Exhibit 4.13
BRIDGE FINANCING AGREEMENT
DATED AS OF DECEMBER 1, 1999
158
BRIDGE FINANCING AGREEMENT
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dated as of
December 1, 1999
among
CITATION CORPORATION,
CITATION FUNDING, INC.,
THE CHASE MANHATTAN BANK
and
FIRST UNION INVESTORS, INC.
159
BRIDGE FINANCING AGREEMENT
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This BRIDGE FINANCING AGREEMENT dated as of December 1, 1999 among CITATION
CORPORATION and CITATION FUNDING, INC., THE CHASE MANHATTAN BANK and FIRST UNION
INVESTORS, INC.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein, shall
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have the following meanings:
"Additional Loans" has the meaning set forth in Section 2.6.
"Additional Notes" has the meaning set forth in Section 2.6.
"Additional Obligations" means Additional Loans or Additional Notes or
both, as the context may require.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For purposes of this definition, "control" including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with", as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" means this Bridge Financing Agreement, as amended, restated or
otherwise modified from time to time in accordance with its terms.
"Asset Sale" means any sale, lease or other disposition (including any
such transaction effected by way of merger or consolidation) by the Company or
any Subsidiary, of any asset, including without limitation any sale-leaseback
transaction, but excluding (i) dispositions of inventory and used, surplus or
worn out equipment in the ordinary course of business, (ii) dispositions to a
wholly-owned Subsidiary of the Company and (iii) cash payments otherwise
permitted under this Agreement.
"Bona Fide Proposal" means a proposal to market securities of all or any
Credit Party to one or more financially responsible institutional investors (or
a commitment from the Underwriters to underwrite the sale of securities, on a
firm commitment basis), on financial and other terms and conditions no less
favorable to the Company than those generally available in the United States
capital markets to issuers of securities having a creditworthiness comparable to
that of such Credit Party, in an amount sufficient to redeem all the outstanding
Obligations and in respect of which the Company is provided with a period of
time to respond to such proposal that is consistent with then prevailing market
practices taking into account the nature, circumstances and prevailing market
conditions of such proposal (it being understood that no such proposal shall be
deemed to be a Bona Fide Proposal if the Underwriters fail to execute such
proposal on substantially the terms proposed).
"Bridge Financing Documents" means this Agreement, the Notes, the
Subsidiary Guaranty, the Warrants, the Warrant Shares, the Fee Letter, the
Engagement Letter and the Warrant Escrow Agreement.
"Bridge Party" means each and any of DLJ Bridge, FUI and Chase.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized or required by law
or other government action to close.
"Cash Consideration" means the aggregate cash consideration to be paid to
the holders of capital stock of the Company and options, warrants and other
rights in respect of such capital stock (other than the Retained Equity and any
such capital stock held by the Management Investors that is to remain
outstanding after the Merger) as consideration for the cancellation thereof
pursuant to the Merger.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of
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America is pledged in support thereof), (ii) time deposits and certificates of
deposit of any domestic commercial bank (including a domestic branch of a
foreign bank) whose outstanding senior long-term debt securities are rated
either A-or higher by Standard & Poor's Ratings Services or A3 or higher by
Moody's Investors Service, Inc., (iii) repurchase obligations with a term of not
more than seven (7) days for underlying securities of the types described in
clause (i) entered into with any bank meeting the qualifications specified in
clause (ii) above, (iv) commercial paper rated at least A-1 or the equivalent
thereof by Standard & Poor's Ratings Services or at least P-1 or the equivalent
thereof by Moody's Investors Service, Inc., maturing within one year after the
date of acquisition, and (v) investments in money market funds substantially all
of whose assets are comprised of securities of the types described in clauses
(i) through (iv) above.
"Change of Control" has the meaning set forth in the Credit Agreement.
"Chase" means The Chase Manhattan Bank, a New York banking corporation, and
its successors.
"Closing" means the date on which all of the conditions set forth in
Section 5.1 shall have been satisfied.
"Commission" means the Securities and Exchange Commission.
"Commitment" means collectively, up to $135,000,000 with the Commitment of
(i) DLJ Bridge severally to be up to $67,500,000, (ii) FUI severally to be up
to $33,750,000 and (iii) Chase severally to be up to $33,750,000 and the
obligation of each Purchaser to purchase Notes hereunder in an aggregate
principal amount at any time outstanding not to exceed the amounts of its
respective several Commitment and the obligation of Chase to make a Loan not to
exceed the amount of its Commitment, as the Commitment may be reduced from time
to time pursuant to Sections 2.4 and 2.5.
"Company" means Citation Corporation, a Delaware corporation.
"Company Corporate Documents" means the operating agreement, articles of
incorporation, by-laws or other governing organizational documents of each
Credit Party.
"Covenant Conversion Date" means the date on which all the conditions set
forth in Section 6.1(b) have been satisfied and the Company is required to
comply with each of the covenants set forth in Exhibit G attached hereto.
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"Credit Agreement" means the Credit Agreement dated as of November 30,
1999, among the Company, the lenders party thereto and The Chase Manhattan Bank,
as administrative agent, as amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Credit Party" means, individually, the Company, Mergerco and each of their
respective Subsidiaries (except those Foreign Subsidiaries that are not "Loan
Parties" under the Credit Agreement); and "Credit Parties" means all of the
foregoing, taken collectively.
"CSI" means Chase Securities Inc., a Delaware corporation, and its
successors.
"Debt" of any Person means, at any date, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business) or which is evidenced by a note, bond,
debenture or similar instrument, (ii) all obligations of such Person under
Financing Leases, (iii) all obligations (contingent or otherwise) of such Person
to reimburse any bank or other Person in respect of amounts paid under a letter
of credit or similar instrument, (iv) all Derivatives Obligations of such
Person, (v) all Guarantee Obligations of such Person in respect of Debt of any
other Person and (vi) all liabilities of the types described in clauses (i)
through (v) above secured by any Lien on any property owned by such Person even
though such person has not assumed or otherwise become liable for the payment
thereof.
"Debt Incurrence" means any incurrence by the Company or any of its
Subsidiaries of any Debt (including without limitation pursuant to the Permanent
Financing).
"Default" means any Event of Default or any event or condition which, with
the giving of notice or lapse of time or both, would, unless cured or waived,
become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
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equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.6.
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"DLJ Bridge" means Citation Funding, Inc.
"DLJ Capital" means DLJ Capital Funding, Inc.
"DLJ High Yield Index" means the index of high yield securities published
by DLJSC on a weekly basis.
"DLJSC" means Donaldson, Lufkin & Jenrette Securities Corporation, a
Delaware corporation, and its successors.
"dollars" or "$" means lawful currency of the United States of America.
"Domestic Taxes" has the meaning set forth in Section 2.8(a).
"Eligible Financing" has the meaning set forth in Section 2.7(b).
"Engagement Letter" means an engagement letter among the Company and the
Underwriters pursuant to which the Underwriters shall be engaged as lead
investment bankers for the Credit Parties to provide certain investment banking
and advisory services for the period as set forth therein.
"Environmental Laws" means all applicable laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary resulting from or
based upon (i) violation of any Environmental Law, (ii) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (iii) exposure to any Hazardous Materials, (iv) the release or
threatened release of any Hazardous Materials into the environment or (v) any
contract, agreement or other consensual arrangement pursuant to which
environmental liability is assumed or imposed with respect to any of the
foregoing.
"Equity Contribution" means a contribution of an aggregate amount of not
less than $240,000,000 in cash to Mergerco as common equity.
"Equity Interest" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person.
"Equity Issuance" means the issuance of any equity securities by the
Company or any of its Subsidiaries (including without limitation any equity
securities issued pursuant to the exercise of stock options or warrants or the
Permanent Financing).
"Equity Securities" means, with respect to the Company, any of its
preferred stock or common stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company and each Subsidiary, and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Escrow Agent" means Snoga, Inc., in its capacity as escrow agent under the
Warrant Escrow Agreement, and its successor in such capacity.
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"Event of Default" has the meaning set forth in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" has the meaning set forth in Section 2.1(b).
"Fee Letter" means the Fee Letter dated as of October 12, 1999 among the
Company and DLJ Bridge Finance, Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, The Chase Manhattan Bank, Chase Securities, Inc., First Union
National Bank, First Union Investors, Inc. and First Union Securities, Inc., as
amended and restated on December 1, 1999, and as further amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Financing Leases" means any lease of property, real or personal, the
obligations or the lease in respect of which are required in accordance with
GAAP to be capitalized on the balance sheet of the lessee.
"Financing Transactions" means (i) the execution, delivery and performance
by each Loan Party (as defined in the Credit Agreement) of the Senior Facilities
Loan Documents to which it is to be a party, the borrowing of loans, the use of
the proceeds thereof and the issuance of letters of credit under the Senior
Facilities, (ii) the execution, delivery and performance by each Credit Party of
the Bridge Financing Documents to which it is to be a party, the issuance of the
Notes, the making of the Loans and the use of the proceeds hereof and (iii) the
Equity Contribution.
"First Anniversary" means the date that is the first anniversary of the
Funding Date.
"Fixed Rate Sale Date" means the date that is the earlier to occur of (i)
the First Anniversary and (ii) the date of any refusal by the Company to execute
a Bona Fide Proposal.
"Foreign Subsidiary" means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America or any State thereof
or the District of Columbia.
"FUI" means First Union Investors, Inc., a North Carolina corporation, and
its successors.
"FUNB" means First Union National Bank, a national banking association
organized under the laws of the United States of America, and its successors.
"Funding Date" means the date of the original issuance of the Notes and the
making of the Loans.
"FUSI" means First Union Securities, Inc., a Delaware corporation, and its
successors.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee Obligation" means as to any Person (the "guaranteeing person"),
without duplication, any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Debt, leases, dividends or other
obligations (the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof, provided, however, that
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the term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business or the guaranty
obligation of any primary obligation which does not constitute Debt. The amount
of any Guarantee Obligation of any guaranteeing person shall be deemed to be the
lower of (x) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such
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Guarantee Obligation is made and (y) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith.
"Hart Scott Rodino" means the Hart Scott Rodino Antitrust Improvements Act
of 1976, as amended, or any successor statute.
"Hazardous Materials" means all explosive or radioactive substances or
wastes, all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
"Holder" means any registered owner from time to time of any Obligation.
"Initial Rate" has the meaning set forth in Section 2.6(b).
"Interest Payment Date" means the last day of each Interest Period (or, if
any such date is not a Business Day, the next succeeding Business Day).
"Interest Period" shall mean the period from the date of this Agreement to
but excluding the 90/th/ day thereafter, and thereafter each successive 90-day
period. If any Interest Period would begin or end on a date which is not a
Business Day, such Interest Period shall begin or end, as the case may be, on
the next succeeding Business Day and any Interest Period that would extend
beyond the Maturity Date shall end on the Maturity Date. DLJ Bridge may, in its
discretion, select Interest Periods of one day for any day on or after the
Obligations shall have become due and payable in accordance with the terms
hereof.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Kelso" means Kelso & Company and its Affiliates.
"Lien" means (i) any mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest in, on or of such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset and
(iii) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities, and (iv) any other arrangement
having substantially the same economic effect as any of the foregoing.
"Loan" means the Loan made to the Company pursuant to Section 2.1.
References to the "Loans" include (i) any portion of such loan sold, assigned or
otherwise transferred in accordance with the terms of this Agreement and (ii)
any Additional Loans.
"Majority Holders" means (i) at any time prior to the Funding Date, DLJ
Bridge, Chase and FUI and (ii) at any time thereafter, the Holders of more than
50% in aggregate principal outstanding amount of the Obligations at such time.
