBAS
By /s/ Duane Helkowski
-----------------------------------
Name Duane Helkowski
Title Vice President
By /s/ Mary T. Finnegan
-----------------------------------
Name Mary T. Finnegan
Title Group Vice President
COMERICA BANK
By /s/ Tamara J. Gurne
-----------------------------------
Name Tamara J. Gurne
Title Account Officer
CREDIT LYONNAIS ATLANTA AGENCY
By /s/ Robert Ivosevich
-----------------------------------
Name Robert Ivosevich
Title Senior Vice President
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THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Noreen St. Lawrence
-----------------------------------
Name Noreen St. Lawrence
Title Authorized Agent
PNC BANK, NATIONAL ASSOCIATION
By /s/ Robert J. Mitchell, Jr.
-----------------------------------
Name Robert J. Mitchell, Jr.
Title
FIRST UNION NATIONAL BANK
By /s/ David J. C. Silander
-----------------------------------
Name David J. C. Silander
Title Vice President
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<PAGE> 1
EXHIBIT 10.17
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of June 17, 1997
relating to
$100,000,000 in Aggregate Principal Amount
of 5 3/4% Convertible Subordinated
Notes due 2004
by and between
Personnel Group of America, Inc.
and
Smith Barney Inc.,
PaineWebber Incorporated
J. C. Bradford & Co.
The Robinson-Humphrey Company, Inc.
and
NationsBanc Capital Markets, Inc.
as Initial Purchasers
================================================================================
<PAGE> 2
This Registration Rights Agreement (the "Agreement") is made
and entered into as of June 17, 1997, by and between Personnel Group of America,
Inc, a Delaware corporation (the "Company"), and Smith Barney Inc., PaineWebber
Incorporated, J.C. Bradford & Co., The Robinson-Humphrey Company, Inc. and
NationsBanc Capital Markets, Inc. (the "Initial Purchasers"), who will purchase
$100,000,000 in aggregate principal amount of 5 3/4% Convertible Subordinated
Notes due 2004 (the "Notes") of the Company (excluding up to an additional
$15,000,000 in aggregate principal amount that may be purchased by the Initial
Purchasers pursuant to their over-allotment option) pursuant to the Purchase
Agreement dated June 17, 1997 (the "Purchase Agreement"), between the Company
and the Initial Purchasers. In order to induce the Initial Purchasers to enter
into the Purchase Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in the
Purchase Agreement. All defined terms used but not defined herein shall have the
meanings ascribed to them in the Indenture (as defined herein).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Advice: As defined in Section 5(r).
Closing Date: The date on which all the Notes are first sold
by the Company to the Initial Purchasers pursuant to the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Common Stock: The Common Stock, par value $.01 per share, of
the Company.
Damages Payment Date: With respect to the Notes or the Common
Stock, as applicable, each Interest Payment Date as defined in the Indenture.
Effectiveness Target Date: As defined in Section 4.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Exempt Resales: The transactions in which the Initial
Purchasers propose to sell the Notes to (i) certain "qualified institutional
buyers" (as such term is defined in Rule 144A under the Act), (ii) to certain
non U.S. persons in offshore transactions in reliance on Regulation S under the
Act and (iii) to a limited number of institutional "accredited investors" as
defined in Rule 501(a)(1), (2), (3) or (7).
Holders: As defined in Section 2(b).
Indenture: The Indenture, to be dated as of June 17, 1997,
among the Company and First Union National Bank, as trustee (the "Trustee"),
pursuant to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture.
NASD: National Association of Securities Dealers, Inc.
<PAGE> 3
Offering Memorandum: The Offering Memorandum, dated June 17,
1997, and all amendments and supplements thereto, relating to the Notes and
prepared by the Company pursuant to the Purchase Agreement.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
Preliminary Prospectus: As defined in Section 3(g).
Prospectus: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any Prospectus Supplement with respect
to the terms of the offering of any portion of the Transfer Restricted
Securities (as defined herein) covered by the Shelf Registration Statement and
by all other amendments and supplements to the prospectus, including
post-effective amendments, and all material which may be incorporated by
reference into such prospectus.
Prospectus Supplement: As defined in Section 5(b).
Record Holder: (i) With respect to any Damages Payment Date
relating to the Notes, each Person who is registered on the books of the
Registrar as the holder of Notes on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur and (ii) with
respect to any Damages Payment Date relating to the Common Stock, each Person
who is a holder of record of such Common Stock fifteen days prior to the Damages
Payment Date.
Registration Default: As defined in Section 4(a).
Registration Expenses: As defined in Section 6(a).
Shelf Registration Statement: As defined in Section 3(a)
hereof.
Suspension Period: As defined in Section 3(a).
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C.
Section 77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note and share of Common
Stock of the Company issuable upon conversion of a Note, until each such Note or
share (i) has been effectively registered under the Securities Act and disposed
of in accordance with the Shelf Registration Statement covering it, (ii) is
distributed to the public pursuant to Rule 144 or (iii) may be sold or
transferred pursuant to Rule 144(k) (or any similar provisions then in force)
under the Securities Act or otherwise.
Underwriter: Any underwriter, placement agent, selling broker,
dealer manager, qualified independent underwriter or similar securities
industry professional.
Underwritten Registration or Underwritten Offering: An
offering in which securities of the Company are sold to an Underwriter or with
the assistance of such Underwriter for reoffering to the public on a firm
commitment or best efforts basis.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to
the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is
deemed to be a holder of Transfer Restricted Securities (each, a "Holder")
whenever such Person owns Transfer Restricted Securities.
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SECTION 3. SHELF REGISTRATION
(a) The Company shall cause to be filed with the Commission as
soon as practicable but in any event on or prior to 30 days after the Closing
Date, a shelf registration statement pursuant to Rule 415 under the Act (as may
then be amended) (the "Shelf Registration Statement") on Form S-1 or Form S-3,
if the use of such form is then available and as determined by the Company, to
cover resales of Transfer Restricted Securities by the Holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. In order for their Transfer
Restricted Securities to be included in the Shelf Registration Statement, the
Holders of such Transfer Restricted Securities shall have provided the
representations required pursuant to Section 3(g) hereof. The Company shall use
its reasonable best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission on or prior to 120 days from the Closing
Date. The Company shall use its reasonable best efforts to keep such Shelf
Registration Statement continuously effective for a period ending two years from
the effective date thereof or such shorter period that will terminate when each
of the Transfer Restricted Securities covered by the Shelf Registration
Statement shall cease to be a Transfer Restricted Security. The Company further
agrees to use its reasonable best efforts to prevent the happening of any event
that would cause the Shelf Registration Statement to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or to
be not effective and usable for resale of the Transfer Restricted Securities
during the period that such Shelf Registration Statement is required to be
effective and usable.
Upon the occurrence of any event that would cause the Shelf
Registration Statement (i) to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) to be not effective and usable for
resale of Transfer Restricted Securities during the period that such Shelf
Registration Statement is required to be effective and usable, the Company shall
as promptly as practicable file an amendment to the Shelf Registration
Statement, in the case of clause (i), correcting any such misstatement or
omission, and in the case of either clause (i) or (ii), use its best efforts to
cause such amendment to be declared effective and such Shelf Registration
Statement to become usable or to obtain withdrawal of any order suspending
effectiveness as soon as practicable thereafter.
Notwithstanding anything to the contrary in this Section 3,
subject to compliance with Sections 4 and 5(b), if applicable, the Company may
prohibit offers and sales of Transfer Restricted Securities pursuant to the
Shelf Registration Statement at any time if (A) (i) it is in possession of
material non-public information, (ii) the Board of Directors of the Company or
the Executive Committee thereof determines (based on advice of counsel) that
such prohibition is necessary in order to avoid a requirement to disclose such
material non-public information and (iii) the Board of Directors of the Company
or the Executive Committee thereof determines in good faith that disclosure of
such material non-public information would not be in the best interests of the
Company and its stockholders or (B) the Company has made a public announcement
relating to an acquisition or business combination transaction including the
Company and/or one or more of its subsidiaries (i) that is material to the
Company and its subsidiaries taken as a whole and (ii) the Board of Directors of
the Company or the Executive Committee thereof determines in good faith that
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement prior to the consummation of such transaction (or such
earlier date as the Board of Directors or the Executive Committee thereof shall
determine) is not in the best interests of the Company and its stockholders (the
period during which any such prohibition of offers and sales of Transfer
Restricted Securities pursuant to the Shelf Registration Statement is in effect
pursuant to clause (A) or (B) of this subparagraph (a) is referred to herein as
a "Suspension Period"). A Suspension Period shall commence on and include the
date on which the Company provides written notice to Holders of Transfer
Restricted Securities covered by the Shelf Registration Statement that offers
and sales of Transfer Restricted Securities cannot be made thereunder in
accordance with this Section 3 and shall end on the date on which each Holder of
Transfer Restricted Securities covered by the Shelf Registration Statement
either receives copies of a Prospectus Supplement contemplated by Section 5(b)
or is advised in writing by the Company that offers and sales of Transfer
Restricted Securities pursuant to the Shelf Registration Statement and use of
the Prospectus may be resumed.
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(b) Neither the Company nor any of its security holders (other
than the Holders of Transfer Restricted Securities in such capacity and other
stockholders having registration rights permitting them to participate therein,
as disclosed in the Offering Memorandum) shall have the right to include any of
the Company's securities in the Shelf Registration Statement.
(c) If the Holders of a majority of the outstanding Transfer
Restricted Securities so elect (with holders of Common Stock constituting
Transfer Restricted Securities being deemed to be Holders of the aggregate
principal amount of Notes converted into such Common Stock for purposes of such
calculation), an offering of Transfer Restricted Securities pursuant to the
Shelf Registration Statement may be effected in the form of an Underwritten
Offering. The Holders of the Transfer Restricted Securities to be registered
shall pay all underwriting discounts and commissions of such Underwriters.
(d) If any of the Transfer Restricted Securities covered by
the Shelf Registration Statement are to be sold in an Underwritten Offering, the
Underwriter(s) that will administer the offering will be selected by the Holders
of a majority of the outstanding Transfer Restricted Securities (with holders of
Common Stock constituting Transfer Restricted Securities being deemed to be
Holders of the aggregate principal amount of Notes converted into such Common
Stock for purposes of such calculation); provided, however, that such
Underwriter(s) shall be reasonably satisfactory to the Company.
(e) Each Holder whose Transfer Restricted Securities are
covered by a Shelf Registration Statement filed pursuant to this Section 3
agrees, upon the request of the Underwriter(s) in any Underwritten Offering, not
to effect any sale or distribution of securities of the Company of the same
class as the securities included in such Shelf Registration Statement, for a
period of up to 90 days beginning on the date any such Underwritten Offering
made pursuant to such Shelf Registration Statement commences, to the extent
timely notified in writing by such Underwriter(s).
