Exhibit 10(i)
ASSET HOLDINGS III, L.P.
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Note Purchase Agreement
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DATED AS OF NOVEMBER 22, 1994
$9,408,030 9.82% SERIES A FIRST MORTGAGE NOTES DUE APRIL 1, 2000
$16,296,970 9.82% SERIES B FIRST MORTGAGE NOTES DUE APRIL 1, 2000
GUARANTIED BY
ADESA CORPORATION
TABLE OF CONTENTS
(Not a Part of the Agreement)
1. PURCHASE AND SALE OF NOTES 1
1.1 Authorization of Notes.............................................1
1.2 The Closings .................................................3
1.3 Purchase for Investment; ERISA.....................................4
1.4 Failure to Tender, Failure of Conditions...........................5
1.5 Expenses ......................................................... 5
2. APPLICATION OF PROCEEDS; SECURITY........................................6
2.1 Application of Proceeds of the Notes...............................6
2.2 Security for the Notes.............................................6
3. WARRANTIES AND REPRESENTATIONS...........................................6
3.1 Nature of Business.................................................6
3.2 Financial Statement; Indebtedness; Material Adverse Change.........7
3.3 Subsidiaries and Affiliates........................................8
3.4 Title to Properties; Leases; Patents, Trademarks, etc of
Guarantor and the Subsidiaries.....................................8
3.5 Taxes..............................................................8
3.6 Pending Litigation.................................................9
3.7 Full Disclosure....................................................9
3.8 Organization and Authority........................................10
3.9 Charter Instruments, Other Agreements, etc. ......................11
3.10 Restrictions on Company, Guarantor and other Subsidiaries.........11
3.11 Compliance with Law...............................................11
3.12 ERISA.............................................................11
3.13 Environmental Protection Laws.....................................13
3.14 Transactions are Legal and Authorized; Obligations are
Enforceable.......................................................13
3.15 Governmental Consent; Certain Laws................................14
3.16 Private Offering of Notes.........................................14
3.17 No Defaults; Transactions Prior to Facility Closing Date, etc. ...15
3.18 Use of Proceeds of Notes..........................................15
3.19 Capitalization....................................................15
3.20 Solvency..........................................................15
4. CLOSING CONDITIONS......................................................16
4.1 Initial Closing Conditions........................................16
4.2 Second Closing Conditions.........................................20
5. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS..............................22
5.1 Guarantied Obligations............................................22
5.2 Performance Under This Agreement..................................22
5.3 Primary Obligation................................................23
5.4 Actions Affecting the Guarantor...................................23
5.5 Waivers...........................................................23
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5.6 Certain Waivers of Subrogation, Reimbursement and Indemnity.......26
5.7 Invalid Payments..................................................26
5.8 Marshaling........................................................26
5.9 Subordination.....................................................27
5.10 Setoff, Counterclaim or Other Deductions..........................27
5.11 No Election of Remedies by Noteholders............................27
5.12 Separate Action; Other Enforcement Rights.........................27
5.13 Noteholder Setoff.................................................28
5.14 Delay or Omission; No Waiver......................................28
5.15 Restoration of Rights and Remedies................................28
5.16 Cumulative Remedies...............................................28
5.17 Execution and Delivery of Notes by Guarantor......................28
5.18 Survival..........................................................29
6. COVENANTS OF THE GUARANTOR..............................................29
6.1 Payment of Taxes and Claims.......................................29
6.2 Maintenance of Properties; Corporate Existence; etc...............29
6.3 Maintenance of Office.............................................30
6.4 Line of Business..................................................30
6.5 Transactions with Affiliates......................................31
6.6 Private Offering..................................................31
6.7 Pension Plans.....................................................31
6.8 Pro-Rata Offers...................................................32
6.9 Fixed Charge Coverage.............................................32
6.10 Maintenance of Consolidated Net Worth.............................32
6.11 Debt Restrictions.................................................32
6.12 Transfers of Property.............................................33
6.13 Restricted Payments...............................................35
6.14 Merger and Consolidation..........................................35
7. INFORMATION AS TO THE GUARANTOR.........................................36
7.1 Financial and Business Information................................36
7.2 Officer's Certificates............................................40
7.3 Accountants' Certificates.........................................40
7.4 Inspection........................................................41
8. INTERPRETATION OF THIS AGREEMENT........................................41
8.1 Terms Defined.....................................................41
8.2 GAAP..............................................................54
8.3 Directly or Indirectly............................................55
8.4 Section Headings and Table of Contents and Construction...........55
8.5 Governing Law.....................................................55
9. MISCELLANEOUS...........................................................55
9.1 Communications....................................................55
9.2 Reproduction of Documents.........................................56
9.3 Survival..........................................................57
9.4 Successors and Assigns............................................57
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9.5 Amendment and Waiver..............................................57
9.6 Expenses. :.......................................................58
9.7 Jurisdiction; Service of Process..................................59
9.8 Company Obligations Nonrecourse...................................59
9.9 Duplicate Originals, Execution in Counterpart.....................60
Annex 1 -- Information as to Purchaser
Annex 2 -- Payment Information
Annex 3 -- Information as to Company, Guarantor and Subsidiaries
Exhibit A -- Form of Collateral Trust Indenture
Exhibit B -- Form of Purchase Request
Exhibit C -- Form of Deed of Trust
Exhibit D -- Form of Mortgage
Exhibit E -- Form of Assignment of Leases and Rents
Exhibit F-1 -- Form of Initial Closing Opinion of Counsel to the Company
Exhibit F-2 -- Form of Initial Closing Opinion of Counsel to the Guarantor
and the Lessees of the Initial Leases
Exhibit F-3 -- Form of Initial Closing Opinion of Special Counsel to
the Purchaser
Exhibit F-4 -- Form of Initial Closing Opinion of local Massachusetts
Counsel to the Guarantor
Exhibit F-5 -- Form of Initial Closing Opinion of local Tennessee Counsel
to the Guarantor
Exhibit G-1 -- Form of Officer's Certificate -- the Company
Exhibit G-2 -- Form of Officer's Certificate -- the Guarantor
Exhibit H-1 -- Form of Secretary's Certificate -- the Company
Exhibit H-2 -- Form of Secretary's Certificate -- the Guarantor
Exhibit I -- Form of Officer's Certificate -- the Company
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ASSET HOLDING III, L.P.
c/o JH Management Corp.
One International Place
Boston, MA 02110-2624
ADESA CORPORATION
1919 South Post Road
Indianapolis, IN 46239
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NOTE PURCHASE AGREEMENT
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$9,408,030 9.82% SERIES A FIRST MORTGAGE NOTES DUE APRIL 1, 2000
$16,296,970 9.82% SERIES B FIRST MORTGAGE NOTES DUE APRIL 1, 2000
Dated as of November 22, 1994
Principal Mutual Life Insurance Company
711 High Street
Des Moines, IA 50392
Ladies and Gentlemen:
ASSET HOLDING III, L.P. (together with its successors and assigns
permitted pursuant to this Agreement, the "Company"), an Ohio limited
partnership, and ADESA CORPORATION (together with its successors and assigns
permitted pursuant to this Agreement, the "Guarantor"), an Indiana corporation,
hereby agree with you as follows:
1. PURCHASE AND SALE OF NOTES
1.1 Authorization of Notes.
(a) Issuance of Notes. The Company will authorize the issue of Nine
Million Four Hundred Eight Thousand Thirty Dollars ($9,408,030) in
aggregate principal amount of its 9.82% Series A First Mortgage Notes due
April 1, 2000 (the "Series A Notes") and Sixteen Million Two Hundred
Ninety-Six Thousand Nine Hundred Seventy Dollars ($16,292,970) in
aggregate principal amount of its 9.82% Series B First Mortgage Notes due
April 1, 2000 (the "Series B Notes"). The Series A Notes and the Series B
Notes shall be issuable as more particularly provided herein and in the
Collateral Trust Indenture, dated as of the date hereof (as the same may
be amended from time to time, the "Indenture"), from the Company, as
grantor, to PNC Bank, Kentucky, Inc., a Kentucky banking corporation, as
security trustee (the "Security Trustee"), in the form of Exhibit A
hereto. Each series of Notes shall
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(i) bear interest on the unpaid principal amount thereof from
the date of issuance thereof at the rate of nine and eight-two
one-hundredths percent (9.82%) per annum (computed on the basis of a
calendar year consisting of twelve 30-day months), payable monthly
on the first (1st) day of each month commencing on the later of
January 1, 1995 or the payment date next succeeding the date of such
Note;
(ii) bear interest, payable on demand, on any overdue principal
(including any overdue prepayment of principal) and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) on
any overdue installment of interest, at a rate equal to the lesser
of
(A) the highest rate allowed by applicable law, or
(B) eleven and eighty-two one-hundredths percent (11.82%)
per annum;
(iii) be prepayable only as provided in the Indenture;
(iv) mature on April 1, 2000; and
(iv) be in the form of Exhibit A to the Indenture.
The term "Notes" as used in this Agreement and in the Indenture
shall include each Series A Note and each Series B Note delivered
pursuant to this Agreement and the Indenture and each Note delivered
in substitution, replacement or exchange for any such Note pursuant
to Section 2.7 of the Indenture.
(b) Purchase and Sale of Notes.
(i) Initial Purchase and Sale of Notes. The Company hereby
agrees to sell to you and, subject in all respects to the terms and
conditions set forth in the Indenture and herein, you hereby agree
to purchase from the Company on the Initial Closing Date the
aggregate principal amount of each series of Notes (the "Initial
Notes") set forth below your name on Annex 1 hereto and designated
as the Initial Notes, at a price equal to one hundred percent (100%)
of the principal amount thereof (the "Initial Note Purchase").
(ii) Second Purchase and Sale of Notes. The Company hereby
agrees to sell to you and, subject in all respects to the terms and
conditions set forth in the Indenture and herein (including, without
limitation, Section 4.2 hereof), you hereby agree to purchase from
the Company on the Second Closing Date the aggregate principal
amounts of each series of Notes (the "Second Notes") set forth below
your name on Annex 1 hereto and designated as the Second Notes, at a
price equal to one hundred percent (100%) of the principal amount
thereof (the "Second Note Purchase").
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(c) Purchase Request. The Company shall deliver a Purchase Request
in connection with the Second Note Purchase which shall be in the form of
Exhibit B hereto and shall specify the following:
(i) the aggregate principal amount of Second Notes subject to
such Purchase Request;
(ii) the proposed date of closing the issuance and sale of the
Second Notes; and
(iii) the account and depository institution to which the
purchase price for the Second Notes should be wired upon the
purchase of the Second Notes.
The Purchase Request shall also certify that the representations and
warranties contained in Section 3 hereof are true and correct on and as of
the date of the Purchase Request and that there exists no Event of Default
or Default at such time.
1.2 The Closings.
(a) The Initial Closing. The closing of the Initial Note Purchase
(the "Initial Closing") will be held on November 29, 1994, or such later
date (not later than November 30, 1994) as may be agreed to by you and the
Company (the "Initial Closing Date"), at 10:00 a.m., local time, at the
office of Hebb & Gitlin, One State Street, Hartford, Connecticut 06103. At
the Closing, the Company will deliver to you one or more Notes (as
indicated below your name on Annex 1), in the series and denominations
indicated on Annex 1, in the aggregate principal amount of your Initial
Note Purchase, dated the Initial Closing Date and payable to you or
payable as indicated on Annex 1, against payment by federal funds wire
transfer in immediately available funds of the purchase price thereof, as
directed by the Company on Annex 2.
(b) The Second Closing. The closing of the Second Note Purchase (the
"Second Closing") will be held on the Second Closing Date. On the Second
Closing Date, the Company will deliver to you, at the offices of Hebb &
Gitlin as set forth in Section 1.2(a) above, one or more Notes (registered
as set forth on Annex 1 hereto), in the series and denominations indicated
on Annex 1, in the aggregate principal amount of your Second Note
Purchase, dated the Second Closing Date and payable to you or payable as
indicated on Annex 1, against payment by federal funds wire transfer in
immediately available funds of the purchase price thereof, as directed by
the Company in the Purchase Request.
(c) Determination of the Second Closing Date. The date of the Second
Closing (the "Second Closing Date") shall be a Business Day that is the
later of the day proposed as the Second Closing Date by the Company in the
Purchase Request or the date five (5) Business Days from the date of the
delivery of the Purchase Request; provided, that in no event shall the
Second Closing Date be later than January 13, 1995.
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1.3 Purchase for Investment; ERISA
(a) Purchase for Investment. You represent to the Company and the
Guarantor that you are purchasing the Notes issued from time to time
pursuant to this Agreement, in the aggregate amounts provided herein, for
your own account for investment and with no present intention of
distributing the Notes or any part thereof, but without prejudice to your
right at all times to:
(i) sell or otherwise dispose of all or any part of the Notes
under a registration statement filed under the Securities Act, or in
a transaction exempt from the registration requirements of the
Securities Act; and
(ii) have control over the disposition of all of your assets to
the fullest extent required by any applicable insurance law.
It is understood that, in making the representations set out in Section
3.12(a) and Section 3.14(a) of this Agreement, the Company and the
Guarantor are relying, to the extent applicable, upon your representations
in the immediately preceding sentence.
(b) ERISA. You represent, with respect to the funds with which you
are acquiring the Notes, that all of such funds are from or attributable
to one or more of:
(i) General Account -- your general account assets or assets of
one or more segments of such general account, as the case may be;
(ii) Separate Account -- a "separate account" (as defined in
section 3 of ERISA),
(A) 10% Pooled Separate Account -- in respect of which all
requirements for an exemption under DOL Prohibited Transaction
Class Exemption 90-1 are met with respect to the use of such
funds to purchase the Notes,
(B) Identified Plan Assets -- that is comprised of employee
benefit plans identified by you in writing and with respect to
which the Company and the Guarantor hereby warrant and represent
that, as of the Initial Closing Date and as of the Second
Closing Date, neither the Company, the Guarantor nor any ERISA
Affiliate is a "party in interest" (as defined in section 3 of
ERISA) or a "disqualified person" (as defined in section 4975 of
the IRC) with respect to any plan so identified, or
(C) Guaranteed Separate Account -- that is maintained
solely in connection with fixed contractual obligations of an
insurance company, under which any amounts payable, or credited,
to any employee benefit plan having an interest in such account
and to any participant or beneficiary of such plan (including an
annuitant) are not affected in any manner by the investment
performance of the separate account (as provided by 29 C.F.R.
Section 2510.3-101(h)(1)(iii));
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(iii) Qualified Professional Asset Manager -- an "investment
fund" managed by a "qualified professional asset manager" (as such
terms are defined in Part V of DOL Prohibited Transaction Class
Exemption 84-14) and all requirements for an exemption under such
Exemption are met with respect to the use of such funds to purchase
the Notes; or
(iv) Excluded Plan -- an employee benefit plan that is excluded
from the provisions of section 406 of ERISA by virtue of section
4(b) of ERISA.
1.4 Failure to Tender, Failure of Conditions.
If at either Closing the Company fails to tender to you the Notes to be
purchased by you at such Closing, or if the conditions specified in Section 4
hereof to be fulfilled at such Closing have not been fulfilled, you may
thereupon elect to be relieved of all further obligations hereunder. Nothing in
this Section 1.4 shall operate to relieve the company or the Guarantor from any
of its respective obligations hereunder or to waive your rights against the
Company or the Guarantor.
1.5 Expenses.
(a) Generally, Whether or not the Notes are sold, the company will
promptly (and in any event within thirty (30) days of receiving any
statement or invoice therefor) pay all fees, expenses and costs relating
hereto, including, but not limited to:
(i) the cost of reproducing this Agreement, the Indenture, the
Notes and the other documents delivered in connection with each
Closing;
(ii) the fees and disbursements of your special counsel incurred
in connection herewith;
(iii) the fees of the Security Trustee;
(iv) the cost of delivering to your home office or custodian
bank, insured to your satisfaction, the Notes purchased by you at
each Closing;
(v) the fees, expenses and costs incurred in complying with each
of the conditions to closing set forth in Section 4 hereof,
including, without limitation, title insurance premiums, survey
expenses, and all fees taxes and expenses for the recording,
registration and filing of the Collateral Documents and for the
issuance and sale of the Notes; and
(v) the cost of obtaining private placement numbers for the
Notes.
(b) Counsel. Without limiting the generality of the foregoing, it is
agreed and understood that the company will pay, at each closing, the
statement for reasonable fees and disbursements of your special counsel
presented at such Closing and the Company will also pay, upon receipt of
any statement therefor, each additional statement for reasonable fees and
disbursements of your special counsel rendered after each such
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Closing in connection with the issuance of the Notes or the matters
referred to in Section 1.5(a) hereof.
(c) Survival. The obligations of the Company under this Section 1.5
and Section 9.6 of this Agreement shall survive the payment of the Notes
and the termination hereof.