"Management Investors" means the officers and employees (including current
and former officers and employees), of the Company at any time when Kelso
beneficially owns (as defined in clause (a) of the definition of the term
"Change of Control") (i) more than 30% of the total ordinary voting power of the
capital stock of the Company and (ii) a greater percentage of the total ordinary
voting power of the capital stock of the Company than is then beneficially owned
in the aggregate by the officers and employees of the Company.
"Material Adverse Effect" means a material adverse effect on (i) the
business, results of operations, properties, condition (financial or otherwise)
or prospects of the Company and its Subsidiaries taken as a whole, (ii) the
ability of any Credit Party to perform any of its material obligations under any
Bridge Financing Document or (iii) the rights of or benefits available to the
Bridge Parties under any Bridge Financing Documents.
"Material Plan" means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $2,500,000.
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"Maturity Date" has the meaning set forth in Section 2.7(a).
"Merger" means the merger of Mergerco with and into the Company, with the
Company being the surviving corporation after such merger.
"Mergerco" means RSJ Acquisition Co., a Delaware corporation.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Cash Proceeds" means, with respect to any transaction, an amount equal
to the cash proceeds received by the Company or any of its Subsidiaries from or
in respect of such transaction (including any cash proceeds received as income
or other proceeds of any non-cash proceeds but only as and when received), less
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(i) any reasonable fees and expenses (including commissions) incurred by the
Company or any of its Subsidiaries in respect of such transaction, (ii) the
amount of any Debt secured by a Lien on a related asset and discharged from the
proceeds of such transaction; (iii) any taxes paid or payable by the Company or
any of its Subsidiaries with respect to such transaction (as reasonably
estimated by such Person's chief financial officer in good faith), (iv) all
distributions and other payments required to be made to minority interest
holders and Subsidiaries or joint ventures as a result of such transaction, or
to any Person (other than the Company or a Credit Party) owning a beneficial
interest in the assets disposed of in such transaction and (v) appropriate
amounts, reasonably determined by the Company in accordance with GAAP, as a
reserve against any liabilities retained by the Company or any of its
Subsidiaries with respect to such transaction.
"Notes" means the Senior Subordinated Increasing Rate Notes issued by the
Company substantially in the form set forth as Exhibit A attached hereto
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including any Additional Notes.
"Obligation" means a Loan or a Note, and "Obligations" means Loans or Notes
or both, including any Additional Obligations, in each case as the context may
require.
"Other Taxes" has the meaning set forth in Section 2.8(a).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permanent Financing" means any Debt Incurrence or Equity Issuance
following the date hereof for the purpose of refinancing the Obligations.
"Permits" means all domestic and foreign licenses, permits and approvals
required for the full operation of the Company and its Subsidiaries, taken as a
whole, including, without limitation, provincial, state, federal, city and
county permits and approvals.
"Permitted Transferee" means any Person that acquires Securities other than
any Person who acquires such Securities (i) in a public offering or (ii) in the
open market pursuant to sales under Rule 144 of the Securities Act or otherwise.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means the prime or reference rate as announced from time to
time by the Bank of New York.
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"Purchasers" means collectively, each of DLJ Bridge and FUI and "Purchaser"
means each of DLJ Bridge and FUI, individually and their respective successors
and assigns.
"Recapitalization" means the transactions contemplated by the
Recapitalization Agreement including, without limitation, transactions in which
(i) Kelso and certain other investors, including the Management Investors, will
make the Equity Contribution, (ii) the Merger will be consummated and (iii)
pursuant to the Merger, unless Kelso elects to replace the public holders with a
third party investor (in which case each of the Equity Contribution and the Cash
Consideration will be increased by approximately $18,100,000) (a) the pre-Merger
common stockholders of the Company (other than the holders of the Retained
Equity and the Management Investors) and holders of outstanding options to
purchase common stock of the Company will receive the Cash Consideration, (b)
certain pre-Merger common stockholders of the Company will retain the Retained
Equity, and (c) Kelso, the Management Investors and other investors will acquire
approximately 93% of the outstanding post-Merger common stock of the Company.
"Recapitalization Agreement" means the Merger and Recapitalization
Agreement, dated June 24, 1999, among the Company, the Management Investors and
Mergerco, as amended by Amendment No. 1 dated as of September 3, 1999 and
Amendment No. 2 dated as of October 12, 1999, and as further amended,
supplemented or otherwise modified from time to time in accordance with its
terms and the terms of this Agreement.
"Retained Equity" means common stock of the Company (including those shares
held by the Management Investors) outstanding prior to the Merger that, pursuant
to the Merger, remains outstanding after the Merger and having an aggregate
value (based on the Cash Consideration per share paid for the Company's common
stock in the Merger) equal to approximately $18,100,000.
"Securities" means the Notes, the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Facilities" means the credit facilities contemplated by the Credit
Agreement and the other Senior Facilities Loan Documents and the transactions
contemplated thereby (excluding any extension, renewal, refinancing or
replacement of all or a portion thereof).
"Senior Facilities Loan Documents" has the meaning set forth in the
definition of "Loan Documents" in the Credit Agreement.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of the capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person.
"Subsidiary Guaranty" means the Subsidiary Guaranty in the form of Exhibit
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D attached hereto executed by each Subsidiary (except those Foreign Subsidiaries
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that do not guarantee the Senior Facilities) of the Company and delivered
pursuant to this Agreement.
"Takedown" has the meaning set forth in Section 2.2(a).
"Taxes" has the meaning set forth in Section 2.8(a).
"Transaction Costs" means the fees and expenses incurred or borne by the
Company and its Subsidiaries in connection with the Transactions.
"Transactions" means, collectively, the Recapitalization and the Financing
Transactions.
"Transfer" means any disposition of Securities that would constitute a sale
thereof under the Securities Act.
"Treasury Rate" means the rate applicable to the most recent auction of
direct obligations of the United States having a maturity of ten years, as
published by the Board of Governors of the Federal Reserve System.
"Underwriters" means, collectively, each of DLJSC, CSI and FUSI.
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"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"Warrant Escrow Agreement" means the Warrant Escrow Agreement among the
Company, the Bridge Parties and the Escrow Agent, in substantially the form of
Exhibit C attached hereto, as amended, supplemented or otherwise modified from
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time to time in accordance with its terms.
"Warrants" means warrants in substantially the form of Exhibit F attached
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hereto.
"Warrant Shares" means shares of common stock issued or issuable upon
exercise of the Warrants.
SECTION 1.2. Accounting Terms and Determinations. Unless otherwise
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specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP
applied on a consistent basis.
ARTICLE II
PURCHASE AND SALE OF SECURITIES, MAKING OF THE LOAN, TERMS OF SECURITIES
AND LOAN
SECTION 2.1. Commitments. (a) Subject to the terms and conditions set
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forth herein and in reliance on the representations and warranties contained
herein and in the other Bridge Financing Documents, the Company agrees to (i)
issue and sell Notes in an aggregate principal amount not to exceed $101,250,000
and each Purchaser severally agrees to purchase Notes in an aggregate principal
amount not to exceed its respective Commitment and (ii) borrow in the principal
amount not to exceed $33,750,000 and Chase agrees to make a Loan in the
principal amount not to exceed its Commitment (the "Loan"). The purchase price
for the Notes and the Loans shall be 100% of the principal amount thereof.
(b) Termination of Commitment. The Commitment will terminate on the
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earliest of (i) the date of the termination of the Recapitalization Agreement,
(ii) the date of the closing of the Transactions without the funding of the
Commitment, (iii) the date on which Kelso or any Credit Party commences the
marketing of any proposed Permanent Financing or the arrangement of any other
financing related to the Transactions with respect to which DLJSC or any of its
affiliates is not the joint book-running manager (on the "left"), CSI is not
joint book-running manager (on the "right") and FUSI is not co-manager, or in
the case of senior bank financing (other than the Senior Facilities), DLJ
Capital is not joint-book manager (on the "left"), co-lead arranger and
syndication agent, Chase is not joint-book manager (on the "right"), co-lead
arranger and administrative agent and FUNB is not co-lead arranger and
documentation agent, as the case may be or (iv) 5:00 PM New York City time on
December 31, 1999 if the Closing has not occurred by such time (such earliest
date, the "Expiration Date"); provided that if at any time on or after the date
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hereof an Event of Default shall have occurred and be continuing, each Bridge
Party may at its option terminate its respective Commitment by notice to the
Company, such termination to be effective upon the giving of such notice; and
provided further that the Commitment shall automatically terminate, without
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notice to the Company or any other action on the part of the Bridge Parties,
upon the occurrence of any of the events specified in Sections 7.1(e) and 7.1(f)
with respect to any Credit Party.
(c) The Commitment is not revolving in nature, and the principal amounts
of Obligations prepaid in accordance with Section 2.7 may not be resold or
reborrowed hereunder.
SECTION 2.2. Takedown Procedures. (a) Notice. The Company shall give
------------------- ------
the Bridge Parties notice not later than 11:00 AM (New York City time) three (3)
Business Days prior to the proposed purchase and sale of Notes hereunder (the
"Notes Takedown") and the borrowing of the Loan hereunder (such borrowing,
together with the Notes Takedown, collectively, the "Takedown"), which notice
shall specify (i) the principal amount of Notes to be purchased and sold at such
Notes Takedown (which amount shall be in minimum denominations of $10,000,000 or
larger multiples of $250,000), (ii) the principal amount of the Loan to be made
hereunder at such Takedown (which amount shall be in minimum denominations of
$10,000,000 or larger multiples of $250,000) and (iii) the date of such Takedown
(which shall be a Business Day). There shall be only one Takedown permitted
hereunder.
167
(b) Funding. On the date of the Takedown, each Bridge Party shall deliver
-------
by wire transfer, to the account number of the Company specified by the Company
in writing no later than 2:00 PM (New York City time) three (3) Business Days
prior to the date of the Takedown, immediately available funds in an amount
equal to the aggregate purchase price of the Notes to be purchased by such
Purchaser hereunder and the principal amount of the Loan to be made hereunder on
such date, less, unless a Bridge Party otherwise requests, the aggregate amount
of fees payable by the Company to such Bridge Party on such date pursuant to
Section 2.3 and expenses (if any) payable to such Bridge Party on such date
pursuant to Section 9.4.
(c) Delivery of Notes. At the Takedown, against payment as set forth in
-----------------
subsection (b) of this Section 2.2, the Company shall deliver to each Purchaser
a single Note representing the aggregate principal amount of Notes to be
purchased at such Takedown registered in the name of such Bridge Party, or, if
requested by a Bridge Party, separate Notes in such other denominations and
registered in such name or names as shall be designated by such Bridge Party by
notice to the Company at least three (3) Business Days prior to the date of the
Takedown.
SECTION 2.3. Fees. The Company shall pay each Bridge Party all fees as
----
and when due in accordance with the Fee Letter.
SECTION 2.4. Mandatory Termination and Reduction of Commitment.
-------------------------------------------------
(a) The Commitment shall terminate on the earlier of the Expiration Date
or the Takedown hereunder.
(b) The Commitment shall be reduced by an amount equal to the Net Cash
Proceeds received by any Credit Party in respect of any Asset Sale (in excess of
the amount thereof required to be paid to the banks under the Senior
Facilities), Debt Incurrence or Equity Issuance (to the extent permitted under
the Senior Facilities) minus the amount of such Net Cash Proceeds applied to
-----
repay outstanding Obligations in accordance with Section 2.7(d) in excess of the
amount thereof required to be paid to the lenders in Senior Facilities. Each
such reduction shall be effective on the date of the related prepayment of the
Obligations, or if no Obligations are at the time outstanding, on the date of
receipt of such Net Cash Proceeds.