(f) The Company agrees not to effect any public or private
offer, sale or distribution of Securities of the same quality and nature as the
Transfer Restricted Securities to be registered in an Underwritten Offering
during the 90-day period beginning on the date any such Underwritten Offering
made pursuant to the Shelf Registration Statement commences, to the extent
timely notified in writing by the Underwriter(s) (except as part of such
registration, if permitted, or pursuant to registrations on Forms S-4 or S-8 or
any successor form to such Forms), unless the Underwriter(s) shall consent in
writing to a shorter period of time; provided, however, that any such agreement
shall permit (A) the issuance by the Company of any shares of Common Stock
issued to employees of the Company or to any other eligible person pursuant to
any employee stock option plan, stock ownership plan, stock bonus plan or stock
compensation plan of the Company in effect on the date of such Underwritten
Offering, (B) the issuance by the Company of Common Stock upon the conversion of
securities, or the exercise of options outstanding at the date of such
Underwritten Offering and (C) the issuance by the Company of shares of Common
Stock during such 90-day period in connection with acquisitions, provided that
any shares of Common Stock issued in acquisitions accounted for under the
purchase method of accounting are contractually restricted from resale for at
least the duration of such 90-day period.
(g) No Holder of Transfer Restricted Securities may include
any of its Transfer Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless such Holder furnishes to the Company in
writing, within 10 business days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus (a
"Preliminary Prospectus") included therein.
SECTION 4. LIQUIDATED DAMAGES
(a) If (i) the Shelf Registration Statement is not filed with
the Commission on or prior to 30 days after the Closing Date, (ii) the Shelf
Registration Statement has not been declared effective by the Commission within
120 days after the Closing Date (the "Effectiveness Target Date"), or (iii) the
Shelf Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately by an
additional registration statement filed and declared effective) or useable for
the
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<PAGE> 6
offer and sale of Transfer Restricted Securities for a period of time (including
any Suspension Period) which shall exceed 60 days in the aggregate in any of the
one-year periods ending on the first and second anniversaries of the Closing
Date (30 days in the case of the one-year period ending on the first anniversary
of the Closing Date), or which shall exceed 30 days in any calendar quarter
within any of such one-year periods (each such event referred to in clauses (i)
through (iii), a "Registration Default"), the Company will pay as liquidated
damages and not as a penalty the amounts set forth herein to each Holder of
Transfer Restricted Securities who has complied with such Holder's obligations
under this Agreement. The amount of liquidated damages payable during any period
during which a Registration Default shall have occurred and be continuing is
that amount which is equal to one-quarter of one percent (25 basis points) per
annum per $1,000 principal amount of Notes or $2.50 per annum per 28.0702 shares
of Common Stock (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) constituting Transfer Restricted
Securities for each 90-day period or part thereof until the applicable
registration statement is filed and the applicable registration statement is
declared effective, or the Shelf Registration Statement again becomes effective
or usable, as the case may be, up to a maximum amount of liquidated damages of
$0.25 per week per $1,000 principal amount of Notes or $12.50 per annum per
28.0702 shares of Common Stock (subject to adjustment as set forth above)
constituting Transfer Restricted Securities. The Company shall notify the
Trustee and the Initial Purchasers within three business days after each and
every date on which a Registration Default initially occurs. All accrued
liquidated damages shall be paid to Record Holders by wire transfer of
immediately available funds or by federal funds check by the Company on each
Damages Payment Date. Following the cure of a Registration Default, liquidated
damages will cease to accrue with respect to such Registration Default.
All of the Company's obligations set forth in the preceding
paragraph which are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such security
shall have been satisfied in full.
The parties hereto agree that the Holders will suffer damages,
and that it would not be feasible to ascertain the extent of such damages with
precision, and the liquidated damages provided in this Section 4 constitute a
reasonable estimate of the damages that will be incurred by Holders of Transfer
Restricted Securities by reason of the failure of the Shelf Registration
Statement to be filed, declared effective or to remain effective, as the case
may be.
SECTION 5. REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the
Company will use its best efforts to effect such registration to permit the sale
of the Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution or disposition thereof, and pursuant thereto
the Company will as expeditiously as possible after the Closing Date:
(a) on or prior to the date 30 days after the Closing Date,
prepare and file with the Commission a Shelf Registration Statement relating to
the registration on Form S-1 or Form S-3, if the use of such form is then
available and as determined by the Company, for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof and shall include all financial statements required to be
included or incorporated by reference therein; cooperate and assist in any
filings required to be made with the NASD and use its reasonable best efforts to
cause such Shelf Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to enable the selling
Holders to consummate the disposition of such Transfer Restricted Securities;
provided, however, that before filing a Shelf Registration Statement or any
Prospectus, or any amendments or supplements thereto, the Company will furnish
to the Initial Purchasers, the Holders and the Underwriter(s), if any, copies of
all such documents proposed to be filed (except that the Company shall not be
required to furnish any exhibits to such documents, including those incorporated
by reference, unless so requested by an Initial Purchaser, Holder or Underwriter
in writing), which documents will be subject to the review of the Initial
Purchasers, the Holders and the Underwriters, if any, and the Company will not
file any Shelf Registration Statement or amendment thereto or any Prospectus or
any supplement thereto to which (i) the Initial Purchasers or the
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<PAGE> 7
Underwriter(s), if any, shall reasonably object or (ii) if there are no
Underwriters, the Initial Purchasers or the Holders of a majority of the
outstanding Transfer Restricted Securities shall reasonably object (with holders
of Common Stock constituting Transfer Restricted Securities being deemed to be
Holders of the aggregate principal amount of Notes converted into such Common
Stock for purposes of such calculation), in each such case within five business
days after the receipt thereof. In addition, the Company shall use its best
efforts to reflect in each such document referenced in this paragraph so filed
with the Commission such reasonable comments as the Initial Purchasers and the
Underwriters, if any, may propose. An Initial Purchaser, Holder or Underwriter,
if any, shall be deemed to have reasonably objected to such filing if the Shelf
Registration Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading which misstatement or omission is specifically
identified to the Company in writing within such five business days;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement continuously effective for
the applicable period set forth in Section 3(a) hereof; cause the Prospectus to
be supplemented by any required supplement thereto (a "Prospectus Supplement"),
and as so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with the applicable provisions of Rules 424 and 430A under the Act
in a timely manner; comply with the provisions of the Act with respect to the
disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement, Prospectus or Prospectus Supplement; and provide that any Shelf
Registration Statement and any amendment thereto and any Prospectus forming a
part thereof and any amendment or supplement thereto complies in all material
respects with the Act and the rules and regulations thereunder, and use its
reasonable best efforts to provide that (i) any Shelf Registration Statement and
any amendment thereto does not, when it becomes effective, 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 not misleading and
(ii) any Prospectus forming part of any Shelf Registration Statement and any
amendment or supplement to such Prospectus, does not include an untrue statement
or a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except to the extent any such untrue statement or omission
in any such Shelf Registration Statement or Prospectus is based upon information
furnished in writing to the Company by any of the Initial Purchasers or any
Holder or any controlling person (as defined below) expressly for use therein;
(c) if requested by the Holders of Transfer Restricted
Securities, or if the Transfer Restricted Securities are being sold in an
Underwritten Offering, the Underwriter(s) of such Underwritten Offering,
promptly incorporate in the Prospectus, any Prospectus Supplement or
post-effective amendment to the Shelf Registration Statement such information as
the Underwriters and/or the Holders of Transfer Restricted Securities being sold
agree should be included therein, including, without limitation, information
with respect to the principal amount of Notes and/or the number of shares of
Common Stock being sold to such Underwriter(s), the purchase price being paid
therefor and any other terms with respect to the offering of the Transfer
Restricted Securities to be sold in such offering; and make all required filings
of such Prospectus, Prospectus Supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be incorporated in
such Prospectus, Prospectus Supplement or post-effective amendment;
(d) advise the Initial Purchasers, the Underwriter(s), if any,
and selling Holders promptly and, if requested by such Persons, to confirm such
advice in writing, (i) when the Prospectus or any Prospectus Supplement or
post-effective amendment to the Shelf Registration Statement has been filed with
the Commission, and, with respect to the Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective, (ii) of
any request by the Commission or any other federal or state governmental
authority for amendments to the Shelf Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto,
(iii) of the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Shelf Registration Statement under the Act or of the suspension by any state
securities commission of the qualification
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<PAGE> 8
of the Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation or threatening of any proceeding for any of the preceding
purposes, (iv) if at any time the representations and warranties of the Company
contemplated by paragraph (l)(i) below cease to be true and correct, (v) of the
existence of any fact and the happening of any event that makes any statement of
a material fact made in the Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the case of the Shelf Registration Statement in order that it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein 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 the light
of the circumstances under which they were made, not misleading, and (vi) of the
Company's determination that a post-effective amendment to the Shelf
Registration would be appropriate. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Shelf Registration Statement, or
any state securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws, the
Company shall use their reasonable best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(e) furnish to each Initial Purchaser, each Holder and each of
the Underwriter(s), if any, without charge, at least one conformed copy of the
Shelf Registration Statement, as first filed with the Commission, and of each
amendment thereto (including financial statements but excluding documents
incorporated by reference therein and exhibits thereto unless requested by such
Initial Purchaser, Holder or Underwriter);
(f) deliver to each Initial Purchaser, each selling Holder and
each of the Underwriter(s), if any, without charge, as many copies of any
Preliminary Prospectus and the Prospectus and any amendments or supplements
thereto as such Persons may reasonably request; the Company consents to the use
of any Preliminary Prospectus and the Prospectus and any amendments or
supplements thereto by each of the selling Holders and each of the
Underwriter(s), if any, in connection with the public offering and the sale of
the Transfer Restricted Securities covered by any Preliminary Prospectus and the
Prospectus or any amendments or supplements thereto;
(g) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the Underwriter(s), if any, and
their respective counsel in connection with the registration and qualification
(or exemption therefrom) of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling Holders or
Underwriter(s) may request, keep each such registration or qualification (or
exemption therefrom) effective during the period such Shelf Registration
Statement is required to be kept effective and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdiction of
the Transfer Restricted Securities covered by the Shelf Registration Statement;
provided, however, that the Company shall not be required (i) to register or
qualify as a foreign corporation where it is not now so qualified or (ii) to
take any action that would subject it to the service of process in suits, other
than as to matters and transactions relating to the Shelf Registration
Statement, in any jurisdiction where it is not now so subject;
(h) cooperate with the selling Holders and the Underwriter(s),
if any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legend, if appropriate; and enable such Transfer Restricted
Securities to be in such denominations and registered in such names as the
Holders or the Underwriter(s), if any, may request at least two business days
prior to any sale of Transfer Restricted Securities;