2. APPLICATION OF PROCEEDS; SECURITY.
2.1 Application of Proceeds of the Notes.
(a) Series A Notes. The proceeds from the sale of the Series A Notes
will be used by the Company to pay for the acquisition of the Mortgaged
Land and related transaction costs, including interest on the Notes.
(b) Series B Notes. The proceeds from the sale of the Series B Notes
will be used to pay (i) the purchase price of the Mortgaged Improvements,
(ii) the costs and expenses incurred in connection with construction and
improvement of the Mortgaged Improvements now existing or hereafter
constructed and (iii) related transaction costs, including interest on the
Notes.
2.2 Security for the Notes. The Notes will be secured by (a) the
Indenture, pursuant to which certain real and personal property of the Company
more particularly described therein is being held in trust by the Security
Trustee for your benefit, (b) the Mortgages, pursuant to which the company has
granted liens in favor of the Security Trustee on all of the Company's right,
title and interest in and to the Mortgaged Properties and certain other property
more particularly described therein and (c) the Assignments of Leases and Rents
pursuant to which the Company has pledged and assigned to the Security Trustee
all of the Company's right, title and interest in and to the Leases and certain
other property more particularly described therein.
3. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to purchase the Notes at
the times and in the amounts provided herein, each of the Company (with respect
to itself and not with respect to the Guarantor and the Subsidiaries) and the
Guarantor warrants and represents, as follows:
3.1 Nature of Business.
Prior to the Initial Closing Date the Company has not engaged in any
business. The Private Placement Memorandum, dated September 8, 1994 (as
supplemented November 29, 1994), prepared by the Guarantor with the assistance
of Banc One Capital Corporation, as placement agent (together with all exhibits
and annexes thereto, the "Placement Memorandum") (a copy of which previously has
been delivered to you), correctly describes the general nature of the business
and principal Properties of the Company, the Guarantor and the Subsidiaries.
6
3.2 Financial Statements; Indebtedness; Material Adverse Change.
(a) Financial Statements. the Guarantor has provided you with (i)
the audited consolidated financial statements of the Guarantor and its
consolidated subsidiaries for the years ended December 31, 1992 and 1993
and (ii) the consolidated financial statements of the Guarantor and its
consolidated subsidiaries for the six month period ending June 30, 1994.
Such financial statements have been prepared in accordance with GAAP
consistently applied, and present fairly, in all material respects, the
financial position of the Guarantor and its Subsidiaries as of such dates
and the results of their operations and cash flows for such periods
(subject, in the case of such interim statements, to normal year end
adjustments). All such financial statements include the accounts of all
subsidiaries of the Guarantor for the respective periods during which a
subsidiary relationship has existed.
(b) Debt. The Company has no outstanding Debt except the Debt
evidenced by the Notes. Part 3.2(b) of Annex 3 hereto lists all debt of
the Guarantor and the Subsidiaries as of October 31, 1994, and provides
the following information with respect to each item of such Debt:
(i) the holder thereof,
(ii) the outstanding amount,
(iii) the portion which is classified as current under GAAP, and
(iv) the collateral securing such Debt, if any.
(c) Material Adverse Change. Since December 31, 1993, there has been
no change in the business, prospects, profits, Properties or condition
(financial or otherwise) of the guarantor or any of the Subsidiaries,
except changes in the ordinary course of business that, in the aggregate
for all such changes, could not reasonably be expected to have a Material
Adverse Effect.
(d) Other Financial Information. All statements or summaries of
historical or pro forma financial condition and performance of the
Company, the Guarantor and the Subsidiaries included in the Placement
Memorandum or delivered to you by the Company or the Guarantor are
complete and correct in all material respects, and such pro forma
statements have been prepared based on assumptions and estimates which are
set forth in the Placement Memorandum and which are reasonable in light of
the circumstances existing at the time such assumptions and estimates were
made, based on the best information available to management of the
Guarantor and the Subsidiaries at the time of the preparation thereof.
Such assumptions continue to be reasonable, based on the best information
available to the management of the Company, the Guarantor and the
Subsidiaries.
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3.3 Subsidiaries and Affiliates.
The Company does not own or control any Securities or other equity
interest of any Person. Part 3.3 of Annex 3 hereto sets forth:
(a) the name of each of the Subsidiaries, its jurisdiction of
incorporation and the percentage of its Voting Stock owned by the
Guarantor and each other Subsidiary, and
(b) the name of each Affiliate (other than individuals) and the
nature of its affiliation.
Each of the Guarantor and the Subsidiaries has good and marketable title
to all of the shares it purports to own of the stock of each Subsidiary, free
and clear in each case of any Lien (other than a Lien in favor of the Bank
securing Debt described in Part 3.2(b) of Annex 3). All such shares have been
duly issued and are fully paid and nonassessable.
3.4 Title to Properties; Lease; Patents; Trademarks, etc of Guarantor
and the Subsidiaries.
(a) Each of the Guarantor and the subsidiaries has good and
marketable title to all of the real Property, and good title to all of the
other Property, reflected in the most recent balance sheet referred to in
Section 3.2(a) hereof (except as sold or otherwise disposed of in the
ordinary course of business). All such Property is free from Liens other
than Permitted Liens.
(b) Each of the Guarantor and the Subsidiaries has complied with all
obligations under all leases to which it is a party (including, without
limitation the Leases). All such leases are in full force and effect and
each of the Guarantor and the Subsidiaries enjoys peaceful and undisturbed
possession under all such leases.
(c) Each of the Guarantor and the Subsidiaries owns, possesses or
has the right to use all of the patents, trademarks, service marks, trade
names, copyrights and licenses, and rights with respect thereto, necessary
for the present and currently planned future conduct of its business,
without any known conflict with the rights of others.
3.5 Taxes.
(a) Taxes of company.
The Company is not in default in the payment of any taxes levied or
assessed against it, its assets or the Mortgaged Properties. All tax
returns to be filed by the Company, if any, in any jurisdiction have in
fact been filed.
(b) Returns of Guarantor Filed; Taxes Paid.
All tax returns to be filed by the Guarantor and each Subsidiary and
any other Person with which the Guarantor or any Subsidiary files or has
filed a consolidated
8
return in any jurisdiction have been filed on a timely basis, and all
taxes, assessments, fees and other governmental charges upon each of the
Guarantor, such Subsidiary and any such Person, and upon any of their
respective Properties, income or franchises, that are shown thereon to be
due and payable have been paid.
(c) Book Provisions Adequate.
(i) The amount of the liability for taxes reflected in each of
the balance sheets referred to in Section 3.2 (a) hereof is in each
case an adequate provision for taxes as of the dates of such balance
sheets (including, without limitation, any payment due pursuant to
any tax sharing agreement) as are or may become payable by any one
or more of the Guarantor and the other Persons consolidated with the
Guarantor in such financial statements in respect of all tax periods
ending on or prior to such dates.
(ii) The Guarantor does not know of any proposed additional tax
assessment against it or any such Person that is not reflected in
full in the most recent balance sheet referred to in Section 3.2(a)
hereof; provided, however, the Guarantor has been advised by the IRS
that its federal income tax return for the Guarantor's 1992 tax year
is being audited, which audit could result in an additional tax
assessment.
3.6 Pending Litigation.
(a) There are no proceedings, actions or investigations pending or,
to the knowledge of the Company or the Guarantor threatened against or
affecting the Company, the Guarantor or any Subsidiary in any court or
before any Governmental Authority or arbitration board or tribunal that,
in the aggregate for all such proceedings, action or investigations, could
reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company, the Guarantor nor any subsidiary is in
default with respect to any judgment, order, writ, injunction or decree of
any court, Governmental Authority, arbitration board or tribunal that, in
the aggregate for all such defaults, could reasonably be expected to have
a Material Adverse Effect.
3.7 Full Disclosure.
The financial statements referred to in Section 3.2(a) hereof do
not, nor does this Agreement, the Indenture, any other Financing Document,
the Placement Memorandum or any statement furnished to you by or on behalf
of the Company or the Guarantor in connection with this Agreement or any
Closing, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein and
herein not misleading. There is no fact that has not been disclosed to you
in writing that has had or, so far as the Company or the Guarantor can now
reasonably foresee, could reasonably be expected to have a Material
Adverse Effect.
9
3.8 Organization and Authority.
(a) The Company. The Company:
(i) is a limited partnership duly organized and validly existing
under the laws of the State of
Ohio;
(ii) has all legal and partnership power and authority to own
and operate the Mortgaged Properties and to carry on its business as
now conducted and as presently proposed to be conducted;
(iii) has all licenses, certificates, permits, franchises and
other governmental authorizations necessary to own and operate the
Mortgaged Properties and to carry on its business as now conducted
and as presently proposed to be conducted; and
(iv) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing (to the extent the
concept of "good standing" exists in such jurisdiction), as a
foreign limited partnership, in each state where any of the
Mortgaged Properties is located.
(b) The Guarantor, the General Partner and the Subsidiaries. Each of
the Guarantor, the General Partner and the Subsidiaries:
(i) is a corporation duly incorporated, validly existing and in
good standing (to the extent the concept of "good standing" exists
in such jurisdiction) under the laws of its jurisdiction of
incorporation;
(ii) has all legal and corporate power and authority to own and
operate its Properties and to carry on its business as now conducted
and as presently proposed to be conducted;
(iii) has all licenses, certificates, permits, franchises and
other governmental authorizations necessary to own and operate its
Properties and to carry on its business as now conducted and as
presently proposed to be conducted, except where the failure to have
such licenses, certificates, permits, franchises and other
governmental authorizations, in the aggregate for all such failures,
could reasonably be expected to have a Material Adverse Effect; and
(iv) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing (to the extent the
concept of "good standing" exists in such jurisdiction), as foreign
corporation, in each state (each of which states is listed in Part
3.8(b) of Annex 3) where the failure to be so qualified or licensed
and authorized and in good standing, in the aggregate for all such
failures, could reasonably be expected to have a Material Adverse
Effect.
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3.9 Charter Instruments, Other Agreements, etc.
(a) Charter Instruments. Neither the Company, the Guarantor nor any
subsidiary is in violation in any respect of any term of any partnership
agreement, charter instrument or bylaw, as the case may be.
(b) Agreements Relating to Debt. Neither the Guarantor nor any
Subsidiary is in violation of any term in, and no default or event of
default exists under, any agreement or other instrument to which it is a
party or by which it or any of its Properties may be bound relating to, or
providing the terms of, any Debt specified in Part 3.2(b) of Annex 3
hereto.
(c) Other Agreements. The Company is not a party to any agreement or
other instrument other than the Financing Documents. Neither the Guarantor
nor any Subsidiary is in violation of any provision of, and no default or
event of default exists under, any agreement or other instrument to which
it is a party or by which it or any of its Properties may be bound (other
than the agreements and other instruments specified in clause (b) of this
Section 3.9).
3.10 Restrictions on Company, Guarantor and other Subsidiaries.
Neither the Company, the Guarantor nor any other Subsidiary:
(a) is a party to any contract or agreement, or subject to any
charter or other restriction that (in the aggregate for all such
contracts, agreements and restrictions) could reasonably be expected to
have a Material Adverse Effect; or
(b) is a party to any contract or agreement that restricts the right
or ability of such Person to incur Debt, other than this Agreement and the
agreements listed in Part 3.10(b) of Annex 3 hereto, none of which
restricts the issuance and sale of the Notes, the performance by the
Company of its obligations under this Agreement or under the Notes or the
performance by the Guarantor of its obligations under this Agreement,
including the Unconditional Guaranty.
3.11 Compliance with Law.
Neither the company, the Guarantor nor any Subsidiary is in violation of
any law, ordinance, governmental rule or regulation to which it is subject,
except for violations which, in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
3.12 ERISA.
(a) Relationship of Vested Benefits to Pension Plan Assets. The
present value of all benefits; determined as of the most recent valuation
date for such benefits as provided in Section 6.7 hereof, vested under
each Pension Plan does not exceed the value of the assets of such Pension
Plan allocable to such vested benefits, determined as of such date as
provided in Section 6.7 hereof.
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(b) ERISA Requirements. Each of the Guarantor and the ERISA
Affiliates,
(i) has fulfilled all obligations under the minimum funding
standards of ERISA and the IRC with respect to each Pension Plan,
(ii) is in compliance in all material respects with all other
applicable provisions of ERISA and the IRC with respect to each
Pension Plan, and
(iii) has not incurred any liability under Title IV of ERISA to
the PBGC (other than in respect of required insurance premiums, all
of which that are due having been paid) with respect to any Pension
Plan or any trust established thereunder.
No Pension Plan, or trust created thereunder, has incurred any accumulated
funding deficiency (as such term is defined in section 302 of ERISA),
whether or not waived, as of the last day of the most recently ended plan
year of such Pension Plan.
(c) Prohibited Transactions.
(i) The issuance and sale by the company of the Notes to you
will not constitute a "prohibited transaction" (as such term is
defined in section 406 of ERISA or section 4975 of the IRC) that
could subject any Person to the penalty or tax on prohibited
transactions imposed by section 502 of ERISA or section 4975 of the
IRC, and none of the company, the Guarantor or any ERISA Affiliate,
nor any "employee benefit plan" (as such term is hereinafter
defined) of the Company, the Guarantor, or any ERISA Affiliate or
any trust created thereunder or any trustee or administrator
thereof, has engaged in any "prohibited transaction" that could
subject any such Person, or any other party dealing with such
employee benefit plan or trust, to such penalty or tax. The
representation by the Company and the Guarantor in the preceding
sentence is made in reliance upon and subject to the accuracy of the
representations in Section 1.3(b) hereof as to the source of funds
used by you.
(ii) Part 3.12 of Annex 3 hereto completely lists all ERISA
Affiliates and all employee benefit plans with respect to which the
Guarantor or any "affiliate" (as such term is hereinafter defined)
of the Guarantor is a "party-in-interest" (as such term is
hereinafter defined) or in respect of which the notes could
constitute an "employer security" (as such term is hereinafter
defined).
As used in this Section 3.12(c), the terms "employee benefit plan" and
"party-in-interest" have the meanings specified in section 3 of ERISA and
"affiliate" and "employer security" have the meanings specified in section
407(d) of ERISA.
(d) Reportable Events. No Pension Plan or trust created thereunder
has been terminated, and there have been no "reportable events" (as such
term is defined in section 4043 of ERISA), with respect to any Pension
Plan or trust created thereunder, which reportable event or events will or
could result in the termination of such Pension Plan and give rise to a
liability of the Guarantor, or any ERISA Affiliate, in respect thereof.
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(e) Multiemployer Plans. Neither the Guarantor nor any ERISA
Affiliate is, nor has any of them ever been, an employer required to
contribute to any Multiemployer Plan.
(f) Multiple Employer Pension Plans. Neither the Guarantor nor any
ERISA Affiliate is, nor has any of them ever been, a "contributing
sponsor" (as such term is defined in section 4001 of ERISA) in any
Multiple Employer Pension Plan.
3.13 Environmental Protection Laws.
(a) Compliance. Each of the Company, the Guarantor and the
Subsidiaries is in compliance with all Environmental Protection Laws in
effect in each jurisdiction where it is presently doing business, except
where any failures to comply with such Environmental Protection Laws, in
the aggregate for all such failures, could not reasonably be expected to
have a Material Adverse Effect.
(b) Liability. Neither the Company, the Guarantor nor any Subsidiary
is subject to any liability under any Environmental Protection Laws,
except such liabilities, in the aggregate for all such liabilities, as
could not reasonably be expected to have a Material Adverse Effect.
(c) Notices. Neither the Company, the Guarantor nor any Subsidiary
has received any:
(i) notice from any Governmental Authority by which any of its
present or previously-owned or leased Properties has been identified
in any manner by any Governmental Authority as a hazardous substance
disposal or removal site, "Super Fund" clean-up site or candidate
for removal or closure pursuant to any Environmental Protection Law.
(ii) notice of any Lien arising under or in connection with any
Environmental Protection Law that has attached to any revenues of,
or to, any of its owned or leased Properties; or
(iii) communication, written or oral, from any Governmental
Authority concerning any action or omission by the Company, the
Guarantor or such Subsidiary in connection with its ownership or
leasing of any Property resulting in the release of any Hazardous
Substance or resulting in any violation of any Environmental
Protection Law.
3.14 Transactions are Legal and Authorized; Obligations are Enforceable.
(a) Transactions are Legal and Authorized. Each of the issuance,
sale and delivery of Notes by the Company, the execution and delivery by
the Company and the Guarantor of this Agreement, the Indenture and the
other Financing Documents to which each is a party, and compliance by the
Company and the Guarantor with all of the provisions of this Agreement,
the Indenture and the other Financing Documents to which each is a party,
and, when issued, each of the Notes:
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(i) is within the power of the Company and the Guarantor; and
(ii) is legal and does not conflict with, result in any breach
of any of the provisions of, constitute a default under, or result
in the creation of any Lien upon any Property of the Company (other
than Liens in favor or the Security Trustee), the Guarantor or any
Subsidiary under the provisions of, any partnership agreement,
charter instrument, bylaw or other agreement to which any such
Person is a party or by which any such Person or any of such
Person's Properties may be bound.