(c) Any such reduction shall reduce permanently each Bridge Party's
Commitment then in effect pro rata.
--- ----
SECTION 2.5. Optional Reduction of Commitment. The Company may, upon not
--------------------------------
less than three (3) Business Days' notice to the Bridge Parties, terminate the
unused Commitment at any time or reduce the unused Commitment from time to time
in amounts equal to $5,000,000 or any larger multiple of $1,000,000. Any such
reduction shall reduce permanently each Bridge Party's commitment then in effect
pro rata.
- --- ----
SECTION 2.6. Interest. (a) Payment Dates. Interest on the Obligations
-------- -------------
shall be payable in dollars in arrears, on each Interest Payment Date during
which such Obligations remain outstanding, commencing with the first Interest
Payment Date after the Funding Date, on the principal sum of the Obligations
outstanding. Interest on the Obligations shall be calculated at the rate per
annum set forth in subsection (b) below, and shall accrue from and including the
most recent Interest Payment Date to which interest has been paid on the
Obligations (or if no interest has been paid on the Obligations, from the date
of issuance thereof) to but excluding the date on which payment in full of the
principal sum of the Obligations has been made.
(b) Interest Rate. Interest for the first Interest Period
-------------
commencing on shall be, as determined by DLJ Bridge on the Funding Date, the
greatest of each of thirteen percent (13.00%) and each of the rates set forth in
clauses (i) through (iii) of the next sentence on such Funding Date (the
"Initial Rate"). Thereafter, the interest rate shall be payable at the greatest
of the following as determined at the beginning of each subsequent Interest
Period: (i) the Prime Rate plus 475 basis points, increasing by an additional 50
basis points at the end of each Interest Period subsequent to the Funding Date
for so long as the Obligations are outstanding; (ii) the Treasury Rate plus 695
basis points, increasing by an additional 50 basis points at the end of each
Interest Period subsequent to the Funding Date; (iii) the DLJ High Yield Index
Rate plus 98 basis points, increasing by an additional 50 basis points at the
end of each Interest Period subsequent to the Funding Date; and (iv) an amount
equal to the Initial Rate plus the product of 50 basis points times the number
of complete Interest Periods that have elapsed since the Funding Date.
Notwithstanding anything to the contrary set forth above, at no time shall the
per annum interest rate on the Obligations exceed seventeen percent (17.00%) nor
shall the per annum interest rate on the Obligations be less than ten percent
(10.00%).
168
(c) If and to the extent that the amount of interest payable on any
Interest Payment Date exceeds the amount of interest on the Obligations which
would have been payable on such Interest Payment Date if the Interest Rate in
effect at all times during the Interest Period then ended had been fifteen
percent (15.00%) (the amount of such excess, if any, being hereinafter referred
to as the "Excess Amount" for such period), then the Company may, at its option,
in lieu of payment of the Excess Amount of interest in cash, pay interest on
such Interest Payment Date through an increase in the outstanding principal
amount of the Loans ("Additional Loans") or the issuance of additional Notes
("Additional Notes"), as the case may be. Such Additional Obligations incurred
on any Interest Payment Date shall, subject to the remaining provisions of this
paragraph, be in an aggregate principal amount equal to the Excess Amount for
such Interest Payment Date, shall otherwise be identical to the outstanding
Obligations and shall be issued to the Holders at the time outstanding in
proportions such that each Holder shall receive the same ratio of cash interest
to Additional Obligations on such Interest Payment Date. Such Additional
Obligations shall be incurred only in denominations of $1,000 and multiples
thereof. Any interest otherwise payable in Additional Obligations which cannot
be so paid because an Additional Obligation would have a denomination less than
$1,000 (or not be a multiple thereof) shall be paid in cash on such Interest
Payment Date. For the avoidance of doubt, it is understood and agreed that
Additional Obligations, if any, are not incurred and issued pursuant to the
Commitments.
(d) Interest on the Obligations will be calculated on the basis of a 365-
day year and paid for the actual number of days elapsed.
SECTION 2.7. Maturity of Obligations; Prepayment of Obligations. (a)
--------------------------------------------------
Maturity Date. The Obligations shall mature and become due and payable on the
- -------------
First Anniversary; provided, however, that the maturity of the Obligations will
-------- -------
be automatically extended to May 1, 2008 (such date, the "Maturity Date") if, on
the First Anniversary, the following conditions are met: (i) there shall exist
no Default or Event of Default hereunder, (ii) there shall exist no default
under the Senior Facilities or any other debt instrument of any Credit Party and
(iii) all fees due to the Bridge Parties and the Underwriters as of such date
shall have been paid in full.
(b) Optional Redemption or Prepayment. The Obligations may be redeemed or
---------------------------------
repaid, in whole or in part, upon not less than ten (10) days written notice, at
the option of the Company, at any time at par plus accrued interest to the
redemption or prepayment date; provided, that the redemption or prepayment price
--------
shall be one hundred three percent (103%) of par plus such accrued interest if
the Obligations are redeemed or prepaid (whether at the time of redemption,
prepayment or maturity) with or in anticipation of funds raised or generated by
any means other than a transaction in which DLJSC or one of its affiliates has
acted as joint book-running manager (on the "left"), CSI has acted as joint
book-running manager (on the "right") and FUSI has acted as co-manager or, in
the case of senior bank financing (other than the Senior Facilities) DLJ Capital
has acted as joint-book manager (on the "left"), co-lead arranger and
syndication agent, Chase has acted as joint-book manager (on the "right"), co-
lead arranger and administrative agent and FUNB has acted as co-lead arranger
and documentation agent (any such transaction, an "Eligible Financing");
provided further however, that the Obligations may be redeemed or prepaid at
- -------- ------- -------
one hundred percent (100%) of par plus accrued interest (i) at any time with the
proceeds from an Eligible Financing or (ii) at any time after the First
Anniversary unless (x)(i) prior to such First Anniversary the Underwriters have
delivered a Bona Fide Proposal and (ii) the Company did not instruct or
otherwise authorize the Underwriters to execute such Bona Fide Proposal, or (y)
the Company and the Underwriters have agreed in their reasonable judgment that
no such Bona Fide Proposal could be made.
(c) Fixed Rate Option. Commencing on the Fixed Rate Sale Date, the
-----------------
Obligations may be sold, transferred or assigned by the Bridge Parties, upon 10
days prior notice to the Company, to third party purchasers on a fixed rate
basis at an interest rate no greater than seventeen percent (17.00%). In such
event, such Obligations may be redeemed or prepaid thereafter, in whole or in
part, upon not less than 10 days written notice, at the option of the Company,
at any time at an amount equal to the Make-Whole Amount plus accrued and unpaid
interest thereon to the redemption date.
"Make-Whole Amount" means, with respect to any Obligations to be redeemed,
an amount equal to, as determined by a Quotation Agent (as defined below), the
sum of (x) the present values of the scheduled payments of interest on the
Obligations through the Maturity Date (without duplication of any accrued and
unpaid interest) plus (y) the present value of the principal amount of the
Obligations at the Maturity Date, discounted, in each case, to the redemption
date on a semi-annual basis (assuming a 360-day year consisting of 30-day
months) at the Adjusted Treasury Rate.
169
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
rate per annum equal to the semi-annual bond equivalent yield to maturity of the
Comparable Treasury Issue (as defined below), assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price (as defined below) for such prepayment
date, plus one-half of one percent (.50%).
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Maturity
Date that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the Obligations.
"Quotation Agent" means the Reference Treasury Dealer (as defined below)
appointed by the Bridge Parties for this purpose after consultation with the
Company.
"Reference Treasury Dealer" means: (i) DLJSC; provided, however, that the
-------- -------
foregoing remain a primary United States government securities dealer in New
York City (a "Primary Treasury Dealer") and (ii) any other Primary Treasury
Dealer selected by the Bridge Parties after consultation with the Company.
"Comparable Treasury Price" means, with respect to any prepayment date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations of US Government
Securities" or (ii) if such release (or any successor release) is not published
or does not contain such prices on such Business Day, (A) the average of the
Reference Treasury Dealer Quotations for such prepayment date, after excluding
the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Bridge Parties obtain fewer than three such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Bridge Parties, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Bridge Parties by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such prepayment date.
(d) Mandatory Prepayments. To the extent permitted under the Senior
---------------------
Facilities, the Company shall, within five (5) days of receipt by any Credit
Party of the Net Cash Proceeds that is in excess of the amount thereof required
to be paid to the banks under the Senior Facilities of any Asset Sale (prior to
the Covenant Conversion Date), Debt Incurrence or Equity Issuance, prepay (to
the extent such Net Cash Proceeds equal or exceed the minimums set forth in
Section 2.7(e)) a principal amount of the Obligations equal to the amount of
such Net Cash Proceeds (less any amounts not required to be paid as a result of
the requirement in subsection (e) of this Section 2.7 that all such prepayments
be made in multiples of $1,000), at a redemption or prepayment price equal to
one hundred percent (100%) of the principal amount of the Obligations so prepaid
together with accrued interest to the date of prepayment (it being understood
that, to the extent such Net Cash Proceeds are not permitted to be used to
redeem or prepay Obligations, such Net Cash Proceeds may be used in any manner
that is permitted under the Senior Facilities); provided, that the redemption or
--------
prepayment price shall be one hundred three percent (103.00%) of par plus
accrued interest if the Obligations are redeemed or prepaid with or in
anticipation of funds raised by any means other than an Eligible Financing;
provided further, that the Obligations shall be redeemed or prepaid at one
- -------- -------
hundred percent (100%) of principal plus accrued interest (i) at any time with
the proceeds from any Eligible Financing or (ii) at any time after the First
Anniversary, unless (x)(i) prior to such First Anniversary the Underwriters have
delivered a Bona Fide Proposal to any Credit Party and (ii) such Credit Party
did not authorize the Underwriters to execute such Bona Fide Proposal, or (y)
the Company and the Underwriters have agreed in their reasonable judgment that
no such Bona Fide Proposal could be made.
(e) Minimum Amount. Any prepayment of the Obligations pursuant to Section
--------------
2.7(b) or (d) shall be in a minimum amount of at least $1,000,000, unless less
than $1,000,000 of the Obligations remain outstanding, in which case all of the
Obligations must be prepaid. Any prepayment of the Obligations pursuant to
Section 2.7(c) shall be in a minimum amount which is a multiple of $1,000 times
the number of Holders at the time of such prepayment. Any such prepayment shall
be made to the Holders pro rata.
--- ----
(f) Partial Prepayments. Any partial prepayment shall be made so that the
-------------------
Obligations then held by each Holder shall be prepaid in a principal amount
which shall bear the same ratio, as nearly as may be,
170
to the total principal amount being prepaid as the principal amount of such
Obligations held by such Holder shall bear to the aggregate principal amount of
all Obligations then outstanding. In the event of a partial prepayment, upon
presentation of any Note the Company shall execute and deliver to or on the
order of the Holder, at the expense of the Company, a new Note in principal
amount equal to the remaining outstanding portion of such Note.
SECTION 2.8. Taxes. (a) For the purposes of this Section, the following
-----
terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings with respect to any payment by any Credit
Party pursuant to this Agreement or under any Obligations or any other Bridge
Financing Document, and all liabilities with respect thereto, excluding, in the
case of the Bridge Parties or any other Holder, taxes imposed on the net income
of the Bridge Parties or such Holder and franchise or similar taxes imposed on
the Bridge Parties or such Holder (all such excluded taxes being hereinafter
referred to as "Domestic Taxes").
"Other Taxes" means any present or future stamp or documentary taxes and
any other excise taxes, or similar charges or levies, which arise from any
payment made pursuant to this Agreement or under any Obligations or any other
Bridge Financing Document or from the execution, delivery, registration,
recordation or enforcement of this Agreement or any Obligations or any other
Bridge Financing Document.