(i) use its best efforts to cause the Transfer Restricted
Securities covered by the Shelf Registration Statement to be registered with or
approved by such other governmental agencies or authorities in addition to the
Commission as may be necessary to enable the seller or sellers thereof or the
Underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (g) above;
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<PAGE> 9
(j) if any fact or event contemplated by clause (d)(v) or
(d)(vi) above shall exist or have occurred, promptly prepare and file a
post-effective amendment or supplement to the Shelf Registration Statement or
related Prospectus or any document incorporated therein by reference or file any
other required document (such as a Current Report on Form 8-K) that would be
incorporated by reference into the Shelf Registration Statement so that the
Shelf Registration Statement shall not contain any untrue statement of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and so that the Prospectus will not contain any untrue
statement of a material fact or omit to state any material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, as thereafter delivered to the purchasers of the Transfer
Restricted Securities being sold thereunder, and in the case of a post-effective
amendment to a Shelf Registration Statement use its best efforts to cause it to
become effective as soon as practicable;
(k) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Shelf Registration Statement
and provide the Trustee under the Indenture and/or the transfer agent for the
Common Stock with certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(l) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith (including,
in the event of an underwritten offering, those reasonably required by the
Underwriters, if any, or the Holders of a majority of the Transfer Restricted
Securities being sold) as may be required in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to the Shelf
Registration Agreement, in connection with an Underwritten Registration, and
whether or not an underwriting agreement is entered into, and if the
registration is an underwritten registration (i) make such representations and
warranties to the Holders and the Underwriter(s) with respect to the business of
the Company and its subsidiaries, the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by reference, if any,
in each case, in form, substance and scope as they may reasonably request and as
are customarily made by issuers to Underwriters in primary Underwritten
Offerings and covering matters including, but not limited to, those set forth in
the Purchase Agreement; (ii) obtain opinions of counsel for the Company and
updates thereof in customary form and covering matters reasonably requested by
the Underwriter(s) of the type customarily covered in legal opinions to
Underwriters in connection with primary Underwritten Offerings addressed to each
selling Holder and the Underwriter requesting the same and covering the matters
as may be reasonably requested by such Holders and Underwriters and their
counsel; (iii) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants (and, if necessary, any other
certified public accountants of any subsidiary of the Company or any business
acquired or to be acquired by the Company for which financial statements and
financial data are required to be included in the Registration Statement)
addressed to the Underwriters and the selling Holders of Transfer Restricted
Securities (it being understood that the Company will not be required to have
the letters so addressed to the selling Holders of Transfer Restricted
Securities if the Company's independent certified public accountants are
prohibited from addressing the letters to the selling Holders of Transfer
Restricted Securities under SFAS No. 72 or a successor rule), such letters to be
in customary form and covering matters of the type customarily covered in "cold
comfort" letters to Underwriters in connection with primary Underwritten
Offerings; (iv) set forth in full or incorporate by reference in the
underwriting agreement the indemnification provisions and procedures of Section
7 hereof with respect to all parties to be indemnified pursuant to said Section;
and (v) deliver such documents and certificates as may be reasonably requested
by the Holders of the Transfer Restricted Securities being sold, the
Underwriter(s) of such Underwritten Offering and their counsel to evidence
compliance with clause (i) above and with any customary conditions contained in
the underwriting agreement entered into by the Company pursuant to this clause
(l). The above shall be done at or prior to each closing under such underwriting
agreement, as and to the extent required thereunder;
(m) make available at reasonable times and in a reasonable
manner for inspection by a representative of the Holders of the Transfer
Restricted Securities, any Underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the Underwriters, all financial and other
records, pertinent corporate documents and
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<PAGE> 10
properties of the Company and its subsidiaries and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Holder, Underwriter, attorney or accountant in connection with such Shelf
Registration Statement prior to its effectiveness, provided, however, that such
representatives, attorneys or accountants shall agree to keep confidential
(which agreement shall be confirmed in writing in advance to the Company if the
Company shall so request) all information, records or documents made available
to such persons which are reasonably in good faith designated by the Company in
writing as confidential unless (i) disclosure of such records, information or
documents is required by court or administrative order (of which the Company
shall have been given prior notice and an opportunity to defend) after the
exhaustion of all appeals therefrom, and to use such information obtained
pursuant to this provision only in connection with the transaction for which
such information was obtained, and not for any other purpose, (ii) disclosure of
such information is required by law (including any disclosure requirements
pursuant to federal securities laws in connection with the filing of any Shelf
Registration Statement or the use of any prospectus preferred to in this
Agreement); (iii) such information becomes generally available to the public
other than as a result of disclosure or failure to safeguard by any such person
or (iv) such information becomes available to any such person from a source
other than the Company and such source is not bound by a confidentiality
agreement;
(n) otherwise comply with all applicable rules and regulations
of the Commission, and make generally available to its security holders, as soon
as practicable, a consolidated earnings statement, which consolidated earnings
statement shall satisfy the provisions of Section 11(a) of the Act (including
Rule 158 thereunder), for the twelve-month period (i) commencing at the end of
any fiscal quarter in which Transfer Restricted Securities are sold to
Underwriters in a firm commitment or best efforts Underwritten Offering or (ii)
if not sold to Underwriters in such an offering, beginning with the first month
of the Company's first fiscal quarter commencing after the effective date of the
Shelf Registration Statement;
(o) cause the Indenture to be qualified under the TIA, and, in
connection therewith, cooperate with the Trustee and the Holders to effect such
changes to the 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 the 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 Commission to enable such Indenture to be so qualified in a timely manner;
(p) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Shelf Registration Statement at
the earliest possible moment;
(q) cause all Transfer Restricted Securities covered by the
Shelf Registration Statement to be listed on each securities exchange or
quotation system on which similar securities issued by the Company are then
listed no later than the date the Shelf Registration Statement is declared
effective, and in connection therewith, to the extent applicable, to make such
filings under the Exchange Act (e.g., the filing of a Registration Statement on
Form 8-A) and to have such filings declared effective thereunder; and cause the
Notes covered by the Shelf Registration Statement to be rated with the
appropriate rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of such Notes or the Underwriters; and
(r) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by any
Underwriter (including any "qualified independent Underwriter" that is required
to be retained in accordance with the rules and regulations of the NASD).
Each Holder 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 by such Holder not materially misleading or necessary to cause
such Shelf Registration Statement not to omit a material fact with respect to
such Holder necessary in order to make the statements therein not misleading.
9
<PAGE> 11
Each Holder agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 5(d)(v) or (vi) hereof, such Holder
will forthwith discontinue disposition of Transfer Restricted Securities until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings with respect to the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities current at the time of receipt of such notice. In the
event Company shall give any such notice, the time period regarding the
effectiveness of the Shelf Registration Statement set forth in Section 3(a)
hereof shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 5(d)(v) or
(vi) hereof to and including the date when each selling Holder covered by such
Shelf Registration Statement shall have received the copies of the supplemented
or amended Prospectus contemplated by Section 5(j) hereof or shall have received
the Advice.
SECTION 6. REGISTRATION EXPENSES
(a) All fees and expenses incident to the Company's
performance of or compliance with this Agreement (the "Registration Expenses")
will be borne by the Company, regardless of whether a Shelf Registration
Statement becomes effective, including without limitation:
(i) all registration and filing fees and expenses (including
filings made with the NASD);
(ii) fees and expenses of compliance with federal securities
or state blue sky laws (including, without limitation, fees and
disbursements of counsel to the Underwriters, if any, in connection
with qualifications of the Transfer Restricted Securities under the
blue sky laws of such jurisdictions as the Underwriters, if any, or
Holders of a majority of the Transfer Restricted Securities being sold
may designate;
(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Transfer
Restricted Securities in a form eligible for deposit with the
Depository Trust Company and of printing the Prospectus and any
Preliminary Prospectus), messenger and delivery services and telephone;
(iv) reasonable fees and disbursements of counsel for the
Company and for the Holders of the Transfer Restricted Securities
(subject to the provisions of Section 6(b) hereof);
(v) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special audit
and "cold comfort" letters required by or incidental to the preparation
and filing of a Shelf Registration Statement and Prospectus and the
disposition of Transfer Restricted Securities);
(vi) fees and expenses associated with any NASD filing
required to be made in connection with the Shelf Registration
Statement, including, if applicable, the fees and expenses of any
"qualified independent Underwriter" (and its counsel) that is required
to be retained in accordance with the rules and regulations of the
NASD; and
(vii) fees and expenses of listing the Transfer Restricted
Securities on any securities exchange or quotation system in accordance
with Section 5(q) hereof.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, rating agency fees and the fees and expenses of any Person, including
special experts, retained by
10
<PAGE> 12
the Company. The Holders of Transfer Restricted Securities shall bear the
expense of any broker's commission or Underwriter's discount or commission.
(b) In connection with the Shelf Registration Statement, the
Company will reimburse the Holders of Transfer Restricted Securities being
registered pursuant to such Shelf Registration Statement for the reasonable fees
and disbursements of not more than one counsel chosen by the Holders of a
majority of the outstanding Transfer Restricted Securities and reasonably
acceptable to the Company (with holders of Common Stock constituting Transfer
Restricted Securities being deemed to be Holders of the aggregate principal
amount of Notes converted into such Common Stock for purposes of such
calculation).
Notwithstanding the provisions of this Section 6(b), each
Holder of Transfer Restricted Securities shall pay all Registration Expenses to
the extent required by applicable law.
SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each
of the Initial Purchasers, (ii) each Holder, (iii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any of the Initial Purchasers or any Holder (any of the persons
referred to in this clause (iii) being hereinafter referred to as a "controlling
person") and (iv) the respective officers, directors, partners, employees,
representatives and agents of any of the Initial Purchasers or any Holder or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as a "Non-Company Indemnitee"), to the fullest
extent lawful, from and against any and all losses, claims, damages, liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigation any such action or claim) and
judgments arising out of or based upon or caused by any untrue statement or
alleged untrue statement of a material fact contained in the Shelf Registration
Statement, Prospectus or Preliminary Prospectus (or any amendments or
supplements thereto), including any document incorporated by reference therein,
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, except, with respect to any Non-Company Indemnitee, insofar as such
losses, claims, damages, liabilities or judgments (1) are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by such Non-Company Indemnitee
expressly for use therein or (2) with respect to any Preliminary Prospectus,
result from the fact that such Non-Company Indemnity sold Transfer Restricted
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final Prospectus, as amended or
supplemented, if the Company shall have previously furnished copies thereof to
such Non-Company Indemnitee in accordance with this Agreement and the final
Prospectus, as amended or supplemented, would have corrected such untrue
statement or omission.