(b) Obligations are Enforceable.
(i) This Agreement, the Indenture and the other Financing
Documents have been duly authorized by all necessary partnership or
corporate action, as the case may be, on the part of the Company and
the Guarantor, have been duly executed and delivered by the General
Partner, on behalf of the Company, and one or more duly authorized
officers of the Guarantor, and each constitutes a legal, valid and
binding obligation of the Company or the Guarantor, as the case may
be, enforceable in accordance with its respective terms, and
(ii) the Notes have been duly authorized and, when issued, will
have been duly executed and delivered by the General Partner, on
behalf of the Company, and will constitute legal, valid and binding
obligations of the Company, enforceable in accordance with their
terms.
3.15 Governmental Consent; Certain Laws.
(a) Governmental Consent. Neither the nature of the Company, the
Guarantor or any Subsidiary, or of any of their respective businesses or
Properties, nor any relationship between the Company, the Guarantor or any
Subsidiary and any other Person, nor any circumstance in connection with
the offer, issuance, sale or delivery of the Notes and the execution and
delivery of this Agreement, is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority on the part of the company, the Guarantor or any
subsidiary as a condition to the execution and delivery of this Agreement
or the offer, issuance, sale or delivery of the Notes.
(b) Certain Laws. Neither the Company, the Guarantor nor any
Subsidiary is subject to regulation under, or otherwise required to comply
with any filing, registration or notice provisions of, (i) the Investment
Company Act of 1940, as amended or (ii) the Public Utility Holding Company
Act of 1935, as amended.
3.16 Private Offering of Notes.
Neither the Company, the Guarantor, any Subsidiary nor Banc One Capital
Corporation (the only Person authorized or employed by the Company or the
Guarantor as agent, broker, dealer or otherwise in connection with the offering
or sale of the Notes or any similar Security of the Company, other than
employees of the Company) has offered any of the Notes or any
14
similar Security of the Company for sale to, or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect thereto with,
any prospective purchaser other than thirty-three (33) other institutional
investors, each of whom was offered all or a portion of the Notes at private
sale for investment.
3.17 No Defaults; Transactions Prior to Facility Closing Date, etc.
(a) No event has occurred and no condition exists that, upon the
execution and delivery of this Agreement or the issuance of any Notes,
would constitute a Default or an Event of Default.
(b) Neither the Guarantor nor any Subsidiary has entered into any
transaction during the period beginning on July 1, 1994 and ending on the
Initial Closing Date that would have been prohibited by Section 6.9 hereof
through Section 6.14 hereof, inclusive, had such Sections applied during
such period.
3.18 Use of Proceeds of Notes.
(a) Use of Proceeds. The Company will use the proceeds from the sale
of the Notes in accordance with Section 2.1.
(b) Margin Securities. None of the transactions contemplated herein
and in the Notes (including, without limitation, the use of the proceeds
from the sale of the Notes) violates, will violate or will result in a
violation of section 7 of the Exchange Act or any regulations issued
pursuant thereto, including, without limitation, Regulations G, T, U and X
of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II. The obligations of the Company and the Guarantor under this
Agreement and the Notes are not and will not be directly or indirectly
secured (within the meaning of such Regulation G) by any Margin Security,
and no Notes are being sold on the basis of any such collateral.
(c) Absence of Foreign or Enemy Status. Neither the sale of the
Notes nor the use of proceeds from the sale thereof will result in a
violation of any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended), or
any ruling issued thereunder or any enabling legislation or Presidential
Executive Order in connection therewith.
3.19 Capitalization.
Part 3.19 of Annex 3 hereto correctly lists the General Partner and
Limited Partner and their respective ownership interests and equity
contributions.
3.20 Solvency.
The fair value of the business and assets of each of the Company and the
Guarantor is in excess of the amount that will be required to pay its respective
liabilities (including, without limitation, contingent, subordinated, unmatured
and unliquidated liabilities on existing debts, as such liabilities may become
absolute and matured), in each case both prior to and after giving
15
effect to the transactions contemplated by this Agreement and the Notes. After
giving effect to the transactions contemplated by this Agreement and the Notes,
neither the Company nor the Guarantor will be engaged in any business or
transaction, or about to engage in any business or transaction, for which such
Person has unreasonably small capital, and neither the company nor the Guarantor
has or had any intent to hinder, delay or defraud any entity to which it is, or
will become, on or after the Initial Closing Date or the Second Closing Date,
indebted or to incur debts that would be beyond its ability to pay as such debts
mature.
4. CLOSING CONDITIONS
4.1 Initial Closing Conditions. Your obligations to purchase and pay for
the initial Notes to be delivered to you at the Initial Closing are subject to
satisfaction of the following conditions precedent:
(a) Collateral Documents. On the Initial Closing Date, each of the
following documents (collectively called the "Collateral Documents") shall
have been duly authorized, executed and delivered by the parties thereto,
shall be in full force and effect, and no default shall exist thereunder,
and the Security Trustee shall have received a fully executed copy
thereof:
(i) the Indenture, in the form of Exhibit A hereto;
(ii) the Deeds of Trust and the Framingham Mortgage, each in
substantially the form of Exhibit C and Exhibit D hereto,
respectively; and
(iii) the Assignments of Leases and Rents, each in substantially
the form of Exhibit E hereto.
The Collateral Documents and any financing statements under the Uniform
Commercial Code executed in connection therewith shall have been recorded,
registered and filed, if necessary, in such manner as to enable the
opinions referred to in Section 4.1(g) to be rendered by the Persons
specified thereby.
(b) Leases. On or prior to the Initial Closing Date, each of the
Leases shall have been duly authorized, executed and delivered by the
parties thereto, shall be in full force and effect, and no default shall
exist thereunder, and the Security Trustee shall have received a fully
executed copy thereof.
(c) Taxes; Other Charges. All taxes, fees and other charges incurred
in connection with the execution, delivery, recording, filing and
registration of this Agreement, the Indenture, the Notes and the
Collateral Documents shall have been paid.
(d) Status of Title. On the Initial Closing Date, the Company shall
have a good and marketable fee estate and each of the Mortgaged
Properties, subject only to the Permitted Exceptions.
(e) Mortgage Title Insurance. The Security Trustee shall have
received a policy of mortgagee title insurance acceptable to you, or
commitments therefor, with
16
respect to each of the Mortgaged Properties, each of which polices shall
(i) insure that the Company is the owner of the subject Mortgaged
Property, (ii) insure that the subject Mortgage constitutes a first lien
on the Mortgaged Property covered thereby, subject only to Permitted
Exceptions, (iii) be satisfactory in form and substance to you and your
special counsel, (iv) be in an amount not less than the amount set forth
on Part 4.1(e) of Annex 3 hereto with respect to such Mortgaged Property,
(v) be issued by a title insurance company which is satisfactory to you
and (vi) contain such further endorsements and affirmative coverage as you
may reasonably request and as are available (including, without
limitation, the deletion of all exceptions to coverage in respect of
survey disclosures, mechanic's liens, creditor rights, parties in
possession and taxes). All premiums in respect of such title insurance
policies shall have been paid in full and evidence thereof shall have been
delivered to you.
(f) Survey. You shall have received a copy of a survey of each of
the Mortgaged Properties, each of which surveys shall be satisfactory in
scope, detail, form and substance to you and your special counsel.
(g) Opinions of Counsel.
You shall have received from
(i) John Witten, Esq, counsel for the Company,
(ii) Jerry Williams, General Counsel of the Guarantor,
(iii) Hebb & Gitlin, a Professional Corporation, your special
counsel,
(iv) Bingham, Dana & Gould, local Massachusetts counsel to the
Guarantor, and
(v) Long, Ragsdale and Waters, P.C., local Tennessee counsel to
the Guarantor,
closing opinions, each dated as of the Initial Closing Date, substantially
in the respective forms set forth in Exhibit F-1, Exhibit F-2, Exhibit
F-3, Exhibit F-4 and Exhibit F-5 hereto and as to such other matters as
each of you may reasonably request. This Section 4.1(g) shall constitute
direction by the Company, the Guarantor and the Lessees to such counsel
named in the foregoing clause (i), clause (ii), clause (iv) and clause (v)
to deliver such closing opinion to you.
(h) Warranties and Representations True.
The warranties and representations contained in Section 3 hereof shall be
true on the Initial Closing Date with the same effect as though made on
and as of that date.
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(i) Material Adverse Change. No material adverse change in the
financial condition, business, operations or Property of the Guarantor
shall have occurred on or after the date of the last audited financial
statements of the Guarantor and its consolidated subsidiaries. No material
adverse change in the condition of the Mortgaged Properties or the
Property of the Guarantor or the Subsidiaries shall have occurred on or
after such date.
(j) Officer's Certificates.
You shall have received:
(i) a certificate dated such Closing Date and signed by a Senior
Officer of the General Partner on behalf of the Company,
substantially in the form of Exhibit G-1 hereto;
(ii) a certificate dated such Closing Date and signed by a
Senior Officer of the Guarantor, substantially in the form of
Exhibit G-2 hereto;
(iii) a certificate dated such Closing Date and signed by the
Secretary or an Assistant Secretary of the General Partner,
substantially in the form of Exhibit H-1 hereto; and
(iv) a certificate dated such Closing Date and signed by the
Secretary or an Assistant Secretary of the Guarantor, substantially
in the form of Exhibit H-2 hereto.
(k) Good Standing Certificates.
You shall have received certificates, dated on or immediately prior to the
Initial Closing Date,
(i) from the Secretary of State (or other appropriate official)
of the jurisdiction of organization or incorporation, as the case
may be, of the Company, the General Partner, the Guarantor and the
Lessees certifying as to the due organization, incorporation and
good standing or existence, as the case may be, of the Company, the
General Partner, the Guarantor and the Lessees;
(ii) from the Secretary of State (or other appropriate official)
of the states of North Carolina and Tennessee and the Commonwealth
of Massachusetts certifying as to the due qualification (i) of the
Company as a foreign limited partnership and (b) the General Partner
as a foreign corporation, in such jurisdictions.
(l) Legality.
The Notes to be acquired by you on the initial Closing Date shall,
on the Initial Closing Date, qualify as a legal investment for you under
applicable insurance law (without regard to any "basket" or "leeway"
provisions), and such acquisition shall not
18
subject you to any penalty or other onerous condition contained in or
pursuant to any such law or regulation, and you shall have received such
evidence as you may reasonably request to establish compliance with this
condition.
(m) Governmental Approvals. On the Initial Closing Date, all
necessary approvals, authorizations and consents, if any, required of all
governmental bodies (including courts) having jurisdiction with respect to
the Mortgaged Properties, the Company, the Guarantor or the transactions
herein contemplated shall have been obtained.
(n) Environmental Assessment. A Phase 1 Environmental Assessment of
each of the Mortgaged Properties shall have been performed and you shall
have received a Phase 1 Environmental Report relating thereto, and such
assessment and such report shall be satisfactory in all respects to you
and your special counsel.
(o) Private Placement Number.
The Company shall have obtained or caused to be obtained private
placement numbers for the Notes from the CUSIP Service Bureau of Standard
& Poor's, a division of McGraw-Hill, Inc. and you shall have been informed
of such private placement numbers.
(p) Equity Investment.
You should have received evidence satisfactory to you that the
Company has received, as its initial capital, cash in an amount not less
than Seven Hundred Ninety-Five Thousand Dollars ($795,000), in the
aggregate, from the General Partner and the Limited Partner.
(q) Interest Escrow
The Company shall have arranged for the deposit with the Security
Trustee (from the proceeds of the Initial Notes) of the Interest Deposit
Amount with respect to the Initial Notes.
(r) Letter from Banc One Capital Corporation
Banc One Capital Corporation shall have delivered to you and your
special counsel a letter describing the manner of the offering of the
Notes, in form and substance satisfactory to you and your special counsel.
(s) Expenses.
All fees and disbursements required to be paid pursuant to Section
1.5(b) hereof shall have been paid in full.
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(t) Compliance with this Agreement.
Each of the Company and the Guarantor shall have performed and
complied with all agreements and conditions contained herein and in the
Indenture that are required to be performed or complied with by the
Company and the Guarantor on or prior to the Initial Closing Date, and
such performance and compliance shall remain in effect on the Initial
Closing Date.
(u) Proceedings Satisfactory.
All proceedings taken in connection with the issuance and sale of
the Initial Notes and all documents and papers relating thereto shall be
satisfactory to you and your special counsel. You and your special counsel
shall have received, in a timely manner, copies of such documents and
papers as you or they may request in connection therewith or in connection
with your special counsel's closing opinion, all in form and substance
satisfactory to you and your special counsel.
4.2 Second Closing Conditions. Your obligation to purchase and pay for
the Second Notes at the Second Closing is subject to, in addition to the
conditions set forth in Section 4.1, the timely receipt of the Purchase Request
and satisfaction of the following conditions precedent:
(a) Opinions of Counsel.
You shall have received from
(i) John Witten, Esq, Corporate Counsel for Banc One Capital
Partner,
(ii) Jerry Williams, Esq, General Counsel of the Guarantor, and
(iii) Hebb & Gitlin, a Professional Corporation, your special
counsel,
closing opinions, each dated as of the Second Closing Date, updating the
legal opinions delivered on the Initial Closing Date and acceptable to you
in form and substance. This Section 4.2(a) shall constitute direction by
the Company and the Guarantor to such counsel named in the foregoing
clause (i) and clause (ii) to deliver such closing opinion to you.
(b) Warranties and Representations True.
The warranties and representations contained in Section 3 hereof
shall be true on the Second Closing Date with the same effect as though
made on and as of the Second Closing Date and no Default or Event of
Default shall exist.
(c) Material Adverse Change. No material adverse change in the
financial condition, business, operations or Property of the Guarantor
shall have occurred on or after the Initial Closing Date. No material
adverse change in the condition of the Mortgaged Properties shall have
occurred on or after such date.
20
(d) Officer's Certificate.
You shall have received a certificate dated the Second Closing Date
and signed by a Senior Officer of the General Partner on behalf of the
Company, substantially in the form of Exhibit I hereto.
(e) Legality.
The Notes to be acquired by you on the Second Closing Date shall, on
such Closing Date, qualify as a legal investment for you under applicable
insurance law (without regard to any "basket" or "leeway" provisions), and
such acquisition shall not subject you to any penalty or other onerous
condition contained in or pursuant to any such law or regulation, and you
shall have received such evidence as you may reasonably request to
establish compliance with this condition.
(f) Interest Escrow
The Company shall have arranged for the deposit with the Security
Trustee (from the proceeds of the Second Notes) of the Interest Deposit
Amount with respect to the Second Notes.
(g) Expenses.
All fees and disbursements required to be paid pursuant to Section
1.5(b) hereof shall have been paid in full.
(h) No Change in Control.
You shall have received satisfactory evidence that no Change in
Control or Control Event shall have occurred at any time subsequent to the
Initial Closing Date.
(i) Proceedings Satisfactory.
All proceedings taken in connection with the issuance and sale of
the Second Notes and all documents and papers relating thereto shall be
satisfactory to you and your special counsel. You and your special counsel
shall have received, in a timely manner, copies of such documents and
papers as you or they may request in connection therewith or in connection
with your special counsel's closing opinion, all in form and substance
satisfactory to you and your special counsel.
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5. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
5.1 Guarantied Obligations
The Guarantor, in consideration of the execution and delivery of this
Agreement and the purchase of the Notes by the Purchaser, hereby irrevocably,
unconditionally and absolutely guarantees to each holder of Notes, as and for
the Guarantor's own debt, until final and indefeasible payment has been made:
(a) the due and punctual payment by the Company of
(i) the principal of, and interest, and the Make-Whole Amount
(if any) on, the Series A Notes at any time outstanding,
(ii) the principal of, and interest, and the Make-Whole Amount
(if any) on, the Series B Notes at any time outstanding, and
(iii) the due and punctual payment of all other amounts payable,
and all other indebtedness owing, by the Company to the holders of
the Notes under this Agreement, the Indenture, the Notes and any
other Financing Document,
in each case, when and as the same shall become due and payable, whether
at maturity, pursuant to mandatory or optional prepayment, by acceleration
or otherwise, all in accordance with the terms and provisions hereof and
thereof; it being the intent of the Guarantor that the guaranty set forth
in this Section 5 (the "Unconditional Guaranty") shall be a continuing
guaranty of payment and not a guaranty of collection; and
(b) the punctual and faithful performance, keeping, observance, and
fulfillment by the Company of all duties, agreements, covenants and
obligations of the Company contained in this Agreement, the Indenture, the
Notes and the other Financing Documents.
All of the obligations set forth in subsection (a) and subsection (b) of this
Section 5.1 are referred to herein as the "Guarantied Obligations."