(b) All payments by any Credit Party to or for the account of a
Bridge Party or any other Holder under any Bridge Financing Document shall be
made without deduction for any Taxes or Other Taxes; provided that, if any
--------
Credit Party shall be required by law to deduct any Taxes or Other Taxes from
any such payment, the sum payable shall be increased as necessary so that after
making all required deductions of Taxes and Other Taxes (including deductions
applicable to additional sums payable under this Section), such Bridge Party or
such Holder (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, the Credit Party shall make such
deductions, the Credit Party shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law and the
Company shall promptly furnish to such Bridge Party or such Holder (as the case
may be) the original or a certified copy of a receipt evidencing payment
thereof.
(c) The Company agrees to indemnify each Bridge Party and each
other Holder for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by such Bridge Party or such Holder (as
the case may be) with respect to any payment made by any Credit Party to, or for
the account of, a Bridge Party or any other Holder under any Bridge Financing
Document and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, unless such penalties or interest are
incurred solely as a result of any negligence or misconduct of such Bridge Party
or such Holder, as the case may be.
(d) The Company shall have no obligations for Taxes under Section
2.8(b) for or on account of:
(i) any Taxes (other than Other Taxes) imposed by way of
deduction or withholding that would not have been so imposed but for the
existence of any present or former connection between such Bridge Party, Holder
or beneficial owner and the jurisdiction imposing the Tax other than merely
holding such Obligation or any Bridge Financing Document, or the receipt of
payments in respect thereof, including, without limitation, such Bridge Party,
Holder or beneficial owner being or having been a citizen or resident thereof,
or being or having been engaged in a trade or business or having a permanent
establishment or other fixed base therein, or making or having made an election
to the effect of which is to subject such Bridge Party, Holder or beneficial
owner to such Tax;
(ii) any Taxes (other than (A) Other Taxes or (B) any Taxes
imposed by way of deduction or withholding) that would not have been so imposed
but for the existence of any present or former connection between the applicable
Bridge Party or Holder or beneficial owner (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such Bridge
Party, Holder or beneficial owner, if such Bridge Party, Holder or beneficial
owner is an estate, a trust, a partnership, a limited liability company or
corporation) and the jurisdiction imposing the Tax other than merely holding
such Obligation or any Bridge Financing Document, or the receipt of payments in
respect thereof, including, without limitation, such Bridge Party, Holder or
beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder,
or possessor) being or having been a citizen or resident thereof, or being or
having been engaged in a trade or business or having
171
a permanent establishment or other fixed base therein, or making or having made
an election to the effect of which is to subject such Bridge Party, Holder or
beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder
or possessor) to such Taxes;
(iii) any Taxes in the nature of estate, inheritance or gift
taxes;
(iv) any Tax that is imposed or withheld by reason of the
failure of the applicable Bridge Party or Holder or beneficial owner of a Note
to comply with a written request by the Company addressed to such Bridge Party,
Holder or beneficial owner to provide (A) information concerning the
nationality, residence or identity of such Bridge Party, Holder or beneficial
owner that is required under a statute, treaty, regulation or administrative
practice of the jurisdiction imposing such Tax as a precondition to exemption
from all or part of such Tax or (B) the applicable signed form required to be
received by the Credit Parties to qualify for an exemption or reduction of such
Tax;
(v) in the case of a Holder other than a Bridge Party or a
person described in Section 8.3(a)(ii), any Taxes imposed on any payment on an
Obligation to a Holder that is a fiduciary or classified as an S corporation or
a partnership of such payment to the extent a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a shareholder of
such S corporation or a beneficial owner would not have been entitled to the
payment of taxes had such beneficiary, settlor, member, shareholder or
beneficial owner directly received its beneficial or distributive share of such
payment;
(vi) any Tax that is imposed or withheld, to the extent
that the applicable Bridge Party or Holder would have been subject to such Tax
at the time of the making of the Loan or the original purchase of the Notes upon
their original issuance if such Bridge Party or Holder had made the Loan or
purchased the Note at that time; and
(vii) any combination of items (i) through (vi) above.
(e) Notwithstanding anything in Section 2.8(d) to the contrary,
the Company agrees to indemnify each Bridge Party and each other Holder for all
Domestic Taxes of such Bridge Party or such other Holder (calculated based on a
hypothetical basis at the maximum marginal rate for a corporation) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, in each case to the extent that such Domestic Taxes result from
any payment or indemnification pursuant to this Section 2.8. This
indemnification shall be paid within 15 days after such Bridge Party or such
Holder (as the case may be) makes demand therefor.
(f) The Company agrees that the provisions of this Section 2.8
shall inure to the benefit of any transferee of any Obligation, provided that a
--------
transferee shall not be entitled to receive any greater payments under this
Section 2.8 than its transferor would have been entitled to receive with respect
to the Obligation so transferred, and provided further that a transferee shall
--------
comply with the provisions of this Section 2.8.
(g) Notwithstanding Section 9.3 and Section 9.4, this Section 2.8
sets forth the exclusive agreement of the parties hereto with respect to Taxes
and Other Taxes.
SECTION 2.9. Warrants.
--------
(a) On the date of the Takedown, the Warrants shall be placed in
escrow pursuant to the terms set forth in the Warrant Escrow Agreement.
(b) If the refinancing of 100% of the Obligations is not
completed within the periods following the First Anniversary set forth in Column
------
A below, Warrants representing the percentage of the Company's fully-diluted
- -
Equity Securities set forth in Column B shall be released from escrow (to the
--------
extent not previously released pursuant to Section 2.9(c)) by the Escrow Agent
to the Bridge Parties pro rata in accordance with their respective Commitments
--- ----
and the Bridge Parties shall be entitled to retain such released Warrants in
accordance with the Warrant Escrow Agreement.
Column A Column B
-------- --------
Period from Percentage
First Anniversary of Equity Securities
----------------- --------------------
172
Up to 90 days 1.25%
91-180 days 1.25%
181-270 days 1.25%
271-360 days 1.25%
-----
5.00%
=====
(c) On and after the Fixed Rate Sale Date, all of the Warrants shall
be released from escrow by the Escrow Agent to the Bridge Parties pro rata in
--- ----
accordance with their respective Commitments as and when the Bridge Parties may
request, provided that the Bridge Parties shall be entitled to such released
--------
Warrants only in order to facilitate such resale, transfer or assignment of the
Obligations.
(d) Any Warrants to which a Bridge Party is not entitled as set forth
above shall be returned for cancellation following a determination thereof. The
Company grants the holders of the Warrants registration rights with respect
thereto on the terms set forth in Exhibit B-2 attached hereto and made a part
-----------
hereof.
SECTION 2.10. Subordination. The obligations of the Company hereunder
-------------
are subordinate and junior in right of payment to all Designated Senior Debt, as
such term is defined in, and to the extent and in the manner set forth in
Exhibit E attached hereto.
- ---------
SECTION 2.11. Registration of Transfer; Register Evidence of Loans.
----------------------------------------------------
(a) The Obligations are transferable and assignable to one or more purchasers or
assignees (in minimum denominations of $2,500,000, measured by the amount
received by the transferee Holder from all transferor Holders on a given date)
subject to any applicable limitations set forth in Article VIII to the extent
the Securities Act applies. The Company agrees to issue from time to time new or
replacement Notes, within three (3) Business Days of request therefor, to
facilitate such transfers and assignments. The Company agrees to provide DLJ
Bridge with notice of any transfer or assignment of the Obligations within two
(2) Business Days of such transfer or assignment.
(b) The Company shall keep at its principal office a register (the
"Register") in which shall be entered the names and addresses of the Holders and
particulars of the respective Obligations held by them and of all transfers of
such Obligations. References to the "Holder" or "Holders" shall mean the Person
listed in the Register as the owner of any Obligation. No transfer of any
Obligation shall be effective except upon recordation in the Register.
(c) The Loans shall not be evidenced by any instruments. Each Holder,
however, at its option, shall be entitled to receive a Loan note, substantially
in the form set forth in Exhibit A attached hereto with conforming changes
---------
thereto, evidencing its portion of the Loan. Each Holder of a Loan shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Company to such Holder resulting from the Loan held by
such Holder from time to time, including the amounts of principal and interest
payable and paid to such Holder from time to time under this Agreement. The
entries made in such accounts shall, to the extent permitted by applicable law,
be prima facie evidence of the existence and amounts of the obligations of the
----- -----
Company therein recorded; provided, however, that the failure of any Holder to
-------- -------
maintain such accounts or any error therein shall not in any manner affect the
obligations of the Company to repay (with the applicable interest) the Loans in
accordance with the terms of this Agreement.
(d) Each Holder of a Loan may at any time exchange such Loan for an
equivalent principal amount of Notes. Any Holder wishing to do so shall notify
the Company of the amount of Notes to be issued and the names and addresses to
be entered in the Register in respect thereof. The Company agrees to issue Notes
in exchange for Loans within three (3) Business Days of the request thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Bridge Party and each
Holder as set forth below:
SECTION 3.1. Organization; Powers. Each of the Company and its
--------------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted (after giving effect to the
Transactions) and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
173
SECTION 3.2. Authorization; Execution; Enforceability. The
----------------------------------------
Transactions to be entered into by each Credit Party are within such Credit
Party's corporate or other organization powers and have been duly authorized by
all necessary corporate or other organization and, if required, stockholder
action. This Agreement has been duly executed and delivered by the Company and
constitutes, and each other Bridge Loan Document to which any Credit Party is to
be a party, when executed and delivered by such Credit Party, will constitute, a
legal, valid and binding obligation of the Company or such Credit Party (as the
case may be), enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
SECTION 3.3. Governmental Approvals; No Conflicts. The Transactions
------------------------------------
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Company or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Company or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any
payment to be made by the Company or any of its Subsidiaries (other than in
respect of Existing Indebtedness (as defined in the Credit Agreement) that is
repaid on the Closing), and (d) will not result in the creation or imposition of
any Lien on any asset of the Company or any of its Subsidiaries, except Liens
created under the Loan Documents.
SECTION 3.4. Financial Condition; No Material Adverse Change. (a)
-----------------------------------------------
The Company has heretofore furnished to the Bridge Parties its consolidated
balance sheet and statements of income, stockholders equity and cash flows (i)
as of and for the fiscal year ended September 27, 1998, reported on by
PriceWaterhouseCoopers, LLP, independent public accountants, and (ii) as of and
for the fiscal quarter and the portion of the fiscal year ended June 27, 1999
certified by its chief financial officer. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Company and its Consolidated Subsidiaries as of
such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.
(b) The Company has heretofore furnished to the Bridge Parties its
pro forma consolidated balance sheet as of June 27, 1999, prepared giving
- ---------
effect to the Transactions as if the Transactions had occurred on such date.
Such pro forma consolidated balance sheet (i) has been prepared in good faith
---------
based on assumptions believed by the Company to be reasonable), (ii) is based on
the best information available to the Company after due inquiry, (iii)
accurately reflects all adjustments necessary to give effect to the Transactions
and (iv) presents fairly, in all material respects, the pro forma financial
position of the Company and its Consolidated Subsidiaries as of June 27, 1999 as
if the Transactions had occurred on such date.
(c) Except as disclosed in the financial statements referred to above
or the notes thereto and except for the Disclosed Matters, after giving effect
to the Transactions, none of the Company or its Subsidiaries has, as of the
Closing, any material contingent liabilities, unusual long-term commitments or
unrealized losses.
(d) Since September 27, 1998, there has been no material adverse
change in the business, results of operations, properties or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole.