(b) In case any proceeding (including any governmental
investigation) shall be brought against any Non-Company Indemnitee, based upon
the Shelf Registration Statement, Prospectus, or Preliminary Prospectus (or any
amendments or supplements thereto), and with respect to which indemnity may be
sought against the Company, such Non-Company Indemnitee shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel, reasonably satisfactory to the Non-Company
Indemnitee and payment of all fees and expenses; provided, however, that the
omission so to notify the Company shall not relieve the Company from any
liability that it may have to any Non-Company Indemnitee (except to the extent
that the Company is materially prejudiced or otherwise forfeits substantive
rights or defenses by reason of such failure). Such Non-Company Indemnitee shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of counsel shall be paid by such
Non-Company Indemnitee, unless (i) the employment of such counsel shall have
been specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or shall have employed
counsel not reasonably satisfactory to the Non-Company Indemnitee (iii) the
named parties to any such action (including any impleaded parties) include both
such Non-Company Indemnitee and the Company and it would be inappropriate for
the same counsel to represent such Non-Company Indemnitee and the Company (in
which case the Company shall not have the right to assume the defense of such
action on behalf of such Non-Company Indemnitee, it being understood, however,
that the
11
<PAGE> 13
Company shall not, in connection with any one such action or separate but
substantially similar or related actions 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) for the Non-Company Indemnitees, which firm shall be designated in
writing by the Non-Company Indemnitees and whose fees and expenses reasonably
incurred shall be reimbursed as they are incurred). The Company shall not be
liable for any settlement of any such proceeding effected without the written
consent of the Company, but if settled with the written consent of the Company,
the Company agrees to indemnify and hold harmless any Non-Company Indemnitee
from and against any amounts payable pursuant to such written consent in
connection with such settlement. Notwithstanding the immediately preceding
sentence, if in any case where the fees and expenses of counsel are at the
expense of the Company and a Non-Company Indemnitee shall have requested the
Company to reimburse such Non-Company Indemnitee for such fees and expenses of
counsel as incurred, the Company agrees that it shall be liable for any
settlement of any action effected without its written consent if (i) each
settlement is entered into more than 30 business days after the receipt by the
Company of the aforesaid request and (ii) the Company shall have failed to
reimburse such Non-Company Indemnitee in accordance with such request for
reimbursement prior to the date of such settlement. The Company shall not,
without the prior written consent of such Non-Company Indemnitee, effect any
settlement of any pending or threatened proceeding in respect of which such
Non-Company Indemnitee is or could have been a party and indemnity could have
been sought hereunder by such Non-Company Indemnitee, unless such settlement
includes an unconditional release of such Non-Company Indemnitee from all
liability on claims that are the subject matter of such proceeding.
(c) Each Holder of Transfer Restricted Securities agrees to
indemnify and hold harmless (i) the Company, (ii) each of the Initial
Purchasers, (iii) each other Holder, (iv) any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company,
any of the Initial Purchasers and each other Holder and (v) the respective
officers, directors, partners, employees, representatives and agents of each of
the parties referred to in clauses (i), (ii), (iii) and (iv), to the same extent
as the foregoing indemnity from the Company to each of the Non-Company
Indemnitees contained in subparagraph (a) and (b), but only with respect to
information relating to such Holder that was furnished in writing by such Holder
expressly for use in the Shelf Registration Statement (or any amendment or
supplement thereto). In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the proceeds received
by such Holder upon the sales of the Transfer Restricted Securities giving rise
to such indemnification obligation.
(d) If the indemnification provided for in this Section 7 is
applicable but unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments 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 hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, 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 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 indemnifying party, on the one hand, or
the indemnified party, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, each of the Initial Purchasers and each Holder of
Transfer Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The losses, claims, damages, liabilities or judgments of an indemnified party
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim prior to the indemnifying party's
assumption of the defense thereof or subsequent thereto to the extent permitted
by the second sentence
12
<PAGE> 14
of Section 7(b) hereof. Notwithstanding the provisions of this Section 7, none
of the Holders shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the total amount received by such Holder with
respect to the sale of Transfer Restricted Securities exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 7(d) are several in proportion to the respective
principal amount of Notes held by each of the Holders hereunder and not joint.
SECTION 8. RULE 144A
The Company hereby agrees with each Holder, for so long as any
of the Notes or shares of Common Stock that are Transfer Restricted Securities
remain outstanding and during any such period in which the Company is not
subject to Section 13 or 15(d) of the Exchange Act, to make available to any
Initial Purchaser or any beneficial owner of the Notes or shares of such Common
Stock in connection with any sale thereof and any prospective purchaser of such
Notes or Common Stock from such Initial Purchaser or beneficial owner, the
information required by Rule 144A(d)(4) under the Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A. The Company shall
file the reports required to be filed by it under the Exchange Act and upon the
request of any holder of Transfer Restricted Securities, the Company shall
deliver to such holder a written statement as to whether it has complied with
such filing requirements. Notwithstanding the foregoing, nothing in this Section
8 shall be deemed to require the Company to register any of its securities under
any section of the Exchange Act.
SECTION 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Offering
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements, (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements and (c) furnishes the Company in writing information
in accordance with Section 3(g) and agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act to the extent contemplated by Section 7(c).
SECTION 10. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the
Shelf Registration Statement who desire to do so may sell such Transfer
Restricted Securities in an Underwritten Offering. In any such Underwritten
Offering, the Underwriter(s) that will administer the offering will be selected
by the Holders of the Transfer Restricted Securities included in such offering
in the manner specified in Section 3(c); provided, however, that such
Underwriters must be reasonably satisfactory to the Company.
SECTION 11. MISCELLANEOUS
(a) Remedies. Each Holder of Transfer Restricted Securities,
in addition to being entitled to exercise all rights provided herein, and as
provided in the Purchase Agreement and granted by law, including recovery of
damages, will be entitled to specific performance of such Holder's 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 the provisions
of this Agreement.
(b) No Inconsistent Agreements. The Company will not on or
after the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders of
Transfer Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders of Transfer Restricted
Securities hereunder do not in any way conflict with
13
<PAGE> 15
and are not inconsistent with the rights granted to the holders of the Company's
securities under any other agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of a majority of the outstanding Transfer Restricted Securities affected by such
amendment, modification, supplement, waiver or departure (with holders of Common
Stock constituting Transfer Restricted Securities being deemed to be Holders of
the aggregate principal amount of Notes converted into such Common Stock for
purposes of such calculation). Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders of Transfer Restricted Securities whose securities are being
sold pursuant to such Shelf Registration Statement and that does not directly or
indirectly affect the rights of other Holders of Transfer Restricted Securities
shall be valid only with the written consent of Holders of at least a majority
of the Transfer Restricted Securities being sold, in each case calculated in
accordance with the provisions of Section 3(c).
(d) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder of Transfer Restricted Securities,
at the address set forth on the records of the Registrar under the
Indenture, with a copy to the Registrar; and
(ii) if to the Company or an Initial Purchaser,
initially at its address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in
accordance with the provisions of this Section.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
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 the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder of Transfer Restricted Securities unless
and to the extent such successor or assign acquired Transfer Restricted
Securities from such Holder; and provided further that nothing herein shall be
deemed to permit any assignment, transfer or any disposition of Transfer
Restricted Securities in violation of the terms of the Purchase Agreement. If
any transferee of any Holder shall acquire Transfer Restricted Securities, in
any manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement and by
taking and holding such Transfer Restricted Securities such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(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.
14
<PAGE> 16
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICTS OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement together with the other
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the securities sold pursuant to the Purchase Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
(k) Owner of Transfer Restricted Securities. The Company will
maintain, or will cause it registrar and transfer agent to maintain, a register
with respect to the Transfer Restricted Securities in which all transfers of
Transfer Restricted Securities of which the company has received notice will be
recorded. The Company may deem and treat the person in whose name the Transfer
Restricted Securities are registered in such register of the Company as the
owner thereof for all purposes, including, without limitation, the giving of
notices under this Agreement.
(l) Further Assurances. Each of the parties hereto shall use
all reasonable efforts to take, or cause to be taken, all appropriate action, do
or cause to be done all things reasonably necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to carry out this Agreement.
[Remainder of page intentionally left blank.]
15
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
PERSONNEL GROUP OF AMERICA, INC.
By: /s/ Ken R. Bramlett, Jr.
----------------------------------
Ken R. Bramlett, Jr.
Senior Vice President of Administration,
General Counsel and Secretary
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
J. C. BRADFORD & CO.
THE ROBINSON-HUMPHREY COMPANY, INC.
NATIONSBANC CAPITAL MARKETS, INC.
BY: SMITH BARNEY INC.
By: /s/ properly authorized person on behalf of Smith Barney Inc.
------------------------------------
Name:
Title:
16
<PAGE> 1
Exhibit 12.1
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 Q1 96 Q1 97
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest Expense including
amortization of debt
issuance costs -- -- -- -- 1,432 -- 1,739
Interest on Rent
Expense (1/3 of Rent Expense) 1,087 959 997 1,050 1,427 282 456
---------------------------------------------------------------------------------------------
Total Fixed Charges 1,087 959 997 1,050 2,859 282 2,195
=============================================================================================
Income before Taxes 552 4,616 6,960 12,414 19,849 2,591 5,968
Fixed Charges 1,087 959 997 1,050 2,859 282 2,195
---------------------------------------------------------------------------------------------
Income before Fixed Charges 1,639 5,575 7,957 13,464 22,708 2,873 8,163
=============================================================================================
Ratio of Earnings to
Fixed Charges 1.5 5.8 8.0 12.8 7.9 10.2 3.7
</TABLE>
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF PERSONNEL GROUP OF AMERICA, INC.
State of
Subsidiary Incorporation Does Business As
- ---------- ------------- ----------------
B.C.P., Inc. Hawaii Nursefinders of Hawaii, Inc.
PFI Corp. Delaware Nursefinders
Nursefinders, Inc. Texas Nursefinders
NF Services, Inc. New York Nursefinders
StaffPLUS, Inc. Delaware Abar Staffing, Allegheny Personnel
Services, Denver Temp, FirstWord
Staffing Services, Judith Fox
Staffing, Profile Temporary
Staffing, Staffinders Personnel,
Temp Connection, TempWorld, West
Personnel Service, WPPS Software
Staffing Specialists
Thomas Staffing California Thomas Staffing
Services, Inc.
InfoTech Services, Inc. North Carolina InfoStaff (Utah and California),
Best Consulting, Command
Technologies, Computer
Resources Group, Energetix,
Software Service Corporation,
Lipson Conroy Services,
Vital Computer Services
International
Broughton Systems, Inc. Virginia Broughton Systems
Lloyd-Ritter California Lloyd-Ritter Consulting
Consulting, Inc.
Word Processing New York Word Processing Professionals
Professionals, Inc.
<PAGE> 1
EXHIBIT 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 7,
1997, included in Personnel Group of America, Inc.'s Form 10-K for the year
ended December 29, 1996, and to all references to our firm included in or made
a part of this registration statement.
/s/ Arthur Andersen LLP
Charlotte, North Carolina,
July 23, 1997.
<PAGE> 1
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM T-1
----------
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT FOR 1939, AS AMENDED,
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
----------
FIRST UNION NATIONAL BANK
(Exact name of Trustee as specified in its charter)
<TABLE>
<S> <C> <C>
230 SOUTH TRYON STREET, 9TH FLOOR
CHARLOTTE, NORTH CAROLINA 28288-1179 56-0900030
(Address of principal executive office) (Zip Code) (I.R.S. Employer Identification No.)