5.2 Performance Under This Agreement.
In the event the Company fails to pay, perform, keep, observe, or fulfill
any Guarantied Obligation in the manner provided in this Agreement, the
Indenture, the Notes or in the other Financing Documents, the Guarantor shall
cause forthwith to be paid the moneys, or to be performed, kept, observed, or
fulfilled each of such obligations, in respect of which such failure has
occurred in accordance with the terms and provisions of this Agreement, the
Indenture, the Notes and the other Financing Documents. In furtherance of the
foregoing, if an Event of Default shall exist, all of the Guarantied Obligations
shall, in the manner and subject to the limitations provided herein for the
acceleration of the Notes, forthwith become due and payable without notice,
regardless of whether the acceleration of the Notes shall be stayed, enjoined,
delayed or otherwise prevented.
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5.3 Primary Obligation.
The Unconditional Guaranty is a primary, original and immediate obligation
of the Guarantor and is an absolute, unconditional, continuing and irrevocable
guaranty of payment and performance and shall remain in full force and effect
until the full, final and indefeasible payment of the Guarantied Obligations.
5.4 Actions Affecting the Guarantor.
The Guarantor consents and agrees that, without notice to or by the
Guarantor and without impairing, releasing, abating, deferring, suspending,
reducing, terminating or otherwise affecting the obligations of the Guarantor
hereunder, each holder of Notes, in the manner provided herein, by action or
inaction, may:
(a) compromise or settle or discharge the performance of, or refuse
to (or otherwise not) enforce, or (by action or inaction) release all or
any one or more parties to, any one or more of the Notes, this Agreement,
the Indenture, or the other Financing Documents:
(b) assign, sell or transfer, or otherwise dispose of, any one or
more of the Notes;
(c) grant waivers, extensions, consents and other indulgences to the
Company or any other guarantor in respect of any one or more of the Notes,
this Agreement, the Indenture or any other Financing Document;
(d) amend, modify or supplement any one or more of the Notes, this
Agreement or the Indenture, in accordance with Section 9.5 hereof or
Section 12.2 of the Indenture;
(e) amend, modify or supplement any other Financing Document, in a
way which does not materially increase the obligations of the Company
thereunder;
(f) release or substitute any one or more of the endorsers or
guarantors of the Guarantied Obligations whether parties hereto or not;
and
(g) sell, exchange, release, surrender or enforce, by action or
inaction, any Property at any time pledged or granted as security in
respect of the Guarantied Obligations, whether so pledged or granted by
such Guarantor or another guarantor of the Company's obligations under
this Agreement, the Indenture, the Notes or any other Financing Document.
5.5 Waivers.
To the fullest extent permitted by law, the Guarantor does hereby waive:
(a) any notice of
23
(i) acceptance of the Unconditional Guaranty;
(ii) any purchase of the Notes under this Agreement or the
Indenture, or the creation, existence or acquisition of any of the
Guarantied Obligations, or the amount of the Guarantied Obligations,
subject to the Guarantor's right to make inquiry of each holder of
Notes to ascertain the amount of the Guarantied Obligations owing to
such holder of Notes at any reasonable time;
(iii) adverse change in the financial condition of the Company
or any other fact that might increase, expand or affect the
Guarantor's risk hereunder
(iv) presentment for payment, demand, protest, and notice
thereof as to the Notes or any other instrument; and
(v) any kind or nature whatsoever to which the Guarantor might
otherwise be entitled (except notices of default and any notice or
demand which is specifically required to be given to such Guarantor
pursuant to the terms of this Agreement);
(b) the right by statute or otherwise to require any holder of Notes
to institute suit against the Company or any other guarantor or to exhaust
the rights and remedies of any holder of Notes against the Company or any
other guarantor, the Guarantor being bound to the payment of each and all
Guarantied Obligations, whether now existing or hereafter accruing, as
fully as if such Guarantied Obligations were directly owing to the holders
of Notes by the Guarantor;
(c) the benefit of any stay (except in connection with a pending
appeal), valuation, appraisal, redemption or extension law now or at any
time hereafter in force which, but for this waiver, might be applicable to
any sale of Property of the Guarantor made under any judgment, order or
decree based on this Agreement, and the Guarantor covenants that it will
not at any time insist upon or plead, or in any manner claim or take the
benefit or advantage of such law;
(d) any defense of objection to the absolute, primary, continuing
nature, or the validity, enforceability or amount, of the Unconditional
Guaranty, including, without limitation, any defense based on (and the
primary, continuing nature, and the validity, enforceability and amount,
of the Unconditional Guaranty shall be unaffected by), any of the
following,
(i) any change in future conditions
(ii) any change of law,
(iii) any invalidity or irregularity with respect to the
issuance or assumption of any obligations (including, without
limitation, this Agreement, the Indenture, the Notes or any other
Financing Document) by the Company or any other Person,
24
(iv) the execution and delivery of any agreement at any time
hereafter (including, without limitation, this Agreement, the
Indenture, the Notes or any other Financing Document) of the Company
or any other Person,
(v) the genuineness, validity, regularity or enforceability of
any of the Guarantied Obligations
(vi) any default, failure or delay, willful or otherwise, in the
performance of any obligations by the Company or the Guarantor,
(vii) any creditors' rights, bankruptcy, receivership or other
insolvency proceeding of the Company or the Guarantor, or
sequestration or seizure of any Property of the Company or the
Guarantor, or any merger, consolidation, reorganization,
dissolution, liquidation or winding up or change in corporate
constitution or corporate identity or loss of corporate identity of
the Company or the Guarantor,
(viii) any disability or other defense of the Company or the
Guarantor to payment and performance of all Guarantied Obligations
other than the defense that the Guarantied Obligations shall have
been fully and finally performed and indefeasibly paid,
(ix) the cessation from any cause whatsoever of the liability of
the Company or the Guarantor in respect of the Guarantied
Obligation, and any other defense that the Guarantor may otherwise
have against the Company or any holder of Notes,
(x) impossibility or illegality of performance on the part of
the Company or the Guarantor under this Agreement, the Indenture,
the Notes or any other Financing Document,
(xi) any change of the circumstances of the Company, the
Guarantor or any other Person, whether or not foreseen or
foreseeable, whether or not imputable to the Company or the
Guarantor, including, without limitation, impossibility of
performance through fire, explosion, accident, labor disturbance,
floods, droughts, embargoes, wars (whether or not declared), civil
commotions, acts of God or the public enemy, delays or failure of
suppliers or carriers, inability to obtain materials, economic or
political conditions, or any other causes affecting performance, or
any other force majeure, whether or not beyond the control of the
Company or the Guarantor and whether or not of the kind hereinbefore
specified,
(xii) any attachment, claim, demand, charge, lien, order,
process, encumbrance or any other happening or event or reason,
similar or dissimilar to the foregoing, or any withholding or
diminuation at the source, by reason of any taxes, assessments,
expenses, indebtedness, obligations or liabilities of any character,
foreseen or unforeseen, and whether or not valid incurred by or
against any Person, or any claims, demands, charges, liens or
encumbrances of any nature, foreseen or unforeseen, incurred by any
Person, or against any sums
25
payable under this Agreement, the Indenture, the Notes or any other
Financing Document that such sums would be rendered inadequate or
would be unavailable to make the payment as herein provided,
(xiii) any change in the ownership of the equity securities of
the Company or the Guarantor,
(xiv) the lack of due diligence by the holders of the Notes in
the collection, protection or realization upon any collateral
securing the Notes (including, without limitation any rights of the
Guarantor under North Carolina General Statute ss. 26-7), or
(xv) any other action, happening, event or reason whatsoever
that shall delay, interfere with, hinder or prevent, or in any way
adversely affect, the performance by the Company or the Guarantor of
any of its obligations under this Agreement, the Indenture, the
Notes or any other Financing Document.
5.6 Certain Waivers of Subrogation, Reimbursement and Indemnity.
The Guarantor hereby acknowledges and agrees that until such time as the
Guarantied Obligations have been finally and indefeasibly paid, the Guarantor
shall not have any right of subrogation, reimbursement, or indemnity whatsoever
in respect of the Guarantied Obligations, and no right of recourse to or with
respect to any assets or Property of the Company. Nothing shall discharge or
satisfy the obligations of the Guarantor hereunder except the full and final
performance and indefeasible payment of the Guarantied Obligations.
5.7 Invalid Payments.
The Guarantor further agrees that, to the extent the Company makes a
payment or payments to any holder of a Note or Notes, which payment or payments
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required, for any of the foregoing reasons or for any
other reason, to be repaid or paid over to a custodian, trustee, receiver or any
other party or officer under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, state or federal law, or any common law or equitable cause, then
to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made and the Guarantor shall be primarily liable
for such obligation.
5.8 Marshaling.
The Guarantor consents and agrees that each holder of Notes, and each
Person acting for the benefit of each holder of Notes, shall be under no
obligation to marshal any assets in favor of the Guarantor or against or in
payment of any or all of the Guarantied Obligations.
26
5.9 Subordination.
In the event that, for any reason whatsoever, the Company is now or
hereafter becomes indebted to the Guarantor in respect of any Indebtedness, the
Guarantor agrees that the amount of such Indebtedness, interest thereon, and all
other amounts due with respect thereto, shall, at all times during the existence
of an Event of Default, be subordinate as to time of payment and in all other
respects to all the Guarantied Obligations, and that the Guarantor shall not be
entitled to enforce or receive payment thereof until all sums then due and owing
to the holders of Notes in respect of the Guarantied Obligations shall have been
paid in full, except that such Guarantor may enforce any obligations in respect
of any such Indebtedness owing to the Guarantor from the Company so long as all
proceeds in respect of any recovery from such enforcement shall be held by the
Guarantor in trust for the benefit of the holders of the Notes. If any other
payment, other than pursuant to the immediately preceding sentence, shall have
been made to the Guarantor by the Company on any such Indebtedness during any
time that an Event of Default exists and there are Guarantied Obligations
outstanding, the Guarantor shall hold in trust all such payments for the benefit
of the holders of Notes.
5.10 Setoff, Counterclaim or Other Deductions.
Except as otherwise required by law, each payment by the guarantor shall
be made without setoff, counterclaim or other deduction.
5.11 No Election of Remedies by Noteholders.
Each holder of Notes shall, individually or collectively, have the right
to seek recourse against the Guarantor to the fullest extent provided for herein
for the Guarantied Obligations. No election to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of such holder's right to proceed in any other form of action or
proceeding or against other parties unless such holder has expressly waived such
right in writing. Specifically, but without limiting the generality of the
foregoing, no action or proceeding by any holder of Notes against the Company or
the Guarantor under any document or instrument evidencing obligations of the
Company or the Guarantor to such holder of Notes shall serve to diminish the
liability of any Guarantor under this Agreement (including, without limitation,
this Section 5), except to the extent that such holder of Notes finally and
unconditionally shall have realized payment by such action or proceeding.
5.12 Separate Action; Other Enforcement Rights.
(a) Subject to Section 8.2 of the Indenture, each of the rights and
remedies granted under this Section 5 to each holder of Notes in respect
of the Notes held by such holder may be exercised by such holder without
notice by such holder to, or the consent of or any other action by, any
other holder of Notes.
(b) Each holder of Notes may proceed, as provided in Section
5.12(a), to protect and enforce the Unconditional Guaranty by suit or
suits or proceedings in equity, at law or in bankruptcy, and whether for
the specific performance of any covenant or agreement contained therein
(including, without limitation, in this Section 5) or in execution of aid
of any power herein granted or for the recovery of judgment for the
obligations
27
hereby guarantied or for the enforcement of any other proper, legal or
equitable remedy available under applicable law.
5.13 Noteholder Setoff.
Each holder of Notes shall have, to the fullest extent permitted by law
and this Agreement, a right of set-off against any and all credits and any and
all other Property of the Guarantor, now or at any time whatsoever with, or in
the possession of, such holder, or anyone acting for such holder, to ensure the
full performance of any and all obligations of the Guarantor hereunder.
5.14 Delay or Omission; No Waiver.
No course of dealing on the part of any holder of Notes and no delay or
failure on the part of any such Person to exercise any right hereunder
(including, without limitation, this Section 5) shall impair such right or
operate as a waiver of such right or otherwise prejudice such Person's rights,
powers and remedies hereunder. Every right and remedy given by the Unconditional
Guaranty or by law to any holder of Notes may be exercised from time to time as
often as may be deemed expedient by such Person.
5.15 Restoration of Rights and Remedies.
If any holder of Notes shall have instituted any proceeding to enforce any
right or remedy under the Unconditional Guaranty, under any Note held by such
holder of Notes, and such proceeding shall have been dismissed, discontinued or
abandoned for any reason, or shall have been determined adversely to such
holder, then and in every such case each such holder, the Company and the
Guarantor shall, except as may be limited or affected by any determination
(including, without limitation, any determination in connection with any such
dismissal) in such proceeding, be restored severally and respectively to its
respective former positions hereunder and thereunder, and thereafter, subject as
aforesaid, the rights and remedies of such holders of Notes shall continue as
though no such proceeding had been instituted.
5.16 Cumulative Remedies.
No remedy under this Agreement (including, without limitation, this
Section 5), the Indenture, the Notes or any other Financing Documents is
intended to be exclusive of any other remedy, but each and every remedy shall be
cumulative and in addition to any and every other remedy given pursuant to this
Agreement (including, without limitation, this Section 5), the Indenture or
pursuant to the Notes.
5.17 Execution and Delivery of Notes by Guarantor.
The Guarantor shall, upon the issuance of any new Notes by the Company
pursuant to Section 2.7 of the Indenture, cause the confirmation of the
Unconditional Guaranty provided for thereon to be duly executed. The failure of
the Guarantor to execute and deliver the confirmation as required herein shall
not relieve the Guarantor of its Unconditional Guaranty with respect to such
Note.
28
5.18 Survival.
So long as the Guarantied Obligations shall not have been fully and
finally performed and indefeasibly paid, the obligations of the Guarantor under
this Section 5 shall survive the transfer and payment of any Note and the
payment in full of all the Notes.
6. COVENANTS OF THE GUARANTOR
The Guarantor covenants that on and after the Initial Closing Date and so
long as any of the Notes shall be outstanding:
6.1 Payment of Taxes and Claims.
The Guarantor will pay, and will cause each Restricted Subsidiary to pay,
before they become delinquent:
(a) all taxes, assessments and governmental charges or levies
imposed upon it or its Property; and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, vendors, landlords and other like Persons that, if unpaid,
might result in the creation of a Lien upon its Property;
provided, that items of the foregoing description need not be paid
(i) while being actively contested in good faith and by
appropriate proceedings as long as adequate book reserves have been
established and maintained and exist with respect thereto, and
(ii) so long as the title of the Company to, and its right to
use, such Property, is not materially adversely affected thereby.
6.2 Maintenance of Properties; Corporate Existence; etc.
The Guarantor will, and will cause each Restricted Subsidiary to:
(a) Property - maintain its Property in good condition and working
order, ordinary wear and tear excepted, and make all necessary renewals,
replacements, additions, betterments and improvements thereto;
(b) Insurance - maintain, with financially sound and reputable
insurers, insurance with respect to its Property and business against such
casualties and contingencies, of such types (including, without
limitation, insurance with respect to losses arising out of Property loss
or damage, public liability, business interruption, larceny, workers'
compensation, embezzlement or other criminal misappropriation) and in such
amounts as is customary in accordance with sound business practices in the
case of corporations of established reputations engaged in the same or a
similar business and similarly situated; from and after January 1, 1996
all such insurance shall be placed
29
with insurers accorded a rating by A.M. Best Company of "A" or better and
a size rating of "X" or better (or comparable ratings by a comparable
rating agency). For purposes of this Section 6.2 and the other Financing
Documents, an insurer shall be considered to have satisfied the aforesaid
rating and size requirements with respect to any policy to the extent that
it has ceded liability under such policy to a reinsurer which satisfies
such rating and size requirements pursuant to a reinsurance agreement
acceptable to you in all respects, and a cut-through agreement (acceptable
to you in all respects) is in effect with respect to such reinsurance
agreement.
(c) Financial Records - keep accurate and complete books of records
and accounts in which accurate and complete entries shall be made of all
its business transactions and that will permit the provision of accurate
and complete financial statements in accordance with GAAP;
(d) Corporate Existence and Rights - do or cause to be done all
things necessary to preserve and keep in full force and effect its
corporate existence, as the case may be, rights (charter and statutory)
and franchises, except where the failure to do so, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect; and
(e) Compliance with Law - not be in violation of any law, ordinance
or governmental rule or regulation to which it is subject (including,
without limitation, any Environmental Protection Law) and not fail to
obtain any license, certificate, permit, franchise or other governmental
authorization necessary to the ownership of its Properties or to the
conduct of its business if such violations or failures to obtain, in the
aggregate, could reasonably be expected to have (i) a Material Adverse
Effect or (ii) a material adverse effect on the ability of the Guarantor
and the Restricted Subsidiaries to conduct in the future the business it
conducts at the time of such violation or failure to obtain.