SECTION 3.5. Properties. (a) Each of the Company and its
----------
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties as defined in the Credit Agreement), free of all Liens, except for
Permitted Encumbrances (as defined in the Credit Agreement) and other Liens
permitted by or existing pursuant to or under the Credit Agreement and except
for minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their intended
purposes.
(b) Each of the Company and its Subsidiaries owns, or is licensed to
use, all trademarks, trade names, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Company and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
174
(c) Schedule 3.5 sets forth the address of each real property that is
------------
owned or leased by the Company or any of its Subsidiaries as of the Closing
after giving effect to the Transactions.
(d) As of the Closing, neither the Company nor any of its
Subsidiaries has received notice of, or has knowledge of, any pending or
contemplated condemnation proceeding affecting any Mortgaged Property (as
defined in the Credit Agreement) or any sale or disposition thereof in lieu of
condemnation. Neither any Mortgaged Property (as defined in the Credit
Agreement) nor any interest of any Credit Party therein is subject to any right
of first refusal, option or other contractual right to purchase such Mortgaged
Property (as defined in the Credit Agreement) or interest therein.
SECTION 3.6. Litigation and Environmental Matters. (a) There are
------------------------------------
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Bridge Financing Documents, Loan
Documents or the Transactions.
(b) Except for the Disclosed Matters indicated on Schedule 3.6
------------
neither the Company nor any of its Subsidiaries (i) has failed to comply with
any Environmental Law or to obtain, maintain or comply with any permit, license
or other approval required under any Environmental Law, except as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (ii) has become subject to any Environmental Liability, except
as could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (iii) has received notice of any claim with respect to
any Environmental Liability, except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or (iv)
knows of any basis for any Environmental Liability, except as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.7. Compliance with Laws and Agreements. Each of the
-----------------------------------
Company and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.8. Investment Company Status. Neither the Company nor any
-------------------------
of its Subsidiaries is an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940.
SECTION 3.9. Governmental Regulation. No Credit Party is, or will
-----------------------
be upon the borrowing of the Loan and the issuance and sale of the Securities
and the use of the proceeds described herein, subject to regulation under the
Public Utility Holding Company Act of 1935 or the Federal Power Act (each, as
amended) or to any federal or state statute or regulation in a manner which
would limit its ability to issue the Notes (in the case of the Company) and
perform its obligations under any Bridge Financing Document.
SECTION 3.10. Taxes. Each of the Company and its Subsidiaries has
-----
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) any Taxes that are being contested in good faith by
appropriate proceedings and for which the Company or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.11. ERISA. No ERISA Event has occurred or is reasonably
-----
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $1,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated
175
benefit obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not, as of
the date of the most recent financial statements reflecting such amounts, exceed
by more than $2,000,000 the fair market value of the assets of all such
underfunded Plans.
SECTION 3.12. Disclosure. The Company has disclosed to the Bridge
----------
Parties all agreements, instruments and corporate or other restrictions to
which, the Company or any of its Subsidiaries is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. As of the Closing none of
the reports, financial statements, certificates or other information furnished
by or on behalf of any Credit Party to the Bridge Parties in connection with the
negotiation of this Agreement or any other Bridge Financing Document contains
any material misstatement of fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that, with respect to projected
--------
financial information, the Company represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time. None of the reports, financial statements, certificates or other
information furnished by or on behalf of any Credit Party to the Bridge Parties
or delivered hereunder or thereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
--------
with respect to projected financial information, the Company represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
SECTION 3.13. Subsidiaries. Schedule 3.13 sets forth the name of,
------------ -------------
and the ownership interest of the Company in, each Subsidiary of the Company and
identifies each Subsidiary that is a Credit Party, in each case as of the
Closing.
SECTION 3.14. Insurance. Schedule 3.14 sets forth a description of
--------- -------------
all insurance maintained by or on behalf of the Company and its Subsidiaries as
of the Closing. As of the Closing, all premiums in respect of such insurance
have been paid.
SECTION 3.15. Labor Matters. As of the Closing, there are no
-------------
strikes, lockouts or slowdowns against the Company or any Subsidiary pending or,
to the knowledge of the Company, threatened. The hours worked by and payments
made to employees of the Company and the Subsidiaries have not been in violation
of the Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters. All payments due from the Company or any
Subsidiary, or for which any claim may be made against the Company or any
Subsidiary, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of the
Company or such Subsidiary. The consummation of the Transactions will not give
rise to any right of termination or right of renegotiation on the part of any
union under any collective bargaining agreement to which the Company or any
Subsidiary is bound.
SECTION 3.16. Solvency. Immediately after the consummation of the
--------
Transactions to occur on the Closing and immediately following the issuance of
the Notes and the making of each Loan made on the Closing and after giving
effect to the application of the proceeds thereof, (a) the fair value of the
assets of each Credit Party, at a fair valuation, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of each Credit Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) each Credit Party will be
able to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (d) each Credit
Party will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing.
SECTION 3.17. Year 2000. Any reprogramming required to permit the
---------
proper functioning, in and following the year 2000, of (a) the computer systems
of the Company and its Subsidiaries and (b) equipment containing embedded
microchips (including systems and equipment supplied by others or with which the
Company's systems interface) and the testing of all such systems and equipment,
as so reprogrammed, has been completed. The cost to the Company and its
Subsidiaries of the reasonably foreseeable consequences of year 2000 to the
Company and its Subsidiaries (including reprogramming errors and the failure of
others' systems or equipment) will not result in a Default or a Material Adverse
Effect. The computer and management information systems of the Company and its
Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the Company
to conduct its businesses without a Material Adverse Effect.
176
SECTION 3.18. Private Offering; Solicitation; Access to Information.
-----------------------------------------------------
The sale of the Notes hereunder is exempt from the registration and prospectus
delivery requirements of the Securities Act. The foregoing representation is
made in reliance upon and subject to the accuracy of the Purchasers'
representations in Section 4.1. No form of general solicitation or general
advertising was used by any Credit Party or, to the best of its knowledge, any
other Person acting on behalf of any Credit Party, in connection with the offer
and sale of the Notes or the Securities or the borrowing of the Loans. Neither
any Credit Party nor any Person acting on behalf of any Credit Party has, either
directly or indirectly, sold or offered for sale to any Person any of the Notes
or any other similar security of any Credit Party or the Securities or other
Obligations except as contemplated by this Agreement, and the Company represents
that neither it nor any Credit Party nor any person acting on its behalf other
than the Bridge Parties and their respective Affiliates will sell or offer for
sale to any Person any such security to, or solicit any offers to buy any such
security from, or otherwise approach or negotiate in respect thereof with, any
Person or Persons so as thereby to bring the issuance or sale of any of the
Notes or other Obligations within the provisions of Section 5 of the Securities
Act.
SECTION 3.19. Non-fungibility. When the Notes are issued and
---------------
delivered pursuant to this Agreement, the Notes will not be of the same class
(within the meaning of Rule 144A under the Securities Act) as securities which
are (i) listed on a national securities exchange registered under Section 6 of
the Exchange Act or (ii) quoted in a U.S. automated inter-dealer quotation
system.
SECTION 3.20. Permits. Except to the extent any of the following
-------
could not result in a Material Adverse Effect: (a) each Credit Party has all
Permits as are necessary for the conduct of their respective businesses as it
has been carried on; (b) all such Permits are in full force and effect, and each
Credit Party has fulfilled and performed all material obligations with respect
to such Permits; (c) no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination by the issuer thereof or
which results in any other impairment of the rights of the holder of any such
Permit; and (d) each Credit Party has no reason to believe that any governmental
body or agency is considering limiting, suspending or revoking any such Permit.
SECTION 3.21. Representations in Other Documents. Each of the
----------------------------------
representations and warranties of the Credit Parties set forth in any of the
Bridge Financing Documents, Senior Facilities Loan Documents and the
Recapitalization Agreement and the other documents related thereto is true and
correct in all material respects.
SECTION 3.22. No Violation of Regulations of Board of Governors of
----------------------------------------------------
Federal Reserve System. No Credit Party or any agent thereof acting on the
- ----------------------
behalf of a Credit Party has taken, and none of them will take, any action that
might cause this Agreement or the borrowing of the Loan and the issuance or sale
of the Securities or the application of proceeds thereof to violate Section 7 of
the Exchange Act or any regulation issued pursuant thereto, including, without
limitation, Regulation T, U or X of the Board of Governors of the Federal
Reserve System. No Credit Party is engaged or will engage, principally or as
one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under said Regulation U.
SECTION 3.23. Company Business. At any time after Closing, the
----------------
Company will not, and will not permit its Subsidiaries to, engage to any
material extent in any business other than the businesses of the type conducted
by the Company and its Subsidiaries on the Funding Date and businesses
reasonably related thereto.
SECTION 3.24. Capitalization. At the date of the Takedown and after
--------------
giving effect to the Transactions, the capitalization of the Company will be as
set forth on Schedule 3.24. Other than as set forth on Schedule 3.24, all of
------------- -------------
the issued and outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable and free and clear of any Lien or other
right or claim (except for those Liens permitted by or securing the Senior
Facilities) and the holders thereof are not entitled to any preemptive or other
similar rights. Other than as set forth on Schedule 3.24, there are no
-------------
subscriptions, options, warrants, rights, convertible securities, exchangeable
securities or other agreements or commitments of any character pursuant to which
the Company is required to issue any shares of its capital stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BRIDGE PARTIES
SECTION 4.1. Purchasers' Representations. Each Purchaser severally
---------------------------
represents and warrants to the Company and Chase that:
177
(a) each Purchaser is an Accredited Investor within the meaning of
Rule 501(a) under the Securities Act and the Securities to be acquired by it
pursuant to this Agreement are being acquired for its own account and each
Purchaser will not offer, sell, transfer, pledge, hypothecate or otherwise
dispose of the Securities unless pursuant to a transaction either registered
under, or exempt from registration under, the Securities Act;
(b) the execution, delivery and performance of this Agreement and the
purchase of the Securities pursuant hereto are within each Purchaser's corporate
powers and have been duly and validly authorized by all requisite corporate
action;
(c) this Agreement has been duly executed and delivered by each
Purchaser;
(d) this Agreement constitutes a valid and binding agreement of each
Purchaser enforceable in accordance with its terms; and
(e) each Purchaser has such knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Securities and each Purchaser is capable of bearing the
economic risks of such investment.