</TABLE>
SHANNON STAHEL
FIRST UNION NATIONAL BANK
230 SOUTH TRYON STREET, 9TH FLOOR
CHARLOTTE, NORTH CAROLINA 28288-1179
(704) 374-6242
----------
PERSONNEL GROUP OF AMERICA, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 56-1930691
(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
6302 FAIRVIEW ROAD, SUITE 201
CHARLOTTE, NORTH CAROLINA 28210
(Address of Principal Executive Offices)
----------
5 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004
(Title of the indenture securities)
================================================================================
1
<PAGE> 2
1. GENERAL INFORMATION.
(a) The following are the names and addresses of each examining or
supervising authority to which the Trustee is subject:
The Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Richmond, Virginia.
Federal Deposit Insurance Corporation, Washington, D.C.
Securities and Exchange Commission, Division of Market
Regulation, Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR.
The obligor is not an affiliate of the Trustee. (See Note 1 on
Page 3)
Because the obligor is not in default on any securities issued under indentures
under which the applicant is trustee, Items 3 through 14 are not required
herein.
15. FOREIGN TRUSTEE.
Not applicable.
16. LIST OF EXHIBITS.
(1) Articles of Association of the Trustee as now in effect.
(2) Certificate of Authority of the Trustee to commence business.
(3) Authorization of the Trustee to exercise corporate trust powers.
(4) By-Laws of the Trustee.
(5) Inapplicable.
(6) Consent by the Trustee required by Section 321(b) of the Trust
Indenture Act of 1939. Included on Page 4 of this Form T-1
Statement.
(7) Report of condition of Trustee.
(8) Inapplicable.
(9) Inapplicable.
2
<PAGE> 3
----------
NOTE
----------
1. Inasmuch as this Form T-1 is filed prior to the ascertainment by
the Trustee of all facts on which to base responsive answers to Item 2, the
answer to said Item is based on incomplete information. Item 2 may, however, be
considered as correct unless amended by an amendment to this Form T-1.
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, FIRST UNION NATIONAL BANK, a national association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Charlotte, and State of North Carolina on the 22nd day of July, 1997.
FIRST UNION NATIONAL BANK
BY: /s/ Shannon Stahel
---------------------------------
Shannon Stahel
Corporate Trust Officer
EXHIBIT T-1 (6)
CONSENTS OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939 and in
connection with the proposed registration for resale under the 1933 Securities
Act, as amended, by Personnel Group of America of its 5 3/4% Convertible
Subordinated Notes due 2004, First Union National Bank as the Trustee herein
named, hereby consents that reports of examinations of said Trustee by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon requests therefor.
FIRST UNION NATIONAL BANK
BY: /s/ Shannon Stahel
---------------------------------
Shannon Stahel
Corporate Trust Officer
Dated: July 22, 1997
---------------------------
4
<PAGE> 5
Exhibit 1
CHARTER NO. 15650
FIRST UNION NATIONAL BANK
ARTICLES OF ASSOCIATION
-----------------------
(AS AMENDED EFFECTIVE JUNE 5, 1997)
For the purpose of organizing an Association to carry on the business of banking
under the laws of the United States, the undersigned do enter into the following
Articles of Association:
FIRST. The title of this Association shall be FIRST UNION NATIONAL BANK.
SECOND. The main office of the Association shall be in Charlotte, County of
Mecklenburg, State of North Carolina. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not less
than five nor more than twenty-five directors, the exact number of directors
within such minimum and maximum limits to be fixed and determined from time to
time by resolution of a majority of the full Board of Directors or by resolution
of the shareholders at any annual or special meeting thereof. Unless otherwise
provided by the laws of the United States, any vacancy in the Board of Directors
for any reason, including an increase in the number thereof, may be filled by
action of the Board of Directors.
FOURTH. The annual meeting of the shareholders for the election of
directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office or such other place as the Board
of Directors may designate, on the day of each year specified therefor in the
Bylaws, but if no election is held on that day, it may be held on any subsequent
day according to the provisions of law; and all elections shall be held
according to such lawful regulations as may be prescribed by the Board of
Directors.
Nominations for election to the Board of Directors may be made by the Board
of Directors or by any stockholder of any outstanding class of capital stock of
the bank entitled to vote for election of directors. Nominations, other than
those made by or on behalf of the existing management of the bank, shall be made
in writing and shall be delivered or mailed to the President of the bank and to
the Comptroller of the Currency, Washington, D.C., Not less than 14
<PAGE> 6
days nor more than 50 days prior to any meeting of stockholders called for the
election of directors, PROVIDED, HOWEVER, that if less than 21 days' notice of
the meeting is given to shareholders, such nomination shall be mailed or
delivered to the President of the Bank and to the Comptroller of the Currency
not later than the close of business on the seventh day following the day on
which the notice of meeting was mailed. Such notification shall contain the
following information to the extent known to the notifying shareholder: (a) the
name and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the total number of shares of capital stock of the bank
that will be voted for each proposed nominee; (d) the name and residence address
of the notifying shareholder; and (e) the number of shares of capital stock of
the bank owned by the notifying shareholder. Nominations not made in accordance
herewith may, in his discretion, be disregarded by the Chairman of the meeting,
and upon his instructions, the vote tellers may disregard all votes cast for
each such nominee.
FIFTH. The authorized amount of capital stock of this Association shall be
7,500,000 shares of common stock of the par value of Fifteen Dollars ($15.00)
each, but said capital stock may be increased or decreased from time to time in
accordance with the provisions of the laws of the United States.
If the capital stock is increased by the sale of additional shares thereof,
each shareholder shall be entitled to subscribe for such additional shares in
proportion to the number of shares of said capital stock owned by him at the
time the increase is authorized by the shareholders, unless another time
subsequent to the date of the shareholder's meeting is specified in a resolution
adopted by the shareholders at the time the increase is authorized. The Board of
Directors shall have the power to prescribe a reasonable period of time within
which the preemptive rights to subscribe to the new shares of capital stock must
be exercised.
The Association, at any time and from time to time, may authorize and issue
debt obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The board of directors shall appoint one of its members President of
this Association, who shall be Chairman of the Board, unless the Board appoints
another director to be the Chairman. The Board of Directors shall have the power
to appoint one or more Vice Presidents; and to appoint a cashier or such other
officers and employees as may be required to transact the business of this
Association.
The Board of Directors shall have the power to define the duties of the
officers and employees of the Association, to fix the salaries to be paid to
them;
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to dismiss them, to require bonds from them and to fix the penalty thereof; to
regulate the manner in which any increase of the capital of the Association
shall be made; to manage and administer the business and affairs of the
Association; to make all By-Laws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the location
of the main office to any other place within the limits of Charlotte, North
Carolina, without the approval of the shareholders but subject to the approval
of the Comptroller of the Currency; and shall have the power to establish or
change the location of any branch or branches of the Association to any other
location, without the approval of the shareholders but subject to the approval
of the Comptroller of the Currency.
EIGHTH. The corporate existence of this association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the UNITED STATES, a notice of the time,
place, and purpose of every annual and special meeting of the shareholders shall
be given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting to each shareholder of record at his address as shown
upon the books of this Association.
TENTH. Each director and executive officer of this Association shall be
indemnified by the association against liability in any proceeding (including
without limitation a proceeding brought by or on behalf of the Association
itself) arising out of his status as such or his activities in either of the
foregoing capacities, except for any liability incurred on account of activities
which were at the time taken known or believed by such person to be clearly in
conflict with the best interests of the Association. Liabilities incurred by a
director or executive officer of the Association in defending a proceeding shall
be paid by the Association in advance of the final disposition of such
proceeding upon receipt of an undertaking by the director or executive officer
to repay such amount if it shall be determined, as provided in the last
paragraph of this Article Tenth, that he is not entitled to be indemnified by
the Association against such liabilities.
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The indemnity against liability in the preceding paragraph of this Article
Tenth, including liabilities incurred in defending a proceeding, shall be
automatic and self-operative.
Any director, officer or employee of this Association who serves at the
request of the association as a director, officer, employee or agent of a
charitable, not-for-profit, religious, educational or hospital corporation,
partnership, joint venture, trust or other enterprise, or a trade association,
or as a trustee or administrator under an employee benefit plan, or who serves
at the request of the Association as a director, officer or employee of a
business corporation in connection with the administration of an estate or trust
by the Association, shall have the right to be indemnified by the Association,
subject to the provisions set forth in the following paragraph of this Article
Tenth, against liabilities in any manner arising out of or attributable to such
status or activities in any such capacity, except for any liability incurred on
account of activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interests of the Association, or
of the corporation, partnership, joint venture, trust, enterprise, Association
or plan being served by such person.
In the case of all persons except the directors and executive officers of
the Association, the determination of whether a person is entitled to
indemnification under the preceding paragraph of this Article Tenth shall be
made by and in the sole discretion of the Chief Executive Officer of the
Association. In the case of the directors and executive officers of the
Association, the indemnity against liability in the preceding paragraph of this
Article Tenth shall be automatic and self-operative.
For purposes of this Article Tenth of these Articles of Association only,
the following terms shall have the meanings indicated:
(a) "Association" means First Union National Bank and its direct and
indirect wholly-owned subsidiaries.
(b) "Director" means an individual who is or was a director of the
Association.
(c) "Executive officer" means an officer of the Association who by
resolution of the Board of Directors of the Association has been determined to
be an executive officer of the Association for purposes of Regulation O of the
Federal Reserve Board.
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<PAGE> 9
(d) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses, including counsel fees and expenses,
incurred with respect to a proceeding.
(e) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(f) "Proceeding" means any threatened, pending, or completed claim,
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
The Association shall have no obligation to indemnify any person for an
amount paid in settlement of a proceeding unless the Association consents in
writing to such settlement.
The right to indemnification herein provided for shall apply to persons who
are directors, officers, or employees of banks or other entities that are
hereafter merged or otherwise combined with the Association only after the
effective date of such merger or other combination and only as to their status
and activities after such date.
The right to indemnification herein provided for shall inure to the benefit
of the heirs and legal representatives of any person entitled to such right.
No revocation of, change in, or adoption of any resolution or provision in
the Articles of Association or By-Laws of the Association inconsistent with,
this Article Tenth shall adversely affect the rights of any director, officer,
or employee of the Association with respect to (i) any proceeding commenced or
threatened prior to such revocation, change, or adoption, or (ii) any proceeding
arising out of any act or omission occurring prior to such revocation, change,
or adoption, in either case, without the written consent of such director,
officer, or employee.
The rights hereunder shall be in addition to and not exclusive of any other
rights to which a director, officer, or employee of the Association may be
entitled under any statute, agreement, insurance policy, or otherwise.