6.3 Maintenance of Office.
The Guarantor will maintain an office at the address of the Guarantor set
forth in Section 9.1 hereof where notices, presentations and demands in respect
of this Agreement may be made upon the Guarantor. Such office will be maintained
at such address until such time as the Guarantor shall notify the holders of the
Notes of any change of location of such office, which will in any event be
located within the United States of America.
6.4 Line of Business.
The Guarantor will not, and will not permit any Restricted Subsidiary to,
engage in any business if, after giving effect thereto, the general nature of
the businesses of the Guarantor and the Restricted Subsidiaries, taken as a
whole, would no longer be substantially the same as the businesses described in
the Placement Memorandum. The guarantor shall manage and operate such businesses
in substantially the same manner that they are managed and operated as of the
Initial Closing Date.
30
6.5 Transactions with Affiliates.
The Guarantor will not, and will not permit any Restricted Subsidiary to,
enter into any transaction, including, without limitation, the purchase, sale or
exchange of Property or the rendering of any service, with any Affiliate, except
transactions (a) having terms no less favorable to the Guarantor or such
Restricted Subsidiary than those that could be obtained in a comparable
arm's-length transaction with a Person not an Affiliate, and (b) approved by a
majority of the Guarantor's directors, including a majority of the independent
and disinterested directors.
6.6 Private Offering.
The Guarantor will not, and will not permit any Person acting on its
behalf to, offer the Notes or any similar Securities for issuance or sale to, or
solicit any offer to acquire any of the same from, any Person so as to bring the
issuance and sale of the Notes within the provisions of section 5 of the
Securities Act.
6.7 Pension Plans.
(a) Compliance. The Guarantor will, and will cause each ERISA
Affiliate to, at all times with respect to each Pension Plan, make timely
payment of contributions required to meet the minimum funding standard set
forth in ERISA or the IRC with respect thereto, and to comply with all
other applicable provisions of ERISA and the IRC.
(b) Relationship of Vested Benefits to Pension Plan Assets. The
Guarantor will not at any time permit the present value of all employee
benefits vested under each Pension Plan to exceed the assets of such
Pension Plan allocable to such vested benefits at such time, in each case
determined pursuant to Section 6.7(c).
(c) Valuations. All assumptions and methods used to determine the
actuarial valuation of vested employee benefits under Pension Plans and
the present value of assets of Pension Plans will be reasonable in the
good faith judgment of the Guarantor and will comply with all requirements
of law.
(d) Prohibited Actions. The Guarantor will not, and will not permit
any ERISA Affiliate to:
(i) engage in any "prohibited transaction" (as defined in
section 406 of ERISA or section 4975 of the IRC) that would result
in the imposition of a material tax or penalty;
(ii) incur with respect to any Pension Plan any "accumulated
funding deficiency" (as defined in section 302 of ERISA), whether or
not waived:
(iii) terminate any Pension Plan in a manner that could result
in the imposition of a Lien on the Property of the Guarantor or any
Subsidiary pursuant to section 4068 of ERISA or the creation of any
liability under section 4062 of ERISA;
31
(iv) fail to make any payment required by section 515 of ERISA;
or
(v) at any time be an "employer" (as defined in section 3(5) of
ERISA) required to contribute to any Multiemployer Plan or a
"substantial employer" (as defined in section 4001 of ERISA)
required to contribute to any Multiple Employer Pension Plan if, at
such time, it could reasonably be expected that the Guarantor or any
Subsidiary will incur withdrawal liability in respect of such
Multiemployer Plan or Multiple Employer Pension Plan and such
liability, if incurred, together with the aggregate amount of all
other withdrawal liability as to which there is a reasonable
expectation of incurrence by the Guarantor or any Subsidiary under
any one or more Multiemployer Plans or Multiple Employer Pension
Plans, could reasonably be expected to have a Material Adverse
Effect.
6.8 Pro-Rata Offers.
The Guarantor will not, and will not permit any Subsidiary or any
Affiliate to, directly or indirectly, acquire or make any offer to acquire any
Notes unless the Guarantor or such Subsidiary or Affiliate shall have offered to
acquire Notes, pro rata, from all holders of the Notes and upon the same terms.
6.9 Fixed Charge Coverage.
The Guarantor will not permit the ratio (as determined at the end of each
fiscal quarter of the Guarantor) of Consolidated Income Available for Fixed
Charges for the period of four (4) consecutive fiscal quarters of the Guarantor
ended on such date to Consolidated Fixed Charges for such period to be less than
2.0 to 1.0.
6.10 Maintenance of Consolidated Net Worth.
The Guarantor shall at all times maintain Consolidated Adjusted Net Worth
of not less than Sixty-Five Million Dollars ($65,000,000).
6.11 Debt Restrictions.
(a) Consolidated Total Debt. The Guarantor will not at any time
permit Consolidated Total Debt to exceed fifty-five percent (55%) of
Consolidated Total Capitalization.
(b) Restricted Subsidiary Debt; Capital Lease Obligations. The
Guarantor will not at any time permit the sum of (i) Total Restricted
Subsidiary Debt plus, without duplication, (ii) Capitalized Lease
Obligations, to exceed ten percent (10%) of Consolidated Adjusted Net
Worth.
(c) Limitation on AFC Debt. The Guarantor will not at any time
permit the ratio of Total AFC Debt to AFC Net Worth to be more than 5.0 to
1.0.
(d) Limitation on AFC Advance Loan Ratio. The Guarantor will not at
any time permit the Aggregate outstanding amount of AFC Advances to exceed
the lesser of
32
(i) eighty-five percent (85%) of AFC Eligible Receivables at such time or
(ii) the aggregate amount of AFC Eligible Receivables multiplied by the
advance rate allowed with respect to AFC Eligible Receivables under AFC's
primary line of credit at such time.
6.12 Transfers of Property; Subsidiary Stock.
(a) Transfers of Property. The Guarantor will not, nor will it
permit any Restricted Subsidiary to, sell (including, without limitation,
any sale and subsequent leasing as lessee of such Property), lease as
lessor, transfer, or otherwise dispose of (individually, a "Transfer", and
collectively "Transfers") any Property of the Guarantor or any Restricted
Subsidiary (including, without limitation, Subsidiary Stock), except:
(i) Transfers of inventory and of obsolete or worn out Property,
in each case in the ordinary course of business of the Guarantor or
such Restricted Subsidiary;
(ii) Transfers from the Guarantor to a Wholly-Owned Restricted
Subsidiary;
(iii) Transfers from a Restricted Subsidiary to the Guarantor or
another Restricted Subsidiary;
(iv) Transfers of Subsidiary Stock permitted pursuant to the
provisions of Section 6.12(b); and
(v) a Transfer of Property to a Person other than an Affiliate
for cash consideration which Transfer is deemed, in the good faith
opinion of the Board of Directors (or management of the Company in
the case of a sale involving assets having an aggregate book value
of less than Two Million Five Hundred Thousand Dollars
($2,500,000)), to be for the Fair Market Value of such Property and
in the best interests of the Guarantor and provided that each of the
following conditions is satisfied with respect to such Transfer:
(A) the sum of
(1) the current book value of such Property, plus
(2) the aggregate book value of each other item of
Property of the Guarantor and its Restricted
Subsidiaries transferred (other than in Transfers
referred to in the foregoing clause (i), clause (ii) or
clause (iii) or Transfers referred to in clause (i),
clause (ii) or clause (iii) of Section 6.12(b)) during
the three hundred sixty-five (365) day period ended as
of the date of such Transfer,
would not exceed ten percent (10%) of Consolidated Total
Assets determined as at the end of the most recently ended
fiscal quarter of the Guarantor prior to such Transfer, and
33
(B) immediately before and after the consummation of such
Transfer, and after giving effect thereto, no Default or Event
of Default would exist.
Notwithstanding the foregoing, a Transfer of Property shall be deemed to
be excluded from the foregoing provisions of this Section 6.12 (including any
calculation made pursuant to Section 6.12(a)(v)(A)(2)) if such Transfer is to a
Person other than an Affiliate for cash consideration which Transfer is deemed,
in the good faith opinion of the Board of Directors (or management of the
Company in the case of a sale involving assets having an aggregate book value of
less than Two Million Five Hundred Thousand Dollars ($2,500,000)), to be for the
Fair Market Value of such Property and in the best interests of the Company,
and;
(I) within one hundred eighty (180) days after such Transfer,
the entire proceeds of such Transfer (net of reasonable and ordinary
transaction costs and expenses incurred in connection with such
Transfer) are applied by the Guarantor or such Restricted Subsidiary
to purchase new Property for use in the conduct of the business of
the Guarantor or the Restricted Subsidiaries as such businesses were
conducted on the Initial Closing Date; or
(II) contemporaneously with such Transfer the entire proceeds of
such Transfer are applied to the payment of Senior Funded Debt,
provided that any prepayment of Senior Funded Debt under a facility
or arrangement that permits the reborrowing of such Debt by the
Guarantor or the Restricted Subsidiaries shall not be counted under
this clause (II) unless the availability to reborrow such Debt is
permanently reduced by an amount equal to the principal amount of
such Senior Funded Debt repaid.
(b) Transfers of Subsidiary Stock. The Guarantor will not, nor will it
permit any Restricted Subsidiary to, transfer any shares of the stock
(or any warrants, rights or options to purchase stock or other
Securities exchangeable for or convertible into stock) of a Restricted
Subsidiary (such stock, warrants, rights, options and other Securities
herein called "Subsidiary Stock"), nor will any Restricted Subsidiary
issue, sell or otherwise dispose of any shares of its own Subsidiary
Stock, provided that the foregoing restrictions do not apply to:
(i) the issuance by a Subsidiary of shares of its own Subsidiary
Stock to either the Guarantor or a Wholly-Owned Restricted
Subsidiary;
(ii) Transfers by the Guarantor or a Subsidiary of shares of
Subsidiary Stock to the Guarantor or to a Wholly-Owned Restricted
Subsidiary;
(iii) the issuance by a Subsidiary of directors' qualifying
shares; and
(iv) the Transfer of all of the Subsidiary Stock of a Subsidiary
owned by the Guarantor and the Subsidiaries if:
34
(A) such Transfer satisfies all of the requirements of
Section 6.12(a)(v) hereof;
(B) in connection with such Transfer the entire Investment
(whether represented by stock, Debt, claims or otherwise) of the
Guarantor and the other Subsidiaries in such Subsidiary is
Transferred to a Person other than the Guarantor or a Subsidiary
not being simultaneously disposed of;
(C) the Subsidiary being disposed of has no continuing
Investment in any other Subsidiary not being simultaneously
disposed of or in the Guarantor; and
(D) immediately before and after the consummation of such
Transfer, and after giving effect thereto, no Default or Event
of Default would exist.
For purposes of determining the book value of Property constituting Subsidiary
Stock being Transferred as provided in clause (iv) above, such book value shall
be deemed to be the aggregate book value of all assets of the Subsidiary that
shall have issued such Subsidiary Stock.
6.13 Restricted Payments.
The Guarantor will not, and will not permit any Restricted Subsidiary to,
make any Restricted Payment unless, immediately after giving effect to such
Restricted Payment,
(a) the aggregate amount of all Restricted Payments declared, paid
or made (as the case may be) since July 1, 1994 would not exceed the sum
of
(i) an amount equal to fifty percent (50%) of Consolidated Net
Income for the cumulative period (treated as one fiscal period) from
July 1, 1994 to the date of such Restricted Payment, plus
(ii) the net cash proceeds from the sale of any capital stock of
the Guarantor (or debt securities of the Guarantor that are
subsequently converted or exchanged or such capital stock, at Fair
Market Value, on a dollar for dollar basis) occurring after July 1,
1994; and
(b) no Default or Event of Default exists or would exist.
6.14 Merger and Consolidation.
The Guarantor will not, and will not permit any Restricted Subsidiary to,
merge or consolidate with or into, any other Person or permit any other Person
to merge or consolidate with or into it (except that a Restricted Subsidiary may
merge or consolidate into the Guarantor or another Restricted Subsidiary)
provided that the foregoing
35
restrictions shall not apply to the merger or consolidation of the Guarantor or
a Restricted Subsidiary with or into another corporation, if:
(a) with respect to a merger or consolidation involving the
Guarantor:
(i) the corporation which results from such merger or
consolidation (the "Surviving Corporation") is solvent and is
organized under the laws of the United States of America or any
state thereof;
(ii) the due and punctual payment of the principal of and
Make-Whole Amount, if any, and interest on all of the Notes,
according to their tenor, and the due and punctual performance and
observance of all the covenants in the Notes, this Agreement, the
Indenture and the other Financing Documents to be performed or
observed by the Company, are expressly guaranteed by the Surviving
Corporation pursuant to a guaranty agreement in substantially the
form of the Unconditional Guaranty and approved by the Required
Holders, and the Guarantor causes to be delivered to each holder of
Notes an opinion of independent counsel, in form, scope and
substance satisfactory to the Required Holders, to the effect that
such guaranty agreement is enforceable in accordance with its terms;
and
(iii) immediately after the consummation of the transaction, and
after giving effect thereto, no Default or Event of Default would
exist;
(b) with respect to a merger or consolidation involving a Restricted
Subsidiary:
(i) the Surviving Corporation is solvent and is organized under
the laws of the United States of America or any state thereof;
(ii) such merger or consolidation is undertaken for the primary
purpose of providing the Guarantor with the means to acquire
(through a Restricted Subsidiary) an automobile auction business;
(iii) all of the Capital Stock of the Surviving Corporation is
owned directly or indirectly by the Guarantor; and
(iv) immediately after the consummation of the transaction, and
after giving effect thereto, no Default or Event of Default would
exist.
7. INFORMATION AS TO THE GUARANTOR
7.1 Financial and Business Information.
The Guarantor will deliver to the Purchaser and to each other holder of
Notes:
(a) Quarterly Statements--as soon as practicable after the end of
each quarterly fiscal period in each fiscal year of the Guarantor (other
than the last quarterly
36
fiscal period of each such fiscal year), and in any event within sixty (60) days
thereafter, duplicate copies of
(i) a consolidated balance sheet of the Guarantor and its
consolidated Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of operations, shareholders equity
and cash flows of the Guarantor and its consolidated Subsidiaries
for such quarter and (in the case of the second and third quarters)
for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP and certified as complete and correct, subject to changes
resulting from year-end adjustments, by a Senior Financial Officer, and
accompanied by the certificate required by Section 7.2 hereof;
(b) Annual Statements -- as soon as practicable after the end of
each fiscal year of the Guarantor, and in any event within one hundred
twenty (120) days thereafter, duplicate copies of
(i) consolidated balance sheets of the Guarantor and its
consolidated Subsidiaries as at the end of such year, and
(ii) consolidated statements of operations, shareholders'
equity, and cash flows of the Guarantor and its consolidated
Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP and
accompanied by
(A) an opinion of independent certified public accountants
of recognized national standing, which opinion shall, without
qualification (including, without limitation, qualifications
related to the scope of the audit or the ability of the
Guarantor or a Subsidiary to continue as a going concern), state
that such financial statements present fairly, in all material
respects, the financial position of the companies being reported
upon and their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the examination
of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for
such opinion in the circumstances.
(B) a certification by a Senior Financial Officer that such
consolidated financial statements are complete and correct, and
(C) the certificates required by Section 7.2 and Section
7.3 hereof;
37
(c) Audit Reports -- promptly upon receipt thereof, a copy of each
other report submitted to the Guarantor or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made
by them of the books of the Guarantor or any Subsidiary;
(d) SEC and Other Reports -- within fifteen (15) days of their
becoming available, one copy, without duplication, of (i) each financial
statement, report, notice or proxy statement sent by the Guarantor or any
Subsidiary to public securities holders generally, and (ii) each regular
or periodic report (including, without limitation, each Annual Report on
Form 10-K, each Quarterly Report on Form 10-Q and each Current Report on
Form 8-K), each registration statement (other than registration statements
on Form S-8) which shall have become effective (without exhibits except as
expressly requested by a holder of Notes), and each final prospectus, and
all amendments to any of the foregoing, filed by the Guarantor or any
Subsidiary with, or received by, such Person in connection therewith from,
the Securities and Exchange Commission or any successor agency;
(e) ERISA --
(i) immediately upon becoming aware of the occurrence of any
(A) "reportable event" (as such term is defined in section
4043 of ERISA), or
(B) "prohibited transaction" (as such term is defined in
section 406 of ERISA or section 4975 of the IRC),
in connection with any Pension Plan or any trust created thereunder,
a written notice specifying the nature thereof, what action the
Guarantor is taking or proposes to take with respect thereto and,
when known, any action taken by the IRS, the Department of Labor or
the PBGC with respect thereto; and
(ii) prompt written notice of and, where applicable, a
description of
(A) any notice from the PBGC in respect of the commencement
of any proceedings pursuant to section 4042 of ERISA to
terminate any Pension Plan or for the appointment of a trustee
to administer any Pension Plan,
(B) any distress termination notice delivered to the PBGC
under section 4041 of ERISA in respect of any Pension Plan, and
any determination of the PBGC in respect thereof,
(C) the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA,
(D) any Multiemployer Plan becoming "insolvent" (as such
term is defined in section 4245 of ERISA) under Title IV of
ERISA,
38
(E) the whole or partial withdrawal of the Guarantor or any
ERISA Affiliate from any Multiemployer Plan and the withdrawal
liability incurred in connection therewith, and
(F) any material increase in contingent liabilities of the
Guarantor or any Subsidiary in respect of any post-retirement
employee welfare benefits.