SECTION 4.2. Chase Representations. Chase represents and warrants
---------------------
to the Company and the Purchasers that:
(a) Chase is making the Loan for its own account in the ordinary
course of its commercial banking business and will not offer, sell, transfer,
pledge, hypothecate or otherwise dispose of any Securities acquired by it
pursuant to the Bridge Financing Documents unless pursuant to a transaction
either registered under, or exempt from registration under, the Securities Act;
(b) the execution, delivery and performance of this Agreement and the
making of the Loan pursuant hereto are within Chase's corporate powers and have
been duly and validly authorized by all requisite corporate action;
(c) this Agreement has been duly executed and delivered by Chase and
does not contravene or conflict with the organizational documents of Chase;
(d) this Agreement constitutes a valid and binding agreement of Chase
enforceable in accordance with its terms; and
(e) Chase has such knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of making the
Loan and acquiring any of the Securities or other Obligations and is capable of
bearing the economic risks of making the Loan and acquiring any of the
Securities or other Obligations.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1. Conditions to Bridge Parties' Obligations. The
-----------------------------------------
obligation of each Purchaser to purchase the Notes to be issued and sold by the
Company hereunder and the obligation of Chase to make the Loan to be made by it
hereunder are each subject to the satisfaction of the following conditions
contemporaneously with the Takedown:
(a) each of the Bridge Financing Documents and the Company Corporate
Documents shall have been duly executed and delivered by the parties thereto and
shall be in full force and effect and no term or condition thereof shall have
been amended, waived or otherwise modified without the prior written consent of
each Bridge Party;
(b) the Company shall have entered into the Senior Facilities in
accordance with the terms of the Credit Agreement and the transactions
contemplated thereby, the terms and conditions of which shall be reasonably
satisfactory in all respects to the Bridge Parties and the Bridge Parties shall
have received evidence reasonably satisfactory to it of the foregoing. The
Company shall have received proceeds of not less than $260,000,000 from the
Senior Facilities and the revolver thereunder shall be available and drawn in a
maximum amount not to exceed $10,000,000 on the Funding Date;
178
(c) the Bridge Parties shall have received such documents and
certificates as the Bridge Parties or their counsel may reasonably request
relating to the organization, existence and good standing of each Credit Party,
the authorization of the Transactions and any other legal matters relating to
the Credit Parties, the Bridge Financing Documents or the Transactions, all in
form and substance reasonably satisfactory to the Bridge Parties and their
counsel;
(d) the Bridge Parties shall have received evidence reasonably
satisfactory to them that all governmental, shareholder and third party consents
and approvals (including Hart Scott Rodino clearance) necessary or desirable in
connection with the transactions contemplated by the Bridge Financing Documents,
the Senior Facilities and the Transactions have been received and all applicable
waiting periods shall have expired without any action being taken by any
competent authority that could restrain, prevent or impose any materially
adverse conditions on, or that could seek or threaten, any of the foregoing, and
no law or regulation shall be applicable which in the judgment of the Bridge
Parties could have any such effect;
(e) the Bridge Parties shall not have become aware since October 12,
1999, of any information or other matter which is inconsistent in a material and
adverse manner with any information or other material disclosed to Bridge
Parties prior to such date;
(f) the corporate, tax, capital and ownership structure (including
articles of incorporation, operating or member agreements and by-laws) and
stockholders agreements of the Credit Parties shall be reasonably satisfactory
to the Bridge Parties in all respects;
(g) absence of any material adverse change in the business, results
of operations, properties, assets or financial condition of any Credit Party,
taken as a whole, since the end of the most recently ended fiscal year for which
audited financial statements have been provided to the Bridge Parties or in the
facts and information as represented to the Bridge Parties by the Credit Parties
and Kelso to date;
(h) except as set forth on Schedule 3.6, there shall exist no pending
------------
or threatened material litigation, proceedings or investigations which (x) could
or purports to affect the transactions contemplated hereby or (y) could
reasonably be expected to have a material adverse effect on the business,
assets, liabilities (including environmental liabilities), financial condition
or operations of the Credit Parties, taken as a whole;
(i) the Bridge Parties shall have received reasonably satisfactory
opinions of counsel to the Credit Parties covering the items set forth in
Exhibit H attached hereto;
- ---------
(j) absence of any Default or Event of Default or event that, with
notice and/or the passage of time, is reasonably likely to result in an Event of
Default and the representations and warranties made herein being true and
correct in all material respects as of Closing and after giving effect to the
Transactions;
(k) the Bridge Parties shall have received the necessary consents
from lenders to the Credit Parties, if any, concerning the anticipated terms and
conditions of the Notes and the Permanent Financing, including the application
of the proceeds from any such financing for the purpose of repaying all of the
Obligations;
(l) the Bridge Parties shall be an addressee of the solvency opinion
delivered by Murray Devine & Co. pursuant to the Credit Agreement which shall be
in a form reasonably satisfactory to the Bridge Parties;
(m) all fees and expenses due and payable to Bridge Parties and the
Underwriters hereunder or under the Fee Letter in connection with the
transactions contemplated hereby, shall have been paid in full;
(n) the Bridge Parties shall be reasonably satisfied as to the amount
and nature of any environmental and employee health and safety exposures to
which the Company and its Subsidiaries may be subject after giving effect to the
Transactions, and with the plans of the Company or such Subsidiaries with
respect thereto, and, to the extent reasonably requested by the Bridge Parties
shall have received environmental assessments (including, if applicable, Phase I
reports) reasonably satisfactory to the Bridge Parties from an environmental
consulting firm reasonably satisfactory to the Bridge Parties;
(o) the Company shall have received the full amount of the gross cash
proceeds from the Equity Contribution and after giving effect to the
Transactions and the other transactions contemplated hereby,
179
Kelso and certain other investors, including the Management Investors, shall
hold not less than 93% of the outstanding post-Merger common stock of the
Company; provided that Kelso shall hold not less than seventy-five percent (75%)
--------
of such post-Merger common stock;
(p) the Recapitalization shall have been consummated or shall be
consummated simultaneously with or immediately following the initial funding
hereunder on the Funding Date in accordance with applicable law, the
Recapitalization Agreement and all other related documentation. The Bridge
Parties shall be reasonably satisfied with all documentation related to the
Recapitalization (to the extent not delivered to the Bridge Parties for review
prior to October 12, 1999). There shall not have been any amendment,
modification or waiver of any of the terms or conditions of the Recapitalization
Agreement and all other related documentation without the prior written consent
of the Bridge Parties. The Cash Consideration shall not exceed $288,500,000;
(q) the Bridge Parties shall have received a pro forma
---------
consolidated balance sheet of the Company as of the Funding Date, after giving
effect to the Transactions and the other transactions contemplated hereby, which
balance sheet shall not be materially inconsistent with the forecasts previously
provided to Bridge Parties. After giving effect to the Transactions, neither the
Company nor any of its Subsidiaries shall have outstanding any shares of
preferred stock or any Indebtedness, other than (i) the Senior Facilities, (ii)
Indebtedness incurred hereunder and (iii) capitalized leases not in excess of
$3,600,000. The aggregate Transaction Costs, including deferred compensation,
shall not exceed $32,500,000;
(r) the Bridge Parties shall have received unaudited consolidated
balance sheets and related statements of income, stockholders' equity and cash
flows of the Company for (i) each fiscal quarter (other than the fourth fiscal
quarter) subsequent to the end of the 1998 fiscal year that ended at least 30
days before the Funding Date and (ii) each fiscal month after the most recent
1999 fiscal quarter for which financial statements were received by the Bridge
Parties as described above and that ended at least 30 days before the Funding
Date; and
(s) the tax position and contingent tax and other liabilities of
the Company and its Subsidiaries after giving effect to the Transactions shall
be reasonably satisfactory to the Bridge Parties.
ARTICLE VI
COVENANTS
The Company covenants and agrees (and covenants and agrees that it
shall cause each Credit Party to covenant and agree) that, from and after the
date of the Takedown and so long as the Commitment remains in effect or any
Obligations remain outstanding and unpaid or any other amount is owing to the
Bridge Parties or the Holders, and for the benefit of Bridge Parties and the
Holders, it will comply with the following:
SECTION 6.1. Incorporation by Reference. (a) Prior to the Covenant
--------------------------
Conversion Date, the Company will comply with each of the covenants contained in
Article V (except for Sections 5.03, 5.07(b), 5.12, 5.13 and 5.14 and references
thereto) and Article VI (except for Sections 6.07, 6.11(a), 6.12 and 6.13 and
references thereto) of the Credit Agreement, which such Sections (the
"Incorporated Sections"), are hereby incorporated by reference mutatis mutandis
- ------------- -------- ------- --------
as if set forth herein in their entirety; provided, that, unless the context
--------
otherwise requires, capitalized and other defined terms used in the Incorporated
Sections shall for the purpose of the Incorporated Sections, have the meanings
set forth in the Credit Agreement, modified as follows:
(i) all references to "Borrower" therein shall mean and be a
reference to "Company" herein;
(ii) all references to "Loan" or "Loans" therein shall mean and
be a reference to "Obligation" or "Obligations" herein;
(iii) all references to "Lender" or "Lenders" therein shall mean
and be a reference to "Bridge Party" or "Bridge Parties" herein (except for
Section 6.04(e) of the Credit Agreement);
(iv) all references to the "Agent" or "Administrative Agent"
therein shall mean and be a reference to "Bridge Parties" herein (except for
Section 6.01(xii) of the Credit Agreement);
(v) all references to the "Required Lenders" therein shall
mean and be a reference to "Majority Holders" herein;
180
(vi) all referenced to "this Agreement", "herein", "hereunder"
and words of similar import therein shall mean and be a reference to this
Agreement;
(vii) all references to any exhibits or schedules therein shall
mean and be a reference to the specific exhibit or schedule to the Credit
Agreement herein; and
(viii) Section 6.01 of the Credit Agreement as incorporated
herein by reference shall include Indebtedness created under the Credit
Agreement or any refinancing thereof as permitted Indebtedness hereunder, so
long as the aggregate amount thereof is not increased above the aggregate
commitments under the Credit Agreement as in effect on the Funding Date.
In connection with any amendment, modification, waiver or supplement
to the Credit Agreement (excluding any amendment, modification, waiver or
supplement to the Credit Agreement with respect to financial covenants) which
will be incorporated herein by reference, the Company hereby authorizes the
Bridge Parties, in their sole discretion, to enter into an appropriate amendment
to this Agreement to reflect such amendment, modification, waiver or supplement.
(b) On or after the Fixed Rate Sale Date, if the Company is in
compliance with Sections 6.12 and 6.13 of the Credit Agreement as in effect on
the Funding Date and the Bridge Parties do not hold any Obligations (other than
any Obligations re-acquired after disposition thereof), the Company will comply
with each of the covenants set forth in Exhibit G attached hereto, which shall
---------
replace the covenants set forth in subsection (a) above and which shall at such
time then (and thereafter) be, upon notice to the Company from DLJ Bridge (but
without the need for any further action), hereby incorporated by reference
mutatis mutandis.
- ------- --------
SECTION 6.2. Monthly Reports. Prior to the Covenant Conversion
---------------
Date, the Company will deliver to each Bridge Party within 30 days after the end
of each of the first two fiscal months of each fiscal quarter of the Company,
its consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal month
and the then elapsed portion of the fiscal year, all certified by one of its
financial officers as presenting in all material respects the financial
condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes.
SECTION 6.3. Notices Under the Credit Agreement. Until the Covenant
----------------------------------
Conversion Date, the Company will deliver copies of all notices given or
received by it in connection with the Credit Agreement to each Bridge Party on
the day that such notice is given by the Company or within three (3) Business
Day after such notice is received by it, as the case may be, in the manner set
forth in Section 9.1 (except that for notices of potential and actual defaults
or events of default given or received by the Company, the Company will deliver
copies of such notices to each Bridge Party on the day that such notice is given
by the Company or within one (1) Business Day after any such notice is received
by the Company).
SECTION 6.4. Permanent Financing. (a) The Company will, and will
-------------------
cause each Credit Party to, take all the actions which, in the reasonable
judgment of the Bridge Parties, are necessary or desirable to obtain Permanent
Financing as soon as practicable through the issuance of securities at such
interest rates and on other terms as are, in the reasonable opinion of the
Bridge Parties, prevailing for new issues of securities of comparable size and
credit rating in the capital markets at the time such Permanent Financing is
consummated and obtained in comparable transactions made on an arm's length
basis between unaffiliated parties, provided, that, if in the reasonable
--------
judgment of the Bridge Parties, equity securities of the Company need to be
provided for the consummation of the Permanent Financing on the terms and
conditions set forth above, the terms of the Permanent Financing shall provide
for the issuance of such equity securities (which may include warrants to
purchase such equity securities). The amount to be financed shall be in an
amount at least sufficient to repay or redeem the Obligations in full in
accordance with their terms. The Company hereby covenants and agrees that the
proceeds from the Permanent Financing shall be used to the extent required to
redeem in full the Obligations in accordance with their terms.