The Association shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, or employee of the
Association, or is or was serving at the request of the Association as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, trade association, employee benefit plan, or other enterprise,
against any
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<PAGE> 10
liability asserted against such director, officer, or employee in any such
capacity, or arising out of their status as such, whether or not the Association
would have the power to indemnify such director, officer, or employee against
such liability, excluding insurance coverage for a formal order assessing civil
money penalties against an Association director or employee.
Notwithstanding anything to the contrary provided herein, no person shall
have a right to indemnification with respect to any liability (i) incurred in an
administrative proceeding or action instituted by an appropriate bank regulatory
agency which proceeding or action results in a final order assessing civil money
penalties or requiring affirmative action by an individual or individuals in the
form of payments to the Association, (ii) to the extent such person is entitled
to receive payment therefor under any insurance policy or from any corporation,
partnership, joint venture, trust, trade association, employee benefit plan, or
other enterprise other than the association, or (iii) to the extent that a court
of competent jurisdiction determines that such indemnification is void or
prohibited under state or federal law.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of holders of a
greater amount of stock is required by law, and in that case, by the vote of the
holders of such greater amount.
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Exhibit 2
[LOGO]
- --------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- --------------------------------------------------------------------------------
Washington, D.C. 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "First Union National Bank," Charlotte, North Carolina, (Charter No. 15650)
is a National Banking Association formed under the laws of the United States and
is authorized thereunder to transact the business of banking on the date of this
Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents
at the Treasury Department in the City
of Washington and District of Columbia,
this 16th day of June, 1997.
[SEAL] /s/ Eugene A. Ludwig
------------------------------------
Comptroller of the Currency
<PAGE> 12
Exhibit 3
[LOGO]
- --------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- --------------------------------------------------------------------------------
Washington, D.C. 20219
Certificate of Fiduciary Powers
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "First Union National Bank," Charlotte, North Carolina, (Charter No. 15650),
was granted, under the hand and seal of the Comptroller, the right to act in all
fiduciary capacities authorized under the provisions of the Act of Congress
approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the authority
so granted remains in full force and effect on the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents
at the Treasury Department in the City
of Washington and District of Columbia,
this 16th day of June, 1997.
[SEAL] /s/ Eugene A. Ludwig
------------------------------------
Comptroller of the Currency
<PAGE> 13
Exhibit 4
BY-LAWS OF
FIRST UNION NATIONAL BANK
AS AMENDED
VARIOUS AMENDMENTS
PRIOR TO 1985
APRIL 16, 1985
OCTOBER 21, 1986
DECEMBER 15, 1993
DECEMBER 13, 1995
MAY 22, 1996
MAY 21, 1997
JUNE 17, 1997
<PAGE> 14
BY-LAWS OF
FIRST UNION NATIONAL BANK
ARTICLE I
Meetings of Shareholders
------------------------
SECTION 1.1 ANNUAL MEETING. The annual meeting of the shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the third Tuesday of February
in each year, commencing with the year 1996, except that the Board of Directors
may, from time to time and upon passage of a resolution specifically setting
forth its' reasons, set such other date for such meeting during the month of
February as the Board of Directors may deem necessary or appropriate; provided,
however, that if an annual meeting would otherwise fall on a legal holiday, then
such annual meeting shall be held on the second business day following such
legal holiday. The holders of a majority of the outstanding shares entitled to
vote which are represented at any meeting of the shareholders may choose persons
to act as Chairman and as Secretary of the meeting.
SECTION 1.2 SPECIAL MEETINGS. Except as otherwise specifically provided by
statute, special meetings of the shareholders may be called for any purpose at
any time by the Board of Directors or by any three or more shareholders owning,
in the aggregate, not less than ten percent of the stock of the Association.
Every such special meeting, unless otherwise provided by law, shall be called by
mailing, postage prepaid, not less than ten days prior to the date fixed for
such meeting, to each shareholder at his address appearing on the books of the
Association, a notice stating the purpose of the meeting.
SECTION 1.3 NOMINATIONS FOR DIRECTORS. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any stockholder
of any outstanding class of capital stock of the bank entitled to vote for the
election of directors. Nominations, other than those made by or on behalf of the
existing management of the bank, shall be made in writing and shall be delivered
or mailed to the President of the Bank and to the Comptroller of the Currency,
Washington, D. C., not less than 14 days nor more than 50 days prior to any
meeting of stockholders called for the election of directors, provided however,
that if less than 21 days' notice of such meeting is given to shareholders, such
nomination shall be mailed or delivered to the President of the Bank and to the
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<PAGE> 15
Comptroller of the Currency not later than the close of business on the seventh
day following the day on which the notice of meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the bank that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the bank owned by the notifying
shareholder. Nominations not made in accordance herewith may, in his discretion,
be disregarded by the chairman of the meeting, and upon his instructions, the
vote tellers may disregard all votes cast for each such nominee.
SECTION 1.4 JUDGES OF ELECTION. The Board may at any time appoint from
among the shareholders three or more persons to serve as Judges of Election at
any meeting of shareholders; to act as judges and tellers with respect to all
votes by ballot at such meeting and to file with the Secretary of the meeting a
Certificate under their hands, certifying the result thereof.
SECTION 1.5 PROXIES. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or employee
of this Association shall act as proxy. Proxies shall be valid only for one
meeting, to be specified therein, and any adjournments of such meeting. Proxies
shall be dated and shall be filed with the records of the meeting.
SECTION 1.6 QUORUM. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
---------
SECTION 2.1 BOARD OF DIRECTORS. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law, all
corporate powers of the Association shall be vested in and may be exercised by
said Board.
SECTION 2.2 NUMBER. The Board shall consist of not less than five nor more
than twenty-five directors, the exact number within such minimum and maximum
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<PAGE> 16
limits to be fixed and determined from time to time by resolution of a majority
of the full Board or by resolution of the shareholders at any meeting thereof;
provided, however, that a majority of the full Board of Directors may not
increase the number of directors to a number which, (1) exceeds by more than two
the number of directors last elected by shareholders where such number was
fifteen or less, and (2) to a number which exceeds by more than four the number
of directors last elected by shareholders where such number was sixteen or more,
but in no event shall the number of directors exceed twenty-five.
SECTION 2.3 ORGANIZATION MEETING. The Secretary of the meeting upon
receiving the certificate of the judges, of the result of any election, shall
notify the directors-elect of their election and of the time at which they are
required to meet at the Main Office of the Association for the purpose of
organizing the new Board and electing and appointing officers of the Association
for the succeeding year. Such meeting shall be held as soon thereafter as
practicable. If, at the time fixed for such meeting, there shall not be a quorum
present, the directors present may adjourn the meeting from time to time, until
a quorum is obtained.
SECTION 2.4 REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such place and time as may be designated by resolution of the
Board of Directors. Upon adoption of such resolution, no further notice of such
meeting dates or the places or times thereof shall be required. Upon the failure
of the Board of Directors to adopt such a resolution, regular meetings of the
Board of Directors shall be held, without notice, on the third Tuesday in
February, April, June, August, October and December, commencing with the year
1997, at the main office or at such other place and time as may be designated by
the Board of Directors. When any regular meeting of the Board would otherwise
fall on a holiday, the meeting shall be held on the next business day unless the
Board shall designate some other day.
SECTION 2.5 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the President of the Association, or at the request of three
(3) or more directors. Each member of the Board of Directors shall be given
notice stating the time and place, by telegram, letter, or in person, of each
such special meeting.
SECTION 2.6 QUORUM. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but a less number may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice.
SECTION 2.7 VACANCIES. When any vacancy occurs among the directors, the
remaining members of the Board, in accordance with the laws of the United
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<PAGE> 17
States, may appoint a director to fill such vacancy at any regular meeting of
the Board, or at a special meeting called for that purpose.
SECTION 2.8 ADVISORY BOARDS. The Board of Directors may appoint an
Advisory Board or Boards in such place or places as the Board of Directors may
determine. Each such Advisory Board shall consist of as many persons as the
Board of Directors may determine. The duties of each Advisory Board shall be to
consult and advise with the Board of Directors and senior officers of the Bank
with regard to the best interests of the Association and to perform such other
duties as the Board of Directors may lawfully delegate.
ARTICLE III
Committees of the Board
-----------------------
SECTION 3.1 The Board of Directors, by resolution adopted by a majority of
the number of directors fixed by these By-Laws, may designate two or more
directors to constitute an Executive Committee and other committees, each of
which, to the extent authorized by law and provided in such resolution, shall
have and may exercise all of the authority of the Board of Directors and the
management of the Association. The designation of any committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility or liability imposed
upon it or any member of the Board of Directors by law. The Board of Directors
reserves to itself alone the power to act on (1) dissolution, merger or
consolidation, or disposition of substantially all corporate property, (2)
designation of committees or filling vacancies on the Board of Directors or on a
committee of the Board (except as hereinafter provided), (3) adoption, amendment
or repeal of By-laws, (4) amendment or repeal of any resolution of the Board
which by its terms is not so amendable or repealable, and (5) declaration of
dividends, issuance of stock, or recommendations to stockholders of any action
requiring stockholder approval.
The Board of Directors or the Chairman of the Board of Directors of the
Association may change the membership of any committee at any time, fill
vacancies therein, discharge any committee or member thereof either with or
without cause at any time, and change at any time the authority and
responsibility of any such committee.
A majority of the members of any committee of the Board of Directors may
fix such committee's rules of procedure. All action by any committee shall be
reported to the Board of Directors at a meeting succeeding such action, except
such actions as the Board may not require to be reported to it in the resolution
creating any such committee. Any action by any committee shall be subject to
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<PAGE> 18
revision, alteration, and approval by the Board of Directors, except to the
extent otherwise provided in the resolution creating such committee; provided,
however, that no rights or acts of third parties shall be affected by any such
revision or alteration.
ARTICLE IV
Officers and Employees
----------------------
SECTION 4.1 OFFICERS. The officers of the Association may be a Chairman of
the Board, a Vice Chairman of the Board, one or more Chairmen or Vice Chairmen
(who shall not be required to be directors of the Association), a President, one
or more Vice Presidents, a Secretary, a Cashier or Treasurer, and such other
officers, including officers holding similar or equivalent titles to the above
in regions, divisions or functional units of the Association, as may be
appointed by the Board of Directors. The Chairman of the Board and the President
shall be members of the Board of Directors. Any two or more offices may be held
by one person, but no officer shall sign or execute any document in more than
one capacity.
SECTION 4.2 ELECTION, TERM OF OFFICE, AND QUALIFICATION. Each officer
shall be chosen by the Board of Directors and shall hold office until the annual
meeting of the Board of Directors held next after his election or until his
successor shall have been duly chosen and qualified, or until his death, or
until he shall resign, or shall have been disqualified, or shall have been
removed from office.