(f) Actions, Proceedings -- promptly after the commencement thereof,
written notice of any action or proceeding relating to the Guarantor or
any Subsidiary in any court or before any Governmental Authority or
arbitration board or tribunal as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined,
is reasonably likely to have a Material Adverse Effect;
(g) Notice of Default or Event of Default -- promptly upon becoming
aware of the existence of any condition or event that constitutes a
Default or an Event of Default, a written notice specifying the nature and
period of existence thereof and what action the Guarantor is taking or
proposes to take with respect thereto;
(h) Notice of Claimed Default -- promptly upon becoming aware that
the holder of any Note, or of any Debt or other Security of the Guarantor
or any Subsidiary, shall have given notice or taken any other action with
respect to a claimed Default, Event of Default, default or event of
default, a written notice specifying the notice given or action taken by
such holder and the nature of the claimed Default, Event of Default,
default or event of default and what action the Guarantor is taking or
proposes to take with respect thereto;
(i) Notice of Control Event -- promptly (and in any event with three
(3) Business Days) upon becoming aware of any Control Event or Change of
Control, written notice thereof to the Company and to each holder of
Notes.
(j) Information Furnished to Other Creditors -- promptly after any
request therefor, copies of any statement, report or certificate furnished
to any holder of Debt or the Guarantor or any Subsidiary;
(k) Rule 144A -- promptly after any request therefor, information
requested to comply with 17 C.F.R. Section 230.144A, as amended from time
to time;
(l) Requested Information -- promptly after any request therefor,
such other data and information as from time to time may be reasonably
requested by any holder of Notes, including, without limitation, data,
information, agreements, instruments or documents relating to the business
or financial operations or performance of the Guarantor or any Subsidiary
and any financial statements prepared by the Guarantor (in addition to the
financial statements specified in clause (a) and clause (b) of this
Section 7.1), in each case which may be reasonably requested by any holder
of Notes; and
(m) Banking Relationship with Security Trustee -- promptly (and in
any event within three (3) Business Days) upon the establishment of any
lending relationship
39
between any one or more of the Guarantor and its Subsidiaries on the one
hand and PNC Bank, Kentucky, Inc., or any of its subsidiaries or
affiliates, on the other hand, a written notice describing such
relationship.
7.2 Officer's Certificates.
Each set of financial statements delivered to each holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations, and, if any Unrestricted Subsidiaries shall exist as such
during the period covered by any such financial statement, such
calculations shall include, without limitation, adjusting calculations and
entries which shall consist of, among other things, adjusting calculations
on (x) a consolidated basis for the Guarantor and the Restricted
Subsidiaries, (y) a consolidated basis for the Unrestricted Subsidiaries
and (z) on a separate basis for AFC) required in order to establish
whether the Guarantor was in compliance with the requirements of Section
6.9 through Section 6.14 hereof, inclusive, during the period covered by
the income statement then being furnished (including with respect to each
such Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amounts, ratio or
percentage then in existence).
(b) Event of Default -- a statement that the signers have reviewed
the relevant terms hereof and have made, or cause to be made, under their
supervision, a review of the transactions and conditions of the Guarantor
and the Subsidiaries from the beginning of the accounting period covered
by the income statement being delivered therewith to the date of the
certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or
an Event of Default or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action the
Guarantor shall have taken or proposes to take with respect thereto.
7.3 Accountants' Certificates.
Each set of annual financial statements delivered pursuant to Section
7.1(b) hereof shall be accompanied by a certificate of the accountants who
certify such financial statements, stating that
(a) they have reviewed this Agreement and stating further, whether,
in making their audit, such accountants have become aware of any condition
or event that then constitutes a Default or an Event of Default and, if
such accountants are aware that any such condition or event then exists,
specifying the nature and period of existence thereof, and
(b) they have reviewed the annual certificate of a Senior Financial
Officer of the Guarantor provided pursuant to clause (a) of Section 7.2
hereof and that they confirm the calculations contained therein.
40
7.4 Inspection.
The Guarantor will permit the representatives of each holder of Notes (at
the expense of the Guarantor at any time when a Default or an Event of Default
exists, and otherwise at the expense of such holder) to visit and inspect any of
the Properties of the Guarantor or any other Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom and to discuss their respective affairs, finances and
accounts with their respective officers, employees and independent public
accountants (and by this provision the Guarantor authorizes such accountants to
discuss the finances and affairs of the Guarantor and the Subsidiaries), all at
such reasonable times and as often as may be reasonably requested.
8. INTERPRETATION OF THIS AGREEMENT
8.1 Terms Defined.
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section of this Agreement following such term:
AFC -- means Automotive Finance Corporation, an Indiana corporation,
one hundred percent (100%) of the Voting Stock of which is owned by the
Guarantor.
AFC Advances -- means at any time the aggregate amount of Debt
outstanding under all lines of credit available to AFC at such time.
AFC Eligible Receivables -- means all receivables of AFC which (a)
arise from a transaction in the ordinary course of AFC's business, (b) are not
subject to any dispute, offset, counterclaim, or other claim or defense on the
part of the Person who is obligated under such receivable, and (c) are not due
from an account debtor 20% or more of the aggregate accounts of which are sixty
or more days past due.
AFC Net Worth -- means, at any time, shareholders' equity of AFC
determined in accordance with GAAP, minus the sum, without duplication, of
(a) goodwill, patents, trademarks, trade secrets and other
intangible assets, and
(b) accounts receivable and notes receivable due from any Affiliate.
Affiliate -- means, at any time, a Person (other than a Restricted
Subsidiary)
(a) that directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with the
Guarantor,
(b) that beneficially owns or holds five percent (5%) or more of any
class of the equity interest or Voting Stock of the Guarantor,
41
(c) five percent (5%) or more of the Voting Stock (or in the case of
a Person that is not a corporation, five percent (5%) or more of the
equity interest) of which is beneficially owned or held by the Guarantor
or a Subsidiary, or
(d) that is an officer or director (or a member of the immediate
family of an officer or director) of the Guarantor or any Subsidiary,
at such time.
As used in this definition:
Control -- means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
Agreement, this -- means this Note Purchase Agreement, as it may be
amended and restated from time to time.
Assignments of Leases and Rents -- means each of those certain Assignments
of Leases and Rents between the Company and the Security Trustee with respect to
the Leases delivered, pursuant to Section 4.1(a) hereof.
Bank -- means Banc One, Indianapolis, National Association.
Bank Loan Agreement -- means that certain Third Amended and Restated
Credit Agreement, dated June 30, 1994, among the Guarantor, AFC, ADESA Funding
Corporation and the Bank, is in effect on the Initial Closing Date.
Board of Directors -- means the board of directors of the Guarantor or a
Subsidiary, as applicable, or any committee thereof that, in the instance, shall
have the lawful power to exercise the power and authority of such board of
directors.
Business Day -- means, at any time, a day other than a Saturday, a Sunday
or a day on which the bank designated by the holder of a Note to receive
payments on such Note is required by law (other than a general banking
moratorium or holiday for a period exceeding four (4) consecutive days) to be
closed.
Capital Lease -- means, at any time, a lease or a conditional sale or
other title retention agreement with respect to which the lessee or the
purchaser theroef is required to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
Capitalized Lease Obligation -- at any time, shall mean all rental
obligations of the Guarantor and the Restricted Subsidiaries which, under GAAP,
would be recorded as liabilities on a consolidated balance sheet of such Persons
at such time.
Change in Control -- means a "Change in Control" as defined in the
Indenture.
Charlotte Property -- means the "Charlotte Property" as such term is
defined in the Indenture.
42
Closings -- means either or both of the Initial Closing and the Second
Closing.
Closing Dates -- means either or both of the Initial Closing Date and the
Second Closing Date.
Collateral Documents -- Section 4.1(a).
Company -- has the meaning assigned to such term in the introductory
sentence hereof.
Consolidated Adjusted Net Worth -- means, at any time, shareholders'
equity of the Guarantor and the Subsidiaries determined on a consolidated basis
in accordance with GAAP, minus
the sum, without duplication of
(i) the amounts, if any, by which the aggregate value of all
Investments (valued as set forth in the definition of "Investment"
set forth in this Section 8.1) at such time exceeds ten percent
(10%) of shareholders' equity at such time, plus
(ii) the amount at such time attributed to the Guarantor's
Investment in AFC, plus
(iii) the amount at such time attributed to the Guarantor's
equity contribution to AFC, plus
(iv) assets located, and notes and receivables due from obligors
domiciled, outside the United States of America, Puerto Rico or
Canada,
all determined on a consolidated basis for such Persons in accordance with GAAP.
Consolidated Fixed Charges -- means, for any period, the sum of
(a) Consolidated Interest Expense for such period, plus
(b) the amount of Operating Rentals payable in respect of such
period by the Guarantor and the Restricted Subsidiaries, determined after
eliminating intercompany transactions among the Guarantor and the
Restricted Subsidiaries.
Consolidated Income Available for Fixed Charges -- means, for any
period, the sum of
(a) Consolidated Net Income, plus
(b) the aggregate amount of income taxes and Consolidated Fixed
Charges (to the extent, and only to the extent, that such aggregate amount
was reflected in the computation of Consolidated Net Income for such
period),
in each case accrued for such period by the Guarantor and the Restricted
Subsidiaries, determined on a consolidated basis for such Persons.
43
Consolidated Interest Expense -- means, for any period, the amount of
interest accrued or capitalized on, or with respect to, Consolidated Total Debt
for such period, including, without limitation, amortization of debt discount,
imputed interest on Capital Leases and interest on the Notes.
Consolidated Net Income -- means, for any period, net earnings (or loss)
after income taxes of the Guarantor and the Restricted Subsidiaries, determined
on a consolidated basis for such Persons, but excluding:
(a) net earnings (or loss) of any Restricted Subsidiary accrued
prior to the date it became a Restricted Subsidiary;
(b) any gain or loss (net of tax effects applicable thereto)
resulting from the sale, conversion or other disposition of Capital Assets
other than in the ordinary course of business;
(c) any extraordinary, unusual or nonrecurring gains or losses;
(d) any gain arising from any reappraisal or write-up of assets;
(e) any portion of the net earnings of any Restricted Subsidiary
that for any reason is unavailable for payment of dividends to the
Guarantor;
(f) any gain or loss (net of tax effects applicable thereto) during
such period resulting from the receipt of any proceeds of any insurance
policy;
(g) any earnings of any Person acquired by the Guarantor or any
Restricted Subsidiary through purchase, merger or consolidation or
otherwise, or earnings of any Person substantially all of whose assets
have been acquired by the Guarantor or any Restricted Subsidiary, for any
period prior to the date of acquisition;
(h) net earnings of any Person (other than a Restricted Subsidiary)
in which the Guarantor or any Restricted Subsidiary shall have an
ownership interest unless such net earnings shall have actually been
received by the Guarantor or such Restricted Subsidiary in the form of
cash distributions; and
(i) any restoration during such period to income of any contingency
reserve, except to the extent that provision for such reserve was made
during such period out of income accrued during such period.
Consolidated Operating Rental Expense -- means, for any period, the
amount of Operating Rentals accrued on, or with respect to, Operating Leases of
the Guarantor and the Restricted Subsidiaries having a remaining term in excess
of one year, determined on a consolidated basis for such Persons in accordance
with GAAP, for such period.
Consolidated Total Assets -- means, at any time, the total amount of all
assets of the Guarantor and the Restricted Subsidiaries (less depreciation,
depletion and other properly
44
deductible valuation reserves), determined on a consolidated basis for such
Persons in accordance with GAAP.
Consolidated Total Capitalization - means, at any time, the sum of
Consolidated Total Debt plus consolidated Adjusted Net Worth, at such time.
Consolidated Total Debt - means, at any time, the aggregate amount of Debt
of the Guarantor and the Restricted Subsidiaries, determined on a consolidated
basis for such Persons, at such time, including (without duplication) the
aggregate principal amount of the Notes then outstanding.
Control Event - means a "Control Event" as such term is defined in the
Indenture.
Debt - means, at any time, with respect to any Person, without
duplication:
(a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of Property acquired by, or services rendered to,
such Person,
(b) All indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to any
property acquired by such Person,
(c) Capitalized Lease Obligations,
(d) all indebtedness or other payment obligations for the deferred
purchase price of property or services secured by any Lien upon or in any
Property owned by such Person whether or not such person has assumed or
become liable for the payment of such indebtedness,
(e) indebtedness arising under acceptance facilities, in connection
with surety or other similar bonds, and the undrawn maximum face amount of
all outstanding letters of credit issued for the account of such Person
and, without duplication, the outstanding amount of all drafts drawn
thereunder,
(f) obligations of such Person with respect to interest rate
protection agreements,
(g) all liabilities of such Person in respect of unfunded vested
benefits under Pension Plans and all asserted withdrawal liabilities of
such Person or a commonly controlled entity to a Multiemployer Plan, and
(h) all direct or indirect Guaranties by such Person of
(i) indebtedness described in this definition of any other
Person (other than AFC); or
(ii) indebtedness of any other Person the proceeds of which were
utilized to finance Property of the Guarantor.
45
Deeds of Trusts - means the "Charlotte Deed of Trust" and the "Knoxville
Deed of Trust" as such terms are defined in the Indenture.
Default - means a "Default" as such term is defined in the Indenture.
Dollars or $ - means United States of America dollars.
Environmental Protection Law - means any federal, state, county, regional
or local law, statute or regulation (including, without limitation, CERCLA, RCRA
and SARA) enacted in connection with or relating to the protection or regulation
of the environment, including, without limitation, those laws, statutes and
regulations regulating the disposal, removal, production, storing, refining,
handling, transferring, processing or transporting of Hazardous Substances, and
any regulations issued or promulgated in connection with such statutes by any
Governmental Authority, and any orders, decrees or judgments issued by any court
of competent jurisdiction in connection with any of the foregoing.
As used in this definition:
CERCLA - means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time to time
(by SARA or otherwise), and all rules and regulations promulgated in
connection therewith.
RCRA - means the Resource Conservation and Recovery Act of
1976, as amended from time to time, and all rules and regulations
promulgated in connection therewith.
SARA - means the Superfund Amendments and Reauthorization Act
of 1986, as amended from time to time, and all rules and regulations
promulgated in connection therewith.
ERISA - means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
ERISA Affiliate - means any corporation or trade or business that:
(a) is a member of the same "controlled group of corporations"
(within the meaning of section 414(b) of the IRC) as the Guarantor; or
(b) is under "common control" (within the meaning of section 414(c)
of the IRC) with the Guarantor.
Event of Default - means an "Event of Default" as such term is defined
in the Indenture.
Exchange Act - means the Securities Exchange Act of 1934, as amended
from time to time.
46
Fair Market Value - means, at any time, with respect to any Property, the
value of such Property that would be realized in an arm's-length sale at such
time between an informed and willing buyer and an informed and willing seller,
each under no compulsion to buy or sell.
Financing Documents - means this Agreement, the Indenture, the Notes, the
Collateral Documents and any other agreements and instruments entered into in
connection with the transactions contemplated hereby.
Framingham Mortgage - means the "Framingham Mortgage" as such term is
defined in the Indenture.
Framingham Property - means the "Framingham Property" as such term is
defined in the Indenture.
GAAP - means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States of
America.
General Partner - Asset Holdings Corporation III, a Delaware corporation,
the sole general partner of the Company.
Governmental Authority - means:
(a) the government of
(i) the United States of America and any state or other
political subdivision thereof, or
(ii) any other jurisdiction (A) in which the Company, the
Guarantor or any Subsidiary conducts all or any part of its business
or (B) that asserts jurisdiction over the conduct of the affairs or
Properties of the Company, the Guarantor or any Subsidiary; and
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
Guarantied Obligations - Section 5.1(a).
Guarantor - has the meaning assigned to such term in the introductory
sentence hereof.
Guaranty - means, with respect to any Person (for the purposes of this
definition, the "General Guarantor"), any obligation (except the endorsement in
the ordinary course of business of negotiable instruments for deposit or
collection) of the General Guarantor guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, including, without
limitation, obligations incurred through an agreement, contingent or otherwise,
by the General Guarantor:
47
(a) to purchase such indebtedness or obligation or any Property
constituting security therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such indebtedness, dividend or
other obligation, or
(ii) to maintain working capital or other balance sheet
condition or any income statement condition of the Primary Obligor
or otherwise to advance or make available funds for the purchase or
payment of such indebtedness, dividend or other obligation;
(c) to lease Property or to purchase Securities or other Property or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of the Primary Obligor to make
payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the indebtedness or obligation
of the Primary Obligor against loss in respect thereof.