(b) The Company covenants that it will, and will cause each Credit
Party to, enter into such agreements as in the judgment of the Bridge Parties
are customary in connection with the Permanent Financing, make such filings
under the Securities Act, the Exchange Act, the Trust Indenture Act of 1939, as
amended, and state securities laws as in the reasonable judgment of the Bridge
Parties shall be required to permit consummation of the Permanent Financing and
take such steps as in the judgment of the Bridge Parties are necessary or
desirable
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to cause such filings to become effective or in the judgment of the
Bridge Parties are otherwise required to consummate the Permanent Financing.
SECTION 6.5. Subsidiary Guaranty. The Company will cause each
-------------------
Subsidiary that is not a guarantor under the Subsidiary Guaranty that becomes a
guarantor under the Guarantee Agreement (as defined in the Credit Agreement) to
enter into the Subsidiary Guaranty.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1. Events of Default Defined; Acceleration of Maturity;
----------------------------------------------------
Waiver of Default. In case one or more of the following (each, an "Event of
- -----------------
Default"), whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation or any
administrative or governmental body, shall have occurred and be continuing:
(a) default in the payment of all or any part of the principal or
premium, if any, on any of the Obligations as and when the same shall become due
and payable either at maturity, upon any redemption, by declaration or
otherwise; or
(b) default in the payment of any installment of interest upon any of
the Obligations or any fees payable under this Agreement as and when the same
shall become due and payable, and continuance of such default for a period of
five (5) days; or
(c) failure on the part of the Company duly to observe or perform any
of the covenants contained in (i) Sections 5.02, 5.04 (with respect to the
existence of the Company) or 5.11 of the Credit Agreement, or in the
Incorporated Sections of Article VI of the Credit Agreement (in each case, as
incorporated herein by reference pursuant to Section 6.1) or (ii) Section 6.4 of
this Agreement and continuance of such default for a period of two (2) Business
Days after receipt by the Company of written notice thereof; or
(d) failure on the part of any Credit Party duly to observe or perform
any of the other covenants or agreements contained in the Bridge Financing
Documents, if such failure shall continue for a period of thirty (30) days after
the date on which written notice thereof shall have been given to the Company at
the option of and by a holder of an Obligation; or
(e) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect in any jurisdiction or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(f) an involuntary case or other proceeding shall be commenced against
any Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for relief shall
be entered against any Credit Party under the bankruptcy laws as now or
hereafter in effect in any jurisdiction; or
(g) there shall be a default in respect of any Debt of any Credit
Party in an aggregate principal amount in excess of $5,000,000 whether such Debt
now exists or shall hereafter be created (excluding the Obligations but
including Debt owing by any Credit Party) if such default results in
acceleration of the maturity of such Debt or (prior to the Covenant Conversion
Date) enables the holder of such Debt to accelerate the maturity thereof; or any
Credit Party shall fail to pay at maturity any such Debt whether such debt now
exists or shall hereafter be created; or
(h) final judgments for the payment of money which in the aggregate at
any one time exceed $5,000,000 shall be rendered against any Credit Party by a
court of competent jurisdiction and shall remain undischarged for a period
(during which execution shall not be effectively stayed) of sixty (60) days
after such judgment becomes final; or
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(i) any representation, warranty, certification or statement made or
deemed made by any Credit Party in any Bridge Financing Document or which is
contained in any certificate, document or financial or other statement furnished
at any time under or in connection with any Bridge Financing Document shall
prove to have been untrue in any material respect when made or deemed made; or
(j) any member of the ERISA Group has failed to pay when due an amount
or amounts aggregating in excess of $2,500,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
has been filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC has
instituted proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition has
existed by reason of which the PBGC is entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there has occurred a complete or
partial withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment obligation in
excess of $2,500,000; or
(k) a breach under the Engagement Letter has occurred and is
continuing for period of two (2) Business Days following notice thereof (other
than (i) due to non-payment of reimbursable expenses payable thereunder or (ii)
due to the unsolicited receipt by the Company of an offer on market terms of a
firmly underwritten transaction to refinance the Obligations which DLJ Bridge
approves); or
(l) any Subsidiary Guaranty shall have been disavowed thereunder, a
court of competent jurisdiction shall have determined that any Subsidiary
Guaranty is unenforceable or any guarantor thereunder shall default in the
performance of any of its obligations under any Subsidiary Guaranty; or
(m) prior to the Covenant Conversion Date, a Change of Control has
occurred;
then, and in each and every such case (other than under clauses (e) and (f) with
respect to the Company), unless the principal of all the Obligations shall have
already become due and payable, the Holders of not less than 33 1/3% in
aggregate outstanding principal amount of the Obligations (except that, for so
long as the Bridge Parties hold more than 50% in aggregate outstanding principal
amount of the Obligations, the Holders of more than 50% in aggregate outstanding
principal amount of the Obligations shall be required), by notice in writing to
the Company, may declare the entire principal amount of the Obligations together
with accrued interest thereon to be immediately due and payable. If an Event of
Default specified in clauses (e) or (f) with respect to the Company occurs, the
principal of and accrued interest on the Obligations will be immediately due and
payable without any declaration or other act on the part of the Holders.
ARTICLE VII
LIMITATION ON TRANSFERS
SECTION 8.1. Restrictions on Transfer. The Bridge Parties shall have
------------------------
the absolute and unconditional right to resell or otherwise transfer the
Securities or other Obligations in compliance with applicable law to any third
party at any time. Notwithstanding the foregoing, from and after the date of
the Takedown and their respective dates of issuance, as the case may be, none of
the Securities shall be transferable except upon the conditions specified in
Sections 8.2 and 8.3, which conditions are intended to ensure compliance with
the provisions of the Securities Act in respect of the Transfer of any of such
Securities or any interest therein. The Bridge Parties will cause any proposed
transferee of any Securities (or any interest therein) held by them to agree to
take and hold such Securities (or any interest therein) subject to the
provisions and upon the conditions specified in this Section 8.1 and in Sections
8.2 and 8.3.
SECTION 8.2. Restrictive Legends. (a) Each certificate for the
-------------------
Security issued to the Bridge Parties or to a subsequent transferee shall
(unless otherwise permitted by the provisions of Section 8.2(b) or Section 8.3)
include a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD,
UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND
THEN ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE
BRIDGE FINANCING AGREEMENT DATED AS OF DECEMBER 1, 1999, AS AMENDED, A
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COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER OF THIS SECURITY AT ITS
PRINCIPAL EXECUTIVE OFFICE.
(b) Any holders of Securities registered pursuant to the Securities
Act and qualified under applicable state securities laws may exchange such
Securities on transfer for new securities that shall not bear the legend set
forth in paragraph (a) of this Section 8.2.
SECTION 8.3. Notice of Proposed Transfers. (a) Five (5) Business
----------------------------
Days prior to any proposed Transfer (other than Transfers of Securities (i)
registered under the Securities Act, (ii) to an Affiliate of the Bridge Parties
or a general partnership in which the Bridge Parties or an Affiliate of the
Bridge Parties is one of the general partners or (iii) to be made in reliance on
Rule 144A under the Securities Act) of any Securities, the holder thereof shall
give written notice to the Company of such holder's intention to effect such
Transfer, setting forth the manner and circumstances of the proposed Transfer,
which shall be accompanied by (i) an opinion of counsel reasonably satisfactory
to the Company addressed to the Company to the effect that the proposed Transfer
of such Securities may be effected without registration under the Securities
Act, (ii) such representation letters in form and substance reasonably
satisfactory to the Company to ensure compliance with the provisions of the
Securities Act and (iii) such letters in form and substance reasonably
satisfactory to the Company from each such transferee stating such transferee's
agreement to be bound by the terms of this Agreement. Such proposed Transfer
may be effected only if the Company shall have received such notice of transfer,
opinion of counsel, representation letters and other letters referred to in the
immediately preceding sentence, whereupon the holder of such Securities shall be
entitled to Transfer such Securities in accordance with the terms of the notice
delivered by the holder. Each certificate evidencing the Securities transferred
as above provided shall bear the legend set forth in Section 8.2(a) except that
such certificate shall not bear such legend if the opinion of counsel referred
to above is to the further effect that neither such legend nor the restrictions
on Transfer in Sections 8.1 through 8.3 are required in order to ensure
compliance with the provisions of the Securities Act.
Five (5) Business Days prior to any proposed Transfer of any Notes to
be made in reliance on Rule 144A under the Securities Act ("Rule 144A"), the
holder thereof shall give written notice to the Company of such holder's
intention to effect such Transfer, setting forth the manner and circumstances of
the proposed Transfer and certifying that such Transfer will be made (i) in full
compliance with Rule 144A and (ii) to a transferee that (A) such holder
reasonably believes to be a "qualified institutional buyer" within the meaning
of Rule 144A and (B) is aware that such Transfer will be made in reliance on
Rule 144A. Such proposed Transfer may be effected only if the Company shall
have received such notice of transfer, whereupon the holder of such Securities
shall be entitled to Transfer such Securities in accordance with the terms of
the notice delivered by the holder. Each Certificate evidencing the Securities
transferred as above provided shall bear the legend set forth in Section 8.2(a).
SECTION 8.4. Registration Rights. The Company hereby grants each
-------------------
Purchaser and each Permitted Transferee registration rights with respect to the
Notes on the terms set forth in Exhibit B-1 attached hereto and made a part
-----------
hereof.
SECTION 8.5. Rule 144A Information. So long as any of the
---------------------
Obligations remain outstanding and, to the extent the Company becomes subject to
Section 13 or 15(d) of the Exchange Act, during any period in which the Company
is not subject to Section 13 or 15(d) of the Exchange Act, the Company shall
make available to any Holder in connection with any sale thereof and any
prospective purchaser of such Obligation from such Holder, the information
required by Rule 144A(d)(4) under the Securities Act.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notice. All notices, demands and other communications
------
to any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address set forth on the
signature pages hereof, or such other address as such party may hereinafter
specify for the purpose. Each such notice, demand or other communication shall
be effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified on the signature page hereof, or (ii) if given by
overnight courier, addressed as aforesaid or, (iii) if given by any other means,
when delivered at the address specified in this Section.
SECTION 9.2. No Waivers; Amendments. (a) No failure or delay on the
----------------------
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any
184
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to any party at law
or in equity or otherwise.
(b) Any provision of this Agreement may be amended, supplemented or
waived if, but only if, such agreement, supplement or waiver is in writing and
is signed by the Company and the Majority Holders; provided, that without the
--------
consent of each Holder of any Obligation affected thereby, an amendment,
supplement or waiver may not (a) reduce the aggregate principal amount of
Obligation whose Holders must consent to an amendment, supplement or waiver, (b)
reduce the rate or extend the time for payment of interest on any Obligation,
(c) reduce the principal amount of or extend the stated maturity of any
Obligation or alter the redemption provisions (other than the provisions
providing for the payment of a premium in connection with a redemption) with
respect thereto or (d) make any Obligation payable in money or property other
than as stated herein and in the Obligations. In determining whether the Holders
of the requisite principal amount of Obligations have concurred in any
direction, consent, or waiver as provided in this Agreement or in the Notes,
Securities, or Loans which are owned by the Company or any other obligor on or
guarantor of the Notes, or, by any Person controlling, controlled by, or under
common control with any of the foregoing, shall be disregarded and deemed not to
be outstanding for the purpose of any such determination; and provided further
-------- -------
that no such amendment, supplement or waiver which affects the rights of the
Bridge Parties and their respective Affiliates otherwise than solely in their
capacities as Holders shall be effective with respect to them without their
prior written consent.