SECTION 4.2(a) OFFICERS ACTING AS ASSISTANT SECRETARY. Notwithstanding
Section 1 of these By-laws, any Senior Vice President, Vice President, or
Assistant Vice President shall have, by virtue of his office, and by authority
of the By-laws, the authority from time to time to act as an Assistant Secretary
of the Bank, and to such extent, said officers are appointed to the office of
Assistant Secretary.
SECTION 4.3 CHIEF EXECUTIVE OFFICER. The Board of Directors shall
designate one of its members to be the President of this Association, and the
officer so designated shall be an ex officio member of all committees of the
Association except the Examining Committee, and its Chief Executive Officer
unless some other officer is so designated by the Board of Directors.
SECTION 4.4 DUTIES OF OFFICERS. The duties of all officers shall be
prescribed by the Board of Directors. Nevertheless, the Board of Directors may
delegate to the Chief Executive Officer the authority to prescribe the duties of
other officers of the corporation not inconsistent with law, the charter, and
these By-laws, and to appoint other employees, prescribe their duties, and to
dismiss them.
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<PAGE> 19
Notwithstanding such delegation of authority, any officer or employee also may
be dismissed at any time by the Board of Directors.
SECTION 4.5 OTHER EMPLOYEES. The Board of Directors may appoint from time
to time such tellers, vault custodians, bookkeepers, and other clerks, agents,
and employees as it may deem advisable for the prompt and orderly transaction of
the business of the Association, define their duties, fix the salary to be paid
them, and dismiss them. Subject to the authority of the Board of Directors, the
Chief Executive Officer or any other officer of the Association authorized by
him, may appoint and dismiss all such tellers, vault custodians, bookkeepers and
other clerks, agents, and employees, prescribe their duties and the conditions
of their employment, and from time to time fix their compensation.
SECTION 4.6 REMOVAL AND RESIGNATION. Any officer or employee of the
Association may be removed either with or without cause by the Board of
Directors. Any employee other than an officer elected by the Board of Directors
may be dismissed in accordance with the provisions of the preceding Section 4.5.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the Chief Executive Officer of the Association. Any such
resignation shall become effective upon its being accepted by the Board of
Directors, or the Chief Executive Officer.
ARTICLE V
Fiduciary Powers
----------------
SECTION 5.1 CAPITAL MANAGEMENT GROUP. There shall be an area of this
Association known as the Capital Management Group which shall be responsible for
the exercise of the fiduciary powers of this Association. The Capital Management
Group shall consist of four service areas: Fiduciary Services, Retail Services,
Investments and Marketing. The Fiduciary Services unit shall consist of personal
trust, employee benefits, corporate trust and operations. The General Office for
the Fiduciary Services unit shall be located in Charlotte, N.C., with City Trust
Offices located in such cities within the State of North Carolina as designated
by the Board of Directors.
SECTION 5.2 TRUST OFFICERS. There shall be a General Trust Officer of this
Association whose duties shall be to manage, supervise and direct all the
activities of the Capital Management Group. Further, there shall be one or more
Senior Trust Officers designated to assist the General Trust Officer in the
performance of his duties. They shall do or cause to be done all things
necessary or proper in carrying out the business of the Capital Management Group
in accordance with provisions of applicable law and regulation.
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SECTION 5.3 CAPITAL MANAGEMENT/GENERAL TRUST COMMITTEE. There shall be a
Capital Management/General Trust Committee composed of not less than four (4)
members of the Board of Directors of this Association who shall be appointed
annually or from time to time by its membership. The General Trust Officer shall
serve as an ex-officio member of the Committee. Each member shall serve until
his successor is appointed. The Board of Directors or the Chairman of the Board
may change the membership of the Capital Management/General Trust Committee at
any time, fill vacancies therein, or discharge any member thereof with or
without cause at any time. The Committee shall counsel and advise on all matters
relating to the business or affairs of the Capital Management Group and shall
adopt overall policies for the conduct of the business of the Capital Management
Group including but not limited to: general administration, investment policies,
new business development, and review for approval of major assignments of
functional responsibilities. The Committee shall meet at least quarterly or as
called for by its Chairman or any three (3) members of the Committee. A quorum
shall consist of three (3) members. In carrying out its responsibilities, the
Capital Management/General Trust Committee shall review the actions of all
officers, employees and committees utilized by this Association in connection
with the activities of the Capital Management Group and may assign the
administration and performance of any fiduciary powers or duties to any of such
officers or employees or to the Investment Policy Committee, Personal Trust
Administration Committee, Account Review Committee, Corporate and Institutional
Accounts Committee, or any other committees it shall designate. One of the
methods to be used in the review process will be the thorough scrutiny of the
Report of Examination by the Office of the Comptroller of the Currency and the
reports of the Audit Division of First Union Corporation, as they relate to the
activities of the Capital Management Group. These reviews shall be in addition
to reviews of such reports by the Audit Committee of the Board of Directors. The
Chairman of the Capital Management/ General Trust Committee shall be appointed
by the Chairman of the Board of Directors. He shall cause to be recorded in
appropriate minutes all actions taken by the Committee. The minutes shall be
signed by its Secretary and approved by its Chairman. Further, the Committee
shall summarize all actions taken by it and shall submit a report of its
proceedings to the Board of Directors at its next regularly scheduled meeting
following a meeting of the Capital Management/General Trust Committee. As
required by Section 9.7 of Regulation 9 of the Comptroller of the Currency, the
Board of Directors retains responsibility for the proper exercise of the
fiduciary powers of this Association.
The Fiduciary Services unit of the Capital Management Group will maintain
a list of securities approved for investment in fiduciary accounts and will from
time to time provide the Capital Management/General Trust Committee with current
information relative to such list and also with respect to transactions in other
securities not on such list. It is the policy of this Association that members
of the
8
<PAGE> 21
Capital Management/General Trust Committee should not buy, sell or trade in
securities which are on such approved list or in any other securities in which
the Fiduciary Services unit has taken, or intends to take, a position in
fiduciary accounts in any circumstances in which any such transaction could be
viewed as a possible conflict of interest or could constitute a violation of
applicable law or regulation. Accordingly, if any such securities are owned by
any member of the Capital Management/General Trust Committee at the time of
appointment to such Committee, the Capital Management Group shall be promptly so
informed in writing. If any member of the Capital Management/General Trust
Committee intends to buy, sell, or trade in any such securities while serving as
a member of the Committee, he should first notify the Capital Management Group
in order to make certain that any proposed transaction will not constitute a
violation of this policy or of applicable law or regulation.
SECTION 5.4 INVESTMENT POLICY COMMITTEE. There shall be an Investment
Policy Committee composed of not less than seven (7) officers and/or employees
of this Association who shall be appointed annually or from time to time by the
Board of Directors. Each member shall serve until his successor is appointed.
Meetings shall be called by the Chairman or any two (2) members of the
Committee. A quorum shall consist of five (5) members. The Investment Policy
Committee shall exercise such fiduciary powers and perform such duties as may be
assigned to it by the Capital Management/General Trust Committee. All actions
taken by the Investment Policy Committee shall be recorded in appropriate
minutes, signed by the Secretary thereof, approved by its Chairman and submitted
to the Capital Management/General Trust Committee at its next ensuing regular
meeting for its review and approval.
SECTION 5.5 PERSONAL TRUST ADMINISTRATION COMMITTEE. There shall be a
Personal Trust Administration Committee composed of not less than five (5)
officers, who shall be appointed annually or from time to time by the Board of
Directors. Each member shall serve until his successor is appointed. Meetings
shall be called by the Chairman or any three (3) members of the Committee. A
quorum shall consist of three (3) members. The Personal Trust Administration
Committee shall exercise such fiduciary powers and perform such duties as may be
assigned to it by the Capital Management/General Trust Committee. All action
taken by the Personal Trust Administration Committee shall be recorded in
appropriate minutes signed by the Secretary thereof, approved by its Chairman,
and submitted to the Capital Management/General Trust Committee at its next
ensuing regular meeting for its review and approval.
SECTION 5.6 ACCOUNT REVIEW COMMITTEE. There shall be an Account Review
Committee composed of not less than four (4) officers and/or employees of this
Association, who shall be appointed annually or from time to time by the Board
of
9
<PAGE> 22
Directors. Each member shall serve until his successor is appointed. Meetings
shall be called by the Chairman or any two (2) members of the Committee. A
quorum shall consist of three (3) members. The Account Review Committee shall
exercise such fiduciary powers and perform such duties as may be assigned to it
by the Capital Management/General Trust Committee. All actions taken by the
Account Review Committee shall be recorded in appropriate minutes, signed by the
Secretary thereof, approved by its Chairman and submitted to the Capital
Management/ General Trust Committee at its next ensuing regular meeting for its
review and approval.
SECTION 5.7 CORPORATE AND INSTITUTIONAL ACCOUNTS COMMITTEE. There shall be
a Corporate and Institutional Accounts Committee composed of not less than five
(5) officers and/or employees of this Association, who shall be appointed
annually, or from time to time, by the Capital Management/General Trust
Committee and approved by the Board of Directors. Meetings may be called by the
Chairman or any two (2) members of the Committee. A quorum shall consist of
three (3) members. The Corporate and Institutional Accounts Committee shall
exercise such fiduciary powers and duties as may be assigned to it by the
General Trust Committee. All actions taken by the Corporate and Institutional
Accounts Committee shall be recorded in appropriate minutes, signed by the
Secretary thereof, approved by its Chairman and made available to the General
Trust Committee at its next ensuing regular meeting for its review and approval.
ARTICLE VI
Stock and Stock Certificates
----------------------------
SECTION 6.1 TRANSFERS. Shares of stock shall be transferable on the books
of the Association, and a transfer book shall be kept in which all transfers of
stock shall be recorded. Every person becoming a shareholder by such transfer
shall, in proportion to his shares, succeed to all rights and liabilities of the
prior holder of such shares.
SECTION 6.2 STOCK CERTIFICATES. Certificates of stock shall bear the
signature of the Chairman, the Vice Chairman, the President, or a Vice President
(which may be engraved, printed, or impressed), and shall be signed manually or
by facsimile process by the Secretary, Assistant Secretary, Cashier, Assistant
Cashier, or any other officer appointed by the Board of Directors for that
purpose, to be known as an Authorized Officer, and the seal of the Association
shall be engraved thereon. Each certificate shall recite on its face that the
stock represented thereby is transferable only upon the books of the Association
properly endorsed.
10
<PAGE> 23
ARTICLE VII
Corporate Seal
--------------
SECTION 7.1 The President, the Cashier, the Secretary, or any Assistant
Cashier, or Assistant Secretary, or other officer thereunto designated by the
Board of Directors shall have authority to affix the corporate seal to any
document requiring such seal, and to attest the same. Such seal shall be
substantially in the following form.
ARTICLE VIII
Miscellaneous Provisions
------------------------
SECTION 8.1 FISCAL YEAR. The fiscal year of the Association shall be the
calendar year.