For purposes of computing the amount of any Guaranty in connection with any
computation of indebtedness or other liability, it shall be assumed that the
indebtedness or other liabilities that are the subject of such Guaranty are
direct obligations of the issuer of such Guaranty.
Hazardous Substances - means any and all pollutants, contaminants, toxic
or hazardous wastes and any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage or filtration of
which is or shall be, in each of the foregoing cases, restricted, prohibited or
penalized by any applicable law.
Indenture - Section 1.1(a)
Initial Note Purchase - Section 1.1(b).
Initial Notes - Section 1.1(b).
Initial Closing - Section 1.2(a).
Initial Closing Date - Section 1.2(a).
Institutional Investor - means the Purchaser, any affiliate of any of the
Purchaser and any holder or beneficial owner of Notes that is an "accredited
investor" as defined in section 2(15) of the Securities Act.
Interest Deposit Amount - with respect to any Note, means the amount of
interest scheduled to accrue on such Note from the date of issuance thereof to
and including June 30, 1995.
48
Investment - means any investment, made in cash or by delivery of
Property, by the Guarantor or any Restricted Subsidiary:
(a) in any Person, whether by acquisition of stock, indebtedness or
other obligation or Security, or by loan, Guaranty, advance, capital
contribution or otherwise; or
(b) in any Property.
Investments shall be valued at cost less any net return of capital through the
sale or liquidation thereof or other return of capital thereon.
IRC - means the Internal Revenue Code of 1986, together with all rules and
regulations promulgated pursuant thereto, as amended from time to time.
IRS - means the Internal Revenue Service and any successor agency.
Knoxville Property - means the "Knoxville Property" as such term is
defined in the Indenture.
Leases - means the "Leases" as defined in the Indenture.
Lessees - means ADESA-Charlotte, Inc., A.D.E. of Knoxville, Inc. and Auto
Dealers Exchange of Concord, Inc.
Lien - means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including, but not limited
to, the security interest lien arising from a mortgage, encumbrance, pledge,
conditional sale, sale with recourse or a trust receipt, or a lease, consignment
or bailment for security purposes. The term "Lien" includes, without limitation,
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting real Property and includes, without limitation, with respect to stock,
stockholder agreements, voting trust agreements, buy-back agreements and all
similar arrangements. For the purposes hereof, the Company and each Subsidiary
shall be deemed to be the owner of any Property that it shall have acquired or
holds subject to a conditional sale agreement, Capital Lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes, and such retention or vesting
is deemed a Lien. The term "Lien" does not include negative pledge clauses in
agreements relating to the borrowing of money.
Limited Partner - means January Partnership Ltd., an Ohio limited
partnership.
Make-Whole Amount - means the "Make-Whole Amount" as such term is defined
in the Indenture.
Margin Security - means "margin stock" within the meaning of Regulations
G, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II, as amended from time to time.
49
Material Adverse Effect - means a material adverse effect on
(a) the Mortgaged Properties,
(b) the business, profits, Properties or financial condition of the
Guarantor and the Subsidiaries, taken as a whole,
(c) the ability of the Company to perform its obligations set forth
in this Agreement and in the Notes,
(d) the ability of the Guarantor to perform its obligations set
forth in this Agreement, or
(e) the validity or enforceability of any material term or provision
of this Agreement, the Indenture, the Notes or any other Financing
Document.
Mortgaged Improvements - means the "Mortgaged Improvements" as defined in
the Indenture.
Mortgaged Land - means the "Mortgaged Land" as such term is defined in the
Indenture.
Mortgaged Properties - means the "Mortgaged Properties" as such term is
defined in the Indenture.
Mortgages - means the "Mortgages" as such term is defined in the
Indenture.
Multiemployer Plan - means any "multiemployer plan" (as defined in section
3(37) of ERISA) in respect of which the Company or any ERISA Affiliate is an
"employer" (as such term is defined in section 3 of ERISA).
Notes - Section 1.1(a).
Operating Lease - means, with respect to any Person, any lease other than
a Capital Lease.
Operating Rentals - means, at any time, all fixed payments which the
lessee is required to make by the terms of any Operating Lease but shall not
include amounts required to be paid in respect of maintenance, repairs, income
taxes, Property taxes, insurance, assessments or other similar charges or
additional rentals (in excess of fixed minimums) based upon a percentage of
gross receipts.
PBGC - means the Pension Benefit Guaranty Corporation and any successor
corporation or governmental agency.
Pension Plan - means, at any time, any "employee pension benefit plan" (as
such term is defined in section 3 of ERISA) maintained at such time by the
Guarantor or any ERISA Affiliate for employees of the Guarantor or such ERISA
Affiliate, excluding any Multiemployer Plan.
50
Permitted Exceptions - means "Permitted Exceptions" as defined in the
Indenture.
Permitted Liens - means
(i) Taxes, etc. - Liens securing Property taxes, assessments or
governmental charges or levies or the claims or demands of
materialmen, mechanics, carriers, warehousemen, vendors, landlords
and other like Persons, so long as
(A) the payment thereof is being actively contested in good
faith and by appropriate proceedings and adequate book reserves
have been established and maintained and exist with respect
thereto, and
(B) the title of the Guarantor or the Subsidiary, as the
case may be, to, and its right to use, such Property, is not
materially adversely affected thereby;
(ii) Certain Encumbrances - Liens in the nature of reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other similar title exceptions
or encumbrances affecting real Property, provided that such
exceptions and encumbrances do not in the aggregate materially
detract from the value of such Properties or materially interfere
with the use of such Property in the ordinary conduct of the
business of the Guarantor and the Subsidiaries, taken as a whole;
and
(iii) Debt - Liens securing Debt of the Guarantor or the
Subsidiaries provided that such Debt is permitted pursuant to
Section 6.11 hereof.
Person - means an individual, sole proprietorship, partnership,
corporation, limited liability company, trust, joint venture, unincorporated
organization, or a government or agency or political subdivision thereof.
Placement memorandum - Section 3.1.
Property - means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
Purchase Request - means a document which conforms to Section 1.1(c).
Purchaser - means Principal Mutual Life Insurance Company.
Required Holders - means, at any time, the holders of more than
sixty-six and two-thirds percent (66-2/3%) in principal amount of the Notes at
the time outstanding (exclusive of Notes then owned by any one or more of the
Company, the Guarantor, any Subsidiary and any Affiliate).
51
Restricted Investment - means, at any time, all Investments except the
following:
(a) Investments in Property to be used in the ordinary course of
business of the Guarantor and the Restricted Subsidiaries;
(b) Investments in AFC, a Restricted Subsidiary or any corporation
that concurrently with such Investment becomes a Restricted Subsidiary;
(c) Investments in direct obligations of (or obligations guarantied
by), (i) the United States of America or (ii) any agency of the United
States of America the obligations of which agency carry the full faith and
credit of the United States of America, provided that in each case such
obligations mature within one (1) year from the date of acquisition
thereof;
(d) Investments in negotiable certificates of deposit issued by
commercial banks organized under the laws of the United States of America
or any state thereof, having assets of at least Five Hundred Million
Dollars ($500,000,000) and the long-term unsecured debt obligations of
which are rated "AA" or higher by Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc., Aa" or higher by Moody's Investors Service,
Inc. or an equivalent or higher rating by another credit rating agency of
recognized national standing in the United States of America, provided
that such certificates of deposit mature within one (1) year from the date
of acquisition thereof;
(e) Investments in commercial paper of corporations organized under
the laws of the United States of America or any state thereof that at the
time of acquisition thereof have a rating of at least "A-1" or higher by
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc.,
"Prime-1" or higher by Moody's Investors Service, Inc. or an equivalent or
higher rating by another credit rating agency of recognized national
standing in the United States of America; and
(f) Investments in entities other than Restricted Subsidiaries and
AFC, provided that the aggregate amount of all such Investments does not
at any time exceed the greater of (A) Ten Million Dollars ($10,000,000) or
(B) ten percent (10%) of Consolidated Adjusted Net Worth as determined
immediately prior to the making of such Investment;
Restricted Payment - means and includes:
(a) any dividend or other distribution (whether in the form of cash
or any other Property), direct or indirect, on account of any shares of
capital stock of the Guarantor or any Subsidiary (other than capital stock
owned legally and beneficially by the Guarantor or any of the Wholly-Owned
Restricted Subsidiaries), now or hereafter outstanding, except a dividend
payable solely in shares of common stock of the Guarantor or such
Subsidiary, as the case may be, and
(b) any optional or mandatory redemption, retirement, purchase or
other acquisition, direct or indirect, of any shares of capital stock of
the Guarantor or any Subsidiary (other than capital stock owned legally
and beneficially by the Guarantor or
52
any of the Wholly-Owned Restricted Subsidiaries), now or hereafter
outstanding, or of any warrants, rights, or options to acquire any shares
of such capital stock, and
(c) any Restricted Investment.
Restricted Subsidiary - a Subsidiary other than AFC (a) which is organized
under the laws of, and conducts substantially all of its business within, the
United States of America, Puerto Rico or Canada and (b) which is engaged in the
used automobile auction business.
Second Closing - Section 1.2(b).
Second Closing Date - Section 1.2(c).
Second Collateral Documents - Section 4.2(a).
Second Note Purchase - Section 1.1(b).
Second Notes - Section 1.1(b).
Securities Act - means the Securities Act of 1933, as amended from time to
time.
Security - means "security" as defined in section 2(1) of the Securities
Act.
Security Trustee - Section 1.1.
Senior Financial Officer - with respect to any corporation, means the
chief financial officer, the principal accounting officer, the treasurer or the
comptroller of such corporation.
Senior Funded Debt - means and includes all debt of the Guarantor now or
hereafter existing, having a final maturity of more than one year from the date
of origin thereof (or which is renewable or extendible at the option of the
Guarantor for a period or periods of more than one year from such date of
origin) or outstanding under revolving credit agreements or other similar
agreements providing for borrowings for over one year from the date of origin
thereof or is extendible or renewable at the option of the Guarantor to a time
more than (1) year after such date of origin (but excluding therefrom all
payments in respect of such Debt that are due and payable within one (1) year of
such time).
Senior Officer - with respect to any corporation, means the chief
executive officer, the chief operating officer, the president, the chief
financial officer, the treasurer or the secretary of such corporation.
Series A Notes - has the meaning set forth in Section 1.1.
Series B Notes - has the meaning set forth in Section 1.1.
Subordinated Debt - shall have the meaning set forth in the Bank Loan
Agreement.
53
Subsidiary - means, at any time, any other corporation of which the
Guarantor owns, directly or indirectly, more than eighty percent (80%) (by
number of votes) of each class of the Voting Stock of such corporation at such
time.
Subsidiary Stock - Section 6.12(b).
Surviving Corporation - Section 6.13.
Total Restricted Subsidiary Debt - means, at any time, the aggregate
amount of Debt of the Restricted Subsidiaries (other than Debt owing to the
Guarantor), determined on a combined basis for such Persons at such time after
eliminating inter-company transactions among the Restricted Subsidiaries.
Total AFC Debt - means, at any time, the aggregate amount of Debt of AFC
(other than Subordinated Debt) outstanding, at such time.
Transfers - Section 6.12(a).
Unconditional Guaranty - Section 5.1(a).
Unrestricted Subsidiary - means AFC and any other Subsidiary which is not
a Restricted Subsidiary.
Voting Stock - means capital stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect corporate directors (or Persons performing
similar functions).
Wholly-Owned Restricted Subsidiary - means any Restricted Subsidiary of
which one hundred percent of the Voting Securities thereof are owned by the
Guarantor.
8.2 GAAP.
Unless otherwise provided herein, all financial statements delivered in
connection herewith will be prepared in accordance with GAAP as in effect on the
date of, or during the period covered by, such financial statements. Where the
character or amount of any asset or liability or item of income or expense, or
any consolidation or other accounting computation is required to be made for any
purpose hereunder, it shall be done in accordance with GAAP as in effect on the
date of, or at the end of the period covered by, the financial statements from
which such asset, liability, item of income, or item of expense, is derived, or,
in the case of any such computation, as in effect on the date as of which such
computation is required to be determined, provided, that if any term defined
herein includes or excludes amounts, items or concepts that would not be
included in or excluded from such term if such term were defined with reference
solely to GAAP, such term will be deemed to include or exclude such amounts,
items or concepts as set forth herein. Whenever a calculation based on the
consolidated financial position or consolidated results of operations of a group
of Persons is required hereby, investments by members of the group in Persons
which are excluded hereby from such group shall be accounted for using the cost
method.
54
8.3 Directly or Indirectly.
Where any provision herein refers to action to be taken by any Person, or
that such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person, including
actions taken by or on behalf of any partnership in which such Person is a
general partner.
8.4 Section Headings and Table of Contents and Construction.
(a) Section Headings and Table of Contents, etc. The titles of the
Sections of this Agreement and the Table of Contents of this Agreement
appear as a matter of convenience only, do not constitute a part of this
Agreement and shall not affect the construction hereof. The words
"herein," "hereof," "hereunder" and "hereto" refer to this Agreement as
whole and not to any particular Section or other subdivision.
(b) Construction. Each covenant contained herein shall be construed
(absent an express contrary provision herein) as being independent of each
other covenant contained herein, and compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
8.5 Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ANY OTHER
CHOICE OF LAW AND CONFLICT OF LAW RULES.
9. MISCELLANEOUS
9.1 Communications.
(a) Method; Address. All communications hereunder or under the Notes
shall be in writing, shall be hand delivered, deposited into the United
States mail (registered or certified mail), postage prepaid, sent by
overnight courier or sent by facsimile transmission (confirmed by delivery
by overnight courier) and shall be addressed,
(i) if to the Company,
Asset Holdings III, L.P.
c/o JH Management Corp
One International Place
Boston, MA 02110-2624
Telephone: (617) 951-7423
Facsimile: (617) 951-7050,
55
or at such other address as the Company shall have furnished in writing to
the Guarantor, the Purchaser and all other holders of the Notes at the
time outstanding,
(ii) if to the Guarantor:
ADESA Corporation
1919 South Post Road
Indianapolis, IN 46239
Attention: Chief Financial Officer
Telephone: (317) 862-7220
Facsimile: (317) 862-7307,
or at such other address as the Guarantor shall have furnished in writing
to the Company, the Purchaser and all other holders of the Notes at the
time outstanding,
(iii) if to any of the holders of the Notes,
(A) if any of such holders is the Purchaser, at its
addresses set forth on Annex 1 hereto (and also to any parties
referred to on such Annex 1 that are required to receive notices
in addition to such holder), and
(B) if any of such holders are not the Purchaser, at their
respective addresses set forth in the register for the
registration and transfer of Notes maintained pursuant to
Section 2.4 of the Indenture,
or to any such party at such other address as such party shall have
furnished in writing to the Security Trustee for entry upon the register
maintained pursuant to Section 2.4 of the Indenture.
(b) When Given. Any communication properly addressed and set in
accordance with Section 9.1(a) hereof shall be deemed to be received when
actually received at the address of the addressee.
9.2 Reproduction of Documents.
This Agreement, the Indenture and the other Financing Documents and all
documents relating hereto or thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be
executed,
(b) documents received by you at any closing of your purchase of the
Notes (except the Notes themselves), and
(c) financial statements, certificates and other information
previously or hereafter furnished to the Purchaser or any other holder of
Notes,
56
may be reproduced by any holder of Notes by any photographic, photostatic,
microfilm, microcard, miniature photographic, digital or other similar process
and each holder of Notes may destroy any original document so reproduced. The
Company and the Guarantor agree and stipulate that any such reproduction shall
be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by such holder of Notes in the regular
course of business) and that any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence. Nothing in this
Section 9.2 shall prohibit the Company, the Guarantor or any holder of Notes
from contesting the validity or the accuracy of any such reproduction.
9.3 Survival.
All warranties, representations, certifications and covenants made by the
Company or the Guarantor herein, in the Indenture, in any other Financing
Document or in any certificate or other instrument delivered by any such Person
or on behalf of any such Person hereunder shall be considered to have been
relied upon by you and shall survive the delivery to you of the Notes regardless
of any investigation made by you or on your behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Company or the Guarantor, as the case may be, hereunder.
9.4 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the
parties hereto. The provisions hereof are intended to be for the
benefit of all holders, form time to time, of Notes, and shall be
enforceable by any such holder, whether or not an express assignment
to such holder of rights hereunder shall have been made by the
Purchaser or the Purchaser's successor or assign.
9.5 Amendment and Waiver.
(a) General Requirements. This Agreement may be amended, and the
observance of any term hereof or thereof may be waived, with (and only
with) the written consent of (i) in the case of Section 1 through and
Section 4, inclusive, and Section 9 (and the definitions set forth in
Section 8 hereof of any defined terms used in such Sections), the Company,
the Guarantor and the Required Holders, and (ii) with respect to all other
Sections hereof, the Guarantor and the Required Holders, provided that no
such amendment or waiver shall, without the written consent of the holders
of all Notes at the time outstanding, amend (i) Section 5, (ii) the
definition of "Required Holders," or (iii) this Section 9.5.