SECTION 9.3. Indemnification. The Company and its Subsidiaries
---------------
(each, an "Indemnifying Party") agree to indemnify and hold harmless each Bridge
Party, its Affiliates, and each Person, if any, who controls a Bridge Party, or
any of its affiliates, within the meaning of the Securities Act or the Exchange
Act (a "Controlling Person"), and the respective partners, agents, employees,
officers and directors of each Bridge Party, its Affiliates and any such
Controlling Person (each an "Indemnified Party" and collectively, the
"Indemnified Parties"), from and against any and all losses, claims, damages,
liabilities and reasonable expenses (including, without limitation and as
incurred, reasonable costs of investigating, preparing or defending any such
claim or action, whether or not such Indemnified Party is a party thereto),
arising out of, or in connection with any activities contemplated by this
Agreement or any of the services rendered in connection herewith, including, but
not limited to, losses, claims, damages, liabilities or expenses arising out of
or based upon any untrue statement or any alleged untrue statement of a material
fact or any omission or any alleged omission to state a material fact in any of
the disclosure or offering or confidential information documents (the
"Disclosure Documents") pertaining to any of the transactions or proposed
transactions contemplated herein, including any eventual refinancing or resale
of the Securities or Loans, provided that the Indemnifying Party will not be
--------
responsible for any claims, liabilities, losses, damages or expenses that are
determined by final judgment of a court of competent jurisdiction to result
solely from such Bridge Party's gross negligence, willful misconduct or bad
faith (such Bridge Party a "Breaching Bridge Party") (it being understood that
the Indemnifying Party shall remain responsible for the claims, liabilities,
losses, damages or expenses of the Indemnified Parties which are not Breaching
Bridge Parties). The Indemnifying Party also agrees that the Bridge Parties
shall have no liability (except for breach of provisions of this Agreement) for
claims, liabilities, damages, losses or expenses, including legal fees, incurred
by the Indemnifying Party in connection with this Agreement unless they are
determined by final judgment of a court of competent jurisdiction to result
solely from such Bridge Party's gross negligence, willful misconduct or bad
faith (any such Bridge Party, a "Liable Bridge Party") (it being understood that
the Bridge Parties who are not Liable Bridge Parties shall not be liable to the
Indemnified Party for the gross negligence, willful misconduct or bad faith of
the Liable Bridge Party). The Bridge Parties shall in no event have any
liability to the Indemnifying Party or to any Credit Party on any theory of
liability for special, indirect, consequential or punitive damages (as opposed
to direct, actual damages) arising out of, in connection with, or as a result
of, this Agreement.
If any action shall be brought against an Indemnified Party with
respect to which indemnity may be sought against the Indemnifying Party under
this Agreement, such Indemnified Party shall promptly notify the Indemnifying
Party in writing and the Indemnifying Party shall, if requested by such
Indemnified Party or if the Indemnifying Party desires to do so, assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Party and payment of all reasonable fees and expenses. The
failure to so notify the Indemnifying Party shall not affect any obligations the
Indemnifying Party may have to such Indemnified Party under this Agreement or
otherwise unless (and then only to the extent that) the Indemnifying Party is
materially adversely affected by such failure. Such Indemnified Party shall
have the right to employ separate counsel in such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party, unless: (i) the Indemnifying Party has failed
to assume the defense and employ counsel reasonably satisfactory to such
Indemnified Party or (ii) the named parties to any such action (including any
impleaded parties) include such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that there may be
one or more legal defenses available to it which are different from
185
or additional to those available to the Indemnifying Party, in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party, provided, however, that the
-------- -------
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the reasonable fees and expenses
of more than one such firm of separate counsel, in addition to any local
counsel, which counsel shall be designated by the Bridge Parties. The
Indemnifying Party shall not be liable for any settlement of any such action
effected without the written consent of the Indemnifying Party (which shall not
be unreasonably withheld) and the Indemnifying Party agrees to indemnify and
hold harmless each Indemnified Party from and against any loss or liability by
reasons of settlement of any action effected with the consent of the
Indemnifying Party. In addition, the Indemnifying Party will not, without the
prior written consent of the Bridge Parties, settle or compromise or consent to
the entry of any judgment in or otherwise seek to terminate any pending or
threatened action, claim, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not any Indemnified Party is
a party thereto) unless such settlement, compromise, consent, or termination
includes an express unconditional release of each Bridge Party and the other
Indemnified Parties, reasonably satisfactory in form and substance to each
Bridge Party, from all liability arising out of such action, claim, suit or
proceeding.
If for any reason the foregoing indemnity is unavailable (otherwise
than pursuant to the express terms of such indemnity) to an Indemnified Party or
insufficient to hold an Indemnified Party harmless, then in lieu of indemnifying
the Indemnified Party, the Indemnifying Party shall contribute to the amount
paid or payable by such Indemnified Party as a result of such claims,
liabilities, losses, damages, or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying Party
on the one hand and by each Bridge Party on the other from the transactions
contemplated by this Agreement or (ii) if the allocation provided by clause (i)
is not permitted under applicable law, in such proportion as is appropriate to
reflect not only the relative benefits received by the Indemnifying Party on the
one hand and each Bridge Party on the other, but also the relative fault of the
Indemnifying Party and each Bridge Party as well as any other relevant equitable
considerations. Notwithstanding the provisions of this Section 9.3, the
aggregate contribution of all Indemnified Parties shall not exceed the amount of
fees actually received by such Bridge Party pursuant to this Agreement. It is
hereby further agreed that the relative benefits to the Indemnifying Party on
the one hand and each Bridge Party on the other with respect to the transactions
contemplated hereby shall be deemed to be in the same proportion as (i) the
total value of the transactions contemplated hereby bears to (ii) the fees paid
to such Bridge Party with respect to such transaction. The relative fault of
the Indemnifying Party on the one hand and each Bridge Party on the other with
respect to the transactions contemplated hereby shall be determined by reference
to, among other things, whether any untrue or alleged untrue statements of
material fact or the omission or alleged omission to state a material fact
related to information supplied by the Indemnifying Party or by such Bridge
Party and the party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. No Indemnified
Party shall have any liability to the Indemnifying Party or any other person in
connection with the services rendered pursuant to this Agreement except for the
liability for claims, liabilities, losses or damages finally determined by a
court of competent jurisdiction to have resulted from action taken or omitted to
be taken by such Indemnified Party in bad faith or to be due to such Indemnified
Party's willful misconduct, or gross negligence. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The indemnification, contribution and expense reimbursement
obligations set forth in this Section 9.3 shall (i) be in addition to any
liability the Indemnifying Party may have to any Indemnified Party at common law
or otherwise, (ii) survive the termination of this Agreement and the payment in
full of the Notes and (iii) remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Bridge Parties or
any other Indemnified Party.
SECTION 9.4. Expenses. The Company agrees to pay all reasonable
--------
out-of-pocket costs, expenses and other payments (in each case, other than
Domestic Taxes) in connection with the purchase and sale of the Notes and the
making of the Loan as contemplated by this Agreement including without
limitation (i) reasonable fees and disbursements of one firm of special counsel
and any local counsel for the Bridge Parties incurred in connection with the
preparation of this Agreement, (ii) all reasonable out-of-pocket expenses of the
Bridge Parties, including reasonable fees and disbursements of counsel, in
connection with any waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder and (iii) if an Event of Default occurs,
all reasonable out-of-pocket expenses incurred by the Bridge Parties and each
Holder, including reasonable fees and disbursements of a single counsel (which
counsel shall be selected by the Bridge Parties if the Bridge
186
Parties are Holders when such Event of Default occurs), in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
SECTION 9.5. Payment. The Company agrees that, so long as the
-------
Bridge Parties shall hold any Notes or Loans, the Company will make payments to
the Bridge Parties of all amounts due thereon by wire transfer by 1:00 PM (New
York City time) on the date of payment to such account as is specified beneath
the Bridge Parties' name on the signature page hereof or to such other account
or in such other similar manner as the Bridge Parties may designate to the
Company in writing.
SECTION 9.6. Successors and Assigns. This Agreement shall be
----------------------
binding upon and shall inure to the benefit of the Company and the Bridge
Parties and their respective successors and assigns; provided that the Company
--------
may not assign or otherwise transfer its rights or obligations under this
Agreement to any other Person without the prior written consent of the Majority
Holders (except after the Covenant Conversion Date as may be permitted pursuant
to Article VI). Subject to the terms of Article VIII, each Bridge Party shall
have the absolute and unconditional right to resell, assign or otherwise
transfer the Obligations in compliance with applicable law to any third party at
any time. All provisions hereunder purporting to give rights to the Bridge
Parties and their respective Affiliates or to Holders are for the express
benefit of such Persons.
SECTION 9.7. Brokers. The Company represents and warrants that,
-------
except for the Bridge Parties, neither it nor any Credit Party has employed any
broker, finder, financial advisor or investment banker who might be entitled to
any brokerage, finder's or other fee or commission in connection with the sale
of the Notes or the making of the Loan.
SECTION 9.8. New York Law; Submission to Jurisdiction; Waiver of
---------------------------------------------------
Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
- ----------
BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 9.9. Severability. If any term, provision, covenant or
------------
restriction of the Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
SECTION 9.10. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be an original with the same effect
as if the signatures thereto and hereto were upon the same instrument.
SECTION 9.11. Entire Agreement. This Agreement and the other Bridge
----------------
Financing Documents represent the entire agreement of the Bridge Parties and the
Company with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Company or any other Credit
Party or any of the Bridge Parties relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Bridge Financing
Documents.
187
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
CITATION CORPORATION
By: /s/ Frederick F. Sommer
--------------------------------------
Name: Frederick F. Sommer
Title: President
Address:
2 Office Park Circle
Suite 204
Birmingham, Alabama 35223
Attention: Stanley B. Atkins
Phone: (205) 871-5731
Fax: (205) 871-5772
; and for purposes of the notice provisions
in Section 9.1
Kelso & Company
320 Park Avenue
New York, New York 10022
Attn: James J. Connors, II
Telephone: (212) 751-3939
Telecopy: (212) 223-2379
CITATION FUNDING, INC.
By: /s/ Richard Beaudoin
--------------------------------------
Name: Richard Beaudoin
Title: Senior Vice President
Address:
277 Park Avenue
New York, NY 10172
Attention:
Fax No.: (212) 892-7542
Account Number and Bank for Payments:
Account Name: DLJ Securities Corp.
Bank Name: Citibank
ABA Number: 021 000 089
Account Number: 3889-6041
For Further Credit to: Citation Funding, Inc.
Account Number: 275-005-239
Attn: Bill Spiro
Fax No.: (212) 892-4467
188
FIRST UNION INVESTORS, INC.
By: /s/ Eric Lloyd
--------------------------------------
Name: Eric Lloyd
Title: Managing Director
Address:
Charlotte Plaza CP-23
201 South College Street
Charlotte, NC 28288-0680
Attention: Arion Skenderi
Telephone No.: (704) 383-3790
Fax No: (704) 383-0835
Account Number and Bank for Payments:
Account Name: First Union Investors, Inc.
Bank Name: First Union National Bank
ABA Number: 053 000 219
Account Number: 5000000002867
Attn: Arion Skenderi
Reference: Citation Corporation Bridge Loan
THE CHASE MANHATTAN BANK
By: /s/ Julie Long
---------------------------------------
Name: Julie Long
Title: Vice President
Address:
270 Park Avenue, 47/th/ Floor
New York, NY 10017
Attention: Julie Long
Fax No: 212-972-9854
Account Number and Bank for Payments:
Account Name: Commercial Loan Services
#7315
Bank Name: Chase Manhattan Bank
ABA Number: 021000021
Attn: Doug Catron
Ref: Citation Corp.
189