SECTION 8.2 EXECUTION OF INSTRUMENTS. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, notices,
applications, schedules, accounts, affidavits, bonds, undertakings, proxies, and
other instruments or documents may be signed, executed, acknowledged, verified,
delivered or accepted in behalf of the Association by the Chairman of the Board,
the Vice Chairman of the Board, any Chairman or Vice Chairman, the President,
any Vice President or Assistant Vice President, the Secretary or any Assistant
Secretary, the Cashier or Treasurer or any Assistant Cashier or Assistant
Treasurer, or any officer holding similar or equivalent titles to the above in
any regions, divisions or functional units of the Association, or, if in
connection with the exercise of fiduciary powers of the Association, by any of
said officers or by any Trust Officer or Assistant Trust Officer (or equivalent
titles); provided, however, that where required, any such instrument shall be
attested by one of said officers other than the officer executing such
instrument. Any such instruments may also be executed, acknowledged, verified,
delivered or accepted in behalf of the Association in such other manner and by
such other officers as the Board of Directors may from time to time direct. The
provisions of this Section 8.2 are supplementary to any other provision of these
By-laws.
SECTION 8.3 RECORDS. The Articles of Association, the By-laws, and the
proceedings of all meetings of the shareholders, the Board of Directors,
standing committees of the Board, shall be recorded in appropriate minute books
provided for the purpose. The minutes of each meeting shall be signed by the
Secretary, Cashier, or other officer appointed to act as Secretary of the
meeting.
11
<PAGE> 24
ARTICLE IX
By-laws
-------
SECTION 9.1 INSPECTION. A copy of the By-laws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office of
the Association, and shall be open for inspection to all shareholders, during
banking hours.
SECTION 9.2 AMENDMENTS. The By-laws may be amended, altered or repealed,
at any regular or special meeting of the Board of Directors, by a vote of a
majority of the whole number of Directors.
12
<PAGE> 25
Exhibit A
---------
First Union National Bank
Article X
Emergency By-laws
In the event of an emergency declared by the President of the United
States or the person performing his functions, the officers and employees of
this Association will continue to conduct the affairs of the Association under
such guidance from the directors or the Executive Committee as may be available
except as to matters which by statute require specific approval of the Board of
Directors and subject to conformance with any applicable governmental directives
during the emergency.
OFFICERS PRO TEMPORE AND DISASTER
Section 1. The surviving members of the Board of Directors or the
Executive Committee shall have the power, in the absence or disability of any
officer, or upon the refusal of any officer to act, to delegate and prescribe
such officer's powers and duties to any other officer, or to any director, for
the time being.
Section 2. In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of this
Association by its directors and officers as contemplated by these By-laws, any
two or more available members of the then incumbent Executive Committee shall
constitute a quorum of that Committee for the full conduct and management of the
affairs and business of the Association in accordance with the provisions of
Article II of these By-laws; and in addition, such Committee shall be empowered
to exercise all of the powers reserved to the General Trust Committee under
Section 5.3 of Article V hereof. In the event of the unavailability, at such
time, of a minimum of two members of the then incumbent Executive Committee, any
three available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Association in
accordance with the foregoing provisions of this section. This By-law shall be
subject to implementation by resolutions of the Board of Directors passed from
time to time for that purpose, and any provisions of these By-laws (other than
this section) and any resolutions which are contrary to the provisions of this
section or to the provisions of any such implementary resolutions shall be
suspended until it shall be
13
<PAGE> 26
determined by an interim Executive Committee acting under this section that it
shall be to the advantage of this Association to resume the conduct and
management of its affairs and business under all of the other provisions of
these By-laws.
Officer Succession
BE IT RESOLVED, that if consequent upon war or warlike damage or disaster,
the Chief Executive Officer of this Association cannot be located by the then
acting Head Officer or is unable to assume or to continue normal executive
duties, then the authority and duties of the Chief Executive Officer shall,
without further action of the Board of Directors, be automatically assumed by
one of the following persons in the order designated:
Chairman
President
Division Head/Area Administrator - Within this officer class, officers
shall take seniority on the basis of length of service in such office or,
in the event of equality, length of service as an officer of the
Association.
Any one of the above persons who in accordance with this resolution
assumes the authority and duties of the Chief Executive Officer shall continue
to serve until he resigns or until five-sixths of the other officers who are
attached to the then acting Head Office decide in writing he is unable to
perform said duties or until the elected Chief Executive Officer of this
Association, or a person higher on the above list, shall become available to
perform the duties of Chief Executive Officer of the Association.
BE IT FURTHER RESOLVED, that anyone dealing with this Association may
accept a certification by any three officers that a specified individual is
acting as Chief Executive Officer in accordance with this resolution; and that
anyone accepting such certification may continue to consider it in force until
notified in writing of a change, said notice of change to carry the signatures
of three officers of the Association.
Alternate Locations
The offices of the Association at which its business shall be conducted
shall be the main office thereof in each city which is designated as a City
Office (and branches, if any), and any other legally authorized location which
may be leased or acquired by this Association to carry on its business. During
an emergency resulting in any authorized place of business of this Association
being unable to function, the business ordinarily conducted at such location
shall be relocated
14
<PAGE> 27
elsewhere in suitable quarters, in addition to or in lieu of the locations
heretofore mentioned, as may be designated by the Board of Directors or by the
Executive Committee or by such persons as are then, in accordance with
resolutions adopted from time to time by the Board of Directors dealing with the
exercise of authority in the time of such emergency, conducting the affairs of
this Association. Any temporarily relocated place of business of this
Association shall be returned to its legally authorized location as soon as
practicable and such temporary place of business shall then be discontinued.
Acting Head Offices
BE IT RESOLVED, that in case of and provided because of war or warlike
damage or disaster, the General Office of this Association, located in
Charlotte, North Carolina, is unable temporarily to continue its functions, the
Raleigh office, located in Raleigh, North Carolina, shall automatically and
without further action of this Board of Directors, become the "Acting Head
Office of this Association";
BE IT FURTHER RESOLVED, that if by reason of said war or warlike damage or
disaster, both the General Office of this Association and the said Raleigh
Office of this Association are unable to carry on their functions, then and in
such case, the Asheville Office of this Association, located in Asheville, North
Carolina, shall, without further action of this Board of Directors, become the
"Acting Head Office of this Association"; and if neither the Raleigh Office nor
the Asheville Office can carry on their functions, then the Greensboro Office of
this Association, located in Greensboro, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association"; and if neither the Raleigh Office, the Asheville Office, nor the
Greensboro Office can carry on their functions, then the Lumberton Office of
this Association, located in Lumberton, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association". The Head Office shall resume its functions at its legally
authorized location as soon as practicable.
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<PAGE> 28
EXHIBIT 7
Call Date: 3/31/97 ST-BK: 37-0351 FFIEC 031
Page RC-1
Legal Title of Bank: First Union National Bank of NC
Address: Two First Union Center
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate No.: |0|4|8|8|5|
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
---------
C400
--------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1) ................................. 0081 2,003,276 1.a.
b. Interest-bearing balances(2) .......................................................... 0071 297,579 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) ............................ 1754 569,806 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) .......................... 1773 1,641,071 2.b.
3. Federal funds sold and securities purchased under agreements to resell .................... 1350 2,536,841 3.
4. Loans and lease financing receivables: ----------------------
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 22,332,077 4.a.
b. LESS: Allowance for loan and lease losses ................... RCFD 3123 174,675 4.b.
c. LESS: Allocated transfer risk reserve ....................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, ---------------------
allowance, and reserve (item 4.a minus 4.b and 4.c) ................................... 2125 22,157,402 4.d.
5. Trading assets (from Schedule RC-D) ....................................................... 3545 2,112,168 5.
6. Premises and fixed assets (including capitalized leases) .................................. 2145 858,917 6.
7. Other real estate owned (from Schedule RC-M) .............................................. 2150 7,718 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) .. 2130 18,614 8.
9. Customers' liability to this bank on acceptances outstanding .............................. 2155 403,090 9.
10. Intangible assets (from Schedule RC-M) .................................................... 2143 346,564 10.
11. Other assets (from Schedule RC-F) ......................................................... 2160 2,301,064 11.
12. Total assets (sum of items 1 through 11) .................................................. 2170 35,254,110 12.
</TABLE>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
<PAGE> 29
Call Date: 3/31/97 ST-BK: 37-0351 FFIEC 031
Page RC-2
Legal Title of Bank: FIRST UNION NATIONAL BANK OF NC
Address: TWO FIRST UNION CENTER
City, State, Zip: CHARLOTTE, NC 28288-0201
FDIC Certificate No.: |0|4|8|8|5|
SCHEDULE RC--CONTINUED
<TABLE>
<CAPTION>
----------------------
Dollar Amounts in Thousands Bil Mil Thou
- ----------------------------------------------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E,
part I) ..................................................... --------------------- RCON 2200 12,901,568 13.a.
(1) Noninterest-bearing(1) .................................. RCON 6631 4,616,676 13.a.(1)
(2) Interest-bearing ........................................ RCON 6636 8,284,892 13.a.(2)
---------------------
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E,
part II) .................................................... --------------------- RCFN 2200 7,149,255 13.b
(1) Noninterest-bearing ..................................... RCFN 6631 0 13.b.(1)
(2) Interest-bearing ........................................ RCFN 6636 7,149,255 13.b.(2)
---------------------
14. Federal funds purchased and securities sold under agreements to repurchase ................ RCFD 2800 6,274,314 14.
15. a. Demand notes issued to the U.S. Treasury .............................................. RCON 2840 115,931 15.a.
b. Trading liabilities (from Schedule RC-D) .............................................. RCFD 3548 2,201,346 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less ......................................... RCFD 2332 1,754,025 16.a.
b. With a remaining maturity of more than one year ....................................... RCFD 2333 416,761 16.b.
17. Not applicable
18. Bank's liability on acceptances executed and outstanding ................................... RCFD 2920 403,090 18.
19. Subordinated notes and debentures(2) ...................................................... RCFD 3200 925,000 19.
20. Other liabilities (from Schedule RC-G) .................................................... RCFD 2930 808,495 20.
21. Total liabilities (sum of items 13 through 20) ............................................ RCFD 2948 32,949,785 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus ............................................. RCFD 3838 0 23.
24. Common stock .............................................................................. RCFD 3230 82,795 24.
25. Surplus (exclude all surplus related to preferred stock) .................................. RCFD 3839 763,989 25.
26. a. Undivided profits and capital reserves ................................................ RCFD 3632 1,468,980 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ................ RCFD 8434 (11,439) 26.b.
27. Cumulative foreign currency translation adjustments ....................................... RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) ......................................... RCFD 3210 2,304,325 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21
and 28) ................................................................................... RCFD 3300 35,254,110 29.
----------------------
</TABLE>
<TABLE>
<S> <C> <C>
Memorandum
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external -------------
auditors as of any date during 1996 .............................................................. RCFD 6724 2 M.1.
-------------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be rquired by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- -----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
12