(b) Solicitation.
(i) Solicitation. Neither the Company nor the Guarantor shall
solicit, request or negotiate for or with respect to any proposed
waiver or amendment of any of the provisions hereof or of the
Indenture or the Notes unless the Purchaser and each other holder of
the Notes (irrespective of the amount of Notes then owned by it)
shall be provided by the Company or the Guarantor, as the case may
be, with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies
of any waiver or consent effected pursuant to the provisions of this
Section 9.5 shall be delivered by the
57
Company or the Guarantor, as the case may be, to the Purchaser and
each other holder of outstanding Notes forthwith following the date
on which the same shall have been executed and delivered by all
holders of outstanding Notes required to consent or agree to such
waiver or consent.
(ii) Payment. Neither the Company nor the Guarantor shall,
directly or indirectly, pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to the Purchaser or any other
holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of
any of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, ratably to
the Purchaser and the other holders of all Notes then outstanding.
(iii) Scope of Consent. Any consent made pursuant to this
Section 9.5 by a holder of Notes that has transferred or has agreed
to transfer its Notes to the Company, the Guarantor, any Subsidiary
or any Affiliate and has provided or has agreed to provide such
written consent as a condition to such transfer shall be void and of
no force and effect except solely as to such holder, and any
amendments effected or waivers granted or to be effected or granted
that would not have been or would not be so effected or granted but
for such consent (and the consents of all other holders of Notes
that were acquired under the same or similar conditions) shall be
void and of no force and effect, retroactive to the date such
amendment or waiver initially took or takes effect, except solely as
to such holder.
(c) Binding Effect. Except as provided in Section 9.5(a) and Section
9.5(b)(iii) hereof, any amendment or waiver consented to as provided in
this Section 9.5 shall apply equally to the Purchaser and all other
holders of Notes and shall be binding upon them and upon each future
holder of any Note and upon the Company and the Guarantor whether or not
such Note shall have been marked to indicate such amendment or waiver. No
such amendment or waiver shall extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon.
9.6 Expenses.
The Company shall pay when billed
(a) all expenses incurred by the Purchaser and any other holder of
Notes in connection with the enforcement of any rights under this
Agreement and the Notes (including, without limitation, all fees and
expenses of the Purchaser's or such other holder's special counsel), and
(b) all expenses relating to the consideration, negotiation,
preparation or execution of any amendments, waivers or consents pursuant
to Section 9.5 and the other terms and provisions hereof, whether or not
any such amendments, waivers or consents are executed, including, without
limitation any amendments, waivers or consents resulting
58
from any work-out, restructuring or similar proceedings relating to the
performance by the Company of its obligations under this Agreement or the
Notes.
9.7 Jurisdiction; Service of Process.
THE COMPANY AND THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE NOTES, OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY
JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER OR UNDER THE NOTES, BROUGHT BY THE
PURCHASER OR ANY OTHER REGISTERED HOLDER OF A NOTE AGAINST THE COMPANY, THE
GUARANTOR OR ANY OF THEIR RESPECTIVE PROPERTY, MAY BE BROUGHT BY SUCH PERSON IN
THE COURTS OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN OR EASTERN
DISTRICT OF NEW YORK OR ANY STATE COURT IN NEW YORK, AS THE PURCHASER OR OTHER
REGISTERED HOLDER OF A NOTE MAY IN ITS SOLE DISCRETION ELECT, AND BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY AND THE GUARANTOR
IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE NON-EXCLUSIVE IN PERSONAM
JURISDICTION OF EACH SUCH COURT, AND AGREE THAT PROCESS SERVED EITHER PERSONALLY
OR BY REGISTERED MAIL SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE
SERVICE OF PROCESS IN ANY SUCH SUIT, AND THE COMPANY AND THE GUARANTOR
IRREVOCABLY WAIVE AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, ANY CLAIM THAT SUCH PERSON IS NOT SUBJECT TO THE IN PERSONAM
JURISDICTION OF ANY SUCH COURT. RECEIPT OF PROCESS SO SERVED SHALL BE
CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED
STATES POSTAL SERVICE OR ANY COMMERCIAL DELIVERY SERVICE. IN ADDITION, THE
COMPANY AND THE GUARANTOR HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT SUCH PERSON MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND/OR THE NOTES, BOUGHT IN SUCH COURTS, AND HEREBY
IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF THE PURCHASER OR OTHER REGISTERED
HOLDER OF A NOTE TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY MANNER
PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE COMPANY OR THE
GUARANTOR IN SUCH OTHER JURISDICTION, AND IN SUCH MANNER, AS MAY BE PERMITTED BY
APPLICABLE LAW. THE COMPANY AND THE GUARANTOR AGREE THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
9.8 Company Obligations Nonrecourse.
Anything contained herein in the Indenture or in the Notes to the contrary
notwithstanding and provided that the Company shall not conduct any business
except that contemplated by the Financing Documents, no recourse shall be had
for the payment of any amount owed pursuant to this Agreement or any claim based
hereon or otherwise in respect hereof or based on or in respect of the Indenture
or the Notes against any partner of the Company (or any partner of any partner
of the Company) or any incorporator, any past, present or future subscriber to
the capital
59
stock thereof or any stockholder, officer, employee, agent or director of any
corporate partner thereof for any deficiency or any other sum owing pursuant to
this Agreement or arising under or with respect to the Indenture or the Notes.
The foregoing provisions of this Section 9.8 shall not prevent recourse to the
Company or to the Trust Estate (as defined in the Indenture) or constitute a
waiver, release or discharge of any indebtedness or obligation evidenced by this
Agreement, the Notes or secured by the Indenture, but the same shall continue
until paid or discharged. The foregoing provisions of this Section 9.8 shall not
limit the right of any Person to name any partner of the Company or any
transferee of any interest in the Trust Estate as a party defendant in any
action or suit for a judicial foreclosure of or in the exercise of any other
remedy under this Agreement, the Indenture or the Notes, so long as no judgment
in the nature of a deficiency judgment or seeking personal liability shall be
asked for or (if obtained) enforced against such Person, and provided further,
that the foregoing provisions shall not preclude the Security Trustee or the
holders of any of the Notes from pursuing any rights or remedies against (i) the
Guarantor under the Unconditional Guaranty, (ii) the Company or any partner of
the Company or other Person set forth above due to any fraud by the Company,
such partner or such other Person in connection with transactions described in
the Indenture or this Agreement or (iii) the Company or any partner due to any
material misrepresentation by the Company with respect to any representation
made in the Indenture or in this Agreement.
9.9 Duplicate Originals, Execution in Counterpart.
Two (2) or more duplicate originals hereof may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the same instrument. This Agreement may be executed in one or more
counterparts and shall be effective when at least one counterpart shall have
been executed by each party hereto, and each set of counterparts that,
collectively, show execution by each party hereto shall constitute one duplicate
original.
[Remainder of page intentionally blank; next page is signature page.]
60
If this Agreement is satisfactory to you, please so indicate by signing
the acceptance at the foot of a counterpart hereof and returning such
counterpart to the Company and the Guarantor, whereupon this Agreement shall
become binding between us in accordance with its terms.
Very truly yours,
ASSET HOLDINGS III, L.P.
By: ASSET HOLDINGS CORPORATION III,
its General Partner
By LANNHI TRAN
------------------------
Name: LANNHI TRAN
Title: Vice President
ADESA CORPORATION
By LARRY S. Wechter
----------------------------------
Name: Larry S. Wechter
Title: Chief Financial Officer
Accepted: Vice President and Treasurer
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By Sarah J. Pitts
-------------------------
Name: Sarah J. Pitts
Title: Counsel
By Warren Shank
-------------------------
Name: Warren Shank
Title: Counsel
[Signature Page to NOTE PURCHASE AGREEMENT of ASSET HOLDINGS III, L.P. in
connection with the issuance of its 9.82% Series A First Mortgage Notes due
April 1, 2000 and its 9.82% Series B First Mortgage Notes due April 1, 2000]
ANNEX 1
INFORMATION AS TO PURCHASERS
Purchaser Name PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
- ----------------------- -----------------------------------------------------
Name in Which Notes are Principal Mutual Life Insurance Company
to be Registered
- ----------------------- ------------------------------------------------------
Initial Notes
Series A RA-1; $9,408,030
Series B RB-1; $7,391,970
- ----------------------- ------------------------------------------------------
Second Notes
Series B RB-2; $8,905,000
- ----------------------- ------------------------------------------------------
Address for Delivery of Principal Mutual Life Insurance Company
Purchase Requests 711 High Street
Des Moines, Iowa 50392
Attention: Investment Department - Securities Division
Vice President (515) 247-5365
- ----------------------- ------------------------------------------------------
Annex 1-1
ANNEX 1
INFORMATION AS TO PURCHASER (Cont.)
Purchaser Name PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
- ----------------------------- -----------------------------------------------
Payment on Account of
Note
Method Federal Funds Wire Transfer
Account Information Norwest Bank Iowa, N.A.
7th & Walnut Streets
Des Moines, Iowa 50309
ABA No. 073 000 228
With respect to the Series A Notes, include
the following:
for deposit in the account of:
Principal Mutual Life Insurance Company
Account No. 014752
Reference: Series A Note Bond No. 1-B-60241
Tax Identification No. 42-0127290
With respect to the Series B Notes, include
the following:
for deposit in the account of:
Principal Mutual Life Insurance Company
Account No. 014752
Reference: Series B Note Bond No. 1-B-60293
Tax Identification No. 42-0127290
- ----------------------------- -----------------------------------------------
Address for Notices Principal Mutual Life Insurance Company
Related to Payments 711 High Street
Des Moines, Iowa 50392
Attention: Investment Department-Accounting
& Treasury
Telephone No.: (515) 248-2643
- ----------------------------- -----------------------------------------------
Annex 1-2
ANNEX 1
INFORMATION AS TO PURCHASER (Cont.)
Purchaser Name PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
- ----------------------------- -----------------------------------------------
Information to Accompany Name of Company: Asset Holdings III
Payments and Notices
Related to Payments Description of
Security: 9.82% Series A/B First Mortgage
Notes (specify series)
Due April 1, 2000
Series A PPN: 04542@AA 3
Series B PPN: 04542@AB 1
Due Date and Application (as among
principal, premium and interest) of the
payment being made:
Name and address of Bank (or Trustee) from
which wire transfer was sent
- ----------------------------- ---------------------------------------------
Address for All other Principal Mutual Life Insurance Company
Notices 711 High Street
Des Moines, Iowa 50392
Attention: Investment Department-Securities
Division
Telephone No: (515) 248-2490
- ----------------------------- ---------------------------------------------
Instructions re Delivery Sarah Pitts, Esq.
of Securities Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0301
- ----------------------------- ---------------------------------------------
Tax Identification Number 42-0127290
- ----------------------------- ---------------------------------------------
Annex 1-3
ANNEX 2
PAYMENT INSTRUCTIONS
The purchase price of the Initial Note Purchase shall be paid by federal
funds wire transfer as set forth below:
Amount Destination
- ------ -----------
$7,496,000 Chicago Title Insurance Company
Bank of America Illinois
Chicago, Illinois
ABA Routing Number: 071000039
FOR CREDIT TO:
CHICAGO TITLE and TRUST COMPANY, NT
Account Number: 49-14562
Notify:
Escrow Number: NT 001705685 1
Escrow Officer: Diane K. Nelson
Closing Division: National
Phone (312) 223-2345
$2,057,562.75 PNC Bank, Kentucky, Inc.
Louisville, Kentucky
PNC Bank LSVL
ABA # 083000108
Credit Account Name: Corporate Trust Clearing
Credit Account Number: 3000991469
Attention: David Metcalf
Reference: Asset Holdings III,
Interest Escrow Account
Number 4822498
$48,527.50 PNC Bank, Kentucky, Inc.
Louisville, Kentucky
PNC Bank LSVL
ABA # 083000108
Credit Account Name: Corporate Trust Clearing
Credit Account Number: 3000991469
Attention: David Metcalf
Reference: Cash Pledge Account
Number 4822480
Annex 2-1
ANNEX 2
PAYMENT INSTRUCTIONS (con't)
$7,197,909.75 First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
ABA No. 011-000-390
Credit Account of: Commonwealth Land Title
Insurance Company
Account No. 539-46504
Annex 2-2
ANNEX 3
INFORMATION AS TO COMPANY, GUARANTOR AND SUBSIDIARIES
(INFORMATION TO BE SUPPLIED BY THE COMPANY AND THE GUARANTOR)
3.2(b). Debt.
Description Current Long Term Total
----------- ------- --------- -----
Bank One<F1> ADESA Corp Corestates-Frons $ 4,713,163.00 $22,190,837.00 $26,904,000.00
Bank One<F1> ADESA Corp Line of Credit $ 8,520,000.00 $ 8,520,000.00
Bank One<F1> ADESA Corp Revolver $13,900,000.00 $13,900,000.00
Bank One<F1> AFC Line of Credit $ 9,000,000.00 $ 9,000,000.00
ADESA Canada 5 Yr. Loan $ 50,051.00 $ 50,051.00
ADESA Canada Vendor Take Back $ 572,958.00 $ 572,958.00
ADESA Canada Mortgage $ 393,276.00 $ 393,276.00
$22,233,163.00 $37,107,122.00 $59,340,285.00
<FN>
<F1>See respective credit agreements for collateral
</FN>
As of 10/31/94
Annex 2-1
ANNEX 3
INFORMATION AS TO COMPANY, GUARANTOR AND SUBSIDIARIES (Cont.)
3.3.Subsidiaries and Affiliates.
Name of Affiliate Nature of Affiliation
- ----------------- ---------------------
ADESA Austin, Inc. Wholly-owned subsidiary of ADESA Corporation
ADESA Auto Transport, Inc. Wholly-owned subsidiary of ADESA Corporation
ADESA Canada, Inc. ADESA Corporation holds 87% of the stock
ADESA-Charlotte, Inc. Wholly-owned subsidiary of ADESA Corporation
ADESA Funding Corporation Wholly-owned subsidiary of ADESA Corporation
ADESA Indianapolis, Inc. Wholly-owned subsidiary of ADESA Corporation
ADESA New Jersey, Inc. Wholly-owned subsidiary of ADESA Corporation
ADESA Ohio, Inc. Wholly-owned subsidiary of ADESA Corporation
ADESA-Ottawa, Inc. Wholly-owned subsidiary of ADESA Canada, Inc.
ADESA Remarketing Services,
Inc. Wholly-owned subsidiary of ADESA Canada, Inc.
ADESA South Florida, LLC ADESA Corporation holds 51% of the membership
interests
A.D.E. of Birmingham, Inc. Wholly-owned subsidiary of ADESA Corporation
A.D.E. of Jacksonville, Inc. Wholly-owned subsidiary of ADESA Corporation
A.D.E. of Knoxville, Inc. Wholly-owned subsidiary of ADESA Corporation
A.D.E. of Lexington, Inc. Wholly-owned subsidiary of ADESA Corporation
A.D.E. Management Company Wholly-owned subsidiary of ADESA Corporation
Annex 3-2
ANNEX 3
INFORMATION AS TO COMPANY, GUARANTOR AND SUBSIDIARIES (Cont.)
Name of Affiliate Nature of Affiliation
Auto Banc Corporation Wholly-owned subsidiary of ADESA Corporation
Auto Dealers Exchange of Concord, Inc. Wholly-owned subsidiary of ADESA Corporation
Auto Dealers Exchange of Memphis, Inc. Wholly-owned subsidiary of ADESA Corporation
Automotive Finance Corporation Wholly-owned subsidiary of ADESA Corporation
Greater Buffalo Auto Auction, Inc. Wholly-owned subsidiary of ADESA Corporation
Greater Halifax Auto Dealers Exchange Inc. Wholly-owned subsidiary of ADESA Canada, Inc.
3095-0539 Quebec Inc. Wholly-owned subsidiary of ADESA Canada, Inc.
3095-1115 Quebec Inc. Wholly-owned subsidiary of ADESA Canada, Inc.
3.10(b). Restrictions on Company, Guarantor and Subsidiaries.
None
3.12 ERISA Affiliates of the Guarantor.
See Part 3.3 Subsidiaries and Affiliates of Annex 3 above.
3.19 Capitalization.
Partner Equity Interest Equity Investment
- ------------------------------------------ --------------- -----------------
Asset Holdings III Corporation, 81.25% $645,937.50
a Delaware corporation (General Partner)
- ------------------------------------------ --------------- -----------------
January Partnership Ltd., an Ohio limited 18.75% $149,062.50
partnership (Limited Partner)
- ------------------------------------------ --------------- -----------------
Annex 3-3
4.1(e). Title Insurance.
Charlotte Property $ 6,700,000
Framingham Property $15,504,000
Knoxville Property $ 4,296,000